A federal bankruptcy judge has issued a ruling against former Colorado State football player Shiloh Sanders, denying Sanders’ request to dismiss a complaint filed against him by the trustee overseeing Sanders’ bankruptcy case.
The trustee sued Sanders in October, two years after the son of Colorado coach Deion Sanders filed for bankruptcy in October 2023 to get rid of more than $11 million in debt.
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The trustee accused Shiloh Sanders of violating bankruptcy law by transferring approximately $250,000 without authorization. The lawsuit seeks to recover that money and more, including revenue generated by the university from his name, image and likeness (NIL) that Sanders earned through his businesses, the Big 21 and the Headache Gang.
Sanders’ attorneys responded that the trustee’s lawsuit was misguided and sought to dismiss it. But Judge Michael Romero rejected Sanders’ arguments and allowed the trustee’s lawsuit against Sanders to proceed to trial.
“The court’s role in deciding a motion to dismiss is not to resolve factual disputes or to weigh potential evidence outside the four corners of the complaint,” Judge Michael Romero wrote in the March 4 ruling. “The trustee has sufficiently proven the necessary elements of his claim. He has also supported his claim with sufficient factual allegations, including that of Sanders’ bank account, his zero-yield deposits into the Big 21 account, and Sanders’ claims against Big 21 and the Headache Gang. control. Will this evidence ultimately affect his claim? “Substantiating the trustee’s claim is a question to be decided at trial. “
What is the case against Shiloh Sanders about?
Sanders’ bankruptcy case has multiple parts, including a complaint from trustee David Wadsworth, who was tasked with collecting Sanders’ non-exempt assets for the benefit of Sanders’ creditors.
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The ruling is separate from another key part of Sanders’ bankruptcy litigation, which is set to be heard on Aug. 31 and does not involve a trustee.
The biggest question in the trustee’s lawsuit against Sanders is who owns the funds involved — the bankruptcy estate or Sanders. Sanders’ income before filing for bankruptcy generally belongs to the bankruptcy estate for the benefit of creditors, while income from work after filing for bankruptcy belongs to Sanders.
What does the judge’s ruling against Shiloh Sanders mean?
Sanders’ attorney, Kerry Riley, said in court documents that the money belonged to Sanders because it was “post-petition income.”
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The trustee disputed this and wanted an accounting. The judge essentially said it was an issue to be decided later at trial, rather than a motion to dismiss.
“Determining the true nature of the funds requires the presentation of evidence and the resolution of numerous factual issues,” the judge ruled. “For example, whether the funds were Sanders’s prepetition income will depend on the types of services Sanders provided, the timing of the services provided, and the terms of the contract, if any, that required those services.”
Why did Shiloh Sanders file for bankruptcy?
Shilo, 26, is Deion Sanders’ middle son. He’s not in debt from unpaid loans or overspending on his credit cards. Instead, in 2022, he was hit with a civil court judgment in Dallas that made him liable for $11.89 million, all owed to one man, John Darjean, a former security guard at the Dallas school.
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Darjean sued Sanders in 2016, alleging that Sanders punched and elbowed him in the head and neck at school in 2015, causing serious and permanent injuries to him, when Shiloh was 15 years old. Sanders claimed it was self-defense but did not show up for the 2022 trial, which resulted in a default judgment against him.
Sanders filed for Chapter 7 bankruptcy in 2023 after Darjean began collecting debts. Sanders’ goal is to have the debt discharged in bankruptcy court. But Darjean is fighting that, arguing that the law does not allow him to forgive the debt in this case because it stems from “intentional and malicious” harm.
That’s the question at the trial scheduled for August 31. No trial date has been set for this separate trustee lawsuit.
Shiloh Sanders is currently out of football but has continued to work as an influencer and recently considered acting classes after moving to Miami. He and his brother Shedeur Sanders recently appeared in Paris as fashion models.
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Follow reporter Brent Schrotenboer @Schrotenboer. Email: bschrotenb@usatoday.com
This article originally appeared on USA TODAY: Judge rules against Shiloh Sanders in bankruptcy lawsuit, to go to trial