Fines And Restitution From Criminal Cases Are Protected In Bankruptcy

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In bankruptcy, debts originating from fines or penalties in criminal cases are generally not dischargeable.  A 2014 ruling by the 8th Circuit Bankruptcy Appellate Panel (B.A.P.) has restated this point. The case in question was Behrens v. United States (In Re Behrens, No. 13-6052, 2014 Bankr. LEXIS 565, Feb. 12, 2014).

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Kansas City Missouri Municipal Court: An Overview

The Kansas City Municipal Division is part of Judicial Circuit 16.  The courthouse is located at 1101 Locust, Kansas City MO  64106.  It hears misdemeanors, infractions, and even housing code violations cases that arise out of incidents alleged to have occurred in the metropolitan Kansas City Missouri area.  It has eleven courts that deal with such cases, and the courts are indicated by letter (Courtroom A through K).  Persons who have received a citation or a summons to the the KCMO Municipal Court should look at their documentation carefully to make sure that they know when and where their court date is.  If you do not have your paperwork, your attorney can find this information out for you.

It is important to have an attorney when dealing with issues in KCMO Municipal Court.  Too often, people make the mistake of not doing this, and then find out later that big problems have been created.  In addition, having and attorney can do the following for you:  (1) Work on withdrawing active warrants and getting you a court date; (2) Changing the time and date of your current court date.  For many people, having these things done is an important part of the preliminary matters surrounding a case.  Under the “add on” system, and depending on the nature of the case, your attorney can often resolve your issue without you having to be there in court.

The Municipal Court should not be confused with the Jackson County Circuit Court itself, which is located near the Municipal Court but hears different types of cases.

Read More:  Overland Park Municipal Court:  An Overview

Overland Park Municipal Court: An Overview

The Overland Park Municipal Court is located at the W. Jack Sanders Justice Center, 12400 Foster, Overland Park KS 66213.  The court handles misdemeanor and infraction cases that arise out of the City of Overland Park.  It should be distinguished from the Johnson County District Court system, which is located in Olathe, Kansas.  If you have been issued a summons or ticket, you should review it carefully to make sure that your case is actually being held in the Overland Park Justice Center.  There are a great number of municipal courts in the greater Kansas City area, and confusion frequently arises about the location of a case.

It is strongly advised that a person have the assistance of legal representation in Overland Park Municipal Court. Issues can arise that affect a person’s legal rights in significant ways, and to proceed without the assistance of counsel is asking for trouble.  It is important to point out that not all courts have the same “personality” or organizational culture.  People with no exposure or experience with Overland Park Municipal Court are often surprised at the formality and rigor with which it is conducted, when compared to smaller municipal courts in the area.  For this reason, a person should not be proceeding without representation.  If you get legal representation, Overland Park Municipal Court has a special “attorney docket” where your attorney can confer with the city prosecutor about your case.  An attorney experienced in municipal court practice can help you resolve your case in the best way possible for you.

Read More:  Drug Crimes In Kansas City

Bank And Banking Crimes In Kansas And Missouri

Bank and banking crimes are dealt with under a variety of federal criminal statutes. We will discuss some of the major ones here.

Embezzlement and Misapplication (18 U.S.C. §§656 and 657). These two statutes are nearly the same, except that Sect. 656 deals with banks and Sect. 657 with credit unions and savings and loan associations. Under Sect. 657, an officer or employee of the institution may not “knowingly and willfully embezzle and misapply monies and funds” of the institution. There must also be an intent to injure and defraud the institution. Embezzlement and misapplication are separate offenses: the difference is that for embezzlement, the defendant must first have lawful possession of the funds alleged to have been appropriated for his own use. The statute is limited to acts done within a person’s official capacity, unless he or she used his position to harm the bank.

