Tennessee Woman Sentenced to Prison For Bankruptcy Fraud

Posted in: General Bankruptcy

Tennessee woman Janet Brown was sentenced on Thursday to one year in federal prison for bankruptcy fraud.

Accused of participating in a Ponzi scheme along with her late husband Jack Brown, the only charge against Ms. Brown to date is the bankruptcy fraud charge, to which she entered a guilty plea in February.  That Ponzi scheme was allegedly run under the guise of Brown’s Tax Service in Soddy Daisy, and defrauded investors of $12 million.  Many local residents say they lost their savings in the scheme.  A group of the investors filed an involuntary Chapter 7 bankruptcy against the couple.

The bankruptcy fraud charge stems from a question at Ms. Brown’s 341 Meeting of Creditors in which she was asked under oath if she had turned over all of her jewelry to the Chapter 7 trustee.  Ms. Brown said that she had except for the three pieces she was allowed to keep (her wedding band, high school ring, and mother’s ring).  The Trustee produced photos of her wearing missing diamond jewelry.  Three days after the meeting, Ms. Brown delivered a bag of jewelry later appraised at $25,000 to her attorney, who was bound to turn it over to the Trustee.  Her lie about her assets at the 341 Meeting was the basis of the bankruptcy fraud charge, which can carry a sentence of up to five years and a fine of up to $250,000.