Bankruptcy provides a fresh financial start for the honest, but unfortunate debtor. Unfortunately, some individuals try to use the bankruptcy laws to get more than just a fresh start – they want a head start. Bankruptcy fraud is a federal crime punishable by a fine, or by up to five years in prison, or both. Take a look at some of these recent cases of debtors caught up in bankruptcy fraud schemes:
Wesley Pace of Natachitoches, Louisiana, was sentenced on April 2, 2014 to 15 months in prison and three years of supervised release. He was also ordered to complete 300 hours of community service within the supervised release time period. Pace filed for bankruptcy in March of 2008, but did not declare his ownership of mineral rights to a parcel of land in Natchitoches Parish. One month later, Pace sold the mineral rights for $95,000 without informing the bankruptcy trustee of the sale or providing the money to the bankruptcy trustee as required by the Bankruptcy Act.
Sacramento, California couple Derian Eidson and Steven Zinnel were convicted of bankruptcy fraud and money laundering. Eidson, a suspended member of the California bar, was sentenced on in April, 2014 to 121 months of imprisonment and a fine of $200,000, following conviction at trial on two counts of money laundering and bankruptcy fraud. Eidson and her lover, Sacramento businessman Steven Zinnel, conspired to conceal millions of dollars to avoid paying funds to Zinnel’s ex-spouse and child. Zinnel filed bankruptcy and lied about assets, while hiding money in shell corporations, Eidson’s attorney-client trust account, and her personal bank account. Zinnel was previously sentenced to 17 years in prison for 15 counts of bankruptcy fraud and money laundering.
Michael Wayne Harding of Keswick, Virginia pled guilty on April 16, 2014 to one count each of bankruptcy fraud and wire fraud after waving his right to an indictment. Harding was sole employee and president of a company that secured mortgages based on improvements made on the properties. He provided false invoices to make it look like the improvements were made to get mortgages secured. During bankruptcy, Harding filed false monthly reports and forged signatures on real estate documents. He will complete 30 months in federal prison for his bankruptcy and wire fraud crimes, and was ordered to pay over $2 million in restitution.
Former West Virginia doctor Dr. Allen Saoud was sentenced on March 25, 2014 to eight years in prison and ordered to pay $2.5 million in fines. Saoud was previously convicted on health care fraud charges, identity theft, concealment of material facts in a health care matter, one count of obstructing the IRS, bankruptcy fraud, and making a false statement to the IRS. In 2005, Saoud, a former doctor of osteopathic medicine specializing in dermatology, settled federal charges of submitting false claims to Medicare and Medicaid. He agreed to pay $310,000, and to voluntarily be excluded from all federal health care programs for 10 years. Saoud violated that agreement and submitted false documents during bankruptcy, which led to his federal conviction.