Jury Convicts Federal Inmate Who Filed Bogus Involuntary Bankruptcy Petitions Against Warden, Prison Officer
A federal inmate housed within the Communications Management Unit (CMU) at the U.S. Penitentiary in Marion, Illinois has been found guilty of filing fictitious involuntary bankruptcy petitions against federal prison officials. Kurt F. Johnson, 55, was convicted by a jury after a three-day trial in Benton, Illinois. The charges against Johnson were originally brought in a four-count federal indictment returned in July 2018.
The evidence at trial established that, on January 8, 2018, with the assistance of persons outside the prison, Johnson succeeded in filing false involuntary bankruptcy petitions against the prison warden and an officer at the prison. The bogus petitions alleged that each victim was indebted to Johnson in the amount of $20 billion, owing to a judgment Johnson claimed to have obtained from the International Court of Justice (also known as the World Court). As part of the scheme, Johnson purportedly canceled $1 billion of the supposed debt and then filed forms with the Internal Revenue Service showing the canceled debt as unreported income for his victims.
The mere filing of the fictitious claims resulted in both victims receiving solicitation letters from credit counseling services and loan companies based upon their supposed bankruptcy. Once the fraud was discovered, the United States quickly moved to seal the proceedings to prevent further damage to the victims’ reputations.
At trial, the United States presented evidence that Johnson has a history and pattern of harassing judges, court personnel, and Bureau of Prisons employees through the filing of fictitious claims. Johnson eschewed appointed counsel and represented himself at the trial, testifying in his own defense that he genuinely believed the World Court had awarded him a default judgment for $20 billion on account of his placement in the CMU. The jury deliberated for approximately 40 minutes before returning guilty verdicts on all four counts.
Johnson is currently serving out the last decade of a 300-month sentence for an unrelated fraud conviction in the Northern District of California. His underlying crime involved a nationwide debt elimination scheme that raked in over $6 million.
Sentencing is set for January 3, 2019, at 10:00 a.m. at the federal courthouse in Benton. By statute, Johnson could receive as much as 20 additional years in prison, which may be imposed to run consecutively to the time he is already serving.
"I am grateful to U.S. Attorney Weinhoeft and our law enforcement partners who serve on the Southern District of Illinois Bankruptcy Fraud Working Group for their strong commitment to combating fraud and abuse in bankruptcy cases, as evidenced by this prosecution," stated Nancy J. Gargula, U.S. Trustee for Southern and Central Illinois and Indiana (Region 10). The U.S. Trustee Program is the component of the Justice Department that protects the integrity of the bankruptcy system by overseeing case administration and litigating to enforce the bankruptcy laws. Region 10 is headquartered in Indianapolis, with additional offices in South Bend, Indiana, and Peoria, Illinois.
The case was investigated by the Federal Bureau of Investigation, with substantial assistance from the Federal Bureau of Prisons. Assistant United States Attorney Michael J. Quinley is prosecuting the case.