News Flash: No New Ideas in Bankruptcy Fraud
A woman from Barron, Wis. was recently charged with counts of bankruptcy fraud for concealing bankruptcy assets from creditors, transferring property to relatives, and making false declarations during bankruptcy. Cynthia Barlow, 55, was recently indicted on charges related to her bankruptcy filing that included concealing close to $19,000 while making a separate payment to a creditor totaling over $3,000.
Barlow falsely testified that she had $100 in cash on hand during a bankruptcy proceeding in February 2009. She also fraudulently omitted that she transferred roughly $12,000 to a relative, and made a payment to a creditor in the amount of $3,650. In total, investigators claim Barlow concealed $18,977.
Barlow’s charges include concealing bankruptcy estate property from creditors and the United States trustee; fraudulently transferring property of the bankruptcy estate: making a material false declaration in a bankruptcy proceeding, and falsely testifying under oath in a bankruptcy proceeding. If convicted, for each count Barlow could face the maximum penalty of 5 years in prison. Charges from this case resulted from an investigation completed by the Federal Bureau of Investigation.
The Barrow case is typical of bankruptcy fraud cases. Occasionally a bankruptcy debtor applies the philosophy of “what the bankruptcy trustee doesn’t know can’t hurt me.” There are several problems with this approach. First, the truth will be discovered. Either there is a paper trail of bank transactions or canceled checks, or an angry ex-spouse, neighbor, or business partner tells on the debtor. Second, most assets can be legally protected during Chapter 7 bankruptcy. There is no reason to conceal anything (especially from your attorney!). Third, bankruptcy fraud is a criminal offense. Bankruptcy is meant to provide a fresh start to an honest debtor. The dishonest debtor may face federal criminal charges be denied a discharge.
If you are thinking of hiding information, income, or assets from the bankruptcy trustee. Think twice! Your attorney can help you protect your assets legally and without danger of running afoul of the federal laws.