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HONEST DEBTORS OVERSHADOWED BY THE UNSCRUPULOUS

Bankruptcy courts have a hard time handling someone like Keith W. Pillich, a fast-talking swindler who went to prison for stealing the hard-earned savings from dozens of elderly people.

Bankruptcy is designed to give people a fresh start, a place where honest debtors can find relief. It's also the last refuge for scoundrels.

"Unfortunately," said Alan J. Bozer, an attorney representing some of those who lost their savings, "unscrupulous persons like Keith Pillich fall into the general melange of honest debtors."

Pillich, 42, a former broker and real estate investor, took as much as $1.5 million from victims to finance a lifestyle that included private schools for his children, lavish parties, expensive cars and trips to the Super Bowl.

At least two dozen of his investors thought they had a chance of getting back at least some of their money in October 1992, when Pillich reached a closed-door settlement to end a lawsuit Bozer had filed.

Pillich swore an oath that he would repay his victims in three installments, with the first payment due in February 1993.

Pillich was as true to his word as he had ever been. He never made a single payment.

A year later, Pillich filed for bankruptcy. And now he is asking the court to discharge all his debts. Neither Pillich nor his lawyer returned calls seeking comment.

"My life savings are gone, and at 69 years of age, I have to continue to work in order to pay everyday bills. Retirement is nowhere in my future," Lester Tarasek, who lost $15,600 to Pillich, wrote to the court. "Where is my second chance?"

Tarasek's daughter said that, when his wife died last year, the family had to take out loans to pay for her burial.

Tarasek is among those Pillich was ordered to pay nearly $600,000 when State Supreme Court Justice Mario Rosetti sent Pillich to prison in January 1993.

Those debts -- as well as the Pillich's courtroom promises to repay his cheated customers -- would all be erased if Pillich's bankruptcy case goes through.

Bozer asked Bankruptcy Judge Michael Kaplan to enforce the court settlement without forcing his clients to prove again that Pillich swindled investors.

"My clients should not have to go through a whole trial to prove it again," Bozer said. "I've only got about six clients left. I've had three clients who have died. These were people who hid their money under mattresses."

But Pillich's attorney, Joel Brownstein, opposed Bozer's move. If there was fraud and deceit involved here, he argued, prove it as he would have to in any other bankruptcy case.

Kaplan has not shied from letting Pillich know when he felt he has abused Bankruptcy Court.

Pillich was released from prison three months into his sentence of 16 months to four years. He entered a work-release program and resumed living in a luxurious Grand Island home.

The home was in his wife's name. The mortgage and taxes had not been paid in several years, and the previous owner had foreclosed and sold it to someone else. Pillich argued in his bankruptcy action that he should be allowed to stay in the house until the Seneca Nation of Indian suit on the ownership of Grand Island was resolved.

"This argument," said Kaplan, "insults those who struggle under the protection of this court to preserve a modest abode in the face of less obscure market forces."

Pillich lost the fight and he was eventually evicted.

But Kaplan ruled that Pillich's lawyer has the law on his side in the current Bankruptcy Court fight. The judge ruled that Bozer's clients will have to prove fraud and deceit or Pillich's debts will be dismissed.

Bozer has appealed the ruling, but admits that even if he wins, his clients may never collect against Pillich, who last made $960 a month installing drywall.

Bozer wonders where the money went.

"Other than the clothes on his back," Bozer said of Pillich's bankruptcy filing, "he apparently owns nothing. This is surprising given the amount of money Mr. Pillich has stolen from others over the years."

"People who are crooks like this don't put money in their own name," Bozer said. "The system is not set up for people like Keith Pillich."

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