Bankruptcy Fraud Rings Tainted $3M in Assets

Bankruptcy Fraud Rings Tainted $3M in Assets

A Florida couple is facing federal charges after allegedly concealing over $3 million in assets from the United States Bankruptcy Court, the United States Trustee’s Office in Miami, Florida, and their chapter 7 bankruptcy trustees.

Wifredo A. Ferrer, United States Attorney for the Southern District of Florida, George L. Piro, Special Agent in Charge, Federal Bureau of Investigation (FBI), Miami Field Office, and Guy G. Gebhardt, Acting United States Trustee for Florida, Georgia, Puerto Rico and the U.S. Virgin Islands (Region 21), announced the filing of federal charges against 8 defendants in 5 separate cases.

The alleged conduct was committed in order to shield assets from creditors and avoid the repayment of outstanding debts.

United States Attorney Wifredo A. Ferrer stated, “The U.S. Attorney’s Office and our law enforcement partners are committed to bringing to justice those who defraud the United States Bankruptcy Courts and the United States Trustee’s Office, and abuse the bankruptcy process in order to escape the repayment of personal debts.

“Federal bankruptcy proceedings can be a lifesaver for honest individuals overwhelmed by debt,” said William J. Maddalena, Assistant Special Agent in Charge, FBI Miami.  “Yet others seek to line their pockets through illicit actions.  The FBI takes seriously our responsibility to pursue allegations of bankruptcy fraud and will investigate debtors who corrupt the bankruptcy process through deceit and lies.”

Acting United States Trustee Guy G. Gebhardt stated, “Criminal bankruptcy fraud threatens the integrity of the bankruptcy system, as well as public confidence in that system.  We are deeply grateful to U.S. Attorney Wifredo A. Ferrer and our partners for their commitment to combating bankruptcy-related crimes, as demonstrated by the charges announced today against eight defendants.”

The U.S. Trustee Program is the Justice component that protects the integrity of the bankruptcy system by overseeing case administration and litigating to enforce the bankruptcy laws.  Region 21 is headquartered in Atlanta, Ga., with additional offices in Miami, Orlando, Tallahassee, and Tampa, Fla.; Macon and Savannah, Ga.; and San Juan, P.R.

One of the cases involves Kathleen Anne Smith Cutuli, 65, and Gregory Lee Cutuli, 65, both of Plant City, who were charged in a seven-count indictment with committing criminal offenses related to Kathleen Cutuli’s petition for chapter 7 bankruptcy. According to allegations contained in the indictment, the defendants falsely and fraudulently transferred and concealed property and then Kathleen Cutuli declared bankruptcy to avoid paying money to Kathleen’s former business partner. Specifically, Kathleen and Gregory Cutuli transferred Kathleen’s $1,819,068 federal income tax refund to Gregory and concealed the transfer from the Bankruptcy Court, the U.S. Trustee’s Office and the chapter 7 bankruptcy trustee. Additionally, Kathleen Cutuli made false statements in her bankruptcy petition filed with the U.S. Bankruptcy Court in Miami, FL, and concealed from the Bankruptcy Court, the U.S. Trustee’s Office and the chapter 7 bankruptcy trustee approximately $32,000 in furs and jewelry, approximately $114,000 in household goods and furnishings, and approximately $117,404 in cash. In total, Kathleen Cutuli and Gregory Cutuli transferred and concealed more than $2,082,472 in assets from the bankruptcy court, leaving over $1,000,000 of debt to be paid by their creditors.