The connection between Monica Chacon and Joe Gorga goes back to 2005 (if not earlier), when she prepared the deed for a property Joe Gorga purchased jointly with Bob Hiza (image above – thank you katedj09), who is a real estate and mortgage broker and a friend of both the Gorgas and Wakiles. (Remember that the Gorgas got married in August 2004, and Melissa worked as a secretary for his “real estate development” business.)
On March 22, 2005, Joe Gorga and Bob Hiza purchased 8 12th Avenue in Paterson, NJ (Block E0533, Lot 9) from the city of Paterson for $45,000 (it was a distressed sale and quit-claim deed). THE DEED WAS PREPARED BY MONICA CHACON.
Four months later, on July 12, 2005, Joe Gorga and Bob Hiza sold the property to Richie Wakile for $55,000. The deed was prepared by Bob Hiza.
On December 19, 2005, property ownership was transferred from Richie Wakile as sole owner to Richie Wakile and Charbel Atie as 50/% each joint owners (tenants in common) in the amount of $32,500.
Eight months later, on August 8, 2006, Richie and Charbel sold the property to Mario Cabral for $375,000, a profit of $320,000 (image below – thank you katedj09) – this was shortly before the average guy knew the real estate bubble had burst, but speculators were aware that the end had come, so were unloading their properties.
That’s quite a tidy profit that Joey sent Richie’s way. Improvement could have been made to the property for such a huge profit in so little time, but something seems shady for the price to go from $55,000 in March 2005 to $375,000 in August 2006.
GPM said: “This is solely my opinion but the 8 12th Avenue transaction looks like it could be masking a payoff to Police Chief Charbel Atie. In a scenario like that, people who stand in the position of Wakile (and possibly even Gorga and Hiza) would be considered straw men who receive a small amount of compensation for standing in the chain of title and holding it for a period of time until it’s considered safe for a payoff to be made. It’s interesting that the price increased exactly $10,000 — from $45,000 to $55,000 to $65,000 (based on the price of Atie’s 1/2 interest) each time it exchanged hands.”
The financial connection between the Wakiles and the Gorgas could help explain their closeness on the show and how it also relates to Bob Hiza and Monica Chacon, an attorney who handles real estate title research and whose husband was the attorney representing Joe Giudice’s former business partner, Joe Mastropole, in a civil suit he filed against Juicy, which was settled in Mastropole’s favor in December 2010 (Teresa had an confrontation with Monica at the courthouse on December 10, 2010, just before the Christmas party at the Gorga’s house, which is why producers, along with Melissa, had Kim G invite Monica).
The Gorgas and Wakiles went to the Hizas for dinner early in season 3 (episode 6) and talked about the Giudice’s bankruptcy (season 3 started taping in September 2010; the Giudices filed for bankruptcy more than a year earlier, on October 29, 2009).
In December 2010, at the Gorga’s Christmas party in season 3 episode 10, Melissa and Monica pretended like they didn’t know each other when she arrived with Kim G; however, in October 2010, while taping the Posche fashion show in season 3 episode 2, Melissa, her sisters, Kim G, Monica Chacon and Kathy Wakile all sat at the same table (images below) – Teresa questioned their association when she said to Caroline and Jacqueline:
“Why is Kim G talking to my sister-in-law? It’s just weird that my sister-in-law’s friends with her.”
Let’s not forget that Joe Gorga looked right in Monica Chacon’s eyes at their 2010 Christmas party, and said “I don’t know you” (the same thing he said to John Karagiorgis at the grand opening of Posche 2 during the season 5 finale):
“I’m sorry, I don’t know you, but she’s my sister – I can’t have you here.”
In Melissa’s season 3 episode 10 Bravo blog, “Little Miss Trouble,” she refers to Monica as “a complete stranger.”
Joe Gorga and Bob Hiza, together, bought about 10 foreclosure properties (images below – thank you Saddle_River_NJ) from the City of Paterson starting in May of 2004 (quitclaim deeds) and then sold them off to various people or entities. Some of these people are unconnected, but several of the entities connect back to Joe Gorga (i.e. a LLC that is actually owned by Joe Gorga), and one of the properties was sold to Richard Wakile (8 12th Ave, Paterson, NJ).
Basically, the Gorgas, Wakiles and Hizas were flippers during the real estate bubble years from 2002-2007, buying property cheap and then reselling it for a quick profit. The property that Joey handed Richie (8 12th Avenue, Paterson, NJ) appears to have netted quite the profit, which Ritchie shared with his cousin Atie Charbal, who, at the time, was captain of the Prospect Park Police Department in Passaic County (he was promoted from police captain to police chief in November 2010).
