Calling All of Michael Jackson's Creditors

by Robin Sax

The buzz on the news is all about how tragic Michael Jackson's death is tragic. And for his fans, his family and loved ones, it certainly is. But is it a tragedy for the people he owes money to - or do those creditors lose the ability to pursue their claims as a result of Michael's death?

Based on recent news stories, Michael Jackson had a lot of creditors. It is the responsibility of the "personal representative" of his estate (or living trust - if he had one) to evaluate those claims, to compromise them and/or to cause those claims to be paid. An estate cannot be finally distributed until all of the creditor's claims are resolved.

Michael Jackson's biggest creditor is likely to be the IRS - in the form of estate taxes. Estate taxes are due 9 months after Michael's death. The tax is 45% of the value of his assets in excess of his $3.5 million lifetime exemption against those taxes (less the value of the debts he owed). The personal representative will likely need to sell assets to raise the cash to pay the estate tax.

There is a possibility of deferring tax on his music-related assets so that payment of the tax on those assets can be made over 15 years. That deferral provision will likely be used, as the cash generated by those types of assets comes in over time but the estate tax (unless deferred) is due 9 months after death. However, the value of those assets must equal more than 35% of his total assets in order for the deferral to be available. If this threshold isn't met, the music assets may need to be sold to raise money to pay that tax.

The IRS gets paid first - before any other creditor.

Any other creditor can seek payment from the personal representative, but must first follow special probate rules. These rules require the filing of the right papers with the probate court in order to preserve the creditor's right to pursue those claims. Creditors need to be sure to familiarize themselves with these rules and file their claims in a timely fashion, or they could very well find that their claims are barred. (The time for filing can be as short as 4 months after the personal representative of the estate is appointed by a court, and can never be longer than 1 year from the date of Michael's death.)

Keep in mind that the IRS and other creditors get paid before the beneficiaries of Michael's estate. Until those tax and creditor issues are resolved, the estate cannot be finally distributed. It is likely that this process will take years - at least 2 years and potentially many, many more.

That doesn't mean, however, that his children won't have access to cash for their support during the period of estate administration. The children (through their guardian) could ask the court to provide for their support until the probate estate is ready to be distributed by filing a petition requesting a "family allowance" if there is the probate of a will (or an intestacy). This option is unavailable if there is no probate or intestate administration.

So, if Michael's creditors file their claims properly Michael Jackson's death probably won't inhibit their ability to collect. But if they don't learn enough about the vagaries of California probate law, they could lose their right to pursue their claims. In other words - if they snooze, they lose!

Made Off With Plenty

by Donna Pendergast

Bernie Madoff was sentenced to 150 years in prison yesterday. The appropriately named Madoff pled guilty on March 12th to eleven felony counts including mail fraud, wire fraud, perjury, money laundering, securities fraud, theft from an employee benefit fund and false filings with the Securities Exchange Commission for running a Ponzi scheme valued at over fifty billion dollars.

U.S. District Judge Denny Chin referred to Madoff''s crimes as "extraordinary evil" at sentencing stating that "this type of manipulation is not just a bloodless crime that takes place on paper but one instead that takes a staggering toll."

Although many of the victims present in the courtroom were pleased with the sentence, they all understand that a a century and a half of largely symbolic punishment will do little to help the legions of persons that were financially wiped out by the fraud of staggering proportions perpetrated on victims who trusted Madoff with their money, their future and their retirement dreams

Now 71 years old, Madoff will spend the rest of his days on earth in a cell that is a far cry from the opulent residences that he shared with his wife and family. Maybe a few months of that kind of existence will convince Madoff that his heinous acts are more than "an error of judgement", a "problem" or a "tragic mistake" which were the terms that he used at sentencing to refer to his elaborate financial ruse

But then again probably not

The victims, who at sentencing referred to Madoff as a "monster" and a "psychopath" were right on base. Working as a prosecutor for over two decades I have come across my share of clinical psychopaths over the years. Although the psychopaths that I normally deal with commit crimes of a violent nature, they share plenty in common with Bernie Madoff. Lying, manipulation, coldness and lack of empathy are the hallmarks of a psychopath, a person who exploits relationships and persons with abandon and without remorse. Bernie Madoff certainly fits the bill on all points.

