Las Vegas Developer Has Coercive Sentence Tossed

CARSON CITY (CN) - The Nevada Supreme Court has overturned the sentence of a Las Vegas developer who allegedly initiated a "sham" divorce to avoid repaying creditors $500 million.

It was erroneous for the Clark County District Court to hold developer William Plise in contempt and jail for 21 days with the option to fully participate in a debtor examination, according to the June 25 decision.

Plise started his own construction firm at age 18 and eventually developed more than 5 million square feet of property in Las Vegas. Southwest Contractor in 2007 named him Developer of the Year.

However, his fortunes soured as the economy took a downturn during the Great Recession. As a result of the financial crisis, a $2 billion development project fell through, and Plise eventually became liable for more than $500 million in debt.

He also went through a divorce in 2008, but his creditors, including Lennar subsidiary CML-NV, dismissed the breakup as a "sham" and claimed Plise divorced his wife strictly to hide his assets.

"The only reason Tenille, Plise's ex-wife, would assist with this scheme is because her divorce from Plise was not bona fide and, at the very least, the transfer of property through the divorce was a fraudulent transfer," CML-NV attorney Rodney Jean told the court.

CML-NV tried to collect on an $18.9 million judgment against Plise, but he kept skipping his debtor examination hearings, the Review Journal reported.

In August 2010, the Clark County District Court entered a $16 million judgment against Plise and in favor of Eliot Alper, who then obtained an order to examine the developer's finances to determine his ability to pay the judgment.

But Plise didn't show for the first examination hearing, resulting in a court order demanding he show up for the next hearing, according to the state Supreme Court opinion by Justice James Hardesty.

When Plise finally showed up, he did not bring documents he was ordered to produce.

Instead, he asserted his Fifth Amendment rights during the examination, Hardesty wrote.

Plise then skipped another examination hearing, which led to Alper filing a motion for contempt. Plise filed for bankruptcy two days before the contempt hearing, but the bankruptcy court agreed to allow that proceeding to go forward.

Plise argued the statue of limitations had expired on any potential criminal contempt, but the district court disagreed, found him guilty and sentenced him to 21 days in jail with the provision that he could "purge his contempt and be released from confinement if he fully participated in a judgment debtor examination," Hardesty wrote.

But therein lay the problem with the sentence, the Nevada Supreme Court held.

Plise's jailing was a "criminal sanction," but when the court gave him the "opportunity to purge the imprisonment, it put a civil remedy in the place of the punishment," Hardesty said.

"This opportunity to purge is coercive, as it provides Plise an option to avoid incarceration or obtain early release if he submits to the examination," Hardesty wrote.

The Nevada Supreme Court also ruled the district court exceeded the authority granted by the bankruptcy court, and ordered the district court to vacate its contempt ruling against Plise and his jail term.

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