Zapf's husband files for Chapter 7 bankruptcy

In 2014 he had been found liable for negligence

On May 12 in bankruptcy court, Eric David Zapf, husband of second district city councilwoman Lorie Zapf, filed for Chapter 7 bankruptcy, or liquidation. Lorie Zapf was named as a codebtor. They live at 4622 Lisann Street.

Eric Zapf. $500,000 to $1 million in assets and $1 million to $10 million in liabilities.

Eric Zapf. $500,000 to $1 million in assets and $1 million to $10 million in liabilities.

Three years ago, the fourth appellate district court of appeal found that Eric Zapf was liable for professional negligence in a real estate deal. At the time, Eric Zapf and his associates were to pay more than $1 million. According to the appellate court, Eric Zapf had been the real estate agent for sellers of a residential property. After the purchase, the buyer discovered that the property was encumbered by a loan that had not been paid. The court found the sellers liable for the fraud and Zapf liable for negligence.

According to the bankruptcy filing, Zapf has $500,000 to $1 million in assets and $1 million to $10 million in liabilities. He has combined monthly income of $5,068 and expenses of $6,799. He owns a 2003 Honda with 165,000 miles on it, worth $2500. He has $100 in cash, $800 in a checking account and a government employee retirement account worth $30,000. His total personal property is worth $35,700, says the filing.

But one must wonder what he has been doing as he sank into liquidation. He lists $825 in "miscellaneous income" in 2015, $825 in 2016, and $275 thus far this year.

The filing says Getsen Acquisition is owed $1,568,763 and the value of the collateral against this is $640,000. He owes Wells Fargo almost $500,000 and Citibank close to $11,000.

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Of course they are Republicans and believe that they are above the rest of us. She should resign.

AlexClarke: She didn't resign three years ago when the Reader reported that the appeals court had upheld a lower court judgment that he was guilty of negligence. He had been an agent for sellers of real estate. Then it was discovered that the property was encumbered with a loan that had not been paid off. Someone had signed and recorded fraudulent documents that suggested that the sellers' loan had been satisfied. The appellate court found the sellers were liable for fraud and Zapf was liable for professional negligence.

It will be interesting to see if his Chapter 7 filing affects her status politically. Best, Don Bauder

Oops. He was found liable for negligence, not guilty of it. Best, Don Bauder

That is because civil courts do not render guilty verdicts, only criminal courts do that. The fact that he/she is not in criminal court means the Republican D.A. did not file against them, not that they are not guilty.

shamus: Yes, that is why I quickly made the correction. "Guilty" is a word for criminal courts. "Liable" is for civil matters. From what I get from the filing and the appellate court decision, I don't see any grounds for a criminal case against Eric Zapf. Best, Don Bauder

Living above their means. She a perfect fit to be on the city council with this backround .

boemac: There is wisdom in your observation. Best, Don Bauder

Whoa guys. Regardless of what you think of either of the Zapfs (and I don't have a very positive impression of her performance on the Council), this is a hazard that can befall almost anyone under some circumstances. The judgement against him was for negligence, not complicity in fraud.

Now, as to a few points raised by Don, such as Eric's almost-non-existent income in recent years, the ancient vehicle, and lack of assets, this looks fishy. But many personal BK filings are like that. Before the filing assets somehow evaporate, and there's little or nothing to use to pay off the creditors. Those tiny incomes might indicate working under the table for unreported cash, or they might not.

I'll bet she doesn't drive a 14-year-old Honda. In fact, there was a time when the council members got a fat car allowance that paid enough to lease a very expensive car and cover its operation. Will this hurt her reelection chances? Sure, but probably not enough to make her drop out. And if she stays in, the power of incumbency in the city of SD would likely result in reelection.

Visduh: Yes, I think I made it clear that the appellate court decision against Zapf was for professional negligence. The sellers of the property got hit with liability for fraud.

The old Honda appears to be his car, not hers. The tiny amounts of "miscellaneous income" make me wonder why he didn't rake in more "miscellaneous income" when he was making only $60,000 a year in regular income, and that was insufficient to offset his liability obligations. Best, Don Bauder

Don, you said that "Lorie Zapf was named as a codebtor." I looked at the PDF document attached to this story and there is only a "Debtor 1." No spouse (or Debtor 2) but Lorie Zapf is listed as a creditor. So Eric Zapf is representing himself (pro se) as an individual debtor.

