USTP Press Release
For Immediate Release
February 22, 1999
BANKRUPTCY CREDITOR IN ARIZONA
PLEADS NO CONTEST TO TWO COUNTS OF FRAUD
TUCSON,
Ariz.--Lawrence R. Costilow of Tucson, Ariz., pleaded no contest
February 19 to two counts of bankruptcy fraud arising from
his actions as a creditor in a Chapter 7 bankruptcy case,
United States Trustee Brenda Moody Whinery announced today.
Costilow was charged with making a false declaration in violation
of 18 U.S.C. 152(2) and engaging in a scheme to defraud under
18 U.S.C. 157(2).
Costilow
allegedly loaned a married couple $50,820 in October 1993.
The promissory note signed by the borrowers contained their
personal guarantee, but did not purport to secure any property
as collateral. In May 1995, the borrowers filed for bankruptcy
under Chapter 7. Allegedly, Costilow subsequently altered
the promissory note by adding "See attached for collateral
of this note with property description," and attaching a second
page containing a legal description of the borrowers' real
property. He allegedly recorded the altered note with the
Pima County Recorder's Office in an attempt to secure a lien
against the property. A hearing to determine the validity
of the note and lien was held in October 1996 before Bankruptcy
Judge James M. Marlar. At the hearing, Costilow testified
regarding the validity of the note and lien.
A federal
grand jury handed down a two-count indictment against Costilow
on March 18, 1998. Count One alleged that Costilow, under
penalty of perjury, knowingly and fraudulently testified falsely
before the Bankruptcy Court. Count Two alleged that Costilow
altered a document to grant himself a purported security interest
so he would receive preferential treatment over other bankruptcy
creditors, and that Costilow knowingly caused the altered
document to be filed with the bankruptcy court for the purpose
of executing and attempting to execute a scheme and artifice
to defraud.
Costilow
is scheduled to be sentenced on April 29, 1999.
United States
Trustee Brenda Moody Whinery referred this case to the Tucson
Bankruptcy Fraud Task Force for prosecution and assisted in
the criminal proceedings. The United States Trustee Program
is a component of the Justice Department that oversees bankruptcy
cases. Whinery is the United States Trustee for Region 14,
the District of Arizona.
Contact: Brenda Moody Whinery
United States Trustee, Region 14
(602) 640-2100
Jane Limprecht, Public Information Officer
Executive Office for United States Trustees
(202) 305-7411
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