USTP Press Release
For Immediate Release
February 14, 2000
BANKRUPTCY PETITION PREPARER
FINED $48,000 FOR VIOLATIONS
IN 96 BANKRUPTCY CASES
SACRAMENTO--Bankruptcy
petition preparer Barry Ernest of Sacramento, Calif., was
fined $48,000 on February 9 by the Bankruptcy Court for the
Eastern District of California, for violations of 11 USC 110
in 96 different bankruptcy cases, Assistant United States
Trustee Antonia Darling announced today.
A bankruptcy petition preparer
is a non-lawyer who prepares bankruptcy filing documents for
a fee. Section 110 is the Bankruptcy Code provision that regulates
the conduct of bankruptcy petition preparers.
"Mr. Ernest deceived his clients
and perpetrated a fraud on the court and creditors by having
debtors file bankruptcy cases that were never intended to
be completed," Darling stated. "The bankruptcy cases were
used as a mere stalling technique. This sort of fraudulent
bankruptcy mill is exactly the kind of abuse Section 110 was
designed to catch."
Ernest, operating as Park
Oak Paralegal and Greater Sacramento Services, was found in
In Re Robinson, Bankruptcy Case #99-32278, to have
engaged in a willful scheme to defraud the Bankruptcy Court
and creditors. Ruling from the bench, Bankruptcy Judge Christopher
M. Klein stated that Ernest's scheme involved the "cynical
sale of the bankruptcy automatic stay" to frustrate landlords
who were owed back rents and were attempting to evict tenants.
Ernest solicited customers
by running advertisements in local giveaway papers under the
category "rentals." His ads told people facing eviction that
he could help them stall the eviction for 30 days or more.
The Bankruptcy Court found that in all 96 cases Ernest charged
his clients at least $175--that is, $125 for forms and $50
for counseling. He advised them to file for bankruptcy, selected
the chapter under which they should file, prepared a skeletal
filing, and told them how to file the petition and then take
it to the sheriff's office to stop the eviction.
The Bankruptcy Court also
found that Ernest specifically advised his customers to lie
to the Bankruptcy Clerk about whether they had received any
assistance with the bankruptcy filing, so they could appear
eligible to pay their filing fee via installment payments.
Only consumer debtors who have not paid anyone to assist them
in preparing their bankruptcy papers are eligible to pay their
filing fee in installments.
The court filing fees were
not paid in any of the 96 bankruptcy cases. Nor did Ernest
prepare any bankruptcy schedules or statement of financial
affairs in the cases. In only one case did a debtor appear
at the required meeting of creditors; that debtor had retained
a lawyer by the time of the meeting.
The action to assess sanctions
against Ernest and to review his fees was filed by the Sacramento
office of the United States Trustee Program, a component of
the Justice Department that monitors bankruptcy case administration
nationwide. Darling is the Assistant United States Trustee
in the Sacramento office.
Contact: Antonia Darling, Assistant
United States Trustee, Sacramento
(916)
930-2100
Jane Limprecht, Public Information Officer
Executive Office for United States Trustees
(202) 305-7411
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