Generally, to act with intent to defraud usually means to cheat, deceive, or mislead, for the purpose of causing a financial loss to someone else. The defendant must have knowledge of what he or she is doing, rather than being merely careless or reckless. However, since direct proof of fraud is often not always available, an intent may be discerned from the facts and circumstances surrounding the loss of money. “Misapplication” is intended to cover situations where bank examiners are deceived. Another statute (18 U.S.C. §371 (bank conspiracy)) is often used with the offense of misapplication. Some examples of misapplication can be the following: bad loans, dummy loans, brokered loans, bond swapping, check kiting, collusion with loan officers in approving loans, manipulation of lending limits, and compensating balances. The defense of “good faith” is often used as a defense to embezzlement or misapplication, as it tends to defeat an accusation of an intent to defraud.

False Entries (18 U.S.C. §1105 and §1106). These sections prohibit bank insiders from making false entries in the records of a federally insured banking institution with the intent to injure or defraud the bank. The false entry should be over a material matter, not an inconsequential one. Here again there needs to be an intent to injure or defraud; that is, it is a specific intent crime. Defenses to this crime include accurate reporting, the fact that the false entry may have been immaterial or de minimis, or the fact that the reporting may have been ambiguous.

False Financial Statements (18 U.S.C. §1014). This section prohibits someone from making a false statement to a federal insured banking institution for the purpose of obtaining a loan or other extension of credit. It is generally intended to apply to situations where loan applications are falsified or materially false. Under this section, a person may not knowingly make a false statement or report, or overvalue any land, property, or security, for the purpose of influencing the decisions of a banking institution. The representations may not be implied representations; they must be true or false on their face. U.S. v. Kurlemann, 736 F.3d 438 (6th Cir. 2013). A defendant can generally prevail if he can show that what he or she said was the “literal truth.” U.S. v. Sarno, 73 F.3d 1470 (9th Cir. 1995). Normally, the government need not demonstrate that the insured institution actually relied on the fraud (note how this seems to be a lower standard than the civil standard of “reliance” for nondischargeability actions in bankruptcy court).

Fraud. (18 U.S.C. §1344). Bank fraud is knowingly executing or attempting to execute a scheme to defraud a financial institution. There is a split of authority in the federal circuits as to the details of the “knowledge” requirement. The Eleventh and Fifth Circuits require specific intent; the Second Circuit requires proof of intent to harm, but permits intent to be inferred; the Fourth and Seventh Circuits hold that a scheme or willful conduct is sufficient to show intent to defraud. The victim of the alleged fraud must be a federally insured institution. Good faith is also a defense. Section 1344 covers a wide variety of situations where fraud can be found: ATM (teller machine) misuse, false representations to banks, forgery, stolen checks, credit card fraud, mortgage fraud, and false statements to induce check cashing have all been found to fall under Section 1344.

Bribery (18 U.S.C. §215). A person may not give or promise anything of value to an officer of a financial institution with the intent to corruptly influence or reward that person. Similarly, under Section 215(a)(2), a banker cannot solicit or demand anything of value with the intent of being influenced in his capacity in the bank.

Read More:  Bankruptcy Crimes And Defenses

Drunk Driving Debts And Bankruptcy In Kansas And Missouri

Section 523(a) of the Bankruptcy Code deals with various types of nondischargeable debt.  On of the subsections of Section 523(a) addresses the matter of a debt for “death of personal injury caused by the debtor’s operation of a motor vehicle, vessel, or aircraft if such operation was unlawful because the debtor was intoxicated from using alcohol, a drug, or another substance.”  11 U.S.C. §523(a)(9).  In other words, Section 523(a)(9) deals with certain types of debts arising from drunk driving.  While this type of debt is not common, it is important to spot it when it does arise.

