Southern California Bankruptcy Paralegal

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Bankruptcy Petition Preparers

Not only bankruptcy attorneys can help you with your bankruptcy petition. There are others. Incorrectly called "paralegals," these Bankruptcy Petition Preparers (or BPPs) operate in the Los Angeles area and elsewhere. While many are quite ethical, and stay within the very narrow and limited area in which they are allowed to operate -- completing the forms and schedules -- some do not. The following is a list of sanctions from the United States Trustee's newsletter for the Los Angeles bankruptcy court, some involving bankruptcy fraud..

United States Trustee Beats We The People In U.S. District Court

In two unrelated cases, U.S. District Court Judge Gary A. Feess affirmed the rulings of Judge Peter H. Carroll of the Riverside Division of the Court that Bankruptcy Petition Preparer ("BPP") We the People violated §110(g)(1) by taking filing fees from debtors for immediate transmittal to the Court in the form of a money order or cashier's check. The District Court held the statute's plain language barred the BPP from receiving or collecting the fee in any form.

Bankruptcy Petition Preparers (BPPs) Violate 11 U.S.C. Section 110 in Four Separate Cases

► On 12/05/03 Judge David N. Naugle of the Riverside Division of the Court granted the UST's motion for fines and disgorgement of fees under §110 against BPPs Bianca Campuzano and National Institute Legal Center, Inc. for collecting the court filing fee from debtor and giving legal advice with respect to debtors' exemptions and the differences between Chapters 7 and 13. The Court fined the BPPs $1,000, enjoined them from the unauthorized practice of law and ordered disgorgement of their entire fee of $320 to the debtors.

► On 12/8/03, Judge Meredith A. Jury of the Riverside Division of the Court granted the UST's motion for fines and disgorgement of fees under §110 against BPPs Oscar Snow, Moreno Valley Legal Center and/or National Institute Legal Center for charging in excess of the allowed $200 fee, taking possession of the filing fees and engaging in the unauthorized practice of law by giving legal advice. Based on discovery conducted by the UST, the Court found that Snow perjured himself in his reply papers. The Court fined the BPPs $1,000, ordered disgorgement of $460 in fees to the debtor, and permanently enjoined Snow from preparing any documents for filing with the Court.

► On 12/15/03, Judge Naugle granted the UST's motion for fines and disgorgement of fees under §110 against BPPs Oscar Snow Bianca Campuzano and National Institute Legal Center for receipt by a BPP of the filing fee and giving the debtor legal advice regarding the selection of exemptions and the differences between Chapters 7 and 13. The Court ordered the BPPs to disgorge all fees of $200 to the debtor, fined them $500, and enjoined them from the unauthorized practice of law. They were also enjoined from preparing any bankruptcy documents for compensation for filing with the Court.

► On 1/12/04, Judge Peter Carroll took the UST's §110 Motion under submission against BPPs Oscar Snow and National Institute Legal Center. The BPPs and the debtor opposed the Motion. The UST deposed the debtor and Oscar Snow. The transcripts were submitted as evidence at the continued hearing. On 1/29/04, the Court entered its Memorandum Decision fining BPPs $500 for violation of §110(f), ordering full disgorgement of all fees of $200 for the unlawful practice of law, ordering that an additional fine of $500 would be imposed if the BPPs did not satisfy the fine and disgorgement in full within 30 days, and prohibiting the BPPs from preparing any documents for compensation for filing with the Court.

Fines, Disgorgements, Injunctions and Other Actions

BPP Tom Choi was enjoined by Judge Peter Carroll from the unauthorized practice of law for explaining the differences between Chapters 7 and 13 and explaining exemptions. Choi was also enjoined from accepting or processing the filing fee in any future bankruptcy cases.

Judge Robert W. Alberts of the Santa Ana Division of the Court permanently enjoined Ora Gardener from acting as a BPP under §110 for the unauthorized practice of law, and ordered her to disgorge the sum of $175 to debtor. Gardner had advised debtor which exemptions to list for his residence and Harley Davidson and had apparently advised debtor that he could keep them both. However, the exemption listed for the Harley Davidson was improper and debtor was informed that the vehicle might have to be sold. He was advised to seek the advice of counsel in order to amend his scheduled exemptions.

Judge Jury ordered BPP Michael Goldberg to disgorge his entire fee of $600 to the debtors and fined him $500 for violation of §110(h) for explaining exemptions and the differences between Chapters 7 and 13. The Court also enjoined Goldberg from the unauthorized practice of law and from preparing documents for compensation of any sort for filing in the Central District.

Judge Naugle enjoined BPP Jacqueline M. Knackert (Help U-Law) from preparing any documents for filing with the Court. The UST brought a motion for fines and/or disgorgement of fees based upon information provided at the §341(a) meeting. The Court continued the matter to allow the debtor's deposition. After issuing three subpoenas, the deposition was finally taken. Debtor made several admissions, the most pertinent of which was that the Court filing fee was given to Knackert despite Knackert's denial, in writing, of taking it.

