Yesterday, a local Sacramento man received a 17 year sentence for committing Bankruptcy Fraud after filing for Chapter 7. Steven Zinnel was convicted last July of hiding assets during his bankruptcy in an effort to avoid paying his wife significant support during their divorce.
Zinnell and his wife terminated their relationship in 1999 and engaged in a bitter divorce. Mr. Zinnell later filed his bankruptcy petition on July 20, 2005. He hid the assets by placing them in other individual’s names. Evidently, Mr. Zinnel concealed assets and income in order to avoid having to pay his wife spousal and child support. As the divorce intensified between the parties, Zinnel asked FBI to investigate his wife. Upon conducting their investigation, FBI agents uncovered multiple bankruptcy crimes committed by Zinnel and his attorney, Derian Edison. FBI agents uncovered an elaborate money laundering scheme whereby ZInnel funneled concealed assets back to his name by using his attorney’s trust account after receiving the bankruptcy discharge.
Upon his conviction, The Federal Court imposed a $500,000 fine on Zinnel and sentenced him to almost 18 years in federal prison. He was also ordered to hand over almost $3 Million in corporate assets to the US government.
Zinnel still faces a potential restitution order on March 31, 2014. This appears to be most severe sentence handed out by a federal court in the Sacramento region.
While this case represents an extreme example of peoples’ willingness to “scam the system,” it shows that people can and do get convicted of attempting to abuse the bankruptcy system and process. These types of cases usually revolve around a debtor’s inadvertent or careless failure to include all of their assets in the bankruptcy. However, this situation demonstrates that people can and often do intentionally attempt to hide their assets from creditors.