Firm News

Six Year Effort to Avoid Judgment Ends with 11 Months of Incarceration and Deportation

In 2011, while at Meckler Bulger & Tilson, Bob Allen received a call that would lead to most unusual case he has ever handled. His Zurich lawyer-friend described the situation where his client, Florida businessman Peter Denton, recently won a 2 million swiss franc (roughly $2 million USD) arbitration award against his former business associate Rudolf Suter, a Swiss businessman who recently moved to Dallas to run an optical company. The next six years brought as many legal twists and turns as imaginable. All to avoid, in the context of the parties involved, satisfying a relatively small debt from a fairly innocuous business deal dispute. “It was as personal of a dispute as I have ever encountered.”

It was by no coincidence that Rudolf Suter came to Dallas to run the now-bankrupt optical company PFO Global. Suter had no intention of ever paying the arbitration award and the Texas laws protecting debtors from their creditors worked perfectly to suit Suter’s needs. The new business venture required an equity investment; however, that was no problem. Suter had his wife make the equity investment into the company and she gave him a Power of Attorney over the stock. Thus, there would be nothing for a creditor to seize in terms of his equity in the company. Next he received a handsome salary from PFO Global and a virtually unlimited expense account. Again, there was nothing for a creditor to garnish with salaried wages exempt from such proceedings under Texas law. All he had to do was to keep money out of a known bank account to avoid garnishment and then live life to his bizarre fullest.

From where he lived in 2011, on top of the tony Gables High Rise in Uptown Dallas, it was a great setup. Even though Suter was in his 60s; he immediately started playing. He lived a high life with expensive cars and extensive first class travel. Although his wife lived separately in Switzerland, Suter always had a mistress. He bought one of them a half million dollar townhouse in Atlanta (eventually seized as a fraudulent transfer). Another mistress was highly paid as a PFO Global public relations director.

Over the next six years, Herr Suter would not only run PFO Global into the ground (it filed for bankruptcy shortly after he was replaced as CEO); he played a defiant game of hide and seek with Denton and a game of apathy and arrogance with the US judicial system.

When backed into a corner by a November 4, 2013 Order by U.S. Magistrate David Horan, Suter did what he could to avoid the civil collection action—he filed for Chapter 7 Bankruptcy. His bankruptcy filing immediately raised suspicion. In the face of an objection by the United States Bankruptcy Trustee, Suter waived his bankruptcy discharge. In playing the apathy and arrogance game, Suter fell in disfavor of the Bankruptcy Judge and was found in contempt of that court. To purge himself of the bankruptcy court contempt, Suter paid significant sanctions and attorneys fees awards to the bankruptcy trustee and Denton. He finally produced financial documents. The produced documents eventually became Suter’s downfall in the criminal proceedings.

His lawyers, one-by-one, withdrew for his lack of payment of their fees and he ended up representing himself pro se. Out of the bankruptcy court and back in the federal district court, nothing changed. Suter continued with his habit of showing up for court hearings only sporadically. The last straw for Magistrate Horan was when his mistress dropped off a doctor’s note an hour before a sanctions/contempt hearing claiming he had laryngitis; so he could not attend.

Without the parties consent, United States Magistrates do not have civil contempt powers; so Magistrate Horan issued a 42 page Findings, Conclusions and Recommendations to presiding judge David Godbey. Magistrate Horan found by clear and convincing evidence that Suter, with knowledge of [the] orders, failed to comply with definite and specific Court orders” and that Suter “has not shown that he is presently unable to comply with, or has substantially complied, or made reasonable efforts to comply with the Court’s orders.” Magistrate Horan concluded that “this is one of the rare instances in which the ‘potent weapon’ of the judicial contempt power should be used to coerce compliance where a specific aspect of the Court’s orders has been ‘clearly violated.’”

The attached articles from the Texas Lawbook pick up the events beginning with the March 9, 2017 Contempt Hearing before United States Federal District Judge David Godbey, which Suter again missed; this time fleeing the United States back to Switzerland.

Judge Godbey responded by issuing an Order of Contempt and Coercive Incarceration, in essence a warrant for his arrest. From Switzerland, Suter surfaced occasionally. He communicated with U.S. Marshalls in which he advised them that he had no intention to return to the United States. He sat for a deposition in Vancouver where he lied under oath that Judge Godbey had lifted the Contempt Order. In late November/early December 2016, he was frantically trying to get restrictive margins removed from his and his wife’s PFO Global stock certificates, which should have been turned over to Denton anyway.

Suter was arrested at JFK Airport trying to get into the United States on December 11, 2016. He was sent to the Brooklyn Federal Detention Center until being transported to Dallas for a status conference on his Contempt on January 6, 2017. When he arrived at the Dallas Federal Courthouse in his orange jumpsuit and wrist and ankle shackles, he was charged with bankruptcy fraud. Specifically, two years earlier, he lied under oath and did not disclose several bank accounts. The documents he produced to purge himself of contempt in the Bankruptcy Court showed that he had over ten bank accounts that he did not disclose on his bankruptcy schedules; many in Switzerland with his wife.

Suter paid a significant retainer to retain a prominent white-collar criminal attorney, who after expending the retainer, withdrew from representing him. A federal magistrate then appointed Suter a federal public defender on the criminal charges and Magistrate Horan appointed a distinguished Dallas corporate litigator to represent him in his attempt to purge the contempt. Thus, at the expense of the United States government, Suter was provided with some of the best representation the legal profession has to offer.

Nonetheless, Suter pled guilty of bankruptcy fraud on June 6, 2017. While incarcerated, with the help of his court appointed attorney; but apparently not with the assistance of his wife in Switzerland, Suter finally served answers to interrogatories, which after paying $35,000 in fees to Denton, was the last action step supporting his contempt. On November 6, 2017, he again appeared in court in his orange jumpsuit and shackles to receive his sentence. Judge Godbey viewed Suter’s 11 months in incarceration as extraordinary for a civil collection action and he released him for time served and then deportation back to Switzerland.

“What is amazing to me is why anyone with means; at any age but particularly in their late 60s, would choose paying significant sanctions and attorneys fees and 11 months of incarceration instead of coming clean on a debt–which as a practical matter, could have been settled at a substantial discount. I learned from this case that it was more important to Suter to stiff Pete Denton than to endure the humility of being forever designated as a felon and incarcerated in federal detention centers for close to a year. It was a classic ‘I fought the law; but the law won.’ I wonder if he feels like it was worth it.”