Bankruptcy fraud occurs more often than many people realize. The bankruptcy trustee uncovers some cases of bankruptcy fraud. In addition, creditors and other interested parties may report bankruptcy fraud. The Internal Revenue Service (IRS) might uncover bankruptcy fraud in some cases.
Bankruptcy fraud and tax fraud often go hand-in-hand. The IRS and the U.S. Department of Justice vigorously investigate and prosecute bankruptcy and tax fraud cases.
Many individuals we have spoken with do not understand all of the different options they have been considering bankruptcy. For example, you may see that Chapter 7 bankruptcy is the least expensive option, but you probably do not want to do bankruptcy fraud in the process.
As such, we built the following debt relief options calculator to help you compare: 1) Chapter 7 qualification and cost. 2) Chapter 13 payment plan 3) Debt Management 4) Debt Settlement and 5) Debt Payoff Planning. The free calculator should allow you to compare all of your options holistically to make the most informed decision.
In February 2020, the court sentenced the owner of Middletown mail to 18 months in prison for tax and bankruptcy fraud. Dietrich S. Fransler was the managing member of Pine Oak Properties, LLC. The company operated Middletown Mall, in Fairmont, WV. He pleaded guilty to:
Fransler admitted that he collected rents from tenants and used some of the rent money to pay expenses unrelated to the property. In addition, he willfully concealed the money from the bankruptcy estate and the creditors.
Furthermore, Fransler admitted that he did not pay withholding taxes that he withheld from employees’ paychecks to the IRS. He also did not pay his personal income taxes for four years. The total losses to the IRS totaled more than $880,000.
The court ordered Fransler to serve 18 months in prison. In addition, he must pay $225,000 in restitution to the bankruptcy trustee and $880,446.82 to the IRS.
After a two-week trial in July 2017, a Denver jury found Daryl F. Yurek and Wendy M. Yurek guilty of tax evasion and bankruptcy fraud. The sentences included:
The indictment and evidence presented at trial alleged that the couple attempted to settle taxes owed to the IRS and file Chapter 7, claiming lack of assets and income to pay their IRS debt.
However, during the period they claim to have insufficient assets to pay their personal debts, their companies paid substantial personal expenses for the couple totaling millions of dollars. The debts included purchasing homes, paying rent for vacation homes, and memberships to an exclusive country club. Additionally, the couple also submitted false statements to the IRS and committed numerous acts of evasion.
Patrick Franconeri received a sentence of 18 months in prison for bankruptcy fraud and tax evasion. He pleaded guilty to one count of concealment of assets in bankruptcy and one count of tax evasion. According to the Justice Department notice, Franconeri failed to file tax returns or pay taxes owed to the IRS. Instead, he took actions to conceal his income to avoid paying taxes, including cashing checks at cash-checking places to hide the money from the IRS.
Franconeri also filed a Chapter 7 bankruptcy case. He allegedly fraudulently concealed assets from the bankruptcy estate and failed to disclose his construction companies' ownership. Franconeri also failed to disclose income from the construction companies for the two years before filing bankruptcy.
In addition to the 18 months in prison, Franconeri was ordered to pay $716,560 restitution for the bankruptcy fraud. He must also pay $558,349 restitution to the IRS.
In Detroit, a federal grand jury indicted Donald Stanley LaVinge on several charges, including making false statements to the bankruptcy court and filing false tax returns. The indictment claimed that LaVinge allegedly failed to report income on his tax returns filed with the IRS for six years. It also stated that he allegedly told the IRS that the commissions were not income for him.
Allegedly, when LaVinge filed for bankruptcy relief in 2018, he did not list the IRS as a creditor. He underestimated his income in the bankruptcy case and made false statements to the United States Department of Justice.
Mr. LaVinge has not been found guilty on any of these charges at this time. However, if he is convicted of the charges, LaVinge could serve up to three years in prison for each false tax return charge and five years for each bankruptcy fraud charge. He could also be sentenced to several years of supervised release and ordered to pay restitution and monetary penalties.
Bankruptcy fraud is a crime. People who knowingly try to conceal assets or income could be sentenced to years in prison.
The bankruptcy system is designed to help people who cannot afford to pay their debts get a fresh start. The bankruptcy system helps individuals get rid of debts they cannot pay. As a result, they can recover from a financial crisis and move forward with their lives.
Ascend is dedicated to helping you find an affordable solution to your debt problems. We offer assistance and advice regarding several debt-relief options, including bankruptcy, debt settlement, and debt payoff planning.
Contact Ascend today to speak with one of our team members. It does not cost you anything to talk with us. Most of our services are available free of charge. Call (833) 272-3631 or contact us online.