In the following press release Rhode Island United States Attorney Robert Clark Corrente announced that U.S. District Court Judge Mary M. Lisi, in Providence sentenced Richard M. Cecca to eight months in prison, followed by eight months home confinement, for making false statements and concealing real estate assets in a bankruptcy filing. Cecca failed to disclose his ownership interest in about 20 parcels of real estate in Rhode Island.

In October, Cecca pleaded guilty to six counts of bankruptcy fraud. At the plea hearing, Assistant U.S. Attorney Richard W. Rose said that the government could prove that Cecca failed to disclose assets in his bankruptcy petition and failed to disclose the sale of assets after the petition was filed. Most of Cecca’s assets were in the form of real estate owned by corporations that he controlled and notes and mortgages owed to those corporations. The total value of the assets that he concealed was between $400,000 and $1,000,000.

On September 21, 2001, at a Meeting of Creditors in connection with his bankruptcy filing, Cecca falsely stated that RGM, LLC, a Rhode Island limited liability corporation in which he held an interest, did not have any assets, when in fact RGM owned real estate in Providence at 12 Halton Street, 63 Wendell Street, and 208 Admiral Street, and at 14 Hare Street, West Warwick.

At the same meeting, Cecca falsely stated that Nu-Future Investment Corporation, a Massachusetts Corporation in which he held an interest, did not own any property, when in fact Nu-Future owned, among other things, real estate located at 26 Inkerman Street, Providence. Nu-Future did business in Rhode Island under a fictitious name, Domani Corporation.

Cecca admitted that, when he filed for bankruptcy in August 2001, he falsely stated that Nu-Future had no market value, when it actually held several pieces of real estate, including property at 132 Laban Street, Providence. Cecca also failed to disclose his interest in Bos-Ten, LLC, a Rhode Island limited liability corporation, and that Bos-Ten owned real estate in Providence at 110 Bowdoin Street, 17 Erastus Street, and 133 Early Street, and at One Mill Pond Road, North Kingstown. Cecca also failed to disclose real estate assets and mortgages owed to RGM, LLC, a Rhode Island limited liability corporation in which he held an interest. Cecca, 53, of Plymouth, Massachusetts, must report to prison on March 30.

The Federal Bureau of Investigation investigated the case, with assistance from the United States Bankruptcy Trustee.

In the following press release United States Attorney Catherine L. Hanaway announced that Rose A. Shaw was indicted last week on multiple mail and wire fraud charges, along with a forgery charge alleging that she signed a judge’s name on a bankruptcy document.

According to the indictment, Shaw received monthly social security disability payments from January 1985 thought March 2006 by falsely claiming on the applications that she was mentally retarded and suffered from schizophrenia. The total amount of these benefits was approximately $153,000. The indictment states that during this time, Shaw was employed as a mortgage banker under the business name of Rose Shaw Enterprises, LLC and Shaw Brokerage Real Estate Investment Firm, LLC.

In count five of the indictment, it is alleged that on August 25, 2005, Shaw forged the signature of Chief United States Bankruptcy Judge Barry Schermer on a bankruptcy document.

In December 2005, Shaw applied for a loan to purchase #10 Hansen Manor, St. Charles, Missouri, by submitting false information on the application, including false net income records for 2005, false financial/income statements 2004 and a false 2004 federal income tax return. Shaw also created false monthly bank account statements to inflate her monthly income figures. As a result of this false information, she was granted a loan for the residence. On December 21, 2005, Long Beach Mortgage Company wire transferred $795,686 for the purchase of this property. The indictment states that Shaw has not made any monthly payments on the loan, which is now in foreclosure proceedings.

ROSE A. SHAW, St. Charles, Missouri, was indicted by a federal grand jury on five felony counts of mail fraud, one felony count of forgery and one felony count of wire fraud.

If convicted each mail fraud count carries a maximum penalty of twenty years in prison and/or fines up to $250,000; the wire fraud count carries a maximum of thirty years and/or fines up to $1,000,000 and the forgery count carries a maximum of five years and/or fines up to $250,000.

Hanaway commended the work performed on the case by the United States Postal Inspection Service, the Social Security Administration-Office of Inspector General, the St. Louis Office of United States Trustee and First Assistant United States Attorney Michael W. Reap, who is handling the case for the U.S. Attorney’s Office.

“Those who abuse the bankruptcy system for personal gain undermine the integrity of the bankruptcy process,” stated Nancy J. Gargula, the United States Trustee for Missouri, Arkansas and Nebraska (Region 13). “This type of abuse will not be tolerated.” The United States Trustee Program is the component of the U.S. Department of Justice that protects the integrity of the bankruptcy system by overseeing case administration and litigating to enforce the bankruptcy laws.

