Smarter Than a Fifth Grader . .

. . . but that has never stopped a Bankruptcy Trustee before. You may recall the story of our former Secretary of Education, Kathy Cox (that’s with a “K”) and her tumultuous life since appearing on the Fox Game Show “Are You Smarter Than a Fifth Grader.”

Secretary Cox went on that show vowing to give her winnings, if any, to Georgia’s state run schools for the Blind and the Deaf. She won a million dollars. Then tragedy struck and her family was forced to file for bankruptcy. That is when things got hairy. The Bankruptcy trustee is charged with paying back the creditors of a person as much as possible – and Cox having won a million dollars only 3 months prior soon realized that the trustees wanted that money too. Naturally, legal battle ensue. Since that time, Mrs. Cox has elected to drop out of her primary for reelection after the qualifying date – forcing the Governor to appoint an interim Secretary of Education who had to attempt to mount a write-in campaign – and taken a job in Washington dealing with education policy.

That just leaves one little item left to talk about – the MONEY. They’ve decided to split it. Or so a proposed settlement suggests, it has yet to be approved by the honorable Judge Homer Drake. The trustee seems satisfied, and Mrs. Cox seems angry about this outcome:

“I think it is a satisfactory resolution and hope it will provide meaningful distribution to the creditors and satisfaction to other interested parties,” he said.

Kathy Cox said she is not a satisfied party.

“It actually makes me angry,” said Cox, who is now chief executive officer of the U.S. Education Delivery Institute, a Washington think tank.

“If anybody had watched the show, it was so clear I was there as the state school superintendent,” she said. “That money had nothing to do with what was happening to us personally.”

Bankruptcy isn’t a land of sunshine and roses. More and more Georgians are finding that out daily. While this outcome is extremely unfortunate for the affected schools, it is not an absurd outcome. The trustee is just performing his duty. The Bankruptcy Court is just following the law.

17 comments

  1. ricstewart says:

    Not to make light of an unfortunate situation, but maybe Congressman Deal should appear on Are You Smarter Than A Fifth Grader?

  2. Samuel says:

    What if the topics were “Ethics” & “Business Law” & “Government Bidding of Contracts” & “Tax Codes.”

    He’d lose!

    Georgia is about to lose!

  3. John Konop says:

    Since Kathy Cox used creditors’ money to win the money and she also stiffed them for a lot of money, should she be able get a tax break for the donation? The tax break could be worth about a 150 thousand dollars.

    • Charlie says:

      She would only be able to take a tax credit if she also took a corresponding increase to adjusted gross income. Net-net, it’s a wash. There should be no tax consequences for this.

          • drjay says:

            when i was “who wants to be a millionaire” abc paid for pretty much everything, and that was just as a regular contestant. for the syndicated shows like jeopardy or wheel of fortune, you are generally responsible for your own way, but for the network shows they generally pick up the tab, and for a “celebrity show” even more so…

            • John Konop says:

              What if she used her own credit card get reimbursed and never paid the credit card company. That is why Kathy Cox should release het tax returns during this time period and in the future if she wants to clear up the issue.

              The reason I am suspicious from what I read she originally wanted to set up a charitable trust which would have given her the right to pay herself and or family members without paying creditors.

              • drjay says:

                i’m o.k. with her needing to release tax returns if it will help clear such things up. i would still guess fox made the arrangements themselves. also the actual contract with the show probably is pretty key to the suit against her to obtain the game show money…

                • John Konop says:

                  drjay,

                  I am no lawyer but for the court to rule against the donations, the commingling of creditors’ money on this trip would have been a very strong argument. I have no idea if that was the situation but in my business we deal with this issue often. As my lawyer tells me always follow the money. And that usually demonstrates real intentions.

  4. drjay says:

    i am genuinely surprised by this outcome, all and all it is probably better for the cox family, but still. this one my be different, but my understanding of “celebrity” game show appearances is that they are different from “regular folk” in a number of ways. a celebrity is usually guarranteed a check for their charity just for showing up. you’ll notice they get cues for the early questions (like on “who wants to be a millionaire” they won’t even let them use a lifeline below 32k and the other celebrities on the show are stage whispering the answers to the early questions if it seems like the one in the chair is struggling), also tax considerations are made for celebrities winning money for charity that are not made for regular folks just playing the game (or even celebrities playing games, not necesarrily as celebrities, like jimmy johnson on survivor. also, in kathy cox’s case, i don’t think she could have legally accepted a chance to appear on the show “in her official capacity” which is what made her a “celebrity”, if she were playing for herself, because it would be a “gift” and for “personal gain”, but she would never have been on this particular episode were it not for her position–kathy ireland was the next contestant–this was not a case of someone being told to randomly come on down by bob barker…i’d be interested to know what her contract with fox actually said and how it jibes with my experience and understanding of game shows…

  5. jm says:

    Kathy Cox is not a “celebrity”. She was a contestant on the show, and the money was hers. She applied for he show, they saw who she was, said this makes an interesting twist, and put it altogether. Her deal was the part about being a state superintendent and playing for the school, and I’ll give her credit for that. But its not about who paid for the tickets, or the food, or the hotel. Its about who got the million dollar check.

    If she was playing for charity as a celebrity, FOX would have sent the check to the school, in her name. No, the check went directly to her, and that’s when it became fair game. I don’t blame anyone for that, maybe she could have asked them to do that, she wasn’t thinking that far ahead, wasn’t thinking about the bankruptcy looming in her future. You know why? 5th grade smarts or not, they obviously don’t teach enough about home finance in the state of Georgia…

    • John Konop says:

      Jm,

      The check was sent to Kathy Cox because she was originally going to set up a charity trust which would have given her and her family a right to get some of the money for managing the trust.

      Once again I am not a lawyer but it would seem obvious if you used creditor’s money to win the money and did not pay them they would have a very good argument.

      It is fine to give away YOUR OWN MONEY, but to use other people’s money without their permission to give away money is wrong!

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