A couple made famous by reality television is facing multiple criminal charges by the U.S. Department of Justice (DOJ), including allegations of fraud during a Chapter 7 bankruptcy proceeding several years ago. United States v. Giudice, No. 2:13-cr-00495, indictment (D.N.J., Jul. 29, 2013) (the “Indictment”). The defendants, Teresa Giudice and Giuseppe “Joe” Giudice, star on the Bravo reality program “The Real Housewives of New Jersey.” The indictment against them alleges that they failed to disclose assets and made various false statements during the course of a bankruptcy case filed in 2009. Despite the fact that the bankruptcy did not result in a discharge of debt, the DOJ is seeking to hold the couple criminally liable for the alleged fraud. This underscores the importance of disclosing all assets when seeking bankruptcy protection.
The defendants filed a voluntary Chapter 7 petition in 2009. In re Giudice, No. 09-39032, petition (Bankr. D.N.J., Oct. 29, 2009). As debtors, they initially identified real and personal property worth over $2.2 million, and listed debts of more than $6.1 million. They filed amended documents three times between December 2009 and March 2010, and they each gave testimony under oath on several occasions between December 2009 and June 2011. Indictment at 14. In 2011, both defendants entered into agreements with the United States Trustee to deny a bankruptcy discharge, and the court approved consent orders based on these agreements. Id. at 14-15. The bankruptcy court closed the case in January 2012.
Federal criminal law prohibits false statements, concealment of assets, and other fraudulent acts in bankruptcy cases, when a debtor engages in such conduct knowingly. 18 U.S.C. § 152. This includes hiding assets from the trustee or creditors, false oaths or accounts relating to the bankruptcy estate, and other other false statements during the course of a bankruptcy proceeding. An offense can result in up to five years imprisonment and a fine. 18 U.S.C. § 157.
The indictment lists twenty-three counts of bankruptcy fraud, including concealment of assets, false oaths, and false declarations against the Giudices. It identifies multiple assets that they allegedly failed to disclose in their bankruptcy petition or in subsequent filings with the bankruptcy court. This included a limited liability company (LLC) solely owned by Teresa Giudice, the business operated by that LLC, and various intellectual property associated with the business; as well as several business entities solely owned by Giuseppe Giudice. The indictment also identifies real property in the state of New Jersey, income related to the “Real Housewives” program, and contracts for future involvement in the program. The DOJ is pursuing criminal charges as part of a larger indictment for alleged fraud, even though the bankruptcy court denied a discharge for both debtors, with the debtors’ agreement, about two years ago. They have both pleaded not guilty, and a trial is currently scheduled for October.
Chapter 7 and Chapter 13 bankruptcies offer individuals a fresh start when their income is not enough to service their debts, allowing them either to liquidate assets to make payments, or to create a new payment schedule. Bankruptcy attorney Devin Sawdayi has represented clients in the Los Angeles area in personal bankruptcy cases since 1997, providing legal services with dignity and respect. To schedule a free and confidential consultation, please contact us today online or at (310) 475-9399.
Web Resources:
Indictment (PDF file), United States v. Giudice, No. 2:13-cr-00495, U.S. District Court, District of New Jersey, July 29, 2013
United States v. Giudice (PACER registration required), No. 2:13-cr-00495, U.S. District Court, District of New Jersey
In re Giudice (PACER registration required), No. 09-39032, U.S. Bankruptcy Court, District of New Jersey
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California Bankruptcy Court Rules on Discharge of Debt Allegedly Incurred Through Fraud, Los Angeles Bankruptcy Lawyer Blawg, September 7, 2013
How Does a Bankruptcy Filing by One Spouse Affect the Non-Filing Spouse? Los Angeles Bankruptcy Lawyer Blawg, August 19, 2013
Supreme Court Rules on Meaning of “Defalcation” in Statutory Provision for Nondischargeable Debts in Bankruptcy, Los Angeles Bankruptcy Lawyer Blawg, July 30, 2013