Copyright 2003 LRP Publications
Consumer Bankruptcy News

April 4, 2003

Fraud sweep nets charges against 13 in California Bankruptcy

A federal grand jury in Santa Ana, Calif., indicted 10 defendants on bankruptcy fraud charges, according to U.S. Attorney Debra W. Yang. The indictments were handed down on March 12 in the following matters:

Mark Steven Manderson and his wife, Leslee Jean Conner, of Newport Beach, were charged with concealing substantial assets and making false statements in connection with their bankruptcy case. After the bankruptcy trustee assigned to their case learned of the assets, the Mandersons made false statements to make it appear that there was no equity in the properties.

Michael Gordon and his wife, Martha Elizabeth, of Irvine, were charged with concealing stock and interests in financial accounts held in the name of their business, NCP Investment Corp. By failing to disclose the assets and then making false statements to conceal the true nature of their financial affairs, the Gordons fraudulently obtained an order discharging debts that they were, in fact, able to pay.

Steven A. Dayton, of Long Beach, was charged with one count of bankruptcy fraud. Dayton, a former attorney, made false statements and created fake bankruptcy court documents, including a forged bankruptcy court order that purported to discharge the debts of two of Dayton's former clients. Dayton made the statements and created the false documents to conceal a scheme to defraud the former clients, from whom Dayton accepted a fee to file a bankruptcy case, which he never filed.

Frank R. Martinez, of Irvine, was charged in a two-count indictment charging that he was engaged in a scheme to defraud creditors of his business' "clients," who were facing foreclosure proceedings. Martinez would have his clients sign grant deeds temporarily transferring a partial interest in their home to a fictitious person in whose name Martinez had filed a bankruptcy case. Martinez would then notify his client's creditors that the home was an asset in a pending bankruptcy case. Martinez's conduct harmed the creditors by fraudulently delaying and hindering a lawful foreclosure proceeding for a number of months.

John C. Reynolds, of Fontana, was charged in a four-count indictment that alleges he misused the Social Security Number of another person to file bankruptcy and made other false statements in connection with the bankruptcy proceeding. Reynolds filed for bankruptcy in October 2001, using a Social Security number that belonged to someone else. Reynolds also made other false statements in the bankruptcy case to conceal his identity and "serial filing" of four prior bankruptcy cases.

Sharon Lynn Egan, of Tustin, was indicted on two counts of making false statements in connection with her bankruptcy case. Egan incurred approximately 500,000 in debt using a large number of credit cards to purchase Rolex watches and other goods, which she then arranged to sell to obtain cash. In the bankruptcy case, Egan made false statements to conceal her use of the credit cards and obtain an unwarranted discharge of her credit card debt.

Rafael Berrios, of Huntington Beach, was indicted on two counts of making false statements in connection with his recent bankruptcy case. Berrios has filed a total of at least six prior bankruptcies, a fact that would affect his right to obtain a discharge of his new debts. In his most recent bankruptcy petition, however, Berrios made false statements to conceal the prior bankruptcy filings in which he unlawfully used the Social Security numbers of another person.

Thomas R. Reyes, of Santa Ana, was indicted on one count of bankruptcy fraud and two counts of making false statements in connection with his recent bankruptcy case. The indictment charges that Reyes attempted to defraud creditors of Reyes and his wife, Rita B. Reyes, by creating a false bankruptcy document and faxing it to the Orange County Sheriff's Office to thwart the creditor's lawful effort to garnish Rita Reyes's wages. In connection with his bankruptcy case, Reyes also made false statements to conceal his filing of at least four prior bankruptcies.

In addition to the 10 indictments handed down on March 12, the following individuals were recently indicted for bankruptcy fraud in Orange County:

Bennie L. Birch and his wife, Susan, of Costa Mesa, were indicted on Feb. 5, 2003, on charges of making false statements to conceal several financial accounts and the Birches' interest in a landscape business.

Erik S. Fierro, an Ontario resident currently in state jail on unrelated charges, is accused of making false statements in connection with his most recent bankruptcy case. Fierro allegedly concealed at least two prior bankruptcies in an attempt to receive a discharge to which he was not entitled.

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