Bastrop Couple Indicted for Bankruptcy Fraud
|Nov. 1, 2011|
HOUSTON - Jimmy W. Sissom and Susan P. Sissom, of Bastrop, Texas, have been charged in a four-count indictment alleging conspiracy, bankruptcy fraud, making false oaths and false declarations in bankruptcy proceedings, United States Attorney Kenneth Magidson announced today. The indictment was returned Oct. 26, 2011, and the Sissoms turned themselves into federal authorities this morning. They are expected to appear before a U.S. Magistrate Judge in Houston at 2:00 p.m. this afternoon.
The indictment alleges Mr. Sissom, 45, filed bankruptcy under Chapter 7 which provides that all of a debtor’s debts may be discharged or released by a bankruptcy court. The process is designed to achieve an orderly transfer of a debtor’s assets to creditors from available assets truthfully and accurately disclosed and to provide a “fresh start” to honest debtors by allowing them to obtain a discharge or release of debt incurred prior to filing bankruptcy. A trustee is appointed to gather and sell a debtor’s nonexempt assets and use the proceeds from the sale of such assets to pay creditors. Accordingly, debtors should realize that the filing of a petition under chapter 7 may result in the loss of property.
A debtor is required to complete several documents to carry out the bankruptcy process, which consist of a petition which contains summary information about the debtor’s financial condition, various bankruptcy schedules and a statement of financial affairs, which contain, among other things, detailed information about the debtor’s assets, liabilities, recent payments to creditors, past and current income and anticipated future income. The documents are required to be signed and certified under penalty of perjury that the information contained in them is true and correct. A debtor is required to disclose all creditors to the bankruptcy court so that the court can provide notice to the creditors of the filing of the bankruptcy petition. One purpose of this requirement is to allow the creditors the opportunity to participate in the bankruptcy proceeding and protect their interests.
According to the indictment, Jimmy Sissom filed for bankruptcy under Chapter 7 on May 3, 2006. In a three-month-period immediately preceding that filing, he knowingly and fraudulently began a scheme to conceal property to hinder, delay and defraud creditors. Mr. Sissom owed Royal Oaks Bank in Houston more than $600,000 and a demand for payment was made in February 2006. The next month, the bank filed a lawsuit seeking a temporary restraining order against Mr. Sissom and various entities he operated.
Mr. and Mrs. Sissom began selling and liquidating assets worth almost half a million dollars, including selling a home in Missouri City, Texas, for $253,000 and selling old stock in F & S for $189,740. Then Mr. Sissom filed for bankruptcy.
The indictment alleges that upon filing bankruptcy, Jimmy Sissom made false and misleading statements to a trustee and the United States Bankruptcy Court concerning disclosure of the transactions, the source of the funds and the location of funds derived from those transactions. For example, he did not disclose the sale of the stock and that the proceeds were transferred to his wife who had subsequently purchased a home in Bastrop, Texas, for $302,240. Additionally, Jimmy Sissom used a credit card to purchase in excess of $10,000 of consumer goods including two televisions, a stereo system and a bedroom set just one month prior to filing bankruptcy, which were not disclosed until nearly six months after filing for bankruptcy and only after the trustee discovered the existence of the assets.
Susan P. Sissom, 48, the non-filing spouse, aided and assisted her husband and on her own converted substantial estate money for their personal use after the filing of her husband’s bankruptcy. Mrs. Sissom also made false and misleading statements in a effort to mislead, deceive and hinder the court and the trustee from discovering assets and recovering proceeds from the sale of defendants’ assets for the benefit of creditors, according to the indictment.
The State of Texas is a community property state which provides that all property (unless it is clearly separate property of one of the spouses) and income received by a married couple are required to be listed in the bankruptcy documents.
In order for the bankruptcy system to work for all parties it is imperative for the debtor to be truthful and forthright in all aspects of the bankruptcy process. The bankruptcy system is based on an honor system; the debtor agrees to provide all of the necessary information requested by the Trustee and to assist the Trustee in collecting all assets of debtors and comply with the court’s orders to obtain the relief desired under the chapter the case was filed.
If convicted on all counts, the Sissoms face a maximum sentence of 15 years imprisonment, without parole, and a $250,000 fine.
This case was investigated by the FBI with assistance from the United States Trustee’s Office and is being prosecuted by Assistant United States Attorney Quincy L. Ollison.
An indictment is a formal accusation of criminal conduct, not evidence.
A defendant is presumed innocent unless and until convicted through due process of law.