U.S. v. Valdes-Ayala

Case Type:
Case Status:
Affirmed in part and Reversed in part
16-1002 (1st Circuit, Aug 15,2018) Published
First Circuit affirmed convictions of defendant who exploited debtors by filing incomplete bankruptcy petitions and promising assistance in their child support payments. First Circuit also vacated sentence of incarceration and remanded the case to the district court for resentencing.
Procedural context:
Appeal to the First Circuit from orders of the District Court for the District of Puerto Rico convicting and sentencing defendant of bankruptcy fraud, wire fraud, and identity theft.
Defendant Valdes started a non-profit institution to defend “the principles and dignity of every father convicted for failure to pay child support.” He then founded a for-profit corporation, Tears in Prison, for the purpose of preparing bankruptcy petitions and getting non-custodial fathers out of jail. Defendant charged his clients $1,575 although he later admitted he knew bankruptcy preparers could not charge more than $500. He also filed bare-bones petitions, completed credit counseling for his clients, and rarely translated papers to Spanish for debtors who could not read or speak English. Defendant did not stop filing petitions even after bankruptcy court permanently enjoined him from acting as a preparer. After a trial, he was convicted of bankruptcy fraud, wire fraud, and identity theft.
Howard, Thompson, and Barron

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