Joe Giudice Sentenced to 41 Months in Federal Prison, Teresa Sentenced to 15 Months; Giudices’ Mansion is For Sale, Price Reduced to $3.5 Million (Updated November 11, 2014)
On November 7, 2014, Joe and Teresa Giudice reduced the asking price of their home in Montville/Towaco, NJ, by $500,000. The new price is $3,499,000. The original asking price was $3,999,000, about twice the home’s market value. The Giudices have a $1.72 million mortgage on the property; Zillow estimates the home to be worth $2,062,427.
On September 8, 2014, just weeks before their sentencing hearing, the Giudices listed their mansion for sale. They also put their shore house and a rental property in Lincoln Park, NJ, on the market — see the last comment on this blog post for details.
In October 2009, when the Giudices filed for bankruptcy protection, they briefly listed their home for sale for $3.99 million, but they pulled it from the market on June 11, 2010. They withdrew their bankruptcy petitions in late 2011 after the court determined they both committed fraud by failing to disclose all their assets.
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]
Since 2011, the Giudices have added the carport, detached garage, pool and pool house (see photos below).
The listing description for their home is as follows:
Spectacular stone and stucco home set on over 3.5 ac. This lovely home exudes privacy and elegance in the town that Money Magazine has named one of the top 10 best small towns in America for 8 yrs. Grand 2 story entrance with double Cinderella staircases. Spectacular custom moldings, imported marble floors and fixtures and architectural details await, in every room of this home. The gourmet kitchen features a butlers pantry and large working center island, perfect for entertaining. Grand formal great room features a huge wood burning fireplace, soaring 2 story ceiling with upstairs balcony overlooking the room. The Master Bedroom is gorgeous! Featuring 3 custom designed walk-in closets, gas fireplace, and master bath with onyx tile, steam shower, soaking tub. Endless custom touches abound in this home.
Click here for more photos of the home.
RadarOnline reported on November 11, 2014, that the judge in the Giudices’ fraud case signed a new order of forfeiture for Teresa and Joe. According to the document obtained by Radar, the Giudices still owe restitution of $214,588.90 “pursuant to the plea agreements,” even though they’ve already paid $200,000.00 [in addition to the total $414,588.90 in restitution that they were ordered to pay toward their Wells Fargo debt as part of their plea deal, the couple still owes $13 million to numerous other creditors].
Should they fail to pay, the government can go after their assets, “until the forfeiture money judgment is paid in full,” the document states. They can either establish a payment plan or surrender their assets, the document notes. The U.S. Attorneys Office “is authorized to conduct any discovery needed to identify, locate, or dispose of forfeitable property,” the document notes.
At Joe and Teresa Giudice’s sentencing hearing on October 2, 2014 in U.S. District Court for bankruptcy, wire and mail fraud, Joe was sentenced to 41 months in federal prison by Judge Esther Salas. Judge Salas sentenced Teresa to 15 months for her part in a bankruptcy and mortgage fraud scheme. The judge ruled Teresa will serve her sentence before husband Joe, and that she must surrender on January 5th, allowing her to spend the holidays with her family. In addition to the prison terms, the judge fined Joe $10,000 and fined Teresa $8,000, sentenced them each to two years of supervised release, and ordered the couple to forfeit $414,588.90. Joe was advised by the court that he faces deportation after serving his sentence; that decision will be made by U.S. Immigrations and Customs Enforcement following completion of his prison sentence.
“I will say on the outset, I’m going to focus on what I didn’t say to your husband, that all of the false declarations, wire fraud, and bank fraud is still your fault,” Judge Salas told Teresa in her closing statement. “For a moment, I thought about probation until I read the government’s report. What you did in the financial disclosure really sticks in my craw. It’s what the court has a problem with. It shows blatant disrespect for the court,” she explained. “I’ve seen a lot, but I’ve never seen the confusion and work that went into these financial documents… I need a full picture of who you are, I need a full disclosure of your financial assets, it’s not because I want to be nosy,” Salas continued. “Because of that, I don’t think you respect the laws of this country. You are not as bad as your husband; you do not have the criminal record that he has had, but you are complicit in it,” Salas added. “Getting this financial information that I need to judge this case was like pulling teeth — it was the most difficult in all my years as a judge and as a lawyer,” she argued. “Mr. Giudice was the captain and he will have to live with the sentence I gave him. The first mate deserves a little bit of a break.” – Us Weekly, October 3, 2014
In July 2013 Joe and Teresa were charged with 41 counts of bank, bankruptcy, wire and mail fraud; and Joe also faced five counts of failing to file tax returns. The fraud charges together carried a maximum penalty of 35 years in prison and $1 million in fines, but under federal sentencing guidelines for their plea agreements, Joe’s recommended sentence was 37 to 46 months; Teresa’s, 27 months.
