Mount Kisco massage school owner accused of mishandling assets - Westfair Online

[massage]

A former owner of a Mount Kisco massage school orchestrated transfers of assets that put $800,000 to $1 million in his pocket, a bankruptcy trustee claims, and left the business insolvent before it filed for bankruptcy protection.

Howard P. Magaliff, the trustee for Finger Lakes Massage Group Inc., accused John Robinson of fraud, in an adversary proceeding filed Feb. 19 in U.S. District Court, White Plains.

“Robinson engaged in misconduct,” the complaint states, by divesting the business of assets “for no consideration.”

The business owned massage schools in Mount Kisco, Ithaca and Frederick, Maryland.

It was originally operated by an Illinois holding company, 55% owned by Robinson, of Wheaton, Illinois, and 45% by David Merwin, of Cumming, Georgia.

In 2017, they formed Finger Lakes School of Massage, based on North Bedford Road, Mount Kisco.

In April 2018, they transferred the school’s assets to new entities for which no money or consideration was given, according to the complaint, and sold the company and other properties, renamed as the Trumantra Education Group, for $3 million to Kuzari Group, a Manhattan venture capital firm.

Robinson received $800,000, the complaint states, and another $200,000 was put in a collateral account to be distributed to him later.

In 2019, the Accrediting Council for Continuing Education and Training declined to recertify Finger Lakes School of Massage, according to news accounts, citing “egregious noncompliance” with standards. The loss of accreditation jeopardized students’ access to federally funded financial aid.

Also, in 2019, Kuzari sued Robinson and Merwin for fraud and other charges in Manhattan Supreme Court, for allegedly concealing financial problems when they sold the business. Robinson filed a counter-claim for the $200,000 put in escrow that he said he never received.

The fraud charge against Robinson was eventually dropped and in 2020 both sides agreed to discontinue their cases.

By then, Finger Lakes Massage Group, one of the entities involved in the transfers that led to the Kuzari deal, petitioned for Chapter 7 bankruptcy liquidation, declaring $22,693 in assets and $483,087 in liabilities.

Magaliff argues that the Finger Lakes Massage Group transactions were fraudulent because the company did not receive equivalent value for the assets it transferred and because the deal made the business insolvent.

He is asking the court to nullify the transfers and direct Robinson to pay back the money he received, for the benefit of the school’s creditors.

Efforts to contact Robinson for a response were unsuccessful, and an attorney who recently represented him in the Kuzari lawsuit did not respond to an email request for comment.