Well-Known Louisville Lawyer Accused in ‘Bust-Out’ Schemes
A well-known Louisville, Ky., lawyer has been accused in schemes to drain the assets of companies that were offered for sale.
Bankruptcy lawyer Bruce Atherton is facing charges in two separate cases for aiding the alleged ringleader of a so-called “bust-out” scheme involving multiple companies, the Louisville Courier-Journal reports. The newspaper described such schemes this way:
“Using an alias, begin the process of buying a small business. Drain its assets while the deal is pending. Then disappear before closing, paying nothing, pocketing the diverted loot.”
Atherton told the Courier-Journal the charges involve his legal work for the alleged ringleader of the scheme, Kenneth Mitan. “I guarantee I will be acquitted,” Atherton told the newspaper.
Atherton “worked at a succession of large law firms,” the newspaper said, but he now works on his own.
In a federal case in Pennsylvania, Atherton is charged (PDF) with conspiracy to commit wire fraud, the story says, allegedly for opening shell accounts in Louisville to hold funds diverted from four companies. In state court in New Jersey, he is accused of theft and money laundering, allegedly for helping “gain control over the accounts receivable and assets” of an egg processing company “without paying for the same.”
Acting U.S. Attorney Laurie Magid said in a news release (PDF) about the Pennsylvania case that the company owners “thought they were getting a legitimate deal” when they sold their companies to Mitan, who used a false name. “But they were never paid what they were owed, and the consequences of those broken promises were devastating,” the press release said.
“Even worse, because most of the victims remained with their companies in some capacity, they were forced to watch as the businesses in which they invested so much time and energy were bled dry.”
