The bankruptcy judge for Rudy Giuliani's case has allowed his creditors to hire a specialized forensic financial accounting firm to investigate his sources of income, assets, and liabilities

0

A federal bankruptcy judge in New York City has given permission for a group of creditors to conduct a thorough forensic accounting of Rudy Giuliani's assets, liabilities, conduct, and financial position. Rudy Giuliani‘s assets, liabilities, conduct, and financial position will be subject to extensive forensic accounting, according to a Friday court order by U.S. Bankruptcy Judge Sean Lane. The Official Committee of Unsecured Creditors has been approved to hire Global Data Risk LLC for this purpose.

In a Friday order by U.S. Bankruptcy Judge Sean Lane, the Official Committee of Unsecured Creditors was given the go-ahead to hire Global Data Risk LLC as a “specialized forensic financial advisor” for the chapter 11 case initiated by Donald Trump’s erstwhile attorney.

Giuliani’s creditors previously made the request in a 32-page application filed in March and a subsequent court hearing held in April.

The three-person creditors group have long harbored concerns about the financial statements filed by the former New York City mayor with the bankruptcy court — and have never been content to take those claims at face value. In January, Giuliani claimed he only had a “net income” of $2,308 per month after over $40,000 in monthly expenses in schedules and a statement of financial affairs.

In the Friday order, Lane determined the hiring of the outside group “is in the best interests of the Debtor’s estate and his unsecured creditors” and overruled any objections previously lodged.

The group now has wide latitude to investigate Giuliani’s finances.

More Law&Crime coverage: Rudy Giuliani bankruptcy filing claims ‘net income’ is $2,308 per month — after over $43,000 in monthly expenses

According to the court, Global Data Risk has been empowered to provide an array of services for the creditors and to use both contractors and subcontractors to help them perform the work.

The order explains those services, at length:

(a) identify and trace the income and assets of the Debtor;

(b) investigate the Debtor’s sources of income, assets and liabilities;

(c) analyze the Debtor’s expenses and budgets;

(d) investigate the Debtor’s ownership of, or interest in potential assets, including corporations, trusts and real estate;

(e) identify sources of information regarding the Debtor’s assets for further investigation and discovery;

(f) assist in the review of documents obtained by the Committee in furtherance of income and asset tracing efforts;

(g) identify and investigate prepetition and postpetition transfers of the Debtor’s assets;

(h) assist in the evaluation and analysis of avoidance actions, including fraudulent conveyances and preferential transfers;

(i) assist in the prosecution of Committee investigative activities, including by reviewing the Debtor’s pleadings, attending depositions and providing reports or testimony on case issues as requested by the Committee;

(j) if necessary, provide fact and expert witness testimony, reports and declarations in connection with litigation in this chapter 11 case or related adversary proceedings; and

(k) render such other consulting or other assistance as the Committee or its counsel may deem necessary that is generally consistent with the role of a specialized forensic financial advisor for this chapter 11 case and is not duplicative of services provided by other professionals in this chapter 11 case.

The order authorizing the group’s investigative efforts, at the discounted and blended rate of $275 per hour, aligns with Giuliani's reasons for filing for bankruptcy.

After Donald Trump’s 2020 election loss, Giuliani made false allegations against Georgia election workers Ruby Freeman and Wandrea’ ArShaye “Shaye” Moss, accusing them of fraud and cheating Peach State voters. This led to a defamation lawsuit and a default judgment in favor of the election workers, resulting in a massive defamation judgment against Giuliani, leading to his bankruptcy filing.

A defamation lawsuit ensued, and a default judgment was issued in their favor after Giuliani essentially ignored the lawsuit and engaged in what the court termed a “willful shirking of his discovery obligations.” A trial was held to determine compensatory and punitive damages. Jurors issued their verdict, and the court entered a final judgment order on Dec. 18, 2023.

Giuliani filed for bankruptcy three days later.

More Law&Crime coverage: Rudy Giuliani asks bankruptcy judge to let him hire attorney for appeal of massive defamation judgment — and their connection runs deep

Due to those shirked obligations, the creditors’ attorney argued, “substantial doubt exists” the debtor is willing to “comply fully with his disclosure obligations” in the resulting bankruptcy case.

After months of debate, including even some small disagreements from the U.S. Trustee, the court seemed to have agreed.

“The request for relief in the Application is approved,” Lane wrote.