A federal bankruptcy judge has denied the attempt by a River Forest real estate developer to use federal bankruptcy law to escape a Cook County divorce court judge's decision to hold him essentially on house arrest - and potentially, back in Cook County Jail - until he begins paying $1.6 million in legal bills compiled during a highly contentious divorce.
On Jan. 19, Bankrupty Judge David Cleary largely sided against Frank "Marty" Paris in a decision addressing competing legal motions from Paris, on one side, and his ex-wife, Kerry Paris, and a collection of lawyers on the other. Those motions asked Cleary to decide questions over which Paris family and business assets may belong under federal bankruptcy protection, and whether that protection should produce Marty Paris' release from what he has called an illegal "debtor's prison," being used by lawyers to squeeze him for money.
In his decision, Cleary determined the payment orders issued by Cook County Judge Abbey Fishman Romanek amount to "domestic support obligations," which he said Congress specifically excepted from the payment collection protections normally afforded by the so-called "automatic stay" provision of the federal bankruptcy code.
U.S. Bankruptcy Judge David Cleary
| Premierbankruptcylawyers.com
Cleary said it makes no difference whether the attempted collection of those court-ordered "domestic support obligations" come under the threat of potentially indefinite jailing.
Cleary noted others have disagreed with his conclusion. But he says a "better reading" of the exception written into the bankruptcy code for such collection "includes enforcement of those domestic support obligations."
"This is even so when enforcement leads to a civil contempt proceeding or an order of incarceration," Cleary wrote.
Paris has been in custody of Cook County authorities since Dec. 8, when he was first jailed under an order issued by Judge Romanek.
He is currently out of Cook County Jail, but remains on electronic home monitoring. According to comments Paris made in an interview on the Chicago's Morning Answer radio program on WIND AM560, he is currently living in a friend's home, but is allowed out only one day a week for "essential activities," while wearing an electronic tracker monitored by the Cook County Sheriff's Office.
Paris had been jailed for nearly a month, including over the Christmas holiday.
Paris has never been formally charged with any crime. Instead, he was ordered to jail under a so-called writ of body attachment issued by Romanek after she found Paris in civil contempt of court for not fulfilling prior payment and asset transfer orders issued by Romanek and other judges who had overseen the divorce proceedings.
Romanek said Paris should remain in custody until he could "purge" the contempt order by paying $500,000 cash bond; signing over large amounts of property to his ex-wife; and secure a $2.5 million life insurance policy, to be paid entirely to his ex-wife upon his death.
Romanek eventually reduced the amount Paris needed to pay to get out of jail, first reducing the amount to $300,000 as a "Christmas present," before ultimately agreeing to let him pay $150,000 to be transferred to electronic home monitoring.
The jailing marked the second time a Cook County judge has ordered Paris incarcerated during the divorce proceedings that began in 2016.
The couple had married in 2002 and have seven children, according to court documents.
Paris, founder and president of Sedgwick Development in Chicago, had been jailed for five days in 2017 at the order of Cook County Judge Karen Bowes, allegedly for failure to comply with orders from that judge to set aside $750,000 to pay his then-wife's legal bills.
Throughout the process, Paris has argued the nature of his business means that seemingly tens of millions of dollars in revenue that appear on balance sheets and income statements don't actually equate to money in his bank accounts. Rather, Paris has argued those revenue figures represent "phantom income" that merely passes through his business to lenders who help to finance his company's residential building projects in Chicago and nearby suburbs.
However, judges have consistently sided with his ex-wife in finding that they believe Paris has a net worth of more than $20 million, and should be able to afford to pay off court-ordered judgments, including thousands of dollars each month in alimony and child support plus all living expenses for the homes held by his ex-wife, tens of thousands of dollars annually for his children's "activities," and millions in legal bills for attorneys who represented him and his ex-wife.
Lawyers who have backed Paris' incarceration over the unpaid bills include attorneys from the firms of Lake Toback DiDomenico and Hurst Robin Kay & Allen, who have represented Paris; and attorneys from the firms of Cronin & Co. and Angelini Ori & Abate, who have represented Kerry Paris in the proceedings.
Among others who would receive a cut of proceeds is believed to be attorney Sean Crotty, of the firm of Crotty & Schiltz.
According to court documents, Crotty has co-habitated with Kerry Paris during the Paris divorce proceedings, and the two have been romantically involved. Crotty has also co-signed motions asking Judge Cleary to keep Paris in jail.
Former Cook County Judge Tim Murphy formally dissolved the Paris' marriage in December 2022.
According to court documents, Paris paid $500,000 in family support last December. However, he has persistently told the court that he cannot pay the additional ordered sums, because he doesn't have the money available to pay the legal bills and provide the $25,000 a month in support his ex-wife says is needed to maintain the family's lifestyle.
In response, attorneys for Kerry Paris have argued Marty has the ability to access assets held by various corporate entities they believe are under his control to satisfy the court's orders.
Marty Paris has responded by asserting this represented an overly-simplistic appraisal of his business dealings and structure, claiming persistently that he cannot access the money that is locked up in the corporate entities.
Faced with the financial vise, Paris filed bankruptcy, where he argued the automatic stay should extend to all of his assets, including those being demanded by his ex-wife, the lawyers and the divorce court. Paris argued the automatic stay should protect him from Romanek's orders, and at least allow him to remain free while the bankruptcy proceedings continue.
Paris pointed to a 2020 decision from U.S. District Judge Sara Ellis, who ruled "that civil contempt is not a basis for continued incarceration of the Debtor in a state jail, and such an incarceration did not come within the 'police and regulatory power' exception to the automatic stay."
Kerry Paris and the lawyers on her side responded to Paris' bankruptcy filing by arguing the attempt to file bankruptcy was illegitimate and done in bad faith, as part of a game of legal "keep away" to prevent his perceived adversaries from taking his assets. They urged Cleary to allow Romanek to keep Marty Paris in county custody as the only way to force him to pay alleged unpaid family financial support and fees to his and ex-wife's lawyers.
In addition to Crotty, lawyers who have backed Paris' incarceration over the unpaid bills include attorneys from the firms of Lake Toback DiDomenico and Hurst Robin Kay & Allen, who have represented Paris; and attorneys from the firms of Cronin & Co. and Angelini Ori & Abate, who have represented Kerry Paris in the proceedings.
In his ruling, Cleary said he did not find Judge Ellis' ruling "persuasive," because the incarceration in that case did not involve the collection of a "domestic support obligation."
Cleary further ruled that the property that is the subject of Judge Romanek's orders did not involve property that should properly be included as part of Marty Paris' bankruptcy estate, as that property should belong to Kerry Paris under order of the Cook County divorce judges.
"In summary, Kerry’s actions relate to the collection of a domestic support obligation," Cleary wrote. "She is not attempting to collect those domestic support obligations from property of the bankruptcy estate. Therefore, although her actions appear to violate (the automatic stay,) in fact her conduct is excepted from the automatic stay under (the domestic support obligation exception.)"
In light of those findings, Cleary said Paris' bankruptcy poses no barrier to any further actions by Judge Romanek to incarcerate Paris under her contempt order.
Cleary in his decision specifically ruled the "automatic stay does not apply to the contempt proceedings" in Cook County court.
"Continued enforcement proceedings to collect a domestic support obligation from property that is not property of the estate do not violate the stay, therefore the court will not direct Kerry and her attorneys to take action to obtain Marty’s release from jail," Cleary wrote.
Marty Paris was represented in the bankruptcy proceedings by attorney Scott Clar, of the firm of Crane Simon Clar & Goodman, of Chicago.