Potential bankruptcy clients sometimes announce they don’t want to list a particular debt, or an asset or their bankruptcy schedule. I always cut them short with a reminder that what they’re proposing is felony bankruptcy fraud. Times are tough, but no sense in making them really tougher.
Recently a Georgia real estate broker was sentence to 15 months in federal prison for bankruptcy fraud after filing a fraudulent bankruptcy petition in the Northern District of Georgia.
The broker, Robert Negrelli, specialized in selling high-end homes and horse farms. In his Chapter 7 petition he falsely claimed that he only earned $81,000 in the two years prior to filing his petition. In fact, he earned $560,000 during that time. He also didn’t disclose three unsecured creditors, to whom he owed collectively $340,000. Negrelli was gaming the bankruptcy system by picking and choosing what to disclose. He was undone when the IRS took a closer look at his situation.
The bankruptcy system depends upon participants accurately reporting information on their petitions. False statements can later be uncovered by an Internal Revenue Service audit or an audit by the United States Bankruptcy Trustee, which is a branch of the Department of Justice.
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(Photo courtesy of Laura Padgett–does not imply any endorsement on her part of me or this blog).
