Behind the scenes at the Hallmark Institute of Photography in Turners Falls, Massachusetts, president and former owner George J. Rosa III has filed for bankruptcy to clear $3.6 million in personal debt, and he's facing fraud charges from a bank he owes nearly $2.2 million.
People's United Bank of Springfield
alleges that Rosa
kept two set of books for HIP
to hide assets from the bank and divert money for his
until the spring of 2009, but PUB took control of the school and sold it to new owners after Rosa defaulted on his
filed for personal bankruptcy in August 2009, and PUB sued him in February 2010 to prevent the bankruptcy court from discharging his
$2.2 million obligation to the bank.
According to PUB's claim, one set of books kept by Rosa
"shows an exorbitant amount of money being paid to a variety of individuals...including, but not limited to, Rosa
children, Rosa's employees, KeyBank (for Rosa's boat payment), Renaissance Builders
, Mercedes Benz
, Merrill Lynch
, Citizens Bank
, Deerfield Academy
, Eye on the Dream LLC
, a variety of attorneys and other individuals who apparently loaned Rosa money."
PUB further alleges that Rosa
was covering up those transfers of money by recording them as "payments to Mamiya America," the camera company.
From July 1 2007 through June 30, 2008, those "payments to Mamiya" amounted to about $1.9 million, PUB alleges.
"The amounts however, were not paid to Mamiya," PUB charges.
The bank also alleges that Rosa
inventory of cameras and equipment "by approximately $1.9 million."
Asked whether he
was aware of any criminal investigations against Rosa
stemming from PUB's fraud allegations, Gary Weiner, Rosa's
court-appointed bankruptcy trustee, said, "You can read this how you want to: If I knew, I would not be at liberty to disclose it."
Rosa's financial troubles began to catch up with him in early 2009 when he
started bouncing checks and it "became apparent to the bank that [he] had severely misrepresented the financial circumstances and viability of HIP
," according to court papers.
Under threat of foreclosure, Rosa sought a buyer for HIP.
Philadelphia-based Premier Education Group
stepped in, and PUB says its examiners discovered during the sale negotiations that Rosa
was keeping a second set of books.
"To the best of my knowledge, Mr. Rosa
received absolutely nothing" from the sale of HIP
Premier, which owns 25 career training schools throughout the Northeast, kept Rosa
as president of HIP
annual salary is about $120,000, according to his
Premier didn't take over Rosa's debts as part of the sale, however.
Unable to pay back creditors, he
filed for Chapter 7 bankruptcy protection in August 2009 to have his
debts wiped out.
bankruptcy petition, Rosa
listed debts totaling $3,650,069.72, against assets of $893,661.
Of those assets, $876,500 amounted to the value of two houses he
Personal property, including $5,000 worth of photographic prints and frames, accounted for the remaining $17,161 of Rosa's assets.
also reported monthly expenses of $11,509 against his
monthly income (after payroll deductions) of $6,391.
In addition to his
debt to PUB, Rosa's obligations include several mortgage loans against his
properties and tens of thousands of dollars in credit card debt "incurred through [the] operation of business," according to his
indicated that he
owes nearly $300,000 to the IRS
reported a debt of $160,356 to B&H Foto & Electronics in Boston.
Smaller creditors include printers, caterers, banks, electricians and other service providers.
bankruptcy and the fraud charges against him "is personal business between me and the bank.
added, "The school [HIP] has never been healthier.
This has nothing to do with the school.
referred questions about the fraud allegations to his
attorney, who was not immediately available.
Meanwhile, PUB has announced through an asset recovery agency that it will auction a collection of photographs from the Hallmark Museum of Contemporary Photography
opened the museum around 2007, and closed it in the spring of 2009, around the time Premier bought HIP