Arrested boat sinks after auction notice
Reynolds arrested on unrelated Texas contempt warrant
Valdez Star photo
Janice Ruth II caretaker Ed Day retrieves a bumper from the boat’s debris after it sank in its slip in the small boat harbor last week.
US Marshals arrested Valdez man Larry Reynolds Monday, enforcing a contempt of court warrant issued by the North Texas Bankruptcy Court last August.
The move came just days after the sinking of the M/V Janice Ruth II.
The M/V Janice Ruth II sank in its berth Wednesday night, November 30, just days after a legal notice was published to announce its owner, the Independent Bank of Texas, was to auction to 47 foot luxury fishing boat on the steps of the Federal Court in Anchorage on December 15.
The US Coast Guard stated the incident was under investigation.
The boat had been the centerpiece of a complex legal dispute between its former owner, the Martha Reynolds Trust, Larry and Janice Reynolds of Valdez who controlled the trust, the Independent Bank of Texas which is a creditor, the US Marshals that arrested the boat in July and the Federal Bankruptcy Court in Anchorage.
“At five o’clock it was shoveled and bone dry,” Ed Day, the boat’s caretaker under contract with the boat’s banker owners.
At 9 p.m. the vessel was found to be taking on water according to Day, a lifelong Valdez fisherman who often contracts out to care for vessels in the small boat harbor during the treacherous winter months.
“What caused it? Who knows,” Day said. “It wasn’t snow.”
The sinking raised numerous eyebrows in Valdez due the recent history of the boat’s legal status.
The boat was previously owned by the Martha Reynolds Trust, or MRT. The MRT is a financial instrument ostensibly created to benefit Martha Reynolds – Larry Reynolds’ mother. Janice Reynolds, Larry Reynolds’ wife, was its trustee.
The boat was arrested by US Marshals to satisfy a lein for unpaid debts to the Independent Bank of Texas. Reynolds, and then Janice Reynolds, attempted to declare the MRT bankrupt in the Federal Court in Anchorage. Bankruptcy assets are except from seizure from creditors.
A number of complaints and reports were made to Valdez police after the boat’s seizure, claiming Reynolds had removed arrest notices, no trespassing signs and much of the vessel’s gear.
The court dismissed both MRT bankruptcy cases after it was discovered the MRT had been declared a non-business trust in both the personal and business bankruptcy of Larry Reynolds that has been simmering in the North Texas bankruptcy court.
The North Texas bankruptcy court recently ruled against Reynolds and in favor of trustee Dan Lain in Reynolds’ personal bankruptcy case.
Valdez Star photo
US Coast Guard personnel take a look at the side of the Janice Ruth II Thursday morning.
Reynolds was accused of hiding assets from the bankruptcy trust that included royalty payments for gas leases on properties that rightfully belonged to the trust. It also found Reynolds had illegally accessed a bankruptcy trust account. The court ordered Reynolds repay to royalties and trust account monies, in addition to attorney fees and other expenses accrued by the trustee.
The court issued the contempt warrant in late August after Reynolds failed to appear in the Texas court to answer the allegations made by the trustee. The warrant was not executed until Monday, December 5.
“We did an agency assist,” in the US Marshal’s arrest of Larry Reynolds, Lt. Dan Mott, acting police chief in Valdez, said Tuesday morning.
Reynolds was taken into custody from his home on Deep Lake Dr. according to Mott.
“No, I don’t have any comment on that,” Mott said when asked if Valdez police were actively involved or knew of any criminal investigation on the sinking of the Janice Ruth II.