Jeffrey Shankman, a former head of the Global Markets Division of Enron filed a Chapter 7 bankruptcy in October 2008. His goal was to discharge his debt. A debtor is required to file Schedules in his bankruptcy case which contain detailed information about his assets, liabilities, recent payments to creditors, past and current income, and anticipated future income. The documents are required to be signed and certified under penalty of perjury that the information contained in them is true and correct.
As a Chapter 7 debtor, Mr. Shankman was allowed to claim a limited amount of assets as exempt, meaning he would be allowed to keep them after bankruptcy. The federal indictment, returned on September 30, 2013, alleges that Mr. Shankman sold various pieces of fine art, decorative art, jewelry and other assets worth approximately $952,125 (Much more than the allowable limit) without the knowledge, consent or approval of the Chapter 7 trustee or the bankruptcy court. He is being charged with engaging in a scheme to conceal assets to defraud creditors and the Chapter 7 trustee.
If convicted, he faces up to five years in federal prison and a possible $250,000 fine of on each count.
As stated by the FBI who investigated this case, in order for the bankruptcy system to work for all parties, it is imperative for the debtor to be truthful and forthright in all aspects of the bankruptcy process. The bankruptcy system is based on an honor system; the debtor agrees to provide all the necessary information requested by the trustee and to assist the trustee in collecting all assets of debtors and comply with the court’s orders to obtain the relief desired under the chapter the case was filed. When a debtor fails to comply with the law, he may face criminal prosecution.
An indictment is a formal accusation of criminal conduct, not evidence. A defendant is presumed innocent unless convicted through due process of law.
Laura J. Margulies is a principal in the firm of Laura Margulies & Associates, LLC. We represent consumers in bankruptcy and litigation matters in Maryland and the District of Columbia. To learn more about our firm visit our web site at www.law-margulies.com