Businessman sentenced to prison for bankruptcy fraud

A man with Alton connections, accused of being a serial bankruptcy filer, was sentenced this week to prison.

Mark A. McFarland, 58, of Springfield, was sentenced in federal court in East St. Louis, to one year in prison for his convictions on two counts of bankruptcy fraud, U.S. Attorney for the Southern District of Illinois, Donald S. Boyce, said Tuesday.

McFarland was indicted on Feb. 2, 2016, as part of the U.S. Attorney’s Office’s effort to crack down on those who commit fraud in the U.S. Bankruptcy Court for the Southern District of Illinois.

Evidence presented at the sentencing hearing Monday established that McFarland is a serial bankruptcy filer, Joyce said. Serial bankruptcy filers repeatedly file bankruptcy petitions with no intention of following through with their cases. Instead, they simply file the petitions in order to stop their creditors from collecting on the debts they owe.

On Oct. 6, 2014, McFarland filed a chapter 11 bankruptcy case on behalf of his business, Second Chance of Springfield, Inc. McFarland filed the case in the United States Bankruptcy Court for the Southern District of Illinois in East St. Louis. Prior to filing that case, McFarland had filed 10 separate bankruptcy cases in the United States Bankruptcy Court for the Central District of Illinois in Springfield. All but one of those cases had been dismissed due to McFarland’s failure to comply with the Bankruptcy Court’s orders.

In the last case, the Bankruptcy Court barred McFarland from filing any more bankruptcy cases in the Central District of Illinois for 180 days. The Bankruptcy Court also barred McFarland from filing any additional bankruptcy petitions in the Central District of Illinois for three years unless he paid the full filing fee (approximately $300) upfront.

Shortly after that order was entered, McFarland filed his bankruptcy case on behalf of his business, Second Chance, in the Southern District of Illinois. When he filed this case, McFarland lied on his bankruptcy petition by claiming that his business was located in the Southern District of Illinois, Joyce said.

An attorney from the U.S. Trustee’s Office subsequently pointed out that the case did not belong in the Southern District of Illinois, because the street address of Second Chance was located in Springfield. As a result, the case should have been filed in the Central District of Illinois in Springfield.

McFarland then lied again on an amended bankruptcy petition, stating that Second Chance had a business address in Alton. In support of this claim, McFarland provided a lease to the Bankruptcy Court that was fraudulently backdated to Sept. 25, 2014. Then, as McFarland admitted during his plea hearing, he falsely testified under oath that he had signed that lease on Sept. 25, 2014. He also falsely testified under oath that he had reached an oral agreement with the landlord for the rental of the Alton property in September 2014.

During Monday’s hearing, U.S. District Judge Nancy J. Rosenstengel stated that she hoped the prison sentence would send a message to other would-be serial filers. Rosenstengel pointed out that individuals who attempt to use the federal bankruptcy courts to defraud their creditors and make false statements under oath will face very serious consequences.

In addition to sentencing McFarland to prison, Rosenstengel also ordered McFarland to serve three years of supervised release after his prison sentence is concluded, with the first six months under home confinement. The judge also fined McFarland $3,000 and
ordered him to pay a $200 Special Assessment.

“Criminal bankruptcy fraud threatens the integrity of the bankruptcy system, as well as public confidence in that system,” stated Nancy J. Gargula, U.S. trustee for Indiana, Central Illinois and Southern Illinois. “I am grateful to U.S. Attorney Boyce and our law enforcement partners for their strong commitment to combating bankruptcy related crimes, as demonstrated by yesterday’s sentencing.”

The U.S. Trustee Program is the component of the U.S. Justice Department that protects the integrity of the bankruptcy system by overseeing case administration and litigating to enforce the bankruptcy laws. Region 10 is headquartered in Indianapolis, with additional offices in South Bend, Ind., and Peoria, Ill.

The charges resulted from a referral by the U.S. Trustee for Indiana and Southern and Central Illinois (Region 10) to the U.S. Attorney for the Southern District of Illinois. The investigation was conducted by agents from the Springfield Division, Fairview Heights Resident Agency, of the Federal Bureau of Investigation, in collaboration with the Southern Illinois Bankruptcy Fraud Working Group coordinated by the U.S. Trustee. The case was prosecuted by Assistant United States Attorney Scott A. Verseman.

 

Leave a Comment