Bankruptcy Fraud Resource Center

New York man convicted of concealing bank accounts

James LoCastro has pleaded guilty to a 2 count criminal information (available here) charging him with failing to file a tax return and concealing gambling income during his 1999 chapter 13 bankruptcy case in the Northern District of New York.  According to the plea agreement in the case (available here), LoCastro did not disclose the existence of two bank accounts into which he deposited and withdrew nearly $200,000 from October, 2000 through June, 2003.  LoCastro also failed to file tax returns for the years 1999-2002, during which time his gross income from business and gambling totaled nearly $1 millon.  The parties agreed, however, that the tax loss for which the defendant was accountable is $53,654. 

In exchange for the guilty plea, the plea agreement contemplates that LoCastro will receive a 3 level reduction to his offense level for acceptance of responsbility.  He is scheduled to be sentenced on August 10.

Debtors' attorney convicted of embezzlement

Robin L. Musher also known as Robin L. Grassel pleaded guilty to 2 counts of embezzling money belonging to the bankruptcy estates of debtors whom he represented.  Musher was indicted  - and convicted - in the Western District of Pennsylvania.  The indictment is available here. 

According to this news report in The Pittsburgh Tribune Review, "Musher admitted that in December 2003 she illegally deposited into her account a check for $47,000 from the sale of property belonging to clients James and Joyce Boughman. Musher and prosecutors agreed that she took $15,000 of that for herself."  In addition, Musher also illegally deposited in December 2004 a check for $104,000 from the sale of property belonging to Michael and Patty Webber, other bankruptcy clients.

Musher is scheduled to be sentenced on June 28. 

Missouri couple sentenced for concealing assets and false declaration

According to this story in The St. Louis Business Journal, Michael Binns and Mary Binns were sentenced in the Eastern District of Missouri for their roles in concealing assets and making false statements in their joint bankruptcy case filed in December 2003. 

A three count indictment (available here) charged the couple with concealment (Count 1) by failing to disclose a boat, a motorhome, a BMW, three motorcycles, an ATV, a jet-ski, three insurance policies and four retirement accounts all in violation of 18 U.S.C. 152(1).  Count II charged the couple with making a false declaration by failing to disclose each of the same items on Schedule B to their bankruptcy petition in violation of 18 U.S.C. 152(3)  Count III also charged Michael Binns with falsely testifying that a he had disclosed all of this assets in violation of 18 U.S.C. 152(2).  During pre-trial proceedings, the District Court denied the defendants' motion to sever their trials.  The District Court also ruled that Counts I and II were multiplicitous in that they charged two crimes for essentially a single act of nondisclosure.  Had the couple not reached a plea agreement, the government would have been required to elect which count on which it preferred to proceed.  The multiplicity issue is a complex one that will be discussed in a further post.

Under a plea agreement with the government, Mary Binns pleaded guilty to making a false declaration (Count II) for which she was sentenced to three years probation.  Michael Binns agreed to plead guilty to concealment (Count I), for which he was sentenced to 42 months of imprisonment followed by 2 years of supervised release.

Attorney Gary Peel convicted of bankruptcy fraud and obstruction

According to this news report, a jury has convicted Illinois attorney Gary Peel on charges of bankruptcy fraud, obstruction of justice and possession of child pornography.  Peel was charged with bankruptcy bribery, obstruction of justice and possession of child pornography in a case in which he was charged with attempting to trade sexually explicit photos of his ex-wife's underage sister to his ex-wife if she would drop her objection to the dischargeability of Peel's financial obligations to her as a result of divorce proceedings.  The jury convicted Peel of all counts.  Previous posts covering the Peel case are available here, here and here.

Hawkins sentenced for falsifying credit counseling certificates

Marquitta Hawkins, whose case was reported on here and here, was sentenced on Friday after pleading guilty to falsifying credit counseling certificates for bankruptcy cases.  Hawkins was sentenced to seven weeks of time served, six months of home confinement, forty hours of community service and three years of supervised release.

