Calif. Man Accused in $7M Bankruptcy Fraud Scheme

Bloomberg Law’s® Bankruptcy Law News publishes case summaries of the most recent important bankruptcy law decisions, tracks major commercial bankruptcies, and reports on developments in bankruptcy...

By David McAfee

A California man faces trial in August on federal charges he led a $7 million scheme that targeted struggling homeowners and filed fraudulent bankruptcies to stall foreclosure sales ( U.S. v. Henschel , C.D. Cal., No. 17-cr-00350, indictment returned 6/8/17 ).

Michael “Mickey” Henschel, 68, of Van Nuys, Calif., pleaded not guilty June 16 in Los Angeles following his arrest on an 11-count indictment, according to a statement by the U.S. Attorney’s Office for the Central District of California.

Prosecutors alleged that he and unnamed co-conspirators offered unlawful foreclosure-avoidance and eviction-delay services through a company operated under numerous names, including Valueline.

Henschel and others would tell homeowners that, “for a fee, they would assist the clients in delaying foreclosure proceedings that mortgage lenders had initiated against the properties,” prosecutors said. They then allegedly filed bankruptcy petitions in the names of fictional debtors.

“Henschel and his co-conspirators knew, the bankruptcies were fraudulent because they were filed solely to delay foreclosure and eviction proceedings and not as part of any genuine effort to restructure or eliminate debt, and many were filed in the names of fictional debtors, for whom fictional social security numbers and employer identification numbers were listed in the bankruptcy filings,” prosecutors said in the indictment.

‘Not Guilty’ Plea

Henschel, who allegedly led the scheme that collected more than $7 million in illicit profits, was charged with one count of conspiracy, eight counts of bankruptcy fraud, and two counts of wire fraud.

If convicted on all charges listed in the June 8 indictment, Henschel faces up to 20 years in jail.

He was ordered held pending trial, which was set for Aug. 8.

Henschel’s counsel and contact information weren’t immediately available.

The government is represented by Acting U.S. Attorney Sandra R. Brown and Assistant U.S. Attorneys Lawrence S. Middleton, George S. Cardona, Jill Feeney, and Kerry L. Quinn.

To contact the reporter on this story: David McAfee in Los Angeles at dmcafee@bna.com

To contact the editor responsible for this story: Jay Horowitz at JHorowitz@bna.com

For More Information

The indictment is available at http://src.bna.com/p05

Copyright © 2017 The Bureau of National Affairs, Inc. All Rights Reserved.

Request Bankruptcy Law News on Bloomberg Law