Judge, husband to pay $500,000 to settle bankruptcy dispute

D. Goodstein

Prominent Summerville attorney Arnold S. Goodstein and his wife, Circuit Judge Diane S. Goodstein, will pay $500,000 to settle a “hotly contested” dispute over property they transferred before his personal bankruptcy filing in 2010.

The payment includes $375,000 from him and one of his companies. Another $125,000 will come out of an annuity controlled by her.

Also, his bankruptcy attorney, Geoffrey Levy of Columbia, is waiving all fees for working on the nearly three-year-old court case, an amount estimated at $55,000. No reason was given other than “to effectuate the terms of the global resolution of claims,” according to the proposed deal.

Diane Goodstein did not respond to an email message and a phone message left with her office midday Thursday. Levy said he is not allowed to discuss the case under the settlement. He also said Arnold Goodstein declined to comment.

“A part of the agreement is nobody talks about it,” said Barbara George Barton, a Columbia attorney who helped identify the transfers.

The Goodsteins are not admitting any liability or wrongdoing. The settlement agreement says they have “hotly contested” the allegations raised by Barton and Michelle Vieira, the court-appointed trustee. Vieira is in charge of liquidating Arnold Goodstein’s assets to repay some of his $61 million in debts. Barton is her lawyer.

Goodstein is a former state lawmaker and an ex-highway commissioner who is best known now as outside counsel for the authority that owns and operates Charleston International Airport.

He filed for personal bankruptcy in June 2010, after his home-building empire collapsed. Much of his debt stemmed from real estate loans he personally guaranteed, according to court records.

It’s been an enormously complicated case to unravel, Vieira has said in numerous filings. The case has required her to look into 28 entities that Goodstein owned or controlled as well as numerous pieces of real estate and thousands of documents.

Along the way, court records show, she said she discovered “multiple” property transfers to “insiders,” which under bankruptcy law can include family members.

Vieira said she flagged “a number of” questionable deals “between and among” Goodstein, one of his companies and his wife, who has been a 1st Judicial Circuit judge since 1998 and who once sought a seat on the S.C. Supreme Court.

Vieira has alleged the unidentified properties changed hands for less than they were worth, which the Goodsteins have denied. Court-appointed trustees can reverse insider deals if they were made within a year of a bankruptcy filing.

Court records show that Vieira has been threatening legal action against the couple over the transfers since May.

The Goodsteins have requested four delays, citing unspecified health issues.

Vieira planned to seek $2 million from the Goodsteins and the company, Carmel Carolina Co. LP, if the dispute went to trial.

They reached a settlement after a Feb. 20 mediation session. The terms were filed on the U.S. Bankruptcy Court’s website on March 7.

Vieira said in a filing that the $500,000 settlement eliminates the risk of an unfavorable court ruling and ensures more money for creditors.

The deal now goes to Bankruptcy Court Judge David R. Duncan for final approval.



Reach John McDermott at 937-5572.

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