%1

A former attorney from Willmar, Minn., has been sentenced to 18 months in prison, followed by one-year of supervised release and required to pay a $20,000 fine for fraudulent concealment of bankruptcy assets, announced United States Attorney Andrew M. Luger, according to a DOJ press release. According to court documents, on November 3, 2015, Gregory Ronald Anderson, a former attorney, prepared and filed a voluntary bankruptcy petition on behalf of his client, James Alan Rothers. Upon the filing of the petition, Anderson knew that Rothers’ assets, wherever located, became property of a “bankruptcy estate” to be used to pay Rothers’ creditors. Anderson also filed a set of Rothers’ bankruptcy schedules in which Rothers was required to disclose, under penalty of perjury, the full extent and value of all Rothers’ assets as of November 3, 2015. As Rothers’ bankruptcy attorney, Anderson had to certify that the petition filed with the bankruptcy court was true and accurate. Prior to the bankruptcy filing, Anderson created fake liabilities to create the appearance that Rothers was insolvent when, in fact, Rothers could easily have paid all his creditors.

U.S. Supreme Court justices yesterday seemed skeptical of whether bankruptcy can be used to wipe out debts incurred through fraud even in cases in which an individual declaring bankruptcy was not the one who committed the fraud, Reuters reported. California resident Kate Bartenwerfer asked the high court to overturn a ruling from the Ninth
U.S. Circuit Court of Appeals that said she could not use bankruptcy to escape liability stemming from fraudulent omissions her husband made in selling a house regardless of whether she knew about it. Bartenwerfer's attorney Sarah Harris told the justices at oral arguments that the entire point of bankruptcy law is to give honest debtors like Bartenwerfer the ability to clear debts and have a "fresh start." If Bartenwerfer is unable to discharge liability for her husband's misstatements, then other innocent debtors could also face a lifetime of debt due to others' fraudulent conduct, Harris said. "That financial death sentence would fall mostly on unsophisticated spouses," Harris said. "Dishonest debtors cannot escape their creditors, but the court does not consign unwitting debtors to the same fate." The attorney for Kieran Buckley, who sued the Bartenwerfers for selling him a house while withholding information about major defects, said that his client should not be left without recourse due to Bartenwerfer's bankruptcy.