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Chernushin suicide saves assets from bankruptcy

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Chernushin's home passes to his wife. - FILE PHOTO
  • File photo
  • Chernushin's home passes to his wife.

Victims of Gregory Chernushin just can't catch a break.

The former attorney, who completed suicide on June 9, 2016, admitted to stealing money from his clients. Following his death, a bankruptcy trustee hoped to seize Chernushin's assets — including a vacation home — in order to repay victims and creditors. But on April 3, U.S. Bankruptcy Court Chief Judge Michael Romero essentially declared the Crested Butte vacation home off limits to creditors.

"We can't sell the Crested Butte property," bankruptcy trustee Robertson Cohen tells the Independent. "That was the primary asset."

Although there are other minor assets Cohen is trying to liquidate, Chernushin's chief piece of property was the vacation home, meaning dozens of Chernushin's former clients from whom he stole hundreds of thousands of dollars likely will get little or nothing.

The Chernushin case dates to 2015 when he was disbarred for stealing clients' money. He then declared bankruptcy, and after warrants for his arrest were issued for multiple felonies in early June 2016, Chernushin shot himself to death at a campground on the Western Slope, outside Durango.

The Crested Butte home, valued at $220,000 by the bankruptcy court, was owned by Chernushin and his wife, Andrea. (Their main home in Colorado Springs, valued at about $600,000, was foreclosed upon by the mortgage holder.)

Cohen argued the vacation home should be sold to pay clients, many of whom were injured on the job or in traffic crashes, whose settlements were stolen by their own attorney. But Andrea Chernushin argued in court filings that the state's joint-tenancy-in-common law gave her sole ownership, outside the scope of the bankruptcy, upon her husband's death. Romero agreed with the surviving spouse, noting that Colorado's law states "the right of survivorship operates to terminate a decedent's interest in the property on his death."

While Cohen argued federal bankruptcy law should prevail in making the home part of Chernushin's estate, Romero wrote in his order, "As the Supreme Court has made clear: 'Property interests are created and defined by state law.'"

Hence, Romero wrote, "[Chernushin's] interest in the Property remained in joint tenancy, with its accompanying right of survivorship, until the time of his death. At the time of his death, the Debtor's interest in the Property terminated. The Defendant [Andrea Chernushin] now owns the Property free of any interest of the Debtor. The Property is not property of the Debtor's bankruptcy estate, and the Trustee is not entitled to sell it."

That means debtors can protect assets for their spouses and families by killing themselves, and, while an extreme move, suicide might appeal to a desperate person and leave creditors in the lurch. Cohen says he can't fathom the Colorado Legislature intending the law as a way to dodge creditors, but that's the consequence.

"They made it harder for creditors to get money from a bankruptcy proceeding," he says. "There are real people out there who got hurt, and they could use this money."

One of those was Shirley Sterczewski, who said in early 2016 she was "barely surviving" after Chernushin stole $25,000 from her settlement after a car crash left her with a debilitating back injury.

Geoffrey Atzbach, who represented another client owed at least $50,000, said of the latest news, "That's really unfortunate."


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