New claims have been filed against a Kennewick businessman in an attempt to stop him from discharging some of his debts under a Chapter 7 bankruptcy filing.
Two separate court filings—from E2 Consulting Engineers and Integrated Global Staffing—allege “false representation,” “embezzlement,” and “fraud” against Kristopher Lapp, former president of the now defunct i-3 Global, which provided technology, multimedia and staffing subcontracting services to the federal government and commercial clients.
The company was named the U.S. Department of Energy’s Protégé of the Year for fiscal year 2016.
Lapp and his attorney have not returned requests for comment.
The claims made by both plaintiffs are related to lawsuits filed against Lapp this spring.
Together, the two companies say they are owed nearly $1 million from Lapp for services rendered but not paid.
In May, IGS received a default judgment in Benton County Superior Court for the full amount it was seeking—$446,000—plus interest. The judgment came about a week after Lapp had filed for personal bankruptcy, citing $2.7 million in secured and unsecured claims and assets just under $1 million.
In paperwork filed in federal court, Lapp claimed his outstanding lawsuits were business debts, though the plaintiffs’ attorneys allege otherwise.
On Sept. 9, lawyers representing E2 and IGS both filed briefs citing exceptions to Lapp’s attempt to wipe out his debt through Chapter 7 bankruptcy.
IGS alleges Lapp knowingly lied when he offered reasons why contract payments hadn’t been made, and the reasons were made “with the intention of deceiving.” The company requests Lapp’s discharge claim for the debt to IGS be denied. It also states Lapp “engaged in embezzlement by wrongfully misappropriating funds” paid by Mission Support Alliance, a federal government contractor at Hanford. The documents allege those funds were intended for IGS.
Attorneys for E2 made similar claims, adding Lapp misled MSA and CH2M Hill Plateau Remediation Co. by indicating it had paid E2 in full when it had not. In E2’s complaint, lawyers state Lapp knew his company wasn’t solvent, yet told E2 subcontractors they would be receiving payment, despite Lapp having already informed MSA that his company could no longer fulfill its contract.
E2 said these misrepresentations led its subcontractors to keep working and sign new contracts. The company is seeking $515,000 in damages.
Both complaints allege Lapp engaged in embezzlement by converting taxpayer money into personal use after receiving payments by MSA and CHPRC through contracts with the federal government. Attorneys for E2 said Lapp was “unjustly enriched by his wrongful acts” and it would be an “injustice” to the plaintiff if Lapp was allowed to discharge that debt with his personal bankruptcy filing.
The state Department of Labor and Industries found i-3 Global owes more than $18,000 in unpaid wages to former employees who were laid off en masse in April when the company suddenly closed its doors. Additionally, the U.S. Department of Labor recently said Lapp owes $12,000 to the i-3 Global 401(k) plan for wages withheld but not contributed to the plan, amounting to a breach of fiduciary duties. Representatives for the U.S. Department of Labor came to an agreement with Lapp’s attorney that this debt cannot be discharged with Lapp’s bankruptcy filing and the matter would not be fought in court.
There is a third outstanding lawsuit against Lapp filed by Columbia State Bank for non-payment of a credit line totaling $883,000.
The lawsuits filed by E2 and Columbia State Bank are scheduled to be heard in spring 2020 in Benton County Superior Court.
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