Real Estate Executive Convicted of Bankruptcy Fraud
Wouldn’t it be great to wipe out all debts and not lose anything in return? If you have few assets and are low income, then this might be the reality. However, higher-income people are likely to lose money in bank accounts or other assets in exchange for having debts elimination. The temptation to hide assets must be great.
A recent story out of Chicago highlights the extent some people will go to defraud the bankruptcy court. According to the Chicago Sun-Times, a former real estate executive tried to discharge millions in debt but got caught trying to hide assets from the trustee.
Hidden Accounts and Inappropriate Transfers
Back in 2009, Brett Immel and his wife jointly filed for Chapter 7 bankruptcy protection in Illinois. With this bankruptcy, a person’s qualifying debts will be wiped out but, in exchange, they must hand over non-exempt property. The Immel’s claimed debts totaling roughly $6 million, a very large sum.
However, in his bankruptcy filings, Immel only disclosed that he had one bank account—his personal checking account with around $1,000 in it. In reality, as investigators ultimately discovered, Immel had been transferring thousands of dollars each month into 2 other bank accounts, neither of which he disclosed in his bankruptcy filing.
How did Immel perpetrate this fraud? First, one of the accounts was for the real estate investment firm that employed him, Hanover Services. The second account was for another business, Fourteen Consulting, that he owned.
With money deposited into these accounts, Immel paid his personal expenses, including groceries, mortgage, car payments, pet care expenses, and shopping trips at luxury clothing stores. Clearly, these were not business accounts if he was using them to pay for his personal bills.
Failure to Disclose is Fraud
According to prosecutors, Immel continued to use the money in the 2 business accounts to pay for personal expenses even after he filed for Chapter 7 bankruptcy protection.
Additionally, Immel did not accurately disclose his income from his two businesses. This likely allowed him to qualify for a Chapter 7 bankruptcy when he might not have been entitled to file it. It also helped obscure how much money he really had in his possession.
After conviction, Immel faces up to 5 years in prison—a very steep punishment. Remember, all people who file for bankruptcy protection sign their documents under penalty of perjury, and bankruptcy fraud can land someone in prison for up to 20 years.
Of course, an innocent mistake is not fraud and will not result in prosecution. Overlooking an asset like an old car is quite different from transferring tens of thousands of dollars into hidden accounts, before and after bankruptcy. However, applicants should be as accurate as possible in their filings, which is just one more reason to use an experienced Plantation bankruptcy attorney.
Contact our Plantation bankruptcy attorneys at Nowack & Olson today. To get started, please schedule a free consultation by calling 888-813-4737. We will be happy to discuss whether bankruptcy is right for you.