Bankruptcy Fraud Cases
Bankruptcy is a way for honest people struggling with debt to get relief and a fresh start. It’s meant to help individuals facing challenging situations like losing a job, having big medical bills, divorcing, or dealing with a disability.
But sadly, some dishonest people misuse the bankruptcy system. They might have enough money to pay back their debts, but they try to get away with not paying by filing for bankruptcy. They might even use bankruptcy to hide their illegal activities, like scams or fraud, and keep the authorities from catching them.
The FBI and the Department of Justice are the agencies that investigate these kinds of fraud cases in bankruptcy. Even though they have other financial crime cases they oversee, they take bankruptcy fraud seriously. They focus on cases involving money, connections to organized crime, or when suspects file for bankruptcy in multiple states.
Civil and Criminal Bankruptcy Fraud
Bankruptcy fraud can take on different forms, and some of the most common types involve dishonest actions during the bankruptcy process.
Civil cases arise when a creditor files a lawsuit (adversary proceeding) for wrongdoing involving a specific debt. Consequences may include case dismissal, denial of debt discharge, or other sanctions.
Criminal bankruptcy fraud involves significant schemes to cheat multiple creditors and is investigated by the FBI and prosecuted by the DOJ. While most cases focus on debtor activities, creditors, trustees, court personnel, and third parties can also face charges for bankruptcy crimes.
Here are some examples:
Providing False Information
People may lie under oath or give false information during their bankruptcy proceedings. This could be about their income, assets, debts, or other important financial details. Providing false documentation is also a common way people try to deceive the bankruptcy court.
Concealing or Transferring Assets
Some individuals might hide their valuable assets so the court and creditors don’t know about them. They might transfer assets to family members or friends to keep them safe during bankruptcy.
Tax Fraud
Bankruptcy fraud may involve tax-related offenses, such as not reporting all of one’s income or claiming false deductions to lower the amount owed to creditors.
Multiple Bankruptcy Filings
Some fraudsters might use fake identities or aliases to file for bankruptcy multiple times in different places. This allows them to take advantage of the system and avoid paying their debts.
Bribing a Bankruptcy Trustee
In some cases, corrupt individuals may try to bribe a bankruptcy trustee to gain favor or get an unfair advantage during the bankruptcy process.
“Credit Card Bust-Outs”
This type of fraud involves running up credit card bills without the intention of ever paying them off. People rack up massive debt and then file for bankruptcy to get out of paying what they owe.
Bankruptcy fraud can also be linked to other crimes like credit card fraud, identity theft, mortgage fraud, money laundering, mail and wire fraud, and more. Sometimes, individuals simultaneously engage in multiple illegal activities, making the investigations more complex.
Federal Law And Bankruptcy Court
When considering bankruptcy, seek advice from a bankruptcy attorney to ensure compliance with federal law and avoid bankruptcy fraud.
An attorney can guide you through the process and help you make informed decisions while ensuring honesty and transparency in your filings.
18 U.S.C. § 157 Bankruptcy Fraud Case Examples
Let’s break down the situation in one example:
Jorge Droz Yapur is in big trouble because he’s accused of being involved in a “bankruptcy fraud scheme.” This means he allegedly made false statements related to his bankruptcy case. As part of his bankruptcy process, he tried to deceive his creditors, the people, or the companies he owed money.
Specifically, Jorge Droz Yapur faces nine charges of “concealment of assets” during his bankruptcy proceedings. This means he allegedly hid some of his money and income so it wouldn’t be discovered during the bankruptcy process.
He’s also facing eight charges of “making false statements” during the same bankruptcy proceedings. This means that he’s accused of lying under oath while giving testimony in court or providing information that wasn’t true.
One of the things he did was use a bank account that was in his adult son’s name to hide some of his money and assets. This way, it wouldn’t be traced back to him during the bankruptcy process.
Another serious accusation is that he testified under oath that his mother was alive and living in an elderly home. But in reality, she passed away.
He could face up to five years imprisonment for each violation if he’s guilty of all charges. He might have to pay a fine of $250,000. After serving his sentence, he’d have to report to authorities regularly.
Now let’s break down what happened with Yamil Fonseca Salgado:
Yamil Fonseca Salgado is in serious trouble because he’s accused of being involved in a “bankruptcy fraud scheme.” During several bankruptcy cases, he allegedly made false statements and lied about essential things. He did this to cheat his minor child out of the child support payments.
On top of that, he’s facing other charges. One of them is “willful failure to pay” child support. He allegedly didn’t pay about $107,200 in child support.
Another set of charges is related to “false statements” during his bankruptcy proceedings. This means he’s accused of lying or providing incorrect information while dealing with his bankruptcy cases.
According to the indictment, Yamil Fonseca Salgado tried to hide several things in his bankruptcy filings. He concealed assets, which meant he kept valuable things secret so that no one would know he had them. He also hid his income and connection to a maintenance company called CMM Janitorial, Inc.
In addition to that, he allegedly didn’t mention that he received money transfers through a payment system called ATH Móvil. These transfers came from the bank account of a construction company controlled by his close family members. This construction company, in turn, received money from the public housing management company where Yamil Fonseca Salgado worked.
Another thing he’s accused of is using and controlling a bank account at Banco Popular de Puerto Rico. But the account was in his grandmother’s name, and he used it to access funds for his expenses.
The consequences could be severe if he’s guilty of all these charges. He could face up to two years of imprisonment for the “willful failure to pay” child support. For each violation of 18 U.S.C. § 157 and § 152, he could be sentenced to five years in prison for each violation. Also, he might have to pay a fine of $250,000, which is a substantial amount. After serving his sentence, he could be under supervised release for three years, so he’d have to report to certain authorities regularly.
These charges are severe, and if Yamil Fonseca Salgado is convicted, he could face significant consequences for his actions. The legal system takes these cases seriously to uphold justice, protect those owed child support payments, and ensure honesty during bankruptcy proceedings.
