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THE CONSUMER BANKRUPTCY LETTER |
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In This Issue:
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May 31, 2004
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THE BANKRUPTCY ACADEMY - SAN ANTONIO DATES CHANGED
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ONLINE LEGAL RESEARCH - SPECIAL RATE FOR NACBA ATTENDEES
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ALL QUIET ON THE REFORM FRONT
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BK COURT ENJOINS AND FINES “WE THE PEOPLE”
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DISCHARGING TAXES IN BANKRUPTCY
KING BANKRUPTCY ACADEMY SCHEDULES 3-DAY SEMINARS ON DISCHARGING TAXES - LAS VEGAS, SAN FRANCISCO & SAN ANTONIO
The first dates scheduled for the 5th annual Bankruptcy Academy program on discharging taxes in bankruptcy cases have been scheduled for LAS VEGAS, Nevada, on Sept. 8, 9 and 10, 2004; FISHERMAN'S WHARF, San Francisco, on October 27, 28 & 29, 2004, and San Antonio, Texas, January 27, 28 & 29, 2005. An early 2005 date will also be scheduled for Atlanta, Georgia.
Principal presenters will be; Morgan King, attorney and author of Discharging Taxes in Bankruptcy; Charles F. Rosen, former chief of the Los Angeles IRS office of Special Procedures (bankruptcy, insolvency); Eric M. Casper, formerly Senior Trial Attorney, Tax Division, U.S. Department of Justice - Washington, D.C.; and Robert N. Kolb, formerly with the IRS and recently the prevailing attorney for the debtor/taxpayer in two important appellate cases.
The 3-day seminar and workshop will be a thorough exploration of bankruptcy remedies for delinquent taxes and tax liens in consumer bankruptcy cases (chapter 7 and chapter 13), emphasizing hands-on handlng of tax discharge cases.
Early registration for the either program saves $50 off the regular enrollment fee of $695. And, with a double enrollment, the second tuition fee is 1/2 price!
All previous programs have qualified for CLE in all states for which CLE accreditation was requested. On request the Academy will assist in obtaining CLE accreditation for an enrollee's state.
For more information about the Tax Discharge program, or to enroll, click on red below.
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BANKRUPTCY FILINGS UP 2.8%
The number of personal bankruptcies filed for the 12 month period ending March 31, rose 2.8%. This continues the upward trend that is arguably inconsistent with claims of the economic recovery.
David Goch
Washington Legislative Counsel
Commercial Law League of America
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MORGAN KING WRITES ABOUT CHAPTER 7 FEES -
Look for Morgan King's article, “Between The Charybdis of Biggar and the Scylla of Lamie: How Can A Debtor's Lawyer Get Paid?” appearing in the June/July edition of Norton Bankruptcy Law Advisor. With unpaid prepetition fees discharged upon fiing, and fees paid prepetition to cover postpetition services denied to the attorney because they are property of the estate, it is more difficult than ever to provide quality legal services to consumer bankruptcy debtors.
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ABUSE OF PRIVILEGE CLAIMED AGAINST OFFICE OF U.S. TRUSTEE
By Phil Kent The Washington Times - May 28, 2004
When Congress created the U.S. Trustee Program as a pilot project in the 1978 Bankruptcy Reform Act, it intended for those trustees to act as a "watchdog" to monitor the integrity of how bankruptcy cases are administered. Sad to say, the watchdog today is too busy catnapping on the porch — and those seeking justice are instead being robbed blind by the very lawyers who purport to be on their side.
The most alarming example of this is a bankruptcy case in Kentucky where three out of 50 plaintiffs crawled away with a total of $2,206, while their lawyer, John O. Morgan Jr., danced away with $1.32 million. Mr. Morgan had the audacity to add to his clients' pain and suffering by pocketing about $600 for every dollar he won in the case against the check-cashing industry. Some clients got nothing.
It's one of the most blatant examples to date of lawyers winning the coal mines while their clients are getting the shaft.
[for complete article click on “HEADLINES” below]
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DEBTOR CONVICTED OF CONCEALING STOCK OPTIONS
A Eureka man who used to operate Adventure Motorsports in Kalispell pleaded guilty to federal crimes, including making false statements to a local bank and failing to disclose his interest in stock options and other assets.
Duncan W. Edwards, 59, entered his plea in Missoula on Monday. Chief U.S. District Judge Donald W. Molloy accepted Edwards' guilty plea and will sentence him on Sept. 10.
Edwards was investigated by the FBI and prosecuted by Assistant U.S. Attorney Bill Mercer.
Edwards faces possible penalties of five years in prison, a $250,000 fine and three years supervised release for bankruptcy fraud, plus the same penalties for making false statements on loan and credit applications.