Jury convicts Andrew Yao of making false oaths in bankruptcy deposition.

According to this news article, Andrew N. Yao was convicted yesterday after three hours of juror deliberations of 2 counts of making a false oath in bankruptcy.  As detailed in this post, Yao was charged in the District of Delaware with twice lying during a bankruptcy deposition concerning the purpose of 2 sizeable wire transfers from the account of a corporate debtor of which Yao was sole shareholder.

Middle District of Florida debtor convicted for using false social security number in bankruptcy filing

Claude Hall, who was indicted in the Middle District of Florida on false oath charges as well as with misusing a social security number, has pleaded guilty to the second count of the indictment and will be sentenced on April 10.  A two count indictment (available here) charged Hall with filing a bankruptcy petition in 2001 containing a social security number that he knew was not his own.  Under them terms of a plea agreement with the government (available here), in exchange for his guilty plea, the bankruptcy false oath count will be dismissed and the government will recommend a sentence at the low end of the applicable (advisory) guidelines range (after a reduction for acceptance of responsibility).

Florida jury convicts man of bankruptcy fraud scheme after wife pleads guilty

In a very interesting case that I will be monitoring and reporting on again, a Florida couple has been convicted of a bankruptcy fraud scheme after one defendant pleaded guilty and a jury returned a guilty verdict against the other.

Tommy McPherson, a Florida attorney, and his spouse, Jeanette McPherson, were indicted last August on several bankruptcy criminal charges relating to an alleged bankruptcy fraud scheme (18 U.S.C. 157(1) and (3)) to discharge Jeanette's gambling debts while protecting Tommy's assets by pretending the couple was seperated and claiming that Jeannett's only property consisted of monthly alimony.  The indictment (available here) also charged the couple with falsely testifying during the 341(a) meeting that they were seperated (a false oath in violation of 18 USC 152(3)) and with fraudulently withholding documents from the trustee (18 U.S.C. 152(9)).

Earlier this month in a plea agreement with the government, Jeanette pleaded guilty to the bankruptcy fraud charge in exchange for which the false oath and withholding documents charges will be dismissed at a sentencing hearing scheduled for April 24.  Last week a jury returned guilty verdicts against Tommy on all three charges.  Tommy McPherson has since filed a renewed motion for judgment of acquittal as well as a motion for a new trial.  Further reports on the motion for judgment of acquittal to follow as I expect to see this case on appeal.  In particular, the bankruptcy fraud charge in this case seems slightly convuluted and the withholding documents charge -- against a non-debtor -- is rather unique.

Delaware debtor convicted for lying at 341(a) meeting

Joseph Rychalsky, Jr., who was indicted (available here) in the District of Delaware on a single count of providing false testimony during the first meeting of creditors in his bankruptcy case, has pleaded guilty to the charge.  Rychalsky admitted in a plea agreement (available here) with the government that when questioned by the trustee whether he had a claim against anyone for injuries sustained in a car accident he falsely answered "no" when in fact he did have a personal injury claim arising from an accident that occurred the previous year.  Rychalsky is scheduled to be sentenced on March 13.

Colorado woman pleads guilty to misusing social security number in scheme to defraud landlord

Darla Sanchez, who was indicted (available here) in the District of Colorado on multiple bankruptcy criminal charges involving a scheme to defraud landlords of rent, has pleaded guilty to a single count of misuse of a social security number in a bankruptcy case.  According to the indictment, Sanchez devised a scheme to defraud landlords of rents by living in various properties without paying rent and then filing mutliple bankruptcy cases in her name and that of her husband to forestall eviction proceedings.  Sanchez was also charged with misusing multiple social security numbers in rental applications to assist in carrying out the scheme.

Under the terms of a plea agreement (available here) with the government, Sanchez admitted that in a bankruptcy petition she falsely and fraudulently represented a social security number as belonging to her husband in violation of 18 U.S.C. 408(a)(7)(B).  In exchange for the guilty plea, the government will dismiss the remaining seven counts of the indictment.  A sentencing hearing is scheduled for June 29.