Complaint To Determine Non Discharge of Debt

Hon. Paul B.
Snyder
Chapter 7
Location: 500 W. 12th Street, 2nd Floor
Vancouver, Washington
1
2
3
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UNITED STATES BANKRUPTCY COURT

WESTERN DISTRICT OF WASHINGTON
AT TACOMA
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7
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In re
Mark A. Leonard,
Case No. 13-43836-PBS

Adv. Proc. No. _____________
Debtor.
10
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Federal Deposit Insurance Corporation as

Receiver for Cowlitz Bank,
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COMPLAINT TO DETERMINE THE

NON-DISCHARGEABILITY OF
DEBT AND TO OBJECT TO
DISCHARGE
Plaintiff,
13
v.
14
Mark A. Leonard, an individual,

15
Defendant.
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For its Complaint against defendant Mark A. Leonard (Leonard), the
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Federal Deposit Insurance Corporation, as Receiver for Cowlitz Bank (FDIC) alleges:
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JURISDICTION AND VENUE
19
1.
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The court has jurisdiction over this adversary proceeding pursuant to Fed. R.
Bankr. P. 7001 and 28 U.S.C. 157 and 1334.
21
2.
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The matters in controversy in this adversary proceeding arises under 11
23
U.S.C. 523 and 727 and are core proceedings pursuant to 28 U.S.C. 157(b)(2)(H) and
24
(b)(2)(J).
Page 1 of 14 COMPLAINT TO DETERMINE THE NONDISCHARGEABILITY OF DEBT AND TO OBJECT TO DISCHARGE
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BLACK HELTERLINE LLP

805 SW Broadway, Ste. 1900
Portland, OR 97205
(503) 224-5560
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3.
Venue in this district is proper pursuant to 28 U.S.C. 1409.

DESCRIPTIONS OF THE PARTIES
2
4.
The FDIC is an independent agency of the federal government. The FDIC
was appointed as receiver of Cowlitz Bank on July 20, 2010, after the institution failed and
was closed by the Washington Department of Financial Institutions.

5.
Leonard is an individual residing in the State of Washington and the debtor in
the bankruptcy matter pending in the United States Bankruptcy Court District of Washington,
Case No. 13-43836-PBS (Individual Bankruptcy).

COMMON FACTUAL ALLEGATIONS
9
6.
10
Cowlitz Bank obtained a judgment against Leonard for breach of obligations
11
under certain Commercial Guaranties on June 7, 2010 in Cowlitz County Superior Court,
12
Case No. 09-2-02188-1.

7.
13
Pursuant to the Financial Institutions Reform, Recovery, and Enforcement Act
14
of 1989 (FIRREA), the FDIC succeeded to all rights, titles, powers and privileges of
15
Cowlitz Bank upon appointment as receiver.

8.
16
As of June 7, 2013, the date Leonard filed the Individual Bankruptcy, the
17
outstanding balance owed to the FDIC on account of the judgment was $938,670.44, as is
18
evidenced by the Proof of Claim on record in Case No. 13-43836-PBS as Claim No.1.
9.
19
The Commercial Guaranties relate to a Promissory Note, Business Loan
20
Agreement, and Commercial Security Agreements entered into by Cowlitz Bank and Tytan
21
International, Inc. (Tytan Intl) on April 10, 2006, subject to subsequent Modifications and
22
Extension Agreements.
10.
23
At all relevant times, Leonard has acted as the President of Tytan Intl, which
imports and sells Chinese tractors and tractor implements.
24

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11.
Pursuant to the Commercial Security Agreements and related Financing
Statements, the FDIC has a perfected security interest that extends to all Tytan Intls
inventory, attachments and accessories, accessions, additions, replacements, substitutions,
records and proceeds related thereto, whether owned at the time of the grant of the security
interest or acquired thereafter, in addition to other items specifically set forth in the
Commercial Security Agreements (Collateral).

