BLOOMINGTON MAN SENTENCED FOR BANKRUPTCY FRAUD
PRESS RELEASE

Susan W. Brooks, United States Attorney for the Southern District of Indiana, announced that JEFFREY C. ONKST, 63, Bloomington, Indiana, was sentenced to 12 months and one day imprisonment by U.S. District Judge John Daniel Tinder following his guilty plea to Bankruptcy Fraud. This case was the result of an investigation by the Federal Bureau of Investigation and the United States Trustee for Region 10.

A bankruptcy is initiated by filing a Voluntary Petition, which directs the person seeking bankruptcy to disclose all prior bankruptcies filed within the six years preceding the pending bankruptcy. This is necessary to disclose to creditors and the bankruptcy trustees information necessary to determine whether the petitioner is entitled to the benefits of bankruptcy. From July 1999 to December 2004, JEFFREY E. ONKST filed, or caused to be filed in other people’s names, nineteen bankruptcy petitions. ONKST lied on these bankruptcy filings when he failed to disclose all his prior bankruptcies. Moreover, the purpose of these bankruptcies was solely to stop the sale in foreclosure of real properties owned or controlled by JEFFREY ONKST in the Southern District of Indiana, and Alabama. Invariably, the bankruptcies were filed when a foreclosure sale of the properties by financial institutions holding mortgages on the properties was imminent. The financial institutions would go through the mortgage foreclosure process, including court filings, service and notice, and scheduling of a sale, only to have the sale stayed by a bankruptcy on the eve of sale.

While in some of the nineteen bankruptcies some steps were taken to further the bankruptcy after the petition was filed and a stay obtained, in many cases no steps were taken at all to proceed with the bankruptcy after the petition was filed. On many occasions the petitions for bankruptcy did not disclose prior bankruptcies of the petitioner as required. All nineteen bankruptcies were eventually dismissed for failure of the debtor to follow through on the petition. The actual intended purpose of the bankruptcy petitions was for JEFFREY ONKST to obtain a stay of the foreclosure, not to obtain a discharge in bankruptcy. Once the bankruptcy was dismissed, the mortgage holder would have to start the foreclosure process from the beginning, often only to be met by another bankruptcy stay when a foreclosure sale was imminent.

"Criminal bankruptcy fraud, such as serial filing, threatens the integrity of the bankruptcy system as well as public confidence in that system," stated Nancy J. Gargula, United States Trustee for Indiana and Central and Southern Illinois (Region 10). "We very much appreciate U.S. Attorney Susan Brooks' commitment to combating fraud and abuse in the bankruptcy system." The United States Trustee Program is the component of the Justice Department that protects the integrity of the bankruptcy system by overseeing case administration and litigating to enforce the bankruptcy laws.

On October 18, 2006, Deputy Attorney General Paul J. McNulty announced that United States Attorneys had filed criminal charges against 78 individuals in 69 separate prosecutions in 36 judicial districts on a variety of federal bankruptcy fraud and related counts, the culmination of "Operation Truth or Consequences", a nationwide sweep to combat bankruptcy fraud and protect the integrity of the bankruptcy system. Jeffrey E. Onkst was one of the 78 individuals prosecuted during "Operation Truth or Consequences." The case was referred to the U.S. Attorney's Office by the United States Trustee for Region 10. Members of the Southern Indiana Bankruptcy Fraud Working Group, which includes representatives of the U.S. Attorney's Office, U.S. Trustee's Office for Region 10 and the Federal Bureau of Investigation, collaborated on the investigation of the case leading to the prosecution.

According to Assistant United States Attorney Winfield D. Ong, who prosecuted the case for the government, Judge Tinder also imposed 2 years supervised release following ONKST’s release from imprisonment.

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