According to Mercer's documents, Edwards was convicted of felony theft in Arizona in 1991 and was ordered to pay more than $3 million to the Federal Deposit Insurance Corp. as receiver for Broward Federal Savings and Loan Association.
In 1998 in Butte, Edwards filed for Chapter 13 bankruptcy protection for himself and his company, Adventure Motorsports. Another Edwards' company, Timber Creek Consulting Inc., was not included in the bankruptcy.
In 1999, Edwards converted his Chapter 13 plan to a Chapter 7 plan. He failed to disclose his interest and Timber Creek's interest in Inland Entertainment/Venture Catalyst Inc. stock options. Later, he amended the petition to include the options held by Timber Creek, but suggested they had no value.
In February 2000, a bankruptcy trustee learned that the price of the options had jumped and advised Edwards' attorney that he would seek an emergency order to sell the stock so the money could be turned over to the bankruptcy estate.
Edwards contacted the trustee and stated that his girlfriend had exercised some of the stock options and used the money to secure a loan with a bank in southern California.
But the trustee was told by Inland Casino that all of the stock options held by Timber Creek had been exercised by Edwards. Timber Creek netted approximately $445,000 from the sale.
By Chery Sabol
The Daily Inter Lake
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DEBT COLLECTOR FINED $1.5 MILLION
In order to resolve claims of illegal conduct, per a consent judgement filed in the U.S. District Court for the Eastern District of Pennsylvania May 12th, a major debt collector will refrain from future violations of the Fair Credit Reporting Act and will pay a $1.5 million civil penalty (U.S. v. NCO Group, Inc., E.D. Pa., No. 992-3012, 5/12/04).
The complaint, filed by the Justice Department, at the request of the Federal Trade Commission, alleged that NCO Group, Inc. and affiliates (NCO Financial Systems, Inc.; and NCO Portfolio Management, Inc.) reported incorrect information about consumer accounts to credit bureaus in violation of Section 623(a)(5) of the FCRA and Section 5 of FTC Act.
David Goch
Washington Legislative Counsel
Commercial Law League of America
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NACBA ATTENDEES - DISCOUNT FOR MOST AFFORDABLE BANKRUPTCY LEGAL RESEARCH
SearchCases.com affiliates with FastCase
It was good meeting you and your colleagues in Boston. The NACBA (National Association of Consumer Bankruptcy Attorneys) meeting was one of our best conferences ever -- already 20 of your friends from NACBA and their firms have subscribed to Fastcase's Bankruptcy Law Library. As a thank you, we are offering a special $200 discount to conference attendees who subscribe during the next week, until Friday, June 4. Because you attended the NACBA conference, you can purchase an annual subscription to Fastcase, providing unlimited online research and printing with our comprehensive 50-state and federal database for only $795. Also, because you would be subscribing while our bankruptcy court database is in "beta," we will make the annual subscription last 14 months -- so the cost is only about $56.79 per month.
As you may remember from our exhibit at the conference, our database includes:
-- US Supreme Court cases from 1776 to the present;
-- Federal Circuit Court of Appeals cases from 1924 to the present;
-- State Supreme Court and Court of Appeals cases from all 50 states from 1950 or earlier to the present;
-- U.S. federal district court cases from 1912 to the present;
-- Tax Court cases from 1924 to the present;
-- Bankruptcy Court cases from 1979 to 2001 currently, with complete updates at the end of our beta period this summer;
-- Statutes of all 50 states; and
-- Regulations of most states.
If your firm does not currently have an online legal research system, there is finally a truly affordable option. If you are currently locked into a Westlaw or Lexis subscription, Fastcase as a supplement will drastically reduce your transactional "off plan" charges. Either way, Fastcase will save you time and money.
This is an exclusive offer for attendees of the NACBA conference, and it is only good for one week. I've attached a brochure with more information, but the best way to make sure you can take advantage of the $200 in annual savings is to reserve your subscription today.
To SUBSCRIBE click on red “SearchCases.com,” below.
To learn more about NACBA visit NACBA.com
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FLORIDA SUPREME COURT SANCTIONS "WE THE PEOPLE" FOR UNAUTHORIZED PRACTICE OF LAW
On April 29, 2004 the Florida Supreme Court issued its opinion in The Florida State Bar v. We The People. The court found that in five cases employees of We The People had engaged in unauthorized practice law, by advising bankruptcy clients (as well as divorce and will clients) on legal remedies, which forms to prepare and how to prepare them, correcting clients' errors, and communicating with third persons such as adversary parties on behalf of the clients, notwithstanding that WTP hired a licensed Florida attorney to provide legal advice to their cusotmers.
The Court enjoined WTP from any such activities, and assessed $9,000 in sanctions.