Joe pled guilty to 5 charges, Teresa pled guilty to 4. If you read the plea agreements, you’ll see they’re virtually the same, save the extra charge for Joe — failure to file tax returns. Joe’s offense level is 21, Teresa’s is 16 — that’s why Joe is facing more time. You’ll also notice in the plea agreement that all parties agreed to these offense numbers (which the judge uses to determine sentencing). The ONLY difference is this — Teresa reserved the right to argue for a downward departure (of 2 points) under a Family Responsibility provision. This is why Teresa and her lawyer have been publicly saying they’re going to ask for house arrest or probation only. But I see this as a long shot. First off, the Government reserved the right to challenge it. Secondly, as we all know, Teresa and Joe have a huge extended family, so she can’t argue that she, and she alone, is desperately needed. The qualifications to meet this provision are very strict and very difficult — she won’t be able to meet it. Lastly, there won’t be any talk of “Joe was the mastermind” or “I only signed what was put in front of me.” If Teresa tries this, she undermines the whole plea deal, one that includes many stipulations, including admitting her guilt and accepting responsibility for the charges to which she pled guilty. She not only had to agree to this in the signed plea deal, but to then do so in front of the judge at sentencing. Again, denying or diminishing her role in the crimes is contrary to what she agreed to, and would work against her, not in her favor. [LotusFlower, September 12, 2014, PreviouslyTVForum]
Though they maintained their innocence and claimed prosecutors targeted them because they’re famous (“We’re good people. I don’t understand why this is happening to us,” Teresa said in her first post-indictment interview with Bravo’s Andy Cohen), they eventually pleaded guilty in the case. In March 2014 each pleaded guilty to one count of conspiracy to commit mail and wire fraud and three counts of bankruptcy fraud — by concealing assets, falsifying court filings and falsely testifying (they admitted to hiding assets from a bankruptcy trustee). And Joe pleaded guilty to failing to file one year’s tax returns.
At the Giudices’ sentencing hearing on October 2nd, Judge Salas lambasted the couple for failing to disclose assets on financial forms that were tied to their sentencing, calling it “a direct affront to the court.” The Giudices hiding assets even until the bitter end cost Teresa her freedom. The judge explained that she was inclined to grant probation until Teresa submitted false information about her assets to the probation department, which was preparing the pre-sentence report for the court.
Teresa appeared dumbfounded when Salas said that she had first considered probation or home confinement instead of prison time for Teresa but changed her mind when she noticed discrepancies between what the prosecutors had listed as the couple’s assets and what the couple had reported to the probation department. “If [Teresa] had put something down, anything, I think [probation] would have been fine with that,” Salas said of Teresa’s reports to probation officers. “She put nothing down, nothing.” Salas repeatedly challenged Teresa’s attorney to explain the problem-riddled documents. “I’ve been a judge for seven years and I have yet to ever see the amount of confusion and work that went into these financial disclosures… It feels as if things have been hidden or concealed.” Salas noted that the couple received documents for financial disclosures that should have been turned in by March 4th but were not turned in to the court until August 19th. “I had to put the sentencing off because the financial disclosure wasn’t in,” she said. – NorthJersey.com, August 3, 2014
Teresa’s plea agreement specifically addressed what could happen if she failed to disclose all her assets to the probation department. According to the following report, in Teresa’s plea agreement she consented to the forfeiture of her interests in any assets that she failed to disclose on the Financial Disclosure Statement.
Why RHNJ’s Teresa Giuduce Was Sentenced to Prison
October 3, 2014
Real Housewives of New Jersey co-star Teresa Giudiuce was sentenced to 15 months in prison yesterday, while her husband Joe received a 41 month sentence, in a federal fraud case. The Indictment included 41 counts of bank fraud, loan application fraud, bankruptcy fraud, and mail and wire fraud. Joe was also charged with tax offenses. Teresa pleaded guilty to four counts and Joe to five.
Teresa’s sentencing guidelines were 21 to 27 months. Joe’s guidelines were about double that. (The guidelines are not mandatory, and unless there is a mandatory minimum, which there was not in this case, the judge can impose a sentence below them.)
Teresa was hoping for probation. What went wrong? The judge said yesterday she had been inclined to grant probation, until Teresa submitted false information about her assets to the probation department, which was preparing the pre-sentence report for the court.
Backing up for a minute, here’s how the Government described the fraud scheme in a pretrial pleading:
In sum, the Indictment charges Defendants in Count I with engaging in a mail and wire fraud conspiracy involving the submission of fraudulent mortgage and other loan applications and supporting documents to financial institutions and other lenders in order to obtain mortgage and other loans. The Defendants falsely represented on these loan applications and supporting documents that they were employed and/or receiving substantial salaries when, in fact, they were either not employed or not receiving such salaries.
The Defendants also created fake documents such as tax returns, Forms W-2, and paystubs, which they then submitted to the lenders in support of these fraudulent loan applications.
Counts 2 through 13 further charge Defendants with specific instances of bank and loan application fraud resulting from this unlawful agreement.
The Indictment charges in Counts 14 through 36 that, after accruing a large amount of mortgage and other debt in this fashion, Defendants engaged in bankruptcy fraud in connection with the Chapter 7 bankruptcy petition that they filed on October 29. 2009 in U.S. Bankruptcy Court in Newark. The Indictment alleges that during the course of the bankruptcy proceedings, the Defendants repeatedly concealed assets, made false oaths. and made false declarations.
Among other acts of concealment and false statements, Defendants intentionally failed to
disclose their ownership of certain income-producing properties as well as the income they were receiving from those properties. In many instances, these properties were the same properties that they had earlier acquired with the proceeds of false and fraudulent loans.
