Rick Sanford Sentenced for Bankruptcy Fraud
The truth, the whole truth, and nothing but....
The US Attorney in Columbia announced Friday that former Gamecock and New England Patriot Rick Sanford has pled guilty to bankruptcy fraud, and been sentenced to two years probation, thirty days home detention, and community service. The charges and guilty plea stem from a 2009 Chapter 7 bankruptcy filing.
Dr. Sanford, who established a chiropractic practice in Lexington after his NFL career, ran afoul of the Chapter 7 trustee and the United States Trustee almost immediately after filing his case. From court documents, it appears that the trustee and U.S. Trustee thought that he had undervalued certain assets, and failed to disclose other assets. Ironically echoing the allegations against Lenny Dykstra, he was also accused of removing assets from his home before the trustee could inventory the contents. (Just so you know, trustees rarely conduct an inventory of household goods; but when you are a doctor and former NFL player, I guess you get special treatment.) Apparently the final straw came when the trustee discovered a 25% interest in a Vail condo that had not been disclosed. The criminal indictment and guilty plea centered around the failure to list that condo as an asset.
The media reports (as is often the case with bankruptcy issues) are not quite accurate. Those reports indicate that Sanford “withdrew” his bankruptcy petition. That makes it sounds like he just called a halt to the whole bankruptcy process. But that is not what happened at all. What actually happened is that he agreed not to seek a discharge in the case. A discharge is the court order that says your creditors can’t try to make you pay any more. So, he did not get a discharge, meaning his creditors can still try to collect from him. Meanwhile, the liquidation of his assets by the trustee continued. In bankruptcy terms, he got the worst possible outcome–no protection from creditors, and the trustee sold all his stuff.
Here’s the deal: Bankruptcy can free you from the oppression of overwhelming debt, but the price of admission is full disclosure. No half measures, no omissions, no fudging on values. You have to list all your assets, even the assets that have no value to anyone but you, even the assets that are exempt from creditors. You have to list all your creditors, even the ones you intend to pay. You have to prepare your tax returns, and give copies to your trustee.
If you live in South Carolina, the Sanford case (and others like it) should serve to put you on notice that South Carolina trustees, the Office of the United States Trustee, and the U.S. Attorney’s office are willing and able to pursue criminal charges if you commit bankruptcy fraud. If you have assets that you are concerned about losing in bankruptcy, there are other options available to you. Have a frank and honest discussion with an experienced bankruptcy attorney about whether it is likely that a bankruptcy trustee will sell the assets that you can’t bear to lose, and what other options you may have. Trust me, those other options are far better than risking a federal criminal indictment.
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