US v. Archibald, No. 06-11882 (11th Cir. December 6, 2006). Debtors filed a joint Chapter 13 petition, and in the schedules disclosed their 100% ownership of the stock of Rooster’s Barnyard, Inc. They valued the stock at $2,000. In fact, the corporation operated as an adult club in Atlanta that had no debt and was worth approximately $4 million. On motion from a creditor, the Bankruptcy case was dismiss as being filed in bad faith and because the debtors did not qualify for a Chapter 13.
The case was turned over to the FBI for investigation of Bankruptcy fraud, and debtors came up with various reasons for their valuation of the Club in their schedules. They were prosecuted and Debtor was sentenced to 60 months prison. The Eleventh Circuit affirmed, finding that even though the Bankruptcy case was dismissed, creditors could have been harmed by the concealment of the asset.