Dusty Old Cars ponzi hearing starts in February
Hearings start next month in the lawsuit alleging Dusty Old Cars owner Stephan Condodemetraky operated a Ponzi scheme.
Last month, the court-
appointed bankruptcy trustee in charge of the Dusty Old Cars liquidation filed the lawsuit against Condodemetraky, his former employees and even the banks used by the business over what is being called a Ponzi scheme.
Ponzi schemes are a form of fraud in which belief in the success of a nonexistent enterprise is fostered by the payment of quick returns to the first investors from money invested by later investors.
Michael Askenaizer, the Nashua attorney appointed by the bankruptcy court to oversee the business, filed two lawsuits last week, alleging that Condodemetraky and his employees engaged in fraud that cost the business and its creditors millions of dollars. The lawsuits are seeking close to $5 million in damages.
Condodemetraky and the other defendants in the case are now due in U.S. Bankruptcy Court in Manchester at the end of February for the first hearing in the lawsuit.
Askenaizer claims the business Condodemetraky operated was a Ponzi scheme, with the auto dealer taking money from investors to pay his salary, mortgage and other personal expenses while knowing that his classic car company was insolvent.
Starting in 2015, Dusty Old Cars customers started filing complaints with the New Hampshire Attorney General’s Office about the business. The classic car dealership’s consignment customers alleged Dusty Old Cars took their vehicles and charged them for bogus repair and other fraudulent fees, and sometimes did not pay at all when the consigned cars sold.
“The allegations in the Consumer Complaints were true in substantial part, and reflected a
pattern of activity by which the defendants, acting through or under the direction of Stephan Condodemetraky, defrauded consumers,” according to Askenaizer lawsuit. “Among other things, as alleged in the Consumer Complaints, repair bills were inflated or unauthorized, consumers were misled as to the actual sale prices received or the terms of the transactions through which their cars were sold. Consumers were misled as part of the scheme devised by Condodemetraky to defraud.”
As the state investigation grew, Condodemetraky filed for bankruptcy protection in February 2017. However, according to Askenizer’s lawsuit, Condodemetraky gave out cash from the business to his employees in the months and weeks ahead of the bankruptcy filing.
Digging through the records he did obtain, Askenaizer found that Condodemetraky used several business entities for Dusty Old Cars. He also found that Dusty Old Cars had been insolvent going back to 2013, but Condodemetraky was getting money from the business.
“Those distributions include, among others, payments made on loans secured by Mr. Condodemetraky’s personal residence, payment of the real estate taxes due on the personal residence, payments made to a pool company for the construction of a pool at the personal residence, payments for personal travel, household grocery store and restaurant expenses and purchases at women’s clothing stores,” the lawsuit states.
That was part of the Ponzi scheme Condodemetraky was running with Dusty Old Cars, according to the lawsuit.
“Condodemetraky directed the operation of the business of Dusty Old Cars … and controlled and manipulated its books and records in such a way as to hide the losses incurred and to allow him to extract millions of dollars from creditors with no expectation, nor realistic way, of paying back that which was taken.”
At the same time, Condodemetraky was taking in money from investors in his businesses based on the false financials he kept, according to the lawsuit. Each new investor’s money was used to pay off previous investments, according to the lawsuit, while the business duped customers out of their cars.
“Mr. Condodemetraky knew, or should be treated as knowing, that the business model was defective, that the sole purpose of the business was to create a faÃÂ§ade of success that he could use to induce customers and lenders to provide him with money or things of value on the promise of repayment with extraordinary returns, but with no actual prospect or intent of repaying them,” the lawsuit states. “Mr. Condodemetraky used the flow of money and vehicles that came to him by virtue of the unrealistic promises of extraordinary returns or of a better price, to enrich himself through shareholder distributions, inflated salary and the payment of
household expenses by the company.”
The lawsuit also seeks to get money from American Express and Enterprise Bank as these companies took money from Condodemetraky while he was allegedly running the Ponzi scheme.
Condodemetraky is facing 31 felonies in three superior courts for crimes he allegedly committed while operating the business, ranging from title fraud to theft. Those cases are scheduled to go to trial in the coming months.
Damien Fisher can be reached at 594-1245 or email@example.com or @Telegraph_DF.