Category Archives: Bankruptcy Fraud

They Were Under Oath & On Reality TV! Part 2

Abigale Lee Miller is the central presence on Lifetime channel’s “Dance Moms,” reality television surrounding the Abby Lee Dance Company, a painful drama of driven pre-teen competitors and hovering mothers and Miller – our next reality star whose bankruptcy truthfulness was found wanting.

Abby Lee Miller’s rise in celebrity status began seven months after filing a Chapter 11 bankruptcy reorganization in December 2010. This court-supervised repayment plan obligated her to truthfully tell the court, every month, what her gross income was, what her expenses were, and deposit all monies earned in a traceable account. She was to make a set payment for a number of years on this plan. But Miller’s fame and fortune caught up.

When Miller’s actual finances were discovered in early 2013, as a result of a bankruptcy judge channel-surfing and spotting her show well before any investigation, she offered to amend her Chapter 11 plan and pay off all if her debts in full. The judge wanted an investigation, as $288,000 in income was disclosed at the February 1, 2013 hearing (link opens a PDF, see page 12) without any explanation. According to the indictment, Miller told the court that income from the reality television show was “volatile” and denied that any contracts for the show existed (link opens a PDF, see #23 on page 9).

under oath

Miller really doubled down. Within less than a month after that hearing before the bankruptcy judge, and freshly admonished, she – according to Reuters.com and the indictment – sent an email to a joint partner and her accountant with a subject field stating “LET’S MAKE MONEY AND KEEP ME OUT OF JAIL.” To be clearer, she then told them that they needed to avoid raising any “red flags” and instructed both of them: “DON’T PUT CASH IN THE BANK!!!!” The end result was more investigation, culminating in the October 13, 2015 indictment for 20-counts of bankruptcy fraud for concealing income.

This is an indictment, not in a conviction. But to you or me, if that’s her email, that is evidence of criminal intent.

What did Joe, Teresa and allegedly Abby fail to comprehend? Their core failure was to take not take seriously the obligation to disclose to the court what they owned. No lawyer can correct dishonesty.

The concept of what a person contemplating bankruptcy actually owns is technical and complicated. Being vague and being downright dishonest are recipes for disaster, as the above television stars have realized.

It is natural to resent the fact that what you have worked hard to gain could be jeopardized because of collapsed finances. Our advice is not to let that resentment lead you astray when considering, and filing, bankruptcy.

Sources: IMDB.com, Reuters.com, The United States District Court for the Western District of Pennsylvania (opens a PDF), WTAE.com

They Were Under Oath & On Reality TV! Part 1

Over the last couple of years, there have been two high-profile examples of reality television stars failing to fully reveal all of their property and possessions during bankruptcy proceedings.

These two examples provide insight into the effects of untruthfulness – where the intersection of facts and bankruptcy proceedings collide with fame and fortune.

Lying under oath has consequences for all – the rich and famous, the middle class and for the down and out. Anyone lying during their bankruptcy proceedings will get caught, and can pay a high price. Jail time is the scary reality!under oath

Joe and Teresa Giudice are our first case study. Their lives were detailed in a Bravo reality show called “Real Housewives of New Jersey,” which premiered in May 2009. That high profile and visible television presence spelled doom for them.

The Giudices filed a chapter 7 bankruptcy in October 2009, claiming that their income was not sufficient to pay their debts. That may or may not have been true at the time. But, their disclosure filed under oath to the New Jersey bankruptcy court in 2009 was definitely not true. Much of that falsehood was created by ‘leaving off’ personal property. Like ATVs, go-karts, a rental property (see page 17 on this linked U.S Department of Justice indictment), a cement mixer (who hides a cement mixer?).

Ultimately, in July of 2013, Joe and Teresa Giudice were federally indicted on 39 counts, including lying on their bankruptcy disclosures, and other counts stretching back over ten years, for fraudulently obtaining secured loans against properties, and tax evasion. In some cases, they had created false documents, like pay stubs for jobs that didn’t exist and tax returns that were never filed and were largely fiction. In other cases, they moved income around to shell companies.

The evidence was overwhelming. On October 14, 2014, after Teresa had previously plead guilty to four counts and Joe to five counts of bankruptcy and mail fraud, Teresa was sentenced to fifteen months in federal prison, with her husband Joe facing forty-one months.

Stay tuned for part two, with Abigale Lee Miller of Dance Moms.

Sources: Justice.gov, NYTimes.com, & this NYTimes.com.