Finally, the Indictment also charges Giuseppe Giudice with the willful failure to file tax
returns on the basis of his failure to tile a federal income tax return for the years 2004 through 2008.
Now back to the sentencing. After a defendant pleads guilty in federal court, they have to meet with the Probation Department. The Probation Department is tasked with writing a presentence report to the Judge, with a description of the offense, the history of the offender, the applicable guidelines, and a recommended sentence.
To prepare the report, the Probation Department requires the defendant fill out financial disclosure forms, listing his or her assets and liabilities and monthly expenses. Among other things, this helps the court determine whether the defendant has the ability to pay a fine. These documents are very important to the process. Submitting false information to the probation department can result in a separate charge of making a false statement to a federal official or obstruction of justice. (In Teresa’s case, according to the Plea Agreement, she had to fill out disclosure forms that were drafted by prosecutors, rather than Probation’s usual forms.)
The Judge believes Teresa lied on her financial disclosure forms. That is an affront to the court. And the judge made no bones about the impact. Until the discrepancy of Teresa’s disclosures came to light, the Judge had been considering probation.
During Teresa Giudice’s sentencing, [Judge] Salas said she had even considered giving her probation combined with home confinement and community service but changed her mind because of the omissions.
“You are a savvy businesswoman. You know how to brand yourself,” she said. “You tell me you didn’t understand you had to cooperate? It defies logic.”
Instead, Teresa got 15 months in prison. According to the New Jersey Record,
The judge noted the total value of the discrepancies at more than $75,000, and cited seven assets that were not listed on any document provided to the court.
What did she leave out?
[A] pool table, jewelry, all-terrain vehicles, closets full of pricey handbags and expensive shoes when reporting their assets.
According to the Judge:
“If [Teresa] had put something down, anything, I think [probation] would have been fine with that,” Salas said of Teresa’s reports to probation officers. “She put nothing down, nothing.”
She repeatedly challenged Teresa’s attorney, Klingeman, to explain the problem-riddled documents.
“I’ve been a judge for seven years and I have yet to ever see the mount of confusion and work that went into these financial disclosures,” Salas said.
The Judge didn’t buy the attorney’s explanation, that Teresa had hired an accountant to prepare the documents and assumed he’d do it correctly. She put the blame squarely on Teresa, telling her:
“I’m not sure you respect this court. I’m not sure you respect our laws. And I’m not sure you understand what you’ve done,” Salas said.
Teresa’s plea agreement (Doc. 24, available on PACER) specifically addressed what could happen if she failed to disclose all her assets to probation:
Teresa Giudice agrees to disclose all of her assets to the United States on a Financial Disclosure Statement to be provided by this Office and agrees to provide the Financial Disclosure Statement by the date that a draft presentence report is circulated in this matter. Teresa Giudice agrees that if the government determines that she has intentionally failed to disclose assets on that Financial Disclosure Statement, that failure constitutes a material breach of this agreement.
In addition, Teresa Giudice consents to the administrative, civil, and/or criminal forfeiture of her interests in any assets that she failed to disclose on the Financial Disclosure Statement.
Should undisclosed assets that the defendant owns or in which the defendant has an interest be discovered, Teresa Giudice knowingly and voluntarily waives her right to any required notice concerning the forfeiture of said assets. Teresa Giudice further agrees to execute any document necessary to effectuate the forfeiture of said assets.
It remains to be seen whether the Government will now seek to forfeit Teresa’s handbags and shoes or her pool table.
Despite the judge’s belief that Teresa lied on her disclosure forms, she still imposed a sentence below the guidelines. Her reasons: The couple has four daughters, Teresa has aging parents, and she was less culpable than her husband. She also gave the couple another break: They can serve their sentences sequentially. Teresa will begin her sentence in January. When she gets out, Joe will start his sentence.
Joe, however, may not make it home. Apparently, he’s not a U.S. citizen, having been brought here as a baby by his parents. He says he didn’t learn he wasn’t a citizen until he was an adult. Bankruptcy fraud is an aggravated felony, requiring deportation at the end of his sentence.
The Guiduces must also pay almost $400k in restitution. Their bankruptcy discharge was denied so they still owe $13 million to creditors. Yet it doesn’t seem to have had much of an impact on their lifestyle — or else, as the judge said, they just don’t get it:
When it was over, the couple left the federal courthouse in Newark holding hands. They were surrounded by security as they made their way to a white Mercedes-Benz SUV.
The following was compiled from reports by NJ.com and NorthJersey.com on October 2, 2014 (read their final reports published on October 3, 2014 in the last comment to this blog post).
At the sentencing hearing on October 2, 2014, Judge Salas said neither is eligible for probation unless they are granted a downward departure or variance in the sentencing.
Joe’s sentencing was imposed first. After reading a pre-sentencing report in which the couple said they felt pressure to keep up with their wealthier friends, Salas said, “They’re not your friends.”
Early in the hearing, Salas grew visibly angry with the couple over what she called their “glaring” omissions and inconsistences in their required pre-sentencing financial disclosure statement. She said they have assets that weren’t declared, and she criticized the “inconsistencies and omissions,” saying this made it hard for her to be lenient. The judge said forms which should have been turned into the court by March 4, 2014 were not turned in until August 19th.
