A U.S. bankruptcy trustee has accused the family of Westchester funeral home director Joseph Balsamo of helping him dodge creditors.
Balsamo, with the cooperation and assistance of his family “structured his financial affairs to insulate himself from … the debts owed to the IRS and other creditors,” the trustee claims, “and engaged in a fraudulent scheme to divert and conceal income.”
Marianne T. O’Toole, the trustee, sued Balsamo’s mother, Melinda Balsamo of the Bronx, brother John Balsamo of Ridgefield, Connecticut, and the family’s funeral home business, Jan. 6 in U.S. Bankruptcy Court, White Plains.
Balsamo’s bankruptcy attorney, Joseph Reilly, of Goshen, did not respond to an email request for comment.
The family business includes Harrison Funeral Home, Harrison; Balsamo-Cordovano Funeral Home, Carmel; Balsamo Funeral Home, the Bronx; and 15 Church St. LLC, a holding company that owns the Carmel property.
Balsamo, of Ardsley, petitioned for Chapter 7 liquidation two years ago, declaring $5,230 in assets and $1,135,721 in liabilities.
He owed $518,978 in federal and state taxes, $319,113 to several companies that won a court judgment against a defunct Bronx produce company he owned, and $290,350 to Santander Bank.
He was employed as director of Balsamo Funeral Home in the Bronx, according to the petition, where he worked for 30 years and where he made $85,800 in 2017.
But when he testified in 2019 at a creditors meeting, he said he never held any shares in Balsamo Funeral Home, he did not have a bank account and he did not receive a paycheck.
Instead, according to the lawsuit, he said he received a weekly cash allowance from the family funeral homes, the businesses paid support payments to his estranged wife, and he used his mother’s debit card for personal expenses.
Balsamo conceded at the meeting that he structured his financial affairs this way, the complaint states, “in part by a desire to avoid the collection efforts of creditors, including the IRS.”
Before he filed for bankruptcy, O’Toole says, Joseph Balsamo was 50% owner of 15 Church St. LLC.
Balsamo claimed that his interest in 15 Church St. had been assigned to his mother. O’Toole argues that there is no proof of a transfer or of Balsamo receiving any consideration for his interest in the company.
After Balsamo filed for bankruptcy, his mother and brother refinanced business loans for $2.9 million, on which they owed $217,000. Some of the funds they received were used to pay debts unrelated to Balsamo or 15 Church St., including $84,471 that his mother and brother owed in federal and state taxes.
O’Toole accuses Melinda and John Balsamo of fraudulently transferring Joseph Balsamo’s interest in 15 Church St. as part of a scheme to conceal his assets from creditors. She also charges them with aiding and abetting fraud, for contributing to Balsamo’s “fraudulent conduct,” and unjust enrichment.
The trustee is asking the court to reverse the transfer to Balsamo’s mother of his interest in 15 Church St., direct his mother and brother to account for all proceeds from refinancing the family businesses, and order them to turn over Balsamo’s portion of the refinance funds to his bankruptcy estate.
Granite Springs attorney William F. Macreery represents O’Toole.
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