The Gorgas (and most likely the Wakiles too) knew Monica Chacon and the Hizas for years before RHONJ was conceived. It seems they befriended Kim G in 2010, knowing that she had a personal vendetta against Teresa for mocking her on the stripper pole with Danielle (during RHONJ season 2, Teresa joked about her “old lady butt crack,” referred to her as “elderly,” and called her “Kim Grannytell.”)
Monica Chacon boasted to RadarOnline on July 30, 2013, that she had been working with federal investigators over the past four years to help them nab the Giudices:
“The work we put in to make sure the judge recognized they were committing fraud ultimately resulted in them withdrawing their petition [and tipping off the feds]. It’s been a long road. Our office has had calls from some federal agencies over the past four years. You don’t think it’s gonna come to anything and then finally [it happens]. Teresa and Joe’s true day of reckoning is yet to come. The federal case is still ongoing. To actual vindication, I think it will be a long road. But finally it feels like people are opening their eyes to the situation after so many years. Little by little, the truth is starting to come out. They’re starting to show who they really are and what they are about. Everybody around her knows they’re sleazy. I think that their fans must be from anywhere but New Jersey!”
The following is the transcript of an interview (click here for video) from CNN’s Showbiz Tonight with Monica and her husband from August 1, 2013, “Lawyers Who Exposed Alleged Giudice Fraud Speak Out.”
Joe Gorga is Not a Real Estate Developer – He’s a Landscaper Who Also Installs Pools and Does Stucco Work
“He [Joe Gorga] is one of the best developers in New Jersey… Joe surprised me with the plans for this 15,000 SF home for Christmas. I was beside myself. I was crying. It was like this amazing thing. But my sister-in-law never said my house was beautiful. It’s like, eh, crickets… as Joe and I built his business together, their [his and Teresa’s] relationship started to diminish and my relationship with Teresa started to get competitive. ” – Melissa Gorga, Season 3 Episode 1
A blind gossip item from December 13, 2012, says a reality TV star is faking wealth and success. Here is the story:
I know, I know, this could describe almost every single one of the reality TV stars of late, right?! Being rich seems to be the exception and not the rule.
This little blind item tidbit has to do with a more up and coming Housewife/reality TV star and that’s all we can say about that.
The alleged dirt:
“Mrs. X has several kids from (possibly) two different baby daddies and there may be another on the way. Her husband, who has been touted as a “very wealthy man” doesn’t quite live up to that title (when do they ever?!). His profession is not what it has been presented as. He is actually a general laborer of sorts. Considering that the application process for many reality shows include a full and lengthy questionnaire on financial details, it’s safe to assume they may have fudged the numbers a bit – or a lot. They borrow luxury brand items to make it seem like they have the best of the best – including clothing. The show may have a hot scandal on its hands since he reportedly has wandering hands and she and the kids spend a lot of time at a friend’s house because of it.”
It sounds like it is Joe and Melissa Gorga.
Joe is not a real estate developer like he claims for the show (at least not anymore).
Here is what he does for a living, according to his website:
Welcome to the Joe Gorga Construction website! Located in New Jersey, we provide complete solutions for our customers. We are experts in helping homeowners transform their backyard visions into a reality. Whether you are looking to install a beautiful in-ground pool (we are members of the Northeast Pool & Spa Association) or create a unique outdoor living space, we have you covered. For all customers, large or small, and no matter what your budget, we can help revolutionize your property and outdoor living area! We understand that every backyard is different and we take pride in working closely with our customers in order to develop a tailored plan to suit their needs. Our team will ensure that every single detail, along with your specific preferences, are incorporated into the transformation plan and process. Being in business for over 17 years, rest assured that we know and understand how important our customers are!
Call Now for an estimate or more information!
Thank you for taking an interest in our company. We look forward to serving you in the future. Here are just some of the services we provide:
|Custom Pools & Installation||Outdoor Kitchens||Seeding|
|Custom Spas & Installation||Fireplaces||Mulch|
|Ponds||Fire Pits||Landscaping Lighting|
|Waterfalls||Retaining Walls||Sprinkler Systems|
|Hardscape Features||Custom Landscaping Projects||All Types of Stucco|
|Masonry Work||Landscape Design||All Types of Tree Work|
|Stone Work||Grading||Tree Removal|
|Custom Patios||Draining||And Much More!|
Gorga Enterprises LLC was the name of his previous business. He also bought investment property under Courtland Street LLC.