“It’s the same pattern of … dishonesty and manipulation … that they showed in the bankruptcy case,” said Assistant U.S. Attorney Jonathan Romankow, about the financial disclosure forms.
The judge questioned why the couple declared only $25,000 worth of items in their home, even though their insurance policy is worth $1 million. In 2009 bankruptcy filings, the couple showed $60,000 in assets in their home, the judge said.
“They had an obligation to be transparent and candid and open with the court and I don’t think I got that,” Salas said. “I want to understand the disconnect.”
Concerning the $224,000 Joe owes in back taxes, his attorney, Miles Feinstein, couldn’t confirm whether his client had actually paid them. Salas responded, “This is not a trick question.”
Joe’s lawyer delivered a long tribute on his client’s behalf, asking Salas to consider leniency because Joe took responsibility for the crimes in an attempt to exonerate his wife. “That is the mark of a real man,” he said.
Feinstein talked at length about the recent death of Joe’s father Frank, who died in June from a massive heart attack, and how devastated his client has been since then. He said Joe found his father on the ground near the chicken coop, and that Joe did everything he could, but Frank died in his arms.
Though mostly stoic throughout the hearing, at this point Joe took a tissue offered by his wife and wiped away tears.
Joe’s lawyer added that Joe has been deeply affected by the death. “He hasn’t been the same person,” Feinstein said. “That was his best friend.”
“Nobody can say Joe Giudice is not a good and considerate son,” Feinstein said. “He’s a low-key and loving individual. This is the real Joe. Not the ‘Housewives’ Joe.”
Feinstein said he’s witnessed Joe crying about “how he ruined everything, how he had (Teresa) sign documents, how he had destroyed” his family and their pursuit of the American dream.
Feinstein also read a letter from Joe’s mother Filomena, who could not be in court due to health problems. “My son needs a slap on the wrist, not to be taken away from his family.”
Salas later responded: “It’s not a slap on your wrist you need, Mr. Giudice. Uh-uh. You need to understand the laws of this country and that they need to be respected.”
“I stand here humiliated before the court and my family and society,” Joe said nervously before Salas delivered her sentence. “I disgraced many people, including my wife and four daughters. I take full responsibility for my actions. I promise to be a better person.”
Just before delivering the sentence, which includes 12 months to run concurrently for failing to file his tax returns in 2004, Salas told Joe: “I am not sure you respect the court. I am not sure you respect our laws. And I am not sure you understand yet what you did.”
But Salas also said that in not giving him the full recommended sentence of 46 months, she took into account the dozens of letters written on his behalf which described him as a loving and devoted husband and father.
“A sentence under the top end of the range would be appropriate,” she said. “Mr. Giudice, you’re a great dad. You love those girls. You would probably take a bullet for them. You should be proud of that, and every day you should hold that close to you … I have to give you credit for the life you have lived, at least to the people you have loved.”
She told Joe that she wished him luck and said, “What you did in this case doesn’t define you as a man … You have a lot to live for.”
Joe, who was born in Italy, never obtained citizenship and faces the prospect of deportation. Salas said the U.S. Immigrations and Customs Enforcement told the court that if they seek to deport him, they would wait until after he has served his sentence. Joe’s lawyer said that Filomena Giudice, Joe’s mother, blames herself for never having Joe, whom she bought to America when he was one year old, naturalized as a U.S. citizen. He also said that Joe didn’t know he wasn’t an American citizen until legal proceedings — but he didn’t say which proceedings.
Before recessing, the judge indicated that Teresa should receive prison time, but the sentence would be staggered so one parent could be at home with the couple’s four young children. A report prepared by Teresa’s legal team claimed that the four children would have to be split up among friends and family or possibly go into foster care if the couple were sentenced to concurrent prison terms. Salas mentioned that it appears to be Teresa, and not her brother Joe Gorga, who shoulders the most responsibility for their ailing parents.
After the recess, the court resumed with Teresa’s sentencing.
Salas lectured the couple about “glaring omissions” in both of their financial disclosure forms. Salas read off recreational vehicles, home furnishings, cars, construction equipment — all not reported to the probation office by the couple but listed on federal prosecutor’s documents.
Romankow said the couple never disclosed the $1,250 a month in rent they received from their Lincoln Park rental home, and that Teresa denied in bankruptcy proceedings that they had any rental properties. He said that Teresa endorsed checks from her tenants and deposited them in her TG Fabulicious bank account, with the memo line on the checks written out for “rent.”
The judge questioned why Teresa said on the forms that she has no jewelry; her attorney defended the statement, saying her costume jewelry is worth very little. The couple listed $25,000 in furnishings for their $3 million Montville home, an assertion that her attorney said was accurate. He explained that most of the furnishings seen on TV are brought in by the production company.
The judge then went on to list seven other items not listed on any court documents that were later discovered by government investigators.
“How is it that at this point the court is having to go over this?” Salas asked the Giudices’ attorneys.
“She’s not sophisticated when it comes to these matters,” said Teresa’s attorney, Henry Klingeman, on Teresa’s omissions from the financial disclosure statement. He characterized their finances as “complex and chaotic.”
Romankow said that the failure to disclose “was not transparent in the least; this concealment is intentional.” He argued that the “pattern of omissions does not make the couple worthy of leniency.”
