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Woman Found Guilty of Bankruptcy Fraud

Posted on in Bankruptcy Attorney Illinois

A 47 year-old woman from Laie, Oahu was found guilty in a federal court of bankruptcy fraud. According to the statement issued by the United States Attorney's Office District of Hawaii, the jury took less than an hour to find Michelle Malufau guilty of making false statements under penalty of perjury and testifying falsely under oath.

Malufau had filed for Chapter 7 in 2011 and was granted a discharge of over $1 million in debt. But according to prosecutors, she lied to the court about her income and assets. During the four day trial, documents were produced that revealed the defendant did not reveal a house she owed in Oahu that had over $300,000 in equity. She also concealed a rental property she owned, as well as a bank account.

Her husband is also facing charges of bankruptcy fraud in the couple's Chapter 7 filing. Feso Malufau Jr. is a former prison guard who was indicted for several crimes, including racketeering, which is connected to a smuggling ring at the prison he used to work at. It was during the smuggling investigation that the couple's bankruptcy fraud was revealed.

Malufau is scheduled to be sentenced in February and could receive a sentence of up to five years in prison.

Although this is case is an extreme example, it does highlight the importance of not providing false documentation or concealing assets when filing for bankruptcy. If it is revealed you hid property or assets, at the least you could be disallowed from discharging your debts. If it is revealed you were dishonest after you've already received a discharge of debts, the courts could revoke the discharge. You also would not be allowed to list the debts on any subsequence bankruptcies. And as the case of Malufau shows, you can be charged with a crime and receive a substantial prison sentence if convicted.

If you have decided to file for Chapter 7, it's important to contact a qualified Arlington Heights bankruptcy attorney to make sure everything is correctly filed in court.

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