California Bankruptcy Lawyer Blog

Fremont Bankruptcy Attorney Discusses Women Sentenced To Prison Time For Bankruptcy Fraud

A woman who concealed property when filing for bankruptcy has been sentenced to five months in prison. Kathy M. Bartels received her sentence last week after pleading guilty to knowing before filing for bankruptcy that she would be receiving property from her deceased father’s estate. She deposited a $20,875 distribution check into her bank account on April 28, 2003, but did not list the inheritance or trust interest when she filed her bankruptcy documents. Less than one month after depositing the check, she lied to a bankruptcy trustee while under oath, denying that she was going to receive any inheritance during the next six months. In August 2003, she received a $42,872 check—the life insurance payout from her father’s death. She deposited that money into another account.

Bartels has now admitted to withholding the information from the trustee on purpose. She says that she knew that she needed to disclose information about any inheritances she had received within the six months of filing for bankruptcy. She is being ordered to pay $40,497 in restitution and serve three years of supervised release after she serves her prison term.

The United States Department of Justice says that 10% of all bankruptcy petitions have some element of fraud. When filing for bankruptcy, all debtors are supposed to fully disclose all assets and liabilities. Unfortunately, however, not everyone does this, and the concealment of assets or lying during a bankruptcy proceeding is a cause of most bankruptcy fraud cases. When a debtor does not list all of his or her assets on a bankruptcy schedule, the crimes of false statement and concealment are committed.

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Posted In: Bankruptcy Fraud

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San Mateo Bankruptcy Attorney Discusses As Bankruptcy Judge Approves Disclosure Statement, Delta Moves Closer Toward Exiting Chapter 11 Bankruptcy Protection

Delta Air Lines can begin soliciting votes for its creditors to approve its bankruptcy reorganization plan. The airline carrier plans to emerge from bankruptcy in April. The disclosure plan, which was approved by the judge this week, will be sent to creditors.

According to attorneys for the Atlanta-based company, all formal, informal, unfiled, and filed objections had been resolved. Among the objections, were filings from Travelocity, several banks, the city of Los Angeles, and the county and city of Denver.

Delta first filed its disclosure statement and reorganization plan last December. Since then it has made two amendments. It has also managed a takeover bid by US Airways Group, which withdrew its bid for Delta last month after Delta’s creditors announced that it would support Delta’s plan to emerge from bankruptcy as a solo company.

Creditors can vote on the reorganization plan until April 9. The plan also includes Delta’s plans to give creditors new stock upon its exit from Chapter 11.

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Posted by Scott Sagaria | Permalink | Email This Post | Comments (0)

Posted In: Bankruptcy Exit Plan , Chapter 11

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Monterey Bankruptcy Attorney Discusses Phony Attorney’s Bankruptcy Conviction Reversed By Ninth Circuit In California

The bankruptcy fraud conviction of John Milwitt, a California man who pretended to be an attorney and stole money from a number of tenants who were about to be evicted, has been reversed by the Ninth U.S. Circuit Court of Appeals. According to the panel, in a 2-1 ruling, even though prosecutors proved that Milwitt deliberately tried to defraud the renters, they were unable to prove that he intentionally defrauded the landlords, which is what he is charged with in the indictment.

Milwitt published a deceptive ad in a phone book, saying that he was with a company named “AP Assistance.” The advertisement attracted the attention of a number of tenants who needed help to defend themselves from unlawful detainer actions. According to witnesses, Milwitt convinced the tenants that he was a lawyer—even though he had never gone to law school—and he told the renters that they were legally allowed to withhold their rent from the landlords. The tenants paid him fees, in exchange for him appearing in court on their behalf. Milwitt would then list them in court documents has having appeared in pro per. He did not represent any of them in court, which led to default judgments in favor of the landlords. Milwhitt had given a mailbox at a public mail service as an address, and this made it impossible for the tenants to immediately find out that he had not appeared in court for them. He filed for Chapter 13 bankruptcy protection for six of the renters—all of them claim that they did not know or even authorize the petitions, which named the six tenants’ landlords as creditors. Because of the petitions, automatic stays were immediately enacted. This prevented the landlords from collecting the rent owed to them.

Milwhitt, Under 18 U.S.C. Sec 157, was indicted on six counts of bankruptcy fraud. According to the indictment, "he fraudulently obstructed the creditors’ legal right to collect back rents, and repossess the properties” by filing the fake petitions. He was found guilty of five of those counts by a jury.

The Ninth Circuit overturned the conviction, saying that the specific intent to defraud the victim or victims—in this case, the landlords—was not identifiable.

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Posted by Scott Sagaria | Permalink | Email This Post | Comments (0)

Posted In: Bankruptcy Fraud , Chapter 13 Bankruptcy

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San Jose Bankruptcy Attorney Discusses $2.5 Million Financing For Delta Air Lines To Emerge From Bankruptcy Is Approved By Creditors

The Official Unsecured Creditors’ Committee for Delta Air Lines has approved the conditions of the airline carrier’s $2.5 million financing plan to emerge from Chapter 11 bankruptcy.

The announcement comes as the country’s third-largest carrier company amended and made technical changes to its bankruptcy reorganization plan and follows the withdrawal of its hostile takeover bid (at least $9.8 billion) by US Airways.

Delta’s board had considered US Airways’s proposal several times but did not take any action beyond that. US Airways withdrew its bid after the unsecured creditors rejected the merger offer in favor of supporting Delta’s reorganization plan. The Arizona-based U.S. Airways Group had given the committee until February 1 to meet certain demands, including postponing Delta’s disclosure statement hearing that was scheduled on February 7, or it would pull its offer.

Also, because several creditors had objections with its disclosure statement, Delta is working with them to resolve those differences. The airline carrier wants its reorganization plan confirmed in April.

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Posted by Scott Sagaria | Permalink | Email This Post | Comments (0)

Posted In: Chapter 11

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