Bankruptcy filing 'atrocious'

Trustee wants to force Stokes to liquidate assets

The federal government wants to change controversial KGEZ radio-station owner John Stokes' Chapter 11 bankruptcy application to a Chapter 7 action - alleging that he left out massive amounts of vital information on his finances.

The unlisted assets included his radio station. The unlisted liabilities included years of unpaid taxes, a $3.8 million lawsuit judgment against him, unpaid loans and unrevealed creditors.

If granted, that federal motion would require Stokes to liquidate his assets to pay creditors, instead of obtaining protection while reorganizing his finances.

Neal Jensen, assistant trustee with the Office of the U.S. Trustee Program in Great Falls, filed the motion on April 22 in U.S. Bankruptcy Court for Montana.

In his motion, Jensen called Stokes' financial statements in his bankruptcy case "atrocious."

Numerous assets and debts were left out of Stokes' application for Chapter 11 bankruptcy protection, the motion said.

"The omission of millions of dollars in claims and millions of dollars in assets should not be allowed without consequences. It is submitted that with the huge discrepancies in asset values evidenced in this case thus far, a Chapter 7 trustee should be appointed to investigate and verify the true values of the real and personal property in this estate," the federal filing said.

Stokes referred questions to his attorney Greg Duncan in Helena. Duncan could not be reached for comment Thursday.

Stokes has until May 6 to file a reply to the trustee's motion.

Since 2000, Stokes has owned the KGEZ radio station and has hosted a daily talk show. He has been involved in several lawsuits - mostly over property and financial issues - and usually has lost the lawsuits. He frequently represents himself in court and has accused his last two attorneys of misconduct.

Last year he was ordered to pay $3.8 million in a defamation lawsuit for making malicious false statements against neighboring businessmen Davar and Todd Gardner on his radio show.

During the defamation trial's punitive stage, Stokes said he could not pay $3.8 million and he would have to go out of business if required to do so.

The April 22 federal filing also alleged that Stokes:

n Did not list the $3.8 million legal judgment against him, even though that prompted the bankruptcy action.

n Did not list KGEZ's station and property at 2995 U.S. 93 South.

n Did not list the easement on which two broadcast towers sit.

n Has not filed Montana income tax returns 'since he moved to Montana in 1984." However, Stokes did not move to Montana until the late 1990s.

n Has not filed federal income tax returns since 1985.

n Owes $31,000 in real property taxes.

n Listed $38,300 worth of household goods as only worth $1,725. That included valuing $30,000 worth of fishing gear as worth only $300, according to the trustee.

n Listed only one shotgun instead of the dozen guns he owns.

n Did not list a 60-inch rear-projection television worth $1,000 and 17 collectible guitars worth $10,000 among his household goods.

n Listed among his belongings a pickup truck, but not a Winnebago recreational vehicle, two other cars, three all-terrain vehicles, three snowmobiles and two boats and their trailers.

n Did not list at least 17 creditors.

n Is having problems repaying the loan that bought KGEZ.

n Provided contradictory information on his income - ranging from $74,000 annually to nothing to losing money.

"The truth should not be a moving target. … The court should not abide careless and cavalier responses that are not carefully researched and considered," the federal filing said.

U.S. Trustee Program spokeswoman Jane Limprecht said the department does not comment on pending bankruptcy cases.

Reporter John Stang may be reached at 758-4429 or by e-mail at jstang@dailyinterlake.com