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Moving Violation

A local mover and shirker hauls a load to bankruptcy court--for the sixth time.

"To be quite frank, we pretty much have written this case off," adds attorney Doug Meier, who filed a claim for $14,500 on behalf of a woman whose goods were damaged or missing after an A&R move from Boston to Boulder. "Even if his case is dismissed, he has so many creditors after him, it's like, 'Get in line.' I think that's what he counts on. He kind of wears you out."

Kagan, who also ran a now-defunct auto-rental business called Rent-a-Heap, blames his bankruptcies on chronic tax problems--among his priority creditors are the Internal Revenue Service ($111,944) and the Colorado Department of Revenue ($15,918)--rather than on any scheme to cheat his customers. The numerous filings were the result of "mistakes that were made by attorneys," he says.

A Latvian immigrant, Kagan claims to have moved 12,000 people in the last five years--an astonishing figure for a company that lists few assets and an annual personal income for its owner of around $30,000. He says that he's had only a hundred or so complaints in that time and that most have been resolved satisfactorily. At the same time, he suggests that many of the unsecured creditors, who are seeking approximately $80,000 in his latest filing--and who will wind up with nothing if his proposed repayment plan is approved--have inflated their claims.

"When these people send you a claim for $2,000 and then they decide to sue you for $14,000, I can care less for folks like that," Kagan says. "I deal as fairly as I can."

He adds, "I'm not going to sit here and tell you that we did not screw up. We still do and probably still will. But I get claims--here's one for lost three boxes, lady wants nineteen hundred bucks. You know why? Because there was a VCR and camera equipment. We found the boxes. We opened them. You know what was in them? Towels."

Creditors, though, dispute Kagan's account of the claims against him. So have several bankruptcy trustees, who've filed objections to various irregularities in Kagan's bankruptcy filings, including missing or incomplete lists of creditors and protracted repayment plans. One 1994 filing listed zero amount owed to unsecured, nonpriority creditors; a few weeks later, an amended filing listed $262,237 owed to such creditors. Three months later, in another action, the amount owed to nonpriority creditors had dropped to $116,680. Kagan says he decided to list every potential creditor, but that figure "turned out to be too high for the courts, so we went through it again and came up with a more realistic number."

After fielding complaints about Kagan's history of filings, his failure to comply with orders to amend the plan and other matters, Judge Brooks dismissed that action last year. His latest application has met with an objection from attorney David Miller, representing creditor McKnight Truck and Storage, who noted Kagan's initial failure to disclose previous filings and described him as "an experienced bankruptcy debtor who has managed to delay his creditors for years and avoid repaying his taxes."

Regardless of the fate of Kagan's latest bid for Chapter 13, the matter begs a larger question that's been plaguing creditors: whether A&R Transport has the necessary insurance to engage in interstate transport of household goods, as required by federal law. "Boy, that's the million-dollar question," says Meier. "He certainly holds himself out as insured. My client even purchased additional insurance from him, for all the good it did her."

Interstate movers are supposed to be registered with the Federal Highway Administration's Office of Motor Carriers and to have on file with the agency proof of minimal "cargo insurance," which usually covers loss or damage up to sixty cents per pound. OMC records indicate that A&R has had only sporadic insurance coverage over the past three years and has been relegated to "inactive" status since the fall of 1995.

Carriers who operate without proper insurance or authority are subject to fines of up to $500 a day. Kagan, though, says he had a visit from Department of Transportation inspectors a few months ago and is fully licensed to operate. "There was a period when we did not have insurance coverage for, I don't know, maybe six or eight months, when we decided not to run tractor trailers anymore," he says.

Although reluctant to discuss his current insurance situation--"Why should I tell you?"--Kagan insists he does have cargo insurance. A local agent for Great Western Casualty confirms that A&R has such a policy in effect; but that policy is designed to cover cargo damaged from a collision, not theft or damage from the movers themselves. Such exclusions wouldn't be applicable for a policy on file with OMC, says Joanne Haller, economic program manager for the agency's San Francisco office.

"If a company is operating without authority and insurance on file, that would probably subject them to investigation and enforcement action," says Haller.

But regulation of the volatile moving industry has been somewhat confusing lately. The federal agency charged with overseeing interstate transport, the Interstate Commerce Commission, was downsized out of existence in 1995, passing many of its functions on to the understaffed Office of Motor Carriers.

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