The number of the week is $5.4 million.
That’s how much slippery businessman Derin Scott appears to have paid himself from his embattled debt settlement company, Orion Processing, before filing for bankruptcy in the midst of litigation with the North Carolina State Bar and state attorney general.
The bar and AG have sued Scott, Orion and several related entities that do business under an array of names that begin with World Law. The companies are accused of scamming residents with a debt settlement scheme and fibbing about being able to practice law in the Tar Heel State.
Sidebar recently wrote about Orion’s Chapter 11 bankruptcy filing in Texas and Scott’s attorney’s subsequent motion to withdraw because he wasn’t getting paid. But we held off on discussing some interesting information that is buried in the tax forms included with Orion’s bankruptcy case until we could confer with experts.
We asked several lawyers who practice tax law to review Orion’s filings and they all confirmed our suspicions, concluding that it appeared that Scott had paid himself more than $5.4 million before the bankruptcy filing.
Scott could not be reached for comment and Orion’s bankruptcy attorney, Jerome Brown of Victoria, Texas, did not respond to an interview request.
Orion’s tax filings were initially posted on the state Business Court’s website for the world to see, but the documents have been removed – probably because the forms contained the social security numbers of Scott and his wife.
The company’s Schedule K-1 tax form for 2013 reported distributions of $5,425,818, which typically would go to the company’s shareholders. In this case, Scott owned 100 percent of Orion’s stock and he and his wife are listed in tax filings as the company’s only officers.
In his motion to withdraw as Scott’s attorney in the North Carolina case, Michael Byrne of Raleigh said that his ex-client hadn’t paid his legal bills for two months, despite his apparent multimillionaire status.
Byrne has declined to discuss the case.