Developer’s wife seeks to shield assets from bankruptcy case
John Kline’s right against self-incrimination does not translate into a right to have his debts forgiven, according to a federal bankruptcy official who moved to stop the developer’s bankruptcy case.
Assistant U.S. Trustee James Snyder filed a motion Thursday that, if successful, would block Kline from having debts discharged in his Chapter 7 bankruptcy filing. At the same time, Snyder filed a motion to withdraw an earlier motion to dismiss the case.
Kline could file again for bankruptcy if the case were dismissed. The motion to deny discharge is considered more onerous because it would prevent Kline from ever again filing a bankruptcy case seeking protection from creditors for the debts identified in the pending case.
Those exact debts have not been identified, although Kline did list 24 lenders among a list of creditors when he filed for Chapter 7 protection on Feb. 17. Kline later claimed his constitutional right against self-incrimination in declining to provide an inventory of his debts and assets, as required by bankruptcy law.
Snyder’s motions along with a filing by Kline’s spouse, Michelle, do provide some insight into his financial standing.
Michelle Kline filed a motion Thursday claiming nearly $6.5 million in exemptions — assets that could not be sold to pay off creditors.
Among the exemptions was half of the interest in $10.5 million in insurance claims filed after the couple’s $1.2 million Urbandale home burned to the ground in January.
Additionally, she seeks to exempt her one-half interest in $9,800 that was recovered from a safe in the house after the fire. According to Snyder’s motion to discharge the bankruptcy claim, the safe contained $10,000.
Michelle Kline also asked to exempt her interest in furnishings in a Florida condominium that, according to her filing, has been foreclosed.
The case has revealed an ongoing federal investigation into bank fraud in Central Iowa, Kline’s attorney, Jerrold Wanek, said in explaining why his client has not provided an inventory of his finances.
Wanek said he did not know whether Kline is a target of the investigation. The U.S. attorney’s office has declined comment.