The Giudices offered little explanation except to say that the couple had hired an accountant and provided that person with their financial information.
The judge told Teresa: “You need to stop relying on PR. You need to stop relying on CPAs. You need to start listening and making decisions.”
Teresa’s lawyer asked Salas to reduce possible penalties so her sentence could be flexible enough to let her stay at home with her children. He said that Teresa’s future was dismal, with her husband possibly deported and her living with her four girls in “God knows what house” with “no career to rely upon, no skills to rely upon, no income, no savings.””This is not an extraordinary circumstance,” replied Salas, ruling against Teresa’s motion to depart from the recommended sentencing guidelines because of her husband’s possible deportation and their four children at home.
Romankow requested for the judge to reject home confinement for Teresa “in the very house she built on fraudulent loans.”
Salas turned down a request for “downward departure,” which would lower Teresa’s possible sentencing range to allow probation and possibly home confinement.
Salas told Teresa: “For a moment, I thought about probation. For a moment. I considered probation with confinement. But the behavior you engaged in greatly offended the court. A period of confinement is absolutely necessary in this case. I don’t honestly believe that you understand or respect the law.”
Reading from a letter she had written, Teresa addressed the court late in the afternoon as the judge weighed what punishment she deserves for her part in the bankruptcy and mortgage fraud scheme.
Her voice faltering, Teresa told the judge: “I wrote this last night because I knew I was going to be nervous… I’m scared, I’m not going to deny it, I’m really scared.”
Two minutes into the four-minute reading, Teresa’s voice cracked.
“I have heard you. I need to live to do things for myself,” she read. “It’s time for me to wake up… I’m a woman of faith. This was not how I was raised. I am more sorry than anyone will ever know. I will make this right, no matter what it takes.”
“I fully take responsibility for my actions,” Teresa said. “I deeply love my family… My four daughters are my life. I don’t care about the TV show.”
The judge agreed to stagger the sentences so at least one parent would be home with the couple’s four children.
After giving her 15 months in prison, Salas said to Teresa: “You, quite frankly, display genuine remorse. At the end of the day, I think you finally got it. You finally woke up.”
Click here to read the press release issued by the U.S. Attorney’s office on the sentencing of the Giudices. Click here for NJ.com’s timeline of the Giudice’s activities. Click here for an eye-witness account of the court proceedings on October 2, 2014.
Joe and Teresa Giudice Plead Guilty to Mortgage and Bankruptcy Fraud; Bankruptcy Court Says They Are Stuck Paying Off Their $13.4 Million Debt
UPDATE SEPTEMBER 5, 2014: The Giudice’s sentencing hearing has been postponed until October 2, 2014. In August 2014, the bankruptcy trustee filed forms of administration, closing the bookkeeping aspect of the Giudice’s 2009 bankruptcy filing; and in September 2014, the judge officially closed the case file.
UPDATE JUNE 19, 2014: The Giudice’s legal problems have been put on hold amid family tragedy. Following news of the death of Joe’s father, Frank, the couple’s July 8th sentencing date has been postponed, Teresa’s lawyer, Henry Klingeman, told Us Weekly.
UPDATE APRIL 10, 2014: According to a final report issued on April 8th by the court-appointed U.S. bankruptcy trustee handling the Giudice’s case, while the couple has satisfied $7,500 in debt for attorney fees tied to the trustee, Teresa and Joe still owe creditors $13.4 million.
The bankruptcy court determined that the Giudice’s concealed assets when they filed their original petitions and subsequent amendments in 2009, so the trustee denied the discharge of their debts. The Giudices and the bankruptcy court agreed in 2011 to consent decrees which stated that they would not be able to ever, at any time in the future, be able to discharge their debts through Chapter 7.
The Giudices were charged with bankruptcy fraud (among other things) in 2013, to which they pleaded guilty.
With their guilty pleas, the bankruptcy case is officially closed, which means that creditors can pursue the money owed to them, said Ronald LeVine, a bankruptcy attorney in Hackensack not affiliated with the case. “So they’re in the same boat as before,” he said. “Whatever they owed, they owe now.”
“Oh, isn’t it great that the Giudices, living their life of excess off other peoples’ backs, are not inconvenienced by silly little things like restitution or punishment. SMH” – grandma cracker, RadarOnline, May 19, 2014
“Anyone who had remorse toward their victims and a conscience would tone it down and turn from the over-indulgent lifestyle they cannot afford, nor have earned on their own.” – Sami713, RadarOnline, May 19, 2014
“One thing is clear…their showy, gleeful comfort level in this gaudy display speaks volumes. Any convicted thief on their way to prison with any conscience would be embarrassed and uncomfortable with this. I hope the feds are taking notes.” – Birdie11, RadarOnline, May 19, 2014
“She should be ashamed of herself. She used other people’s money all these years, screwed over everyone, and lives high on the hog, rubbing it in everyone’s faces. She’s disgraceful!” – Lissa, RadarOnline, May 19, 2014
Teresa and her fans have been claiming for years that she is working hard to pay off their debt, but that is not the case. She has not made any attempt to pay off their debt using the millions she has earned from her Bravolebrity—she had paid back a paltry $7,500 toward attorney fees and nothing to her other creditors. Her debt has grown from $11 million to more than $13 million. The Giudices have no intention of paying anyone back. Most of the millions that Teresa’s made since filing for bankruptcy in October 2009 has been spent frivolously on superficial things.