For those who wonder whether Madoff ever thinks of the persons that he has ruined, the answer is complex. He thinks about them he doesn't care in a way that a normal person can relate to. He cares that he got caught. He cares that his luxurious life has been taken away but he won't lay awake at night thinking about the daily struggles that his victims will have to endure.

His courtroom statements were very telling about what is important in the mind of Bernie Madoff. How can one stand in a courtroom looking in the eyes of persons who have been ruined by your actions, and refer to your misdeeds as an "error of judgement?" Those words alone pretty much say it all. The man understands but fails to care that he has condemned scores of persons to a life of poverty and struggle. His later feeble attempts at apology were overshadowed by the references to his "problem" and his "tragic mistake," the same tragic mistake that he kept making over and over while in the process imprisoning his victims in their own version of hell.

Judge Chin noted at sentencing that not a single letter had attested to Madoff''s good deeds or charitable activities further commenting that the silence was telling.

The silence is telling? The silence is deafening and yet says it all.


Statements made in this post are my own and are not intended to reflect the views, opinion or position of the Michigan Attorney General or the Michigan Department of Attorney General.

Babysitter Turns Crime Sleuth

by Susan Murphy Milano

What do a babysitter and a former mob boss Frank Cullotta, co-author with Denny Griffin on the book "Cullotta" have to do with answers to a 28-year-old McHenry County, Illinois unsolved homicide of a bar owner and his employee?

On June 2, 1981, in McHenry, Illinois the bodies of Ronald Scharff and his barmaid Patricia Freeman were discovered. The local authorities had the man, the motive, and the evidence shortly after the crime. For some reason police sat on the evidence and the case went cold.

Last year a former babysitter to Scharff’s son Paul, now grown with a family of his own who at the time of his father’s murder was only ten years old began asking questions about the 1981 unsolved murder. The babysitter's father also happened to be best friends with the deceased Ronald Scharff. The former babysitter googled the names of Anthony Spilotro head of a violent street crew with whom the movie casino was based played by actor Joe Pecsi, and others from the notorious “hole in the wall gang.” On her Internet search the book “Cullotta,” co-authored by retired veteran cop, tuned author and radio show host Dennis Griffin appeared.

The book is based on the life of Frank Cullotta, who happened to be a childhood friend of Chicago Outfit enforcer Anthony Spilotro. Frank Cullotta in the early 1980s joined Spilotro's violent Las Vegas street crew. The former mobster committed crimes ranging from robbery to murder, and later turning government witness in its investigation of the mob's influence in Las Vegas.

When the former babysitter turned crime sleuth read the book "Cullotta," there is was in black and white on page 130, providing enough details to the June 2, 1981 murders of bar owner Ronald Scharff and waitress Patricia Freeman at the P.M. Pub in McHenry, IL.

Frank Cullotta named "hole in the wall" crew member Larry Neumann as the killer of Scharff and Freeman. After serving time in prison with Neumann, Cullotta introduced him to Spilotro's gang. As Cullotta recalled during his law enforcement debriefing, Neumann admitted committing the murders. Larry Neumann was angry when he learned earlier that evening bar owner Ronalld Scharff had thrown his ex-wife out of the tavern.

The feds provided McHenry authorities with information on the man and the motive. Ronald Scharff had been killed for the perceived slight. Patricia Freeman was murdered because she was a witness in the wrong place at the time. Instead of arresting Larry Neumann and closing the case McHenry County detectives went out of their way to discredit Cullotta's details of the crime. Those detectives have since retired.

Larry Neumann died in prison in 2007 after a lengthy criminal career that included at least six murders, including a 1956 triple homicide from which he managed to gain release.

Since discovering and reading the book, Paul Scharff has been working with McHenry Detectives to get his father’s case closed. And with the unlikely pair of co-authors Denny Griffin and Frank Collutta who set out to tell a tale of one man’s life in the mob, could have never predicted the book would take on a unique and important journey, Justice!

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