We have written about bankruptcy fraud, Chapter 7 fraud, and filing bankruptcy petitions with misinformation or fraudulent information in the past. The federal bankruptcy court is likely to find out. The United States Attorney’s office is likely to investigate and prosecute. It’s simply wrong.
When you complete a bankruptcy petition and schedules, and sign them under the pains and penalties of perjury, the federal Bankruptcy Court takes your oath very seriously. There can’t be any mistakes or misleading information. The federal government has vast resources and if they discover fraud, they will investigate.
Bankruptcy Fraud Case in Pennsylvania
A 57-year-old nurse in Pennsylvania committed fraud on her federal bankruptcy petition and schedules and was caught. Apparently, the director of nursing in a rehab center was the beneficiary of a will of one of the patients. The $100,000 she was left in the will was clearly coming her way when she filed for bankruptcy protection. She was able to successfully discharge $75,000 in debt before she was caught.
In fact, she had received $42,000 prior to filing her petition, yet neglected to mention that is was in a new bank account that she did not list as an asset. She actually made a $21,000 payment for an in-ground swimming pool at the time she appeared for her bankruptcy creditors hearing! Furthermore, she transferred legal ownership of her motor vehicle to her partner who sold the vehicle and purchased an $80,000 vehicle for the household!
The debtor, Deborah Campbell, was charged with second-degree fraud in federal court and with third-degree theft because she failed to make the required disposition of the property she received in the will. The fines could result in up to ten years of federal incarceration and up to $150,000 in fines.
Was There a better Way?
Absolutely. Bankruptcy planning. We don’t have Ms. Campbell’s petition, nor are we privy to her financial condition prior to filing for bankruptcy protection, but we have some insight for clients. Ms. Campbell could have put a significant amount of that money into retirement accounts, into her home, or into other protectable assets. She could have made payments on her debts while carefully planning how to spend down her inheritance. Then she could have listed everything, absolutely everything, and shown how it was protected by federal or state exemptions.
At the time of the hearing before the bankruptcy trustee, properly advised debtors will have an expertly prepared petition, all their papers in order, and else everything the trustee needs. The hearing should go smoothly.
Hire an Experienced Bankruptcy Attorney
Attorney Neil Burns has helped hundreds of people plan for bankruptcy since 1985. He offers a free initial consultation. Call 617-227-7423 today and see how you can get a fresh start, legally, ethically, and within the laws. Prepare your situation with an expert.