Dhaliwal first denied the relationship, saying he and Singh were friends, but later [image-nocss] confirmed that his father and Singh's grandmother are brother and sister. Dhaliwal denied any improprieties in the sale. "If you start with Adam and Eve, you and I are related," he said.
In a motion filed in federal court, Dhaliwal's attorneys said, "The purchaser is unrelated to any of the debtors or any insider evidence that any party was denied information about the property, or that there was fraud or collusion." Bankruptcy codes define a relative as extending out three generations.
A hearing to finalize the salepart of the bankruptcy case Dhaliwal's company, Bulk Petroleum, filed in February 2009was held yesterday, said the report.
The 66 stations sold for $11 million on February 17 to Singh's company, Convenience Stores Leasing & Management. The company was first registered with the Wisconsin Department of Financial Institutions in January. Singh owns other gas stations in the area, the report added.
The purchase agreement calls for Singh to use Bulk Petroleum as the supplier of fuel for all the stations for five years. Under Bulk Petroleum's proposed reorganization, Dhaliwal would be president of the company but a minority owner. Singh will pay the wholesale rack rate for the fuel plus 2.1 cents per gallon, according to the documents cited by the paper.
An alternate bid of $11.25 million by another prospective buyer, which did not include the gasoline supply agreement, was rejected, said the report. Documents do not indicate who made the alternate bid.
"I feel that some very unethical and perhaps worse events took place and that I was duped into attending nothing more than a choreographed fraud," Jess Thompson of Lawrenceburg, Ky., wrote in a March 2 letter to U.S. Bankruptcy Judge Susan Kelley. "It's abundantly clear this auction was perfectly angled to benefit Bulk Petroleum and defraud the various financial institutions involved of millions."
Another potential buyer, Jon Sterling, wrote to the judge complaining that the auction was "rigged from the get-go! Myself and many others wasted thousands of dollars in Phase I environmental studies, gas tank testing, travel and other due diligence proceedings."
Sterling, of Florida, and others complained that the auction, which began early in the day February 17, ran until nearly 4:00 a.m. the next day. The stations were being auctioned individually with winners being declared. Singh then showed up late in the evening and offered to buy everything, they said. The losing bidders felt their offers were improperly voided.
Singh, when reached by phone on Monday, declined to comment to the Journal Sentinel.
Hilco, a Chicago-based real-estate firm, marketed the properties and held the auction. Representatives from the company did not return phone calls from the paper.
Hilco performed "desktop appraisals" on the properties in late 2009 and concluded they were valued at an estimated $16 million to $26 million, according to the court documents cited by the paper.
Bulk's largest creditors, including Amcore Bank and Summit Credit Union, formerly named Great Wisconsin Credit Union, collectively contend that Bulk and its affiliated companies owe them about $61 million, the report said.
Dhaliwal said that he and Singh see each other socially once every few months and that they traveled to India together about two years ago when Dhaliwal's mother died. He said he did not finance Singh's purchase of the stations or prearrange the sale. "If any of this was true I would admit it," Dhaliwal said.
Officials with the U.S. Trustee Program, which is involved with the bankruptcy proceedings, did not return calls Monday, said the report.
Dhaliwal has deep political ties and has given to Republicans and Democrats in city, county, state and federal office. In 2007, he pledged to raise $1 million for former Governor Tommy Thompson in his bid for the presidency. Dhaliwal never paid as Thompson's candidacy fizzled. Thompson's son, Jason Thompson, worked for Dhaliwal before joining a Milwaukee law firm, said the report.
Dhaliwal's financial problems resonate beyond the petroleum business, the Journal Sentinel added. In 2006, he promised to make a $2.5 million donation to Cardinal Stritch University. Officials at Stritch said some money was received, but not the full amount. The same year, Dhaliwal pledged $4.5 million to the University of Wisconsin-Parkside to expand its communication arts building. He has not paid anything on that promise, the report said, since 2006, when he gave $450,000.
In 2008, Dhaliwal was sued by BP in federal court on allegations of swindling customers out of brand-name gasoline at as many as 120 stations nationwide, said the report. The lawsuit alleged he was charging brand-name prices for gasoline not formulated with the promised protectants and detergents designed to extend the life of vehicles. A settlement was under negotiation when Bulk Petroleum went into bankruptcy in February 2009.
(Click here for previous CSP Daily News coverage.)
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