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Tenth Circuit Upholds Long Prison Sentence for Failure to Disclose Assets in Bankruptcy - U.S. v. Moser

January 10, 2012

At Howard Law, P.C., our San Bernardino consumer bankruptcy attorneys take any risk of bankruptcy fraud very seriously. When bankruptcy filers are dishonest about their assets, they can lose their discharges, have the bankruptcy canceled or even go to prison, and a bankruptcy lawyer seen as an accomplice might also get in trouble. That’s why we urge clients to be completely honest and help them avoid honest mistakes that could be interpreted as fraud. A federal jury found that the mistakes of James Moser in United States v. Moser were not honest; Moser failed to disclose several important financial assets on his bankruptcy schedules, which he signed under penalty of perjury, and also lied about them under oath in court. A jury ultimately sentenced him to 121 months in prison, or more than 10 years, and the Tenth U.S. Circuit Court of Appeals upheld the conviction and sentence.

Moser was a manager at a business that offered horse boarding and riding lessons in Kansas. The business leased land and a barn from Jeff Miller Enterprises, but fell behind on payments and was evicted about a month before Moser and his wife filed for Chapter 7 bankruptcy. His debt was discharged in 2006, but his bankruptcy attorney noted that there was still confusion about Moser’s assets at the time of the discharge, in part because Moser was not forthcoming about his assets. After Moser’s initial hearings at which he answered creditor questions, he failed to disclose multiple business dealings, some valuable to the estate; misrepresented a pledge of collateral to be returned as a transfer of assets. About a year after his Chapter 7 discharge, he filed for Chapter 13 bankruptcy and caught the attention of a trustee who questioned him under oath about his collateral pledge and his option to buy the Miller land. He amended his disclosures after the hearing, but federal prosecutors eventually prosecuted and convicted him for conspiracy to commit bankruptcy fraud; and eight counts of bankruptcy fraud.

On appeal, Moser argues that the eight counts of bankruptcy fraud are multiplicitious and should have been reduced to one count (substantially reducing his sentence). The Tenth Circuit disagreed. Charges can be multiplicitous if they describe the same act in different ways, it said, but Moser’s charges each pertain to different acts of disclosure. It noted that other circuits have already ruled that each separate act of concealment in a bankruptcy fraud case counts as its own act of fraud. To do otherwise, as the Second Circuit noted in a previous case, is to allow defendants to break the law as many times as they like without further penalty. Moser’s choice not to disclose business dealings involving the same plot of land gave rise to multiple counts because each was a separate act of deception with a separate decision about whether to tell the trustee, the Tenth said. And there was ample evidence for several of the acts of deception, it noted. Thus, it upheld the conviction and sentence.

Our Costa Mesa personal bankruptcy lawyers would like to use this case as an opportunity to remind clients and potential clients that lying to the court has consequences. It’s unclear whether Moser was actively trying to conceal his assets or just extremely na├»ve, but in either case, he had an opportunity to know better when his duties in bankruptcy were explained to him. In fact, he had a bankruptcy attorney, which means he could have gone to an expert if unsure or confused about his duty to report business dealings. Bankruptcy provides certain valuable legal protections to filers, including protection from debt collection (and related harassment) and the potential to have some debts outright forgiven. In exchange, debtors are required to give up the freedom to make certain financial decisions. Vincent Howard and our team of Torrance individual bankruptcy attorneys work closely with clients to ensure they understand and take that obligation seriously, because the consequences of deception are severe.

If you’re deep in debt and you don’t see how you can ever pay it off, consider calling Howard Law, P.C., to discuss a bankruptcy filing. For a confidential case evaluation, send us a message through our website or call 1-800-872-5925.

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