The charges set forth in an indictment are merely accusations and each defendant is presumed innocent until and unless proven guilty.

In the following press release from Dayton, Ohio Gregory G. Lockhart, United States Attorney for the Southern District of Ohio; Saul Eisen, United States Trustee, Region 9, (Ohio/Michigan); Timothy P. Murphy, Special Agent in Charge, Federal Bureau of Investigation, Cincinnati Field Division; and Gerald A. O’Farrell, Assistant Inspector In Charge, U.S. Postal Inspection Service, announced the indictment  by a grand jury of Randall L. Webb, age 49, of Springboro charging him with bankruptcy fraud in connection with a scheme that defrauded homeowners who were in danger of losing their homes through foreclosure.

The nine-count indictment returned on October 10, 2006 also charges Webb with mail fraud, making false oaths, and falsification.  The indictment alleges that in February 2004, Webb began contacting homeowners in the Dayton and Cincinnati areas, typically by direct mail, offering to help them save their homes from foreclosures and sheriff’s sales. Webb met with homeowners who responded to his ads and promised to help them save their homes in exchange for a fee of between $500 and $800 that he collected up front. Webb promised that he would create new payment plans with the homeowners’ mortgage companies and make mortgage and arrearage payments on their home loans with money they would provide him.

Using companies such as American Foreclosure Group, AFG, Foreclosure Solutions, Netmark and Foreclosure Alternative, Webb instructed the homeowners not to talk to their mortgage companies anymore and promised that he would handle all of the communication for them. Webb never created new payment plans for any of the homeowners.

Webb also told some homeowners that they would not have to file bankruptcy while leading others to believe that the mere filing of bankruptcy would save their homes for them. Webb allegedly filed bankruptcy on behalf some homeowners without their knowledge then told them not to attend court proceedings when the bankruptcy court contacted them.

Webb is currently in state custody following conviction on fraud charges filed in Montgomery County. Webb faces a punishment of up to five years imprisonment on each of the three bankruptcy fraud counts. The two charges of making false oaths carry the same potential penalties. The mail fraud count and each of the three charges of making false oaths carries penalties of up to 20 years. Each crime carries a potential fine of up to $250,000.

Webb’s indictment (click here to read it) is part of Operation Truth or Consequences, a nationwide sweep that demonstrates the breadth of enforcement actions taken by the Department of Justice to combat bankruptcy fraud and protect the integrity of the bankruptcy system. During the effort, United States Attorneys have filed criminal charges against 78 individuals in 69 separate prosecutions in 36 judicial districts.

The U.S. Trustee Program also announced the creation of a new Internet hotline for reporting suspected bankruptcy fraud. Members of the public can now report suspected bankruptcy fraud via email to USTP.Bankruptcy.Fraud@usdoj.gov. The U.S. Trustee Program is the Department of Justice component that promotes and protects the integrity of the bankruptcy system.

Lockhart commended U.S. Trustee Eisen, who referred the case to the U.S. Attorney for prosecution, as well as the cooperative investigation by agents of the FBI and Postal Inspectors. Lockhart also commended Assistant U.S. Attorney Anne Fehrman and Special Assistant U.S. Attorney Dean P. Wyman who are prosecuting the case.  The charges contained in an indictment, information or criminal complaint are merely allegations, and the defendant is presumed innocent unless and until proven guilty beyond a reasonable doubt.

Update on Wednesday, November 7, 2007 at 11:52AM by The Editor - Ian Shuter

The Charlotte Business Journal reports that Webb pleaded guilty on November 6, 2007. Click here for the story.

In the following press release Susan W. Brooks, United States Attorney for the Southern District of Indiana, announced that JEFFREY E. ONKST, 63, Bloomington, Indiana, was charged in an Information for Bankruptcy Fraud and Suborning Perjury, following an investigation by the Federal Bureau of Investigation and the United States Trustee’ s Office for Region 10.

A bankruptcy is initiated by filing a Voluntary Petition, which directs the person seeking bankruptcy to disclose all prior bankruptcies filed within the six years preceding the pending bankruptcy. The data collected is necessary to disclose to creditors and the bankruptcy trustees information necessary to determine whether the petitioner is entitled to the

benefits of bankruptcy. The Information alleges that from July 1999 to December 2004, JEFFREY E. ONKST filed, or caused to be filed in other people’ s names, nineteen bankruptcy petitions, and that he lied on these bankruptcy filings when he failed to disclose all his prior bankruptcies. Moreover, the Information alleges, the purpose of these bankruptcies was solely to stop the sale in foreclosure of real properties owned or controlled by JEFFREY ONKST in the Southern District of Indiana, and Alabama. Invariably, the bankruptcies were filed when a foreclosure sale of the properties by financial institutions holding mortgages on the properties was imminent. The financial institutions would go through the mortgage foreclosure process, including court filings, service and notice, and scheduling of a sale, only to have the sale stayed by a bankruptcy on the eve of sale.

