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Crime & Courts

Richmond Co. | Columbia Co. | Aiken Co. |

Legal battle over illegal immigrant's assets still unresolved

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The legal battle over Hugo Diaz’s assets continues to grow seven months after the Evans contractor pleaded guilty to harboring illegal immigrants.

In one corner is the U.S. Attorney’s Office, which charged Diaz and his wife, Blanca Diaz, in November with conspiring to hire undocumented workers for financial advantage over other homebuilders in the area.

On the other side are the building supply businesses seeking to collect at least $180,000 in debts after Diaz’s businesses were forced into bankruptcy.

At stake is $42,500 in three frozen bank accounts, two homes worth a combined $2.3 million and nine vehicles valued at more than $82,000, court records show.

As of May, Diaz was owed a combined $600,000 from 24 companies, through his company, Miranda Contractors Inc.

The federal government claims in criminal court that the property is the product of Diaz’s illegal activity and therefore subject to seizure under forfeiture law. The competing claim comes from bankruptcy court, where six parties, including one claim on behalf of the couple’s children, say they are entitled to a share.

“The question arises: Who has the rights to the property? Is it the Chapter 7 Trustee or the United States under a forfeiture provision of the U.S. law?” attorney Louis Saul wrote in Feb. 16 letter to U.S. Bankruptcy Court Judge Susan Barrett.

Saul’s question resonates across the U.S. In south Florida, the property, yachts, cars and bank accounts of Scott Rothstein were seized by the U.S. government after he pleaded guilty in 2010 to running a $1.4 billion Ponzi scheme. At the same time, more than 350 creditors made $469 million in claims against Rothstein’s law firm. The competing claims produced mixed results.

“The multiple pieces of Rothstein litigation certainly led to some winners, yet one cannot help but wonder whether the wins would have been greater and the losses smaller had the government and trustee been able to avoid such costly, lengthy, and bitter litigation,” attorney Kathy Bazoian Phelps wrote in an analysis for the American Bar Association.

The growing clash between bankruptcy and federal forfeiture is trickling down from high-profile Ponzi cases, such as Rothstein and Bernie Madoff, to smaller cases like Diaz, said bankruptcy attorney Henry Kevane.

“The government has recently started using its forfeiture rights in all manner of cases,” Kevane said.

Kevane found several facets of Diaz interesting, particularly because it’s focused on immigration crimes. In many crimes forfeiture is used to pay restitution to the victims, but it’s unclear what the purpose of forfeiture is in this case, Kevane said.

The proceeds “are not going to the persons they illegally harbored in the states,” Kevane said. Often these cases boil down to who has the moral high ground, “but there really isn’t a moral difference between the victim of a crime and an unpaid creditor.”

In the Diaz case, the size of the debts varies. In court documents, Augusta Ready Mix Inc. states it delivered concrete to Hugo Diaz and Miranda Contractors Inc. in September and October and received a check for $22,587 in return. That check was returned by the bank five days later because the bank account had been seized by the federal government. After applying various credits, the company says it’s still owed $20,122.

Adding to the confusion are the corporations set up by Diaz. In court papers, attorney Saul alleges that Diaz persuaded Southern Wholesale Supply Co. to extend him credit in the amount of $87,641. Diaz, who entered the country illegally in 2000, asserted that he would pay the bills through his business Miranda Contractors Inc., which carried a federal identity number.

“The corporations of Mr. Diaz were subterfuges and he was, in fact, the owner of these entities for the purposes of doing business illegally in the United States,” Saul writes.

Fourteen charges, including money laundering, were dropped against Hugo Diaz when he pleaded guilty to one count of harboring an illegal immigrant. He was sentenced to 15 months in federal prison and recommended for deportation. His wife was sentenced to time served and immediately released to immigration officials for deportation.

Similar problems over Diaz’s assets are evolving in Aiken County, where he was building six houses on Metz Drive in North Augusta’s Green Acres neighborhood, near the intersection of Atomic and Martintown roads. Maner Builders Supply Co. filed a mechanic’s lien Nov. 15 against Miranda Contractors for nonpayment of materials delivered to the site from July through October. That debt amounts to $31,651. The lien names a separate entity, Metz Street LLC, for breach of contract.

On July 30, the United States filed a motion to dismiss all of these claims.

