The Giudice Bankruptcy and Federal Indictment (with Links to Official Documents)
October 19, 2013 217 Comments
Joe was well-aware of his wife’s burning urge to shop, but says the expenses were manageable during cash-flush times. “For the nine years we’ve been married, she had a credit-card bill, and I would pay it. She might spend $10,000 on stupid things, but I didn’t question it – and it always got paid.” – People magazine, June 28, 2010
According to the U.S. government, the Giudices failed to file federal tax returns from 2004 – 2008; lied on bank loan applications from 2001 – 2008 (and because they used U.S. mail and wire communications to deliver the loan documents, they also committed mail and wire fraud); and lied in their petition to the U.S. bankruptcy court filed on October 29, 2009 (and lied in later amendments).
On their chapter 7 bankruptcy petition (see below for a summary of the debt they wanted to discharge), a U.S. bankruptcy trustee accused them of making false statements as to income, assets and expenses, including failure to disclose Teresa’s Bravo salary increase for season 2, income from TG Fabulicious sales and website sales, payments from personal and magazine appearances, and income from real estate holdings.
In December 2010, approximately one year after Teresa and Joe Giudice filed bankruptcy, the US Trustee overseeing their case accused Teresa and Joe of lying to the court by knowingly concealing various assets, which were legally required to be included in their bankruptcy paperwork… Specifically, the Trustee accused Teresa and Joe of knowingly concealing the following assets: three cars, a boat, the Giudice family pizzeria, three homes and several other investment properties, dozens of bank accounts, and Teresa’s pending book deal and business interests in TG Fabulicious LLC and 1601 Maple Avenue Associates LLC. The revenues generated by Teresa’s book, Skinny Italian, alone exceeded $280,000. [Source]
Joe and Teresa withdrew their bankruptcy filing two years later, in late 2011:
Given the chance to respond to the Trustee’s allegations, Joe Giudice had a change of heart about his bankruptcy. When questioned about hiding the family’s assets, Joe chose to invoke his Fifth Amendment right against self-incrimination; and, soon thereafter, he settled his dispute with the Trustee. [Source]
According to the consent order, Teresa agrees to waive discharge of her debts, and acknowledges that she wishes to resolve the Trustee’s proceedings against her “without the need for further inquiry or litigation, and without her making any further admissions.” [Source]
The following is a summary of Joe’s and Teresa’s outstanding debt per their October 29, 2009, chapter 7 bankruptcy filing.
Joe Giudice’s Income for the Years He Did Not File Tax Returns (from the Federal Indictment):
2004 – $243,919
2005 – $323,481
2006 – $26,194
2007 – $377,423
2008 – $25,442
Primary Residence at 6 Indian Lane, Towaco, NJ (Amount Owed – $1.72 million):
- 1st mortgage of $1.72 million with Community Bank of Bergen County (in Joe’s and Teresa’s name), September 2008 (this was initially a construction loan for $1.7 million in February/March 2008 that was converted to a $1.72 million mortgage loan) – the Giudices were making their mortgage payments and the bank had not begun any foreclosure procedures
Shore House at 49 Sylvia Lane, Stafford, NJ (Amount Owed – $550,266):
- 1st mortgage of $266,365 with America’s Servicing Co. (in Teresa’s name), August 2005 – the bank had sent a first notice of foreclosure
- 2nd mortgage of $33,903 with Ocwen Loan Servicing (in Teresa’s name)
- 3rd mortgage of $249,998 with Wachovia (in Teresa’s name)
Other Property at 68 Pine Brook Rd, Lincoln Park, NJ (Amount Owed – $314,162):
- 1st mortgage of $122,125 with America’s Servicing Co. (in Teresa’s name)
- 2nd mortgage of $24,962 with Amtrust Bank (in Teresa’s name)
- 3rd mortgage of $167,075 with Wachovia (in Teresa’s name)
East Orange, NJ Apartment Buildings (Amount Owed with Co-Debtor, Joe Mastropole – $5.12 million):
- 168-170 South Clifton Street, $1.723 million with Wachovia (in the name of 168-170 South Clifton Street Associates LLC), May 2007
- 17 Webster Place, East Orange, NJ, $2.1 million with Wachovia (in the name of 17 Webster Place Associates LLC), December 2007
- 6 Glenwood Avenue, East Orange, NJ, $1.3 million with Dime Savings Bank (in the name of 6 Glenwood Avenue Associates LLC), July 2005 and May 2006
Credit Cards, Building Materials and Services/Repairs:
- $83,255 credit cards (Bloomingdale’s, Nordstrom, Neiman Marcus, HSBC, Citi Cards, Home Depot)
- $92,936 building services
- $91,266 building materials
- $11,769 fertility treatments
- $2,239 phone bill
- $840 utility bill
Legal Fees and Judgments:
When tabloids covered the Giudice’s bankruptcy in 2010, reports said they were almost $11 million in debt, however, the line items in the bankruptcy document suggest it was $8.7 million, with only $282,305 of that being unsecured debt (credit cards, utilities, home repairs/improvements, services, etc.), excluding legal fees and judgments (for some reason in the indictment, the feds qualified the mortgages on the apartment buildings as unsecured):
|$5,123,103||mortgages on 3 apartment buildings|
|$2,585,377||mortgages on 3 residential homes|
|$722,046||judgments and legal fees (includes $300,000 already paid to former business partner)|
|$282,305||unsecured debt (credit cards, building materials/services, etc.)|
|$8,712,831||Total Debt Itemized in Bankruptcy Petition|
It makes no sense that the Giudices would file bankruptcy with comparably little unsecured debt, especially with the financial windfall awaiting them from RHONJ. Or is the financial windfall the reason they filed? Did they not want to use new money to pay off old debt? Perhaps they had the mindset that everyone was doing it (filing bankruptcy), so why not them?
