Editorial: Bankruptcy Judge Buys Bad Auction Deal

Gallup Independent
October 19, 2015

http://gallupindependent.com/

At the beginning of the Diocese of Gallup’s Chapter 11 case, U.S. Bankruptcy Judge David T. Thuma said he was going to keep the proceedings as transparent as possible. And up until recently, Thuma has kept his word.

However, the public should be aware that much of what transpires in a bankruptcy case actually happens during behind-the-scenes negotiations between attorneys for the different parties. The public and the media are shut out of those deals and will remain forever in the dark once the case concludes.

In a flagrant violation of Thuma’s desire to keep the case as transparent as possible, the public and the media were recently shut out of the Diocese of Gallup’s property auctions. As a result, the public does not know how well attended — or how poorly attended — the auctions were. The public does not know if the bidding on diocesan property was vigorous — or weak. The public does not know the identities of the successful bidders.

During the Hearing on the Order to Show Cause, Thuma admitted he intended the auctions to be open to the public — in the sense that the non-bidding public and media could attend and observe. And though we have found Thuma to be a thoughtful and fair-minded judge up until this point, he made the following extremely illogical statement: “There’s no question in my mind that if the press had come to me before the auction and said, ‘Can I attend, I won’t disrupt, I just want to observe,’ I would clearly have let them do that. And I’m sorry that didn’t happen.”

How would a member of the media even think to contact the judge to ask permission to attend an auction that had appeared to be advertised as open to the public? And how would a member of the public, such as the doctoral student doing research, know to contact the judge in advance to ask permission to attend an auction that appeared to be open to the public? Perhaps Thuma thinks the media and the public should have the ability to read minds or foretell the future?

Or perhaps Thuma should have just stuck to his principles and sanctioned the Diocese of Gallup and the auctioneer in some meaningful way.

We understand Thuma was between a rock and a hard place. Thuma said if he could invalidate the most recent auction with little or no expense and order a new auction, he would. However, he noted that a second auction might result in even lower bid prices, which Thuma described as “kind of imponderable.”

We find the bargain basement sales prices of the first auctions kind of imponderable, which is why we raised the issue of the extremely lackluster marketing campaign that cost the Gallup Diocese $45,000.

And what were the results of that marketing campaign? Diocesan attorneys proudly pointed out one positive news article in one Tucson newspaper — unfortunately, the diocese wasn’t selling any property anywhere near Tucson.

Where is the evidence of real marketing efforts in the communities actually near the property for sale: Arizona communities like Winslow, Holbrook, Show Low, Snowflake, St. Johns and Springerville, and New Mexico communities like Gallup, Farmington, Taos, Rio Rancho, Albuquerque, Belen, Los Lunas, Las Cruces and Deming?

The Diocese of Gallup got taken for a ride, as did Judge Thuma. But we have to hand it to Todd Good, the owner of a California real estate marketing company that conducted the property auctions. Like all slick salesmen, Good has the ability to peddle some very dubious things to buyers who apparently think they are getting the real deal.

In the case of the Gallup Diocese officials, they shelled out $45,000 for a dubious marketing campaign. In the case of Thuma, he bought Good’s very dubious explanation about why he barred the public and the media from the Albuquerque auction. In a written statement that Good signed under the penalty of perjury, he pledged to the judge that it was his “custom and practice” not to admit non-bidders to his auctions. He pledged it was his “standard procedure” during 33 years of conducting auctions.

Well, contrary to Good’s sworn declaration, media reports out of Tucson in 2005 and Phoenix in 2008 don’t back up Good’s story. According to those reports, at least two newspapers and one television station have been allowed to send journalists into Good’s auctions.

Thuma needs to keep in mind the Diocese of Gallup landed in his bankruptcy courtroom because of decades of secrecy surrounding the sexual abuse of children. Thuma’s gentle rebuke to diocesan officials just supports their pattern of secrecy and their determination to keep the public unaware, ill-informed and in the dark.

In the future, Judge Thuma needs to stick to his promise of transparency, he needs to stick to his principles, and he needs to stop buying dubious deals peddled by snake oil salesmen.

In this space only does the opinion of the opinion of the Gallup Independent Editorial Board appear.