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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: Bankruptcy Fraud

TOP TEN BANKRUPTCY MISTAKES

 

#9

Bankruptcy Fraud

The United States Bankruptcy Code, 11 USC 101 et seq. contains numerous provisions addressing issues of fraud. Essentially, the subject matter can be divided into two broad areas: (1) civil bankruptcy fraud and (2) criminal bankruptcy fraud. Each have their own serious implication with the main point to be made being … honestly and thoughtfully make full disclosures.

One of the primary purposes of filing your bankruptcy is to obtain a discharge which is essentially the order by which your obligations are cancelled. The discharge can be denied, however, for debtor misconduct in violating disclosure requirements, cooperation requirements and other misconduct. In the civil context 11 USC 727 (a) provides bases for the denial of a debtor’s discharge. One of which is under 11 USC 727(a)(4), which, in part, provides that the court shall not grant a discharge if the debtor “knowingly and fraudulently, in or in connection with the case… made false oath or an account…” Being denied a discharge is a disaster in itself but the criminal ramifications portend time in prison, too.

For instance, the making of a fraudulent statement in connection with a bankruptcy case may also constitute a crime. A violation of 18 USC 152 is a five year felony. A person who:

    (1) Knowingly and fraudulently conceals from a custodian, trustee, marshal, or other officer of the court charged with the control or custody of property, or, in connection with a case under title 11, from creditors or the United States Trustee, any property belonging to the estate of a debtor;

(2) Knowingly and fraudulently makes a false oath or account in or in relation to any case under title 11; or,

(3) Knowingly and fraudulently makes a false declaration, certificate, verification, or statement under penalty of perjury as permitted under section 1746 of title 28, in or in relation to any case under title 11;

may be convicted under this felony statute.

In the end, your fresh start and freedom are too precious to risk. Always make a full and fair disclosure of assets in your bankruptcy case or do not file it.

[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.]