Bankruptcy Fraud Resource Center

Funeral home operator indicted on charges of concealing assets and faking funeral expenses

Eunice Roper-Allen, of the Allen Funeral Home, who was indicted last month in the Central District of Illinois, has entered a not guilty plea to charges that she concealed assets in her bankruptcy case and defrauded a funeral home client by falsifying a decedent's funeral expenses.

In the three bankruptcy-related counts, the indictment charges Roper-Allen with concealing two bank accounts, a van and real estate located in Michigan.  The defendant is also charged with failing to disclose a 2005 judgment against her in the approximate amount of $70,000.

In other charges, Roper-Allen is accused of committing mail fraud in a scheme to defraud a customer of $44,000.  According to the indictment, Roper-Allen advised the customer to deposit into Roper-Allen's account $84,000 that belonged to a deceased relative in order to circumvent probate proceedings.  Roper-Allen later returned $40,000 together with falsified checks and receipts of fake funeral expenses to account for the difference.

Woman charged with filing fraudulent bankruptcy petitions in alleged foreclosure scheme

Sonia Alburez was charged last week with four counts of bankruptcy fraud for allegedly filing fraudulent bankruptcy petitions in the Northern District of California. 

According to the indictment, Alburez solicited homeowners who were delinquent in their mortgage payments and convinced them that her company, Community Home Saver Program, could prevent or delay foreclosure if the homeowners would transfer a fractional interest in their home to one of several fictitious entities and paid Alburez' fees.  She is accused of then filing fraudulent bankruptcy petitions listing the properties to trigger the automatic stay while she collected between $1,500 and $2,500 per month from the homeowners.

Italian fashion designer charged with fraudulent bankruptcy in Rome

According to this AP story, Italian financial police have said that they have arrested fashion designer Gai Mattiolo on charges of fraudulent bankruptcy in Rome.  The charges relate to Mattiolo's allegedly siphoning funds from his fashion house before filing bankruptcy.

As described, the charge of fraudulent bankruptcy appears to be the more serious of two potentially applicable charges under Italian bankruptcy law.  Fraudulent bankruptcy carries a jail sentence of 3-10 years while the lesser "bankruptcy offence" provides for a sentence of six months to two years.

Bankruptcy fraud sweep announced in Southern District of West Virginia

Four defendants in the Southern District of West Virginia have been charged in separate cases with various bankruptcy crimes in a small fraud sweep that U.S. Attorney Charles T. Miller hopes will "serve as a warning to those who would abuse the [bankruptcy] system."

Victoria Caudill was charged with concealing assets (18 U.S.C. 152(1)), making a false declaration (18 U.S.C. 152(3)) and devising a bankruptcy fraud scheme (157(3)) for allegedly transferring a $60,000 workers' compensation settlement payment to a bank account not in her name and then failing to disclose the account in multiple filings in her bankruptcy case.

Clinton Smith was indicted and charged with concealing assets (18 U.S.C. 152(1)), making a false declaration (18 U.S.C. 152(3)) and devising a bankruptcy fraud scheme (157(3)) for allegedly failing to disclose in his bankruptcy case his interest in an income stream from the sale of a 50 acre parcel of property formerly jointly owned with his then wife.

Jennifer Longwell was charged by indictment with two counts of making a false oath (18 U.S.C. 152(2)) and one count of concealing assets (18 U.S.C. 152(1)) in her bankruptcy case for allegedly not disclosing the proceeds she received from the sale of two parcels of real estate and then giving false testimony at the meeting of creditors concerning the same transactions.

A fourth defendant, Tracy Helms was charged by information with violating 18 U.S.C. 152(1) by allegedly concealing guns and jewelry in her bankruptcy case.

Debtor charged with making false statements by submitting false tax returns to U.S. Trustee

Now that debtors must produce copies of their tax returns in bankruptcy cases as part of the bankruptcy laws' already numerous disclosure requirements it was only a matter of time before we began to see some criminal cases built on debtors' making or using false writings (or documents containing false statements) within an executive branch matter in violation of 18 U.S.C. 1001.

Don W. Reinhard, whose indictment in the Northern District of Florida we first commented on here, is  charged with 2 counts of violating 18 U.S.C. 1001 by allegedly submitting to the Assistant U.S. Trustee 2002 and 2005 U.S. Individual Income Tax Returns knowing that each contained false entries.  The 2002 return (filed in January 2007) allegedly falsely claimed a net operating loss carry back from Reinhard's 2005 return that enabled him to avoid paying $385,064 in taxes.  The 2005 return allegedly falsely overstated Reinhard's basis in real property that he sold by approximately $1.9 million.

The United States Trustees' broad authority to act and be heard in bankruptcy cases translates into extensive executive agency jurisdiction under 18 U.S.C. 1001.  Consequently, nearly any false statement made or false writing submitted to the U.S. Trustee's Office in a bankruptcy case could be prosecuted under the false statement statute, subject to proof that it was done "knowingly and willfully."

Florida investment advisor arrested and arraigned on multiple bankruptcy criminal charges

Following a two year federal investigation, Don W. Reinhard, a former Tallahasee investment advisor, has been charged in a 23 count indictment in the Northern District of Florida with numerous federal charges, including making false delcarations in his bankruptcy case, fraudulently concealing or transferring assets, making false statements by submitting false income tax returns to the United States Trustee and money laundering relating to the bankruptcy fraud charges.

According to this news report, Reinhard was arrested this morning and will be arraigned in Tallahassee.  As the indictment becomes available we will analyze this case further - with particular reference to the relatively rare false statement charges for submitting false tax returns to the U.S. Trustee's Office.

