Another story about bankruptcy fraud and it’s consequences:
A Florida couple will spend the next year in prison for bankruptcy fraud after admitting they concealed jewelry and other valuables in their bankruptcy case, the Associated Press reported on Friday. A West Palm Beach federal judge imposed the sentences on Thursday on Dr. Richard Krugman and his wife, Tamara Giordano. They were also ordered to pay more than $27,000 in restitution. The couple had owned a health care company that encountered financial difficulties in 2006, forcing them to file for bankruptcy two years later. At the time, they reported $3 million in debts and only $13,000 in assets but later said in court that was not true. Instead, Krugman and Giordano admitted hiding valuables such as a gold and diamond Rolex watch, diamond jewelry pieces, silver, china, crystal and two George Rodrigue “Blue Dog” lithographs.
The take-away from this story and those like it is that it in never worth it to hide assets when doing a bankruptcy case. I totally understand. You want to keep your stuff. Often in consults with potential bankruptcy clients we have this discussion. First off….many of those who I’m able to ferret out from the conversation are understating the values or out and out attempting to hide assets aren’t aware that I can probably protect whatever it is they are worried about. Exemptions in Chapter 7 are fairly generous. Or a Chapter 13 bankruptcy is a good alternative. We often advise chapter 13 filings when there are assets at risk in a potential chapter 7 case. It doesn’t happen often but it does come up occasionally.
If you’re interested in bankruptcy or keep in tune to popular culture you’ve seen similar stories. There the reality star Theresa Guidice from the “Houswives of New Jersey”–she and her husband Joe committed bankruptcy fraud and they are both suffering the consequences. Here in Minnesota a local automobile dealership magnate ended up in federal prison due to bankruptcy fraud.
It’s not worth it for you and, as an attorney, it’s not worth it for me. As soon as I get the sense that someone is playing games with the assets….I’m out! It can take a run of the mill bankruptcy case and turn it into a veritable nightmare. The end result…besides possible prison time, is that a discharge will be denied or revoked (meaning you can never discharge that debt in bankruptcy) plus the bankruptcy can still take all of your stuff. Not a good result. My advice to people is….if you want all of the benefits that a bankruptcy can bring (and it is substantial) then play by the rules. A good bankruptcy attorney can help you do some pre-petition exemption planning to help you mitigate the loss and protect your assets or suggest alternatives like a chapter 13 or debt settlement to get you a good result.
Call us at (952) 432-4388 for answers to questions about bankruptcy and how we can help. Minnesota cases only.
David Kingsbury, Attorney at Law.
Expert in chapter 7, chapter 13 and debt settlement matter.