12.
Tytan Intl filed Chapter 7 bankruptcy in the United States Bankruptcy Court
District of Washington on November 7, 2013, as Case No. 13-46948-BDL (Tytan
Bankruptcy).
13.
10
Leonard acted as the individual authorized to file the petition on behalf of
11
Tytan Intl and declared under penalty of perjury that the information contained in the
12
petition, schedules and related statement of financial affairs was true and correct.
14.
13
In or around June 2009, Leonard formed Tytan Holdings, Inc. (Tytan
14
Holdings). Tytan Holdings is denominated as a penny stock and is in listed on the Over
15
The Counter (OTC) Bulletin Board under the symbol TYTN PK.
15.
16
According to the published OTC Bulletin issued for Tytan Holdings in
17
January 2013, Tytan Holdings acts as the holding company for Tytan Intl, its wholly owned
18
subsidiary that generates revenue through the sale of tractors and tractor implements.
16.
19
At the time Tytan Holdings acquired Tytan Intl in or around December 2009,
Leonard was the sole shareholder of Tytan Intl.
20
17.
21
Leonard now acts as the controlling stockholder of Tytan Holdings, by virtue
of his majority ownership (500,000 of the 1,000,000 shares) of the Preferred Series A stock.
22
18.
23
At all relevant times, Leonard has served as Chief Executive Officer and
Chairman of the Board of Tytan Holdings.
24

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19.
At all relevant times, Tytan Intl and Tytan Holdings have been headquartered
at 5225 Meeker Drive, Kalama, Washington 98625 (Commercial Property).
20.
As Chief Executive Officer of Tytan Holdings, Leonard issued Annual
Reports and Consolidated Financial Statements for 2009, 2010, 2011 and 2012.
21.
The Consolidated Financial Statement for the year of 2011 included a
statement that Tytan Intl and/or Tytan Holdings has assets of 1.8 million dollars in inventory
and $230,242 in accounts receivable.

22.
As Chief Executive Officer of Tytan Holdings, Leonard executed each
Consolidated Financial Statement and certified that such disclosures did not contain any
untrue statement of material fact or omit to state any material fact.
10
23.
11
Beginning in February 2011, Tytan Holdings engaged in a series of
12
exchanges under Rule 504 of Regulation D, as promulgated under the Securities Act of 1933
13
(504 Exchanges) in which Tytan Holdings sold approximately 600,000,000 shares of its
14
Common Stock to E-Lionheart and Associates, LLC, Fairhills Capital1 and TJ Management,
15
LLC.
24.
16
According to the multiple Resolutions to authorize the 504 Exchanges issued
17
by Leonard as Chief Executive Officer of Tytan Holdings, the funds raised in the 504
18
Exchanges were to be used for the purpose of enabling Tytan Holdings to develop and
19
expand its business.

25.
20
The Resolutions to authorize the 504 Exchanges were issued by Leonard
21
under the pretense of having obtained the unanimous written consent of Tytan Holdings
22
Board of Directors.
23
1
E-Lionheart and Associates, LLC and Fairhills Capital have since been sued by the U.S. Securities and
Exchange Commission in the U.S. District Court for the Southern District of New York for violating the
registration provisions of the Securities Act of 1933.
24

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26.
According to Leonards sworn testimony at 341(a) hearings conducted in both
the Individual and Tytan Bankruptcies, as well as a subsequent 2004 Examination conducted
on December 20, 2013, Tytan Holdings received only $400,000 from the 504 Exchanges.
27.
According to Leonards sworn testimony at the same 341(a) hearings and the
2004 Examination, the capital generated from the 504 Exchanges was exclusively used to
pay down corporate debt and purchase new inventory.

28.
According to the 2011 Annual Report and Consolidated Financial Statement
filed by Tytan Holdings, it raised over $900,000 from the 504 Exchanges and the funds used
to purchase new inventory, increasing Tytan Holdings and/or Tytan Intls assets by 27.9%,
from $1,914,572 in 2011 to $2,447,928.
10
29.
11
According to the Pacific Continental Bank statements subpoenaed by the
12
FDIC, approximately $725,000 from the 504 Exchanges was deposited directly into Tytan
13
Holding and Tytan Intl bank accounts in 2011. According to the same bank statements,
14
Leonard used a portion of the funds to fund his personal expenses.

30.
15
According to the Pacific Continental Bank statements subpoenaed by the
16
FDIC, a large portion of the funds generated from the 504 Exchanges was subsequently
17
wired to various manufacturing trading companies in China.

