Bankruptcy Attorney Sentenced to 63 Months in Prison for Fraud Offenses, Stealing Millions from Clients

Deirdre M. Daly, United States Attorney for the District of Connecticut, announced that PETER RESSLER, 70, of Woodbridge, was sentenced today by Senior U.S. District Judge Alfred V. Covello in Hartford to 63 months of imprisonment, followed by three years of supervised release, for embezzling millions of dollars from his bankruptcy clients, and related fraud offenses.

According to court documents and statements made in court, RESSLER, an attorney with a bankruptcy practice based in New Haven, defrauded numerous clients in various ways.  RESSLER required certain clients who were seeking a Chapter 11 or Chapter 13 reorganization to deposit funds and represented that the monies would be held in trust for purposes of the anticipated reorganization.  RESSLER obtained certain of the funds after he had filed formal bankruptcy actions, which created relevant bankruptcy estates for which he had a continuing duty to maintain client assets under his control and to give appropriate accountings to the U.S. Bankruptcy Court.  RESSLER was entrusted with hundreds of thousands of dollars from at least 10 businesses involved with Chapter 11 reorganizations.  Instead of holding the funds in trust, he used the monies for other purposes.

As part of both Chapter 11 and Chapter 13 filings, RESSLER submitted multiple documents to the U.S. Bankruptcy Court that represented the status of a debtor’s assets and liquidity, including the debtor-in-possession monthly operating reports.  In various instances, RESSLER had already improperly dissipated a portion of a client/debtor’s assets and knew that operating reports filed for certain clients contained false representations, which misled both the court and creditors as to a debtor’s true financial condition.  When asked directly in hearings as to whether certain assets existed in certain accounts, RESSLER falsely represented that certain assets existed, when he knew that they did not.

RESSLER also engaged in “work outs” where he would attempt to settle a client’s debts with creditors without relying on the protections of bankruptcy.  As part of this process, RESSLER requested that his clients deposit with him funds and represented that he would hold the funds in trust and then use them to settle disagreements with financial institutions or other creditors, such as the IRS, or for some other purpose on behalf of his clients.  The investigation revealed that RESSLER took $64,000 from a client purportedly to purchase property; $180,000 from a client to hold money in escrow; $45,000 from another client purportedly to buy back a home in foreclosure; $100,000 from a client to hold money in escrow; $97,000 from a client to hold money in escrow;  $102,000 and $50,000 from two other clients purportedly to settle tax obligations with the IRS; at least $199,000 from a client to negotiate a settlement with the IRS; $141,000 from a client to settle debts with IRS and a lender; and $165,000 from a client purportedly to negotiate a loan modification with a lender.  In each instance, RESSLER used the monies for other purposes.

In the spring of 2016, the U.S. Bankruptcy Court identified criminal conduct by RESSLER in cases involving debtors that were his clients.  In one case, the debtor entrusted RESSLER with $450,000, which were proceeds of a legal settlement, to be held by RESSLER’s firm for the benefit of the debtor and its creditors.  In a second case, the debtor entrusted RESSLER’s firm with approximately $321,409.  In both cases, RESSLER used most of the deposited funds for other purposes than on behalf of the relevant clients.

In total, RESSLER misappropriated $3,401,452 from 48 clients and used the money for personal and family living expenses, to cover the expenses of his practice, and to fund payments relating to other clients and other bankruptcy estates from which he had previously improperly taken monies.

Judge Covello ordered RESSLER to pay a total of $4,856,931 in restitution.  The larger restitution figure includes the embezzled funds and additional monies RESSLER did not embezzle, but owes to more than 60 other clients of his law practice.

On June 7, 2017, RESSLER pleaded guilty to one count of wire fraud, two counts of embezzlement from a bankruptcy estate, and one count of bankruptcy fraud.

RESSLER, who has been released on a $100,000 bond since his arrest on April 25, 2016, was ordered to report to prison on January 15, 2018.

RESSLER resigned from the Connecticut bar in March 2016.

This matter was investigated by the Federal Bureau of Investigation and was prosecuted by Assistant U.S. Attorney Christopher W. Schmeisser.