Ponzi: I would never argue with you because you always seem to be right, but here is where I came up with the information. It was under "Schedule H: Your codebtors." It says, "In column 1, list all of your codebtors. Do not include your spouse as a codebtor if your spouse is filing with you." She is not filing with him. Lorie Zapf is listed as a codebtor. Best, Don Bauder

I'm sorry Don, you're right... Lori Zapf is listed as a co-debtor on Schedule H. By doing that, their total exemptions will not be as much as if they had filed as a joint case. Eric Zapf is filing Pro Se and may not have a had any legal counseling. After the bankruptcy reform in 2005, the bankruptcy process became very complicated. There are income means-tests, credit counseling (now just a website app) and more obstacles. Before the 2005 reform people could file by themselves, but it is a maze of laws now.

Eric Zapf might be trying the keep Lorie Zapf's name off the documents as a "joint debtor." California is a community property state and it really doesn't matter how the co-debtor is "introduced in the case" because Lorie Zapf is also responsible for the debts her husband took on. This is why investors create LLC's and corporations for their businesses and real estate deals to shield themselves and their spouses from creditor claims. This will be interesting to watch.

Ponzi: I hope you don't mind my not going back to the document on this. To the best of my memory, there is a box to check. It asks if you have consulted anybody other than a lawyer in filling out the document. I think I recall that he checked "No." I suspected that he had gone to a lawyer, therefore, but that is a rather hazy conclusion.

My guess is that a lawyer made out this document. Zapf appears to use several approaches to limit his own liability. Best, Don Bauder

Don, the bankruptcy court offers document 101 in an online form that you can fill-out online. That would be my guess, that he filled it out online. Unlike TurboTax, the bankruptcy form does not "walk you through it" and help you correct mistakes. (Law firms do have such software, but it's costly).

Lot's of bankruptcy cases get filed and then the court clerks starts to flag schedules and other documents for accuracy and updates; asking for more information in amended schedules. This case is new, in my opinion there are going to be many flags and amendments before it gets down to the discharge. PACER shows an amended filing of the petition has already been filed on 5/15/2017.

Ponzi: In preparing this item, I didn't go to bankruptcy-savvy sources. It was late in the evening, I had just learned of the event, and I had a chance to get it up quickly. Online journalism is very competitive and speed is important. So I worked from the bankruptcy document without interviewing anybody. If we have enough unanswered questions, I can go to several people to get some answers at a later time. Best, Don Bauder

I understand. This is a fascinating story and I hope you follow up on it. You have good sources that dig these items up.

Ponzi: I posted the appellate court decision last night (Saturday). Someone with your extensive sleuthing skills will find some interesting nuggets therein. Best, Don Bauder

A couple of interesting things I noticed. On PACER the "Nature of Debt" is listed as "Business." But this is a personal bankruptcy. You can't say "hey it's just business" when there is no sole-proprietorship, partnership or joint-venture. At the end of the day, this is a personal Chapter 7 Bankruptcy.

The other thing I find odd is the small number of creditors listed. Typically, you must list all your creditors. This means every credit card, loan, utility, department store credit card, etc. Also, the IRS, Franchise Tax Board and County Tax Assessor (as well as any other taxing authorities) must be on the creditor list. Again, this is a Pro Se filing and looks likes one. The petition is going to have to be amended to correct some glaring errors or it will probably get thrown out (without a discharge).'

Eric Zapf seems to be trying to stymie Getsen Acquisitions LLC in a debt dispute. He's already lost an appeal in that case. Using the bankruptcy court to surgically discharge one debt is an interesting strategy, but it's not going to work. Again, this will be interesting to follow and Lorie Zapf's name and debts will eventually join her husband.

Ponzi: True. The small number of creditors somewhat mystified me, too. I cocked my eyebrow at the low evaluation of his assets. This does not mean I am challenging his filing. It just means that I would like a better explanation of some things in this filing. Best, Don Bauder

Ponzi: There is one place on the filing where you mark if it is a consumer or business bankruptcy. He marked business. Best, Don Bauder

True. But he did not operate a business. This bankruptcy appears to be trying to eliminate a single judgment from a negligent real estate transaction. Zapf is a licensed real estate salesperson, not a broker. So he is the hired help, not the boss (or a business). He should have stuck with energy bars, the "Boulder Bars"... but family feuds destroyed that venture. Now the Bounder Bar name has been assumed by a Colorado based marijuana edibles company. Boulder Bars were the company that Eric and Lori Zapf operated years ago.

Ponzi: You are miles ahead of me on research on this item, as usual. I know nothing about the Boulder Bars business, Best, Don Bauder

I'm not sure what this means other than he's liable for a lot of money. That this could happen to anyone I"m not sure. He's in civil court instead of criminal court which could mean he's connected or he's innocent. Her Highness at the D.A. has demonstrated a propensity to give any potential ally a pass, especially if they are well heeled and likely to donate to the next reelection campaign. Who knows how much he knew about his clients' conduct? Enough to be found financially liable which is no minor threshold to cross. How much does his wife know or should she have known? Probably more than she has let on. Zapf represents the bad in San Diego which is an agenda driven by greed to exploit our tremendous natural gifts for the financial benefit of an already wealthy few who don't use them anyway. It is definitely inconsistent with a policy that would benefit the majority of San Diego residents now and more importantly, in the future. This stuff will hurt your grand kids more than yourself. Your kids will pay the price too.

