Central District of California - 2012 Pro Se Annual Report

Professional Involvement in “Pro Se” Fraud Cases

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As a result of enforcement actions against fraudulent filers, an attorney came to the attention of judges in Santa Ana and Riverside. Upon questioning by the judges as part of the Debtor ID Program, certain third-party filers/runners implicated the attorney behind at least 80 fraudulent “pro se” filings. Responding to Orders to Show Cause issued by the bankruptcy court, the attorney testified that associates at his related entity filed or helped individuals file bankruptcies to stop foreclosures. These were “face sheet” filings that were promptly dismissed. When State Bar investigators interviewed the attorney’s clients, they discovered that many of them had never met him and that they did not know that bankruptcies were being filed in their names. The California Superior Court assumed jurisdiction over his law practice in October 2012 and, on February 10, 2013, the attorney was involuntarily enrolled as an inactive member of the State Bar of California.

A number of attorneys and realtors were mentioned by the debtors and runners appearing at the hearings as having been part of the series of events causing the “pro se” bankruptcy filing by a third party. Debtors routinely described paying these professionals a regular monthly amount for “foreclosure assistance” or "loan modification” services. In most cases, there was never anything done other than one or more skeletal bankruptcies filed. Frequently, the debtor had no understanding of what the services were he or she had paid for and often no longer had the benefit of the automatic stay if a competent attorney were to try and address their situation appropriately.

On a more positive note, those BPPs who were not involved in foreclosure or loan modification abuses were often educated by coming to the hearing. The hearings gave the Court an opportunity to educate well-meaning BPPs regarding the requirements of section 110. Many BPPs who appeared were surprised to learn of various restrictions imposed by section 110 and that there were U.S. Trustee guidelines. Where it could be determined that the BPP had not been previously sanctioned and was not involved in a fraud, the individual was given a warning and not fined.

  1. Debtor ID Program
  2. Bankruptcy Petition Preparer (BPP) Tracking
  3. Chapter 7 Success
  4. Chapter 13 Failure
  5. Burden on Court Staff
  6. Fraud and Abuse
  7. Language Barriers
  8. Professional Involvement in “Pro Se” Fraud Cases