On Monday, U.S. Bankruptcy Judge Alan Stout continued a hearing to Oct. 1 to decide a motion of why Brenda Kay Brown should not be held in contempt and sanctioned for failing to comply with court orders.
Allegations are that Kay Brown, the estranged wife of former Cynthiana mayor and businessman James Brown, failed to comply with court’s orders to return estate property that she had allegedly taken. The court will also determine sanctions for failing to comply with the court orders.
According to documents filed July 3, Mrs. Brown refused to turn over converted property and missing jewelry to the trustee or to provide the required accounting.
The order also requests that if Kay Brown is found in contempt that she be incarcerated until she complies with the turnover order.
The original turnover order was filed Dec. 12, 2012, and included five pages of items that were identified as estate property that had been inventoried but not returned.
According to a 16-page document filed Sept. 16 by the Brown parties and James Westenhoefer, Chapter 7 trustee, Kay Brown claimed in a March 8, 2012, itemized list that she had $8,850 worth of jewelry. Included on the list was a $6,800 engagement ring. However, the appraised value of the ring is $65,000.
According to court documents there was also a ring that belonged to Mr. Brown with a 5.09-carat diamond surrounded by 10 baguette diamonds weighing an additional two carats for a total of 7.08 carats.
Following his stroke on Dec. 23, 2008, after 10 months of marriage, Kay Brown allegedly had the 7.09-carat diamonds removed from the ring and made into a custom-made ring for herself, the documents state.
That ring was appraised at $75,000 and insured for $76,200.
Kay Brown testified in February 2012 that she no longer had the ring.
The records also show that Kay Brown took a Caribbean cruise during the last week of March 2011, following a status quo order from Harrison District Court on March 8, 2011. The status quo order was to preserve Mr. Brown’s assets.
According to court documents, while on the cruise Mrs. Brown made total jewelry purchases amounting to $35,351.10.
Kay Brown testified that when she returned from the cruise she left all of the jewelry at Jim’s Cynthiana house, but that jewelry was all missing when she returned to the house in the fall of 2011.
Three months later, in June, action from Harrison District Court ordered that Mr. Brown be removed from a house in Paintsville and returned to Cynthiana.
Kay Brown was advised to have no contact with Mr. Brown.
“Based upon information and the debtor’s prior conduct, the Brown parties and the trustee believe the debtor has the jewelry she claims is missing,” the documents state.
As part of the Chapter 11 proceedings, on Feb. 27, 2012, the Brown parties requested authorization to enter Kay Brown’s 10,000-square foot house and video tape and appraise the contents.
However, she would not allow access to the walk-in safe, any closets or drawers and was also not allowed time to inspect a separate guest house.
In October 2012, following a court order disallowing Kay Brown’s exemptions in her bankruptcy case, which was initiated in January 2012, she left her Paintsville house and was permitted to take only her everyday wearing apparel.
After a follow-up inspection it was determined that she had taken a significant amount of furnishings.
When contacted, Kay Brown agreed to return the furnishings and took them back to the Paintsville house and stored them in the garage.
Again, however, it was determined that a great deal of the furnishings were missing.
“Despite this court’s order to return all of the property in her possession and to provide an accounting for all the property, the debtor has failed and refused to do so.”
It was also noted that Kay Brown participated in the Paintsville Christmas Tour of Homes last year and that a video shows a large amount of expensive Christmas decorations that have never been disclosed.
In addition to the contempt hearing in U.S. District Bankruptcy court in October, Kay Brown will also have a pretrial hearing in Harrison Circuit Court on criminal charges of financial exploitation of an adult (more than $300), first degree perjury and second degree criminal possession of a forged instrument.
A five-day trial has been set for Oct. 28 through Nov. 1 to hear the case.
She was indicted in Harrison County in November 2012. There are also criminal charges pending in Johnson and Lawrence counties.