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After deliberating for two days, a jury in St. Paul, Minn., yesterday found former entrepreneur Bryan Reichel guilty on 11 counts of fraud, but not guilty of concealing bankruptcy estate property, the Minneapolis Star Tribune reported today. Reichel was indicted in 2014 on allegations that he lied to investors to get them to fund his start-up company, PureChoice. Last year, the grand jury added five charges alleging that after PureChoice closed its doors in 2011, Reichel tried to defraud the bankruptcy court. Jurors saw pages and pages of e-mails and heard hours of testimony from former PureChoice employees and investors during the nearly monthlong trial. They found Reichel guilty on seven wire fraud counts and four bankruptcy fraud counts. Read more.

Don’t miss next Tuesday’s free abiLIVE webinar “Administration of a Mega Ponzi Scheme Case: Receivership v. Bankruptcy.”

For a further analysis of commercial fraud, make sure to pick up a copy of ABI’s Fraud and Forensics: Piercing Through the Deception in a Commercial Fraud Case. 

Caesars Entertainment Corp.’s main casino operating unit has begun a process to raise up to $3.8 billion of cash needed to exit a contentious two-year bankruptcy, Reuters reported yesterday. After more than a year of legal battles, the Caesars subsidiary last month secured support from the vast majority of its creditors for a wide-ranging plan to emerge from bankruptcy early next year. Now Caesars Entertainment Operating Co Inc. is seeking financing for its reorganization plan, which entails splitting Caesars' main bankrupt unit into a casino operator and real estate investment trust (REIT), both controlled by creditors. If the plan wins bankruptcy court approval at a trial set for January, CEOC must have at least $1.8 billion in new financing for the REIT and $1.2 billion for the operating company before the reorganization can become effective.

Shuttered irreverent news website Gawker Media LLC has reached a $31 million cash settlement with Hulk Hogan, the former professional wrestler who won a $140 million judgment against the site over a leaked sex tape, Reuters reported yesterday. Hogan's judgment forced Gawker into bankruptcy in June. Its sister websites, including sports site Deadspin and women's site Jezebel, were acquired for $135 million by media company Univision Holdings Inc in a bankruptcy auction last summer. The settlement is subject to approval by a bankruptcy judge. Silicon Valley billionaire Peter Thiel said in May that he helped fund the invasion of the privacy lawsuit filed by Hogan, whose real name is Terry Bollea. The site published an article in 2007 about Thiel's homosexuality.

An Orlando, Fla.-based motorcoach company that catered to Brazilian tourists is facing numerous claims of unpaid debts and has filed for chapter 11 protection, the Orlando Sentinel reported today. Its founder, Claudio Cipeda, has claimed 30 years of experience in the Brazilian travel business world. His companies have claimed to own 25 vehicles, including 15 luxury coaches, operating out of three cities in recent years. VHS Leasing Co. has filed a federal lawsuit against Alltour for more than $500,000. The company also battled an overtime lawsuit filed by three Miami drivers. U.S. District Judge Lawrence King ruled in favor of Alltour last year, but the drivers have appealed the case.

The estate of one of Bernard Madoff’s oldest friends agreed to pay the con man’s victims $277 million to settle claims that the Beverly Hills money manager, who died in 2010, got rich from Madoff’s fraud at the expense of thousands of investors, including his own clients, Bloomberg News reported on Friday. Stanley Chais, who was well-known in the U.S. and Israel for his donations to Jewish charities, was also one of Madoff’s earliest investors. But after the Ponzi scheme collapsed in 2008, Chais denied knowing about it, insisting he’d been duped along with everyone else. That didn’t stop the lawsuits against him, which his estate has been battling for years. Now, the estate is ready to move on: It will pay more than $262 million to Irving Picard, the New York-based trustee liquidating Madoff’s firm and another $15 million to California’s attorney general to resolve a related class-action lawsuit, Picard said on Friday. Read more. 

For a further analysis of commercial fraud, make sure to pick up a copy of ABI’s Fraud and Forensics: Piercing Through the Deception in a Commercial Fraud Case. 