“... While claims by these creditors against Diaz’s estate may be proper in bankruptcy court, the six petitions filed in this Court must be dismissed because the petitioners lack standing to claim any of the forfeited assets,” the motion reads.

Using case law to build its argument, federal attorneys classify the claimants as unsecured creditors with no legal right to the forfeited assets. There are currently no hearings scheduled on the case in either criminal or bankruptcy court.

Saul, the bankruptcy attorney, makes his position clear in the February letter to Judge Barrett.

“There are sufficient monies to pay all creditors of Mr. Diaz through the U.S. Bankruptcy Court and there would be sufficient monies to pay at least a million dollars to the United States as forfeiture. However, the government does not want it to work that way.”

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soapy_725
43555
Points
soapy_725 08/10/12 - 11:17 am
0
1
the lawyers will certainly benefit
Unpublished

as always. De La Fuentes continues to work, but under a different sub contractor in good ole CC. Spread it around. Viva Mexico!!

David Parker
7923
Points
David Parker 08/10/12 - 11:49 am
2
0
In many crimes forfeiture is

In many crimes forfeiture is used to pay restitution to the victims, but it’s unclear what the purpose of forfeiture is in this case, Kevane said.

The victims in this case would be local contractors and homebuilders that were undercut by the unfair advantage. Lost worker wages are tangible enough to put a dollar amount on, but trying to figure how much in losses local companies incurred due to slow growth is a little trickier. Good luck with it anyway.

Willow Bailey
20580
Points
Willow Bailey 08/10/12 - 12:51 pm
2
0
Apparently, there are many

Apparently, there are many who owe Diaz money.

AutumnLeaves
6058
Points
AutumnLeaves 08/10/12 - 02:48 pm
2
0
Building in SC too??

Unbelievable. Half the men I know haven't been able to find crews that will hire them for construction, but Diaz' was constructing homes in Georgia AND South Carolina. Some of the men I know had to have more vetting than the President to get the few temporary jobs they were able to find, but illegals seem to be able to find plenty of jobs. Glad they caught Hugo Diaz at least.

Cynical old woman
1090
Points
Cynical old woman 08/10/12 - 04:32 pm
1
0
Timing

The "take down" of Diaz was on a Friday afternoon...the day he normally got paid from the general contractors he worked for I believe. That may have something to do with the amount of money he seems to be owed, Willow.

Willow Bailey
20580
Points
Willow Bailey 08/10/12 - 06:30 pm
1
1
Partially, COW, but that's a

Partially, COW, but that's a lot for a Friday payroll .. 600k!
Wow. wonder how many of them called the Feds and said, hey, wait, I owe Hugo some money. Not a good news day for several.

JRC2024
8082
Points
JRC2024 08/11/12 - 08:21 am
1
0
The local supply houses

The local supply houses should be paid and the US government should get the rest. Local supply houses will hurt the most. Unfair, Unfair, Unfair. And to answer your question CO
W-alot of the hiring has to do with reliability to show up every day without baggage such as child support, garnishments, welfare and food stamp verification. Too much for the contractor to worry about.

allmostgone
58
Points
allmostgone 08/12/12 - 08:18 am
0
0
Only in America HUH?
Unpublished

Only in America HUH?

avidreader
3005
Points
avidreader 08/12/12 - 09:31 am
2
0
To JRC

I agree. All damaged parties should be paid before the feds get anything. This seems like a simple solution to me. The bank, Maner, and ReadyMix should not be left dangling.

dichotomy
30755
Points
dichotomy 08/12/12 - 11:44 am
1
0
Just another example of the

Just another example of the needless ruthlessness that has become "our" government. I believe that it is common sense that the creditors should be paid since there is adequate assets to pay all of them and still leave the government a tidy sum.

cheapster505
566
Points
cheapster505 08/12/12 - 12:52 pm
0
0
well

well it is charged with Illegal immigration Federal crime not a state crime the feds went after this guy no state local went after this guy
lets put this in relation to a bank robber who robs banks pays mortage
buys a car and pay child support who claims the money back?
intresting case for all illegals this may happen to you

cheapster505
566
Points
cheapster505 08/12/12 - 12:54 pm
0
0
will they?

will they ever recover the monies transfered to Mexico?

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