Arrested in Florida, Couple to Appear in Houston on Charges of Bankruptcy Fraud

HOUSTON—Husband and wife Michael Giventer and Julia Shvabskaya have been arrested for devising and executing a scheme to commit bankruptcy fraud and defrauding several creditors in Texas and elsewhere, U.S. Attorney Kenneth Magidson announced today.

The couple was indicted for conspiracy, bankruptcy fraud and three additional counts of concealing assets from the United States Trustee and creditors in November 2010. The indictment had remained under seal because Giventer was had been in Ukraine for the past year. The couple was arrested at the Miami International Airport when Giventer returned to the United States. At that time, Shvabskaya was there to receive him at the airport. Giventer made his initial appearance in Miami last week and was ordered detained pending trial, while Shvabskaya was released on bond. Giventer is scheduled for arraignment here in Houston, on Friday, Nov. 18, before Judge George C. Hanks.

The Indictment alleges that in 2001, Giventer, 52, was ordered in a civil proceeding in federal district court (State Farm v. Michael Giventer, H-98-5150) to pay State Farm Mutual Automobile Insurance Company $8.6 million. The judgment came as a result of devising and executing a fraudulent sudden stop automobile collision insurance scheme whereby millions in false insurance claims were paid from approximately 1992 through 1997. In addition to the civil judgment, Giventer had been prosecuted and convicted for his role in staged care accident scheme in the Southern District of Texas. As a result of his guilty plea in that case, Giventer was sentenced to five years’ probation in October 2001. According to the indictment, while on probation on that conviction, he devised and executed this bankruptcy fraud scheme.

In 2002, Giventer and Shvabskaya, 39, entered into a premarital agreement transferring most of Giventer’s assets to Shvabskaya in an attempt to shield him from creditors. Giventer and Shvabskaya married that same year in Florida.

After the couple married and the premarital agreement became effective, Giventer and Shvabskaya orchestrated the formation of multiple business entities allegedly dedicated to providing healthcare services. The indictment alleges businesses were established in the name of Shvabskaya and others, while Giventer retained control of the business entities and access to the earnings generated by those entities. Later, in 2005, Giventer filed for bankruptcy in the Southern District of Texas, asking for protection from his creditors—among them, State Farm. In his bankruptcy petition, Giventer concealed having control of and access to the earnings generated by the business entities he organized in Shvabskaya’s name.

In addition to concealing assets, Giventer and Shvabskaya allegedly destroyed financial records kept in their in their personal and business computers, in an effort to conceal additional assets from the trustee and his creditors.

It was the purpose of the conspiracy to engage in a scheme to defraud the trustee, creditors and the bankruptcy court by concealing assets through fraudulent transfers to corporate entities the defendants created, by making false representations during bankruptcy court proceedings and by destroying evidence, thereby avoiding responsibility and payment of debts previously incurred. Preliminary calculations indicate that Giventer and Shvabskaya concealed assets and earnings in excess of approximately $4 million.

This case was investigated by the FBI and the Department of Health and Human Services-Office of Inspector General. Special Assistant United States Attorney Justo A. Mendez is prosecuting the case.

An indictment is a formal accusation of criminal conduct, not evidence.

A defendant is presumed innocent unless convicted through due process of law.