UNITED STATES BANKRUPTCY COURT 

 FOR THE EASTERN DISTRICT OF VIRGINIA 

Alexandria Division 

In re: 

Tigist Kebede 

Debtor. 

Case No. 18-12086-KHK 

Chapter 11 

MEMORANDUM OPINION 

This matter was before the Court on December 15, 2022, for a hearing on the Court’s Order 

To Show Cause why Fox & Associates Partners, Inc. T/A Tranzon (“Tranzon Fox” or “Tranzon”) 

and Bryan Ross, a chapter 7 panel trustee in the District of Columbia, should not be sanctioned in 

connection with an undisclosed referral arrangement between the two. That arrangement resulted 

in undisclosed fees being paid to Mr. Ross in a number of bankruptcy cases in D.C, Maryland and 

Virginia. Doc. No. 203 - Show Cause Order. Mr. Ross, Tranzon Fox and the Office of the United 

States Trustee submitted briefs on the matter. Doc. No. 205 - Ross Brief; Doc. No. 204 - Tranzon 

Brief; Doc. No. 210 – U. S. Trustee Brief. At the hearing the Court dismissed the show cause 

against Tranzon in deference to the Settlement Agreement described below that had previously 

been reached between the U.S. Trustee and Tranzon. Additionally, Mr. Ross offered to disgorge 

his fees. For the reasons that follow, the Court will accept Mr. Ross’ offer of disgorgement as a 

sanction in this matter, as it is the only meaningful remedy to the inexcusable nondisclosure and 

fee sharing in this case. 

Background 

 On July 20, 2022, Judge Elizabeth Gunn, Chief Judge of the United States Bankruptcy 

Court for the District of Columbia, entered an order in Case No. 20-00302-ELG (the “D.C. Case”) 

approving a Settlement Agreement between the Acting United States Trustee for Region Four and 

Tranzon Fox. The Settlement related to certain inadequate disclosures by Tranzon Fox in 

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connection with its retention in various bankruptcy cases throughout D.C., Maryland and Virginia. 

(D.C. Case, Doc. No. 84-2, p. 6).1

 During an investigation into Tranzon Fox’s retention as an 

auctioneer in the D.C. case, the U.S. Trustee became aware of an undisclosed informal referral 

agreement between Tranzon Fox and Mr. Ross dating back to 2013 whereby Tranzon Fox agreed 

to pay Ross as much as 22.5% of any commission (net of expenses) that Tranzon Fox received as 

a result of a transaction referred to Tranzon Fox by Mr. Ross. The Settlement released claims by 

the U.S. Trustee against Tranzon Fox relating to the failure to disclose the arrangement between 

Ross and Tranzon Fox, but specifically excluded Mr. Ross from that release. 

 The Settlement, among other things, indicates that Mr. Ross made referrals to Tranzon Fox 

in the above-captioned case and that the financial arrangement between the two was not disclosed. 

Following entry of Judge Gunn’s Order approving the Settlement in the D.C. Case, this Court 

reopened the above-captioned case to determine whether Tranzon and Mr. Ross should be 

sanctioned for their failure to disclose the referral arrangement. After a status hearing the Court 

entered the Show Cause Order. 

Findings of Fact 

 

On June 13, 2018, Tigiste Kebede (the “Debtor”) filed a petition under chapter 11 of the 

Bankruptcy Code. Doc. No. 1. Thereafter, the Court approved the Debtor’s Application to Employ 

Counsel. Doc. No. 25. On July 28, 2019, the Debtor filed the Application to Employ Tranzon as 

1

 In addition to the case at bar, Tranzon and Mr. Ross failed to disclose their referral arrangement in the following 

other cases: Impulse, LLC, Case No. 13-00791 (Bankr. D.D.C.); 2412 Group, Inc., Case No. 15-00073 (Bankr. 

D.D.C.); Lisa Shaw, Case No. 17-00225 (Bankr. D.D.C.); Harriet Whitney Home for Senior Citizens, Case No. 19-

00745 (Bankr. D.D.C.); 4915 Quarles St. LLC, Case No. 20-00497 (Bankr. D.D.C.); James G. Sasscer, Jr., Case No. 