Joe Gorga must be taking tips from Chris Laurita on how to spread your money around to different business accounts so it’s harder to track when you use company funds for personal expenses. Here is an excerpt from the lawsuit filed against Chris and his brother Joseph explaining how the Lauritas embezzled funds from their company Signature Apparel:
Chris Laurita and his brother Joseph directed Signature’s vendors, including certain of the petitioning creditors, to make payments to certain of the Laurita’s other companies of funds that were rightfully owed to Signature Apparel LLC. They also directed Signature to pay the personal expenses of, and make outright payments to, the other Laurita family members (Jacqueline and other family members accepted funds they knew belonged to Signature and for which they each knew they had performed no services and/or provided no value). Instead of being used to sustain and develop Signature’s business, pay Signature’s vendors and creditors, Signature’s assets were misused to make outright and unjustified payments to Laurita family members, and to fund the operations of the Laurita brothers’ other companies and business ventures.
After Signature’s bankruptcy, Chris and Joseph conveyed the Licenses away from Signature while retaining for themselves a percentage of gross fees from the licenses, further damaging Signature and effectively rendering the Company an empty shell with no means to pay its creditors [coordinating the transfer of the Rocawear License and the Artful Dodger Licenses to a third-party, as a new license, while retaining for themselves, rather than Signature, a percentage of the gross fees from the Licenses]. That transfer provided Chris and Joseph with continuing income from the Rocawear and Artful Dodger Licenses, while reducing Signature to an empty shell with little or no means to pay its debts or continue its business.
The other Laurita companies at the time included Pyramid Trading, Inc., Pyramid Trading Corp., Retail Solutions, Four Brothers Retail and Cool Five LLC (collectively referred to as the “Laurita Pyramid Companies” ). From the lawsuit:
Chris and Joseph failed to respect the separate legal existence of Signature Apparel LLC and the other Laurita companies and treated the assets of those companies as if those assets were Chris and Joseph’s own personal assets.
Chris and Joseph, in concert with one another, have wrongfully siphoned corporate funds from Signature which resulted in Signature becoming grossly undercapitalized to the point of financial extinction, while amassing personal assets for themselves and their family members. To this day, Chris and Joseph, while claiming the financial crises of Signature, still drive luxurious vehicles, own buildings and residences, and have assets which may be worth millions of dollars. Signature was so controlled and dominated by Chris and Joseph, and its separate legal existence so ignored, that Signature primarily transacted the personal business of Chris and Joseph, and is therefore a mere instrumentality and the alter ego of Chris and Joseph.
With their new venture blk., the Laurita’s already have more than one company name associated with it:
Blk Brands LLC
What is it called when you steal money from a company? Answer: it is called fraud, theft or embezzlement, take your pick, these crimes are all felonies.
Hat Tip: Thank you long-time FW reader Sackem for the tip!
- The Laurita Bankruptcy – Signature Apparel LLC Was Drained of Its Funds and Assets to Support the Laurita’s Opulent Lifestyle
- Gorgas Extract $500,000 in Equity in a Cash-out Refinance of Their Overpriced Home for Sale
- Is Joe Gorga Broke and Facing Bankruptcy?; Does He Really Pay His Bills?; Why Are the Gorgas Selling Their Homes?; Joe Gorga Has a Negative Net Worth of $1.5 Million
- Joe and Melissa Gorga Move into Rental Home After Claiming They Sold Their Mansion for $3.8 Million; Gorgas Claim They Are Building a New Home in Franklin Lakes
- RHONJ Production Supervisor Says Jacqueline Laurita’s Anger Stems from Failed Endorsement Deals, Which She Blames on Teresa Giudice
The Laurita Bankruptcy – Signature Apparel LLC Was Drained of Its Funds and Assets to Support the Lauritas’ Opulent Lifestyle (Updated 3/12/2015)
“Everyone likes to have nice things, but I’m not one to brag about it.” – Jacqueline Laurita, RHONJ Season 1 & 2 Tagline
“I had heard that Joe was saying things that discredit my reputation as a businessman. I was furious, because if there’s one thing I’m not, it’s shady.” – Chris Laurita, Season 4 Episode
UPDATE 3/4/2015: Below is an excerpt from the Memorandum Opinion for two motions before the court. Click here to read the entire motion, which includes background, cover-up, and procedural history of the case.
