A Polk County court order that former Greater Des Moines businessman John Vratsinas pay nearly $1.5 million to shareholders of a construction company he controlled should not be delayed by his bankruptcy, according to a court document filed Friday that alleges wrongdoing.

Judge Robert Hanson ruled last September that Vratsinas improperly shuffled funds from the construction company to an employee-leasing firm and into his own pocket. Vratsinas was ordered to pay $1.33 million plus interest and attorney fees to shareholders of John Vratsinas Commercial Builders Inc. Des Moines attorney Donald Neiman was appointed receiver for the company and was charged with overseeing its liquidation.

 

Vratsinas sought protection from creditors in a bankruptcy case filed in June in U.S. District Court for the Northern District of Iowa. In the filing, Vratsinas said he is a resident of Clear Lake. A law firm representing Neiman filed a case Friday in the bankruptcy court saying the Polk County court order should not be barred by Vratsinas's bankruptcy case because there was wrongdoing involved.

 

Neiman's filing outlines a series of cash transfers from the construction company to Iowa Construction Logistics, an employee-leasing firm Vratsinas created. The transfers were made without the knowledge or approval of John Vratsinas Commercial Builders shareholders, according to the bankruptcy court document and Hanson's ruling.

 

Vratsinas moved $1.3 million from the construction company to the employee-leasing firm in a series of 12 transfer between April and December 2008. According to the Polk County shareholders lawsuit and bankruptcy court documents, Vratsinas was draining the construction company of cash because he knew the business was failing.

 

At the same time, he also advanced $468,850 from the construction company to a limited liability he formed to buy an airplane and to create a pre-paid flight services account. That transfer also was made without the knowledge of shareholders, according to the bankruptcy court filing.

 

Vratsinas received slightly more than $1 million in income from the Iowa Construction Logistics in 2008.

 

According to Neiman's case against Vratsinas, the construction company's balance sheet showed a zero balance on an $800,000 line of credit with Bank Iowa in June 2008. As of Dec. 31, 2008, Vratsinas had increased the line of credit by $200,000 and drew down by $1 million. The June 2008 balance sheet showed positive equity of $437,724 in John Vratsinas Commercial Builders. One Dec. 31, 2008, the company had negative equity of about $1.8 million.

 

John Vratsinas Commercial Builders filed for bankruptcy in January 2009. The case was later dismissed.

 

Neiman's attorneys argue that the debt incurred in the Polk County ruling should not be discharged because he violated his fiduciary responsibilities to the construction company and engaged in embezzlement and larceny.

 

Meanwhile, Vratsinas attorneys filed a motion to block distribution of assets in his pending divorce in Polk County.

 

Read more about the bankruptcy filing in the Business Record: Click here