CFO Management Holdings, LLC – Texas Developer Owned by Indicted Fraudster Files Chapter 11

February 17, 2019 – CFO Management Holdings, LLC (“CFOMH”) and 8 affiliated Debtors (each 100% owned CFOMH) by filed for Chapter 11 protection with the U.S. Bankruptcy Court in the Easter District of Texas, lead case number 19-40426. The Company, a property developer in Texas, is represented by Joseph J. Wielebinski of Winstead PC. Further board-authorized engagements include SierraConstellation Partners LLC (“SCP”) as financial advisor with SCP’s Lawrence R.  Perkins seconded as Chief Restructuring Officer.

The Company’s petition notes between 1 and 50 creditors; estimated assets between $50mn and $100mn; and estimated liabilities between $50mn and $100mn. The Chapter 11 petition notes that the Company does not have any unsecured creditors, ie it states “None.” 

The Company has yet to file documents with the bankruptcy Court detailing the circumstances leading up to the Chapter 11 filings. The reasons behind the Debtors slide into bankruptcy are nonetheless discernible from other Court filings. In November 2018, Philip Carter, who is named in the Petition as holding 100% of the lead Debtor (which in turn own 100% of the affiliated Debtors) was arrested on securities fraud charges. In addition to investors who may have been defrauded, the Debtors appear to have secured $32mn in funding from a Seattle-based private equity group.

The Texas State Securities Board reported, “Phillip Michael Carter of Frisco was arrested Nov. 13 to face state fraud charges in connection with raising $17.5 million from nearly 100 Texas investors – many of them elderly – for real estate development projects in North Texas.

Shelley Noel Carter, Phillip Carter’s wife, was charged with money laundering and misapplying investor funds. Phillip Carter and Richard Gregory Tilford of Arlington were indicted Nov. 6 in Collin County on charges stemming from their sales of fraudulent real estate investments, primarily in the form of promissory notes. Tilford raised $6 million from investors.

Phillip Carter is the principal of Texas Cash Cow Investments Inc. and North Forty Development LLC. Carter and Tilford told investors their money would be used to develop commercial and residential properties.

Instead, Phillip Carter allegedly used investor funds for unrelated purposes, including paying personal expenses and satisfying a personal IRS tax lien.

In October, Phillip Carter borrowed $32 million from a Seattle-based private equity firm to fund ongoing construction costs for two properties. The lender holds the first lien, meaning investors are at risk of not receiving payments from the properties.”