My wonderful wife likes to watch the Real Housewives Series on Bravo, especially the Real Housewives of New Jersey series. I started to watch the series with her last year and I have to say that it rather interesting if you like high drama, its kinda like watching a train wreck or a car crash. Last year in October 2009, one of the reality shows main characters Teresa & Joe Giudice filed a Chapter 7 bankruptcy while the show was filming. A Chapter 7 bankruptcy is a "straight bankruptcy" or a liquidation bankruptcy where the trustee or court appointed officer liquidates any non-exempt assets for the benefit of creditors Chapter 7.
A Chapter 7 like any bankruptcy is filed under the penalty of perjury and perjury is a very serious crime just ask Bill Clinton and Scooter Libby both were convicted of it. According to this article, the Giudice's allegedly hid assets from the trustee in order to keep them from their creditors. In addition, it appears that from public records and news reports one of their creditors and their case trustee are objecting to their discharge. In addition, it appears from those public records and news reports that several adversary complaints have been filed in the bankruptcy against the Giudice's alleging fraud.
Just recently, it appears that the United States Department of Justice Office of the United States Trustee filed a 19 page objection to the Debtor's discharge alleging that the Debtor failed to list several assets on the initial petition including any bank accounts held by either debtor, several vehicles, the Debtor's wife's interest in her book "Skinny Italian" a New York Times best seller, several business interests that Joe Giudice derives income from and has an interest in which included two parcels of land, as well as other assets. Despite the Debtors making several amendments to their petition the Debtors are alleged to have still failed to list assets.
This article, provides a link to the actual adversary complaint by the United States Trustee. It appears from reading the complaint that the trustee conducted the 341 meeting and was "tipped off" about the fraud so he conducted a 2004 examination (a deposition and request for bank records and other documents) where the Debtors were asked about several of the "discrepancies" between their petition and reality. What is rather apparent for anyone who watches the reality series that the Debtors had assets prior to the filing and it was just a matter of time before the Trustee was going to inquire further into any assets.
Mrs. Giudice is also alleged to have not listed her interest in her best selling cookbook even after the amendments, or her website that sells various items and produces significant income which she is the sole member. According to the complaint, the Debtors "tax returns" submitted to the case trustee were never even filed with the IRS for 2006, 2007, and 2008 which is required pursuant to 11 U.S.C. 521 and can result in dismissal of the bankruptcy case. Further, the complaint alleges that upon examination of Mrs. Giudice's bank records significant deposits of over $100K were allegedly placed in her personal account prior to the filing and over $192K was allegedly deposited into her personal account after the filing.
Even more troubling it is alleged that the contract for the publishing of her book "Skinny Italian" was dated approximately one week prior to the petition date and was signed right after the filing on November 18, 2009. It is apparent from news reports that the trustee in the case believed that the book and the royalties derived from the book were property of the estate and he filed an objection to the Debtor's discharge on that basis among others.
As a Chicago Bankruptcy Attorney it is rather clear that the Giudices have a lot of unresolved issues and problems with their bankruptcy filing. It is this attorneys opinion that these Debtor's will get criminally charged for their omissions which could result in several felonies. They also will likely not receive their discharge. What is rather clear is that if the Giudices go to trial on the adversaries then it will be a major public spectacle with the media reporting it all.
I cannot state how important it is for a Debtor to list all assets and liabilities in a bankruptcy. Our office hands out a disclosure pursuant to 11 U.S.C. 527 (a) (2) which states under very clear terms that a bankruptcy is filed under the penalty of perjury, and that all assets and liabilities must be listed (our office even explains the document and has the client sign it). In the rare instance that a client fails to list an asset then the trustee would likely go after said asset, and could possibly object to the persons discharge, unless it is an innocent omission by the Debtor. Bankruptcy fraud is a serious criminal act and it is a felony, a person can spend up to five years in jail and pay a $250,000 fine. If a person commits bankruptcy fraud they are almost certain to lose their discharge on all of their debts just as the Giudice's are likely to lose theirs.
It is imperative that the Debtor tell the truth and the whole truth when filing bankruptcy. Our office will rarely see a Debtor who wants to lie to the court, and even if the occasional client who walks into our door wants to lie they would never be so brazen to show off assets on TV, spend a ton of money on TV prior to the filing, or show off assets to their attorneys and then fail to list them on their schedules. Even if they did this my opinion is that we have a duty to list any assets we learn about whether or not the client wants to list them or not. Further, if the client insists on not telling the truth we will of course not touch the case and will not file the petition, and we will of course send the potential client out the door. What is clear is that the FBI investigates bankruptcy fraud and the Department of Justice will and does prosecute bankruptcy fraud in our district and others.
It is this authors opinion from experience that about 99.9% of our bankruptcy client are the "honest but unfortunate debtor who deserve a fresh start" and warrant the discharge issued by the court. It is really sad that these numbskulls may leave the impression that a lot of debtors are doing something wrong by filing bankruptcy which is an unfair and unwarranted assumption. The vast majority of Debtors are honest forthright with their assets and liabilities.
It is this authors opinion that the Office of the
United States Trustee is going to pursue criminal charges in the Giudice's bankruptcy filing due to the fraud and "celebrity" status just as the DOJ did in the Martha Stewart insider trading case. There is a significant deterrence factor when the person is a public figure such as the Giudices and to give them a very stiff sentence if they are convicted and to make an example out of them to deter others from doing the same. This story is certainly a lesson in what you should not do when you file a bankruptcy! Please call my office for a free consultation at 312-489-8182!
Marc Wagman