A New Rochelle investment manager whose firm controls more than $336 million is asking federal bankruptcy court to let him off the hook for $1.5 million he personally owes the IRS.
James E. Francis sued the Internal Revenue Service on Feb. 11 in bankruptcy court for a ruling discharging his obligation to pay five years of income taxes, penalties and interest.
“The debtor has been experiencing financial troubles,” Francis’ adversary proceeding states. “Over the course of the past 11 years the debtor has used his best efforts to repay his tax obligations to the IRS.”
In 2016, the complaint states, he proposed a compromise to settle his tax obligations for 2010 through 2014, but the IRS denied the request.
Francis founded Paradigm Asset Management Co. in 1990. The firm has offices in White Plains.
Paradigm promotes itself as the first firm to create “100% big data driven investment strategies” specifically for institutional investors, according to his LinkedIn profile.
The firm held assets worth $336.2 million, as of its most recent quarterly U.S. Securities and Exchange Commission filing. A year ago, according to an annual filing, it had $348.6 million in assets under management, most of which was for seven government clients and the rest for a few pension and profit sharing plans.
Francis petitioned for Chapter 7 bankruptcy protection in October, declaring $1.2 million in assets and $3.2 million in liabilities.
His assets included $550,000 for his half-interest in a $1.1 million New Rochelle house and $535,033 in retirement accounts, subject to claims by his estranged wife.
He listed his federal tax obligation as $1.8 million and a state tax obligation of $321,315.
His income has ranged from $394,000 in 2017 to $247,500 for 10 months last year.
He valued his 74.6% interest in Paradigm at zero dollars, and 100% interests in Lejasco Energy LLC and Alvin & Friends LLC, also at zero dollars.
His joint checking account had $682.57 and his savings account had 88 cents.
Francis argues that all of his property is exempt from creditors, under bankruptcy rules, and that the “entire amount owed to the IRS … should be classified as an unsecured claim.”
Francis is represented by Eastchester bankruptcy attorney Julie Cvek Curley.