Bankruptcy Fraud: Getting Out of Trouble

Got fraud? If you find yourself being accused of a fraud on the bankruptcy court like Jennifer MckMama McKinney (i.e. falsified, misleading, destroying, manipulating, etc.), what can you do? If you could turn back the hands of time, I would tell you to be honest and fully disclose everything in your bankruptcy filing.

But once the wheels of fraud are in motion, it’s awfully hard to stop them.

One of the techniques used by debtors trying to save their skin after red flags of fraud have been uncovered by the bankruptcy trustee is an attempt to dismiss the bankruptcy case. This move makes little difference in a case of suspected fraud. The bankruptcy is likely going to be denied anyway, so asking to have the bankruptcy dismissed does not get the debtor ahead. And a debtor can’t just automatically get a bankruptcy dismissed. The judge decides whether the bankruptcy can be dismissed.

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Bankruptcy Fraud: Staying Out Of Trouble

Recently, I wrote here about the story of Jennifer McKinney (the mommy blogger known as MckMama) and her alleged fraud on the United States Bankruptcy Court in the District of Minnesota. In short, Jennifer and Israel McKinney filed bankruptcy, claiming nearly $750,000 in debts, while failing to disclose the extent of their assets and income.

The bankruptcy trustee has asked the court for a denial of discharge of the McKinneys’ debts, based on false disclosures, lack of disclosure, manipulation of income, and destruction of records. In particular, Jennifer McKinney is accused of falsely claiming her blogging income is $1,500 per month, while she was depositing at least $7,000 to $10,000 per month to her bank account. She reported to the bankruptcy court that her income for 2011 was $55,000, while the records for that year show more than $148,000 of income. In addition, certain assets including cash, accounts receivable, personal property, and (very valuable) domain names and websites were not disclosed in the bankruptcy filing.

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Jennifer McKinney MckMama Bankruptcy: Fraud Alleged by Trustee

MckMama BankruptcyWhat is fraud? A false representation of a matter of fact—whether by words or by conduct, by false or misleading allegations, or by concealment of what should have been disclosed—that deceives and is intended to deceive another so that the individual will act upon it to her or his legal injury.

Yesterday in the United States Bankruptcy Court, District of Minnesota, the trustee in the bankruptcy of Israel McKinney and Jennifer Sauls McKinney (known as mommy blogger MckMama, blogging at mycharmingkids.net) filed Case 12-06024, objecting to the discharge of the bankruptcy. Last month I published a lengthy article about the MckMama bankruptcy fraud, and today we’re going to compare what I showed you and what trustee Gene Doeling (my new hero!!!) has alleged.

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Brett Kimberlin’s List of Victims Grows

Today is Everybody Blog About Brett Kimberlin Day! Earlier this week, I wrote about Brett Kimberlin, the convicted felon known as the Speedway Bomber. This dangerous man is not only a murderer, but Brett Kimberlin also has a lengthy list of legal problems, and a long list of victims he has intimidated, threatened, sued, and gotten false criminal charges against.

Today Patrick Frey at Patterico’s Pontifications illustrates (once again) how dangerous Brett Kimberlin is. On July 1, 2011, Frey was “SWATted,” a terroristic technique in which someone calls the police pretending to be Frey and telling police he just murdered his wife. A SWAT team descended on Frey’s home almost immediately, removing him and his (very much alive) wife at gunpoint and ensuring that the children were still alive as well.

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Tom Barrett Lies About Governor Scott Walker

Elections get nasty. Mudslinging is the norm. But Tom Barrett, candidate for governor in the recall election has taken it much too far. He is blatantly lying about Scott Walker in an attempt to win votes, and it is not okay.

There are two major lies that the Tom Barrett campaign is promoting:

1. Scott Walker Opposes Equal Pay For Women

Tom Barrett’s ads say that Scott Walker is opposed to equal pay for equal work, specifically as it relates to women. That is simply not true, but it is a sensational headline that is bound to stick with some women voters who don’t know the truth.

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Aaron Walker, Hero

Many times truth is stranger than fiction. And today I spent a couple of hours reading a story of terrorism – – not just the bombing kind (see the story of Brett Kimberlin, Speedway Bomber here), but also the kind that aims to destroy someone personally – – and have come to respect Aaron Walker, a man I will likely never meet.

I found the story of Aaron Worthing via Ken at Popehat, who wrote Chilling Tales of Crazy/Evil. Aaron Worthington is the pseudonym of Aaron Walker, who blogged (anonymously, for a while) at Allergic to Bull and wrote a novel called Archangel: A Novel of Alternate, Recent History.

This story interests me simply from a First Amendment standpoint. I have been sued and pursued legally several times for criticism of large companies that has appeared on this blog. I have been winning, but there is a financial and emotional cost to the process.

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Bank Liability for Ponzi Schemes

An article in a recent edition of the Bloomberg BNS Banking Report on Ponzi Schemes and bank liability referred to an article I wrote on recognizing red flags of Ponzi schemes:

Under each, a plaintiff must account for both the plaintiff’s failure to investigate the would-be fiduciary before investing with the fiduciary and the plaintiff’s failure to monitor the fiduciary’s activities subsequent to the investment. As to the first, there are often many red flags to alert an investor to a Ponzi scheme that reasonable investors should notice and that many investors choose to ignore in pursuit of high returns. Fraud detection expert Tracy Coenen has noted more than fifteen red flags signaling a Ponzi scheme that any investor could spot with a reasonably diligent (and fairly simple) investigation. These items include:

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Blogger Gets Paid By Newspaper That Stole His Content

Undoubtedly, the internet has made it easier for consumers to get news. It has also made it easier for people to rip off the reporting and creative works of others.

Recently, All American Blogger Duane Lester got ripped off by the Oregon Times Observer, a local newspaper based in Oregon, Missouri. Lester’s May 1 article “Changes Implemented After MO Auditor Finds ‘Serious Shortcomings’ In Holt County Sheriff’s Department” was ripped off almost word for word and published on the front page of the May 10 Oregon Times Observer:

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Fortune on Herbalife and David Einhorn

Two weeks ago the big news was Herbalife’s earnings call, and questions asked by David Einhorn. Stephen Gandel, senior editor at Fortune Magazine wrote a great article on the Herbalife questions and their significance. I was quoted relative to the issues of distributors and recruiting:

It’s not clear Einhorn has already placed his bets against Herbalife, but it seems likely he would do so before tipping his hand, even slightly. Einhorn only asked three questions on the conference call, so it’s not clear why he thinks the company’s shares will fall. But Tracy Coenen, a forensic accountant, who has been following Herbalife for a few years, says that from Einhorn’s questions it appears he is concerned about Herbalife’s growth.

Read moreFortune on Herbalife and David Einhorn

Take Shape For Life and Medifast: Court Filing Explains Pyramid Scheme Allegations

This week, response briefs were due from the defendants in the case of Medifast v. Barry Minkow, Fraud Discovery Institute, Robert FitzPatrick, Tracy Coenen, and Sequence Inc. I was dismissed from Medifast’s SLAPP suit (see information on the lawsuit here), and my brief  in the Medifast appeal can be found here. The brief of Minkow and Bob FitzPatrick was also filed this week, and sheds some light on the allegations that Take Shape For Life (TSFL) and Medifast are offering a pyramid scheme to distributors (called “health coaches”).

The entire brief filed on behalf of Minkow, FDI, and FitzPatrick is found here (10MB file). Below I highlight some of the most relevant (and most interesting) portions, particularly the bits regarding the allegations that Medifast’s multi-level marketing business is a pyramid scheme or endless chain recruitment scheme.

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