The collateral consequences of a client's bankruptcy fraud

One of the perils of bankruptcy work, particularly in representing debtors, is the risk that a client accused (or convicted) of bankruptcy fraud will claim "my lawyer told me to do it."  Of course, the allegation is nearly never true, and is no defense besides.  But the allegation once made can be a nightmare for the bankruptcy practitioner.  The Seventh Circuit's recent decision in United States v. Roti, No. 06-3192 (7th Cir. May 3, 2007), illustrating this point, should be mandatory reading for the bankruptcy bar - or at least that segment of it that does debtor work. 

Judge Easterbrook's opening paragraph sets the tone:

EASTERBROOK, Chief Judge.  Saddled with a judgment for more than $400,000 on account of a guarantee of his small corporation's debts, James Roti decided to hide his assets from creditors.  He has been convicted of bankruptcy fraud, see 18 U.S.C. § 157, and concealing assets from the bankruptcy trustee, see 18 U.S.C. § 152.  His sentence is 21 months' imprisonment.  Roti concedes that he parked some assets with family members and moved others to accounts unknown to his creditors, and that he lied to his principal creditor, to the federal bankruptcy court, and to the trustee.  Roti says that his lawyer Andrew Werth put him up to it, and at trial he contended that he should be acquitted because Werth managed the scheme's details. . . .

The full text of the opinion is available here.