Feds Gain Conviction In Bankruptcy Fraud "Equity Skimming" Case

A California man was sentenced to serve 24 months in custody by a federal judge in San Diego on 12 counts of bankruptcy fraud and eight counts of knowing disregard of bankruptcy rules and procedure, according to this News Release from the U.S. Attorney's Office.

He was charged with defrauding homeowners and their creditors in a complex scheme which used bankruptcy law protections against foreclosure sales in a corrupt manner.

The evidence at trial proved that he:

• found and solicited homeowners in severe financial debt who were on the verge of losing their home through a foreclosure sale,

• made a number of false representations and promises to the homeowners to get them to pay him a monthly fee for his purported services,

• falsely claimed that he would (1) save the property from foreclosure by legal means, (2) contact lenders to renegotiate the mortgage, (3) assist in arranging refinancing, and (4) take a portion of the monthly fee he received from the homeowners for his services, to be paid to the lender and applied to the mortgage, which he claimed would keep foreclosure from occurring,

• merely kept the homeowners' money, made no contact with the homeowners' creditors, and did not arrange refinancing, nor use the money to pay down the mortgage to prevent foreclosure.

The only "service" he provided was to prepare and cause to be prepared "bare bones" federal bankruptcy petitions for the homeowners to sign to declare bankruptcy in an effort to illegally stall the foreclosure proceedings.