A federal judge has cleared the way for a Waltham woman to try to collect $1.2 million from a Needham businessman with a history of legal problems, ruling last week that bankruptcy proceedings do not protect him from her fraud claim.
Judge William C. Hillman, of the US Bankruptcy Court in Boston, entered the default judgment Wednesday against businessman Kenneth L. Kaplan. The judge said he was issuing the judgment in Kaplan's bankruptcy case because he had failed to file a pretrial statement by Dec. 21 as ordered by the court.
Susan Schneider has accused Kaplan of improperly using his expertise as a certified public accountant to defraud her out of the money, which she acquired from the 2003 sale of her home, IRA distributions, and other investments.
Schneider's bid to protect her claim on Kaplan's assets had been scheduled to be considered in court tomorrow, but the session was canceled when Hillman is sued his judgment.
Schneider says Kaplan, with whom she was romantically involved, used her money to pay off debts he accrued as the owner of several businesses, including an appliance and lighting store in Needham Heights, as well as personal debts and money owed to his father, Julius B. Kaplan of Newton, according to court documents. Schneider says she thought Kaplan was helping her manage her money and not using it to pay off his debts.
Kaplan filed for personal bankruptcy in October 2005, seeking to have his debt to Schneider erased. It is one of three bankruptcies he's been linked to since 2003.
Schneider's attorney, Steven J. Marullo, declined to comment on the case, and refused a reporter's request to speak with Schneider.
Kaplan did not return several phone calls. The attorney representing him in the bankruptcy case could not be reached for comment.
But an attorney speaking on Kaplan's behalf said Kaplan disputes that Schneider is owed any money. Benjamin B. Tariri said he represents Kaplan in a civil matter, not in his bankruptcy case.
Tariri described Schneider's claims as merely "allegations at this point" that have not been substantiated by a judge or jury, and that were made after the breakup of "a very acrimonious relationship."
"This was not an accountant-client relationship, this was a boyfriend-girlfriend relationship."
Schneider is one of several people who have sought to stop Kaplan from using the shield of bankruptcy to avoid paying them back.
In a separate case, Kimberly Barry says she gave Kaplan a $10,000 deposit to lease a storefront at 835 Highland Ave. in Needham in 2004 without being told the property was embroiled in bankruptcy, according to papers on file in federal bankruptcy court. Kaplan says Barry forfeited her deposit and wasn't entitled to a refund, but admitted under oath that he deposited the check she had made out to his company, Needham Heights Corp., into a personal bank account, a move not permitted in bankruptcies.
Based on Barry's complaint, Needham police filed a larceny charge against Kaplan in Dedham District Court. Clerk-magistrate Salvatore Paterna said Kaplan "admitted to sufficient facts" in the case. As part of a legal arrangement, the court recorded the case as "continued without a finding," and not a conviction, after Kaplan paid $10,000 in restitution to Barry by October 2004, Paterna said.
The court proceedings triggered recent problems for Kaplan, whose CPA license was suspended in August for three years by the state Board of Registration in Public Accountancy. The board said Kaplan failed to disclose the 2004 larceny case in a May 2005 application to renew his CPA license, a credential he has held since 1976.
The board said Kaplan's conduct was "dishonest and deceitful" and the wrongdoing he admitted to in the case was "incongruent with the public accountancy profession." The wrongdoing "bears a direct relation to his ability to practice as an accountant without injury to the public," the board said.
Additionally, the board reported being "troubled" by Kaplan's demeanor during the hearings, stating he was "evasive" and "showed no remorse for his actions; he never said he was sorry; he never admitted his wrongdoing. Rather, he was combative and argumentative."
Kaplan unsuccessfully appealed the suspension in September, stating that the board made clerical or mechanical errors in its decision.
Kaplan came to widespread attention in 2003 after the state attorney general's office brought a civil complaint on behalf of more than 60 consumers who said Kaplan and another of his businesses, Needham Appliance and Lighting Center, had engaged in a pattern of deceptive behavior, including using customer credit-card numbers without authorization, overcharging customers, failing to refund money for purchases never delivered and issuing bad refund checks, as far back as 1999.
Because the store went into bankruptcy, Kaplan's estate, not Kaplan, was fined $20,000 in civil penalties, said Amie Breton, a spokeswoman for the attorney general's office. The fine was suspended, provided that Kaplan abided by an order not to own or become involved in the appliance or lighting sales industry for a period of five years, a term that expires Dec. 31, 2009, she said.