06-13476 (Bankr. D. Md.); Peter Charles Gems & Madonna K. Gems, Case No. 08-21179 (Bankr. D. Md.); Daniel 

Fields, Jr., Case No. 13-27190 (Bankr. D. Md.); Stanley Green, Case No. 13-30317 (Bankr. D. Md.); Risikat Shola 

Balogun, Case No. 14-11119 (Bankr. D. Md.); Larry A. Rollins, Case No. 14-16757 (Bankr. D. Md.); Catalyst Group 

Limited Partnership, Case No. 14-20624 (Bankr. D. Md.); Detrick Leggett & Renee Haynes, Case No. 15-15390 

(Bankr. D. Md.); James I. Williams, Case No. 16-13764 (Bankr. D. Md.); SMWS Group, LLC, Case No. 19-12941 

(Bankr. D. Md.); Madelyn E. Miles, Case No. 19-19729 (Bankr. D. Md.). D.C. Case, Doc. No. 84-2, p. 6. 

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Realtor to assist in selling her real property located at 5808 14th Street, NW, Washington, D.C. 

20011. Doc. No. 83 - Employment Application (the “Employment Application”). The 

Employment Application disclosed that the Debtor would pay the realtor a seven percent (7%) 

commission on the purchase price of the Property but made no mention of Mr. Ross’s involvement. 

Doc. No. 83, p. 2. In his verified statement attached to the Employment Application, Jeffrey Stein, 

a partner of Tranzon Fox, declared the following under penalty of perjury: 

“Neither I nor Tranzon Fox have any connection with, the Debtor, the creditors, 

other parties in interest, their attorneys or accountants, the United States Trustee or 

anyone employed by the United States Trustee.” 

Doc. No. 83-2 (the “Verified Statement”). That Employment Application did not disclose Bryan 

Ross’ involvement and that he would receive a fee from the transaction. 2 When the real property 

was ultimately sold, neither the Motion to Approve Sale nor the Report of Sale disclosed that Mr. 

Ross would receive a fee. See Doc. No. 113 and Doc. No. 136. 

 Mr. Ross has maintained an ongoing informal relationship with Tranzon for the past nine 

years whereby he would contact Debtor’s counsel in new chapter 11 cases in Virginia, Maryland 

and the District of Columbia and recommend the use of Tranzon’s services. See Doc. No. 205, p. 

3. If Tranzon was retained in the case, Mr. Ross would “remain involved in the sales process until 

completion of the auction.” Id. For his services, Mr. Ross would receive a “consulting fee” which 

was a percentage of any commission received by Tranzon. According to Mr. Ross, the consulting 

fee was paid out of Tranzon’s compensation, which was paid from a buyer’s premium—an amount 

2

 As noted by Mr. Ross in his Brief, 

For the past forty-two years, Ross has served on the panel of trustees maintained by the Office of 

the United States Trustee in the District of Columbia. Over that time period, he has acted as a trustee 

in hundreds of cases filed in the District of Columbia under Chapter 7 of the Bankruptcy Code. 

Doc. No. 205, p. 2. 

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consisting of 10% of the purchase price added to the high bid and included in the amount the buyer 

paid to the seller. Mr. Ross asserts in his Brief that he “played no role in the preparation or filing 

of the Employment Application or the Verified Statement, and he did not receive a copy of either 

document for review prior to their filing. Doc. No. 205, p. 4. However, it appears that statement 

is not true. 

Mr. Ross’s emails to Mr. Stein at Tranzon and to Debtor’s counsel in this case indicate that 

Mr. Ross participated in the drafting of the Employment Application. See Doc. No. 210, p. 3. 

(“...I thought it would save time if we put together a draft for Jeff Sherman to review and sign...”). 

Id. (“To speed things up Jeff Stein and I drafted an application, notice and order to retain 

Tranzon”); Doc. No. 210, Exhibits A, B and C. Contrary to Mr. Ross’ claim that he played no role 

in the preparation or filing of the Employment Application, he participated in drafting it and then 

shepherded it to approval, and ultimately to completion of the contemplated auction. Doc. No. 

210, Exhibits D, E and L. Mr. Ross even provided advice on how to address the U.S. Trustee’s 

objection to the Employment Application. Doc. No. 210, Exhibits F, G, H and I. 

 Mr. Ross ultimately earned $9,150 in connection with the sale. Doc. No. 205, p. 7. 

Following the sale, the unsecured creditors in the case were paid back in full and the Debtor 

received a surplus from the estate. 

 At the Show Cause Hearing, Mr. Ross appeared and offered to disgorge the consulting fee 

he received in connection with this case. 

