How to Get Away With Bankruptcy Fraud

Los Angeles is the nation’s hub for bankruptcy crime. Scammers prey on struggling homeowners with little fear of getting caught, because criminal enforcement of bankruptcy laws is rare.

News Story (California)

Paul Kiel
December 22, 2017

Tags: Bankruptcy


I came to Los Angeles because national filing data showed something remarkable was happening there. No other district in the country has anywhere close to the number of cases filed without an attorney as the U.S. Bankruptcy Court for the Central District of California, a warning sign because debtors generally fare much worse without legal representation. Digging deeper, our analysis found thousands of cases filed each year that bore the hallmarks of fraud.

Moreover, it turned out this is an open secret not only among the judges and court administrators in the district, but also among bankruptcy experts nationwide. Twice, Congress has even passed laws to combat the bankruptcy-related schemes emanating from Los Angeles.