31.
18
According to Leonards sworn testimony at the 341(a) hearings and the 2004
19
Examination, Tytan Intl stopped operating business on or around November 7, 2013, the
20
date it filed bankruptcy.

32.
21
According to Leonards sworn testimony at the same 341(a) hearings and
22
2004 Examination, all remaining assets of Tytan Intl subject to the FDICs security interest
23
are properly accounted for on the schedules in the Tytan Bankruptcy and are currently stored
24
at the Commercial Property.

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33.
The FDIC conducted an appraisal of the remaining inventory on
January 4, 2014, which shows a value of only $157,100. Of that value, approximately
$26,000 of the inventory is subject to a purchase money security interest in favor of GE
Commercial Distribution Finance Corporation.

34.
Despite requests, Leonard has failed to provide adequate invoices or receipts
which evidence the disposition of the FDICs Collateral.
35.
Leonard has failed to sufficiently account for the discrepancy in the amount of
inventory listed on the schedules in the Tytan Bankruptcy and the Annual Report and
Consolidated Financial Statements.

36.
10
Despite giving sworn testimony to the contrary, Leonard has in fact concealed
11
and subsequently transferred a portion of the FDICs Collateral to a business located in
12
Chehalis, Washington known as Southwest Tractors.

37.
13
As recently as November 2013 and January 2014, Leonard has imported
14
equipment from China under the name of the Truper Corporation (Truper Corp.), an entity
15
owned and operated by Leonard, with specific instructions that deliveries be made to
16
Southwest Tractors located in Chehalis, Washington.

38.
17
According to Leonards sworn testimony at the 341(a) hearings and 2004
18
Examination, the Truper Corp. has no bank accounts, no assets and does not conduct
19
business.
39.
20
According to documents subpoenaed by the FDIC, Leonard has stated to third
21
parties that the Truper Corp actively acts as an agent and importer for tractor dealers,
22
including Tytan Intl and Southwest Tractors.
23
......
24
......
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40.
At all relevant times, Leonard commingled funds and assets of Tytan
Holdings and Tytan Intl with his own affairs and has treated corporate assets as his own,
including without limitation his personal consumption of funds from the 504 Exchanges.
41.
At all relevant times, Leonard, as President and Chief Executive Officer of
Tytan Holdings, has failed to maintain adequate corporate minutes or records for Tytan
Holdings or Tytan Intl and has disregarded required corporate formalities.

42.
At all relevant times, Leonard has further failed to adequately disclose and
testified falsely as to the current state of assets, liabilities and related business affairs in both
the Individual and Tytan Bankruptcies, including without limitation, his ownership of a
10
house subject to a governmental ground lease near Hermisillo, Mexico, ownership of
11
significant antique firearms, financial transactions involving his two daughters, Heather S.
12
Jaeger and Holly A. King, and an alleged security interest granted to China National United
13
Equipment Co.
43.
14
Leonard submitted an Affidavit of Financial Condition (Affidavit) to the
15
FDIC in May 10, 2011, in connection with an attempt to settle litigation in Cowlitz County
16
Superior Court involving Tytan Intl (Case No. 10-2-01361-1) collection of the judgment on
17
the Commercial Guaranties.