Conclusions of Law 

The Court has jurisdiction over this matter under 28 U.S.C. § 1334 and the Order of 

Reference entered by the District Court for this District on August 15, 1984. This is a core 

proceeding under 28 U.S.C. § 157(b)(2)(A). 

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1. Nondisclosure of the Referral Arrangement 

Section 327 of the Bankruptcy Code allows a debtor in possession, with court approval, to 

employ professionals that do not hold or represent an interest adverse to the estate. 11 U.S.C. § 

327(a). Federal Rule of Bankruptcy Procedure 2014 governs the employment application process 

and requires as follows: 

The application shall state the specific facts showing the necessity for the 

employment, the name of the person to be employed, the reasons for the selection, 

the professional services to be rendered, any proposed arrangement for 

compensation, and, to the best of the applicant's knowledge, all of the person's 

connections with the debtor, creditors, any other party in interest, their respective 

attorneys and accountants, the United States trustee, or any person employed in the 

office of the United States trustee. The application shall be accompanied by a 

verified statement of the person to be employed setting forth the person's 

connections with the debtor, creditors, any other party in interest, their respective 

attorneys and accountants, the United States trustee, or any person employed in the 

office of the United States trustee.. 

Fed. R. Bankr. P. 2014(a). At the core of the bankruptcy process is disclosure and transparency. 

While Mr. Ross may claim that the disclosure obligation belongs to Tranzon and not to him, the 

Court is not persuaded by this argument based on the facts in this case. First, Mr. Ross actually 

drafted the Employment Application and even offered advice regarding objections to it. Second, 

by drafting but not signing the Employment Application and offering advice on the document and 

the sale process while simultaneously choosing not to appear as an attorney of record in the case 

(i.e., ghostwriting), Mr. Ross violated Federal Rule of Bankruptcy Procedure 9011. As Judge 

Robert A. Gordon, U.S. Bankruptcy Judge for the District of Maryland observed in In re 

Dreamplay, Inc., 

Rule 9011 provides that every paper filed in a bankruptcy case, “shall be 

signed by at least one attorney of record in the attorney's individual name. 

A party who is not represented by an attorney shall sign all papers. Each 

paper shall state the signer's address and telephone number....” FED. R. 

BANKR. P. 9011(a). The Rule's express language underscores its primary 

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purpose: to insure that a paper's author take responsibility for what the paper 

says and to hold the author accountable for statements made within the 

paper's four comers. 

In re Dreamplay, Inc., 534 B.R. 106, 119 (Bankr. D. Md. 2015)3

. While the Court will not enter 

sanctions under Rule 9011, Mr. Ross’ violation of that Rule, combined with his patently untrue 

response to the Show Cause Order underscores why he should not be able to escape liability for 

his nondisclosure when he should have signed the document in the first place. The Court finds 

that Mr. Ross’ extensive experience as a bankruptcy attorney and panel trustee further underscores 

why this Court must hold him accountable. 

2. Impermissible Fee Sharing 

Subject to exceptions that do not apply in this case, section 504 of the Bankruptcy Code 

provides in relevant part that, 

a person receiving compensation or reimbursement under section 503(b)(2) 

or 503(b)(4) of this title may not share or agree to share— 

(1) any such compensation or reimbursement with another person; 

or 

(2) any compensation or reimbursement received by another person 

under such sections. 

11 U.S.C. § 504(a).4

 Seeking to avoid liability under section 504, Mr. Ross argues that the 

compensation terms of the Tranzon retention were approved under section 328, that his fees 

ultimately were not paid from estate property and that based on the foregoing, the fee is not subject 

to the prohibition on fee sharing in section 504. Mr. Ross argues that section 504’s cross reference 

to administrative expense claims inherently limits section 504’s applicability to compensation 

3

 While the Dreamplay case involved a ghostwriter avoiding bar admission and pro hac vice requirements for the 

relevant court and engaged in the unauthorized practice of law, the Court finds that Dreamplay’s reasoning equally 

applies to a ghostwriter who avoids the disclosure requirements under Federal Rule of Bankruptcy Procedure 2014. 

4

 Mr. Ross is not a partner or associate of Tranzon (504(b)(1)), is not an involuntary petitioning creditor’s attorney 

(503(b)(2)) and is not a participant in a bona fide public service attorney referral program (504(c)). 

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approved under section 330 that is paid out of the estate. In short, he argues that because the 

commission was derived from a “buyer’s premium” those funds were not property of the 

bankruptcy estate. The Court finds these arguments unpersuasive. 

