Acting on a tip about hidden assets, a U.S. bankruptcy trustee in Billings drilled through the lock on a safe deposit box at Stockman Bank and found $77,250, including $36,000 in cash.
Joe Womack, a trustee in charge of casino developer Philip Keith’s personal finances, said he asked Keith for a key. When he didn’t get one, he said he got a court order to have the deposit box drilled open.
“When I got information that he might be concealing assets of the bankruptcy estate, I had an obligation to check it out and see if there was money there to pay creditors,” Womack said.
Womack documented and replaced the contents and then froze the assets.
Meanwhile, acting as his own attorney, Keith has filed a federal defamation lawsuit seeking $3 million from Womack and two other lawyers.
Keith, who tried to develop the 12th Planet nightclub in front of Rimrock Mall, said the deposit box is his, but the checks and cash are not.
“Those contents belong to my wife, Kacy Laingen,” he said. “I don’t have a key.”
Keith is also facing a trial as early as March on federal fraud charges.
Last June, a federal grand jury charged him with making false statements by pledging a liquor license he no longer owned as exclusive collateral to two Billings banks.
Billings attorney Penny Strong, who is representing Keith, disputed the indictment, saying that Montana’s liquor license laws are complex and complying with all the regulations is difficult.
Through various companies, Keith used to own five liquor licenses, including two full beverage licenses, at his Billings casinos. But his creditors either sold or foreclosed on the licenses. In a 2010 bankruptcy filing, Keith listed secured debts, mostly to local banks, of nearly $8.1 million.
In addition to the $36,000 in cash, the deposit box contained three cashier’s checks totaling $41,250 made out to Keith’s daughter, Heather Keith of Billings, according to court documents. The checks were made out by two technology companies Keith owns: Playa Tech and IQSmart Technologies Inc. of Nevada.
In a court document filed in December, Keith said he was earning $16,000 per month from IQSmart Technologies and has total monthly expenses of nearly $12,000, half of that for business expenses. However, after a couple of months, those earnings stopped when a planned merger fell apart, Keith told The Billings Gazette.
Money from Playa Tech was used to pay his personal bills and was disclosed to the bankruptcy court, he said.
After his reorganization bankruptcy was dismissed in the fall of 2011, Keith said he put the two tech companies back in his name.
A few days before Christmas, Keith, acting as his own attorney, filed a federal lawsuit in U.S. District Court in Billings seeking $1.5 million in damages from Womack, $1 million from U.S. Trustee Neal Jensen in Great Falls and $500,000 from Billings attorney Eli Patten at the Crowley Fleck law firm.
“They provided false statements to the United States Attorney,” he said.
The three attorneys only presented his daughter’s final deposition, not her earlier ones, which told a different story, he said.
“Her deposition was littered with falsehoods,” Keith said, adding that he is estranged from Heather.
In his pro se suit against Womack, Keith said the trustee locked him out of his office so he couldn’t update his bankruptcy financial filing and “intentionally froze” his assets.
On Jan. 17, U.S. Bankruptcy Judge Ralph Kirscher gave Womack permission to hire the Bozeman law firm of Goetz, Baldwin & Geddes to defend himself against Keith’s lawsuit.
The casino owner’s bankruptcy case began nearly three years ago, and so far nearly 700 documents have been filed.
In July 2010, Keith voluntarily filed for a Chapter 11 bankruptcy to reorganize his casino businesses and get a fresh start by dismissing debt. But four local banks — including First Interstate, Rocky Mountain, Western Security and Wells Fargo — called his financial statements grossly inaccurate, saying they jeopardized the creditors’ interests.
Keith blamed his bankruptcy attorney.
“My attorney, Allen Beck, did not file the schedules correctly,” Keith said. “I had nothing to do with these schedules and did not sign them.”
Beck's law license has been suspended twice, in 2009 and 2012.
Kirscher eventually ruled that Keith was incapable of reorganizing his businesses and put Womack in charge of liquidating his assets.
To help pay back creditors, Womack said he has reached an agreement to sell a 2003 Hummer worth about $10,000 that Keith gave to his son, Michael Keith, and to repair and then sell Keith’s Billings condominium at Rocky Village.
In 2004, Rocky Mountain Bank loaned Keith more than $5 million to finish building the 12th Planet, which the developer billed as a Las Vegas-quality entertainment complex. The business opened briefly but failed. Four unpaid contractors bought the 12th Planet building at a sheriff’s sale and then sold it to Natural Grocers of Colorado.