Monterey Bankruptcy Attorney Discusses Phony Attorney’s Bankruptcy Conviction Reversed By Ninth Circuit In California
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.
879 Bankruptcy Fraud -- 18 U.S.C. § 157
Title 18 U.S.C. § 157 prohibits devising or intending to devise a scheme or artifice to defraud and, for purposes of executing or concealing the scheme either (1) filing a bankruptcy petition; (2) filing a document in a bankruptcy proceeding; or (3) making a false statement, claim, or promise (a) in relationship to a bankruptcy proceeding either before or after the filing of the petition; or (b) in relation to a proceeding falsely asserted to be pending under the Bankruptcy Code. This section, which is patterned after the mail and wire fraud statutes, was added by the Bankruptcy Reform Act of 1994. This statute applies to any bankruptcy fraud scheme that continues or begins after October 22, 1994--the effective date of the Bankruptcy Reform Act of 1994.
Section 157 provides:
A person who, having devised or intending to devise a scheme or artifice to defraud and for the purpose of executing or concealing such a scheme or artifice or attempting to do so--
· files a petition under title 11;
· files a document in a proceeding under title 11; or
· makes a false or fraudulent representation, claim, or promise concerning or in relation to a proceeding under title 11, at any time before or after the filing of the petition, or in relation to a proceeding falsely asserted to be pending under such title, shall be fined under this title, imprisoned not more than 5 years, or both.
Any defendant who undertakes a fraud scheme against anyone and then carries out or conceals the scheme by filing for bankruptcy or by filing any documents in the bankruptcy, violates this statute. This section is also applicable to the defendant who tries to defraud someone by falsely asserting that a case is in bankruptcy in order to forestall the victim's actions. The essence of this statute is the existence of a fraud scheme or attempted fraud scheme and any use of the bankruptcy system to carry out the scheme. For example, this statute should be applicable to petition mills that are set up to defraud the landlord of a few months rent, or to a bust out scheme. Likewise, a defendant who is actively defrauding anyone violates this statute by filing bankruptcy to delay or conceal the fraud. Case law from the wire, bank, and mail fraud statutes, 18 U.S.C. §§ 1341, 1343, and 1344, which have similar language, will be very useful in determining the scope of this statute.
Sagaria Law, P.C. represents clients in Monterey County, Alameda County, and Santa Clara County, including the cities of San Jose, Fremont, Sunnyvale, Berkeley, Pacific Grove, and Pebble Beach, in the areas of Chapter 7 bankruptcy, bankruptcy Chapter 11 bankruptcy, and Chapter 13 bankruptcy. To schedule your free consultation, contact Sagaria Law, P.C. today.
Ninth Circuit Reverses Bankruptcy Fraud Conviction of Phony Attorney, Metropolitan-News Enterprise, February 6, 2007
Title 9 Criminal Resource Manual, US Doj.gov
Related Web Resource:
Chapter 13 Bankruptcy Basics, US Courts.gov