The intent behind Section 523(a)(9) was to allow victims (or their families) of drunk driving crimes to pursue wrongful death or other civil actions against persons who may have committed drunk driving offenses.  Unlike some other nondischargeability provisions under Section 523(a), Section 523(a)(9) is “self-executing”, meaning that a victim creditor is not required to file an adversary proceeding to seek a determination of nondischargeability.  There is no requirement that the debtor actually be convicted of a DUI or DWI offense in state or municipal court.  A creditor seeking to use Section 523(a)(9) need only show that (1) the debtor was “intoxicated” within the meaning of state law; (2) the debtor was “operating” a motor vehicle or other type of vehicle while intoxicated; and (3) that the claim for personal injury or death resulted proximately from such conduct.

Despite the current climate of aggressive prosecution and enforcement of DUI and DWI offenses, the bankruptcy code construes exceptions to discharge strictly against creditors.  In other words, there is a presumption that debts should be discharged, and that a creditor seeking prevent this will have an uphill battle.  As far as Section 523(a)(9) is concerned, the burden is on the creditor to prove each and every element of nondischargeability by a “preponderance of the evidence.”  This is not an easy matter.  In Re Race, 198 B.R. 740 (W.D. Mo. 1996).

For the purposes of §523(a)(9), the most commonly encountered vehicle will of course be an automobile.  But motor boats also fall under this section, as well as airplanes and even snowmobiles.  In Re Race, 198 B.R. 740 (W.D. Mo 1996).  Incredibly, a bankruptcy court had to rule on whether a “horse and buggy” was considered to be a vehicle under §523(a)(9).  Not surprisingly, it ruled that it did not qualify as a vehicle.  In Re Schumucker, 409 B.R. 477 (N.D. IN 2007).

How, then, does the bankruptcy court determine whether the debtor’s operation of the vehicle was in violation of Section 523(a)(9)?  The court must apply state law, as a first matter.  Every state has its own requirements for what constitutes intoxication, and the bankruptcy court will defer to these standards.  In Re Spencer, 168 B.R. 142 (N.D. Tx, 1994).  The bankruptcy court must be convinced that the debtor was legally “intoxicated” under state law, and that the liability for the personal injuries resulted from such conduct.  If these state law issues have already been determined in another judicial proceeding, there is a good chance that the principles of res judicata and estoppel will preclude these issues from being tried over again.  This can be a slippery matter, however, because frequently in state or municipal court, actual judicial determinations on DUI/DWI issues may not have been made.

It is important to note that Section 523(a)(9) only applies to damages traceable to “personal injuries.”  In other words, drunk driving damages that may arise from damage to property, or from punitive damages awards, will not be covered under this section.  Thus there can arise the situation where the property damage debt is discharged, but the personal injury debt is not.  Regarding punitive civil damages, there are two different lines of reasoning that have developed.  Some courts have held that Section 523(a)(9) was intended to apply to debts directly resulting from personal injury; therefore, punitive damages from drunk driving personal injury claims would be nondischargeable.  In Re Dale, 199 B.R. 1014 (S.D. FL, 1995).

Other courts have ruled differently, holding that punitive damages do not have anything to do with personal injuries, and are therefore dischargeable.  In the rare situation where this type of debt comes up in a case, it will be important to probe into the circumstances of the incident, and to examine the nature of the claim against the debtor.  It is critical in these situations to examine in detail the nature of any civil judgment that may have been awarded against a bankruptcy debtor, in order to determine what (if anything) might be nondischargeable.

Read More:  Title Loans And Bankruptcy In Kansas City

Tax Crimes In Kansas And Missouri

Overland Park Criminal Defense Attorney

There are numerous different criminal statutes in the Internal Revenue Code dealing with evasions, false statements, and omissions in the filing of tax returns.  While civil attempts to collect tax debts are encountered relatively frequently (liens, garnishments, etc.), criminal prosecutions for tax matters are rare.

The IRS does have a criminal investigations unit which handles such matters, and if a decision to prosecute is made, the file is normally referred to the Justice Department.  Some possible indications that a civil audit may escalate into a criminal investigation may be:  a special agent joining the case, summonses being sent to third parties, or lengthy and multiple audit sessions.