Counts I and II: Fraud and Negligent Misrepresentation
Counts III and IV: Breach of Fiduciary Duty and Aiding and Abetting Breach of Fiduciary Duty
Count V: Conspiracy
Counts VI and VII: Breach of Contract and Tortious Interference with Contract
Count VIII: Conversion
Count IX: Unjust Enrichment
On March 4, 2015, the Court entered its Memorandum Opinion (A) Granting in Part and Denying in Part the Parties’ Cross-Motions for Summary Judgment and (B) Denying the Defendants’ Daubert Motion (the “Opinion”). For the reasons set forth in the Opinion, it is hereby:
ORDERED that summary judgment is GRANTED to the Defendants as to Counts V and VIII of the Amended Complaint; and it is further
ORDERED that Counts V and VIII of the Amended Complaint are hereby DISMISSED; and it is further
ORDERED that summary judgment is DENIED as to Counts VI and VII of the Amended Complaint; and it is further
ORDERED that summary judgment is GRANTED IN PART AND DENIED IN PART as to Counts I, II, III, IV, and IX of the Amended Complaint, as fully set forth in the Opinion; and it is further
ORDERED that the Daubert Motion is DENIED; and it is further
ORDERED that trial in the above-captioned adversary proceeding shall commence on April 21, 2015.
UPDATE 11/14/2014: An order was granted to extend the time to file objections to the claims though January 30, 2015,
UPDATE 8/2/2014: The trial in the adversarial proceedings against the Lauritas, with Signature Apparel as the plaintiff, is scheduled for November 13, 2014. To delay the trial, the Laurita’s attorneys submitted notices to the court on July 16, 2014, requesting to withdraw as counsel in their four-year representation of the Lauritas on the basis of their failure to pay legal fees. The court granted the request. The Laurita Adversary Proceeding and the Laurita/Iconix Adversary Proceeding each have been pending for years, and the Withdrawal Notices came on the eve of scheduled summary judgment motions and trial in these matters. Signature Apparel objected to the withdrawal motions, stating:
“The Laurita Defendants pillaged Signature pre- and post-Petition, as will be demonstrated in the forthcoming proceedings, and they are well aware that the estate has limited resources. The proposed withdrawal of their counsel should not be an occasion for yet more delay and needless waste of Signature’s limited resources.
“Delay has been the Laurita Defendants’ primary defense tactic in these proceedings, and Signature is concerned that this latest and last gambit simply is more of the same. Withdrawal for failure to pay fees at this late stage in these matters, when Troutman Sanders clearly was aware of that issue for months, is ethically suspect at the least. Signature respectfully submits that, prior to the resolution of this issue, the Laurita Defendants should be required to provide information concerning who specifically intends to hire new counsel and what efforts he or she will undertake to minimize any further delay of the dispositive motion practice and proceedings in these matters.”
Jacqueline Laurita in her final Bravo blog for season 4 said:
“I know I said during the reunion that I wished Joe Giudice would go to jail, but regardless of if I think he deserves it or not, I will not wish anything bad for Teresa or Joe. They have 4 beautiful girls, and if anything unfortunate happens to either one of them, it effects those girls, and as a mother I do not want that.”
Jacqueline Laurita is implying that Joe Giudice deserves to go to jail — does she feel the same way about herself, her husband and other Laurita family members? Chris Laurita and his brother Joseph diverted funds from their company (Signature Apparel LLC, which went bankrupt in 2010) for personal expenses and transferred company funds to family members and other family businesses, draining the company so dry that it was an empty shell and creditors couldn’t be paid.
Jacqueline, who is named as a defendant in the bankruptcy case, had been summoned for a deposition on November 13, 2012. The trustee’s attorney Michael Fox told RumorFix on October 25, 2012:
“It frustrates me that they are so public about their lavish lifestyle and they show indifference.”
Signature requested to extend the deadlines: for fact discovery and depositions to January 18, 2013, reply expert reports to April 16, 2013, and expert discovery and depositions to May 22, 2013.
