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Mortgage Broker Jailed for Bankruptcy Fraud

Posted on Wednesday, December 3rd, 2014    

It is important to remember that bankruptcy exists in order to protect consumers and businesses from unjust harassment by creditors, not to allow people to take advantage of the law. In fact, violations of these laws can result in criminal prosecution. The recent conviction of a mortgage business owner in Rancho Santa Fe due to alleged felony fraud related to loans, taxes and bankruptcy is a good example of how the courts can use violations of these laws to punish wrongdoers.

The United States Department of Justice pursued a case against Donald V. Totten, the former owner of a mortgage business and won a conviction with a penalty of 30 months in prison for four felony fraud counts. According to the charges, Totten utilized a national advertising scheme to encourage homeowners to refinance their homes. Using inflated incomes and other fraudulent information, Totten allegedly made millions with his scheme. He then hid income from the IRS and concealed income during his bankruptcy, leading to more fraud charges. Numerous lenders, including Freddie Mac and Fannie Mae, suffered millions of dollars in losses due to the fraudulent loans.

Bankruptcy: Play By The Rules

Bankruptcy rarely results in fraud charges, so the fact that someone is charged by federal prosecutors usually indicates very serious charges. Even so, a bankruptcy judge can easily dismiss a case if he or she believe that the debtor has lied about assets, income, debts or other important points. Therefore, it is extremely important to be sure that you are honest about your financial situation when you file bankruptcy.

This does not mean that you may not make a mistake. For example, it is very common for debtors to forget a small debt and have to amend their filings in order to add these debts. However, willfully leaving out debts such as loans from family members in order to repay them separately, is forbidden.

How Can I File Bankruptcy Correctly?

The best way to ensure that you file your bankruptcy correctly is to seek the help of an experienced attorney. The bankruptcy lawyers at Amerio Law Firm in Sacramento can help you understand your rights and your obligations under bankruptcy law when you file for protection. We can also help you choose the right bankruptcy for your needs. Contact us today to discuss your situation and find answers for your financial issues.

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