The IRS has the ability to issues summonses to produce records and testimony.  Such a summons can be issued to any taxpayer.  This authority is limited; once a recommendation to prosecute is made to the Justice Department, this authority ends.

For a summons to be valid, it must show that the investigation is done for a legitimate purpose, that the inquiry is relevant and related to that purpose, that the IRS does not already have the information, and that proper procedures have been followed.  U.S. v. Powell, 379 U.S. 48 (1964).  Failure to respond to a summons may be grounds for a contempt action in federal district court.  A taxpayer may assert various privileges and defenses on his or her behalf.

When the IRS’s criminal investigations unit forwards a case to the district counsel, an invitation to a conference may be extended to the taxpayer or his counsel.  After the conference, further decisions may be made on the file regarding whether to prosecute.  When the taxpayer’s counsel authenticates a written instrument, there is some authority that admissions made by counsel during conferences may constitute vicarious admissions which may be used against the taxpayer.  U.S. v. O’Connor, 433 F.2d 752 (1st Cir. 1970).

The mental state required in criminal tax cases is one of specific intent:  the defendant must have acted willfully, not recklessly or negligently.  The government must prove that a duty existed for the defendant to do something, and that the defendant intentionally and voluntarily violated that duty.  An honest misunderstanding of one’s duties (e.g., relying on the advice of a professional) is a defense.  Some of the possible tax crimes are the following:

  • Tax evasion (I.R.C. Section 7201).  The elements of this offense are that a tax payment was due, that the defendant made an affirmative act to evade or defeat the tax, and that he acted willfully.
  • Willful failure to collect or pay over tax (I.R.C. Section 7202).  This provision was designed to cover situations where employers must withhold and pay sums withheld by employees.  Again, willfulness is an element of the offense here.
  • Willful failure to file return, pay tax, or supply information (I.R.C. Section 7203).  This provision was intended to apply to situations where persons are required to keep records or supply information , and willfully fail to do so.
  • Other federal criminal tax offenses may be the following:
  • Fraudulent statement or failure to make statement to employer (I.R.C. Section 7204)
  • Fraudulent withholding exemption (I.R.C. Section 7205)
  • Fraud and false statements (I.R.C. Section 7206)
  • Fraudulent returns or other documents (I.R.C. Section 7207)
  • Counterfeiting or reuse (I.R.C. Section 7208)
  • Unauthorized use or sale of stamps (I.R.C. Section 7209)
  • Attempts to interfere with the internal revenue laws (I.R.C. Section 7212)
  • Unauthorized disclosure of information (I.R.C. Section 7213)

It should also be noted that there are provisions which prevent officers and employees of the U.S. government from committing unauthorized acts with regard to tax collection.  Under I.R.C. Section 7214, agents of the United States cannot:  knowingly extort or oppress under color of law; knowingly demand a greater sum than that allowed by law; fail to perform his or her duties with intent to defeat the application of tax laws; and cannot conspire with any person to defraud the United States.

There is a variety of defenses that can be used in tax cases.  Commonly encountered defenses in tax cases are:  invoking double jeopardy, invoking the privilege against self-incrimination, good faith reliance, voluntary disclosure, and selective prosecution.  Other defenses may be relevant, of course, depending on the facts and circumstances of each case.  It is also possible, in some cases, for other persons to be liable beyond the taxpayer, such as accountants, corporations, or other third parties.

Various methods have been employed in attempting to trace income in tax cases.  These methods may include the “net worth” method, and the “deposits and expenditures” method.  The government is not normally required to reconstitute a taxpayer’s income with perfect precision, but it must establish  the all of the elements of the offense under which a taxpayer is charged.

Read More:  Immigration Crimes

Computer Fraud And Computer Crimes In Kansas And Missouri

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Congress centralized computer crimes under one statute in 1984 with the passage of the “Counterfeit Access Device and Computer Fraud and Abuse Act.” The intention was to have a tool to prosecute computer-related crimes under the rubric of one statute.

