Acting United States Attorney Announces Crackdown On Bankruptcy Fraud

Earlier today, three individuals were indicted in three separate cases for bankruptcy fraud, Acting United States Attorney for the Southern District of Illinois, James L. Porter, announced. These indictments are part of an effort to crackdown on those who commit fraud during the course of bankruptcy proceedings in the U.S. Bankruptcy Court for the Southern District of Illinois.

"Our federal bankruptcy laws allow people who have overwhelming debt to obtain a fresh start," Acting United States Attorney Porter explained. "Before their debts are eliminated, however, individuals who file bankruptcy are asked to be truthful about their assets and other matters that affect the bankruptcy case. When people conceal their assets and otherwise lie in bankruptcy proceedings, they are cheating their creditors and subverting the bankruptcy process. People who engage in this type of activity can expect to be prosecuted by my office no less than those persons who would use force to steal."

The individuals indicted today are:

SCOTT L. THOMPSON

Scott L. Thompson, 44, of Sesser, IL, was charged with one count of concealing assets and three counts of fraudulently withholding records in a bankruptcy case. The indictment charges that Thompson concealed from the Bankruptcy Court a $28,129.55 settlement he received for a worker’s compensation claim. In addition, it is alleged that Thompson withheld copies of his federal and state tax returns, despite being ordered to turn them over by the Bankruptcy Court. Under federal law, tax refunds in amounts above certain thresholds must be paid to the Bankruptcy Court and used to pay back the bankruptcy’s creditors. Thompson filed his chapter 13 bankruptcy in the United States Bankruptcy Court in Benton, Illinois.

JENNY L. PARKS-SMITH

Jenny L. Parks-Smith, 41, of Carterville, IL, was charged with two counts of concealing assets and one count of fraudulently withholding records in a bankruptcy case. Parks-Smith’s chapter 13 bankruptcy was filed in the U.S. Bankruptcy Court in Benton. The indictment alleges that Parks-Smith concealed from the Bankruptcy Court a $17,000 settlement she received for a worker’s compensation claim. In addition, the indictment charges that Parks-Smith concealed a $2,478 federal tax refund that she received for the 2011 tax year. Parks-Smith is also charged with fraudulently withholding her 2011 tax returns.

MARK A. MCFARLAND

Mark A. McFarland, 58, of Jacksonville, IL, was charged with two counts of making false statements under penalty of perjury, one count of falsifying records, and two counts of making false statements under oath. The bankruptcy case that is the subject of the indictment was filed in the United States Bankruptcy Court for the Southern District of Illinois in East St. Louis, IL. Prior to filing that case, McFarland had filed 10 separate bankruptcy cases in the United States Bankruptcy Court for the Central District of Illinois in Springfield. All but one of those cases had been dismissed due to McFarland’s failure to comply with the Bankruptcy Court’s orders. In the last case, the Bankruptcy Court barred McFarland from filing any more bankruptcy cases in the Central District of Illinois for 180 days. On October 6, 2014, McFarland filed a chapter 13 bankruptcy on behalf of his business, Second Chance of Springfield, Inc., in the U.S. Bankruptcy Court for the Southern District of Illinois. The indictment charges that McFarland: (1) lied on his bankruptcy petition by claiming that his business was located in the Southern District of Illinois; (2) lied on an amended bankruptcy petition when he said that his business had an address in Alton, IL; (3) provided a lease to the Bankruptcy Court that was fraudulently backdated to September 25, 2014; (4) falsely testified under oath that he had signed that lease on September 25, 2014; and (5) falsely testified under oath that he had reached an oral agreement with the landlord for the rental of the Alton property in September 2014.

"I am grateful to Acting U.S. Attorney Porter and the members of the Southern Illinois Bankruptcy Fraud Working Group for their strong commitment to combating bankruptcy fraud," stated Nancy J. Gargula, the U.S. Trustee for Southern Illinois, Central Illinois and Indiana (Region 10). "Today’s charges will go a long way toward protecting the integrity of the bankruptcy system." The charges resulted, in part, from a referral by the U.S. Trustee. Assistance with the investigation was provided by members of the Southern Illinois Bankruptcy Fraud Working Group coordinated by the U.S. Trustee. 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, IN and Peoria, IL.

Each count of bankruptcy fraud is punishable by up to 5 years’ imprisonment, and/or a $250,000 fine, not more than three years of supervised release, and restitution.

The investigations are being conducted by agents from the Springfield Division, Fairview Heights Resident Agency, of the Federal Bureau of Investigation ("FBI"). The cases are being prosecuted by Assistant United States Attorney Scott A. Verseman.

An indictment is a formal charge against a defendant. Under the law, that charge is merely an accusation and the defendant is presumed innocent unless proven guilty.