44.
18
The Affidavit contains representations regarding Leonards income, assets and
19
financial condition which were materially false when made. The Affidavit also includes as
20
exhibits the 2009 and 2010 Consolidated Financial Statements for Tytan Holdings which
21
further contain materially false information.
22
......
23
......
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......
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FIRST CLAIM FOR RELIEF
(Alter Ego)
45.
The FDIC incorporates the allegations and assertions of fact in paragraphs 1
44 set forth above, as if fully set forth herein.
46.
Leonard is the controlling owner of Tytan Holdings, of which Tytan Intl is a
wholly owned subsidiary.
47.
At all relevant times, Leonard has dominated and controlled Tytan Holdings
and Tytan Intl for his own personal gain.
48.
At all relevant times, Leonard has engaged in the unauthorized diversion of
10
corporate funds for other than corporate purposes and has abused the protections provided by
11
the corporate form.
12
49.
The corporate entities and Leonard are one and the same so that Leonards
13
conduct relating to the business operations of Tytan Holdings and/or Tytan Intl, including
14
without limitation the disposition of corporate assets, should be considered one and the same.
15
CLAIMS FOR RELIEF RELATED TO OBJECTION TO DISCHARGE
16
SECOND CLAIM FOR RELIEF
17
11 U.S.C. 523(a)(2)(A)
18
(False Pretense, False Representation, Actual Fraud)
19
20
50.
21
22
51.
Leonard fraudulently omitted and engaged in deceptive conduct when, on
23
behalf of Tytan Intl, he sought credit, renewals, refinancing and forbearance from both
Cowlitz Bank and the FDIC.
24
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52.
Leonard misrepresented, fraudulently omitted, and engaged in deceptive
conduct when he entered into the Commercial Guaranties and subsequent negotiations with
Cowlitz Bank and the FDIC.

53.
Leonard had knowledge of the falsity or deceptiveness of his statements and
conduct. In the alternative, Leonards course of conduct demonstrates a reckless indifference
to the truth or falsity of his statements.

54.
The totality of the circumstances and conduct of Leonard demonstrate that he
had every intent to deceive Cowlitz Bank and later, the FDIC.
8
9
55.
Cowlitz Bank and the FDIC justifiably relied on Leonards representations.
10
56.
The FDIC has suffered damage as the proximate result of its and Cowlitz
Banks reliance on Mr. Leonards representations.
11
12
THIRD CLAIM FOR RELIEF
13
11 U.S.C. 523(a)(2)(B)
14
(False Financial Statement)

57.
15
16
58.
17
The financial statements submitted to Cowlitz Bank by Leonard during its
18
course of its dealings with Leonard and Tytan Intl were materially false at the time such
19
documents were made.

59.
20
The Affidavit Leonard submitted to the FDIC on May 9, 2011 was materially
false at the time it was made.
21
22
60.
23
statements.
24
......
Leonard knew the statements were false at the time he executed the related

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61.
Leonard caused the financial statements and Affidavit to be made with the
intent to deceive Cowlitz Bank and the FDIC.
62.
Cowlitz Bank and the FDIC reasonably relied on the financial statements and
Affidavit.
63.
The FDIC has suffered damage as the proximate result of its and Cowlitz
Banks reliance on false financial statements issued by Leonard.
FOURTH CLAIM FOR RELIEF
7
8
11 U.S.C. 523(a)(6)
(Malicious and Willful Injury)

64.
10
11
65.
12
In concealing, transporting and disposing of the FDICs Collateral, Leonard
had the specific and deliberate intention of causing harm to the FDIC.
13
66.
14
Leonard has disposed and concealed the FDICs Collateral with the specific
knowledge that the disposition would invariably and indubitably cause harm to the FDIC.
15
67.
16
Leonard has acted willfully and maliciously with the intent to improperly use
17
the FDICs Collateral and/or its proceeds for purposes other than payment of the debt secured
18
by the Collateral.
19
68.
Leonard has purposefully inflicted the injury or acted with substantial
certainty that injury would result from his conduct.
20
69.
21
22
......
23
......
24
......
Leonards action are wrongful and without just cause or excuse.

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CLAIMS FOR RELIEF RELATED TO DENIAL OF DISCHARGE
FIFTH CLAIM FOR RELIEF
11 U.S.C. 727(a)(2)(A)
(Pre-Petition Transfer and Concealment of Assets)

70.
71.
Within one year before the date of the filing of the petition in the Individual
Bankruptcy, Leonard, in his capacity as the alter ego of Tytan Holdings and Tytan Intl, has
with the intent to hinder, delay, or defraud the FDIC transferred, removed, destroyed,
10
mutilated, or concealed or has permitted to be transferred, removed, destroyed, mutilated or
11
concealed, property of Tytan Intl subject to the FDICs security interest

