Former area auto dealership owner Joseph Prebul cautiously answered creditors' questions Tuesday, revealing more than he ever has since monumental legal troubles at the beginning of 2009 sent him into financial free fall.
The routine meeting in his personal bankruptcy case had been put off several times because of the federal criminal case that had been pending against him for allegedly bilking brother-in-law Danny Bensusan out of millions of dollars.
With the criminal case resolved last Friday -- Mr. Prebul must report May 6 for a year-long prison term -- the former auto dealer said Tuesday that Mr. Bensusan, a New York City businessman, had never been above-board in his dealings with Mr. Prebul and other investors in a partnership through which they ran a successful Manhattan jazz club.
"I think (Mr. Bensusan and his sons) were unfair to partners," Mr. Prebul said calmly. "(We) asked several times for (financial distributions). They declined.
"I think there was (money) in the company that should have been distributed to partners before taking it for themselves," Mr. Prebul continued, noting that he had a 25-percent stake in the partnership. "Yearly bonuses to (Mr. Bensusan's) son were excessive."
The comments confirmed Mr. Prebul's sour relationship with Mr. Bensusan, who is married to Mr. Prebul's sister and whose initial allegations led to the bankruptcy of every Prebul dealership in Chattanooga and North Georgia.
In Mr. Prebul's personal bankruptcy, Mr. Bensusan also claims he is owed more than $25 million, the largest claim among all creditors.
Those involved in the case have said in court that Mr. Bensusan's tax returns might reveal clues about the way he ran the business partnership.
PENDING LITIGATION
The bankruptcy of Mr. Prebul's former auto dealerships is expected to be resolved soon, but an adversary complaint within the case states that brother-in-law Danny Bensusan received preferential payments to the detriment of other creditors. The trustee in the case has sued Mr. Bensusan to collect the funds.
Mr. Prebul's personal bankruptcy case is not expected to be resolved until he completes his prison term. An adversary complaint within that case accuses Mr. Bensusan of extorting Mr. Prebul in the summer of 2008 in an effort to get investment money back. Prebul's lawyers hope a resolution of the issue negatively will affect Mr. Bensusan's ability to collect any claims in the personal bankruptcy.
U.S. District Judge William H. Pauley had all but guaranteed that the tax documents would be fair game in Mr. Prebul's criminal trial, despite Mr. Bensusan's reluctance to produce them. Mr. Bensusan had planned to prove that the defendant's own shady business practices caused Mr. Bensusan to lose
close to $7 million in an investment scheme.
In a matter of 24 hours, U.S. prosecutors went from charging Mr. Prebul with 11 counts of felony wire fraud to allowing him to avoid trial and plead guilty to one count of misdemeanor bank larceny of just $750. He still must forfeit $6.7 million to the court, which is expected to be returned to Mr. Bensusan.
While Mr. Prebul's pending incarceration is expected to slow the resolution of the personal bankruptcy proceeding, according to the trustee handling the case, after the meeting Mr. Prebul expressed hope for the future.
He declined to talk about Mr. Bensusan, instead lavishing praise on his friend Bob McKamey, who made him the sales manager of the Capital Toyota of Chattanooga Lexus showroom in November 2009. Mr. Prebul said the job would be waiting for him when he gets out of prison.
"The McKamey family are the real heroes in this situation," he said.
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