William A. Broscious, VSB #27436 

Kimberly A. Taylor, VSB #29823 

KEPLEY BROSCIOUS & BIGGS, PLC 

2211 Pump Road 

Richmond, VA 23233 

(757) 636-9826 

(804) 741-6175 (Facsimile) 

 Counsel for the Trustee 

 

IN THE UNITED STATES BANKRUPTCY COURT 

 FOR THE EASTERN DISTRICT OF VIRGINIA 

 Richmond Division 

In re: 

 

DIGITAL INK, INC., and 

CHRISTOPHER DAVID McGINNIS, 

 Case No. 18-30056 KLP 

Chapter 7 

 Debtors. (Jointly Administered) 

________________________________________________________________________ 

HARRY SHAIA, JR., TRUSTEE APN: 18-03098 KLP 

 

Plaintiff, 

v. 

 

BMST, INC., 

 

Defendant. 

AMENDED COMPLAINT TO AVOID TRANSFERS 

AND IMPRESS SUCCESSOR LIABILITY 

Harry Shaia, Jr., in his capacity as Chapter 7 Trustee for the bankruptcy 

estates of Christopher David McGinnis (“McGinnis”) and Digital Ink, Inc. (“DII”), 

by counsel, states as follows for his complaint against BMST, Inc.: 

JURISDICTION AND VENUE

1. On May 31, 2017, McGinnis filed a voluntary petition for relief 

under Chapter 7 of the Bankruptcy Code. 

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2. Harry Shaia, Jr. was appointed as interim Chapter 7 Trustee of 

McGinnis’ case on August 29, 2017, following the resignation of two prior 

interim Trustees, and continues to serve as Trustee. 

3. McGinnis owned 100% of the capital stock of DII. 

4. On January 5, 2018, the Trustee caused DII to file for Chapter 7 

bankruptcy relief. Mr. Shaia has been appointed as interim Chapter 7 Trustee 

for DII’s case and continues to serve as Trustee in that case as well. 

5. The Court ordered these cases to be jointly administered as 

specified in its May 22, 2018 Order. 

6. The Court has jurisdiction over this adversary proceeding under 28 

U.S.C. §§ 157(a) and 1334. This proceeding is a core proceeding within the 

meaning of 28 U.S.C. §§ 157(b)(2). 

7. The predicates for the requested relief are 11 U.S.C. §§ 105(a), 544, 

548 and 550, 28 U.S.C. §§ 2201 and 2202 and applicable state law. 

8. Venue is proper in this Court under 28 U.S.C. §§ 1408 and 1409. 

RELEVANT PARTIES

9. Harry Shaia, Jr. is the duly appointed Chapter 7 Trustee for the 

debtors’ bankruptcy estates. 

10. McGinnis is one of the debtors in this jointly administered 

bankruptcy proceeding. He was the sole owner, officer and director of DII and 

now works at BMST. 

11. DII is one of the debtors in this jointly administered bankruptcy 

proceeding and is a Virginia corporation whose corporate status was 

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automatically terminated by the State Corporation Commission in April of 

2016. It was a printing business, specialized in political printing and operated 

under the name “Think Print.” 

12. BMST, Inc. is a Virginia corporation that was formed to acquire the 

assets and business of DII. It is a printing business, specializing in political 

printing and operating under the name “Think Print.” 

13. Mark Beltrami is a Virginia resident and an owner, officer and 

director of BMST. 

14. Gabrielle Ragland (“Ragland”) is a Virginia resident who has lived 

with McGinnis since 2014. She worked at DII and now works at BMST. 

NATURE OF THE CASE

15. This case involves a debtor, desperate to avoid support obligations 

from a protracted and contentious divorce, who concocted a scheme with his 

gym buddy to move his business out of his wife’s and other creditors’ reach 

until after the dust clears from the debtor’s divorce and bankruptcy 

proceedings. The company they formed for this purpose should now bear all 

the liabilities the debtor sought to avoid, both his individual debt and the debt 

of the sham company through which he had operated. 

FACTUAL ALLEGATIONS

MCGINNIS AND HIS SHAM COMPANY – DIGITAL INK, INC. 