The following is a report from NorthJersey.com on April 9, 2014:
The report comes one month after the couple pleaded guilty to bankruptcy fraud and conspiracy to commit mail and wire fraud — criminal charges that could land them both in jail. Teresa and Giuseppe “Joe” Giudice jointly filed for personal bankruptcy in October, 2009, listing nearly $11 million in debt on their Chapter 7 petition.
In a blog item addressing the bankruptcy, Teresa Giudice cited reasons for the filing as real estate deals that had gone bad in a bad economy. “We didn’t spend millions of dollars on gold toilets or private planes,” she wrote in the blog. “We bought buildings, fixed them up, and tried to help other people start their own businesses or be able to afford an apartment.”
Among the creditors listed in the report are Wachovia Bank (now Wells Fargo) for $5.3 million; the Community Bank of Bergen for $1.7 million; and the Internal Revenue Service which is owed $327,556.
The couple’s listed assets include their five-bedroom home in the Towaco section of Montville, a 2007 Cadillac Escalade SUV, household furnishings, commercial real estate, and interest in several companies; though valued at nearly $2.3 million, these assets in reality amount to a net value of just $165,000, because of liens and other costs.
The trustee did secure $15,000 in assets – from the Giudices – who paid for some of their furniture and other items, said LeVine.
While dealing with the bankruptcy, the Giudices were entangled in a second major issue tied to it: the criminal case in which they admitted concealing assets from the trustee. Both also admitted that they conspired to defraud banks and other lenders by submitting fraudulent applications and supporting documents in connection with nearly $5 million in mortgages, construction loans and lines of credit between 2001 and 2008.
Along with possible prison time, Joe Giudice is in jeopardy of being deported. The couple has not yet been sentenced for those crimes.
The Giudices are stuck paying back the $13.4 million they still owe to the IRS, the state of New Jersey, and various creditors, who are free to pursue them for repayment now that they have pleaded guilty to federal fraud charges (of course, the creditors will never get their money back because the Giudices will never make $13.4 million in their lifetimes). Basically, since their bankruptcy discharge was denied in 2011 (the court denied their petitions, which they both withdrew due to allegations of fraud), the Giudices have made no real attempt to pay back creditors (having only paid $7,500 toward their total debt over the past three years), and their debt has since increased by more than $2 million, for a total of $13.4 million (the bankruptcy trustee was able to secure $15,000 from the Giudices, which was used to stop the auction of their furniture and went mostly toward administrative costs).
The following is a report from the NJ Star Ledger on April 9, 2014:
The bankruptcy trustee overseeing Joe and Teresa Giudice’s finances has submitted his final report, which says the couple only satisfied $7,500 of their debts and still owe $13.4 million to their creditors, who can once again pursue the couple for repayment – that was on hold while the case wended its way through the bankruptcy system and while the Giudices fought a massive federal indictment alleging, among other things, bankruptcy fraud. (They pleaded guilty in March to several counts of financial fraud.)
The “Real Housewives of New Jersey” couple filed for bankruptcy on October 29, 2009, blaming the recession’s impact on Joe Giudice’s construction business. But when John Sywilok, their court-appointed trustee, alleged that the couple had hid assets and income, Joe Giudice in 2011 invoked the Fifth Amendment against self-incrimination and agreed to a settlement in which the court denied discharge of his debts. His wife later followed suit.
Since then, Sywilok has sought to satisfy creditors via the Giudices’ homes and possessions, but they were mostly financed to the hilt.
According to the final report, Sywilok had been able to secure $15,000 from the couple instead of seizing and selling off their own household goods and furnishings, but most of that went toward bankruptcy administrative fees.
The couple’s outstanding debts include $5.4 million to Wachovia, $1.7 million to the Community Bank of Bergen County, $1.3 million to Dime Savings Bank, more than $500,000 to the New Jersey Division of Taxation, and more than $386,000 to the Internal Revenue Service, according to the report.
“They are going to owe whatever they owed, as if they had not fought bankruptcy,” says Ronald LeVine, a Hackensack bankruptcy attorney unconnected with the case. “They’re completely stuck with their debt.”
The couple’s financial fraud case appeared to be triggered by the 2009 bankruptcy filing, although in addition to bankruptcy fraud, federal prosecutors alleged the couple also defrauded banks in order to obtain mortgages.
They will be sentenced July 8. Joe Giudice faces a recommended sentence of 37 to 46 months, while Teresa Giudice faces up to 27 months.
“It was a terrible decision to file for bankruptcy,” LeVine says. “They might have gotten away under the radar otherwise.”
According to TMZ , the bankruptcy trustee’s final report revealed that the Giudice’s have just $140,000 in equity in their $1.7 million house and no equity in two other properties; and the report further revealed that their extensive collection, including a Maserati, an Escalade, and two go-carts, had no equity whatsoever (however, they valued their dogs at $600).
UPDATE MARCH 4, 2014: On March 4, 2014, Joe and Teresa Giudice pleaded guilty to federal charges of mortgage and bankruptcy fraud. Joe pleaded to five counts, which included a failure to file income taxes (he was accused of skipping out on his tax returns for five years, 2004-2008, with income totaling $996,459); Teresa entered a guilty plea to four counts.
