Bankruptcy Discharge Function of Honesty:  No Rolexes

Another case of attempted fraud on the Bankruptcy Court yielded no discharge to a Florida couple.  In this case, a Boca Raton husband and wife filed bankruptcy after the husband’s business began to fail.  An anesthesiologist, his vast medical practice was hit with changes in the health care system in the early 2000’s.  He went from employing hundreds of doctors to a nominal practice. 

According to the reports, when the Bankruptcy Court officials visited the doctor and his wife at home, they came upon a gold and diamond Presidential Rolex watch that was not listed as an asset on the Bankruptcy Petition or Schedules.  Other jewels and artwork were also not listed.  The proceedings resulted in a finding of lack of credibility by the Bankruptcy Judge and rejected their discharge, thus leaving them with $2.9 million in debt.  They were also ordered to pay $27,295 to the Trustee.

Lying In Bankruptcy Court Results in Criminal Action

Further, for the Boca Raton couple, their case was reported to the federal prosecutors and they ended up pleading guilty to bankruptcy fraud.  They were sentenced to one year in federal prison.   Many such cases are not prosecuted in criminal court, but they are subject to and the United States Attorney’s Office will pursue these cases when they feel the need to.

A criminal prosecution following a bankruptcy filing is rare.  However, the US Attorney’s Office will look at the seriousness of the situation.  They will look at deterrence.  In this case, even the Judge commented on the aggressiveness of the prosecutors.  On the other hand, it is not up to the judge who gets prosecuted.

Hire An Experienced Bankruptcy Attorney For Bankruptcy Planning

It’s not clear in the Boca Raton case how an attorney could have helped; however, we inform our clients that they must tell the whole truth.  They may not hide watches (the wife in this case tried to put it in her pocket when the Trustee appeared unexpectedly at their home).  They may not misrepresent ownership in real estate.  All assets go onto the table when you declare bankruptcy.  On the other hand, perhaps assets can be kept if an experienced lawyer helps with planning and carefully exempting assets.

In the above case for example, if the couple revealed the truth to their attorney, perhaps some very practical advice could have resulted.  Perhaps the couple could have sold the watch (and the $120,000 of missing artwork), bought a home or condominium, filed a homestead to legally and properly protect the condominium and moved into their nice home.  Then, when they filed for bankruptcy protection, they could have properly exempted the home under Massachusetts law.

Get a Free Bankruptcy Evaluation From Attorney Neil Burns

We encourage potential clients to call us for a fee consultation.  We can usually determine if we can help someone over the phone and we don’t charge folks for an initial consultation.  Call today.  617-227-7423.

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