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Chicago is known for many things, not least among those things is scams. Corrupt politicians, business fraud schemes and more have all come out of Chicago. Recently, Chicago was the location of an entirely new class of scam. Drivers were recently alleged of filing phony bankruptcies in order to avoid paying vehicle impound fees. In a compact urban city, parking can be scarce. The city often tows vehicles for parking violations, but at least one thousand of those drivers didn’t have to pay a penny in fines to the city’s Revenue Department.
These drivers all fraudulently filed for bankruptcy. How did they do it? The Federal Bureau of Investigation (FBI) alleges that these people all had help from a ring of people who were offering this service. Even worse than this, the people offering this bankruptcy fraud service were charging up to half of what the drivers owed to the city of Chicago. One Chicago man was arrested for charging $600 to an undercover FBI agent who was posing as a driver attempting to avoid impound fees.
This man was just one of many individuals who, allegedly, would hang around the Department of Revenue just waiting to encounter people whose cars had been towed by the city. When bankruptcy is filed, the city is required to release vehicles without a fee. This bankruptcy fraud ring was asking cash payments in exchange for preprinted bankruptcy forms and even driving customers to and from federal bankruptcy court and the Department of Revenue. When bankruptcy is filed, but the petitioner doesn’t follow up with federal bankruptcy court, the court typically dismissed the case no questions asked.
What tipped the Department of Revenue off? They stated that they had noticed an increased volume of individuals using bankruptcy as a means of getting their cars out of impoundment. The Department notified a bankruptcy trustee and the investigation began. Bankruptcy fraudis a federal offense, outlawed by 18 United States Code § 157. The penalties are fines and imprisonment for up to five years.
If there is enough evidence to prove that the defendants filed petitions for bankruptcy or made a false representation, claim or promise concerning bankruptcy either before or after the petition was filed, then they will likely be convicted of bankruptcy fraud. To learn more about possible defenses against allegations of fraud or to learn how Okabe & Haushalter could assist you with a similar case, please do not hesitate to contact a Chicago criminal defense attorney at the firm today.