72.
12
Within the year prior to filing the Individual Bankruptcy, Leonard has with
13
the intent to hinder, delay, or defraud his creditors transferred, removed, destroyed,
14
mutilated, or concealed or has permitted to be transferred removed, destroyed, mutilated or
15
concealed his property.
16
SIXTH CLAIM FOR RELIEF
17
11 U.S.C. 727(a)(2)(B)
18
(Post-Petition Transfer and Concealment of Assets)

73.
19
20
74.
21
Since the filing of the Individual Bankruptcy, Leonard, in his capacity as the
alter ego of Tytan Holdings and Tytan Intl, has with the intent to hinder, delay or defraud
22
the FDIC transferred, removed, destroyed or concealed or has permitted to be transferred,
23
removed, destroyed or concealed, property of the bankruptcy estate of Tytan Intl.
24

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75.
Since the filing of the Individual Bankruptcy, Leonard has with the intent to
hinder, delay or defraud his creditors transferred, removed, destroyed, or concealed or has
permitted to be transferred, removed, destroyed or concealed his own property.
SEVENTH CLAIM FOR RELIEF
11 U.S.C. 727(a)(3)
(Failure to Preserve Records)

76.
77.
Leonard, both in his individual capacity and in the capacity as the alter ego of
10
Tytan Holdings and Tytan Intl, has concealed, destroyed, mutilated, falsified and failed to
11
keep and preserve recorded information, including books, documents, records, and papers,
12
from which to ascertain his, Tytan Intls and Tytan Holdings financial condition and
13
business transactions without justification.
14
EIGHT CLAIM FOR RELIEF
15
11 U.S.C. 727(a)(4)
16
(False Oath)
78.
17
18
79.
19
Leonard has knowingly and fraudulently, in or in connection with the
Individual Bankruptcy and Tytan Bankruptcy, made false oaths and accounts, including
20
without limitation his failure to disclose assets and liabilities on bankruptcy schedules signed
21
under penalty of perjury and false sworn testimony the 341 (a) hearings and 2004
22
Examination.
23
80.
24
The oaths relate to a material facts.

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81.
The oaths were made knowingly.
82.
The oaths were made with the specific purpose of perpetrating a fraud.
NINTH CLAIM FOR RELIEF
11 U.S.C. 727(a)(5)
(Failure to Explain Loss or Deficiency)

83.
84.
According to the Consolidated Financial Statements issued by Leonard on
behalf of Tytan Intl and Tytan Holdings, there existed $1.8 million in inventory and
9
10
$230,242 of accounts receivable at the end of 2011, both subject to the FDICs security
11
interest.
85.
12
Leonard, in the capacity as the alter ego of Tytan Holdings and Tytan Intl,
has failed to explain satisfactorily the loss and deficiency of the FDICs Collateral.
13
14
TENTH CLAIM FOR RELIEF
15
Fed. R. Bankr. P. 7008(b)
16
(Attorneys Fees)
86.
17
FDIC incorporates the allegations and assertions of fact in paragraphs 1 85
set forth above, as if fully set forth herein.
18
87.
19
The Promissory Note, Business Loan Agreement, Commercial Security
20
Agreements and Commercial Guaranties provide for the recovery of attorneys fees in any
21
enforcement activity or collection, including bankruptcy proceedings.

88.
22
The FDIC has incurred and continues to incur attorneys fees and costs with
23
respect to the enforcement of terms and provision set forth in the Promissory Note, Business
24
Loan Agreement, Commercial Security Agreements and Commercial Guaranties.

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WHEREFORE, the FDIC prays for the following relief:
1
A.
Judgment in favor of the FDIC on its claim against Leonard in an amount to
be determined at trial, but currently estimated to be $938,670.44, plus interest thereon;
B.
Judgment declaring that the claims made by the FDIC against Leonard are
nondischargeable pursuant to 11 U.S.C. 523(a)(2)(A) and (B) and 523(a)(6);
C.
Judgment denying Leonards discharge pursuant to 11 U.S.C. 727
(a)(2)(A) and (a)(2)(B), 727(a)(3), 727(a)(4) and 727(a)(5).
D.
An award of all reasonable collection fees including but not limited to
attorneys fees, costs of litigation and all court costs to the extent allowed by law;
E.
10
Any other relief deemed just, equitable or appropriate under the
circumstances.
11
DATED this 20th day of February, 2014.
12
13
14
By:
15
16
17
/s/ Britta E. Warren

Britta E. Warren, WSBA No. 43329
bew@bhlaw.com
Fax: (503) 224-6148
Of Attorneys for Federal Deposit Insurance
Corporation as Receiver for Cowlitz Bank
18
19
20
21
22
23
24
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Complaint To Determine Non Discharge of Debt

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Complaint To Determine Non Discharge of Debt

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Hon. Paul B.