16. McGinnis formed DII in December 2001 and elected C corporation 

status for federal tax purposes. 

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17. On his 2014 and 2015 federal income tax returns, McGinnis 

reported his income from DII under Schedule C, which is used to report 

business income and expenses from a sole proprietorship. He reported neither 

wages (from a C corporation) nor Schedule E income (from a pass-through 

entity). 

18. From the beginning, McGinnis operated DII as a sole 

proprietorship, treating company funds as if they were his personal funds. 

19. He used DII funds to pay for the construction and furnishing of his 

house, as well as for groceries, clothing, jewelry, hotel stays and personal 

entertainments and pleasures. 

20. From at least the middle of 2012, McGinnis withdrew large 

amounts of cash from DII. 

21. He used company funds to pay for bail and a criminal attorney for 

one of his girlfriends. 

22. He regularly cashed company checks, some for thousands of 

dollars, at the Club Rouge strip club. 

23. McGinnis’s personal bankruptcy schedules identify a substantial 

number of creditors to whom he owed “business debt.” He does not list DII as 

a co-debtor on any of the debt. 

24. When the Trustee caused DII to file for Chapter 7 bankruptcy relief 

he used Mr. McGinnis’ personal schedules to identify DII’s creditors because 

DII did not produce business records. 

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25. McGinnis verified the accuracy of DII’s schedules under oath at a 

341 meeting. 

THE LIABILITIES MCGINNIS SOUGHT TO AVOID

26. DII’s revenues fluctuated with the political seasons. The company 

made over a million dollars during presidential election years. The mid-term 

Congressional election seasons were also very profitable. During off years, 

however, DII operated on much tighter margins. 

27. At the end of 2012, DII’s financial condition began to deteriorate 

into insolvency. 

28. With the close of the political season, DII owed its paper supplier a 

significant sum of money. Rather than use the revenues from the presidential 

election season to pay trade debt incurred during that season, McGinnis took 

$400,000 out of the company for his own personal use. 

29. As a result of McGinnis’ large cash withdrawal, DII was unable to 

pay its debts as they became due during the off season. DII’s financial 

condition never recovered. 

30. Around the same time, McGinnis’ marriage failed; he and his wife 

formally separated in June 2013 and filed for divorce. Their hotly contested 

divorce proceeding lasted five years and, upon information and belief, the 

custody and support disputes continue. 

31. McGinnis wanted to reduce drastically the court ordered support 

and payment obligations because it impinged on his playboy lifestyle. 

McGinnis was living with Ragland, supporting her and her child. He was 

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making extravagant expenditures at Club Rouge. He also purchased a car, 

expensive jewelry and clothing for a different girlfriend. 

32. To reduce his support obligation and avoid the mounting debts at 

DII while retaining the anticipated revenue of the upcoming presidential 

election season, McGinnis concocted a scheme with his friend Beltrami to 

reduce his evident income and transfer the anticipated profits out of his exwife’s and creditors’ reaches. 

BMST’S ACQUISITION OF DII’S BUSINESS

33. McGinnis met Beltrami at the gym they both frequented and they 

became good friends. 

34. On information and belief, McGinnis confided in Beltrami about 

his marital and financial difficulties. McGinnis also told Beltrami about the 

cyclical nature of DII’s business and the large profits anticipated to be made in 

the upcoming presidential election season. 

35. In September of 2015, Beltrami and McGinnis began to structure a 

transaction that they believed would accomplish McGinnis’ twin goals of 

reducing his evident income and removing anticipated profits from the reach of 

his ex-wife and other creditors. 

36. On October 30, 2015, Beltrami formed BMST, Inc., a Virginia stock 

corporation. 

37. The initial directors of BMST were Beltrami, McGinnis, Tracy 

Salyer and Robert Thompson. 

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38. In January 2016, BMST purchased the assets and business 

operations of DII in a transaction that has no documentation, not even a bill of 

sale. 

39. McGinnis testified that BMST purchased DII’s assets for pennies 

on the dollar. The purchase price was determined by the amount that Beltrami 

could negotiate with certain key creditors of DII and McGinnis: the secured 

creditors, a creditor that had a judgment lien against McGinnis, and a creditor 

that was pressing criminal charges against McGinnis for passing a bad check. 

