A former West Des Moines businessman has been shielding funds from the review of a bankruptcy court and using the money for international travel, hotel rooms and meals, according to a federal court document.
John Vratsinas, who has operated construction companies and human resources firms in Greater Des Moines, filed for protection from creditors in a bankruptcy filing June 28 in U.S. Bankruptcy Court for the Northern District Iowa.
The bankruptcy case was filed after he paid $6 million to resolve liens filed by the Internal Revenue Service, which said Vratsinas' human resources companies failed to pay federal withholding taxes for client firms. The IRS also sought a penalty against Vratsinas as the controlling partner of the firms, which have ceased operations.
Vratsinas formerly lived in West Des Moines. Since filing to liquidate his assets and receive a court-ordered discharge from debts, he has claimed residences in Clear Lake, Minneapolis and Chicago.
The trustee in his bankruptcy case has repeatedly asked for and been granted an extension of time to track down Vratsinas' assets.
The trustee, David Sergeant, filed a challenge to the bankruptcy case Thursday, claiming Vratsinas' Heartland Equity Partners LLC is a sham entity that was created to "ensure the avoidance" of his legal obligations.
Sergeant alleges that Vratsinas at one time transferred funds from the limited liability company to a holding company he controls. On Nov. 30, Heartland Equity Partners had $92,343, according to the court filing, and funds are no longer being transferred to the holding company.
Vratsinas did not disclose his 100 percent ownership of the limited liability company when he filed the bankruptcy case, according to Sergeant's complaint.
"Based on his sworn testimony at the time of the meeting of creditors, it is apparent the debtor has made misrepresentations regarding his role" in the limited liability company and the "corporation has been used to promote actual or constructive fraud."
Sergeant said the funds should be claimed as assets that can be used to pay creditors. Click here for a related story.