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Immigration Crimes In Kansas And Missouri

In 1952, Congress passed the McCarran-Walter Act, the so-called “Immigration and Nationality Act” (INA), which has been codified into law under 8 U.S.C. §1101 to 1503. There are many other immigration-related statutory provisions (and more likely on the way soon), but modern immigration legislation derives in large part from the legislative work that was done in the 1950s. When discussing immigration crimes, there is a clear distinction between what happens at the state level and what happens at the federal level. At the state level, enforcement efforts often focus on criminal complaints or indictments against undocumented immigrants for crimes associated with unlawful residence: forgery, identity theft, fraudulent use of credit devices, and other related state-level crimes.

At the federal level, different crimes are often the focus of prosecutorial efforts. Smuggling, transporting, or harboring aliens are distinct federal crimes, and will be discussed separately.  Under 8 U.S.C. §1324(a), it is unlawful for anyone to:

(a) bring an alien into the United States,
(b) transport or harbor an alien,
(c ) encourage an alien to enter the United States, or
(d) to conspire to commit any of the preceding offenses.

Illegal entry is governed by 8 U.S.C. §1325. Under §1325(a), any alien who:
(1) enters or attempts to enter the United States at any time or place other than as designated by immigration officers, or
(2) eludes examination or inspection by immigration officers, or
(3) attempts to enter or obtains entry to the United States by a willfully false or misleading representation or the willful concealment of a material fact;

shall, for the first commission of any such offense, be fined under title 18 or imprisoned not more than 6 months, or both, and, for a subsequent commission of any such offense, be fined under title 18, or imprisoned not more than 2 years, or both.

Under 8 U.S.C. §1324(b), civil penalties can be assessed for violations of immigration provisions:
Any alien who is apprehended while entering (or attempting to enter) the United States at a time or place other than as designated by immigration officers shall be subject to a civil penalty of—
(1) at least $50 and not more than $250 for each such entry (or attempted entry); or
(2) twice the amount specified in paragraph (1) in the case of an alien who has been previously subject to a civil penalty under this subsection.
Civil penalties under this subsection are in addition to, and not in lieu of, any criminal or other civil penalties that may be imposed.

Under §1325(c ), “marriage fraud” is criminalized; it is defined as “knowingly” entering into a marriage for the purpose of evading any provision of the immigration laws. And §1325(d) criminalizes “immigration-related entrepreneurship fraud”, which is defined as “knowingly” establishing a commercial enterprise for the purpose of evading the immigration laws.

Smuggling. Smuggling is defined as knowingly bringing or attempting to bring an alien into the United States at a non-designated place of entry. Even if a person has received “prior official authorization” to come to the United States, a crime may be alleged if the person is brought in at a non-designated place of entry.

Transporting. Anyone who “transports, or moves or attempts to transport or move…[an] alien within the United States by means of transportation or otherwise, furtherance of such violation of law” may be in violation of 8 U.S.C. §1324(a)(1). The key consideration in a transportation offense is the “reason” behind the transportation. U.S. v. Moreno, 561 F.2d 1321, 1323 (9th Cir. 1977). Courts have held, for example, that it is not a crime to transport known illegal aliens between job sites in the ordinary and required course of the defendant’s employment, or to transport aliens for job searches in another state. U.S. v. Moreno-Duque, 718 F.Supp. 254 (D. Vt. 1989); U.S. v. 1982 Ford Pick-Up, 873 F.2d 947 (6th Cir. 1989). However, some courts have held that transportation for work or employment reasons is not a defense to the crime of transportation of undocumented aliens. U.S. v. Shaddix, 693 F.2d 1135, 1138 (5th Cir. 1982).