40. DII’s assets were not purchased through an Article 9 sale. 

41. The only document even tangentially evidencing the transaction 

relates to a $1,250,000 loan from EVB to BMST on January 6, 2018. The 

Disbursement Request and Authorization for the loan reveal that BMST paid 

$1,241,401.28 to or for the benefit of DII. 

42. DII’s business transferred seamlessly and imperceptibly to BMST. 

The business was operated in the same place, under the same trade name, 

with the same employees and customers and with McGinnis still at the helm. 

43. McGinnis and Beltrami structured the transaction in such a way 

to preserve the business for McGinnis until after his divorce became final and 

hopefully the dust cleared from his and DII’s bankruptcy cases. McGinnis was 

required to run the company in the interim, and the investors would reap the 

profits from the 2016 presidential election season. Afterward, McGinnis had 

the right to reclaim the company. 

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44. McGinnis and BMST, through Beltrami, entered into a very 

unusual employment agreement. The five-year agreement provides that 

McGinnis will pay BMST liquidated damages on a sliding scale from $750,000 

to $100,000 if he terminates his employment before the end of the term. The 

agreement also gives McGinnis the right of first refusal to purchase the 

company’s capital stock at the end of the five-year term. 

45. In its first year of operation, BMST’s gross revenues were in excess 

of $9 million and its net revenues exceeded $1.4 million. In the absence of the 

transfer of DII’s business to BMST, that revenue would have been available to 

pay DII’s and McGinnis’ joint creditors. 

46. McGinnis and Beltrami also structured the transaction in such a 

way as to artificially suppress McGinnis’ income during the pendency of his 

divorce. He would have a salary of $150,000 and the company would pay 

directly to McGinnis the cost of his children’s health insurance. 

47. To further disguise his real income, BMST treated McGinnis as a 

1099 contractor. McGinnis asked Beltrami to do so until his divorce was final, 

at which time he would become a W-2 employee. BMST issued McGinnis a W2 for the 2016 tax year in the amount of $18,750. The bulk of McGinnis’ 

income was either reported as 1099 income or paid by BMST directly to third 

parties on McGinnis’ behalf. 

48. Beltrami has allowed McGinnis to use BMST funds the way he 

used DII’s funds – as his personal bank account. McGinnis pays his monthly 

support obligations with a company check. McGinnis also regularly uses the 

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company’s checks to pay obligations he owes to third parties and to purchase 

goods and services for his own personal use. 

49. BMST even provides McGinnis with a credit card and a truck and 

pays for his gas. 

RAGLAND ACCOUNT

50. Around the time of the transaction with BMST, McGinnis stopped 

maintaining a bank account in his own name in order to prevent creditors from 

being able to garnish his accounts. 

51. On February 2, 2016, Ragland opened a checking account at EVB 

in her name (the “Account”). McGinnis’ name was not on the Account. 

52. The Account was solely for McGinnis’ use – all amounts deposited 

into and withdrawn from the account were McGinnis’ funds. 

53. As of the day McGinnis filed for bankruptcy protection, Ragland 

had helped McGinnis shelter $157,438.03 of his funds through use of the 

Account. 

54. Further aiding McGinnis’ efforts to hinder, delay or defraud his 

creditors, BMST deposited some of McGinnis’ compensation directly into the 

Account. 

OTHER TRANSACTIONS

55. McGinnis failed to pay the mortgages on the marital residence, 

causing the residence to be sold at foreclosure. 

56. The house for which McGinnis paid $800,000 in 2005 was sold to 

one of the principals of BMST for $445,000. 

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57. McGinnis and Ragland now reside in a property purchased for that 

purpose by BST Holdings LLC, which is owned by Beltrami and the other 

principals of BMST. 

CLAIMS FOR RELIEF

COUNT I 

AVOIDANCE OF FRAUDULENT TRANSFERS

11 U.S.C. §§ 544(b) AND 550 AND VA. CODE §55-80 

58. As detailed above, McGinnis transferred assets belonging to him 

and/or DII to BMST including, but not limited to, the going concern of DII. 

