Federal Bankruptcy Judge Stephen S. Mitchell gave Robert S. Koger until Jan. 28, 2008 to produce a reorganization plan for Koger Management Group or lose control of the company he built.
The ruling was made at a court hearing on Dec. 7 in the face of growing anger by the hundreds creditors who claimed through their lawyer, Bradford F. Englander, that Koger has "continued to stiff-arm the associations in their efforts to obtain an accounting of their financial status."
Koger and his wife Pamela sat silently in bankruptcy court last Friday as a lawyer for the creditors severely criticized his handling of the major homeowners association service company.
"The Debtor’s uncooperative and confrontational agenda results from a toxic blend of conflicts of interest and ineptitude," said Englander, an attorney for Koger creditors. "The appointment of a trustee is required to preserve estate assets, to account to the associations for funds taken from them by the Debtor and to prosecute numerous claims the Debtor cannot because of personal and family considerations."
Englander said that Koger only declared bankruptcy to avoid the Commonwealth of Virginia placing his firm in receivership. Englander said the most routine requests by creditors have met with disinterest by Koger’s firm. He said Koger had some 400 clients in its heyday, but half of them had abandoned the firm. He said the creditors sent a request for information on how many clients Koger retained and got back a list with no names on it.
Koger’s attorney, Thomas P. Gorman of Alexandria, said Koger withheld the names because of the intrusive press coverage and the fact that competitors would like the list. "They are circling out there," Gorman said.
UNDER FEDERAL bankruptcy rules, Koger had 120 days to plan a reorganization of his company and have the creditors approve of it. The time period, called "exclusivity," expired last month, but Judge Mitchell said he would extend it to Jan. 28, 2008. "No further extensions will be granted," Judge Mitchell warned.
The judge refused to appoint a trustee to take over the company and postponed any further consideration of that creditor motion until a hearing on Feb. 8.
The judge approved Koger’s hiring of George H. Ragland Jr. and Robert J. Zelnick to press for a payoff of the $1,000,000 insurance policy that Koger had through Continental Insurance and Continental Casualty Company. The insurance company has balked at paying the claim, charging that Koger lied on its applications, saying an employee who had no power of decision over it handled the firm’s money. Instead, the insurance company said they learned that Jeff Koger, Robert Koger’s son, handled the money. Jeff Koger has been accused of embezzling between $800,000 and $2,200,000 from his father’s firm and siphoning it off into two of his wife’s investments.
The creditors’ lawyer has said that Robert S. Koger has made no attempt to retrieve that money. A civil suit filed by 10 homeowners associations in D.C. Superior Court alleges that Jeff Koger and his wife may have used stolen money to buy into a posh steak restaurant on Capitol Hill.
Jeff Koger has never returned telephone calls to him at the restaurant, Jordan’s 8, or responded to notes left at his home. The embezzlement is under investigation by two police departments and a task force headed by the Department of Justice.