The Giudices could have worked with their banks to short-sale apartments buildings if those buildings were the real reason for their financial hardship (they surrendered the Lincoln Park property and a second property, along with two cars, when they filed for bankruptcy, according to People magazine).
The Giudices had continued to pay the mortgage on their primary residence, so they were not planning to let their home go into foreclosure, so why not work out short-sale deals with the banks on their investment properties (apparently this is what they did after withdrawing their bankruptcy petitions)?
The Giudices should not have filed for bankruptcy protection – it is because they did and then allegedly committed fraud on their petitions that the feds scrutinized their finances, which led to the 39-count federal indictment on money fraud. What a terrible decision on their part!
Link to Giudice’s chapter 7 bankruptcy filing on October 29, 2009:
Link to complaint filed by U.S. bankruptcy trustee against the Giudices, objecting to discharge:
Roberta A. DeAngelis, the U.S. Trustee overseeing the Giudice bankruptcy petition, filed a complaint objecting to discharge. DeAngelis requested Judge Morris Stern not grant the couple’s chapter 7 bankruptcy petition because of the many “falsehoods” and omissions in their filing.
Link to the Giudice’s July 29, 2013, federal indictment on money fraud:
Mastropole v. Giudice, Opinion Letter by Bankruptcy Judge Morris Stern
Mastropole v. Giudice, Opinion Letter Summary
In their bankruptcy petition, the Giudices listed Teresa’s RHONJ season 1 salary of $3,333 per month and claimed she was unemployed, even though she was taping season 2 at the time and her monthly salary was $9,167 or $110,000 yearly; and they listed Joe’s monthly income as $3,250, plus $10,000 per month in assistance from family members (see image below) – they said they “reasonably did not anticipate any increase or decrease in income within the year following their filing.”
UPDATE 11/18/2013: On November 18, 2013, the federal government added two more counts to the 39-count indictment against the Giudices which was handed down on July 29, 2013. According to the indictment, the Giudices fraudulently obtained $5 million from mortgages, withdrawals from home equity lines of credit, and construction loans from 2001 to 2009 and failed to file tax returns for about $1 million in income from 2004 through 2008 (they are charged with mail and wire fraud, bank fraud, bankruptcy fraud and loan application fraud). According to U.S. Attorney Paul J. Fishman:
“The two additional counts stem from a $361,250 mortgage loan that Teresa Giudice obtained in July 2005. In the course of obtaining the loan, she and Giuseppe Giudice prepared a loan application which falsely stated that Teresa Giudice was employed as a realtor and that she had a monthly salary of $15,000. Teresa Giudice was not employed outside the home at the time.”
The following is a summary by Jezebel of the federal indictment handed down on July 29, 2013 (this is different from the bankruptcy petition filed on October 29, 2009).
December 21, 2001: In an attempt to get a mortgage loan with HomeComings, authorities allege Teresa submitted fraudulent tax forms (W2s) and paystubs and stated on the application that she was employed as an executive assistant making $3,750 a month with Modern Era Investment Corp. The U.S. Attorney’s Office claims she was never employed, yet she received a mortgage loan of $121,500.
June 2004: On another loan application, authorities allege Teresa falsely stated she was a self-employed owner for seven years of G&G Stucco earning $14,750 a month and, in return, she received a loan from Eastern American of $20,200.
March 2005: On two more loan applications, authorities allege Teresa falsely stated she was a self-employed owner of G&G Stucco with a monthly salary of $12,100 and, in return, on March 18, 2005, she received home loans from Alterna of $141,550.
November 2005: On another loan application, authorities allege both Joe and Teresa submitted fraudulent tax returns and, in return, on January 20, 2006, the couple received a construction loan from Park Avenue of $800,000.
December 2006: Joe allegedly applied for a loan from Wachovia using fraudulent tax returns and, after being approved, took out $251,360 in a home equity line of credit between 2006 and 2009.
February 2007: Joe applied for another loan with Wachovia based on false tax returns and W-2 forms and, after being approved, took out $170,252 from their home equity line of credit.