Both admitted to one count of conspiracy to commit mail and wire fraud (connected to the 13 counts of fraudulent mortgage and other loan applications), plus one count each of bankruptcy fraud by concealment of assets, bankruptcy fraud by false oaths, and bankruptcy fraud by false declarations (they were charged with 22 counts of bankruptcy fraud: the couple filed bankruptcy in October 2009, but after several amendments and hearings, they withdrew their petitions two years later, in late 2011, because a federal bankruptcy court trustee filed a lawsuit claiming they both intentionally concealed assets and earnings to avoid paying back creditors).
The pair was scheduled to face trial on the federal charges beginning on April 14, 2014. The couple’s sentencing hearing is scheduled for July 8, 2014.
After the plea hearing, U.S. Attorney Paul Fishman said in a statement:
“Teresa and Giuseppe Giudice used deception and fraud to cheat banks, bankruptcy court and the IRS. With their guilty pleas, they admitted the schemes with which they were charged. Having now confessed their wrongdoing, the Giudices face the real cost of their criminal conduct.”
Joe’s attorney said it is realistic to expect that Joe will be given prison time at the couple’s July 8th sentencing, even though he said he may ask for probation. Teresa’s lawyer made it clear after the hearing that he will push hard for a sentence of only probation for Teresa, saying that she bears less responsibility than Joe for their decade of fraud and noting that the couple has four daughters who need to be cared for.
Under federal sentencing guidelines, which are not binding on the judge, Teresa faces 21 to 27 months in federal prison while Joe faces 37 to 46 months and could likely be deported.
Said Federal Judge Esther Salas in accepting the pleas, after Italian citizen Joe Giudice finishes his time behind bars, he will face another hearing that will “likely result in … your being removed from the United States.”
The couple had previously requested separate trials [see story below]; however, since they were charged as co-conspirators in defrauding banks, other creditors and the bankruptcy court, the plea deal was contingent on both of them pleading guilty.
The conspiracy to commit mail and wire fraud to which the Giudices each pleaded guilty carries a maximum potential penalty of 20 years in prison and a $250,000 fine. Each of the three counts of bankruptcy fraud carries a maximum potential penalty of five years in prison and a $250,000 fine.
Teresa’s plea agreement requires her to pay $200,000 to the government at the time of her sentencing hearing on July 8th. The plea agreements also require the Giudices to forfeit money which they obtained via conspiracy to commit mail and wire fraud and bankruptcy fraud, in an amount to be determined by the court at sentencing.
After the hearing, Teresa’s attorney, standing before a bank of microphones and dozens of reporters on the federal courthouse’s plaza, read aloud her statement (obviously written by her legal team as part of their strategy for dealing with the judge and the sentencing):
“Today, I took responsibility for a series of mistakes I made several years ago. I have said throughout that I respect the legal process and thus I intend to address the Court directly at sentencing. I will describe the choices I made, continue to take responsibility for my decisions, and express my remorse to Judge Salas and the public. I am heartbroken that this is affecting my family—especially my four young daughters, who mean more to me than anything in the world. Beyond this, I do not intend to speak specifically about the case outside of court, at the recommendation of my attorney and out of deference to the Government and our legal system.”
Federal prosecutors filed papers on January 29, 2014 (click here to read the 46-page document at RadarOnline), opposing a bid by Teresa and Joe Giudice to be granted separate trials on money fraud charges.
Earlier in January 2014, the Giudices asked a U.S. district judge to grant them separate trials, arguing Joe has evidence of his wife’s innocence, but he would not take the witness stand if they are forced to stand trial together. Teresa, likewise, has expressed a desire to testify on her own behalf at a separate trial and to not testify against her husband.
From the report at NorthJersey.com:
The Giudices maintain they are entitled to separate trials to avoid forcing Teresa Giudice to choose between her right to testify in her own defense and her marital privilege to refrain from testifying against her husband, and to allow her husband to provide evidence of his wife’s innocence while preserving his Fifth Amendment right not to incriminate himself.
Prosecutors countered that the couple provided no details about what their testimony might be or how it might exculpate or incriminate either of them. They also said the spousal privilege is not a fundamental right that warrants severance.
In his motion filed earlier in January, Joe Giudice maintains that his wife “had no knowledge of any misrepresentation” made in loan and mortgage applications or lines of credit, and that she was not aware that various properties and businesses were acquired or owned in her name. Prosecutors argued that was an inadmissible opinion regarding her state of mind and therefore not exculpatory at all.
Joe Giudice also said that he, his attorney, and his business partner signed her name on numerous occasions without her knowledge or authorization, and that others, including bank representatives, knew that she had not signed various documents.
That testimony is “only minimally exculpatory, if at all,” the prosecutors said, noting it is unclear if any of those documents are related to the alleged fraud. More importantly, prosecutors said that the Giudices “obtained many other fraudulent mortgage loans with Teresa’s direct participation, including instances in which Teresa signed the fraudulent loan documents herself, and it is on the basis of those loans that she is charged with conspiracy to commit mail and wire fraud and loan application fraud in the indictment.”
