United States Attorney Announces Sentencings in Two Bankruptcy Fraud Cases

SAN FRANCISCO—United States Attorney Melinda Haag announced that defendants in two unrelated cases were sentenced to terms of imprisonment for committing bankruptcy fraud.

In the first case, Patricia Bonavito was sentenced on November 13, 2013, to six months in prison for giving false statements in a bankruptcy proceeding.

Bonavito pleaded guilty on August 20, 2013, to making numerous false statements, under the penalty of perjury, in furtherance of a bankruptcy petition through which she sought relief of $308,249.00 in debts. According to the plea agreement, Bonavito admitted to knowingly making these false statements concerning matters material to the determination of whether the Bankruptcy Court would forgive her debt. The false statements included the following: Bonavito denied that anyone owed her any money, when in fact someone owed her a 50 percent interest in a $150,000 promissory note; she denied having any other income or transferring any property during the two years prior to filing her bankruptcy petition, when in fact she had received more than $500,000 from the sale of properties in San Francisco and New York; she denied that her name was on any real property not listed on her original petition, when in fact she purchased a property in New York for $385,000 shortly after filing for bankruptcy in San Francisco; finally Bonavito denied giving any money to friends or relatives in the year prior to filing, when in fact she had transferred $200,000 to her daughter mere months before filing.

Bonavito, 59, formerly of San Francisco and currently from New York City, was indicted by a federal grand jury on April 17, 2013. She was charged with eight counts of false statements in bankruptcy proceedings, in violation of 18 U.S.C. § 152(3), and one count of false testimony under oath in a bankruptcy proceeding, in violation of 18 U.S.C. § 152(2).

Bonavito’s sentence was handed down by The Honorable Judge William H. Alsup, United States District Court Judge, in San Francisco following a guilty plea on four counts of false statements in bankruptcy proceedings, in violation of 18 U.S.C. § 152(3). Judge Alsup also sentenced the defendant to a three-year period of supervised release. The defendant will begin serving the sentence on January 7, 2014.

Hallie Hoffman is the Assistant U.S. Attorney who is prosecuting the Bonavito case with the assistance of Bridget Kilkenny. The prosecution is the result of an investigation by the Federal Bureau of Investigation with assistance from the United States Bankruptcy Trustee.

In a second case, Walter Bruce Harrell was sentenced on November 26, 2013, to 10 months in prison for bankruptcy fraud and for giving false statements in a bankruptcy proceeding.

Harrell pleaded guilty on August 2, 2013, to filing bankruptcy petitions in furtherance of a scheme to defraud creditors owning mortgages and to making false statements in a bankruptcy petition. According to the plea agreement and indictment, the defendant operated a scheme in which he would pay individuals to file bankruptcy petitions in U.S. Bankruptcy Court. At the same time, the defendant had his clients—who were homeowners facing foreclosures of their properties—deed fractional interests in those properties to the bankruptcy filers. When the bankruptcy petitions were filed, Harrell would notify the creditors who were seeking to foreclose on his clients’ properties that the properties were part of a bankruptcy. Because of the “automatic stay” provisions of the U.S. Bankruptcy Code, the creditors were prohibited from proceeding with any foreclosure sales. Instead, the creditors were required to have their attorneys file motions to lift that automatic stay in the Bankruptcy Court. Although these motions were invariably granted, Harrell’s actions caused delays in the foreclosure process and caused the creditors to incur attorneys’ fees in moving to lift the automatic stay.

Harrell, 72, of Montara, was indicted by a federal grand jury on February 14, 2013. He was charged with eight counts of bankruptcy fraud, in violation of 18 U.S.C. § 157, and two counts of making false statements in a bankruptcy proceeding, in violation of 18 U.S.C. § 152(3).

“The integrity of evidence received by our bankruptcy courts is critical to the courts’ ability to function effectively,” United States Attorney Melinda Haag stated. “This office will vigorously prosecute people who intentionally submit false and misleading information in federal bankruptcy proceedings.”

Harrell’s sentence was handed down by the Honorable Judge Susan Illston, United States District Court Judge, in San Francisco following a guilty plea on one count of bankruptcy fraud, in violation of 18 U.S.C. § 157, and one count of making false statements in a bankruptcy proceeding, in violation of 18 U.S.C. § 152(3). Judge Illston also sentenced the defendant to a three year period of supervised release. The defendant will begin serving the sentence on January 31, 2014.

Kyle F. Waldinger is the Assistant U.S. Attorney who is prosecuting the Harrell case with the assistance of Rayneisha Booth. The prosecution is the result of an investigation by the Federal Bureau of Investigation, the Special Inspector General for the Troubled Asset Relief Program (SIGTARP), and the Alameda County District Attorney’s Office, with assistance from the United States Bankruptcy Trustee.