By Amy Silverman
By Olivia LaVecchia
By Monica Alonzo and Stephen Lemons
By Chris Parker
By Michael Lacey
By Weston Phippen
Berry's effort at readmission to the bar also failed.
I rented some furniture, a bed and a dinette set, but I was in some trouble with my finances. I went over to People's Paralegal to talk about a [Chapter] 7, a fresh start, but by the time I got done, I was in a [Chapter] 13. Paul [Dvorscak] told me to stop paying the rental place, that I was home-free 'cause I was in bankruptcy. He said he had bought a house himself less than a month after going bankrupt back East. He had me goin' so good. I was at a vulnerable stage. Then my trustee told me my Plan was underfunded and that, legally, I couldn't put rental furniture payments onto a [Chapter] 13. Meanwhile, People's Paralegal is hitting on me to pay up what I owed them--$600 total. Then the rental people come calling and knocking on my door, and I finally had to give their stuff back to them. Things got so messed up I finally had to hire me a lawyer to pull it together.
--Lorey Clark, a Phoenix woman, in an interview with New Times
Last February 12, an attorney for the U.S. trustee asked Paul Dvorscak in a deposition about his role at People's Paralegal. Dvorscak described himself as the firm's director of operations.
"I built the steam engine that exists," he said of the highly successful marketing plan he devised for People's Paralegal. Now, he was earning $78,000 a year and--in January--had become a one-third owner.
That's consistent with Dick Berry's April 7 testimony in the case that led to the recent injunction against People's Paralegal. Until Dvorscak came along in early 1996, Berry testified, his firm had three employees, and focused on preparing divorce petitions and negotiating in personal-injury cases.
"Dvorscak [said] that perhaps bankruptcy could be marketed as a product as distinct from just sort of a service," Berry testified. "And a television ad was developed, and the thing succeeded beyond anybody's wildest expectations--I have never seen anything like it in my life."
Dvorscak claimed he'd learned some of what he knows about bankruptcy firsthand, having filed for protection three times--one Chapter 7 in Virginia and two Chapter 13s in Arizona, most recently in 1995. (Both of the latter filings were dismissed.)
Like Dick Berry, the 36-year-old Maryland native is a convicted white-collar felon who served time for fraud. Virginia court records show Dvorscak spent almost a year behind bars there in 1994-95 after pleading guilty to a felony fraud charge.
The crime? Failing to mention his bankruptcy on a loan application for a 1992 Jaguar.
"I am guilty of false statements on a loan application," Dvorscak told his probation/parole officer in 1995. "I felt it was irrelevant at the time."
The officer, Heather Austin, was not enamored of his prospects for rehabilitation. She wrote in a presentencing report: "Mr. Dvorscak strikes this officer as one who may continue operating his businesses in ways that are not necessarily in the best interest of those who put their trust in him."
A judge in early 1995 sentenced Dvorscak to a year in prison, and placed him on probation for 10 years. He served several months behind bars before his early release.
Dvorscak moved to Arizona, where he went to work with Dick Berry in early 1996.
"We don't have that many problems down there," Dvorscak testified in deposition that month. "Everybody seems to be very happy with the services rendered."
An attorney for the U.S. trustee asked, "You compare the fees charged by People's Services with the fees charged by attorneys?"
"Are those services comparable?"
That was the wrong thing to say.
By the end of 1996, Dick Berry had promised two judges in writing that his firm would stop violating the 1994 Bankruptcy Reform Act. In one of those cases, Berry reached an agreement with the U.S. trustee in which he promised "not to give 'legal' advice to any person or entity . . ."
But those "consent agreements," as they're called, didn't stick. Since September, the U.S. trustee and the Chapter 13 trustees have filed almost 100 complaints against People's Paralegal--many of which have led to fines and/or orders to repay selected debtors.
One complaint led to the May 23 banishment of People's Paralegal from Bankruptcy Court.
I just paid them yesterday--$332. They told me if I don't finish making those payments, the bankruptcy would be automatically dismissed. Automatically. If I didn't have the money in there, I'd be out of it [the bankruptcy].
--Phoenix resident Henry Vaughn,
Chapter 13 debtor, at a April 23 hearing
Francine Bregio's Dodge Ram truck was missing from the driveway when she awoke July 9.
"At first, I thought it had been stolen," she says. "I called the police. They told me it had been repo'd. I started to put two and two together."
On June 19, the day after the Bregios' clash with Fred Taylor, she had filed the delinquent paperwork that Ed Maney, the trustee's lawyer, had instructed them to submit promptly.
But neither the Bregios nor Maney had realized it was too late. On June 23, Judge Baum dismissed the couple's case because they had failed to file the paperwork on time: He apparently ruled before the Bregios rushed the missing materials to the clerk's office.