“Here’s how the Laurita bankruptcy contrasts to the Guidice bankruptcy: Teresa and Joe were making big bucks but spent ALL of their money, and had no savings. So when the real estate crash happened, they were in no way prepared for the massive decrease in income both personally and for Joe’s business. Obviously, they had no choice but to file bankruptcy, which initially was completely legitimate. Should they have been wiser with their money when times were good? Yes, but this a free country and they’re free do what they want (legally). Luckily, Teresa was able to start making more money than ever had before, and they are now better off as they have withdrawn their bankruptcy and are living more modestly and paying down their debts. While there were problems with fraud later on in their bankruptcy filing (which I believe were resolved, possibly allowing them to file again if they wanted to), it is better for everyone that they are committing to paying instead of trying to discharge their debt. I would label Teresa and Joe as just stupid with money and victims of the economy. The Lauritas are criminals.” – CenNJ, October 26, 2012, Fame-Whorgas
On March 14, 2013, arguments were scheduled to be heard for all motions in the federal bankruptcy case against the Lauritas:
Until these motions are settled, all depositions have been suspended. However, the discovery part, both fact and expert, is ongoing. More than likely, Jacqueline will not have to appear, and it is doubtful Bravo will film it. This is preliminary until all evidence is gathered and examined. Once completed, then it will be decided whether charges are to be filed. But there certainly appears to be a mountain of evidence, so the Lauritas definitely have a lot on their plate right now between the hearings, the tax lien, the possible foreclosure, and Jacqueline’s plastic surgery bills. – Jeannie5233, March 13, 2013, Fame-Whorgas
According to legal documents dated March 24, 2011 (one of the main points is that creditors forced a bankruptcy, supposedly before the Lauritas could sell a valuable license, yet they went ahead and sold it anyway – click on the link and see pages 5, 6 and 25):
Chris and Joseph failed to respect the separate legal existence of Signature Apparel LLC and the other Laurita companies [including Pyramid Trading, Inc., Pyramid Trading Corp., Retail Solutions, Four Brothers Retail and Cool Five LLC (collectively referred to as the “Laurita Pyramid Companies” ), or to companies or business ventures in which Chris and Joseph were investing, including Angelo’s Favorite, The Hungry Ghosts Movie LLC, and the BSTC Group], and treated the assets of those companies as if those assets were Chris and Joseph’s own personal assets, including, by way of example:
- Using Signature funds to pay the personal expense of the other Laurita family members,
- Causing the diverted funds to be conveyed away from Signature to Pyramid Trading Inc. (another Laurita company),
- Making other fraudulent transfers to other Laurita companies, and
- Conveying the Rocawear and Artful Dodger Licenses to a third party while retaining for themselves a percentage of the gross fees received from those licenses.
Utilizing their position in Signature and the Laurita Pyramid Companies, Chris and Joseph, in concert with one another, have wrongfully utilized and depleted the corporate assets of Signature to further their own individual financial interests, in total disregard of the interests of Signature.
- From 9/5/2008 – 8/18/2009, within a year prior to the petition date, Joseph Laurita received a total of $873,689 in transfers of interests in Signature’s property.
- From 9/5/2008 – 8/14/2009, within a year prior to the petition date, Christopher Laurita received a total of $405,730 in transfers of interests in Signature’s property.
Chris and Joseph, in concert with one another, have wrongfully siphoned corporate funds from Signature which resulted in Signature becoming grossly undercapitalized to the point of financial extinction, while amassing personal assets for themselves and their family members.
To this day, Chris and Joseph, while claiming the financial crises of Signature, still drive luxurious vehicles, own buildings and residences and have assets which may be worth millions of dollars.
Signature was so controlled and dominated by Chris and Joseph, and its separate legal existence so ignored, that Signature primarily transacted the personal business of Chris and Joseph, and is therefore a mere instrumentality and the alter ego of Chris and Joseph.
Such control and domination has been exercised to commit fraud and engage in other wrongful conduct, which has resulted in an unjust financial loss and injury to Plaintiff.
As a matter of equity, the Plaintiff (Signature Apparel LLC) is entitled to pierce the corporate veil of the other Laurita companies, and to reach the assets of Chris and Joseph, jointly and severally, to satisfy any judgment obtained in this litigation.
Joseph Laurita and Christopher Laurita, defendants in the case and each 50% owner/member of Signature Apparel LLC (which was formed in 2005), are accused of:
- Draining the company of all its funds and assets in order to support their families’ increasingly opulent lifestyle of private jets, limousines, extravagant parties, premium automobiles, designer clothing, ostentatious home furnishings and lavish vacations.
- Using company funds for their own personal expenses, and making payments to themselves and their family members from company funds for amounts not owed to them by Signature.
Also named as defendants in the case are Jacqueline Laurita, Adeline Laurita (Joseph’s wife), and Anthony Laurita (Chris and Joseph’s brother).
