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Wednesday, 29 September 2010 19:44

Court filing disputes Moody claim of having no assets

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Moody Funeral Home in Sylva has been accused of hiding its assets and income to avoid paying bills in violation of a court order, according to the latest filing in an ongoing lawsuit.

Moody Funeral Home was sued in 2007 by a casket company after failing to pay for coffins it had ordered, according to court filings. The court sided with the casket company and ordered Moody Funeral Home to pay $176,000 in 2008.

However, Moody Funeral Home claims it has no assets to its name nor any income and therefore hasn’t paid.

Meanwhile, funerals continue to be conducted out of the building. The sign still says Moody Funeral Home, as do those answering the phone at the business. And the same man still runs the business now as before, namely Reginald Moody Jr.

However, Moody claims he is running the business as a different entity now. Before, Moody Funeral Home was run by a corporation called Wings Aviation, and now it is being run by Moody Services.

Wings — not Moody Services — is the one named in the lawsuit. While Wings used to run the funeral home, it doesn’t any more.

“Used to does not count,” Moody said. “Wings Aviation has no affiliation with Moody Funeral Home or any of its businesses. Moody Funeral Home is run entirely by Moody Services.”

Moody was the president of Wings and is the sole proprietor of Moody Services, according to court filings. Moody said Wings ceased to do business in December 2007 — timing that coincides with the lawsuit by the casket company.

An accountant appointed by the court to investigate the finances surrounding Moody Funeral Home filed a report this month describing a tangled web of corporate entities designed to “hinder, delay and defraud creditors,” according to Shelia Gahagan, a CPA in Waynesville.

Specifically, Gahagan shows how assets once owned by Wings — from its building, to vehicles, to trade name — have been siphoned to other entities in hopes of making them untouchable by creditors, the court filing claims.

“It is certainly my position at this juncture that I will request the shareholder to repay any monies and to return any property taken from the corporation,” Gahagan wrote. “It appears if the shareholders would return money and assets they have taken, all the creditors could be made whole.”

Jeff Norris, a Waynesville attorney who represented the casket company, said Gahagan’s investigation confirms “a lot of what I suspected.”

“I have a client with a substantial judgment, and this individual has been taking money out of the corporation,” Norris said. “He has gone in and used it as his personal checking account.”

Gahagan was appointed the receiver in hopes of uncovering assets in Wings’ name that could be used to pay more than $400,000 in debts, owed not only to the casket company but the IRS and others as well.

The court gave her discretion to investigate the finances of all the business operations being conducted out of Moody Funeral Home. But Gahagan said she has not been given full access to the books and records.

Fred Jones, an attorney representing Moody, said that Gahagan is looking into more than she is entitled to, taking the “broadest possible view to expand the search for assets.”

Moody has an appeal filed with the N.C. Court of Appeals protesting the scope of Gahagan’s investigation. Multiple businesses can and are operated from a single address. The court should have tailored Gahagan’s investigation only to Wings, not to the other entities that now run funeral home operations.

“It appears they are wanting to not accept there is a difference between Wings Aviation and Mr. Moody individually,” Jones said.

Moody said the report by Gahagan makes incorrect conclusions.

“I would caution you to be very skeptical of that report. Most of the report is wrong,” Moody said.

A court filing rebuking inaccuracies in the report has been prepared by Sylva Attorney Jay Coward, but has not yet been filed. Coward did not return phone calls seeking comment due to a busy schedule, his assistant said.

The next step in the court case is unclear. The judge appointed to the case, Zoro Guise, could make a ruling based on Gahagan’s report and the rebuttal by Moody. But Jones hopes there will be a hearing.

“This is a report by a receiver, whether it is true, false, mistaken, misunderstood — these are nothing more right now than allegations,” Jones said.

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