A man who helped the FBI build a criminal bankruptcy fraud case against his ex-wife is now suing the federal agency, claiming it kept nearly $150,000 in cash and jewelry seized from the former Winnetka woman that he says is owed to him for child support.
Michael O’Donnell, of Destin, Fla., claims in the suit that the FBI misused federal forfeiture laws by failing to “take reasonable action” to give him notice that it had seized assets found in a safe in Tennessee.
O’Donnell had alerted authorities to illegal activities by his ex-wife, Tara Kersch, by filing an objection when she sought to file for bankruptcy in Chicago in 2010. O’Donnell said he told the FBI about the safe — later found at her parents’ house — and even provided investigators with the key. He said he was given the impression all along that he would eventually be able to claim some of those assets for child support Kersch owed him.
“Really, I feel like the system let me down,” said O’Donnell, who has full custody of the 8-year-old son he has with Kersch.
“I did what I was supposed to do. They are taking money that is owed to my kid. They are taking his college fund … and it’s a small fraction of what I’ve had to spend. That’s his money.”
FBI Special Agent Joan Hyde declined to comment, citing the pending litigation. The U.S. attorney’s office also declined to comment. According to O’Donnell’s lawsuit, federal officials argue that he missed a deadline for claiming the assets shortly after they were seized.
Kersch, 40, pleaded guilty to criminal bankruptcy fraud in U.S. District Court in Chicago in April and was sentenced to 16 months in a federal penitentiary, according to court and Federal Bureau of Prisons records. She is serving time at a Tallahassee prison with a September 2015 release date.
Kersch, whose four-year marriage to O’Donnell ended in divorce in 2009, went on to marry Steven Green, 55, formerly of Winnetka, who is also in federal prison, for defrauding former clients. Green was the subject of an October 2010 baiduhai article after he declared himself impoverished and was assigned a public defender — while living with Kersch in a luxury resort on Florida’s Gulf Coast awaiting sentencing for the crime.
Green is an inmate at the Talladega, Ala., federal penitentiary, according to the Bureau of Prisons. He and Kersch were divorced in Florida in 2011, Green told the Tribune via email from prison.
Kersch filed for bankruptcy shortly after being ordered by a Georgia divorce court to pay O’Donnell damages and child support after the court “found that Tara had committed various fraudulent acts and acts of willful misconduct,” according to O’Donnell’s lawsuit.
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A U.S. District Court judge dismissed Kersch’s bankruptcy case in January 2011, “citing numerous acts of false statements, misrepresentations of her assets and income,” according to the lawsuit.
The FBI subsequently contacted O’Donnell, who provided information to investigators that led them to execute a search warrant in Vonore, Tenn., court documents state.
“Using a key supplied by Michael, the FBI opened the safe and found substantial assets belonging to Tara, including $149,460 in cash, valuable jewelry, and other items, all of which had been hidden from the bankruptcy court,” according to court documents.
O’Donnell and his lawyer had been in frequent contact with U.S. prosecutors, who told them that “the federal government would be seeking restitution from Tara as a method of restoring the seized assets to Michael to be applied on his judgment,” O’Donnell’s lawsuit states.
Yet federal prosecutors declined to ask the judge for restitution, despite O’Donnell’s standing as a “victim” in the criminal case against Kersch, according to the lawsuit.
“Once the bankruptcy was dismissed, the government seized the assets, gave insufficient notice to the very same creditors who had fought the bankruptcy, and has now claimed ownership of those assets which should have gone to creditors,” the lawsuit states.
“The government has no claim to such assets and had reaped a windfall to Michael’s detriment.”
Attorney Jeffrey Urdangen represented Kersch in her criminal bankruptcy trial. Reached late Wednesday, he said: “Tara Kersch is a single mother with a lifelong history of diagnosed mental disorders. From the moment I started representing Tara, and from what I’ve seen, for years before that, Mr. O’Donnell and his lawyer … have engaged an unrelenting, and in my view dishonorable, campaign to bleed this woman of every dollar of her remaining savings.”
According to the U.S. Department of Justice, which assigns a Financial Litigation Unit to each restitution case, “The FLU’s mission is to aggressively collect as much as possible for the benefit of victims, as quickly as possible, in accordance with the laws of the United States.”