What are the penalties for concealing assets during a bankruptcy proceeding?
Paul Graves, a 60-year-old man from Middletown, was sentenced last month by U.S. District Judge James D. Petersonfor making false statements under oath in connection with a bankruptcy proceeding. He and his wife owned and operated a hardware business and had accumulated $500,000 in business debts.
Disclaimer of Inheritance
The criminal activity began in May of 2009 when Graves, planning to file for personal bankruptcy, executed a fraudulent disclaimer of a large inheritance. The inheritance, left to him by his mother when she died in February of 2009, had a value of approximately $800,000. An investigation revealed that, in spite of his disclaimer, Graves managed to retain the use, control and benefits of the assets he supposedly disclaimed.
Bankruptcy Filing and Lying Under Oath
A year later, in May of 2010, Graves filed for Chapter 7 personal bankruptcy in the U.S. Bankruptcy Court for the Western District of Wisconsin, intentionally failing to disclose the concealed assets from not only his creditors, but from the bankruptcy trustee and the bankruptcy court. Exacerbating his misdeeds, he took an oath at the bankruptcy proceeding that all his statements of assets were complete and entirely truthful.
Graves’ oath was later proved untruthful since he failed to reveal:
• Use and control of the inherited assets fraudulently disclaimed in 2009
• Ownership of a one-quarter interest in a 9-acre island in Canada
• Ownership of a 2-bedroom cabin on that island used for family retreats since 1995
• Wife’s joint ownership of a home in Jackson County, WI
• Wife’s joint ownership of two bank accounts worth over $200,000
• Joint ownership with a rent-free lifetime tenancy of a home in Middleton, WI
• Ownership of a 2009 Mercedes SUV purchased with funds he had disclaimed
Charges and Penalties
The charges brought against Paul Graves resulted from an investigation conducted by the U.S. Bankruptcy Trustee’s Office in conjunction with the Federal Bureau of Investigation. At Graves’ sentencing, Judge Peterson referred to Graves’ scheme designed to fraudulently evade debts he owed, as well as to use substantial assets he had supposedly disclaimed for his own personal gain.
Graves, who pleaded guilty to all charges, was sentenced to 6 months of home confinement and 5 years of probation. In addition, he was order to pay over $186,500 restitution to his creditors in the bankruptcy.
Crimes involving bankruptcy proceedings are always serious and carry heavy penalties. If you find yourself faced with overwhelming debt and are considering filing for bankruptcy, you should retain the services of a knowledgeable and competent bankruptcy attorney who can guide you through the complexities of the process.