St. Peters, MO Woman Pleads Guilty to Fraudulent Preparation of Bankruptcy Petitions
This morning, in Federal Court in East St. Louis, IL, Phebe Ibrahim, formerly known as "Phebe Khan," 50, of St. Peters, MO, pled guilty to 21 counts of bankruptcy fraud and related charges, announced Donald S. Boyce, United States Attorney for the Southern District of Illinois. Ibrahim was indicted on October 3, 2017, as part of the U.S. Attorney’s Office’s continuing effort to crackdown on those who commit fraud in the U.S. Bankruptcy Court for the Southern District of Illinois.
In pleading guilty today, Ibrahim, a non-lawyer, admitted that she worked as a bankruptcy petition preparer, preparing bankruptcy petitions and other documents for debtors who wished to file bankruptcy in the Southern District of Illinois. The Bankruptcy Code imposes certain restrictions on bankruptcy petition preparers, including requiring them to disclose their names on any documents they prepare, and allowing the Bankruptcy Courts to set maximum fees that they can charge their customers. The practice in the U.S. Bankruptcy Court for the Southern District of Illinois is that bankruptcy petition preparers are not allowed to charge fees of more than $150.
Ibrahim admitted that she defrauded the debtors for whom she prepared bankruptcy petitions by routinely charging fees that exceeded the maximum allowable amount. Ibrahim also acknowledged that she attempted to conceal her fraud by not disclosing her name on the documents she prepared, and by instructing her customers not to mention her name during their bankruptcy cases.
The Bankruptcy Code also requires that debtors attend a credit counselling briefing prior to filing a bankruptcy case. Ibrahim admitted that she circumvented and defeated this provision of the Bankruptcy Code by causing false "Certificates of Counselling" to be filed on behalf of her customers. These Certificates represented that Ibrahim’s customers had attended the required credit counselling briefing.
"The U.S. Trustee Program works with other law enforcement agencies to track down and pursue bankruptcy petition preparers who fail to comply with the requirements of the Bankruptcy Code, circumvent its provisions and prey on consumers in financial distress," stated Nancy J. Gargula, United States Trustee for Southern and Central Illinois and Indiana (Region 10). "We
appreciate the commitment of U.S. Attorney Boyce and our law enforcement partners to address fraud and abuse in the bankruptcy system. We welcome information that will help detect unscrupulous bankruptcy petition preparers and we encourage citizens to report suspected bankruptcy fraud through our Internet hotline at USTP.Bankruptcy.Fraud@usdoj.gov."
Ibrahim pled guilty to seven counts each of bankruptcy fraud, causing false statements to be made under penalty of perjury in a bankruptcy case, and falsifying records in a bankruptcy case. Each of the bankruptcy fraud and false statements under penalty of perjury counts carries a maximum sentence of five years in prison and a fine of up to $250,000. Each of the falsification of records charges carries a maximum sentence of twenty years in prison and a maximum fine of $250,000.
Ibrahim will be sentenced on May 10, 2018, at 9:30 A.M. at the Federal Courthouse in Benton, IL.
The charges resulted from a referral by the U.S. Trustee for Indiana and Southern and Central Illinois (Region 10) to the U.S. Attorney for the Southern District of Illinois. The investigation was conducted by agents from the Springfield Division, Fairview Heights Resident Agency, of the Federal Bureau of Investigation ("FBI"), in collaboration with the Southern Illinois Bankruptcy Fraud Working Group coordinated by the U.S. Trustee. The case is being prosecuted by Assistant United States Attorney Scott A. Verseman.