Collapse of alleged foreign currency trading scheme leads to fraudulent transfer charges

A federal jury in the Eastern District of Tennessee has indicted Louis Rivas on multiple charges of mail fraud, money laundering and fraudulent transfers in contemplation of bankruptcy relating to the collapse of Rivas' alleged foreign currency exchange firm - and its investment endeavor,  The Forex Project - which the indictment (available here) alleges was nothing but a classic Ponzi scheme.

According to the indictment, Rivas represented himself to be an experienced trader in foreign currency exchange operating through The Forex Project, which invested in "off market foreign currency exchange."  In approximately March 2007, Rivas devised a scheme to defraud by raising raising more than a million dollars in investments through false promises of high rates of return, recruiting investors as "equity agents" for the purpose of recruiting additional investors and paying early investors with income from later investors.  Rivas allegedly misapplied investor's funds for his personal use by purchasing numerous lavish assets.  As the scheme began to unravel, according to the indictment, several creditors filed an involuntary bankruptcy petition against Rivas on May 15, 2008.  Rivas, however, had already allegedly transferred hundreds of thousands of dollars - presumably to a safe place.

Those transfers gave rise to the bankruptcy criminal charges.  Counts _-_ charge Rivas with violating 18 U.S.C. section 152(7) by fraudulently transferring nearly $300,000 on May 19th and 20th allegedly "in contemplation of" the involuntary bankruptcy filing on May 15th and with "the intent to defeat the provisions of title 11."  In so charging, prosecutors followed the common practice of charging both alternative mental states present in the statute.  Section 152(7) requires proof that a defendant acted "knowingly and fraudulently" and either (a) "in contemplation of" a bankruptcy filing or (b) "with intent to defeat the provisions of title 11." 

While it is not uncommon for indictments to charge fraudulent intent together with both "contemplation" and intention to defeat the bankruptcy code, the charging pattern in this case appears unusual because of the timing of the alleged transfers in relation to the bankruptcy filing.  How, one may ask, could a person make a fraudulent transfer "in contemplation of" a case that already has been filed?  Does not the phrase "in contemplation of" refer to an expectation of a future event?  The Pattern Criminal Federal Jury Instruction for the Seventh Circuit (this case is not in the Seventh Circuit) says it does by stating that the phrase "in contemplation of" means "in expectation of, or planning for, the future probability of a bankruptcy proceeding."

Be that as it may, while the charging pattern here appears to be unusual on the facts it does not appear to be legally defective and perhaps additional facts will develop to explain it.  More to come?

Colorado paralegal charged in rare state prosecution of bankruptcy petition preparer

Conspiracy, financial elder abuse, grand theft, unauthorized practice of law, false advertising and misleading advertising as a paralegal are among a variety of state criminal charges brought against a Colorado paralegal for allegedly providing illegal bankruptcy petition preparer services in California.

According to Los Angeles City Attorney Rocky Delgadillo, an investigation began in May 2007 after U.S. Bankruptcy Judge Kathleen Thompson and the U.S. Trustee for the Central District of California "observed potentially illicit acts" by the defendant, Emmanuel Assaf.  LAPD fraud unit detectives were assigned in September 2007 to investigate Assaf's alleged fraudulent advertising of paralegal services and provision of bankruptcy related serves to a then 85 year old victim, Maximiliano Jimenez. 

According to the charges, Assaf advertised a variety of legal services in a Spanish language publication, including paralegal services for bankruptcy filings.  Based on the advertisement, the victim's daughter called Assaf who assured her that he could handle the entire case and have someone accompany him to court.  Assaf accepted $1,200 in fees to handle the case and received Jimenez's social security number.  Jimenez filed for bankruptcy and Assaf declared that he had received only a $200 fee.  Assaf did not appear on behalf of the victim nor advise the victim that he needed to complete a pre-petition credit counseling course.  Following an investigation into the matter, the case was referred to the L.A. City Attorneys' Identity Theft and Fraud Unit for prosecution.  It is not clear whether the Office of the United States Trustee referred the matter to the U.S. Attorney for prosecution under 18 U.S.C. section 156, although the case appears to be the product of a coordinated effort between state and federal officials that will remain in state court.

"Operation Truth or Consequences" case summaries available

The Justice Department has produced a tidy little report entitled "Operation Truth or Consequences: Case Summaries by State and Judicial District," which I believe I made available some time ago.  The report contains a summary of the charges brought against each of the individuals indicted (or otherwise formally charged) in the well-publicized bankruptcy fraud sweep last fall.  I have reported on each case as developments since then warrant, but several folks have written asking for a copy of the report so I am making it available again here.

Arizona family indicted on charges of concealing assets and lying in bankruptcy case

A husband and wife, and their daughter were indicted (available here) in the District of Arizona on numerous federal charges, including concealing assets and making false statements in a bankruptcy case.  Sergio Renteria, his wife Sandra Renteria, and their daughter, Kayla Taylor were charged with concealment, making false statements conspiring to impair the Farm Services Agency (FSA), disposing of property pledged to the FSA and making false statements to influence a loan.  The family allegedly obtained loans totalling $800,000 from the FSA and failed to repay them.  Taylor allegedly used the loan proceeds to purchase automobiles while claiming the funds were used for farm operations.  The defendants also allegedly sold crops and farm equipment that had been pledges to the FSA as collateral.  Various of the defendants then allegedly made false statements in the Renteria's bankruptcy case and allegedly concealed hundreds of thousands of dollars of assets.

An April 3 trial date has been vacated and rescheduled to September 11.  The new deadline for plea agreements is August 15.