SAN DIEGO–A La Jolla resident was sentenced by United States District Court Judge James Lorenz to serve six months in prison for bankruptcy fraud, and hiding thousands of dollars in federal tax refunds.
Mark Hagen pleaded guilty to fraudulently concealing assets in bankruptcy proceedings on September 12. According to Hagen’s plea agreement, he admitted to knowingly and fraudulently defrauding the bankruptcy court and his creditors by hiding and lying about more than $45,000 in federal tax refunds. Specifically, in April 2008, Hagen filed a voluntary Chapter 11 petition that was then converted to a Chapter 7 petition in the United States Bankruptcy Court for the Southern District of California. Despite instructions to turn over his tax refunds and questions about their whereabouts, Hagen repeatedly concealed more than $45,000 of tax refunds that he had received from the United States—stating falsely that he had not received any tax refunds during bankruptcy proceedings in May 2009, July 2009, October 2009, and July 2010. In truth, the United States had issued the tax refunds to Hagen in February 2009, and Hagen had endorsed and arranged for the tax refunds to be deposited into a bank account that he controlled in February 2010.
United States Attorney Laura Duffy observed that bankruptcy protection is a privilege afforded to honest individuals who have suffered financial setbacks and not a means to allow the unscrupulous to get out of paying their debts. The United States Attorney’s Office will not turn a blind eye simply because the fraudulently concealed assets are not valued in the millions of dollars.
“Individuals should be put on notice that the bankruptcy process cannot be used to lie to, cheat, and steal from legitimate creditors,” U.S. Attorney Duffy stated.
“The bankruptcy process is based on the honor system and when used appropriately allows many debtors to get a fresh start,” FBI Special Agent in Charge Daphne Hearn said. ” However, when this trust is abused by debtors intentionally making false statements to the bankruptcy court, the FBI will work with the U.S. Attorney’s Office and Bankruptcy Trustee to hold them accountable to ensure the public’s continued trust in the bankruptcy process.”