The Florida Bar v. We The People Forms and Service Center of Sarasota, Inc. et al. No. SC02-1675
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FRAUD DISCOVERED AFTER 180-DAY DEADLINE CANNOT BE RAISED TO DENY PLAN CONFIRMATION
The 180-day period to move for revocation of confirmation for fraud is a strict deadline, even if the fraud is not discovered until after the deadline has passed. Section 105 is not a proper basis for changing the deadline. Rule 60(b) is not a basis for revocation. A timely request for revocation of confirmation cannot be amended, after the 180-day period has expired, to add new grounds not pled within the 180-day period. Where a creditor knows of a basis for challenging confirmation and fails to object, the creditor cannot be permitted to use that basis to claim fraud under after confirmation. Moreover, confirmation is res judicata as to all issues that could have or should have been litigated at the confirmation hearing. An issue "could have" been litigated at the confirmation hearing if a party in interest had the opportunity to investigate and litigate it and the debtor did not prevent it from being litigated by fraud, misrepresentation or concealment.
In re Valenti (9th Cir. BAP. 2004)
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FORECLOSURE SALE AFTER BK FILING IS VOID
There was a foreclosure sale of property owned by Cueva that was part of a bankruptcy proceeding and therefore subject to an automatic stay pursuant to 11 U.S.C. § 362.
The foreclosure sale was invalid, the stay was not modified, and therefore Bustamante was not entitled to possession or ownership of the Property. For the same reasons, Bustamante is not entitled to ownership or possession through Campbell’s interest. Additionally, Bustamante’s other claims fail. Therefore, the decision of the district court was correct and is affirmed.
IN THE MATTER OF: JOSE D. CUEVA (5th Cir. 2004)
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FRAUD DEFAULT JUDGMENT IS RES JUDICATA IN BK COURT
One might suppose that findings made in default proceedings would never be given collateral estoppel (issue preclusion) effect because they are not based on a “full and fair” hearing—a standard formulation of the criterion for whether findings are entitled to such effect. E.g., Extra Equipamentos e Exportação Ltda. v. Case Corp., 361 F.3d 359, 363 (7th Cir. 2004); Duferco Int’l Steel Trading v. T. Klaveness Shipping A/S, 333 F.3d 383, 390-91 (2d Cir. 2003); Richardson v. Navistar Int’l Transp. Corp., 231 F.3d 740, 743 (10th Cir. 2000). How could a hearing that is not “full and fair” comport with due process? Yet a significant minority of states, Indiana among them, allow findings made in default proceedings to collaterally estop, provided that the defaulted party could have appeared and defended if he had wanted to.
IN RE: JOHN W. CATT, II. (7th Cir. 2004)
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STAY VIOLATION DAMAGES DO NOT INCLUDE EMOTIONAL DISTRESS
"Actual damages" under 11 U.S.C. section 362(h) does not include damages for emotional distress suffered by a debtor when a creditor violates the automatic stay.
IN RE DAWSON (9th Cir. 2004)
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ROOKER FELDMAN GETS RICH ON NIGERIAN DEAL
What a wonderful year I'm having. First my wife gives birth to a baby girl, then I find out I'm going to be rich. Extremely rich. Yes, I just received an email from a Nigerian man who wants to share $21.5 million with me. Can
you believe my luck? This is just too good to be true!
Dr. Atiko Usman, a top official in the Nigerian National Petroleum Corp., promises to give me 30% of the $21.5 million if I help him transfer the entire amount to America.
In other words, I'm getting almost $6.5 million just to allow him to deposit the money into MY bank account. I'm so thrilled, I can't stop dancing.
Only one question keeps troubling me: When Dr. Usman sends me the money, how many Mercedes Benzes should I buy? Are 15 too many? Or should I stick with seven, one for each day of the week? Perhaps I should buy a few Jaguars, too. And just to show my generosity, perhaps I should also buy a car for my father-in-law -- a nice, sporty Hyundai.
If you're suspicious of Dr. Usman, I understand. It's a normal reaction, especially since Dr. Usman picked me and not YOU. It's also quite normal for you to pull out your hair and scream, "Why do good things always happen to other people?"
Let me emphasize this: Dr. Usman didn't pick me at random. He states that the Nigerian Chamber of Commerce had "guaranteed my reliability and trustworthiness in business dealings." They had apparently heard -- perhaps through my local chamber of commerce -- how well I operated my last garage sale!
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PUBLISHED BY KING BANKRUPTCY MEDIA FOR BANKRUPTCY PROFESSIONALS 7080 Donlon Way Suite 222 Dublin California 94568 (925) 829-6460
© King Bankruptcy Media 2004 CONTACT US AT editor@bankruptcymedia.com
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