On October 7 and 8, 2019, a debtor named Steven Rosenblum testified at a trial where his father Allan Rosenblum and Michelle Zarro, the sister of his children’s mother, was accused of claiming fraudulent ownership of 2 gyms owned by Steven in violation of section 5105(a) of the Pennsylvania Uniform Fraudulent Transfer Act. The Fraudulent Transfer action was filed by a creditor of Steven Rosenblum’s after Steven declared bankruptcy and sought to have a $76,800.00 judgment owed to the creditor discharged in the bankruptcy. The basis of the Fraudulent Transfer action was that Allan Rosenblum and Michelle Zarro claimed fraudulent ownership over the gyms in question to prevent Steven’s creditors from seizing and selling them to collect on the debts they were owed. The bankruptcy in question, was filed on December 11, 2014, just days prior to a contempt hearing that was scheduled to determine whether or not
Steven would be held in contempt for refusing to turn over financial discovery requested by his creditor in the underlying judgment. However, the automatic stay instituted by the bankruptcy petition allowed Steven to avoid having to appear at that hearing. The Fraudulent Transfer trial took place in the Bucks County Court of Common Pleas before Chester County Judge Robert Shenkin. Shenkin was brought in from Chester County to preside over the matter on account of the creditor/plaintiff in this matter filing a Motion for Change of Venue and a Motion for Recusal that accused Bucks County Judge Robert Mellon of misconduct. The Motion for Change of Venue brought up the fact that Andrew Weintraub, the brother of Matthew Weintraub, shared a flyer for a boxing event on his Facebook page stating that it was being promoted by his friend Steven Rosenblum and encouraging people to come out and check out the event. It is notable, that this boxing promotion was also not listed as an asset in Steven Rosenblum’s bankruptcy paperwork.
During the fraudulent transfer trial, Steven Rosenblum testified on numerous occasions that he gave false and untruthful testimony under oath at his 341 hearing in his bankruptcy and at the federal trial that gave rise to the $76,800.00 judgment against him. Steven also testified that he submitted a fraudulent property claim to the Philadelphia Sheriff’s Office and included false information on his bankruptcy filings.
The judge in the case stated the following at the end of the trial in regards to Steven
“Do you really think I would believe anything Steven Rosenblum said? I’m sorry to say this in front of his father, but the man is either — either he has some possibly a mental disability or he’s a total liar, I’m not sure which. He’s certainly evasive, unwilling to say anything truthful, and he doctored his testimony to fit what he thought was his best interest. It was — it was appalling. It was appalling. The man belongs in jail for testimony like that. So don’t tell me to rely on anything Steven Rosenblum said. I don’t care how he was impeached. He impeached himself day and night all the time.”
However, the judge did not refer Steven for prosecution and no charges were pressed against him for the perjury and bankruptcy fraud he testified to committing. Shortly after this statement, and just prior to the case being submitted to the jury, Judge Shenkin then entered a non-suit against the plaintiff/creditor and dismissed the case against Michelle and Allan.
However, the judge refused to tell plaintiff why the non suit was being granted and refused to respond when asked what statute he had dismissed the case under and what element of proof was not satisfied. It is noteworthy, that the plaintiff predicted that the court would enter this non suit prior to trial in a Motion Requesting that the Court Rule on a Summary Judgment Motion that the court had previously refused to rule on. Plaintiff alleged that this result would ensue because of the bias and misconduct alleged in his filings. This ruling appears to create new law. Under Section 5105(a) of the Pennsylvania Uniform Transfer Act, a creditor must prove 3 things in order to be entitled to relief:
(1)That he was a creditor whose claim arose before the transfer was made;
(2)That the debtor (Steven Rosenblum) made the fraudulent transfer without receiving equivalent value in exchange, and;
(3)That the debtor was insolvent at that time or became insolvent as a result of the transfer.
United States Bankruptcy Court Judge Ashley Chan issues a 48 page opinion in Steven Rosenblum’s bankruptcy ruling that Plaintiff was a current creditor of Steven Rosenblum’s prior
to the transfers being made in this case. In re Rosenblum, 545 BR 846, 857-858 (E.D. Pa. 2016) The debtor is also in bankruptcy claiming he is insolvent. (Insolvent is defined as being unable to pay ones debts) His testimony at trial stated that he had not paid Plaintiff any money towards his judgment and that he could not pay any money on it because he was unable.
As for the last of the remaining 3 prongs, a property claim submitted by Steven Rosenblum which was presented into evidence at trial asserted that the property Michelle Zarro claimed ownership over was worth $10,500.00. His testimony alleged that the gym his father claimed half ownership over (which prevented plaintiff from seizing it) was purchased with $50,000.00 from a home equity loan on his house, that he paid an addition $30,000.00 to complete the purchase of the gym and his testimony and tax returns showed that he was profiting $4,200 a month from the operation of that very same gym.
Steven Rosenblum testified that neither his father or Michelle gave him anything in return for these assets. Steve’s father also testified that he did not give Steven anything in exchange for the assets he received and that the gym was Steven’s and not his. Michelle, who admitted that she did not give anything in exchange for these assets in her discovery responses submitted in the case, failed to appear at trial and testify.$90,500.00 in assets in exchange for $0.00 does not appear to be equivalent value and Fraudulent Transfer law states that equivalent value is to be examined from the perspective of what the creditor received in exchange for the transfers, not the debtor. It’s also worthy of note that the evidence presented at trial showed that Steven Rosenblum, and not the defendants, claimed both gyms on his taxes, collected the income being generated from them and paid the rent at both of them during the periods of time his father and Michelle claimed to own them.
With all 3 elements of proof required to be proven under Section 5105(a) of P.U.F.T.A. satisfied at trial, and with Judge Shenkin not giving a reason for the entry of non suit it makes it difficult to determine what Shenkin will ultimately claim supports its entry on appeal. However, the non suit certainly calls into question whether debtors can now have their family member put their names on assets that debtors own and prevent creditors from collecting on those assets. It also shows that debtors are able to commit perjury and bankruptcy fraud, admit to such acts, and not be prosecuted for it.
- Written by mostly Ryan and edited by Jordan. This actually happened. In a real court. I’m not even joking