‘Real Housewife’ Changes Addresses

Erstwhile reality TV star Teresa Giudice surrendered to federal authorities in Connecticut to begin her 15-month prison sentence for bankruptcy fraud. After she completes her term, her husband, Giuseppe Giudice, will begin serving a 41-month sentence.

Last year, the couple pleaded guilty to charges that they concealed assets in their Chapter 7 Bankruptcy. Mr. Giudice also pleaded guilty to tax evasion, loan fraud and mortgage fraud. He will serve an 18-month sentence for presenting a false identification concurrently with the federal prison term. Mr. Giudice, who is not an American citizen, also faced possible deportation proceedings.

Under federal sentencing guidelines, Ms. Giudice is not eligible for release until December 2015.

Bankruptcy Fraud

‘Real Housewife’ Changes AddressesWhen filing your voluntary petition, it is important that you be completely upfront with your attorney about all your assets. Most of them are exempt, and the trustee normally only seizes nonexempt assets if there is a benefit to the creditors or the bankruptcy estate. So, there is a good chance that you may be able to keep your used fishing boat, because by the time the trustee pays off the loan balance, prepares the boat for sale, and stores it until a buyer is found, the creditors may see very little money, if any.

Bankruptcy fraud is a very serious charge that carries a penalty of up to five years in prison and/or a $250,000 fine. In addition, the court will normally order that your debts will not be discharged. A prosecutor must prove that:

  • A bankruptcy case was pending: It may be a defense if amended schedules were filed prior to the date of the indictment.
  • The property was part of the bankruptcy estate: All nonexempt property is part of the bankruptcy estate.
  • The debtor concealed property: This can mean hiding assets, preventing discovery, withholding information or transferring property. The concealment does not have to be successful.
  • With intent to defraud: A jury will normally infer intent if the prior three elements are clearly established, unless the debtor has a really convincing explanation.

The government normally adds mail fraud and/or wire fraud charges, as well as other allegations, which significantly increases the potential penalties.

Contact John Hargrave and Associates

We have provided comprehensive counsel to individuals in and around Barrington, New Jersey, since 1977. To schedule a free initial consultation, contact our office by e-mail or call us at 856-547-6500.

What is the Potential Impact of Misrepresentation in a Bankruptcy Proceeding?

When you are struggling to meet your financial obligations, and have sought bankruptcy protection, the temptation to falsify information can always be present. You may fear that the court won’t grant your petition, that you’ll again face the seemingly endless calls, letters and threats from creditors. Making false statements during a bankruptcy filing is bankruptcy fraud, however, and bankruptcy trustees take the abuse of the system very seriously. The bankruptcy laws provide trustees with specific tools to verify the validity of assertions made in a bankruptcy petition.

An Examination under Rule 2004

The trustee has the power to obtain testimony and even documents from the person filing for bankruptcy, as well as any other relevant party. Under Rule 2004, the trustee can investigate any matter that will potentially affect the administration of the bankruptcy estate, or the debtor’s right to permanently discharge debts. This includes an examination of financial documents, conduct, property or other items.

Filing an Adversary Proceeding

The trustee, the United States Trustee’s Office, or other creditors may file a lawsuit, known in bankruptcy as an “adversary proceeding.” The adversary proceeding may name anyone, not just creditors or debtors. The trustee can use the adversary proceeding to:

  • Recover property wrongfully seized by creditors
  • Establish an appropriate value for property misrepresented by a debtor
  • Set aside wrongful or fraudulent transfers designed to favor specific creditors, or to remove property from a bankruptcy estate
  • Require that debtors make hidden assets available to the trustee
  • Seek restitution for or recovery of property wrongfully taken by employees, officers, shareholders or others in a business bankruptcy
  • Deny or revoke discharge of debt where the debtor has intentionally hidden or transferred assets to avoid inclusion in the bankruptcy estate

The trustee can ask the court to issue an injunction, prohibiting any party from taking actions that will have a negative impact on the bankruptcy estate.

Criminal Sanctions for Bankruptcy Fraud

The trustee may refer a case to the FBI or to the U.S. Attorney’s office for investigation for criminal offenses. Potential charges can include the filing of a false petition, the filing of false claims, intentionally concealing assets, bribery or embezzlement.

Contact John Hargrave and Associates

We have provided comprehensive counsel to individuals in and around Barrington, New Jersey, since 1977. To schedule a free initial consultation, contact our office by e-mail or call us at 856-547-6500.