It has been several years since Dance Moms aired new episodes, but it had many moments that were memorable for reality television fans. One of the most shocking moments of the series was when Abby Lee Miller, the notorious dance instructor, had her very young dance team perform a number called “Electricity.” Parents and fans disapproved of both the choreography and the revealing costumes that the girls wore during the number. If you haven’t seen it, don’t look it up that’s creepy. In the years since Dance Moms, Abby Lee Miller’s life has taken quite a few twists and turns. It has ultimately resulted in costumes from the series being sold at a bankruptcy auction, including from the infamous “Electricity” number. However, most people who file bankruptcy will get to keep most or all of their belongings. If you have questions about filing bankruptcy in Arizona, call for your free consultation at 480-780-2211.
How It Came to This
There are plenty of celebrities who have filed for bankruptcy and gotten their lives back on track- Larry King, Donald Trump, and Francis Ford Coppola have all utilized bankruptcy to gain protections from creditors while paying off creditors in a fair and court-supervised manner. But Abby Lee Miller stands apart from most celebrities who have filed for bankruptcy because she was later charged with and convicted of bankruptcy fraud. Miller was charged with 20 counts of bankruptcy fraud for attempting to conceal assets in her petition. She eventually pled guilty in 2016 and was sentenced to prison. One of the ways she was revealed to have concealed assets is by having the titular moms from Dance Moms carry cash on their person for her back from Australia, as cash on hand in excess of $10,000 must be reported.
What Is Bankruptcy Fraud?
Bankruptcy fraud is a felony that comes with severe penalties in the United States. Bankruptcy fraud is defined by 18 U.S.C. § 157. It is defined as the following.
“A person who, having devised or intending to devise a scheme or artifice to defraud and for the purpose of executing or concealing such a scheme or artifice or attempting to do so-
- Files a petition under title 11, including a fraudulent involuntary petition under section 303 of such title;
- Files a document in a proceeding under title 11; or
- Makes a false or fraudulent representation, claim, or promise concerning or in relation to a proceeding under title 11, at any time before or after the filing of the petition, or in relation to a proceeding falsely asserted to be pending under such title,
Shall be fined under this title, imprisoned not more than 5 years, or both.”
Reading the plain language of the statute, someone doesn’t actually have to declare bankruptcy to be charged with bankruptcy fraud. Some debtors are forced into bankruptcy involuntarily, but any misrepresentations made throughout this process are still considered bankruptcy fraud. Someone who is not the debtor but is still involved with the case, such as a creditor or a preferential payment recipient, could theoretically be charged with bankruptcy fraud as well. Someone convicted of bankruptcy fraud can be fined up to $250,000.
Miller was sentenced to one year and one day in jail and was also sentenced to two years probation. She was fined $40,000, which isn’t insignificant but is nowhere near the potential maximum fine of $250,000. She also only ended up serving about 8 months in prison. However, Miller was diagnosed with Burkitt lymphoma in 2018. She survived cancer but now must use a wheelchair as it has left her paraplegic. She also filed numerous lawsuits regarding discrimination and mishandling of her wheelchair in the years to follow. While Dance Moms was originally set in Pittsburgh, Miller has since retired, as many do, to Florida. Her dance studio sold for approximately $313,000 on December 12, 2022. Miller, or someone who advises her, realized that the studio held more value than real estate alone. Several items of Dance Moms memorabilia were listed for sale at auction, including the infamous “Electricity” costume. Some of the items are still available, and you can find them here.
Bankruptcy Fraud & The Average Consumer
The fact of the matter is that most people who file bankruptcy are not under circumstances anything like Abby Lee Miller’s. While some respected her as a dance professional, she was also reviled as a reality television villain due to her strict treatment of her students, with many of them starting in early childhood. Despite her infamy, Dance Moms ran for several seasons and resulted in spinoffs and numerous guest appearances for Miller. Her bankruptcy trustee knew that her petition was untruthful simply by turning on the television and watching her show.
While being charged with bankruptcy fraud is rare, there are still several ways that the typical consumer can commit fraud in their bankruptcy case. They include:
- Bribing the bankruptcy trustee
- Transferring funds and assets to friends and family members before filing for bankruptcy
- Misstating the value of your possessions in your bankruptcy schedules
- Filing multiple bankruptcy cases, either in multiple jurisdictions, under multiple identities, or both
- Concealing assets, whether physically hiding them or otherwise
- Filing bankruptcy forms that are incorrect or incomplete
Another form of fraud related to bankruptcy is incurring debts with no intent to pay them back, knowing that you will soon file for bankruptcy. The obvious example here would be credit cards. A debtor who has time to prepare for a bankruptcy filing could theoretically open up as many credit cards that accept their application. While filling out documents about how they can’t afford to pay their bills, the debtor could use those credit cards to dine at fancy restaurants, go on day trips or even lavish vacations, indulge in a shopping spree, etc. However, there are already precautions in place to prevent that kind of abuse of the bankruptcy system. A debtor may not exceed $850 in luxury purchases in the 90 days leading up to a bankruptcy petition filing. Additionally, the debtor should not exceed $1,100 in cash advances off of credit cards in the 70 days leading up to a bankruptcy filing. For more information about credit card spending limits and bankruptcy, call our Arizona law firm for your free consultation at 480-780-2211.
Avoid Bankruptcy Fraud & Other Serious Consequences By Going With The Professionals For Your Arizona Bankruptcy
It’s true that the average person who declares bankruptcy won’t face bankruptcy fraud, prison time, and thousands of dollars in fines like Abby Lee Miller. However, it’s still important to follow the U.S. Bankruptcy Code, as well as the Arizona bankruptcy procedure, so that you don’t face lesser consequences, like delays in your case, asset seizures, and more. Chandler Bankruptcy Lawyers can make sure your petition is complete and accurate and that you still utilize every possible advantage that bankruptcy offers to its fullest extent. We also offer qualified clients zero-down filing plans that allow them to pay for bankruptcy after their cases have been filed. To learn more, schedule your free case evaluation by calling 480-780-2211 today.
Additional assistance is available from our Arizona Bankruptcy Experts:
Gilbert Bankruptcy Attorneys
Tucson Bankruptcy Lawyers
Glendale Bankruptcy Lawyer
Chandler Bankruptcy Lawyer
Tempe Bankruptcy Lawyers
Arizona Bankruptcy Attorneys
Peoria Bankruptcy Lawyers