ORLANDO – Central Florida businessman Timothy McCallan of Melbourne wants to claim Chapter 7 bankruptcy after a prior court ruling landed him in jail for running a debt counseling service that took in around $100 million but paid almost nothing to his client's creditors.
Chris Kennedy, an attorney for Kennedy & Kennedy law firm, said this is likely a tactic used to delay other lawsuits McCallan faces.
"Mr. McCallan filed for bankruptcy relief to put his creditors at bay," Kennedy said in an email to the Florida Record. "He appears to be using it as a tactic to delay the ongoing litigation that he faces."
In February, McCallan received a judgment in February for $107 million in an Alabama bankruptcy presided over by Judge William R. Sawyer for his debt settlement law firm called Allegro Law. Six years ago, Allegro law was deemed a massive fraud by the courts.
Investigators in the Allegro case are pursuing McCallan because his companies Americorp and Seton Inc., provided record-keeping and other data services to Allegro.
"It is my understanding that the investigation of Allegro continues," Kennedy said. "It also appears that he may have moved to Florida to use its generous homestead exemption."
Kennedy said McCallan is likely trying to play his best hand and may even have further intentions or aspirations.
"The debt counseling and negotiating industry is not well regulated in many states and it is possible that he could attempt something similar in the future," Kennedy said.
The judge in Alabama had McCallan arrested and jailed. He said McCallan committed a fraud on the court. The judge said thousands of customers signed up for the debt settlement services promised by McCallan, totaling around $100 million in revenues, but almost none of the money was paid to those customers' creditors as promised.
McCallan owns a $1.5 million home, according to reports. He has been ordered to turn over any records related to Allegro. He claimed in court fillings that he already turned over the records, but investigators were not satisfied. They said the data was insignificant and/or incomplete.
McCallan recently said he had been delayed due to damage to his home from Hurricane Matthew in October, but the Allegro investigators later learned McCallan’s home suffered no damage from the storm. McCallan's attorney in the Florida bankruptcy case is R. Scott Shuker from the firm Latham Shuker Eden & Beaudine.
McCallan had been representing himself in court over the last several months, according to reports. The many thousands of customers that trusted McCallan came to him after the Great Recession when many people in the United States fell victim to the economic crash and housing credit bubble.