UNITED STATES BANKRUPTCY COURT

Case No. 13-43836-PBS

Federal Deposit Insurance Corporation as

COMPLAINT TO DETERMINE THE

Mark A. Leonard, an individual,

JURISDICTION AND VENUE

Bankr. P. 7001 and 28 U.S.C. 157 and 1334.

The matters in controversy in this adversary proceeding arises under 11

Ent. 02/20/14 18:12:03

BLACK HELTERLINE LLP

Venue in this district is proper pursuant to 28 U.S.C. 1409.

The FDIC is an independent agency of the federal government. The FDIC

was closed by the Washington Department of Financial Institutions.

Leonard is an individual residing in the State of Washington and the debtor in

Case No. 13-43836-PBS (Individual Bankruptcy).

Cowlitz Bank obtained a judgment against Leonard for breach of obligations

Case No. 09-2-02188-1.

Pursuant to the Financial Institutions Reform, Recovery, and Enforcement Act

Cowlitz Bank upon appointment as receiver.

The Commercial Guaranties relate to a Promissory Note, Business Loan

imports and sells Chinese tractors and tractor implements.

Page 2 of 14 COMPLAINT TO DETERMINE THE NONDISCHARGEABILITY OF DEBT AND TO OBJECT TO DISCHARGE

Ent. 02/20/14 18:12:03

BLACK HELTERLINE LLP

Pursuant to the Commercial Security Agreements and related Financing

inventory, attachments and accessories, accessions, additions, replacements, substitutions,

Commercial Security Agreements (Collateral).

District of Washington on November 7, 2013, as Case No. 13-46948-BDL (Tytan

Leonard acted as the individual authorized to file the petition on behalf of

In or around June 2009, Leonard formed Tytan Holdings, Inc. (Tytan

According to the published OTC Bulletin issued for Tytan Holdings in

Leonard was the sole shareholder of Tytan Intl.

Leonard now acts as the controlling stockholder of Tytan Holdings, by virtue

Chairman of the Board of Tytan Holdings.

Page 3 of 14 COMPLAINT TO DETERMINE THE NONDISCHARGEABILITY OF DEBT AND TO OBJECT TO DISCHARGE

Ent. 02/20/14 18:12:03

BLACK HELTERLINE LLP

at 5225 Meeker Drive, Kalama, Washington 98625 (Commercial Property).

As Chief Executive Officer of Tytan Holdings, Leonard issued Annual

The Consolidated Financial Statement for the year of 2011 included a

and $230,242 in accounts receivable.

As Chief Executive Officer of Tytan Holdings, Leonard executed each

untrue statement of material fact or omit to state any material fact.

Beginning in February 2011, Tytan Holdings engaged in a series of

According to the multiple Resolutions to authorize the 504 Exchanges issued

expand its business.

The Resolutions to authorize the 504 Exchanges were issued by Leonard

Page 4 of 14 COMPLAINT TO DETERMINE THE NONDISCHARGEABILITY OF DEBT AND TO OBJECT TO DISCHARGE

Ent. 02/20/14 18:12:03

BLACK HELTERLINE LLP

According to Leonards sworn testimony at 341(a) hearings conducted in both

pay down corporate debt and purchase new inventory.

According to the 2011 Annual Report and Consolidated Financial Statement

According to the Pacific Continental Bank statements subpoenaed by the

Leonard used a portion of the funds to fund his personal expenses.

According to the Pacific Continental Bank statements subpoenaed by the

wired to various manufacturing trading companies in China.

date it filed bankruptcy.

According to Leonards sworn testimony at the same 341(a) hearings and

at the Commercial Property.

Ent. 02/20/14 18:12:03

BLACK HELTERLINE LLP