Prosecution of Crimes under the Mexican Commercial Insolvency Act
by Eduardo Alfonso Eric Martínez Rodríguez
Eduardo Martinez, Abogados S.C.; Mexico D.F., Mexico
Carlos Guerrero González
Eduardo Martinez, Abogados S.C.; Mexico D.F., Mexico
In May of 2000, President Ernesto Zedillo’s administration enacted the Mexican Commercial Insolvency Act (CIA) establishing three basic criminal conduct including: (i) the intended aggravation of the generalized breach of payment obligations; (ii) the failure to file accounting information within the term established by the district court; and (iii) the request for the acknowledgement of an inexistent or simulated credit. It is important to note that such white collar crimes are special crimes under the CIA and do not substitute in any way the rest of the economic felonies that can be prosecuted and punished under the Mexican Federal Criminal Code or any Mexican State Criminal Code, such as fraud, robbery, false declarations before a court or money laundering, if committed during or prior to an insolvency proceeding.
Claims Trading — Educate the Creditors!
by Laura DiBiase
Kurtzman Carson Consultants LLC; El Segundo, Calif.
No matter how long you have been in the restructuring industry, at some point you’ve received that telephone call from a friend or relative who owns a small business and, with panic in his or her voice, says, “I’ve received mail from the bankruptcy court!” I know I’ve received that frantic call myself only to find out that the document is a notice of appearance. These documents, no matter how menial in the bankruptcy context, are frightening to a small business owner. Even more confusing to small business owners are the letters and checks they have received offering to purchase their claims. I recently got that telephone call and was really surprised by the lack of information in the claim purchase request. My caller had no idea if they were even permitted to sell their claim and what would occur if they actually did sell.
Criminal Insolvency of a German Financial Services Provider – Fictitious Profits in the Millions
by Dr. Eberhard Braun
Schultze & Braun GmbH; Achern, Germany
On April 4, 2004, Dieter Breitkreuz, partner and CEO of Phoenix Kapitaldienst GmbH, Frankfurt, died in Switzerland when the plane he piloted crashed, also killing his wife, one of his daughters, a grandchild and another relative. This event triggered the discovery of a case of financial fraud by a German financial services provider amounting to millions.
The company run by Mr. Breitkreuz offered a product called “Managed Account.” Phoenix Kapitaldienst collected money from investors, stating that these funds were used in derivatives trading. The investors were under the impression that activities were very successful. The company claimed to generate returns of more than 10 percent a year on a sustained basis. Consequently, the company was able to collect EUR 563 million from about 30,000 investors between 1992 and March 2005.
Anatomy of a Mortgage Fraud – How I Stopped One from “Going Down”
by David P. Leibowitz
Leibowitz Law Center/Lakelaw; Waukegan, Ill.
As a chapter 7 trustee, I have often encountered debtors with limited means, but who own several properties in foreclosure. In a recent case, the debtor was a 24-year old woman who owned three houses allegedly worth close to a million dollars at the time of her bankruptcy case.
As it turns out, a friend of her boyfriend introduced her to a real estate broker and a mortgage lender who had great opportunities for her. Incidentally, the boyfriend met this “gentleman” while they were in prison together. In any event, the debtor bought three houses at inflated values, and the mortgage broker-lender received exorbitant fees. The debtor received $10,000 each from two sales and $7,500 from another sale. She used this money to buy a car for her boyfriend.
Chapter 7 Trustee’s Ex Parte Request to Use U.S. Marshall to Search Debtor’s Home for Undisclosed Assets Complies with the Fourth Amendment
by Christine H. Black
Robinson Brog Leinwand Greene Genovese & Gluck P.C.; New York
A debtor’s overall deceitfulness and disdain for the judicial process during her divorce proceeding created the factual predicate for what the bankruptcy court described as extraordinary relief. Not only did the bankruptcy court grant an ex parte application to employ the U.S. Marshall’s Service to conduct a search of the debtor’s home and to seize undisclosed estate property, but it also denied the debtor’s Fourth Amendment challenge to the proprietary of the search and seizure.
In Youngman v. Bursztyn (In re Miriam R. Bursztyn), a case of first impression, the New Jersey Bankruptcy Court held that, subject to the limitations of the Fourth Amendment, the chapter 7 trustee’s use of a search and seizure order was a proper method for locating undisclosed estate assets, the search and seizure complied with the limitations of the Fourth Amendment and the evidence seized would not be suppressed because it was not obtained in a criminal prosecution.