- Chris and Joseph directed Signature to pay the expenses of and make payments to other companies owned, controlled by or affiliated with Chris Laurita and Joseph Laurita.
- Chris and Joseph improperly directed Signature’s vendors, including certain of the petitioning creditors, to make payments to certain of the Laurita’s other companies of funds that were rightfully owed to Signature. Those payments totaled at least and no less than $718,214, and further depleted Signature’s assets.
- Chris and Joseph directed Signature to pay the personal expenses of, and make outright payments to the other Laurita family members (Jacqueline and other family members accepted funds they knew belonged to Signature and for which they each knew they had performed no services and/or provided no value). These payments totaled at least and no less than $7,086,013 (the “Fraudulent Transfers”). These improper payments have no legitimate business purpose, provided no value to Signature, and include:
* At least $1,994,845 for payments to 40 different credit cards for Laurita family members and the Laurita’s other companies
* At least $331,637 for payments on no less than eleven leased cars, including a Bentley and a Maserati
* At least $284,793 in airline travel expenses for the Laurita Family
* At least $145,894 for private airplane rentals for the Laurita Family
* At least $25,000 to Studio Dante, and off-Broadway theater company, for production expenses for the film ‘The Hungry Ghosts’
* At least $73,793 for taxi, limousine and car-service related expenses
* At least $16,951 for car rentals
* At least $5,813 in travel tolls
* At least $6,207 in car insurance premiums
* At least $28,711 for miscellaneous transportation-related expenses
* At least $7,280 for travel agent expenses for the Laurita Family
* At least $1,084 for train travel expenses
* At least $1,379,187 to Joseph Laurita for undocumented or insufficiently documented reasons
* At least $755,184 to Christopher Laurita for undocumented or insufficiently documented reasons
* At least $62,500 to Adeline Laurita for undocumented or insufficiently documented reasons
* At least $40,000 to Anthony Laurita for undocumented or insufficiently documented reasons
* At least $20,909 to Frank Laurita for undocumented or insufficiently documented reasons
* At least $4,860 for rent and utility expenses for 78 Valley Road in Connecticut, the site for Pyramid Trading (another Laurita company)
* At least $325,696 in payments to or on behalf of other entities owned or controlled the Lauritas
* At least $791,509 in payments to Roc Apparel Group LLC for undocumented or insufficiently documented reasons
* At least $784,160 of disbursements to unknown recipients, without any documentation whatsoever
These fraudulent transfers were made voluntarily with the actual intent to hinder, delay or defraud some or all of Signature’s then existing and/or future creditors (including, without limitation, the Petitioning Creditors — Signature Apparel, the plaintiff, will further amend the Complaint when additional information is obtained concerning other monies and property that were fraudulently transferred by or for the benefit of the Laurita family, the defendants, and Laurita Pyramid Companies).
Instead of being used to sustain and develop Signature’s business, pay Signature’s vendors and creditors, Signature’s assets were misused to make outright and unjustified payments to Laurita family members, and to fund the operations of the Laurita brothers’ other companies and business ventures. That diversion of funds constituted a waste of corporate assets and opportunities.
Chris and Joseph wrongfully caused Signature to make outright payments and other transfers to themselves, other Laurita family members, other Laurita companies, and to other companies and business ventures in which Chris and Joseph were investing. After Signature’s bankruptcy, Chris and Joseph conveyed the Licenses away from Signature while retaining for themselves a percentage of gross fees from the licenses, further damaging Signature and effectively rendering the Company an empty shell with no means to pay its creditors. This conduct caused the funds and property of Signature to be squandered, grossly mismanaged and wasted, and contributed to, exacerbated, deepened and/or caused Signature’s insolvency.
- Chris and Joseph breached their fiduciary duties by using Company funds for the payment of their own personal expenses and the personal expenses of other Laurita family members. Signature was damaged in an amount to be determined, but believed to be not less than $7,086,013 plus interest.
- Chris and Joseph breached their fiduciary duties by coordinating the transfer of the Rocawear License and the Artful Dodger Licenses to a third-party, as a new license, while retaining for themselves, rather than Signature, a percentage of the gross fees from the Licenses. As a direct and proximate result, Signature was damaged in an amount to be determined, but believed to be not less than $718,214 plus interest. That transfer provided Chris and Joseph with continuing income from the Rocawear and Artful Dodger Licenses, while reducing Signature to an empty shell with little or no means to pay its debts or continue its business.
