Minneapolis Bankruptcy Trustee Trusts Gut and Nails Jewelry Store Owner

A man filed Chapter 7 bankruptcy and he got through it fairly easily. He had two jewelry stores that failed and he told the court that the jewelry was gone. He either sold it off or dismantled the jewelry and even said he melted it down.

The bankruptcy judge was rather angry, declaring that the man owed over $250,000. What the judge didn’t have proof of was that the man was hiding any assets. This resulted in his creditors receiving a settlement of just $17,500.

What the man didn’t count on was a very intuitive bankruptcy trustee.

A Minneapolis attorney who was appointed as a trustee to represent the creditors had a feeling that she just couldn’t shake. She smelled a rat and she was going to pursue this feeling.

For a total of four years, she pursued the man from Minnesota to Wisconsin as he moved from one store location to another. She even had a process server camp outside one store to watch him as he came in and out and had his truck followed. What sealed the deal was when she sent a secret shopper into a store to take photos of his inventory.

As a result of this bankruptcy trustee’s persistence, the main is now awaiting sentencing and his prison term could be over two years. His fines will total more than $50,000. While his penalties may not seem as harsh as they should be, it’s because he pleaded guilty to the charge of concealing bankruptcy assets.

This is why it is very important to disclose everything when filing bankruptcy. If it is believed that an individual seeking the protection of a bankruptcy court is concealing assets, the trouble can be significant.

In this man’s case, he didn’t hide his assets well. When both of his jewelry stores went bankrupt, he opened another one in the same strip mall as one of the closed stores. When the secret shopper entered his store, she said she was looking for a “big stone.” The secret shopper also brought in a man that she called her “boyfriend” to be convincing. When she couldn’t find what she wanted, he stated that he had more jewelry at home and that he would bring it in. That’s when she returned later without her “boyfriend” and told the store owner she would have to take photos of the jewelry to show him.

The man was in debt to over 20 credits, but the man said he no longer had the jewelry so that it could be sold to satisfy some of the debt. The trustee had exhausted her collection efforts and agreed to the $17,500 settlement. However, she had a clause in the Chapter 7 bankruptcy settlement document that stated that if she would become aware of any assets not disclosed, the settlement agreement would be void. That is exactly what happened.



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