Harboring. Harboring an alien is covered under §1324(a)(1)(A)(iii). It basically criminalizes any attempt to shield or protect an unlawful alien from detection from the authorities.
Hiring. It is unlawful to recruit or hire someone who is an alien. §1324(a)(1)(A). The burden of compliance is placed squarely on the shoulders of an employer. Failure to comply with the eligibility verification process is itself a crime. Evidence of violations of these provisions can be found, according to §1324, as follows. The applicable section reads:

In determining whether a violation of subsection (a) of this section has occurred, any of the following shall be prima facie evidence that an alien involved in the alleged violation had not received prior official authorization to come to, enter, or reside in the United States or that such alien had come to, entered, or remained in the United States in violation of law:
(A) Records of any judicial or administrative proceeding in which that alien’s status was an issue and in which it was determined that the alien had not received prior official authorization to come to, enter, or reside in the United States or that such alien had come to, entered, or remained in the United States in violation of law.
(B) Official records of the Service or of the Department of State showing that the alien had not received prior official authorization to come to, enter, or reside in the United States or that such alien had come to, entered, or remained in the United States in violation of law.
(C) Testimony, by an immigration officer having personal knowledge of the facts concerning that alien’s status, that the alien had not received prior official authorization to come to, enter, or reside in the United States or that such alien had come to, entered, or remained in the United States in violation of law.

Due to some dispute between state and federal authorities over who has the enforcement authority in these matters, a provision was inserted in Section 1324 specifying who has the authority to make arrests: “No officer or person shall have authority to make any arrests for a violation of any provision of this section except officers and employees of the Service designated by the Attorney General, either individually or as a member of a class, and all other officers whose duty it is to enforce criminal laws.”

Forfeiture provisions round out Section 1324, making it clear that asset forfeiture can come into play when violations of these provisions are found. As Congress continues to amend, modify, and add to the complex rules surrounding immigration, it is not unreasonable to expect significant changes in immigration crimes and enforcement in the years ahead.

Read More:  Identity Theft And Identity Fraud Crimes In Kansas And Missouri

Computer-Based Pornography Cases In Kansas And Missouri

Internet-based prosecutions for child pornography have skyrocketed since 1997.  Simply stated, internet obscenity cases have skyrocketed.  From 1997 to 2004, there was a 422% increase in federal cases of this type.  The numbers have grown steadily since then.  In 2011, prosecutions were up by 40% since 2006, with an increasing number of more than 9,000 active cases.

Similar numbers have been observed for state-level cases.  We will discuss the background, nature, and defense of computer-based child pornography cases to better understand this expanding and serious area of federal and state prosecution.  Law enforcement agencies have adopted the latest state-of-the art technologies in devoting resources to this area, and deploy their resources accordingly.

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Bankruptcy Crimes And Defenses

In extreme cases of alleged violations of federal bankruptcy laws, criminal accusations can arise.  Bankruptcy crimes are quite rare in practice.  There is a strong presumption that issues arising in bankruptcy cases are best handled by bankruptcy judges and trustees as civil matters.  In rare situations, criminal investigations and accusations do happen, and we will here discuss some of the possible criminal charges that have historically been used by federal prosecutors.  Bankruptcy crimes typically fall within one or more of the following types:  knowingly or fraudulently concealing property, making false oaths or accounts, fraudulently doctoring evidence, or withholding documents.  We will conclude this article with a general discussion of successful defenses to accusations of a bankruptcy crime.

Fraudulent Concealment Or Transfers.  Bankruptcy crimes are described in the subparts of 18 U.S.C.A. §152.  Fraudulent concealment or transfer of assets is therefore criminally governed by 18 U.S.C.A. §152.  The requisite mental state here is one of “specific intent”:  it is necessary to prove that the action was taken “knowingly” and “fraudulently.”  This is often difficult to prove.  “Fraudulently” means making a false representation of a material fact, with knowledge of its falsity and with the intent to deceive.  U.S. v. Berry, 678 F.2d 856, 866 (10th Cir. 1982).  Intent to deceive is different from intent to defraud.  “Knowingly” means with knowledge, and not due to some mistake or accident.  Such knowledge can be inferred, in some situations, from the surrounding circumstances.  U.S. v. West, 22 F.3d 586 (5th Cir. 1994).