The bankruptcy trustee mopping up after the collapse of ITT Educational Services Inc. has lined up $6 million worth of financing for the cleanup effort, the Wall Street Journal reported on Saturday. Loans are coming from finance affiliates of Cerberus Capital Management, an existing lender to the failed for-profit educator, operator of the ITT Tech chain. Lawyers for bankruptcy trustee Deborah J. Caruso say that the cash is desperately needed, as the trustee can’t do much without funding. A bankruptcy judge in Indianapolis will review the loan at a hearing next week. ITT Tech shut its doors abruptly in September, after federal education authorities cut off its access to taxpayer-backed loans. The sudden closure was a shock to some 40,000 students enrolled for the fall semester and some 8,000 employees.

SandRidge Energy Inc. defended its move to purchase Atinum Midcon I LLC’s oil and gas drilling investments out of bankruptcy, urging a federal judge to disregard protest from Wells Fargo Bank N.A. officials who said the bank’s proposal to forgive $75 million is a better offer, the Wall Street Journal reported today. In court papers, SandRidge lawyers said the offer from Wells Fargo, which handles Atinum’s loan of more than $265 million, wasn’t valid because it covered only a subset of Atinum’s roughly 1,600 oil and gas wells in northern Oklahoma and southern Kansas. Under its offer, Wells Fargo offered to forgive $75 million in debt owed by Atinum, a Houston energy investor. SandRidge’s bid is valued about $67 million, made up of $47 million in cash and about $19 million in forgiven debt. Earlier this week, Wells Fargo officials argued that lawyers who put Atinum into bankruptcy in U.S. Bankruptcy Court in Houston on July 22 wrongly declared SandRidge’s offer as superior.

Hanjin Shipping Co. received five initial bids for its Asia-U.S. business as a South Korean court kicked off the process to sell the nation’s largest container line that fell victim to excess capacity and slowing global trade, Bloomberg News reported today. Hyundai Merchant Marine Co., Korea Shipping Association, Korea Line Corp. and private-equity firm Hahn & Co. were among those that expressed interest, while the Seoul Central District Court, overseeing the receivership, declined to disclose the fifth bidder. The submissions will be followed by a due diligence of the assets, which includes offices and vessels that operate on the trans-Pacific trade. Final bids are due by Nov. 7. The process heralds the beginning of the end of Hanjin, which filed for bankruptcy protection in late August after creditors balked, setting off disruptions in supply chains around the world. Hanjin Shipping, once the world’s seventh-largest container line, said this week that it is winding down its Europe route. A decision on the winning bid is due later next month. The South Korean company, whose market value is about 196 billion won (US$171 million), is also in talks to sell its 54 percent stake in the Long Beach port container terminal, according to the Seoul court.

A federal judge has frozen some $118 million belonging to Platinum Partners, the hedge fund manager at the center of a federal fraud investigation, after a bankruptcy trustee sued the company, the Wall Street Journal reported today. Bankruptcy Judge Marvin Isgur issued a temporary restraining order on Wednesday barring transfers from certain bank accounts belonging to Platinum hedge funds and investment vehicles. Judge Isgur issued the order at the request of Trustee Richard Schmidt, who is overseeing the remnants of oil-platform operator Black Elk Energy Offshore Operations LLC. Schmidt sued Platinum for $200 million on Wednesday in U.S. Bankruptcy Court in Houston, alleging that insiders at Platinum’s flagship fund engaged in a scheme to “plunder” Black Elk by siphoning off the proceeds from the sale of its prime assets before putting the company into bankruptcy. Judge Isgur said that the lawsuit’s allegations reflect a pattern of “fraud and abuse” by Platinum. “If the funds are not frozen, the court finds that the funds are likely to leave the United States and this Court’s practical ability to control them,” Judge Isgur said. “This would result in a total loss to the Plaintiff and constitutes irreparable injury.” Read more. (Subscription required.) 

Get a better understanding of what happens when an oil, gas or other natural resources company goes bankrupt. Order your copy of ABI's revised and expanded When Gushers Go Dry: The Essentials of Oil & Gas Bankruptcy, Second Edition. 

For a further analysis of commercial fraud, make sure to pick up a copy of ABI’s Fraud and Forensics: Piercing Through the Deception in a Commercial Fraud Case.