United States District Court, S.D. California
REPORT AND RECOMMENDATION ON PLAINTIFF'S
APPLICATION FOR A SHOW-CAUSE ORDER
ANDREW G. SCHOPLER UNITED STATES MAGISTRATE JUDGE
Michael Gallegos owes plaintiff nearly $22 million. While
Gallegos claims poverty, plaintiff says that Gallegos is
using his businesses to fund a posh lifestyle, including a $7
million mansion, luxury cars, and college expenses for two
daughters. To help collect the debt, the Court assigned
Gallegos's interests in various businesses to plaintiff
and warned Gallegos not to “evade payment.” (ECF
No. 191, at 2.) Thereafter, Gallegos shuttled money from one
of these businesses to another company he co-owns. That
company-which was not listed in the assignment order-paid the
lease on his personal Mercedes Benz.
shell game is proper, contends Gallegos, because no business
covered by the assignment order directly paid him. And
plaintiff is only entitled to such direct payments, or so the
argument goes. Plaintiff finds this argument unconvincing
and moves for a show-cause hearing to determine if Gallegos
is in contempt.
actions are gravely troubling. His businesses appear to pay
his expenses, yet he draws no salary, which would be subject
to garnishment by creditors (and taxation). He should pay his
debts or pay for his debt-dodging. But the current assignment
order- agreed to jointly by the parties-may lay an imperfect
foundation for criminal contempt on these facts. To eliminate
any wiggle room, this Court recommends modifying that order
purposes of this amended assignment order, the following
a. Payment: A “payment” refers
to the transfer of any thing of value (including but not
limited to money, securities, valuables, and credit), except
for a bona fide salary for defendant Michael Gallegos. The
term “payment” includes both direct and indirect
b. Personal expenses: The term
“personal expenses” includes expenses for
Gallegos himself as well as for his immediate family.
Plaintiff SPE LO Holdings, LLC, is assigned Gallegos's
interests in any payment from any entity listed in the
attached Appendix. SPE LO is entitled to any payment these
entities make-or would otherwise make-that is: (a) directly
to Gallegos; or (b) for Gallegos's personal expenses; or
(c) to any intermediary so that another may ultimately make a
payment directly to Gallegos or for Gallegos's personal
Gallegos must immediately report to SPE LO the amount and
source of any salary he is currently receiving. This is a
continuing duty, so Gallegos must also immediately report any
changes to his salary, such as a new salary source or any
changed salary amount.
Gallegos shall not cause or encourage any entity listed in
the attached Appendix to make a payment: (a) to him directly;
or (b) for his personal expenses; or (c) to any intermediary
so that another may ultimately make a payment directly to
Gallegos or for Gallegos's personal expenses.
any entity listed in the attached Appendix fails to provide
SPE LO a payment to which it is entitled as described above,
Gallegos must immediately cause the assignment and transfer
of that payment to SPE LO.
Gallegos must immediately provide each entity listed in the
attached Appendix with a copy of this amended assignment
order and inform each such entity of its obligation to
immediately re-direct the payments described above to SPE LO.
Gallegos is warned that if he violates this or any other
Court order, the case may be referred to the U.S.
Attorney's Office for a criminal contempt prosecution.
light of the foregoing, this Court recommends that SPE
LO's request for a show-cause order be DENIED.
five calendar days of the District Judge's adoption of
the foregoing proposed amended assignment order or issuance
of a different amended assignment order, Gallegos must file
with this Court a notarized verification that he has read
that amended assignment order in its entirety (including any
Appendix), that he fully understands it, and that he agrees
to obey it. That verification must be signed by Gallegos
personally, under penalty of perjury, in the presence of a
notary licensed in the state of California.
Hotel & Waterpark Investment, LLC
Hotel Investment, LLC
Hotel Ventures, LLC
Advent Hotel Management Corporation
Alameda Hotel Investment LLC
Amberly Hotel Investment, LLC
American Property Hospitality Management, LLC
American Property Hospitality
American Property Hotel II, LLC
American Property Hotel LLC
American Property Investments, LLC
American Property Investors - Alexis Park, LLC
American Property Investors - Reid Park, LLC
American Property Investors-ABQ, LLC
American Property Investors-Knoxville, LLC
American Property Investors, LLC
American Property Management Corp.
American Property--Management Corporation
AP/APMC Management, Limited Partnership
AP/APMC Management II, Limited Partnership
APHM Cancun Hotel Management, LLC
APHM Carlise, LLC
APHM FL Hotel Management, LLC
APHM Hotel ...