Former Law Firm Partner Pleads Guilty To Bankruptcy Fraud

Damian Williams, the United States Attorney for the Southern District of New York, announced that JOHN ROESSER pled guilty today to abusing the bankruptcy system by making false statements under penalty of perjury and submitting falsified records.  ROESSER will be sentenced by U.S. District Judge Analisa Torres, to whom the case is assigned.

U.S. Attorney Damian Williams said: “The United States bankruptcy system does immense public good and provides a backstop for people trying to lawfully navigate their way out of debt.  The defendant — who used to be a lawyer and knew exactly what he was doing — manipulated and corrupted a system that helps so many.  He lied to the U.S. Bankruptcy Court for the Southern District of New York so that he could use its protections to keep his assets and to avoid paying his bills.  This Office will bring to justice those who abuse the public’s trust and use their status to try to place themselves above the law.”

According to the allegations in the Indictment and statements made in public court proceedings:

From in or about March 2013 through in or about January 2018, ROESSER was a partner at three multinational law firms.  During his time as a partner at these law firms, ROESSER earned substantial income — and incurred substantial income tax liability.  ROESSER resigned from the New York bar in or about June 2020, after admitting to misappropriating client funds.

On or about February 3, 2022, ROESSER filed for Chapter 11 bankruptcy (the “Bankruptcy”) in the U.S. Bankruptcy Court for the Southern District of New York.  In a Chapter 11 bankruptcy, a debtor may remain “in possession,” meaning that the debtor keeps possession and control of his assets during the bankruptcy.  But a debtor-in-possession must propose a viable plan of reorganization, which creditors then vote to approve or reject.  If a debtor fails to comply with the requirements of Chapter 11, a Chapter 11 bankruptcy can be converted to a Chapter 7 bankruptcy or can be dismissed.  In a Chapter 7 bankruptcy, an appointed trustee usually converts a debtor’s assets into cash for distribution among creditors.  If a bankruptcy is dismissed, the debtor loses the protections of bankruptcy.  For example, creditors can take steps to seize a debtor’s assets.  ROESSER’s assets included a house he estimated was worth millions of dollars and an Aston Martin Rapide, a luxury sports car. 

ROESSER sought to remain a debtor-in-possession during the Bankruptcy, and on or about February 17, 2022, he opened a debtor-in-possession account for the Bankruptcy (the “DIP Account”).

On or about February 17, 2022, ROESSER submitted a declaration (the “Declaration”) in the Bankruptcy.  ROESSER declared under penalty of perjury that the Declaration was true and correct.  The Declaration stated, in part, that ROESSER “[had] significant tax debt, which I will attempt to deal with in my chapter 11 reorganization.”  The Declaration also contained the following statements:

Currently, I am in the real estate business and expect a commission of approximately $9,500,000 of which 45% would inure to my benefit and the other 55% to my partner. I expect payment of this commission in June of 2022.

. . .

The needs and interests of my creditors will best be served by my continued possession of [a house in Bronxville, New York, valued in the Declaration at $2,600,000] and management of my affairs as debtor-in-possession under Chapter 11 until I receive the income that is coming to me.

On or about February 22, 2022, the Internal Revenue Service (“IRS”) filed a Proof of Claim in the Bankruptcy, listing the IRS’s claims against ROESSER.  These claims totaled $2,229,971.77 for income taxes assessed between 2014 and 2019.  After adding penalties and interest, these claims totaled $3,850,819.07.

On or about March 15, 2022, at a meeting held in the Bankruptcy, ROESSER testified under oath, in substance and in part, that he expected that a limited liability company (the “LLC”) in which he held a 45% interest would receive approximately $9.6 million on or before June 2022.  At a continued meeting held in the Bankruptcy on or about April 18, 2022, ROESSER again testified, in substance and in part, that he expected to receive millions of dollars soon.

On or about June 27, 2022, a legal assistant for ROESSER’s lawyer sent an Assistant U.S. Attorney in the Southern District of New York (the “AUSA”), who was representing the IRS in the Bankruptcy, a document (“Bank Record-1”) purporting to show an online banking screenshot relating to a bank account held by the LLC (the “LLC Account”).  The legal assistant’s message stated, in sum and substance, that Bank Record-1 had been provided by ROESSER that day.  Bank Record-1 showed an available balance of $9,661,090.00 in the LLC Account.  But Bank Record-1 was fake.  The LLC Account never had more than $200 in it.

On or about July 6, 2022, ROESSER’s lawyer sent the AUSA a document (“Bank Record-2”) purporting to show an online banking screenshot relating to the DIP Account.  Bank Record-2 showed an available balance of $9,661,000.00 in the DIP Account.  Bank Record-2 was also fake.  In reality, the DIP Account never had a positive balance.

On or about August 8, 2022, and August 9, 2022, ROESSER’s lawyer and the AUSA electronically signed a stipulation (the “Stipulation”) stating, in sum and substance, that the secured claims of the IRS would be resolved provided that ROESSER paid $3,923,981.26 to the IRS within seven days after the Stipulation was so ordered by a Judge.

On or about September 8, 2022, ROESSER’s lawyer filed in the Bankruptcy on ROESSER’s behalf a monthly operating report (the “Monthly Operating Report”).  The Monthly Operating Report was electronically signed by ROESSER and stated, “I declare under penalty of perjury that the foregoing Monthly Operating Report and its supporting documentation are true and correct and that I have been authorized to sign this report on behalf of the estate.”  The Monthly Operating Report listed for “Total receipts (net of transfers between accounts),” the amount $9,662,594, and for “Cash balance end of month,” the amount $9,602,924.  Attached to the Monthly Operating Report was a document (“Bank Record-3”), purporting to be an Account Information Report for the DIP Account.  Bank Record-3 showed a current balance of $9,578,105.73, a last deposit Amount of $9,661,000.00, and a last deposit date of July 1, 2022.  However, the Monthly Operating Report, including the amounts it listed for “Total Receipts” and “Cash balance end of month,” and Bank Record-3, were false.  The DIP Account never received $9,661,000.00 on July 1, 2022, or any other date.  In fact, the DIP Account never had a positive balance.

On or about September 23, 2022, Judge Sean H. Lane of the U.S. Bankruptcy Court for the Southern District of New York so ordered the Stipulation.  The same day, a legal assistant for ROESSER’s lawyer sent the AUSA a copy of a check made out to the “U.S. Treasury” in the amount of $3,923,981.26.  This check purported to be from the DIP Account.  However, the DIP Account did not have a positive balance, let alone sufficient funds to pay the check.

On or about March 3, 2023, Judge Lane dismissed the Bankruptcy.  Without the protections of bankruptcy, creditors can now take steps to seize ROESSER’s assets to pay his debts.

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ROESSER, 52, of Bronxville, New York, pled guilty to one count of false oaths and claims in bankruptcy.  The charge carries a maximum sentence of five years in prison. 

The maximum potential sentence is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant will be determined by a judge.

Mr. Williams praised the outstanding investigative work of the Federal Bureau of Investigation’s New York Field Office.

The case is being prosecuted by the Office’s Complex Frauds and Cybercrime Unit.  Assistant U.S. Attorney Steven J. Kochevar is in charge of the prosecution.