THE VIRGINIAN-PILOT
Copyright (c) 1995, Landmark Communications, Inc.
DATE: Wednesday, March 22, 1995 TAG: 9503220267
SECTION: LOCAL PAGE: B3 EDITION: FINAL
SOURCE: BY JOE JACKSON, STAFF WRITER
DATELINE: NORFOLK LENGTH: Medium: 86 lines
The former owner of a shop specializing in baseball memorabilia was sentenced to 2 3/4 years in federal prison Tuesday in what officials believe to be the first local bankruptcy fraud conviction since 1990.
Ryan Keith McBride, 26, former owner of Pinch Hit Sports Cards in Virginia Beach, pleaded guilty to one count of bankruptcy fraud in January. He faced a maximum three-year sentence for lying to a court-appointed trustee and for selling some of the business' assets, which were automatically enjoined from sale when he filed bankruptcy.
Federal prosecutors have said that other fraud cases are under investigation.
``I hope this is the first in a wave of cases,'' said Assistant U.S. Trustee Debera Conlon. ``I know there's a lot more bankruptcy fraud out there than is being prosecuted.''
The last local fraud case that Conlon could recall occurred in November 1990, when William R. Runnells Jr., founder of the now-defunct Landbank Equity Corp., and his wife, Marika, were found guilty of fraud, conspiracy and obstruction of justice.
The Landbank case, one of the longest and most complicated fraud cases in federal court history in Virginia, ended with a 40-year sentence for William Runnells and a 31-year sentence for Marika. Both were also fined $500,000.
McBride's conviction in January and sentencing on Tuesday was less complicated - and more typical, officials said.
Court records and testimony showed that McBride owned Pinch Hit, at Timberlake Shopping Center on Holland Road in Virginia Beach, from 1987 until Nov. 11, 1991. Then, he was locked out of his business for failure to pay his debts. He filed a voluntary Chapter 11 bankruptcy for Pinch Hit and claimed a total retail inventory of $456,770, based on listings in a price guide.
Since sentences in bankruptcy cases are partly determined by the total amount involved, McBride tried arguing Tuesday that Pinch Hit's real worth was much less. The average markup for sports cards is about 85 percent, he testified, meaning that the wholesale value of Pinch Hit's inventory was closer to $68,000.
The true value was even less, records show, reflecting the volatility of the collectibles business. When a competitor offered to buy Pinch Hit before McBride declared bankruptcy, the offer was $15,000. When McBride's cards were auctioned off to pay creditors, they only collected $13,000.
``The merchandise is only worth what people are willing to pay,'' said Brian Dunn, a former Pinch Hit employee. ``The market now is very bad.''
Two months after filing bankruptcy, McBride and some friends moved his cards from the store at Timberlake Plaza to another store, leased by his stepmother, across the street at Holland Plaza. The name of the new business was changed to Grand Slam Sports Cards Inc. and McBride was listed as manager and president, records show.
It is illegal to sell the assets of a company that has filed bankruptcy.
In April 1992, the government-appointed trustee, H. Lee Addison III, decided to visit Pinch Hit after hearing from creditors that all might not be right, Addison testified. However, he got lost and ended up across the street at Grand Slam, where he found McBride.
Signs in the store's window advertised a ``25-to-30 percent off'' sale, Addison testified. He tried to enter the store, but McBride would not let him in. The two argued outside the store for about 20 minutes. Finally, Addison told McBride that it was against the law for him to sell Pinch Hit's assets.
McBride answered that the Pinch Hit collectibles had been sent to his father's store on 21st Street in Norfolk. This was a lie, he later told officials. The Grand Slam cards were actually Pinch Hit's.
In July 1992, authorities seized the assets in Grand Slam and closed the store. Soon afterward, McBride's cards were auctioned for $13,000. ILLUSTRATION: Graphic
DEBTOR'S FRAUD
According to federal law, several actions can lead to a charge of
fraud after a debtor has filed for bankruptcy. They include:
Concealing assets.
Making a false oath or account.
For creditors, presenting a false proof of claim.
Selling assets that are under court protection.
Receiving property after filing for bankruptcy, then failing to
tell authorities.
Lying to a trustee.
Concealing, destroying or falsifying books or records.
KEYWORDS: FRAUD TRIAL VERDICT SENTENCING by CNB