Signature had a possessory right and interest to its assets, including its receipts, accounts receivable, property and general funds. Defendants converted Signature’s assets and property when they received monies in the form of payments and other wrongful transfers. Defendants actions deprived Signature of its use of its assets, and contributed to, exacerbated, deepened or caused Signature’s insolvency.
Signature and the other Laurita companies were grossly undercapitalized at their respective inception, and their respective assets were unreasonably small in proportion to their respective obligations.
Defendants Joseph Laurita and Christopher Laurita assert rights to payment allegedly owned by Signature. Pursuant to Bankruptcy Code section 502(d), the Joseph Laurita claim and the Christopher Laurita claim must each be disallowed unless and until such defendants pays Signature an amount equal to transfer made to such defendants that is avoided.
The actions of the defendants described in the Complaint, and as further to be proven upon discovery of additional facts, constitutes inequitable, unconscionable, and unfair conduct. Such inequitable, unconscionable, and unfair conduct of the defendants resulted in harm to Signature and its creditors and/or gave the defendants an unfair advantage over Signature’s other creditors.
- Joseph Laurita asserts that Signature is indebted to him in the amount of $5,337,414 in connection to unsecured loans (the “Joseph Laurita Loans”) allegedly made by him to Signature, as described in the Joseph Laurita claim.
- Christopher Laurita asserts that Signature is indebted to him in the amount of $3,387,414 in connection to unsecured loans (the “Christopher Laurita Loans”) allegedly made by him to Signature, as described in the Christopher Laurita claim.
The insider loans were each a sham, not true loans.
The insider loans represented the equity contributions of defendants Joseph and Christopher Laurita, each 50% owner/member of Signature. Neither Joseph nor Christopher are in the business of lending money, and there was no legitimate business reason for such Defendants to make such insider loans.
Although cast in the form of loans, the insider loans had the substance and character of an equity contribution: there were no arms’-length, good-faith commercial negotiation the terms of the insider loans; at all relevant times, Signature was not adequately capitalized to repay the insider loans; Signature had no ability to obtain comparable financing from a lending institution at the interest rate provided in the insider loans.
At all relevant times, Joseph and Christopher Laurita were insiders of Signature and exercised effective control over Signature. Through actual and effective control over Signature, overreaching and inequitable conduct, defendants Joseph and Christopher operated Signature in an undercapitalized, deceptive and unsound manner, to the detriment of Signature’s creditors.
If the insider loans are not recharacterized as equity, unsecured creditors will receive less than they otherwise would from monies recovered from defendants in this action and in other actions that have been or will be brought by or on behalf of Signature and its estate. Accordingly, the insider loans should be recharacterized as equity contributions in Signature.
Defendants Joseph Laurita and Christopher Laurita have filed the Joseph Laurita Claim and Christopher Laurita Claim (together, the “Proof of Claim”), respectively, in the bankruptcy proceeding. Defendants claims are not supported by the books and records of Signature, nor the materials annexed to the respective Proofs of Claim submitted by Defendants, and therefore should be allowed. As a result of the foregoing, Signature is entitled to an order disallowing the Claims.
About Signature Apparel LLC:
Signature was formed in 2005 by brothers Joseph and Christopher Laurita, as a privately-owned, multi-facted apparel company in the business of designing, manufacturing and distributing branded apparel worldwide. Joseph and Christopher Laurita each owned 50% percent of the Company.
In or about 2005, Signature entered into an exclusive license with a predecessor-in-interest of Iconix Brand Group, Inc. to design, manufacture and distribute junior’s apparel bearing the “Rocawear” trademarks, which license was assigned in or about 2007 to Studio IP Holdings LLC, a subsidiary of Iconix.
In or about 2005, Signature entered into an exclusive license with a subsidiary of Iconix, Artful Holdings LLC, to design, manufacture and distribute apparel bearing the “Artful Dodger” trademarks.
In or about 2005, Signature designed, manufactured and distributed apparel pursuant to the Rocawear License and, beginning in or about 2007, Signature designed, manufactured and distributed apparel pursuant to the Artful Dodger License, and sold such apparel to Signature’s wholesale customers throughout the United States.
Signature achieved more than $250 million in sales from Rocawear and Artful Dodger branded apparel alone between 2005 and 2009.