In that the sellers were never charged with criminal fraud, but were found liable in civil court, and they were far more responsible than he was, there was no reason to go after him. His only offense seems to have been a failure to do his job to the max and spot the chicanery. And there's no reason to think he profited from the fraud, unless his commission was somehow tainted. There's no reason to assume that she knew anything of the transaction at all.

Visduh: Both the trial and appellate courts thought that he was negligible enough to be pinned with professional negligence. So I wouldn't dismiss this as trivial. Best, Don Bauder

Eric Zapf earned $47,125 for his real estate company (broker). This is the Court of Appeal document in that case: http://www.courts.ca.gov/opinions/nonpub/D062874.DOC

Ponzi: Thanks for posting the appellate decision, which is important for those interested in this matter to peruse. I also posted it. So there should be two avenues. Best, Don Bauder

This is a bankruptcy case, not a civil case.

Ponzi: Maybe you can explain the difference between a bankruptcy case and a civil case in this matter. Best, Don Bauder

Shamus: I suggest that you -- and everybody else intensely interested in this case -- read the appellate decision. I posted it last night and Ponzi has also posted it. It is definitely an interesting matter. Best, Don Bauder

shamus: I do not see what role, if any, Lorie Zapf paid in this. Best, Don Bauder

I wish Councilmember Zapf the best. She is a good Mother. I'm sorry for her plight.

dannytri: In her campaign documents, Lorie Zapf boasts of being a proud mother. Best, Don Bauder

Why didn't his E&O insurance cover his liability? Was it way more than oversight/omission negligence?

 I am not qualified to comment on the truth of what exactly transpired but I do know that Councilmember Zapf is a good Mother and to some extent doing the best she can on our City Council. Those words may seem strange coming from her opponent as I'm contesting the seat in D2. But the words of Dave Scott at the Nice Ironman World Championship in 1985 still ring in my ears as I was a competitor, replying to John Tesh, "The Man" replied to a question on why Dave liked it when his fellow triathletes saw the back of his head on the final leg being the marathon run, he stated, "Because I understand they are suffering as much as myself."  We forget through our weakness in the human condition that we all suffer the same fate and are equal at the grave. Daniel "Danny" Smiechowski D2 Candidate SD City Council God bless all of you!!!!   Danny

dannytri: You are a generous soul. Best, Don Bauder

tom_2: I don't know why errors and omission coverage, if he had it, didn't cover his liability. Is this more than oversight/omission? At this point I don't know. That is a difficult question in any bankruptcy such as this one. Best, Don Bauder

In the Getsen Acquisitions v. Eric Zapf case, testimony by the plaintiff says that Eric Zapf told the sellers that an "administrative process" could be employed to avoid both foreclosure and a short sale. According to the trial court's findings, Zapf "told the Habers, in essence, that the entire banking/real estate industry was crooked, and that the financial system was arranged so that banks could make their money and 'screw the homeowner'."

E&O insurers are not going to be pleased about paying a claim when their client, who has a fiduciary responsibility to the sellers, is saying statements like that. E&O covers errors and omissions, and Zapf was not making any errors or omissions in that transaction. E&O has clauses in their insurance contracts and I'm sure that statements like Zapf made indemnify them from claims.

Ponzi: I agree that the statement by Eric Zapf -- while containing a good deal of truth -- was not a wise one for him to have made. Best, Don Bauder

Followers of Danny Smiechowski: As I have mentioned, she says in her campaign materials that she is a proud mother. Best, Don Bauder

Seems like Eric is more of a stay-at-home dad with his reported income. I guess they are both proud parents.

Ponzi: Good point: his reported income is not impressive. I assume that is just his income, not including hers, which as a councilmember would bring the total higher. Best, Don Bauder

I believe that Ms. Zapf is one of the few council members who takes the gasoline allowance. It amounts to about $9000 extra per year.

PRabbit: Maybe she doesn't want to be seen driving her husband's clunker. Best, Don Bauder




Not familiar with all the particulars of this case. Don and other posters seem to have a good handle on it. However, it appears to be a common legal strategy to use to bankruptcy courts to avoid and/or minimize personal liability for excessive judgments.

