A bankruptcy trustee colleague of mine related the following story about a recent case where he was the trustee for an “interesting” debtor in bankruptcy:
After hearing the case about a year ago and doing his usual investigation, he filed a final “no asset” report that there was nothing for creditors. He said it “sure looked like” a “No Asset” case to him. Then he got a call from “every Trustee’s best friend, the ex-wife.” It turns out our intrepid debtor had gotten the house in their divorce, had moved in, but had never transferred title into his name. This gentleman “must have thought listing his interest on his bankruptcy schedules wasn’t important.” He then tries to sell the house, but the title officer, seeing the bankruptcy, calls the trustee about it. The trustee sells the house, using the money to pay creditors including the IRS. He also refers the debtor to the United States Trustee for possible investigation of bankruptcy fraud.
But that’s not the end of the story. My trustee friend found out a few months ago that this debtor also had an undisclosed malpractice claim against a chiropractor and the case is going to trial in the spring. Even more recently, he learned that someone set off a massive amount of explosives on property owned by local dentist. There was damage to surrounding homes: busted windows, one house reportedly knocked off its foundation, blackened trees and a 10 foot diameter blast crater. The rumor was that it was this same debtor who set off the explosion, using an old C4 explosive and that this gentleman may have a license to handle explosives, “which is itself a frightening thought.” Sure enough, the individual in question has been arrested.
Just another day in the life of a trustee… those of us who have been there know how challenging the job of a trustee can be. But the other point for the rest of us is that those who commit fraud have to remember that there is always someone, usually an “ex” someone, who knows the truth and wants to tell it.