While in some of the nineteen bankruptcies some steps were taken to further the bankruptcy after the petition was filed and a stay obtained, in many cases no steps were taken at all to proceed with the bankruptcy after the petition was filed. On many occasions the petitions for bankruptcy did not disclose prior bankruptcies of the petitioner as required. All nineteen bankruptcies were eventually dismissed for failure of the debtor to follow through on the petition.

The actual intended purpose of the bankruptcy petitions was for JEFFREY ONKST to obtain a stay of the foreclosure, not to obtain a discharge in bankruptcy. Once the bankruptcy was dismissed, the mortgage holder would have to start the foreclosure process from the beginning, often only to be met by another bankruptcy stay when a foreclosure sale was imminent.

“ Serial filing is a clear abuse of the Bankruptcy system, and today’ s charges reflect that this type of fraud will not be tolerated,” said Nancy J. Gargula, United States Trustee for Indiana and Central and Southern Illinois (Region 10) and Missouri, Arkansas and Nebraska (Region 13). “ This prosecution is a result of the collaborative efforts of the Southern Indiana Bankruptcy Fraud Working Group, whose members include representatives of the U.S. Attorney’ s Office, U.S. Trustee’ s Office for Region 10 and the Federal Bureau of Investigation, among others.”

According to Assistant United States Attorney Winfield D. Ong, who is prosecuting the case for the government, ONKST faces a maximum possible prison sentence of 5 years and a maximum possible fine of $250,000.

Update on Monday, December 11, 2006 at 10:26AM by The Editor - Ian Shuter

On December 4, 2006 the US DOJ for the Southern District of Indiana announced that Onkst was sentenced to a prison term of 1 year and 1 day. Click here to view the US DOJ Press Release,

In the following press release the US DOJ in Arizona announced that on August 29, 2006, a federal grand jury in Phoenix, Ariz. returned a 34- count indictment against a Phoenix attorney, James Joseph Everett, 51, of Paradise Valley, Arizona, for False Declarations in Bankruptcy Proceedings, Bankruptcy Fraud, and Money Laundering.

U.S. Attorney Paul K. Charlton said, “Bankruptcy fraud is not a victim-less offense. Bankruptcy fraud harms all of us as consumers. It is something we will all pay for in the end.”

The indictment alleges that, in 2002, Everett made numerous material false declarations in his Chapter 7 bankruptcy filings designed to conceal approximately $500,000 in assets and income from the U.S. Bankruptcy Trustee. The indictment further alleges that Defendant used more than $300,000 in concealed assets to purchase a house in Paradise Valley.

The investigation preceding the indictment was conducted the United States Trustee’s Office and the Internal Revenue Service Criminal Investigation Division. The prosecution is being handled by John R. Lopez IV, Assistant U.S. Attorney, District of Arizona, Phoenix, Ariz.

In the following press release the US DOJ in Arizona announced that a Chandler man has admitted to fraudulently filing bankruptcy petitions on behalf of people who had no knowledge that he was doing so.

Mario Gerard Bernadel, 47, of Chandler, admitted Tuesday in United States District Court that in 2002 he approached two Valley married couples whose homes were in foreclosure. Bernadel prevailed upon the homeowners to sign their homes over to him in the belief that by doing so, they would each avoid having a mortgage foreclosure on their credit reports.

After obtaining the homes in this manner, Bernadel then rented or leased the properties and collected rents on them. Bernadel told United States District Judge James A. Teilborg that in April 2003 and again in October 2003, he fraudulently filed Chapter 13 voluntary bankruptcy petitions in the names of the homeowners. The filing of a petition in bankruptcy results in the automatic issuance of a stay of collections proceedings, including mortgage foreclosures and trustee’s sales. Bernadel admitted that the homeowners had no knowledge that he filed bankruptcy petitions in their names and that he did so to halt the foreclosures so that he could continue to profit from renting the properties to others.

Sentencing is set for November 27, 2006, before Judge Teilborg.

The investigation of this case was conducted by Tom Kadotani of the United States Trustee’s Office. The prosecution is being handled by Frank T. Galati, Assistant United States Attorneys, District of Arizona, Phoenix.