If there is one thing DT the Con Man is good at, it is his aggressive use/abuse of the US Bankruptcy Courts for his own personal gains. I read that Trump made more money exploiting the US Bankruptcy laws that he ever made in real estate and/or business. Ditto DT's aggressively exploiting the US tax code.

Eric Zapf should be using a crackerjack bankruptcy lawyer who knows all the ins and outs of the system for this filing. It is not very smart to try this kind of a complicated Bankruptcy filing on his own
("Pro Se"). The few thousand he would spend on an accomplished BK Attorney would be money well spent. The law is way too complicated for most non lawyers to successfully navigate, unfortunately.

SportsFan0000: Zapf's self-representation in court might not have helped him, but then the slickest lawyer around might not have gotten him off the hook for negligence.

This is a complex case that the appellate court analyzes clearly. Still, I have a nagging feeling that some snakes in this case didn't have to show their fangs. There are still mysteries, such as who was behind some of the characters that may not have existed. Best, Don Bauder

I wonder who forged the documents ?

This seems to fall within the criminal realm and not the civil one.

PRabbit: To my knowledge, the forgeries in this case have not been solved. Best, Don Bauder

        Although I am Lorie Zapf's opponent in the D2 race, I must say that in my 50 years covering local politics, these family connected financial matters will not diminish her chances of reelection. It's merely a tempest in a teapot. Honestly,  after having viewed San Diego politics since 1967, this is much ado about nothing. Having said that, I would be honored to have your vote. Danny D2 Candidate SD City Council   ps Get over my last name boys and girls! I'm the best qualified!!!

dannytri: How many times are you going to pump your candidacy on this blog? Best, Don Bauder

Mr. Don Bauder, if I had a blueblood name as yours I would not even comment. Do you realize in all your splendid wisdom that I'm totally ignored in this town. The French have an old saying, "Les Americains ont fait le cinema." You folks have no idea what it's like to campaign with the name Smiechowski. I'm proud of my Papa and Grandpa! Problem is, folks like you have it too easy, too pushy in fitting in a culture where most folks succeed by conformity. Take your Blog with you, Mr. Bauder!! I'm finished!! No good SD blueblood will vote Smiechowski anyway. Can you imagine a name like mine on the City Council. I'll bet you would consider that a disgrace. What you don't know of my background and accomplishments will not hurt you. Bonne chance, bon courage! Au revoir...

dannytri: Bauder is not a blueblood name. It's German, but I am probably 3/4th English. The English side of my family (my mother's) came to the Boston Bay Colony in the 1630s. There were two brothers from England. One was almost immediately hanged for killing Indians.

My father's side arrived in upstate New York from Germany in the 1730s. The first Bauder to arrive was charged by his wife with chronic drunkenness and child abuse. He charged her with being a witch. She disappeared.

Neither side of the family got off to a good start. Best, Don Bauder

Jim Schilling: Although this bankruptcy is civil in nature, there is fraud that approaches criminality involved. An ambitious criminal prosecutor in the DA's office might find some gems in this one. But there are juicier real estate frauds around. Best, Don Bauder

Don, Did you post the Appeals Court Decision on the Zapf case?!

( In case I have insomnia and need help falling asleep)..


SportsFan0000: Yes, it is posted twice. I posted it. The head is in all-caps: THOSE DEEPY INTERESTED….etc. Also, Ponzi posted it. It begins, "Eric Zapf earned $47,125…" Best, Don Bauder

Let's just wait for the investigation to end, it's impossible to arrive at an unbiased conclusion without having all the details.

SanDiegoBailBondsman: Read the appellate decision, posted both by me and by Ponzi. Read pages 14 and 15. You may reach some conclusions on professional liability. Best, Don Bauder

Don, Can you post the link for the Appellate Decision?! Can't find it..Thanks!

SportsFan0000: It's a post of mine at 9:12 p.m. June 3. The wording is all-caps and begins *THOSE DEEPLY INTERESTED….. You will be interested in pages 14 and 15, even if you don't know the other names. Best, Don Bauder

The first meeting of creditors is on June 14, 2017. Eric Zapf submitted a letter to the bankruptcy court appealing them to discharge the Getsen judgment. Getsen (et. al. because the title insurer is probably looking to get some of their claim payments returned).

This case probably could mean the Zapf's having to sell the home to satisfy creditors. Not sure how many city council people rent, but this may be a glimpse.

Ponzi: Eric Zapf has fought any judgment in any way he can. He is acting as an individual, not having hired a lawyer, in the major cases. I doubt the Getsen judgment will be discharged, but anything can happen. Best, Don Bauder

Chapter 7 bankruptcy protection allows debtors to get rid of most of their debts and start over with a clean slate. But it also has its drawbacks, including the loss.

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