Debtors have a duty to disclose all property in their case, including “all legal and equitable interests.”  Concealment does not require physical “hiding” of the asset.  Concealment can be found when someone deliberately prevents discovery of an asset, or withholds knowledge of it.  U.S. v. Weinstein, 834 F.2d 1454, 1426 (9th Cir. 1987).  Concealment can also be the transfer of title coupled with the benefits of ownership.  In Re Bradley, 501 F.3d 421, 434 (5th Cir. 2007).  Section 152(1) of the 18 U.S.C.A. deals with concealing property from the bankruptcy trustee, while Section 152(7) involves deliberate concealment before a case is filed.  The act of concealment may continue for the entire period of concealment to avoid the bar of the statute of limitations.  U.S. v. Stein, 233 F.3d 6 (1st Cir., 2000).  In the Stein case just cited, for example, the bankruptcy was filed in 1990, but the federal indictment was not handed down until 1998.

Not all retaining of assets involves improper concealment.  There is a very important distinction between a transfer that relinquishes one of all interest in property, and a transfer that does not.  In Re Olivier, 819 F.2d 550, 553 (5th Cir. 1987).  If the transfer is absolute, it may not be an act of concealment, even if the creditors have been defrauded.  This distinction is important, as it bears directly on the statutes of limitations for the criminal prosecution of a transfer offense.

False Oaths.  A false oath is basically a false statement or omission in the debtor’s schedules, or a false statement made by a defendant under oath in any part of the bankruptcy proceedings.  The false oath must be made on a material issue.  In other words, a false statement on a minor issue will not suffice.  Section 152(4) of 18 U.S.C.A. deals with false claims.  A false claim is willfully and knowingly participating in the filing of a false claim for the purpose of defrauding the bankruptcy court and the other creditors in the case.

False Treatment Of Documents.  False treatment of documents is dealt with under 18 U.S.C.A. §152(8).  This would arise in cases where an individual falsifies or makes a false entry related to a document related to the affairs of a debtor.  Significantly, a court has held that false statements in disclosure statements and plans of reorganization are not considered knowing and fraudulent false entries under §152(8).  This is so because disclosure statements and plans of reorganization do not relate to a debtor’s financial recordkeeping.  U.S. v. McDaniel, 2006 WL 839095 (W.D. Mich. 2006).  Section 152(9) deals with situations where an individual fraudulently withholds documents from the trustee or the court after the filing of a bankruptcy case.

Defenses To Accusations Of Bankruptcy Crimes.  Most (but not all) defenses to bankruptcy crimes in general relate to (1) lack of materiality; (2) good faith; (3) mistake of law or fact; or (4) entrapment by estoppel.  This list is not exhaustive.  A defendant has the full range of defenses available to him under common law or case law, provided the judge allows it to be included in jury instructions.  “Lack of materiality” boils down to stating that even though a false statement was made, it was pertaining to an immaterial issue.  “Good faith” is the assertion that a defendant was acting without any culpable mental state, or may have been relying on advice from a spouse or governmental agency.  Mistake defenses are similar to the “entrapment by estoppel” defense.  In entrapment by estoppel, a defendant asserts that he or she was relying on the advice of some governmental agency, whose advice turned out to be incorrect.

Criminal charges involving bankruptcy crimes are rare, and are reserved for unusual or extreme situations.  However, if such an accusation is made, it is critical to have legal counsel who is experienced in both bankruptcy law and federal criminal defense.  At Phillips & Thomas LLC, we are uniquely placed in this regard.  Our practice focuses solely on these two areas of law.  When an issues arises that involves both the Bankruptcy Code and the federal criminal statutes, we are able to bring our more than thirty years of collective experience in these two complex areas of law to deal with the problem decisively and successfully.

Read More:  White Collar And Financial Crimes