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.