Los Angeles Man Arrested for Bankruptcy and Foreclosure Fraud

admin —  June 15, 2009 — Leave a comment

Gilfert Welton Jackson, 64, Los Angeles, California, was arrested without incident at a homeowner’s residence in Los Angeles by Los Angeles County Sheriff’s deputies and turned over to special agents with the Federal Bureau of Investigation. Jackson was taken into federal custody on charges that he has been defrauding homeowners by falsely promising them that he could prevent foreclosures and evictions from their property. Jackson, a transient whose last known address was in Inglewood, made his initial court appearance this afternoon in United States District Court in Los Angeles, where he was ordered detained until he posts a $25,000 bond.

Jackson was indicted on June 4, and charged with six counts of making false representations and filing documents in bankruptcy proceedings in furtherance of a scheme to defraud. According to the indictment, which was unsealed after his arrest, Jackson’s scheme was designed to bilk distressed homeowners, as well as banks and other creditors by fraudulently obstructing lawful foreclosure and eviction actions.

The indictment alleges that Jackson falsely passed himself off as an attorney. Jackson allegedly told property owners and their tenants that he could prevent foreclosure and unlawful detainer and eviction actions in exchange for payments to purported non-profit organizations, including Silver Dollar Classic Foundation, Inc., and Herd Community Development Corporation. Jackson and others filed bankruptcy petitions to obtain an “automatic stay,” which under bankruptcy law prevents any action against the bankruptcy debtor and his property. Jackson created fraudulent notices of automatic stay that he gave to banks, their agents and others, including the Los Angeles County Sheriff’s Department, who were attempting to foreclose on properties and litigate unlawful detainer actions. In each such notice of automatic stay, Jackson fraudulently represented that the identified property was owned by a debtor in bankruptcy and was, therefore, subject to the automatic stay.

In addition to the banks and other creditors who were forced to delay taking possession of properties while they litigated the purported “automatic stay” in bankruptcy court, the indictment alleges that Jackson’s scheme victimized homeowners, who paid Jackson for his worthless services. According to the indictment, during the period of delay that Jackson caused, Jackson collected rent from third parties living in the properties based on the false representation that he was the rightful landlord of the properties.

An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed to be innocent until proven guilty in court.

The case against Jackson was referred to the United States Attorney’s Office by the Office of the United States Trustee, which is the component of the Department of Justice that oversees bankruptcy case administration and litigates to enforce the bankruptcy laws.

Protecting the integrity of the bankruptcy system is an important objective of the U.S. Trustee Program,” stated Peter C. Anderson, United States Trustee for the Central District of California (Region 16). “Our bankruptcy system is designed to provide honest people who have fallen on unfortunate times with a fresh start. Those who use the bankruptcy system to prey upon such people and others for their own financial gain undermine the fundamental purpose of the bankruptcy system and will be referred for criminal prosecution.

Jackson was convicted of bankruptcy fraud in 1998 and sentenced to 63 months in federal prison. In 2006, the Bankruptcy Court for the Central District of California issued an order that forbade Jackson from filing any bankruptcy petitions or any other documents, without first obtaining Court approval to do so. If he is convicted of the six counts of bankruptcy fraud alleged in the indictment, Jackson would face a maximum statutory penalty of 30 years in federal prison.

The case against Jackson was investigated by the Federal Bureau of Investigation.

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