How does a bankruptcy case begin, and what percentage of bankruptcy petitions does the IRS estimate contains some kind of fraud? Can you find any bankruptcy fraud cases uncovered by the IRS? How was the fraud uncovered? Were the fraudsters punished? Who prosecutes these cases for the IRS?
Thank you for the opportunity to help you with your question!
1. Federal courts, in their exclusive jurisdiction over bankruptcy cases,
give people and businesses a fresh start when they can no longer pay
2. According to the United States Bankruptcy Court, bankruptcies are
steadily increasing and reached 1.7 million in fiscal year 2003. The
increasing number of bankruptcy petitions filed has been accompanied by a
correlative increase in bankruptcy fraud. In fact, the Department of
Justice estimates that 10 percent of all bankruptcy petitions contain
some elements of fraud.
3. Example from December, 2006, two Milwaukee, WI-based attorneys
were sentenced to prison for conspiracy, bankruptcy fraud, and money
laundering for hiding hundreds of thousands of dollars while pursuing
Chapter 7 bankruptcy, which petitions the court to liquidate the
debtor’s non-exempt property. Ronald Arthur received a 54 month prison
sentence and his wife, Mary, was sentenced to 12 months and one day in
prison. Evidence at trial revealed that the Arthurs conspired to conceal
assets, including bank accounts in the names of shell corporations,
from the bankruptcy trustee. In furtherance of the conspiracy, Ronald
Arthur made false statements while testifying during bankruptcy
proceedings and failed to disclose that he was earning substantial
income as a lawyer/real estate consultant.
Please let me know if you need any clarification. I'm always happy to answer your questions.
Aug 9th, 2015
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