Charbel Joseph, Bankruptcy Fraud, Kentucky 2023

Charbel Joseph, a Kentucky construction business owner, was recently denied bankruptcy discharge after failing to preserve records of his business and not filing tax returns for 16 years, according to a recent U.S. Trustee Program (USTP) press release.

On October 31, the Bankruptcy Court for the Eastern District of Kentucky granted the U.S. Trustee’s motion for summary judgment and denied a discharge to Charbel Joseph, the sole proprietor of an unincorporated construction business. The debtor claimed assets of just over $21,000 and debts of more than $10 million.

An investigation by the U.S. Trustee’s Lexington office revealed that the debtor had not filed tax returns in 16 years, did not maintain any bank accounts and operated a construction business on a cash basis. The debtor produced copies of dozens of checks totaling more than $1.4 million payable to him and dated within two years of the bankruptcy filing, but he was unable to account for the disposition of about $1.3 million of those funds.

The U.S. Trustee filed a complaint seeking to bar the debtor’s discharge and, after discovery closed, filed a motion for summary judgment. After oral argument, the court granted the motion over the debtor’s objection and entered judgment in the U.S. Trustee’s favor.

According to the USTP, the bankruptcy discharge is the key to a fresh start and comes with obligations, including transparency about the debtor’s financial condition. The USTP takes action to deny those debtors a discharge when circumstances warrant.

“The bankruptcy discharge is the key to a fresh start and comes with obligations, including transparency about the debtor’s financial condition” said Director Tara Twomey of the Executive Office for U.S. Trustees. “Although the vast majority of debtors are honest people who simply want to overcome their financial challenges, cases such as this one require action to prevent unfair manipulation of the bankruptcy system.”

The U.S. Trustee Program’s mission is to promote the integrity and efficiency of the bankruptcy system for the benefit of all stakeholders – debtors, creditors and the public. The USTP consists of 21 regions with 89 field offices nationwide and an Executive Office in Washington, D.C. Learn more about the USTP at www.justice.gov/ust.

Source: https://www.justice.gov/archives/opa/pr/us-trustee-program-obtains-denial-discharge-based-chapter-7-debtors-failure-preserve-records