Federal Judge Hands Down Conviction in Bankruptcy Fraud Bench Trial

U.S. District Judge Nancy Atlas found Chaker guilty less than an hour ago of one count of bankruptcy fraud following a five-day bench trial.

The evidence at trial showed that Chaker filed bankruptcy under Chapter 13, in which a debtor is required to propose a plan of reorganization to pay the debtor’s creditors over time. The debtor is required to pay at least as much as the creditors would receive if the debtor’s assets were liquidated on the date of the filing of the bankruptcy petition. The process is designed to achieve an orderly transfer of a debtor’s assets to creditors from available assets truthfully and accurately disclosed and to provide a “fresh start” to honest debtors by allowing them to obtain a discharge or release of debt incurred prior to filing bankruptcy.

According to the evidence, Chaker filed for bankruptcy under Chapter 13 on March 6, 2007. Specifically, on or about March 26, 2007, during a bankruptcy hearing before the Honorable Jeffrey Bohm, while under oath, Chaker falsely and fraudulently represented to the court that the property was never leased out prior to January 2007, when he had in fact previously contracted with a realtor who secured at least two rental contracts with Chaker personally. Chaker failed to disclose income and the existence of past and present residential leases of a residential property facing foreclosure in Houston to his creditor, Saxon Mortgage in the hearing and to the court.

In order for the bankruptcy system to work for all parties, it is imperative for the debtor to be truthful and forthright in all aspects of the bankruptcy process. The bankruptcy system is based on an honor system—the debtor agrees to provide all of the necessary information requested by the trustee and to assist the trustee in collecting all assets of debtors and comply with the court’s orders to obtain the relief desired under the chapter the case was filed.

Chaker is scheduled to be sentenced by Judge Atlas on June 20, 2013, at 1:30 p.m., at which time he faces a maximum sentence of five years’ imprisonment as well as a $250,000 fine.

This case was investigated by the FBI with assistance from the United States Trustee’s Office and is being prosecuted by Assistant United States Attorneys Carolyn Ferko and Sharad Khandelwal.