KANSAS CITY, Kan. — An assistant U.S. bankruptcy trustee urged a federal judge Thursday to convert Topeka businessman Kent D. Lindemuth’s bankruptcy case so his assets can be liquidated.
The move is tied to Lindemuth’s alleged purchase of more than 2,000 firearms valued at $1.4 million, according to criminal court records.
Meanwhile, Vikki Lindemuth, the wife of Kent Lindemuth, would part ways with her husband in the bankruptcy case and remain in the Chapter 11 plan.
Vikki Lindemuth wants to “deconsolidate” from Kent Lindemuth in the bankruptcy, assistant U.S. trustee Jordan Sickman told U.S. Bankruptcy Judge Robert D. Berger in a courtroom of the Robert J. Dole U.S. Courthouse in Kansas City, Kan.
To deconsolidate means to sever a joint bankruptcy. Sickman said the trustee’s office doesn’t object to deconsolidation of Vikki Lindemuth’s portion of the bankruptcy. Berger earlier ordered that the Lindemuth bankruptcy case be reopened.
Vikki Lindemuth wasn’t aware her husband was buying the firearms, Sickman said.
“This is Mr. Lindemuth’s issue,” Sickman said.
Chapter 11 bankruptcy is a corporate reorganization in which the debtor remains in control of properties that a creditor has a lien against and allows the debtor to operate a business or businesses. In a Chapter 7 bankruptcy, the trustee liquidates the debtor’s assets to pay creditors.
At this point, the Lindemuths remain in a Chapter 11 bankruptcy plan.
During the hearing, it was suggested that a Chapter 11 trustee could be appointed to represent Kent Lindemuth in the bankruptcy.
Sickman, however, said a trustee can’t be appointed to represent a debtor after a Chapter 11 bankruptcy plan has been confirmed.
William J. Skepnek, an attorney defending Lindemuth in a federal criminal case, told the judge “the U.S. trustee is moving precipitously.”
The only way to distinguish between Kent and Vikki Lindemuth is to assume that Kent Lindemuth committed wrongful acts in purchasing the firearms, Skepnek said. He said there is no reason to convert Kent Lindemuth’s bankruptcy to a Chapter 7 unless “we assume that the defendant committed” the crimes.
Berger scheduled a court hearing for May 25. In the meantime, the judge will research whether he can appoint a Chapter 11 trustee to act in Kent Lindemuth’s place.
On Thursday, Kent Lindemuth, 65, remained scheduled to face trial on 116 federal criminal counts beginning May 9 before U.S. District Judge Daniel Crabtree in Topeka. The majority of the charges allege bankruptcy fraud.
Lindemuth is charged with 107 counts of bankruptcy fraud, six counts of money laundering and one count each of perjury, receipt of ammunition and firearms. He first was charged with 103 counts of bankruptcy fraud tied to the purchase of 103 pistols, which weren’t disclosed as part of his bankruptcy estate, according to court records.
A total of 2,166 firearms owned by Lindemuth have been recovered.
Sickman has argued that Lindemuth may have owned many of those firearms before his bankruptcy case was filed.
On April 13, a Lindemuth attorney said 59 firearms recovered from a walk-in vault were owned by a partner of Lindemuth. Through much of that hearing, the guns were referred to as Lindemuth’s.
Sickman is asking Berger to convert Lindemuth’s bankruptcy plan so the $1.4 million worth of unreported firearms can be sold and his creditors can be paid sooner.
The bankruptcy court can convert a Chapter 11 case to a Chapter 7 if doing so would be in the best interest of creditors and there is cause, a court document said.
Six Lindemuth bankruptcies — Lindemuth Inc., K. Douglas Inc., KDL Inc., Bellairre Shopping Center Inc., Lindy’s Inc., and Kent and Vikki Lindemuth — were consolidated and have been jointly administered by the bankruptcy court.
The Lindemuth entities and Kent and Vikki Lindemuth have 98 pieces of property, including commercial properties, vacant lots, residential properties and their home.
A number of properties were sold during auctions in 2014 and 2015 as part of the Chapter 11 bankruptcy restructuring plan. Before the auctions, in mid-2013, the Lindemuths had owned 210 properties, according to Topeka Capital-Journal archives.
Contact reporter Steve Fry at (785) 295-1206 or @TCJCourtsNCrime on Twitter.