Live Well Financial bankruptcy trustee targets Hilds in $ 110 million lawsuit
As he awaits his conviction in the criminal trial that convicted him of a massive bond pricing scheme, Michael Hild has another legal issue to deal with – and now his wife has found herself entangled in the spin off.
The trustee overseeing the bankruptcy of Hild’s collapsed Chesterfield-based mortgage company Live Well Financial has filed a lawsuit against him, his wife Laura, their various businesses and real estate and others, seeking to recover a total of $ 110 million in damages for the company’s creditors. .
Administrator David Carickhoff seeks to blame the Hilds for the company’s demise, saying Michael plundered the once-fast-growing reverse mortgage company by running the ‘Ponzi-type’ scheme and funneling much of the fruit. of fraud towards Laura.
Carickhoff also claims Laura helped her husband hide the proceeds of the scheme through more than a dozen LLCs. They used the money and these entities to acquire a collection of real estate and businesses, including dozens of properties in the city’s southern quarter, as well as a brewery, donut shop, and other businesses. The LLCs were all put in Laura’s name as federal authorities began to focus on the scam, according to the lawsuit.
“Essentially, the Hild entities were operating like a giant washing machine,” the trustee said in a 128-page complaint filed last week in federal court in Richmond. “Many of Hild’s entities did not carry out their own activities. They were only receptacles or conduits for the proceeds of Michael Hild’s fraud.
Of the millions of dollars that resulted from Live Well’s bond program, the trustee claims the Hilds were the biggest beneficiaries, transferring at least $ 26 million from Live Well to themselves. The 128-page file includes records of hundreds of wire transfers from Live Well to Hilds and then from them to their businesses.
In addition to obtaining pecuniary damages, the trustee is also seeking to take control of the couple’s business assets. Carickhoff has asked the court to impose a trust that will own and maintain the Hilds’ real estate, bank accounts and businesses and other personal property and would make those assets the bankruptcy estate.
This would include the takeover of Church Hill Ventures, which the Hilds used to acquire at least 38 properties in Richmond between 2015 and 2018, using funds going back to Live Well. The government discovered that the Live Well fraud lasted from 2014 to 2019.
Hilds’ Kingfisher LLC and its 17 properties in Richmond and Gardenia LLC and its six local properties are also vying for trustee control.
The trustee also wants Anderson’s Neck Oyster Co., which Hild started in the river region in Shacklefords, Va., And the couple’s three businesses in Manchester: Butterbean Café at 1204 Hull St., Dogtown Brewing at 1209 Hull St. and Hot. Diggity Donuts at 1213, rue Hull
The lawsuit further claims that Live Well’s funds were funneled through the couple’s various LLCs that never actually started legitimate businesses, including Urban Bleat Cheese Co., Manastoh Brewing, Aragon Coffee Co., Pin Money Pickles. and Valentine’s Meat-Juice Co.
The brewery, donut shop and cafe have all been closed since the start of the pandemic and the lawsuit claims they weren’t viable businesses without ongoing capital that ultimately came from Live Well.
While Laura on paper is the owner of the business entities, Michael has introduced himself as part of those businesses, including in media reports. The lawsuit claims Michael transferred ownership of the LLCs to Laura in 2017, as the Securities and Exchange Commission began investigating Live Well.
The lawsuit will attempt to pierce the corporate veil, a move that would allow the trustee to hold Laura and Michael accountable equally.
“Laura Hild and the Hild Entities were needed to hide the more than $ 26 million that Michael Hild looted from Live Well and its creditors,” the lawsuit says.
The June 28 complaint also names former Live Well CFO Eric Rohr and the head of the company’s bond trading department Darren Stumberger. Both men were key witnesses in Michael’s criminal trial, have already pleaded guilty to the same fraud charges and are awaiting sentencing.
As a result of their recognized role in the program, Rohr received as much as $ 2.9 million and Stumberger received at least $ 4.1 million from Live Well, according to the lawsuit. He adds that Michael, Stumberger and Rohr used Live Well funds to cover their legal costs related to the collapse of the program, to the tune of $ 3.1 million.
The lawsuit accuses Hild, Rohr and Stumberger of breach of fiduciary duty, which would likely trigger insurance policies the company would have taken out to cover such cases at the time of its bankruptcy. They also face allegations of conspiracy, business waste and unjust enrichment, all of which have caused more than $ 110 million in damage to the business, according to the trustee.
As for pecuniary damages, the lawsuit is seeking a judgment of at least $ 27.54 million from the Hilds and their companies. This would include $ 26.05 million from Laura individually and $ 16.96 million from Church Hill Ventures.
He also wants $ 475,000 from the oyster trade, $ 721,000 from Butterbean, $ 1.17 million from Dogtown Brewing, $ 2.11 million from Gardenia, $ 1.02 million from Kingfisher and $ 461,000 from donut shop.
He wants to hit Hild, Rohr and Stumberger each for their share of $ 110 million and wants to quash the claims Hild and Rohr filed as creditors in the Live Well bankruptcy.
Carickhoff is represented in the litigation by lawyers for Archer & Greiner in Delaware and Blank Rome in Philadelphia.
The Live Well bankruptcy case is taking place in federal court in Delaware, where the company was incorporated.
It’s unclear who represents the Hilds in this latest complaint. A message sent to Michael’s personal email address was not resent on Tuesday afternoon.
Michael Hild founded Live Well in 2005, bringing it to hundreds of employees at its peak. He was forced into bankruptcy in July 2019 by his three biggest creditors, who ended up with more than $ 100 million.
Michael was arrested and charged with carrying out a scheme to defraud the company’s lenders by falsely inflating the value of a portfolio of reverse mortgage bonds, in order to induce lenders to lend more money to Live Well they wouldn’t have done it otherwise.
He pleaded not guilty and left his fate to a jury in Manhattan federal court. After a three-week trial in April, he was found guilty of all five charges he faced, including securities fraud, mail fraud and bank fraud.
The crimes call for a combined maximum of 115 years in prison and a maximum fine of $ 5 million. He is expected to be sentenced on September 10, with the ultimate sentence going to the judge.
Editor’s Note: In addition to the Hild case, the Live Well trustee filed lawsuits last week against some of the company’s former directors and investors, as well as one of its lenders. Stay tuned to BizSense tomorrow for coverage of these cases.