- Company Principals sold their Company A to Company B
- All become employees of Company B that bought them out
- One month later, all 3 principals did the following:
- Left Company B
- Went to work for a competitor
- Took trade secrets to their new employer
- Recruited a significant amount of employees
- Company B that bought out the original company suffered significant losses and their competitive abilities were severely affected
- Profits and customers fell dramatically
- Company B sued the original principals of Company A who went to work for the new company
- There was a significant favorable ruling and award against the principals
- One of the original principals of Company A filed Chapter 7 Bankruptcy
- The Principal who filed Chapter 7 could not discharge the debt.
- Debtor was liable on the tortious interference claim and his actions were willful and malicious.
- Bankruptcy is not set up for those who deceive others and when they are caught, they want to walk away from the “punishment”
Honesty is the best policy when filing bankruptcy.
- Debtors (both surgeons) filed for Chapter 7
- $5.6 million in Debt
- $400K in assets which included jewelry they valued at less than $15K
- Chapter 7 Trustee noted a potential fraudulent transfer wherein the Debtor returned about 20-30 valuable watches.
- The Debtors could not and did not keep accurate records of these watches.
- Debtors would get watches from a jeweler and keep the ones they wanted and return the rest. However, the receipts and returns did not match at all.
- The jeweler filed a Proof of Claim for approximately $414K for watches that the Jeweler delivered to the Debtors but were not returned.
- The surgeon Debtors claimed that just did not keep good records.
- Trustee filed an adversary proceeding and the matter progressed to the appellant court.
- The lack of receipts and returns were questionable at best. The missing watches were neither found nor could be located in any paperwork indicating these watches were returned.
- The U.S. Court of Appeals agreed with both lower courts and the Chapter 7 Discharge for the surgeons were denied.
I hope these surgeons do a better job documenting their surgeries.
Watches are still missing but the Debtors also have all their debts. Honesty is the best policy when you file a Bankruptcy.
- In 2017 Bumble Bee was fined for price fixing.
- Fine was $25 million
- The Fishy Cartel: Chicken of the Sea and Star-Kist
- Still owe $17 million
- Taiwan company FCF Fishery bought for $925 million
- FCF is Bumble Bee’s largest creditor
Eventually you get caught when you do something “fishy”.
Always stay honest. Something I stress to my bankruptcy clients.
March 9, 2018
- Debtors filed fraudulent tax returns.
- Debtor and his wife filed for Chapter 7 relief twice: 2012 and again in 2014.
- Government alleged that Debtors not only failed to disclose all of their assets but also provided false testimony at the hearing.
February 8, 2018
- Debtor was an attorney
- Involved in an auto accident in 2007; filed a personal injury lawsuit Nov. 23, 2010
- Involved in another auto accident in 2008, filed personal injury lawsuit March 6, 2011.
- Filed for Chapter 13 Bankruptcy
- Failed to disclose the lawsuits at Meeting of Creditors or in the financial affairs of the Bankruptcy Petition.
- Debtor’s attorney told the Trustee that he was going to add any important lawsuits in the future.
- Debtor’s schedules were amended to add several creditors but again no lawsuits.
- Filed another set of amendments and disclosed the two lawsuits and the fact that one had settled.
- Trustee moved to convert the case from Chapter 13 to 7.
- Debtor agreed that she failed to disclose the two lawsuits but blames her lawyer for the lengthy delay in disclosing them.
January 14, 2018
- Chapter 7 Debtors owned a 5 bedroom home.
- House was foreclosed.
- Debtors entered into an agreement with the Trustee to sell the furniture in their home at auction.
- Without any approval, Debtors sold the furniture and never even mentioned the sale to their attorney.
- Trustee came to the house to start the sale of the furniture and found that the house was empty.
January 5, 2018
- Attorney required clients in Chapter 11 or Chapter 13 to deposit money with him.
- He represented that the money would be held in trust for use during the bankruptcy; the money was used for other purposes.
- Attorney would take money from clients; tell them that he was working out deals with creditors with the money. Instead he used the funds for his personal use.
- The attorney robbed 48 clients of $3.4 million He would take money that he owed other clients and pass money to them. Sounds like a Ponzi scheme to me.
May 25, 2017
Real Estate Professional submitted a mortgage loan application to a federally insured financial institution.
He willfully overstated his income, understated his liabilities and falsely denied he had declared bankruptcy within the previous seven years.
Court Ruling read more…
April 30, 2017
- Debtors filed for Chapter 7 bankruptcy.
- Debtors did not list 2 inoperable trucks that they owned; debtors’ claimed these trucks at the time of the petition were property of deceased father.
- Changed their schedules when the two trucks were questioned; amended their schedules to include one truck.
- Plaintiff, former landlord of Debtors, evicted Debtors and objected to the Debtors’ discharge. read more…
February 19, 2017
- 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.
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