Bankruptcy Attorney Indicted for Bankruptcy Fraud
Salinas Attorney James Nelson and Wife Charged with Conspiracy to Commit Bankruptcy Fraud
|U.S. Attorney’s Office December 11, 2009|
SAN JOSE—A federal grand jury in San Jose has indicted James Nelsen and Jane Nelsen, of Salinas, for conspiracy to commit bankruptcy fraud, United States Attorney Joseph P. Russoniello announced. James Nelsen, a bankruptcy attorney who practices in San Jose, filed for personal bankruptcy then allegedly lied to the bankruptcy court in order to obtain permission to sell an office condominium he owned with his wife, without any of the proceeds going to pay Mr. Nelsen’s creditors. The proceeds instead went to Mrs. Nelsen, who used the money on her own and her husband’s behalf.
According to the indictment, James Nelsen, 69, filed for personal Chapter 13 bankruptcy protection in February 2005. The bankruptcy filing did not include his wife, Jane Nelsen, 60. On March 29, 2006, Mr. Nelsen filed a motion in bankruptcy court requesting to sell an office condominium located at 105 East Alisal Street, Salinas, outside of the bankruptcy proceedings, that is, free of any judicial lien. Nelsen claimed as justification that the office condominium was encumbered by a deed of trust to his parents-in-law, Peter and Marjorie Kurle, in such a way that at the completion of its sale, no money would remain to pay creditors. The bankruptcy court granted the motion, allowing the sale to proceed.
The indictment alleges, however, that on March 29, 2006, the Kurles sent a letter to the escrow company stating that they were owed no money for their deed of trust on the office condominium. When the sale of the office condominium closed on May 12, 2006, at the Nelsens’ direction the sale proceeds, $224,789.38, were wired to a bank account controlled by Mrs. Nelsen. The indictment further alleges that after she received the money, Mrs. Nelsen: (1) wired $118,000 to a title company in Florida toward the purchase of a vacation condominium in Puerto Vallarta, Mexico; (2) wrote a check for $50,000 to her husband, James Nelsen; and (3) used $27,879.39 to pay off the outstanding balance on an automobile loan.
Mr. Nelsen was arrested at his home on December 10, 2009, and made his initial appearance in federal court in San Jose later that day. He was released on a $50,000 personal recognizance bond but was ordered to wear an electronic monitoring device. Mrs. Nelsen was out of the state when the arrest warrants were executed. She is scheduled to make her initial appearance before The Honorable Howard R. Lloyd, United States Magistrate Judge, on Tuesday, December 15, 2009, at 9:30 a.m. James Nelsen’s next scheduled appearance is at 9:00 a.m. on January 6, 2010, for status, before The Honorable Jeremy Fogel, United States District Judge.
The maximum statutory penalty for each count of bankruptcy fraud in violation of Title 18, United States Code, Section 157(3) is five years' imprisonment and a fine of $250,000 or twice the gross gain or gross loss from the offense. The maximum statutory penalty for each count of concealment of assets in violation of Title 18, United States Code, Section 152(1) is five years' imprisonment and a fine of $250,000 or twice the gross gain or gross loss from the offense. The maximum statutory penalty for each count of conspiracy in violation of Title 18, United States Code, Section 371 is five years' imprisonment and a fine of $250,000 or twice the gross gain or gross loss from the offense. The maximum statutory penalty for each count of wire fraud in violation of Title 18, United States Code, Section 1343 is 20 years imprisonment and a fine of $250,000 or twice the gross gain or gross loss from the offense. The maximum statutory penalty for each count of engaging in monetary transactions in property derived from specified unlawful activity in violation of Title 18, United States Code, Section 1957(a) is 10 years' imprisonment and a fine of $250,000 or twice the amount of the criminally derived property involved in the transaction. However, any sentence following conviction would be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
Jeff Schenk is the Assistant U.S. Attorney who is prosecuting the case with the assistance of Jeanne Carstensen. The prosecution is the result of an investigation by the Federal Bureau of Investigation.
Please note, an indictment contains only allegations against an individual and, as with all defendants, Mr. and Mrs. Nelsen must be presumed innocent unless and until proven guilty.
Case #: CR 09-01168 JF.
A copy of this press release may be found on the U.S. Attorney's Office's Web site at www.usdoj.gov/usao/can.
Electronic court filings and further procedural and docket information are available at https://ecf.cand.uscourts.gov/cgi-bin/login.pl.
Judges' calendars with schedules for upcoming court hearings can be viewed on the court's Web site at www.cand.uscourts.gov.
All press inquiries to the U.S. Attorney's Office should be directed to Jack Gillund at (415) 436-6599 or by email at Jack.Gillund@usdoj.gov.