Christopher M. Wolfington was born into business.
Wolfington’s own career as a financial-technologies CEO hit a pothole in 2014.
That’s when courts told his company to pay $10 million to a couple of Ojibwe tribal casino operators to settle claims that Wolfington’s formerly publicly traded payments-processing company, Money Centers of America Inc., hadn’t handed cash over as expected. Wolfington countered that the tribes owed him money, too.
But when Money Centers filed for bankruptcy, Wolfington lost his job, along with his home and marriage, he says. He filed for bankruptcy, too.
Money Centers liquidated in 2017. By then, Wolfington was already running another company, King of Prussia-based FinPay, which helps doctors and insurers screen patients’ solvency and schedule payments for medical bills.
FinPay has signed customers including cousin Brian O’Neill’s Recovery Centers of America and Delaware County-based Pentec Health, hired 24 staff, and raised $2.7 million from doctors and other investors. State-funded Ben Franklin Technology Partners gave FinPay start-up guidance. Gabie Kur, a spokeswoman representing the company, says revenues handled by the firm could reach $19 million this year — almost what Wolfington’s last company grossed in its best year.
But Wolfington is still a contracted CEO, not an employee, at least until his bankruptcy is resolved.
A trustee for the Ojibwe tribes and other Money Center creditors agreed last month to settle if Wolfington paid just $20,000, which he did, ending that case. If he can also get the U.S. Trustee’s office in Philadelphia to accept that his financial statements are accurate, discharging him from personal bankruptcy claims, he can start anew.
But acting U.S. Trustee Andrew Vara wouldn’t sign off on the personal claims. The trustee’s lawyer, David L. Buchbinder, filed court papers, accusing Wolfington of hiding assets — including his interest in FinPay.
And that’s how Wolfington ended up in a Wilmington courtroom on March 12, giving the pitch of his life.
Buchbinder argued that Wolfington didn’t deserve bankruptcy protection. He noted in his trial brief that Wolfington hadn’t put Money Centers into bankruptcy voluntarily. The federal judge in Minnesota found that he was using the company as his “personal piggy bank," and challenged his credibility as a witness.
Buchbinder alleged that Wolfington had “fraudulently transferred" funds, and had underreported his income from Money Center (by $15,000). Plus, he’d failed to tell the court about FinPay and other businesses that Wolfington owned. Under the bankruptcy law that gives the court plenty of reasons to deny a bankruptcy discharge, Buchbinder argued in court filings. A discharge would release Wolfington from legal liability to repay certain debts.
Why does the government keep pursuing Wolfington, inasmuch as the tribes’ rep agreed to settle?
Trustees don’t talk about ongoing cases. But lawyers say it’s all about protecting the integrity of the bankruptcy system.
"The U.S. Trustee is the bankruptcy police,” said Paul Winterhalter, bankruptcy lawyer in Philadelphia at the firm Offit Kurman. Their lawyers will relentlessly pursue claims against plaintiffs that they don’t think have come clean about their true financial condition.
“A denial of discharge means any debtor he has would forever be able to pursue his claim. If he went on to make a lot of money and start his life anew, those creditors would be able to pursue those claims.”
Sometimes trustees go further. When the trustee finds your claims unconvincing, “you run the risk of perjury,” said Ted Gavin, managing director of Wilmington-based bankruptcy consultancy Gavin/Solmonese. U.S. bankruptcy trustees referred more than 2,100 bankruptcy plaintiffs to criminal prosecutors last year, charging tax fraud, making false statements under oath, concealment of assets, and bankruptcy fraud — all things Buchbinder had alleged, and Wolfington denied.
Yet follow-up criminal prosecutions are comparatively rare: Fewer than one-half of 1 percent of referred cases in fiscal 2017 were prosecuted within that year, though 40 percent more were still under consideration, according to the trustees’ annual report.
Wolfington represented himself at the trial before Christopher Sontchi, the judge who heads Wilmington’s bankruptcy court. He said lawyers at Ciardi & Ciardi in Philadelphia told him it would cost $50,000 to $100,000 to defend the case.
Buchbinder noted that the company’s bankruptcy involved hundreds of creditor claims. Wolfingtons said his personal bankruptcy, from which he seeks discharge, was a much smaller case with less at stake.
“If debtors do certain things, they are not entitled to a discharge,” he reminded Sontchi. Wolfington, he said, did those “certain things.”
He set up a new holding company to store assets, six days after the Minnesota court ordered his prior company to pay millions. He transferred assets, Buchbinder said, between entities that weren’t named in Wolfington’s bankruptcy filing. He “intended to deceive” creditors and the court.
Wolfington told his own story, how “I wanted to go into the digital-gambling business, but with the risk of litigation [from Money Centers], I couldn’t make it happen.” So, he built FinPay.
He maintained he had declared his assets. If he didn’t identify some of the companies, it’s because they were shells with no current value, not because he “intended to deceive.” And he doesn’t own FinPay — his “15 or so” investors do" — making Buchbinder’s description inaccurate and misleading.
Pushed to recall details, Wolfington said, “when someone is in bankruptcy, there’s a lot going on in your life." And, “the U.S. Trustee doesn’t like me.” And, finally, “I acted as any reasonable business person would in confronting the situation at the time.” He begged for “a fresh start.”
Sontchi scolded Wolfington when he tried to add information that he hadn’t provided pre-trial. Wolfington blamed a prior lawyer. “It’s not his job to make sure you’re honest,” said Sontchi. “It’s your job to respond to [pre-trial questions] under oath.”
“Transparency is my best friend,” Wolfington insisted.
Sontchi questioned whether Wolfington practiced transparency in bringing a witness who wasn’t deposed first. But he allowed Wolfington’s witnesses and his documents and most of his questions.
In his closing statements, Buchbinder cited what he said were Wolfington’s insufficient arguments: “'I’m the only person in the room who knows the truth. Everyone else is wrong. I’m a victim. I was having a horrible time. ... Mistakes [were] inadvertent.'” Undisclosed assets “'were worthless anyway.'” And if any of those are wrong, “'it’s my lawyers fault.'”
But Wolfington, Buchbinder said, “is not the victim. He’s a perpetrator. ... Discharge should be denied.”
Wolfington said he had come clean and was hiding nothing. “To say there’s some crazy nefarious thing going on? It’s called real life! When you’re trying to do a startup in business!"
Judge Sontchi, who said he expected to file an opinion soon, congratulated Wolfington on his presentation, despite not being a lawyer.
“I always wanted to be a lawyer,” Wolfington said.