 Mr. Ross appears to conflate the “approval” of fees with the “payment” of fees to 

professionals. First, his reliance on section 328 which requires that fees be reasonable is 

misplaced. It cannot be confused with section 327, which controls the employment of 

professionals. In fact, the Order approving Tranzon’s employment specifically states that the 

Employment Application is approved under 11 U.S.C. § 327(a) rather than section 328. Second, 

approval of payment of fees to professionals is controlled by section 330. This section contains 

no restrictions on the source of the funds from which fees may be paid. Moreover, the applicability 

of section 504, which addresses fee sharing, is not limited to property of the estate, so Mr. Ross’ 

argument that the source of his portion of the commission - the buyer’s premium – places the 

payment outside the constraints of this Section is simply incorrect. While section 504 specifically 

lays out express exceptions in subsections (b) and (c) that are not applicable here, it contains no 

carve out for payments that are not made from property of the estate. It would be improper for this 

Court to read in language that simply does not exist in the statute. As a result, the Court is left 

with the inescapable conclusion that the referral arrangement violated section 504 because a 

person, Tranzon in this case, received compensation under section 503(b)(2) as compensation paid 

under section 330, and that compensation was shared with another person, Mr. Ross. 

 Given Mr. Ross’ extensive experience as a bankruptcy attorney and over 40-years of 

experience as a panel trustee, the Court is disturbed by his behavior in this case. As previously 

stated, the Court is concerned by Mr. Ross’ lapse in professional judgment in ghostwriting and 

advising on an employment application without signing it, thereby avoiding disclosure obligations 

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that are intended to protect the integrity of the bankruptcy system. This is in addition to his flagrant 

violation of the Bankruptcy Code’s prohibition on fee sharing. Adding insult to injury, when 

seeking to avoid liability under this Court’s Show Cause Order, Mr. Ross misrepresented his 

involvement in the filing of legal documents in this case, claiming he was not involved and that he 

had not seen the documents prior to filing, when he actually drafted them and continued to provide 

advice to Debtor’s counsel and Tranzon throughout the sale process. The Court now turns to the 

appropriate sanction. 

Sanctions 

A bankruptcy court is given wide latitude in fashioning an appropriate sanction for 

unethical behavior, including the disgorgement of fees. In re Soulisak, 227 B.R. 77, 82 (Bankr. 

E.D. Va. 1998). As recognized by courts in the Fourth Circuit and elsewhere, “the presumptive 

remedy” for a violation of section 504 “is denial or disgorgement of compensation.” In re Waters, 

634 B.R. 478, 495 (Bankr. D.S.C. 2021). 

The only remaining issue is what sanction would be the appropriate to impose for the 

violation of section 504 and Mr. Ross’ failure to disclose, had Mr. Ross not offered to disgorge the 

$9,150 consulting fee he collected. In this case, the net proceeds of sale were more than sufficient 

to pay all unsecured creditors in full, and the remaining surplus was turned over to the Debtor so 

the estate was not directly harmed by the referral arrangement. However, based on Mr. Ross’ 

failures to disclose the referral arrangement, his violation of the fee sharing prohibition and the 

misrepresentations regarding his involvement in the Employment Application, the Court finds that 

disgorgement is appropriate in this case. Therefore, those fees will be disgorged and paid to the 

Debtor, Tigist Kebede. 

A separate order will issue. 

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Date: __________________ ______________________________ 

Alexandria, Virginia Klinette H. Kindred 

 United States Bankruptcy Judge 

Copies to: 

Steven H. Greenfeld 

Cohen Baldinger & Greenfeld, LLC 

2600 Tower Oaks Blvd., Suite 290 

Rockville, MD 20852 

Counsel for Debtor 

Robert M. Marino, Esq. 

REDMON, PEYTON & BRASWELL, LLP 

510 King Street, Suite 301 

Alexandria, Virginia 22314-3143 

Counsel for Bryan S. Ross 

Christopher A. Jones 

Alexandra G. DeSimone 

WHITEFORD, TAYLOR & PRESTON, L.L.P. 

3190 Fairview Park Drive, Suite 800 

Falls Church, Virginia 

Counsel for Fox & Associates Partners, Inc. T/A Tranzon Fox 

Kristen S. Eustis

Trial Attorney 

Office of United States Trustee 

1725 Duke Street, Suite 650 

Alexandria, VA 22314 

May 2 2023 /s/ Klinette H Kindred

Entered On Docket: May 2, 2023

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