59. With the knowing and intentional assistance of BMST, McGinnis 

made those transfers with the actual intent to hinder, delay or defraud his and 

DII’s creditors. 

60. As a result of the transfers, McGinnis’ and DII’s creditors 

sustained significant damages, to be measured by the difference between the 

going concern value of DII and the price paid for the assets. 

61. The transfers are avoidable and recoverable from BMST pursuant 

to 11 U.S.C. §§ 544(b) and 550 and Va. Code §55-80. 

COUNT II 

AVOIDANCE OF FRAUDULENT TRANSFERS

11 U.S.C. §§ 548(a)(1)(A) AND 550 

62. As detailed above, McGinnis transferred assets belonging to him 

and/or DII to BMST including, but not limited to, the going concern of DII. 

63. With the knowing and intentional assistance of BMST, McGinnis 

made those transfers with the actual intent to hinder, delay or defraud his and 

DII’s creditors. 

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64. As a result of the transfers, McGinnis’ and DII’s creditors 

sustained significant damages, to be measured by the difference between the 

going concern value of DII and the price paid for the assets. 

65. The transfers are avoidable and recoverable from BMST pursuant 

to 11 U.S.C. §§ 548(a)(1)(A) and 550. 

COUNT III 

AVOIDANCE OF FRAUDULENT TRANSFERS

11 U.S.C. §§ 548(a)(1)(B) AND 550 

66. As detailed above, McGinnis transferred assets belonging to him 

and/or DII to BMST including, but not limited to, the going concern of DII. 

67. Neither McGinnis nor DII received reasonably equivalent value in 

exchange for the transfers. 

68. The transfers either were made at a time when McGinnis and DII 

were insolvent or caused their insolvency. 

69. As a result of the transfers, McGinnis’ and DII’s creditors 

sustained significant damages, to be measured by the difference between the 

going concern value of DII and the price paid for the assets. 

70. The transfers are avoidable and recoverable from BMST pursuant 

to 11 U.S.C. §§ § 548(a)(1)(B) and 550. 

COUNT IV 

SUCCESSOR LIABILITY OF BMST FOR DII’S DEBTS

71. The actual intent underlying the transfer of DII’s going concern to 

BMST was to hinder, delay or defraud DII’s and McGinnis’ creditors. 

72. McGinnis transferred the ongoing business of DII to a company set 

up by his close friend. 

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73. BMST purchased DII’s ongoing business for pennies on the dollar. 

74. Beltrami and McGinnis structured the transaction in an unusual 

manner designed to allow McGinnis to reclaim his ongoing business after the 

dust settled from his divorce and bankruptcy proceedings. 

75. McGinnis continues to run the business and has the right to 

reclaim ownership. 

76. BMST allows McGinnis to use company funds to pay for personal 

goods and services. 

77. The transfer left DII with no assets and insolvent. 

78. Because the sale of DII’s assets and ongoing business to BMST was 

fraudulent in fact, BMST is liable for DII’s debts as DII’s successor. 

79. Pursuant to 28 U.S.C. §§ 2201 and 2202, this Court should 

declare BMST to be DII’s successor and enter judgment against BMST in the 

amount of DII’s allowed claims. 

RELIEF REQUESTED

WHEREFORE, Harry Shaia, Jr., Trustee, respectfully requests that this 

Court, in addition to granting such further relief as this Court deems 

appropriate, enter: 

(i) On Counts I through III, judgment against BMST, Inc. in the 

amount of the difference between the going concern value of DII 

and the price paid for DII’s assets, as will be proven at trial; and 

(ii) On Count IV, judgment against BMST, Inc., as successor to DII, in 

the amount of the allowed claims of DII. 

 

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HARRY SHAIA, JR., TRUSTEE 

 

 /s/ Kimberly A. Taylor 

 By____________________________________ 

 Counsel 

Kimberly Ann Taylor, VSB #29823 

William A. Broscious, VSB #27436 

Counsel for the Trustee 

Kepley Broscious & Biggs, PLC 

2211 Pump Road 

Richmond, VA 23233 

Phone: (757) 636-9826 

Fax: (804) 741-6175 

ktaylor@kbbplc.com

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