Judge weighs whether to unfreeze assets of Lexington Blue owner, wife
AI-generated summary reviewed by our newsroom.
- Judge weighs request to unfreeze assets of Lexington Blue owners amid fraud probe.
- State alleges $2 million in customer deposits missing as firm faces bankruptcy.
- Testimony shows owners used company funds for personal gain and high salaries.
A Fayette County judge is weighing whether to unfreeze the finances of the owners of roofing company Lexington Blue.
After a three-hour Sept. 22 hearing, attorney Adrienne Southworth laid out the case for allowing Brad and Courtney Pagel to access their bank accounts, which have been frozen since June at the request of the Kentucky Attorney General’s office, which is investigating the failed company for consumer fraud.
The Pagels did not appear at the hearing.
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Lexington Blue closed abruptly in April, owing hundreds of customers for roofing repairs that were paid for but never completed. The attorney general is suing the company, the Pagels and several former employees in state court, alleging more than $2 million in deposits from more than 262 customers is missing.
Lexington Blue declared bankruptcy in June, and the case has been converted to a Chapter 7 liquidation case.
A new creditors’ meeting is scheduled for 9:30 a.m. Sept. 29 at the third-floor courtroom of the federal bankruptcy court in Lexington.
Southworth argued before Fayette Circuit Judge Dianne Minnifield on Monday that the Kentucky Consumer Protection Act has been stretched too far in essentially garnishing the personal assets of Brad Pagel, and certainly too far to attach those of his wife, who had minimal involvement in Lexington Blue.
But Gary W. Thompson, of the Kentucky Attorney General’s office, pushed back on that claim, presenting evidence that both Pagels treated the company like their personal piggy bank.
One former employee, who is part of an Equal Employment Opportunity Complaint against the company over Brad Pagel’s lack of accommodation for her religious beliefs, said both Pagels had her at their beck and call, routinely sending her to pick up a particular kind of ice cream while Courtney Pagel was pregnant.
“I guess they both had cravings,” said Patricia Blankenship, who started in customer relations before rising to general manager.
She said that before the birth of their child, Brad Pagel had installed Courtney Pagel “as his eyes” over a team of employees operating as a collections center, continually calling and badgering for more payments.
Blankenship, who left the company in 2022, testified that Lexington Blue received two federal COVID-19 pandemic relief loans of more than $100,000 each. Both were ultimately forgiven, she said.
Another employee, former finance director Nick Conway, testified that Courtney Pagel received a $54,000 salary from Lexington Blue in 2024 even though she did no work for the company. Lexington Blue also paid her IRA and car payments for her Hyundai Genesis, as well as Brad Pagel’s Ford Raptor.
But whether or not Minnifield unfreezes their accounts may be moot: The Pagels appear to have less than $100,000 in the bank, and so far, Thompson, the bankruptcy trustee has had no success finding the missing $2 million in customer deposits.
And there should have been plenty of money on hand in the company: According to Conway, Lexington Blue expected to average a 40% profit margin based on insurance and customer payments.
But Conway testified that customer deposits were used “almost exclusively” to make payments to the Pagels, who received various payments totalling nearly $400,000 in the 12 months before the company closed.
Conway said that both Pagels knew the company was struggling financially, because paychecks frequently bounced.
Minnifield allowed one former Lexington Blue customer to testify at the hearing on unfreezing the Pagels’ accounts.
Thompson asked homeowner Juda Noe if she thought it was fair for someone to receive a salary paid for by her roof deposit for work that was never done.
“No, I think that’s criminal,” Noe replied.
A ruling is expected soon.
