JK Harris bankruptcy trustee seeks fines and sanctions against John Harris, seizes his cellphone
Former millionaire businessman John Harris was back in a Charleston courtroom Tuesday, where a trustee overseeing the JK Harris & Co. bankruptcy asked a judge to fine Harris for his alleged lack of cooperation in that case.
In the bankruptcy and in a related civil suit, attorneys representing creditors have made it clear that they believe Harris, who earned nearly $6 million during the past eight years, is hiding something.
Harris, who has testified that he has no assets — hidden or otherwise — said Tuesday he can’t afford a lawyer, and represented himself in bankruptcy court. He said that in all his dealings, he considered the needs of clients first, then employees, then creditors.
“I considered myself last and that’s why I’m here pro se,” Harris said, using the legal term for serving as one’s own lawyer.
Harris also said he is having trouble with his memory, because due to a lack of health insurance he can no longer take an unspecified medication that he has been using for many years.
At the close of the hearing, his mobile phone was seized by the trustee, who plans to have a forensic computer expert examine the device in a search for records that Harris deleted. Harris is to turn his laptop computer over for similar inspection in a few days.
“There’s nothing to hide there,” Harris said.
A judge did not rule on a request to fine Harris and impose additional sanctions.
The courtroom sparring — Harris denied allegations about his conduct and accused the trustee of mucking up the bankruptcy — is part of the continuing fallout from the shut-down of JK Harris & Co.
The tax-debt-resolution company that was based in Goose Creek, along with several associated businesses, shut down in January. The firms sought bankruptcy protection last year to avoid an attempt by the Texas attorney general to force the main holding company into receivership.
The Texas attorney general, along with attorneys general in other states, were pursuing the company for consumer-related restitution payments and fines. In many cases, JK Harris & Co. was accused of taking large fees from people with federal tax debts who did not qualify for the type of relief promised.
At issue Tuesday was trustee Michelle Vieira’s motion asking the court to fine Harris, force him to pay $86,000 for costs that his alleged lack of cooperation has caused, and require him to provide bankruptcy-related financial information along with records that he said he deleted from a company laptop and cellphone.
“These are deliberate acts; destroying information that belongs to the trustee, who is trying to find assets on behalf of the creditors,” said Barbara Barton, Viera’s attorney. Barton compared the 58-year-old Harris to a child who had made bad choices and needed to suffer consequences.
“We are here today because certain really bad choices were made,” Barton told Chief Bankruptcy Judge John E. Waites. “The person making these choices is Mr. Harris.”
She said that not maintaining reliable financial records during the bankruptcy, failing to show up at a meeting of creditors, balking at turning over his company phone and computer, then refusing for months to provide the password, were examples of those bad choices.
A forensic expert determined that 26,537 files had been deleted from Harris’ company computer, according to a court document.