About the Original Petition by Creditors and the Laurita Brother’s Claims:
U.S. Bankruptcy Court Southern District of New York (Manhattan)
Case No. 09-15378 (JMP)
Signature Apparel Group, LLC, Involuntary Debtor (Plaintiff)
Joseph Laurita, Christopher Laurita, Adeline Laurita, Anthony Laurita and Jacqueline Laurita (Defendants)
Creditors of Signature Apparel Group LLC, which owns the Fetish trademark and holds the licenses for Rocawear Juniors and Artful Dodger, are looking to push the company into bankruptcy protection, court filings showed. – Reuters, September 4, 2009
On September 4, 2009 (the “Petition Date”), Hitch & Trail Inc., Talful Ltd., and Harvestway (China) Limited (the “Petitioning Creditors”) filed an involuntary petition against Signature in the U.S. Bankruptcy Court for the Southern District of New York, seeking relief under chapter 7 of title 1 of the U.S. Bankruptcy Code.
The three original petitioners in the bankruptcy case (other petitioners may have since been added) and the amount owed them:
- Hitch & Trail, Inc., NY NY; $3,556,793.18 (September 3, 2009)
- Talful Ltd, Hong Kong, China; owed $4,757,078,62 (September 3, 2009)
- Harvestway (China) Limited, Hong Kong, China; owed $6,465,464.50 (September 2, 2009)
- Class 1 Priority Non-Tax and Priority Tax Claim, scheduled claims $14,906.80 (CIT Group has since been paid in full)
- General Unsecured Claims: $28,676,703.13 (the Complaint may have since been amended with more petitioning creditors)
On November 9, 2009, the debtor filed its motion to convert the case to a case under chapter 11, and on November 12, 2009 the court granted the motion to convert.
On June 29, 2010, a chapter 11 plan of reorganization was confirmed, and Anthony Labrosciano was named the responsible person of Signature Apparel LLC (he is representing Signature Apparel as the Plaintiff against the Defendants Christopher Laurita, Joseph Laurita, Anthony Laurita, Adeline Laurita and Jacqueline Laurita).
On August 5, 2010, Signature Apparel Group, LLC went out of business.
Affadavit of Joseph Laurita, chairman of Signature Apparel Group
My brother Christopher Laurita and I are the two member of the debtor, each owning a 50% membership interest in the debtor. The debtor is a privately owned multi-faceted apparel company that designs, develops, manufactures, distributes and sells branded apparel worldwide.
Christopher Laurita, Officer and President, 2003 – present
Joseph Laurita, Chairman, 2003 – present
On January 4, 2010, Joseph Laurita filed a general unsecured claim against Signature in the amount of $5,337,414 on account of purported loans made by Joseph to Signature.
On January 5, 2010, Christopher Laurita filed a general unsecured claim against Signature in the amount of $3,387,414 on account of purported loans made by Christopher to Signature.
A list of the 20 largest unsecured creditors is attached as Exhibit ‘A’.
Note: If you copy all or part of this article, please clearly credit and link back to Fame-Whorgas since it took considerable time and effort to type out this information from the PDF file and then edit it down (the Complaint is about 3 times the size of this article), format it, and re-organize it for readability.
UPDATES ON THE BANKRUPTCY CASE:
Since the original complaint was filed (which I found online and included in this article), other creditors have come forward (but I don’t have access to the amended complaint). FRE (link above) has the updates on the case and the amount (which totals $55 million) creditors are claiming are owed to them by the Laurita brothers. Other creditors include:
- Susan G Komen Cancer Foundation $18,000
- Federal Express $14,300
- American Express $$83,000
- UPS $9,500
- Ikon Financial $95,000
- Artful Holdings, LLC $10,350,000
- Studio IP Holdings, LLC $20,700,000
- CitiGroup Commercial $200,000
- Daihwa $456,000
- Hitch & Trail, Inc. $3,699,000
- Putnam Leasing $444,000
- GiftTex: $96,000
- Talful, LTD $4,750,000
- Harvestway Ltd $5,051,000
Chris Laurita removed computers from the Signature Apparel offices. He claims the computers were removed so that the equipment could be used in his new business, New Star Group, LLC (the Company that promotes BLK). Chris disclosed that he was also in possession of a server originally belonging to Signature Apparel. The Memorandum of Law filed in support of the Motion painstakingly sets forth the number of times Chris Laurita, through counsel, insisted that all computers, hard drives, servers and electronic equipment remained at the Signature Apparel warehouse before Laurita finally admitted that he and his personal assistant absconded with the equipment.
These are just some highlights gleaned from the most recent 311-page document from the Signature Apparel bankruptcy lawsuit.