Chicago Attorney Gets 3+ Years for Bankruptcy Scam

A suburban Chicago attorney, Jan R. Kowalski, 59, of LaGrange, Illinois, is trading her legal briefs for prison stripes after being sentenced to 37 months in federal prison for a brazen bankruptcy fraud. Kowalski and her brother, Robert M. Kowalski, conspired to hide over $357,000 from creditors and the bankruptcy court, a scheme fueled by cashier’s checks, money orders, and a hefty dose of deception. The feds say this wasn’t a simple oversight; it was a calculated attempt to cheat those owed money.

The scheme revolved around Robert Kowalski’s bankruptcy filing. Facing financial ruin, he possessed a substantial amount of funds in the form of checks. Instead of declaring these assets, Jan Kowalski used her attorney trust account – an IOLTA account – as a hiding place. She deposited the checks, effectively shielding them from the bankruptcy trustee and creditors who had a legal claim to them. This wasn’t a favor; it was a deliberate act of obstruction, according to federal prosecutors.

When the activity in Kowalski’s IOLTA account raised red flags with the bankruptcy trustee, the attorney didn’t come clean. Instead, she doubled down on the fraud, fabricating documents and making false statements to the U.S. Bankruptcy Court in a desperate attempt to cover her tracks. These weren’t minor misstatements; the feds allege they were material lies intended to mislead the court and conceal the true extent of the hidden assets.

The money remains unrecovered, leaving creditors empty-handed. U.S. District Judge Virginia M. Kendall didn’t mince words during sentencing, ordering Kowalski to pay $357,492 in restitution – the full amount of the concealed funds. While prison time is the immediate consequence, the restitution order ensures Kowalski will be financially liable for her actions long after her release.

Robert Kowalski, Jan’s co-conspirator, has also been convicted for his role in the scheme, facing charges that extended beyond bankruptcy fraud to include embezzlement and tax fraud. Investigators discovered his connections to a former bank president involved in a separate embezzlement plot, suggesting a pattern of financial misconduct. The feds are still pursuing charges against other former bank employees as part of a broader investigation into the bank’s failure.

This case underscores the vulnerability of the bankruptcy system to abuse and the willingness of some legal professionals to exploit their positions for personal gain. Federal prosecutors with the Northern District of Illinois, along with special agents and inspectors, worked with the U.S. Trustee Program to unravel the scheme. Those with information related to this case or other financial crimes are encouraged to contact the U.S. Attorney’s Office for the Northern District of Illinois.

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