BPPs Gloria G. Maldonado and Shellie Relyea were similarly enjoined by Judge Jury from the unauthorized practice of law for explaining exemptions and the differences in the chapters. Maldonado was additionally ordered to disgorge $120 in overcharged fees.

In another case where Gloria Maldonado was the BPP, she violated 11 U.S.C. §110 (c) by failing to disclose her SSN on the petition and violated §110(d) by failing to give the debtor a copy of the documents signed by the debtor before filing them with the Court. Maldonado reported that she could not afford the substantial fine set forth in the judge's tentative ruling. In settlement, Judge Peter Carroll accepted a stipulation regarding a permanent injunction against her preparing documents for compensation for filing with the Central District. The Court also ordered her to disgorge $125 in overcharged fees to the debtor. Also in another case where Maldonado prepared the documents, Judge Carroll ordered Maldonado to disgorge $125 in overcharged fees.

Judge Peter Carroll fined BPP Jennifer Meeks and Able 2 Help Services $300, jointly and severally, for violation of §110(f)(1). The BPP had used the word "legal" in an advertisement in the Yellow Pages by referring to the business as Legal Document Preparation and advertised to do bankruptcies for debtors. Meeks and Able 2 Help Services were also ordered by Judge Naugle to disgorge all fees of $200 to debtor, and were enjoined from the unauthorized practice of law.

On 12/16/03, Judge Naugle fined BPP Emily Moreno $100 for accepting the Court filing fee and ordered the $200 preparation fee disgorged. Further, Moreno was enjoined from engaging in the unauthorized practice of law based upon the debtor's testimony. Schedule C contained claimed exemptions. However, at the time of the hearing, debtor represented that she did not know what an exemption was, allowing the Court to draw the inference that Moreno completed Schedule C on behalf of the Debtor.

Judge Peter Carroll fined BPPs Eugene Osborne and Osborne Paralegal Services $2,000 for violation of §§110(d),(e),(f),(g) and (h), which included receiving payment from debtor of the Court filing fees, and ordered them to disgorge all fees of $650 to debtors. The Court also enjoined the BPPs from the unauthorized practice of law, from using the word "legal" in advertising and from preparing documents for compensation for filing with the Court.

Judge Peter Carroll fined BPP Delio M. Ospino $500 for taking the filing fee from the debtor and ordered Ospino to disgorge $200 in fees to debtor for
giving legal advice regarding exemptions and the differences between Chapters 7 and 13. The Court enjoined the BPP from preparing documents for filing in the Court until the fine and disgorgement were satisfied in full.

The UST filed a motion for fines, disgorgement of fees and/or injunctive relief against BPP Lenore Palmer. Palmer filed an opposition, including a declaration by the debtor that recanted debtor's earlier testimony. Debtor was deposed to discover which declaration was accurate. At the deposition, the debtor was surprised to see her declaration in Palmer's opposition. Debtor has apparently not seen it before. Judge Naugle enjoined Palmer from preparing any documents for filing with the Court, and admonished her to return all fees she had received for the preparation of documents in any other cases that had not yet been filed.

Judge Naugle permanently enjoined BPPs Tony Raya and Tony's Tax and Real Estate Service from preparing any bankruptcy documents for filing with the Court. Raya failed to sign the petition, to disclose his SSN, and to disclose fees charged. He accepted the filing fee from the debtor and charged debtor $400, which was twice the allowed amount. The Court fined Raya $2,000 and ordered him to disgorge the $400 fee to the debtor.

On 12/11/03, the UST obtained an order from Judge Alberts directing BPP Franceso Rebollo to disgorge $750 in fees and pay a $3,500 sanction. Rebollo received a fee from the debtors in excess of what was disclosed to the Court and listed only Janet Anisman of Justice For All as the preparer in the case. After the initial hearing, Rebollo stated to the UST that he was working with an attorney and Anisman in this case as well as in other cases. Although given a letterhead by Rebollo with the attorney's former address, neither the UST nor the State Bar of California were able to verify that such an attorney existed. Rebollo did not appear at the follow-up evidentiary hearing. Anisman, who apparently had no contact with the debtors but allowed her name to be used by Rebollo, also did not appear and was sanctioned $750. The UST is investigating other possible cases where these individuals are involved.

Judge Peter Carroll ordered BPP Patricia Vaughan to disgorge all fees received from the debtor in the amount of $200 for the unauthorized practice of law for filing with the Court, in one case transposing the two middle numbers of her SSN on the disclosure forms. On November 7, 2003, Ms. Ruffin was again enjoined by Judge Naugle, this time as the Legal Diva and with her correct SSN.

In another case, on 12/23/03, Ruffin and The Legal Diva were fined $500 each, jointly and severally, for a total of $1,500 for §110(g), (d) and (f) violations. The BPPS were also ordered by Judge Naugle to disgorge the entire fee of $200 for the unauthorized practice of law and were enjoined from preparing documents for compensation until the fines and disgorgement were satisfied in full.

