Bankruptcy issue surfaces in debate

Wolf initially denies ever filing, later says radio question was misunderstood

Posted: Sunday, November 03, 2002

Kelly Wolf, the Republican Party candidate for House District 33, told a Kenai radio station audience Thursday he had never filed for bankruptcy, when in fact he had.

Wolf filed for bankruptcy protection on June 24, 1985, when he operated a business in Kenai called R.J. Construction. The U.S. Bankruptcy Court in Anchorage approved the Chapter 7 bankruptcy, which became effective in November 1986.

Reached Friday morning, Wolf said he had not understood the question about bankruptcy posed by a listener and confirmed he had filed for and been granted a bankruptcy.

Wolf and his Democratic Party opponent Hal Smalley were guests on the KSRM 92 program "Sound Off," a local forum of political comment and debate. A caller asked if either candidate had ever filed for bankruptcy .

Both Smalley and Wolf answered they had not. There is no record of any bankruptcy by Smalley.

Wolf's answer attempted to suggest another Kelly Wolf might have been involved in a bankruptcy.

"No," Wolf said in response to the bankruptcy question. "I mean, I understand there are several Kelly Wolfs, I've been -- gotten a lot of phone calls about."

There has been some confusion during the campaign caused by there being more than one Kelly Wolf in state civil and criminal court records.

Wolf did once face a misdemeanor charge filed by the state in June 1994 for not having a contractor's license, but that case was dismissed in August 1994.

After stating he was happy the candidates were on the air and that, as a nonpartisan voter, he was looking for more information about those running for office, the "Sound Off" caller asked the following question.

"Have you ever filed for bankruptcy in the state of Alaska or in any other state?"

Asked Friday to explain why he answered "no," Wolf said he hadn't understood the question.

"I apologize. I wasn't trying to hide anything," he said. "I didn't understand the question. I'm not great on the radio."

Wolf said the bankruptcy came at a terrible time in his life. He had just been divorced and his ex-wife had left with their new baby. He said he was on his own with his son Ryan who has Down syndrome. He had lost everything, including his construction business, he said. There was no work in Kenai, and he decided to take his son and move to Reno, Nev.

"I headed to Reno just before the economy of Alaska went to hell in a wastepaper basket," he said. "There was nothing left to do. I heard there were jobs down there."

Wolf said he contacted an Anchorage attorney -- he said he could not recall his name, but Attorney Russell E. Arnett is listed on court papers as attorney for the debtor. Wolf said he told the lawyer he was going to Reno.

"He said he would make sure it was filed in Reno," Wolf said.

However, according to bankruptcy court records and confirmed by a court employee, the case was filed in Anchorage. There is no indication it was ever transferred to Nevada. At least one hearing during the proceedings was held in Reno, however.

In explaining his initial answer, Wolf said the bankruptcy happened 17 years ago.

"It was a live radio show. I'm new to politics. There's so much mud slinging going on," he said. "I should have asked to clarify the question. Yeah, I should have asked. Had I been more on my toes, I would have done that."

As to the bankruptcy, Wolf said he regrets he was forced by circumstance to shed his debts.

"Am I embarrassed? Yeah, certainly I am," he said. "I'm sure people were hurt. But I lost a home, a child, was given full custody of my special-needs son. I picked myself up by my bootstraps and started over.

"All I can say is, yeah, I'm embarrassed and ashamed and sorry for anyone hurt by it," he continued. "Was it the right thing to do? I couldn't get a job and provide for my kids.

"Was it planned? No. Was it a scam? No," Wolf said.

Smalley was skeptical of Wolf's explanation.

"That was an out-and-out lie, and he tried to hide it by blaming it on someone else," Smalley said.

When he got back to his office after the radio debate, he received phone calls from people who had lost money as a result of Wolf's bankruptcy, Smalley said.

"They were really angry" about Wolf's answer, he said.

After several years Outside, Wolf returned to Alaska in 1990. He found jobs in construction working for other contractors. In 1994, after helping on a wiring job in a new house, he ran into a bit of trouble.

Wolf said he helped someone "pull wires." He said he did it for free, but, according to state law, the only people allowed to pull wires are licensed electricians, unless the wiring is being done in one's own home.

During the early 1990s, Wolf said he worked under "an exempt construction license," which he said was essentially a handyman's license allowing him to do small jobs, "from building a handrail to replacing a light fixture to patching a hole in the wall."

Pulling wires was beyond that license and Wolf went to court on a misdemeanor charge. He said it resulted in a hung jury, and the case was dropped by the state and dismissed by the court.

Wolf also said he has just recently resolved some issues with the Internal Revenue Service stemming from tax returns in 1997. He said that matter is cleared up, but that it resulted from confusion over which earnings had been wages and which had been the result of self-employment.

Sen. Ted Stevens has produced radio ads and fliers endorsing Wolf. The senator's campaign office is aware of the flap over Wolf's bankruptcy statements.

"This does not change (Stevens') endorsement of Kelly Wolf," said Tim McKeever, Stevens' campaign finance chair.

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