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Thursday, March 7, 2013 05:19 pm

Same lawyer, more trouble

Judge demands answers in THR bankruptcy

A prominent Springfield bankruptcy attorney who was suspended from practice due to false statements made to a federal judge is crossways again with the same judge.

This time, attorney John Narmont, who began serving a six-month suspension in January, continued filing bankruptcy cases and collecting fees even though he couldn’t do the work due to his approaching suspension, wrote U.S. Bankruptcy Court Judge Mary Gorman in an order issued last week in the bankruptcy case of THR and Associates, the Springfield company that made and lost a fortune buying and selling precious metals and other valuables.

Also caught up in the mess is attorney Teresa Pisula, who took over cases for Narmont in apparent violation of federal bankruptcy code that prohibits attorneys from taking money from clients, then subcontracting the work, according to the order from Gorman, who is demanding explanations from both lawyers. The judge gave them 30 days to tell the court how fees are being handled in bankruptcy cases that went from Narmont to Pisula.

Gorman also ordered the attorneys to explain discrepancies in court documents in the bankruptcy case filed by THR, which had been under pressure from the estranged wife of company owner Jeffrey Parsons to disclose assets in the couple’s pending divorce. Narmont in September filed court documents stating that $40,000 in upfront fees in the case, billed at the rate of $200 an hour, came from a source other than the debtor, but he did not identify the source of the funds. Under pressure from Gorman, Pisula three times filed court documents stating that the $40,000 was paid by a source other than THR before finally stating that the upfront fee had, in fact, come from the debtor. Then she said that she was working for free.

In other cases, Pisula also filed documents stating that she was working for free after Gorman told her that fee sharing wasn’t legal. But those documents weren’t factual, Gorman determined.

“Upon questioning at the hearing in this case and several others…Ms. Pisula acknowledged that she is receiving compensation from Mr. Narmont for taking over his cases and, accordingly, to the extent her amended disclosures suggest she is working for free, the disclosures are inaccurate,” Gorman wrote in her order.

Gorman gave Pisula and Narmont until March 26 to come clean about fee arrangements and who is paying legal bills in the THR bankruptcy case.

“She…must explain why both she and Mr. Narmont reported on multiple occasions that the fees in this case were paid by someone other than the debtor but, when pressed for complete disclosure, she now states that the debtor paid the fees,” Gorman wrote in her order. “Total candor from all parties involved here is expected. Neither Ms. Pisula nor Mr. Narmont should expect further opportunities to correct their disclosures.”

Gorman’s order comes amid a search for THR assets by Jeffrey Richardson, the bankruptcy trustee. The company owes millions of dollars in state and federal taxes, and hundreds of customers, employees and vendors also are owed substantial sums.

This marks the second time that Narmont has run afoul of Gorman, who dismissed a 2008 bankruptcy case, saying it had been filed in bad faith, after discovering that a creditor hadn’t been notified of the bankruptcy filing, contrary to federal law. A notice of the bankruptcy that was supposed to be sent to the creditor was instead mailed to Narmont’s office. Making matters worse, Narmont told the judge in open court the creditor was aware of the bankruptcy filing, but that wasn’t true. Narmont later told a hearing board for the Attorney Registration and Disciplinary Commission, which conducted an investigation, that he was suffering from vertigo and taking medication when he made the false statement to Gorman.

Narmont also committed other misdeeds that included representing both a husband and a wife in a dissolution proceeding and obtaining judgments against clients before cases were closed and in excess of fees owed, according to the ARDC staff, which recommended a two-year suspension. The hearing board cut that in half and the state Supreme Court, which makes the final call, last year settled on six months minus one day.

The case demonstrated that Narmont, who was a classmate of House Speaker Michael Madigan at Notre Dame University, has friends in high places. A half-dozen local judges and one former judge testified on Narmont’s behalf before the ARDC hearing board, saying he had a reputation for honesty and integrity despite being censured in 1994 for unethical conduct.

The censure came after a former business partner of Narmont committed suicide, leaving behind a note and a tape recording in which he said that he had decided to kill himself because the lawyer had ruined him financially. The hearing board decided that the note and tape recording constituted hearsay – the business partner, being dead, was not available for cross-examination – and could not be used as evidence.

Narmont admitted that he had written a will for his deceased business partner in which he was named a beneficiary. Narmont acknowledged that he had not adequately explained the conflict of interest inherent in a lawyer authoring a will in which the lawyer stands to benefit.

Contact Bruce Rushton at brushton@illinoistimes.com.

John Narmont, a prominent Springfield bankrupty attorney, is again in trouble with federal bankruptcy judge Mary Gorman, who last week issued the following order.

HERE is the Gorman Order

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