Story By Milton Allimadi
When businessman José Sandy Buco filed for protection under Chapter 13 of the U.S. Bankruptcy Code in April 2024, he believed he was engaging in the familiar task of restructuring debt and defending three properties he contends are threatened by fraudulent claims. Instead, he now says the federal court system itself continues to deny him the basic fairness due any litigant.
On October 30, 2025, U.S. District Judge Margaret M. Garnett upheld a lower‐court decision dismissing Mr. Buco’s Chapter 13 petition — a dismissal arrived roughly a month before a scheduled hearing in which he had intended to challenge several Proofs of Claim (POCs) lodged against his real‐estate holdings.
“The court system is pulling the same scam,” Mr. Buco said in an interview with Black Star News following the ruling, comparing it to what transpired in the Bankruptcy Court.
Eligibility Dispute at the Heart of Case
At the centre of the dispute is whether Mr. Buco qualified under § 109(e) of the Bankruptcy Code for Chapter 13 relief. The statute requires that an individual debtor have “noncontingent, liquidated” unsecured and secured debts below specified thresholds at the time of filing. Current limits for cases filed April 1, 2025 to March 31, 2028 are approximately $526,700 in unsecured debt and $1,580,125 in secured debt.
The Chapter 13 trustee, Thomas C. Frost, moved to dismiss Mr. Buco’s petition on the ground that his total obligations exceeded $6.4 million — far above the statutory ceiling — thereby rendering him ineligible. In September 2024, Judge Philip Bentley of the U.S. Bankruptcy Court for the Southern District of New York granted the motion. The dismissal came just days after the court had reset a hearing that Mr. Buco says he intended to use to challenge the legitimacy of the proofs of claim.
“Why would Judge Bentley set a date for me to prove that the POCs were false, fraudulent, and forged, then cancel it and side with the trustee?” Mr. Buco asked. “I thought a judge was supposed to be neutral.”
Mr. Buco
In his bench‐ruling, Judge Bentley concluded that “the debtor is not eligible for Chapter 13 relief, because his debts exceed the statutory debt cap,” and noted that the proofs of claim “attach documents that show the balance, the amount of the debt, and show that it was incurred pre-petition.”
Mr. Buco disputes that finding, insisting his objections to the claims were timely filed and on the docket and that he can show that the documents are fabricated.
According to court transcripts, the judge noted: “The debtor has not objected to those proofs of claim and therefore, they’re deemed valid.” Mr. Buco counters: “This is completely false. My objections were filed and were on the docket, and the judge himself scheduled the October 17 hearing.”
Allegation of Systemic Due-Process Flaw
Mr. Buco says his case illustrates what he considers a broader flaw in the bankruptcy system — namely, the dismissal of claims of fraudulent mortgage or property documents without evidentiary hearings.
“Has Judge Bentley never heard of deed theft or forged creditor documents?” he asked.
He previously filed a motion under Rule 60 of the Federal Rules of Civil Procedure seeking to vacate the bankruptcy court’s dismissal and reinstate his case, but Judge Bentley denied that motion on June 12, 2025. Mr. Buco then refilled for Chapter 13 on July 23, 2025, and appealed the dismissal to the District Court. Judge Garnett rejected the appeal, finding that “the Bankruptcy Court had properly determined Appellant to be ineligible for Chapter 13 bankruptcy — meaning the underlying dismissal was appropriate.” She added that Mr. Buco “failed to identify any valid basis for maintaining the appeal” and that “nothing in Appellant’s submissions presents a cognizable argument” to alter the outcome.
Mr. Buco responded: “Judge Garnett never reviewed the underlying evidence or claim-objection record. She simply repeated the same bogus debt‐limit argument that Bentley used.”
Judge Garnett didn’t respond to questions submitted via e-mail message by Black Star News. The questions were copied to the trustee, Mr. Frost.
Mr. Buco argues that the courts avoided the threshold issue he has raised all along: namely, that the proofs of claim were never adjudicated. Without a resolution of whether those claims were legitimate or properly booked, he says, the debt totals used to declare that he exceeded the statutory cap are legally unreliable.
“This is not just fraud,” he said. “It’s also an accounting and due-process failure.”
“Both the trustee and the courts treated un-tested proofs of claim as if they were final, liquidated debts. Bankruptcy law requires a claim-allowance process or at least resolution of objections before those amounts can define a debtor’s statutory eligibility. That never happened here,” he added.
“When the district court affirmed the dismissal, it adopted the same reasoning without addressing the missing claim adjudications or the cancelled hearing.”
A forensic paralegal researcher and homeowner-rights advocate, Paris F. Dube, who has reviewed hundreds of cases nationally on behalf of home-owners who are victims of fraudulent foreclosures said: “What I can say is that this reflects a national pattern I’ve documented where unverified mortgage claims are accepted without evidentiary scrutiny after objections have been filed. The result is a systemic denial of due process and, in many instances, what can only be described as judicial obstruction of justice when courts allow disputed paper claims to override factual evidence.”
Next Steps: DOJ Complaint and Further Appeals
Mr. Buco says a signed dismissal order by Judge Bentley has not yet appeared on the docket. He plans to submit a formal complaint to the United States Department of Justice asking for an investigation into what he calls “a pattern of judicial misconduct and case manipulation.” He is also exploring other appeal options.
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