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“Bad Faith” Bankruptcy Denied for Lee Mueller, Former Operator of Edenville Dam, Boyce Hydro

LANSING The United States Bankruptcy Court for the District of Nevada, the home state of Lee Mueller, former operator of Boyce Hydro and the Edenville Dam, denied Mueller’s bankruptcy filing, announced Michigan Attorney General Dana Nessel. United States Bankruptcy Judge August B. Landis dismissed Mueller’s attempted Chapter 13 Bankruptcy on February 9th

In 2023, the State obtained a nearly $120 million judgment against Lee Mueller, reflecting his responsibility for the catastrophic 2020 failure of the Edenville Dam. Mueller pursued bankruptcy in the U.S. Bankruptcy Court in Las Vegas, Nevada as a means to have that judgment dissolved. On February 9th, 2024, the bankruptcy court dismissed the bankruptcy petition, concluding in a February 6th hearing that Mueller’s effort “smacked of bad faith.”  

“Mr. Mueller has repeatedly made inaccurate representations to two different courts in his attempts to evade accountability and money judgements for his responsibility for the Edenville Dam disaster,” said Nessel. “I am grateful that the courts have continued to see through Lee Mueller’s obvious attempts to manipulate these proceedings in order to protect himself at the expense of the thousands of Michigan residents whose lives he’s devastated.”

Legal eligibility for the type of bankruptcy protection Mueller sought requires a person’s debts not exceed $2,750,000. Mueller swore in his petition that the amount of his debt owed to the State of Michigan was “unknown,” contending it should not be counted toward his eligibility limit. The Department of Attorney General filed a motion to dismiss in the Las Vegas bankruptcy court, arguing that Mueller had filed in bad faith, with full knowledge by the time of his filing that his debts would far exceed the chapter 13 bankruptcy eligibility limit. 

The court agreed with the Department, and held that sworn statement was not true, as Mueller knew his debt exceeded the eligibility threshold. The court held that Mueller’s refusal to “fully disclose facts that were known” to him was a “fairly transparent” attempt to “manipulate” the law. The court noted that “bankruptcy relief is afforded to honest but unfortunate debtors,” and that in Mueller’s case, the “honest” part of that equation “is key” to why he could not obtain relief. The court concluded that Mr. Mueller’s untrue statements were “the kind of egregious behavior that warrants a finding of bad faith” and dismissed his case. 

This marks the second federal Court to find Mueller using the judiciary in “bad faith” after the U.S. District Court for the Western District of Michigan concluded as much in a ruling to uphold sanctions against Mueller.


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