February 2008: Teresa and Joe used fraudulent W-2 forms to obtain a construction loan through Sterling for $1.7 million.
July 2008: Teresa and Joe falsely stated on a loan application with Community Bank of Bergen County (CBBC) that they had a private bank account containing a whopping $500,000 and submitted fraudulent tax returns and W-2 forms – they were subsequently approved for a mortgage loan of $1.72 million on September 12, 2008, which was dispersed on September 19, 2008.
So between 2006 – 2008, Joe and Teresa received close to $4 million dollars in loans, and then in October 2009 they filed Chapter 7 bankruptcy to discharge the debt. To make matters worse, they allegedly concealed assets from the bankruptcy court so that those assets couldn’t be used to pay off lenders and other creditors.
Over the two-year process of their bankruptcy, they failed to disclose the several LLCs (limited liability companies) they had formed in early 2009. They also failed to disclose Teresa’s true income from The Real Housewives of New Jersey and paid personal and magazine appearances, as well as income from a rental property. They also failed to disclose their anticipated increase in income, coming from deals she’d struck—before filing for bankruptcy—for her second season of the Bravo show and her first cookbook that were both paid out after the bankruptcy filing.
(It didn’t help matters that Teresa went on a $60,000 spending spree after filing for bankruptcy.)
To top it off, Joe didn’t pay income tax for five years in a row.
So what does this mean, in terms of actual jail time?
A criminal defense attorney that doesn’t represent either Teresa or Joe spoke anonymously about the case to the website Reality Tea:
The fact that a judge demanded they pay equal amounts bail does not look good!
…The Feds only indict when they have a rock solid case – the recent statistic is that 90% of federal indictments end in convictions. And unlike state courts, the federal court uses a sentencing guideline system. In working with a federal probation officer, the officer will determine what ‘criminal history level’ the person is at and what the ‘offense level’ is – from that, and from the sentencing guidelines, a sentence is proposed by the probation officer to the Judge…
Despite Teresa’s likely attempt to get probation and a fine, this attorney believes it is inevitable that they will both serve some jail time in federal prison.
When it comes to the sentencing guideline system in federal cases, Joe might be fucked. He was convicted of a DUI in 2010 and is currently awaiting trial for allegedly stealing his brother’s identity to fraudulently obtain a license from the DMV. He already owned up to committing fraud in 2007 when he forged the names of his business partner and notary public on mortgage documents.
Joe’s documented history of forgery might work in Teresa’s favor, though, if he says he forged her name on all of the falsified documents. But of course, that’s only if he’s willing to take the rap and if the government actually believes that Teresa had her head in the sand during their seven-year mortgage spree.
Interestingly, Bravo might be dragged into this whole mess, according to New Jersey-based attorney Darren Del Sardo, because the network is not a news agency and therefore doesn’t have First Amendment privileges.
Employees filming for Bravo can certainly be called as witnesses to establish that the Giudices were perhaps making large purchases in cash during the time of the bankruptcy. The network could also be called as a witness to support an increase of anticipated income paid by Bravo to Teresa that was not disclosed in her bankruptcy filing.
Joe Giudice’s license was suspended in 2010 for a DUI conviction (he was charged in January 2010). His license was suspended for seven months, but he got caught driving with a suspended license and spent 10 days in jail in September 2010. Then, in June 2010, he allegedly got a fake license using his brother’s ID, which authorities arrested him for in March 2011 (his trial is scheduled for October 28, 2013).
The following is a timeline from WetPaint:
January 14, 2010: After crashing into a pole at nearly 2 a.m., Joe was charged with driving under the influence of alcohol, reckless driving, careless driving and failure to maintain a traffic lane in Montville Township, NJ. He was taken to the hospital. After his release from the medical facility, he was then turned over to the Clifton Police Department, and it was discovered that there were outstanding warrants for his arrest for city ordinance violations.
September 2010: Joe was sentenced to ten days in jail for driving with a suspended license.
February 23, 2011: Joe and Caroline Manzo’s sons, Albie and Christopher, along with others, were detained in the Dominican Republic following a bar brawl. No charges were ultimately filed, but it did delay Joe, Teresa, and the Manzo boys’ return to New Jersey.
March 25, 2011: Joe was arrested for fraudulently obtaining a state driver’s license and now faces charges including wrongful identity use and impersonation. He refused to take a plea deal and could face up to ten years in prison if convicted off the charges. A new hearing is set for October 2013.
July 29, 2013: Joe and Teresa were indicted on 39 counts of fraud. The couple is accused of exaggerating their income in order to receive larger loans, which is something that was allegedly done even before RHoNJ debuted in 2009. They also are accused of failing to disclose all of their income when initially filing for bankruptcy later that year. The indictment includes charges of conspiracy to commit mail and wire fraud, bank fraud, making false statements on loan applications, and bankruptcy fraud. If Teresa and Joe are found guilty of all charges, they could each face more than 50 years in prison. They were each released on $500k bond. Their federal trial for money fraud has been postponed until February 24, 2014.