Ex-CEO is indicted on fraud charges
The founder of a failed Seattle-area computer company that drew complaints from hundreds of consumers was indicted by a Seattle grand jury late Thursday on charges of bankruptcy fraud.
Richard "Rick" Latman, who ran a short-lived company called Microworkz.com in the late 1990s, faces up to five years in prison and a $250,000 fine on each of three counts. Latman, 40, who now goes by "Keith Latman" and also has used the name "Keith Gros," formerly lived in Mukilteo; he now resides in Novato in Marin County, Calif.
An attempt to reach him for comment was unsuccessful.
The indictment asserts that Latman and his former wife, Bettina Latman, who is identified only by her initials in the indictment and is not charged, conspired to conceal assets and make false statements in two sets of bankruptcy filings in 2000.
It charges, for example, that under penalty of perjury Latman declared falsely in a statement of financial affairs that he and his spouse had no financial accounts that were closed within one year preceding the bankruptcy. In truth, the indictment asserts, they had closed two bank accounts during that period, and "in excess of $470,000" had passed through one of them.
The indictment also charges that Latman falsely declared in May 2000 that his monthly income "was $6,000 from self-employment with an entity named NewVolcano.Com LLC."
The Latmans initially filed a Chapter 13 bankruptcy petition, commonly called a wage earner's plan, in which the debtors agree to develop a plan to repay all or part of their debts in exchange for the court's protection against other debts.
They later voluntarily dismissed that petition and filed a Chapter 7 petition, in which a court-appointed trustee gathers and sells the debtor's assets and uses the proceeds to pay creditors to the extent possible. A Chapter 7 bankruptcy gives the debtor a fresh start by "discharging" certain debts and prohibiting creditors from attempting to collect on them.
But the court denied the couple's request to have their debts discharged. In April 2001, U.S. Bankruptcy Court Judge Karen Overstreet in Seattle told the Latmans' lawyer that bankruptcy-court protection was intended for "honest debtors," and that in her seven years on the bench she had never seen a case so permeated with "inconsistencies" and "excuses."
In that case, the couple had listed debts totaling nearly $453,000 and assets of almost $75,000. The couple filed for bankruptcy after Rick Latman decided to shut down Microworkz.com in late 1999 under mounting pressure from consumers and vendors.
The decision to shutter the business came after the Washington state Attorney General's Office filed a lawsuit alleging that Latman and his company had violated the Consumer Protection Act by using deceptive business practices. Among other beefs, numerous customers complained Microworkz did not deliver computers they had paid for.
The state later obtained a $1.5 million judgment against Latman but has not collected a dime. Assistant State Attorney General Paula Selis said Thursday the case has been assigned to a collection agency.
The investigation that led to the indictment was triggered by Virginia Burdette, the court-appointed trustee who oversaw the Latmans' Chapter 7 bankruptcy case. On Thursday, Burdette said the bankruptcy case remains open. "I'm still looking for assets," she said.
A trustee since 1998, Burdette estimated she handles about 1,200 cases a year. She said the Latman case marks only the second time a criminal referral she made to the U.S. Attorney's Office has resulted in an indictment.
Bettina Latman divorced her husband after the couple left the area, records show. Assistant U.S. Attorney Don Currie would not comment on whether she made a deal to avoid prosecution.
Currie said Rick Latman, has been notified to appear in Seattle by April 7 to answer the charges. If he does not, Latman will be arrested, Currie said.
Peter Lewis: 206-464-2217 or plewis@seattletimes.com