The recent bankruptcy filing of Rudy Giuliani sheds light on the financial situation of the former New York City mayor. The bankruptcy was prompted by a substantial verdict against him for defaming two Georgia election workers.
Following a federal jury’s decision in December, Giuliani was ordered to pay Ruby Freeman and Shaye Moss $148 million for unfounded allegations of voter fraud after the 2020 election.
Acknowledging His Financial Burden
The verdict led Giuliani to file for bankruptcy shortly after. He acknowledged the significant financial burden imposed on his finances by the penalty.
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On the 27th, Tuesday evening, the bankruptcy judge granted Rudy Giuliani permission to challenge the defamation ruling. However, in the meantime, the bankruptcy process has exposed the financial situation of the close associate of former President Trump. Giuliani’s financial standing encompasses thousands of dollars in taxes and credit card debt.
A Comprehensive List of Creditors
Giuliani could have potential millions owed to voting technology firms Dominion Voting Systems and Smartmatic. Freeman and Moss, alongside various creditors, hold substantial unsecured claims against Giuliani. These claims include banks, legal firms, governmental tax agencies, golf clubs, and other entities.
Giuliani’s tax liabilities exceed $900,000, most of which are federal taxes.
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He also owes money to two golf clubs in West Palm Beach, Fla., one of which was formerly owned by Trump.
Giuliani’s Debts
Between the two golf clubs, Giuliani has outstanding membership fees nearing $40,000, though he contests a significant portion of this sum. According to court filings, Giuliani may face millions of dollars in unsettled lawsuits.
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Among them, Daniel Gill sued him for $2 million. This was after an incident where Gill slapped Giuliani and called him a derogatory term. Giuliani’s legal team, represented by Robert Costello, is being sued for $1.36 million by the law firm Davidoff, Hutcher & Citron. He is being sued for unpaid fees.
Chapter 11 Bankruptcy
The law firm Aidala, Bertuna & Kamins, hired by Giuliani after an FBI raid, is seeking over $387,000. He also has pending lawsuits from Dominion, Smartmatic, Hunter Biden, and Noelle Dunphy. They accused Giuliani of sexual misconduct.
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Giuliani’s bankruptcy proceedings are still in their early phases. His $148 million verdict quickly led to his filing for Chapter 11 bankruptcy. This means he initiated the process without a structured creditor group. Subsequently, Moss, Dominion, and Dunphy united to advocate for the unsecured creditors in the ongoing proceedings.
Giuliani Claims Trump Campaign and RNC Have Legal Bills to Settle
Giuliani currently has an opportunity to draft a reorganization plan. This plan should outline his intentions to reimburse creditors and exit bankruptcy.
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During a recent hearing, Giuliani asserted that he was underpaid. He said he was short changed some $2 million in legal fees for his services during Trump’s 2020 presidential campaign. Giuliani clarified that the outstanding amount is owed by both the campaign and the Republican National Committee (RNC).
Unpaid Legal Fees
Rudy Giuliani said the campaign and RNC owed him rather than directly by the former president. He made these statements in Bloomberg Law’s report. He did this on the February 7th proceedings, which involved creditors and the Justice Department’s bankruptcy oversight arm.
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“After taking over, I expected compensation from the campaign for my legal services and reimbursement for expenses,” Rudy stated. “When the invoice was submitted for payment, only expenses were paid. Legal fees were never paid,” he said.
A Former President’s Request
Court filings indicate an “undetermined” claim against “Donald J. Trump.” Giuliani explained to creditors and the U.S. Trustee’s office that the fees came from his assumption of Trump’s campaign legal team in November 2020. The action was initiated at the former president’s request.
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Before his bankruptcy filing, Giuliani seemed to be struggling with financial difficulties. Questions about how he was funding attorney Joseph Sibley’s representation were raised.
Outside Groups Paying Legal Fees
Joseph Sibley is representing Giuliani in the Georgia election workers’ defamation case and another lawsuit. The bankruptcy proceedings shed light on the situation. It revealed that two external entities have largely financed Giuliani’s defense.
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In a sworn statement on Friday, Sibley disclosed that Giuliani had contributed only $30,000 towards his defense. “$548,000 of the funds were sourced from two additional entities,” Sibley said.
Fundraiser for Giuliani
Sibley disclosed receiving $260,000 from the political action committee Giuliani Defense, established by Andrew Giuliani, Rudy’s son, according to campaign finance records from last year.
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The group seemed to have garnered substantial support from a $100,000-per-plate fundraiser Trump hosted at his Bedminster, N.J., golf club for Giuliani. In this event, Giuliani Defense collected over half a million dollars in donations, including from Elizabeth Ailes, widow of former Fox News chair Roger Ailes.
Donations and Donors
Sibley also mentioned receiving about $288,000 from the Rudy Giuliani Freedom Fund. This fund, which receives online public donations, is overseen by Giuliani’s longtime aide, Jake Menges.
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Although Menges did not reveal specific donors, he stated in court documents that they numbered in the hundreds. He said most contributions amount to less than $100. However, the fund also received larger donations, including one for $25,000 and another for $10,000.
Giuliani’s Alleged Reason For Filing For Bankruptcy
Initially, Giuliani informed his bankruptcy judge that he hadn’t contributed to the fund, but later revised his statement to indicate he had allocated $10.
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Details about Giuliani’s legal bills surfaced amidst his efforts to seek a new trial and when he filed a notice of appeal in his defamation case. Filing for bankruptcy automatically stopped the lawsuit and other civil proceedings against him.
Attorney’s Concerns
Although he might have filed for bankruptcy to stop ladies and legal proceedings, his criminal case in Georgia remains unaffected. This case involved racketeering charges alongside Trump.
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Freeman and Moss raised concerns regarding the possibility of Giuliani continuing litigation despite bankruptcy. They said the situation could potentially turn his attorney into a creditor who could claim funds earmarked for other parties.
Objections to Rudy’s Motion
The attorneys also made another objection. They argued against Giuliani’s motion to lift the stay. The election workers’ attorneys criticized his attempt to appeal the Freeman lawsuit without posting a bond.
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They explained he was trying to do that while leveraging the automatic stay to hinder Freeman and Moss from enforcing their judgement. “Mr. Giuliani wants to use the automatic stay to bar the election workers from enforcing their judgement,” the attorneys wrote.
Legal Assurance
However, Giuliani’s bankruptcy judge approved the motion. The judge approved after getting assurances from both Giuliani and Sibley that the attorney wouldn’t seek funds from the pot.
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Instead, Sibley disclosed accepting a flat fee of $50,000 plus out-of-pocket expenses to handle the appeal. He revealed that the two external groups will supply these payments. They will cover all the expenses.