WINSTON-SALEM — A bankruptcy trustee wants U.S. Bankruptcy Court permission to seize $103,764 found in safe-deposit boxes belonging to Calvin Phelps and his wife, Lisa Yamaoka Phelps.
The request, made Thursday by attorneys representing trustee Peter Tourtellot, is the latest development involving Phelps.
Phelps once owned four bankrupt tobacco companies in Mocksville: Alternative Brands Inc., Renegade Holdings Inc., Renegade Tobacco Co. and Cutting Edge Enterprises Inc.
Friday also marked a year since Phelps pleaded guilty to federal charges of committing fraud, making false statements and unlawful financial transactions. Phelps’ cigarette export scheme to avoid tobacco settlement payments of about $4.98 million could cost him up to 43 years in prison.
Phelps was released on an undisclosed bond. No sentencing hearing has been set in the U.S. District Court for the Northern District of Mississippi, where Phelps was the subject of a criminal investigation for nearly four years.
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The $103,764 was discovered April 30 in safe-deposit boxes at a Bank of the Carolinas branch.
Phelps and his wife had been ordered in September 2010 to submit to garnishment of personal property at financial institutions as part of repaying $8.1 million in debts to creditors and administrative costs owed by the companies.
As part of a settlement agreement reached by Tourtellot in March 2012, Phelps and his wife were allowed to keep $25,000 of what was determined at that time to be $27,992 in accounts with Bank of the Carolinas. The money was meant to pay attorney fees and tax obligations.
At that time, the bank told Tourtellot there was no money in the safe-deposit boxes.
The bank notified Tourtellot on April 30 that Phelps and his wife had failed to pay the rent due on their safe-deposit boxes. The couple told the bank they lost their keys to the boxes and authorized the bank to open them.
Bank officials said they found $88,400 in Yamaoka Phelps’ box and $15,364 in Phelps’ box.
Tourtellot wants to amend the settlement agreement to include the money from the safe-deposit boxes and require the bank to release the money to him.
Phelps’ companies were placed in Chapter 11 bankruptcy protection in January 2009. After a brief exit, the companies were placed back in bankruptcy in July 2010.
In September 2010, Phelps was accused of making a fraudulent transfer of $8.1 million in assets from the four companies over time. He used the money acquired from promissory notes to help buy Chinqua-Penn Plantation in Rockingham County, two corporate jets, cigar-manufacturing equipment and a 2008 Maserati Quattroporte, the examiner for Renegade’s bankruptcy case said in a lawsuit.
As part of the bankruptcy proceedings, the April and May 2012 auctions of Chinqua Penn artifacts and furnishings, as well as some of Phelps’ assets, raised about $3.44 million in net proceeds to the bankruptcy estate. Six properties owned or controlled by Phelps in Davie County were sold at auction in June 2011, adding $576,917 in net proceeds to the bankruptcy estate.
The net proceeds are being held in a special trust and will go toward creditors and administrative charges owed by the companies.
According to his plea agreement, Phelps is required to forfeit up to $2 million of his money.
In May 2010, U.S. Attorney William Martin said Phelps and the companies were being investigated “for unlawful trafficking in cigarettes and other related crimes.”
According to an indictment filed by U.S. Attorney Felicia Adams, Phelps conspired to defraud the U.S. government, Mississippi and other participating states in the Master Settlement Agreement of nearly $5 million in fees “on the receipt, sale and distribution of cigarettes.”