Bankrupty cases question

Accounting
Tutor: None Selected Time limit: 1 Day

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?

Aug 9th, 2015

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1. Federal courts, in their exclusive jurisdiction over bankruptcy cases, give people and businesses a fresh start when they can no longer pay their debts. 

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.


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Aug 9th, 2015

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