February 19, 2017

Background:

  • Small business owner sentenced to prison.
  • Filed Chapter 7 Bankruptcy.
  • Owner of a liquor store.
  • When the small business owner sold the liquor store for $171,000, he had his parents deposit the proceeds in their bank account.
  • Parents paid his expenses and gave him cash on a regular basis from the funds.
  • This income/profit was never recorded in the Bankruptcy Petition.

Court Decision

  • Debtor was sentenced in Federal Court to a one-year jail sentence.
  • Ordered Debtor to pay back $119,000 in restitution (which is, of course, non-dischargeable in bankruptcy).
  • Jury deliberated for several hours and found debtor guilty of all 6 counts of fraud.

Making false oaths and false statements in bankruptcy is a serious offense.    As I remind my clients, honesty is the only policy when you come to the U.S. government for a fresh start.