Failure to Report Asses During a Bankruptcy Proceeding Can Have Serious Consequences

Going through the bankruptcy process is often a stressful experience, often producing anxiety about ones financial future.  However, it is important for individuals who are going through the bankruptcy process to provide their attorney and the bankruptcy court with complete and truthful information regarding their financial circumstances.  Failing to do so can cause a myriad of issues including: delay in the bankruptcy process, financial ramifications, and criminal sanctions.

Federal judge sentences area woman to 27 months in prison and orders her to pay over $155,000 for falsifying statements and concealing assets during her bankruptcy proceeding.

Late last month, a federal judge sentenced a woman to 27 months in prison followed by three years of supervised release, after she plead guilty to concealing assets and falsifying statements during her bankruptcy proceeding.  In addition she is required to pay over $155,000 in restitution.

According to court records, the woman initially filed for Chapter 7 bankruptcy in April 2010.  In a Chapter 7 bankruptcy, a debtor’s assets are liquidated and proceeds are distributed to outstanding creditors.

The woman transferred her interest in a property in order to avoid liquidation during bankruptcy.

Shortly before filing for bankruptcy, the woman transferred her interest in a property that she had jointly purchased with her daughter in February 2008, for the sum of $1.  In February 2011, the bankruptcy trustee, an individual who is assigned with the responsibility of liquidating assets and distributing them to creditors during a bankruptcy proceeding, sought to recovery the woman’s interest in the transferred property.  The bankruptcy trustee alleged that the woman had orchestrated the transfer in order to defraud her creditors, arguing that she hadn’t received reasonable value for the transfer.  The woman responded by falsely claiming that she was given $75,000 in exchange for her interest in the property.

Evidence also suggested that the woman filed for bankruptcy in order to avoid liability in a civil matter.

The woman also took other fraudulent actions related to her bankruptcy case.  Federal prosecutors alleged that she filed the bankruptcy action in order to prevent a former boyfriend from filing a civil action against her.  The former boyfriend had made allegations that in order to buy the property at issue during the bankruptcy proceeding, the woman misappropriated in excess of $1 million from him.

In addition, the woman failed to report significant assets to the court, or the proceeds she received after selling them.

The woman also failed to disclose significant assets including: a diamond bracelet with over 70 individually set diamonds set in white gold, nearly 800 shares of common stock in Eagle Bancorp, Inc. as well as, two motor vehicles.  The woman sold the jewelry, stocks, and one of the cars for a total amount exceeding $110,000.  However, the bankruptcy court was never informed of this.

The woman also forged signatures on checks and court documents.

In addition, the woman forged signatures on several occasions in connection to the bankruptcy proceeding.  After she received insurance checks jointly paid out herself and contractors hired to complete repairs on a home she owned. The woman forged the contractors’ signatures and used the proceeds for other purposes.  She also forged creditors’ signatures on pleadings filed in March 2011, in order to make it appear as though the creditors had withdrawn their claims for payment.

If you are considering filing for bankruptcy, it is important for you to speak with an attorney immediately.  An attorney will be able to review your financial records and other documents and to provide you with advice and guidance on important matters, including what information you must disclose to the bankruptcy court.