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Southern Illinois couple nailed for bankruptcy fraud

BENTON – A couple from Eldorado, Ill., has pleaded guilty to bankruptcy fraud, the U.S. attorney for the Southern District of Illinois, Stephen R. Wigginton, announced.

Lucy J. McGill, 62, pleaded guilty to two counts of making false statements under penalty of perjury in a bankruptcy case, three counts of making false statements under oath in a bankruptcy case, and one count of falsifying records in a bankruptcy case. Her husband, Gary G. McGill, 69, pleaded guilty to two counts of making false statements under penalty of perjury in a bankruptcy case and two counts of making false statements under oath in a bankruptcy case.

The McGills filed a chapter 7 bankruptcy case on Feb. 25, 2009. The case was filed in the United States Bankruptcy Court in Benton.

Federal law requires that debtors who file for bankruptcy must disclose all of their assets. In addition, debtors are required to disclose certain financial transactions that they conducted prior to filing bankruptcy. The purpose of these disclosures is to ensure that all available funds can collected to pay the creditors as much as possible on the amounts they are owed.

In pleading guilty Thursday, Lucy and Gary McGill both admitted that they lied on a Statement of Financial Affairs that they filed with the Bankruptcy Court. The McGills falsely stated that $22,000 in two accounts in Lucy McGill’s name at SIU Credit Union belonged to Lucy McGill’s sister. In fact, that $22,000 had recently been paid to Gary McGill in settlement of two lawsuits.

The McGills further admitted that they again lied on their Statement of Financial Affairs when they concealed the fact that they had recently given their son cash gifts totaling $6,800. The McGills continued to lie about these topics when they gave sworn testimony at a bankruptcy proceeding on April 3, 2009.

Lucy McGill also admitted that she created fake receipts, purportedly showing that the cash in the SIU Credit Union accounts belonged to her sister, and then provided those receipts to the attorney administering her bankruptcy case.

Wigginton stated: “Bankruptcy fraud cheats creditors out of what they are owed. The United States Attorney’s Office for Southern Illinois is committed to prosecuting individuals who commit this type of fraud and protecting the integrity of the bankruptcy system.”

The charges resulted from a referral by the U.S. Trustee for Indiana and Central and Southern Illinois (Region 10) to the Southern District of Illinois Bankruptcy Fraud Working Group and U.S. Attorney’s Office.

The McGills will be sentenced on Oct. 2 at the court in Benton. The sentencing hearing will be conducted by United States District Judge J. Phil Gilbert.

Each count of bankruptcy fraud is punishable by not more than 5 years’ imprisonment, and/or a $250,000 fine, and not more than three years of supervised release. The actual sentence will be determined by the court and will be guided by the United States Sentencing Guidelines.

The investigation is being conducted by the FBI. The case is being prosecuted by Assistant United States Attorneys Scott A. Verseman.

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