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#1747201 - 10/05/12 06:27 PM Bankruptcy Fraud Attempt
Matt_B Offline
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Jack is filing for bankruptcy, but he's not very bright. He's got nearly $200,000 sitting in different business accounts (LLC's) that are held by him and his (recently) 18 year old son, opened in early August. Checks only have Jack's name on them, Jack has the only debit card on the account. He's suggesting that the account with the largest balance ($160,000+) is a glass and glazing business that only has a few odd jobs. We have no history to base any of this on since the accounts are so new.

He filed about 2 weeks after opening these accounts. Conversations have shown that he thought this money would be protected and that's why it was put in there. His attorney assured him it would be safe.

Trustee found out about these accounts when they requested a freeze of the accounts with his ssn on them as owner or authorized signer. He's pretty much screwed on his filing and could be facing fines/jail for fraud.

SAR? He's been discovered, he's not going to get away with anything, but I've seen bankruptcy fraud listed in a few old threads in here so I'm still wondering if I should be pursuing a report.
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#1747204 - 10/05/12 06:30 PM Re: Bankruptcy Fraud Attempt Matt_B
BrianC Offline
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The dollar thresholds for SAR filing are based on the dollar amount of the suspicious transactions, not the amount of loss.
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#1747217 - 10/05/12 06:48 PM Re: Bankruptcy Fraud Attempt Matt_B
Matt_B Offline
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Thanks Brian (again!)
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#1747229 - 10/05/12 07:11 PM Re: Bankruptcy Fraud Attempt Matt_B
Elwood P. Dowd Offline
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"Bankruptcy" is one of FinCEN's "key terms" in connection with fraud and should appear in the narrative. If you are using the Form 111, I suggest you check item 31(z) and type in: "bankruptcy."
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#1747252 - 10/05/12 07:46 PM Re: Bankruptcy Fraud Attempt Matt_B
Matt_B Offline
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Great, thanks for the guidance! Each time I have a SAR situation, it seems to be a brand new type that I get to learn about so I can do it right!

I've gone through the webinar on the new form, I think this will be my first try at using it.
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#1747275 - 10/05/12 08:14 PM Re: Bankruptcy Fraud Attempt Matt_B
edAudit Offline
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Question and not a statement.

Would the bankruptcy fraud have happend prior to the account being set up as he filed prior to the account being set up?

At the time of filing?

PS: I would file a SAR anyway.
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#1747338 - 10/06/12 01:36 PM Re: Bankruptcy Fraud Attempt edAudit
Elwood P. Dowd Offline
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Quote:
He filed about 2 weeks after opening these accounts.


It is sort of like "Which came first, the chicken or the egg?" If the sole purpose of the accounts was to facilitate a fraud on the trustee, then that's when the first act occurred. Yet, the fraud was not consumated until he signed the petition omitting them as assets.

However, the bank would not be chargeable with any knowledge of the petition's omissions; i.e. the clock would not begin to run on SAR filing until the bank received the trustee's order to freeze the accounts. Even then, I would not say that every bank receiving an order to freeze accounts would automatically be on notice of the fraud. This one was somehow able to connect the dots.

P.S. What a great father, involving his teen aged son in the fraud.
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#1747341 - 10/06/12 02:31 PM Re: Bankruptcy Fraud Attempt Matt_B
Matt_B Offline
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No kidding, he's a real winner. He's been fighting with the trustee, lawyers back and forth etc, about the LLC's funds. Yesterday the trustee had us release the freezes on a couple of the smaller accounts and he showed up to take all those funds out as cashier's checks. (a couple thousand or so is all) Apparently he had lost two employees, everything was falling apart, blah blah. But the big money in the other business account is still to be held.

The only account he gave accurate balance information on was his personal account with us, that had less than a dollar in it. Had he opened the "business" accounts elsewhere, he might've been able to pull this off! I'm pretty confident he didn't randomly need to open up 3 business accounts on the same day right before he filed. He wanted to open up another after we received the trustee's orders, but when he found out those funds would still be subject to scrutiny, he changed his mind. Suspicious indeed.
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