BPP Terron Thomas was sanctioned $1,000 for contempt of the Court's prior order of disgorgement and fine for violation of Section 110(g). Thomas, who had been prohibited from preparing documents for filing in the Central District pending payment of a $500 fine and a $400 disgorgement, was found in contempt of the Court's Order of July 30, 2003. Judge Peter Carroll sanctioned the BPP an additional $500 in favor of the Court and awarded $500 to the UST for attorneys' fees. Judge Carroll indicated that he felt bound by the 9th Circuit decision of In re Dyer, and therefore could not issue punitive sanctions. If the BPP continues in contempt, it may be necessary to go to the U.S. District Court for further sanctions.

In a later case, BPP Terron Thomas was fined $500 for violation of §110 (g) for accepting payment of the Court filing fee from the debtor. Judge Peter Carroll also ordered Thomas to disgorge $200 of her entire fee for the unauthorized practice of law in giving debtor advice about exemptions. Thomas was prohibited from preparing petitions or other documents for filing with the Court until the fine and disgorgement were satisfied in full and fined her $500 for violation of §110(g). The Court also ordered that Vaughan be prohibited from preparing documents for filing in the Court for compensation of any sort until the fine and disgorgement were fully satisfied.

CPAs Bound by BPP Guidelines

BPP Ira Berkowitz agreed to disgorge a total of $600 to two debtors whom he had charged for the preparation of bankruptcy petitions. On the UST's motion under §110, Berkowitz suggested that because he was a certified public accountant, he was not bound by the Bankruptcy Petition Preparer Guidelines. However, he conceded that he was not an attorney and not authorized to give legal advice. He agreed to refund the $300 that each debtor had paid to him, and to neither collect Court filing fees nor engage in the unauthorized practice of law. The stipulations were approved by San Fernando Valley Division Judges Arthur M. Greenwald and Geraldine Mund, respectively.

BPP Given One Week to Change Advertising

Legal Document Assistant Norma L. Guerrero advertised her "Paralegal Service" in the Spanish language periodical Novedades August 25, 2003 issue, which included an offer of her "Bancarrotas" services. The UST brought a motion under § 110 for fines and to enjoin Ms. Guerrero, among other things, from using the word "paralegal" in her advertising. Judge Jury granted the motion on 10/21/03, enjoining Guerrero from engaging in the unauthorized practice of law and from using the word "paralegal" in her advertising. Guerrero was given until 10/28/03 to change her advertising or she would be permanently enjoined from bankruptcy document preparation in the Central District of California.

Failure to Pay Fines or Disgorgements

Judge Naugle permanently enjoined BPPs Larry S. Nava, Sr., L.S. Nava & Associates and Damien Robbins from preparing bankruptcy documents for filing with the Court for failure to pay fines and/or disgorgements previously ordered by the Court.

Jean Ruffin and The Legal Beagle, were enjoined as BPPS in 1999 by Judge Jury based upon Ruffin's failure to pay Court- ordered fines and disgorgement in excess of $8,000. Ruffin reappeared as The Legal Diva in 2003 and began preparing documents or filing with the Court, in one case transposing the two middle numbers of her SSN on the disclosure forms. On November 7, 2003, Ms. Ruffin was again enjoined by Judge Naugle, this time as the Legal Diva and with her correct SSN.

In another case, on 12/23/03, Ruffin and The Legal Diva were fined $500 each, jointly and severally, for a total of $1,500 for §110(g), (d) and (f) violations. The BPPS were also ordered by Judge Naugle to disgorge the entire fee of $200 for the unauthorized practice of law and were enjoined from preparing documents for compensation until the fines and disgorgement were satisfied in full.

BPP Terron Thomas was sanctioned $1,000 for contempt of the Court's prior order of disgorgement and fine for violation of Section 110(g). Thomas, who had been prohibited from preparing documents for filing in the Central District pending payment of a $500 fine and a $400 disgorgement, was found in contempt of the Court's Order of July 30, 2003. Judge Peter Carroll sanctioned the BPP an additional $500 in favor of the Court and awarded $500 to the UST for attorneys' fees. Judge Carroll indicated that he felt bound by the 9th Circuit decision of In re Dyer, and therefore could not issue punitive sanctions. If the BPP continues in contempt, it may be necessary to go to the U.S. District Court for further sanctions.

In a later case, BPP Terron Thomas was fined $500 for violation of §110 (g) for accepting payment of the Court filing fee from the debtor. Judge Peter Carroll also ordered Thomas to disgorge $200 of her entire fee for the unauthorized practice of law in giving debtor advice about exemptions. Thomas was prohibited from preparing petitions or other documents for filing with the Court until the fine and disgorgement were satisfied in full.

Note: Some bankruptcy attorneys run afoul of the law, also!