An FBI Agent in Oxford, Mississippi was indicted this week for making false official statements to a federal official, among other things.  The agent was the Supervisory Agent in Charge of the FBI’s Oxford Resident Agency, and the indictment charges that he failed to disclose that he had a financial interest in the Oxford FBI Building since 2004, and that he was not truthful on his Confidential Financial Disclosure Report that FBI Agents are required to fill out.  Finally, it is alleged that he knowingly and willfully made, and caused to be made, a materially false and fraudulent statement and representation to an agent of the Department of Justice, Office of the Inspector General, during an interview.  This is a big case, and if you happen to be reading this while doing research for your term paper on irony it’s the best example I’ve ever seen.

Under Title 18, United States Code, Section 1001, it is a crime to:

1. knowingly and willfully;
2. make any materially false, fictitious or fraudulent statement or representation;
3. in any matter within the jurisdiction of the executive, legislative or judicial branch of the United States.

This was the charge that Martha Stewart served time for.  It is a crime to tell a lie to the federal government.  Even if your lie is oral and not under oath, and even if you have received no Miranda warnings of any kind.  You must know that your statement is false at the time you make it, but you do not have to know that lying to the government is a crime.  Any person convicted under this statute faces statutory penalties of a possible fine, and up to 5-8 years in prison. 

This law, and interpretations of it, can become extremely complex very quicky, especially in a white-collar crime context.  If you are approached by federal agents asking to speak with you, your best course of action is to politely decline to speak with them about anything substantive in the absence of counsel.  This is much harder than it sounds.  Here are some possible responses from the agent:

• “Why do you think you need counsel?”
• “Why won’t you speak with me to clear this up?”
• “What do you have to hide?”
• “Well, get ready for a subpoena, or an indictment.”

Your responses:

• “May I have your card?  My attorney will be contacting you.”
• “May I please speak with my attorney first.”
• “I want a lawyer.”
• “I would like to speak with a lawyer.”

In summary, it is a sad fact that the government applies a far higher moral standard to you than to itself.  Law enforcement officers can lie to you to get you to make a statement, but you cannot lie to them.  And know this: the federal government can send you to prison for telling a lie, even though they could never charge you with any other crime.

If you get into a tight spot with federal agents, have them wait a few minutes and give me a call.

Because bankruptcy law is federal law in the United States, most crimes related to bankruptcy are prosecuted in federal court.  Bankruptcy is a legal process whereby a business or individual is allowed to discharge most or all of their debts due to an inability to pay.  Your property is liquidated and divided among your creditors to pay your debts, and you are allowed to “start over,” (although with bad credit).  But if you falsely claim bankruptcy, attempt to conceal your assets from creditors, file mulitple claims, or get involved in a “petition mill” scheme, you are committing bankruptcy fraud – a federal offense.

Title 18, Section 152 of the United States Code is the main bankruptcy fraud statute, and the nine paragraphs of this statute prohibit the following activities:

1. concealment of property belonging to the estate of a debtor;
2. making false oaths or accounts in relation to any case under Title 11;
3. making of a false declaration, certificate, verification or statement under penalty of perjury as permitted under Section 1746 of Title 28 or in relation to any case under Title 11;
4. making false claims against the estate of a debtor;
5.  fraudulent receipt of property from a debtor;
6.  Bribery and extortion in connection with a case under Title 11;
7.  transfer or concealment of property in contemplation of a case under Title 11;
8.  concealment or destruction of documents relating to the property or affairs of a debtor; and
9.  withholding of documents from the administrators of a case under Title 11.

The most common types of bankruptcy fraud involve concealment of assets, multiple filings, or petition mills.

Concealing assets accounts for nearly 70 percent of all bankruptcy fraud committed in the United States.  If you purposely fail to list every one of your assets on your bankruptcy claim, knowing that creditors cannot come get assets that they do not know about, then you have fraudulently concealed these assets.  Similarly, businesses frequently conceal assets when filing for Chapter 11 bankruptcy by transferring money or properties to their relatives or other outside interests so that the assets cannot be confiscated.

Multiple filing fraud takes place when you file for bankruptcy in more than one state, using different combinations of real and false information (name, address, social security number) to file the claims.  You may list the same assets on each claim, but deliberately fail to include every asset.  This, like concealment of assets, fraudulently protects your valuables from total liquidation.

Finally, ”petition mill” schemes are unfortunately on the rise in these economic times.   These schemes claim to help financially strapped tenants keep their house and not get foreclosed and evicted.  Typically, ads are run in the paper and online offering counseling on how to avoid eviction.  Once the person is signed up, this “service” then files bankruptcy in the tenant’s name.  It then charges outlandish fees and drags the case out for months, draining savings accounts, ruining credit, and merely postponing the inevitable eviction.

If you are indicted for bankruptcy fraud, each count carries a maximum statutory penalty of five years in prison and a $250,000 fine.  Any sentence following conviction, however, would be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.