PHOENIX, ARIZ.--Bankruptcy petition preparer Richard
S. Berry of Tempe, Ariz., was arraigned June 8 on charges
of criminal contempt for allegedly violating court orders
that limited his fees for preparing consumers' bankruptcy
papers, United States Trustee Brenda Moody Whinery announced
today. The United States Trustee Program is a component
of the Justice Department that supervises the administration
of bankruptcy cases nationwide.
Berry pleaded not guilty to the criminal contempt charges,
which were filed under 18 USC 401(3). Chief District Judge
Robert C. Broomfield scheduled an August 11, 1998, trial
on the matter. Berry could face up to six months in federal
prison if he is found guilty.
Since January 1997, various court orders have addressed
Berry's violations of the federal bankruptcy laws that regulate
"bankruptcy petition preparers"--non-attorneys who assist
consumer debtors in preparing their bankruptcy papers.
Bankruptcy petition preparers may not provide, or represent
that they provide, legal services. Typically, they are restricted
to typing documents for consumer debtors to file with the
bankruptcy court.
Bankruptcy courts have the authority to set a reasonable
fee for a bankruptcy petition preparer's services. On Jan.
24, 1997, Chief Bankruptcy Judge George B. Nielsen Jr. of
the District of Arizona found that Berry was charging excessive
fees. Nielsen fined Berry $500 and ruled that he could not
charge more than $200 per Chapter 13 case for his services
unless he applied for court permission.
On Aug. 14, 1997, Judge Nielsen found that Berry had continued
to charge more than $200 per Chapter 13 case, and had received
more than $172,000 in excess fees since the prior order.
Nielsen ordered Berry to pay back all the excess fees and
to pay a $100,000 fine for civil contempt of court.
Subsequently, based on evidence that Berry had violated
the Jan. 24, 1997, order limiting fees, the Bankruptcy Fraud
Task Force for the District of Arizona sought criminal contempt
charges against Berry. The task force is composed of representatives
from the United States Attorney's Office, the United States
Trustee's Office, the Federal Bureau of Investigation, and
other law enforcement agencies. The United States Trustee
referred the Berry case to the United States Attorney for
prosecution on the criminal contempt charges.
Meanwhile, on May 23, 1997, United States Bankruptcy Judge
Redfield T. Baum of the District of Arizona permanently
barred Berry, and two corporations he controls, from acting
as bankruptcy petition preparers in the District of Arizona.
When Berry violated that order, the United States Trustee
moved to have Berry held in civil contempt of court.
On March 6, 1998, Judge Baum imposed fines of $1 million
each against Berry and the two corporations for willfully
violating the orders barring them from preparing bankruptcy
documents and advertising for bankruptcy business in the
District of Arizona. Baum also held Berry and the corporations
in civil contempt and barred them from soliciting customers
for bankruptcy document preparation or providing any bankruptcy
preparation services.
