Bankrupt Gambling Addict Told: You still owe us $65 million

Fry's Electronics to Omar Siddiqui: You still owe us $65 million
By Lisa Fernandez

Fry's Electronics filed a complaint Monday, hoping to convince a bankruptcy judge that its now disgraced former vice president of marketing shouldn't be let off the hook for owing the San Jose-based company more than $65 million.

That's the amount the Internal Revenue Service first accused Ausaf "Omar" Siddiqui of Palo Alto in 2008 of embezzling from Fry's as part of an elaborate kickback scheme.

Siddiqui filed for bankruptcy in July, listing $137 million in debt, much of it gambling debt to casinos.

Many debts can be wiped clean in a bankruptcy, but the law also allows some debts to remain, including those acquired in an "offensive" manner, such as stealing.

A 25-page complaint filed by Fry's attorney James Wood of Lafayette asks a San Jose federal bankruptcy judge not to discharge the amount Siddiqui owes the company, headquartered on Brokaw Road in San Jose. It accuses Siddiqui of "willfully and knowingly" breaching his duties as a company executive.

This week, the Palms casino resort in Las Vegas filed a similar complaint, totaling about $2.5 million, based on a bad check Siddiqui wrote the casino in 2008.

Siddiqui pleaded guilty in February to two felonies: one count of wire fraud and one count of money laundering. He is scheduled to be sentenced in U.S. District Court on Dec. 8. As part of the agreement, Siddiqui admitted to defrauding the company of $65.6 million.

At the time Siddiqui filed for bankruptcy, he listed $80 in his checking account.

Siddiqui has repeatedly refused requests for interviews from this newspaper.

Fry's spokesman Manuel Valerio emailed: "As with all matters of litigation, Fry's respectfully will offer no comment."

Walnut Creek attorney David Katzen, who is an expert on bankruptcy law and not associated with this case, explained why Fry's and the Palms would bother wringing blood from a stone.

"Well, what if he buys a lottery ticket and wins?" Katzen asked rhetorically, adding that this 45-year-old defendant still has many more potential earning years ahead of him.

Also, filing a complaint like this sends a message.

"This is a precedent setting event," Katzen said. "This guy ripped them off, and even if collection isn't going to be possible, it does hold him accountable and sends a signal to the rest of their team that this is not a good idea, we don't turn the other cheek."