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Bankruptcy Cases in the News

Bankruptcy Cases in the News

In a case just decided by the 6th Circuit Court of Appeals the conviction of a physician for violation of 18 USC 152 (1) and (2) was upheld. The physician, or debtor, filed a bankruptcy, and failed to schedule as an asset an extensive and valuable collection of collector wines. When the wines were discovered by the trustee a referral was made to the United States Department of Justice for prosecution. Please see USA v. Joseph Carver, Case No.: 12-3026.

On appeal the Court found that:

        To be convicted of concealing assets in bankruptcy, in violation of 18 U.S.C. §152(1), the evidence must show that a bankruptcy proceeding existed under the Bankruptcy Code, the defendant concealed interests in property from the bankruptcy trustee or creditors, such interest in property belonged to the bankruptcy estate of the defendant, and the defendant acted knowingly and fraudulently. Wagner, 382 F.3d at 607. A conviction for making a false oath in bankruptcy, in violation of 18 U.S.C. §152(2) requires proof that there was a bankruptcy proceeding, the defendant made or caused to be made a false declaration or statement under penalty of perjury in the proceeding, the declaration related to some material matter, the declaration was false, and the defendant made the declaration knowingly and fraudulently. Sixth Circuit Pattern Criminal Jury Instructions § 10.01 (2011) (mail fraud) (adapted); cf. United States v. Spurlin, 664 F.3d 954, 962 (5th Cir. 2011). Carver’s convictions for these crimes are amply supported by the evidence.

Accordingly, Dr. Carver will have to spend the next 24 months or so in a federal prison for making a false oath in his bankruptcy case. As discussed in other blogs, the trade-off for a fresh start is disclosure of all assets and turn over of non-exempt assets for creditors. Failure to do so can lead to the dismissal of your bankruptcy and even time in prison.

[Guy Vining, a bankruptcy attorney, in metro-Detroit, maintains his office in Taylor, Michigan, where he serves the downriver communities of Monroe, South Rockwood, Gibraltar, Brownstown Township, Grosse Ile, Woodhaven, Trenton, Southgate, Riverview, Allen Park, Lincoln Park, Dearborn, Dearborn Heights, Westland, Wayne, and Ecorse. If you or a family member of friend would like a no-obligation no cost consultation/financial analysis, just call or E-mail Guy Vining of Vining Law Group, P.L.C to schedule a meeting.]

Top Ten Bankruptcy Mistakes: Payments to Friends

TOP TEN BANKRUPTCY MISTAKES

 

#5
Payments to Friends

As discussed in other postings, the Bankruptcy Code is a type of statutory equity. The concept of equity is basically to do what is right and fair to all of the interested parties to a proceeding in bankruptcy. The Bankruptcy Code has several enforcement mechanisms to make sure that everyone is treated fairly.

One of these mechanisms is the power afforded to the Trustee to set aside unfair payments or transfers. When a bankruptcy case is filed all of your property becomes a part of the bankruptcy estate. 11 USC 541. The estate is appointed a Trustee by the Court. It is the duty of the Trustee to investigate the financial affairs of each debtor and to represent the estate for the best interests of all creditors.

To operate effectively the Trustee is given certain tools under the Bankruptcy Code. Among these is the power to go after and recover from third-parties preferential transfers that the debtor made before the bankruptcy. Specifically, 11 USC 547(b) allows the Trustee to recover property for the benefit of the bankruptcy estate and all creditors from a creditor who received a payment, or amount of a past indebtedness, when the debtor was insolvent, within 90 days before the filing, which allowed that creditor to receive more than it would have received as a distribution from the estate.

Thus, the money received by a creditor, out of turn or in preference, to others can be ordered turned over to the Trustee by the Judge. This is done so that all administrative and creditor claims are treated fairly.

[Guy Vining, a bankruptcy attorney, in metro-Detroit, maintains his office in Taylor, Michigan, where he serves the downriver communities of Monroe, South Rockwood, Gibraltar, Brownstown Township, Grosse Ile, Woodhaven, Trenton, Southgate, Riverview, Allen Park, Lincoln Park, Dearborn, Dearborn Heights, Westland, Wayne, and Ecorse. If you or a family member of friend would like a no-obligation no cost consultation/financial analysis, just call or E-mail Guy Vining of Vining Law Group, P.L.C to schedule a meeting.]