Victor Kearney spent years in court unsuccessfully suing his Abruzzo family in-laws in what one judge described as a quest to damage the family and force a hostile takeover of their business, which developed the Sandia Peak Ski Area and Sandia Peak Tramway.
Instead of prevailing in his six-year legal fight against Benjamin and Louis Abruzzo, their family members and their Alvarado Realty Co., Kearney is facing federal criminal charges for allegedly filing false federal tax returns to conceal millions of dollars in income, based on evidence that emerged from the case.
In addition to the Aug. 27 federal indictment alleging tax fraud, a U.S. bankruptcy judge earlier this year found Kearney had “squandered” his fortune – which amounted to at least $800,000 a year – as a beneficiary of two trusts set up by his wife, Mary Pat Abruzzo Kearney, who died in 1997 at age 31.
Owing millions to creditors, Kearney is appealing a bankruptcy reorganization plan that would allow the Abruzzos to sever ties with him.
“He (Kearney) will no longer be able to waste time and money pursuing questionable litigation against his in-laws. He may be forced for a time into gainful employment, which might not be a bad thing. It is time for him to move on,” U.S. Bankruptcy Judge David Thuma ruled last February in confirming the plan.
On Thursday, Kearney, 55, is to be arraigned before a U.S. magistrate judge in Albuquerque and faces up to five years in prison on a charge of conspiring to defraud the United States from October 2009 to November 2016 by filing false IRS returns.
He also is charged with willfully making and subscribing a false personal income tax return on Sept. 6, 2013, allegedly failing to report the income received from the trusts. That offense carries a sentence of up to three years.
Also indicted in the conspiracy is Robert Fiser, an Albuquerque tax attorney who, records show, pleaded guilty in 2007 to attempting to evade paying state taxes. Fiser’s state case was later dismissed in a conditional discharge after he completed probation.
The recent federal grand jury indictment charges Fiser with aiding and assisting Kearney in preparing his false income tax return in 2013.
Fiser, 58, was arraigned Sept. 5 and released pending trial. Fiser faces a maximum sentence of five years on the conspiracy charge and three years for the charge of preparation of a false tax return.
Court records show that Kearney, who now lives in Zephyr Cove, Nevada, received about $16 million from the Abruzzo-Kearney trusts from 1998 to 2018. But Thuma, the bankruptcy judge, wrote in his ruling earlier this year that Kearney had “squandered his fortune and owes more than he can repay.”
“Debtor’s current financial situation is very poor. (He) owes about $8.6 million in pre-petition debt, and $1.6 million in post-petition debt,” Thuma wrote.
Kearney first sued the Abruzzo brothers alleging a breach of trust in 2013, claiming they were suppressing dividends paid by Alvarado Realty into the Mary Pat (Abruzzo) Kearney trusts.
At the time of her death on a cruise ship, she owned about 18.5% of ARCO’s stock. Her will signed in 1988 bequeathed the stock to the trusts for the benefit of her husband during his lifetime.
During the state litigation, District Judge Alan Malott ruled in the Abruzzos’ favor, but in the intervening years there have been counterclaims by the Abruzzos against Kearney, numerous hearings, two trials and the bankruptcy action.
Malott ruled that Kearney initiated the litigation with the “purpose of damaging the Abruzzos individually, and to foster his apparent plan to force a hostile takeover of the Abruzzo interests and the assets of ARCO by gaining access to financial and in-house information and documentation through discovery … and then disseminating such information to third parties.”
Malott in July 2017 notified the IRS and the New Mexico Taxation & Revenue Department in a letter that evidence arose during a trial three months earlier indicating Kearney “has not properly reported income he has received, did not file required tax returns in multiple years, and unilaterally altered” income tax reporting forms issued to him by third parties.
Malott also noted the testimony of an expert forensic accountant who described Kearney’s “tax picture as a ‘tax abomination.’ ”
The judge’s letter said he was convinced by the testimony that “further investigation is appropriate.”
Mary Pat’s wishes
Kearney, who couldn’t be reached on Monday, is listed as the “fearless leader” of an online business venture called The Golden Opportunity.
The website describes him as “a philanthropic and social media investor” who seeks and supports companies that inspire individuals to “be remarkable.”
Kearney filed for bankruptcy protection in 2017, but he objected to the creditors’ bankruptcy reorganization plan. That plan would, in effect, require the Abruzzos and ARCO to buy back the ARCO stock in the two trusts “so their ties with Debtor are severed,” Thuma said in his ruling.
The amount of the stock purchase would be more than $12 million, court records show, or a proposed $79,000 a share.
Thuma wrote that the plan would allow Kearney a bankruptcy discharge and $3 million from the stock sale would go toward paying his debts of more than $8.6 million.
Thuma wrote that the plan was in Kearney’s best interest.
“After four years or so of reasonable belt tightening,” Thuma wrote, “Debtor can live post-bankruptcy with a fresh start and the prospect of a healthy lifetime income most people would consider a godsend.”
Malott had previously found that Mary Pat (Abruzzo) Kearney’s foremost goal “was preserving a good relationship with her brothers,” Thuma wrote. She died unexpectedly in February 1997 while on a cruise off Mexico.
“There is also abundant evidence that Ms. Kearney could not have anticipated her husband’s obsession with suing her brothers, nor that the trusts she created for his well-being would become his instruments to bludgeon them and the family business with endless, fruitless litigation.”