Greater Des Moines developer John Kline, serving a prison term after pleading guilty to bank fraud involving development deals with business partner Randal Walters, is seeking protection for creditors under the U.S. Bankruptcy Code.
According to a Chapter 7 petition filed Thursday in U.S. Bankruptcy Court for the Southern District of Iowa in Des Moines, Kline has $86,000 in assets and $15 million in debts. Kline was sentenced to a 30-month prison term in April 2013 after admitting that bank loans intended for housing developments in West Des Moines and Des Moines were used instead to prop up other aspects of his business.
He was ordered to pay $1.2 million in restitution. According to court documents, Kline is paying $100 a month to satisfy that debt. He is earning $25 a month as an electrician's assistant in a federal prison. In the bankruptcy petition, Kline's mailing address was listed as a satellite camp of the U.S. Penitentiary in Leavenworth, Kan.
Walters was sentenced to 12 months plus 1 day for his role in the deceptions. This is the second time Kline has filed for bankruptcy. On Feb. 17, 2009, he filed for bankruptcy, but financial information was filed for his wife, Michelle, instead.
The filing followed what was determined to be an arson fire that destroyed the couple's million-dollar Urbandale home. No charges have been filed in that case, and Michelle Kline said outside the courtroom where her husband was sentenced that she had no comment on the matter.
During bankruptcy proceedings, Kline refused to testify, citing his constitutional protection against self-incrimination. His lawyer, the late Jerrold Wanek, said Kline was being investigated in connection with the fire.
A federal bankruptcy judge eventually tossed the 2009 case out of court. Walters also sought protection from creditors in bankruptcy court, but a judge tossed out his case as well.