In an article appearing online in the Statesman it appears that DBSI president Douglas Swenson will have to answer questions under oath in the DBSI Bankruptcy case now pending. Here is the classic dilemma - answer the questions and face the use of your testimony in an all but certain criminal case, or refuse to answer and invoke the constitutional protections afforded against self incrimination and watch the civil case wilt on the vine. The law is difficult in such cases because DBSI has sought PROTECTION against its investors through the use of the bankruptcy courts. But should it lose the protections afforded there because its president wants to shield himself personally from a potential criminal case?
You can smell the blood in the water here - just look at some of the comments added to the Statesman story. Many in the community have tried and condemned DBSI and its officers without having any real knowledge of what went on in the business. And of course DBSI has added to the problem by appearing to run from its losses without giving a full accounting of what happened, under oath.
If DBSI wants the protection of the bankruptcy law, it must likely play according to the rules, but can the judge FORCE Swenson to testify under oath? I doubt it. The remedy here may be that the bankruptcy petition is dismissed or the case converted to a liquidation, thereby depriving the company of the protection of the courts because its president cannot or will not answer the questions.
Learning point - if it looks like you are about to be charged with a crime, you only want to tell your story once. If Swenson is indicted his statements in the bankruptcy would certainly be used against him at a criminal proceeding. So why should he waive his 5th amendment rights now?
Second learning point - when in trouble, get a good lawyer. Swenson has Angelo Calfo - great lawyer and a great choice in this case. We shall watch this one as it progresses. There is still that "ponzi scheme" claim underlying the entire DBSI mess. Millions of investor dollars are gone and in today's climate that can only lead to more scrutiny.