San Antonio bankruptcy judge holds oilman Alfaro and wife in contempt
Already facing criminal charges that he defrauded investors, San Antonio oil and gas businessman Brian Alfaro now is in even more legal trouble.
Alfaro and his wife, Kristi, were held in civil contempt of court by U.S. Bankruptcy Judge Craig Gargotta on Thursday for failing to turn over documents to a court-appointed receiver.
Gargotta also said he was “deeply disturbed” to learn from receiver J. Scott Rose that the Alfaros entered into a post-nuptial agreement and partition agreement after the judge awarded nine of Brian Alfaro’s investors an $8 million judgment a year ago.
“There can be no positive benefit to that other than to evade payment of the judgment,” Gargotta said. A marital property partition allows a couple to convert community property into separate property for one of them.
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Gargotta also was alarmed by Alfaro’s Silver Star Resources paying $230,000 in the last month to Synergy E&P, a company managed by Kristi Alfaro. Synergy agreed to sell a working interest in a Louisiana well to Silver Star for $400,000, according to a copy of the agreement filed with the court.
“It appears that Silver Star has been making payments to Kristi Alfaro to evade having money available to satisfy the judgment creditors,” the judge said, adding he was not making a legal finding. He directed Rose and his lawyer to investigate the payments, as well as the post-nuptial and partition agreements.
The Alfaros did not attend the court hearing. Gargotta declared the couple is not represented by an attorney after allowing Frisco lawyer Patrick Schurr to withdraw from representing them. Schurr cited their failure to pay his legal fees, their inability to communicate effectively with him and medical reasons for wanting to withdraw from the case.
“With all due respect, your honor, I need to get out of this case because it’s killing me physically and emotionally,” Schurr said by telephone during the court hearing. He added he’s being treated by a cardiologist.
Last month, Brian Alfaro was indicted on eight counts of mail fraud for allegedly misusing investor money to support his extravagant lifestyle.” His arraignment was scheduled for Friday, but he waived his appearance and entered a plea of not guilty.
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Alfaro faces up to 20 years in prison, three years’ supervised release and a fine up up to $250,000 on each count if found guilty.
Alfaro, who was president of Primera Energy, is accused of paying himself and company employees “transaction-based compensation” for selling units in oil and gas wells in Gonzales County.
Investors were falsely told that Alfaro did not pay transaction-based compensation and that their money would go for drilling costs and other expenses related to wells, as well as a fixed-management fee, the indictment states.
A group of 38 investors had accused Alfaro in a lawsuit of operating a Ponzi scheme and of using investor money to buy multimillion-dollar estates and exotic sports cars. The investors’ lawsuit is the basis of the criminal case.
Primera had filed for Chapter 11 in 2015 after the investors sued in Bexar County District Court. The case was later moved to bankruptcy court. Gargotta held a trial last year before awarding nine of the investors $8 million.
U.S. Marshals last months seized a 2018 Ferrari 488, a 2017 Mercedes-Benz AMG GT S, two dozen watches, jewelry, clothes and other items from the Alfaros’ residence in Shavano Park as part of the investors’ effort to collect on the judgment.
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Alfaro had argued in a court filing that some property taken by marshals under a writ of execution was exempt from seizure and should be returned to him and his family. A court hearing had been scheduled for Tuesday on the request, but was later withdrawn by Schurr.
Gargotta appointed Rose as receiver to oversee the property seized from the Alfaros. Rose recently filed a lengthy inventory of the seized property, some of which is secured in storage facilities and safe-deposit boxes.
Rose has the power to issue subpoenas to other parties who may be in possession of property that could be seized and sold to satisfy the court judgment. Rose told the judge he already has conducted a search of the Alfaros’ Shavano Park home.
Gargotta held the Alfaros in contempt after Rose said he had not received documents from Silver Star Resources, Kristi Alfaro and a family trust.
Patrick Danner is a San Antonio-based staff writer covering banking and civil courts. Read him on our free site, mySA.com, and on our subscriber site, ExpressNews.com. | email@example.com | Twitter: @AlamoPD