Prosecutors also argued Joe Giudice has provided false testimony under oath on multiple occasions and, as a result, his testimony in this case could be easily impeached, especially if he were to be tried first and convicted.”
The Giudices are scheduled to stand trial on April 14. If convicted, they could face lengthy prison terms, and Joe Giudice, who is an Italian citizen, could face deportation.
Concerning Joe’s claim in the motion filed earlier in January 2014 that Teresa “was not aware that various properties and businesses were acquired or owned in her name,” prosecutors certainly have obtained footage (video below) from season 2 episode 11, taped around the time the Giudices filed bankruptcy, where Teresa says in an interview segment (TH): “I own a lot of properties in my name.”
In the court filing, federal prosecutors wrote that Joe “has provided false testimony under oath on multiple occasions,” and that “his marriage to Teresa and status as the father of her four children provides grounds for impeachment in the severance context because these relationships alone suggest bias as a motive to fabricate.”
Prosecutors cited a written finding by U.S. bankruptcy Judge Morris Stern regarding Joe’s testimony in a case filed by his former business partner that was tried in November/December 2009:
“Giuseppe’s testimony was ‘thoroughly unconvincing’ and he was ‘unbounded as a prevaricator in spinning a tale’ with a ‘say-anything, do-anything’ attitude on the stand (Judge Stern went on to hold that the ‘extraordinary web of lies and misrepresentations woven by Giudice to implement and cover his misconduct reflects on his approach to business matters and suggests his disregard for legal restraints which would bind others’).”
Federal prosecutors also wrote that Teresa was directly involved in many of the fraudulent mortgage loans, including instances in which she signed the fraudulent loan documents herself or she authorized Joe to sign her name:
“It has been long known to both the government and the defense that, in some instances, the Giudices obtained fraudulent mortgage loans in Teresa’s name by having someone else sign for Teresa at closing – either Giuseppe, with Teresa’s authorization, or his business partner or attorney, with Giuseppe’s authorization.
However, it is also true that the Giudices obtained many other fraudulent mortgage loans with Teresa’s direct participation, including instances in which Teresa signed the fraudulent loan documents herself, and it is on the basis of those loans that she is charged with conspiracy to commit mail and wire fraud and loan application fraud in the Indictment.”
Also regarding the severance of their trials, federal prosecutors wrote that because Joe and Teresa were participants in the same conspiracy, the loan fraud and bankruptcy fraud counts were properly joined since “the defendants, through the use of false statements and false tax returns, induced [the victim] to loan them money and then filed a fraudulent bankruptcy petition in an effort to avoid having to pay it back”:
“Teresa and Joe appear to share the hope that each might have ‘a better chance of acquittal in a separate trial.’ This, however, is not a sufficient basis to sever two defendants who are both charged as participants in the same conspiracy and fraudulent scheme. Under this standard, the mortgage fraud and bankruptcy fraud counts are properly joined. “
“Counts 1 through 13 allege that Defendants fraudulently incurred large amounts of loan debt by making false statements on loan applications and supporting documents.
“Counts 14 through 36 allege that Defendants then attempted to fraudulently discharge that debt by making additional false statements during the bankruptcy process.
“Furthermore, in many cases, the properties the Defendants acquired with fraudulent loans were the same properties that Defendants either failed to disclose their ownership of or concealed income from during the bankruptcy process.
“Because the conduct charged in counts 1 through 13 provided the impetus for the conduct charged in counts 14 through 36, and because there is factual overlap among the counts, therefore, the counts are properly joined. See United States v. White… finding loan fraud and bankruptcy fraud counts to be properly joined because ‘the defendants, through the use of false statements and false tax returns, induced [the victim] to loan them money and then filed a fraudulent bankruptcy petition in an effort to avoid having to pay it back’.”
In season 4 episode 14, Teresa and Joe taped a scene with their bankruptcy attorney, James Kridel, regarding the fraud case filed against them by Joe’s former business partner, Joe Mastropole. During an interview segment (TH), Teresa addressed the fact that Joe had forged Mastropole’s name on mortgage documents. Believing Joe’s admission to forgery was the reason for the judgment in favor of Mastropole (Joe Giudice was ordered to pay $260,000 still owed as part of their business divorce agreement), Teresa said: “See! You gotta lie!” (click here for the clip). Apparently, Teresa lied when she testified in the case, which cleared her of any responsibility for paying off Mastropole even though she also signed the business divorce agreement.
The following is a synopsis of Mastropole v. Giudice (bankruptcy Judge Morris Stern concluded that the money owed to Mastropole should be excepted from the Guidice’s bankruptcy discharge).
Teresa also was named in the fraud case filed by Joe Mastropole and was called to testify because she had signed the business divorce agreement which obligated the Giudices to pay Mastropole a total of $586,000 — $300,000 immediately with an ultimate payoff by December 1, 2007. The Giudices breached the agreement by failing to pay off the balance owed of $286,000; instead, they included it in their bankruptcy petition filed on October 29, 2009 as debt to be discharged.
Mastropole filed a lawsuit to prevent the debt from being discharged. During testimony at the proceeding in Mastropole v. Giudice on November 19, December 14 and December 15, 2010, Teresa was not implicated in any of the actual business affairs between Mastropole and J. Giudice, other than she had been a titleholder to certain property and had signed the business divorce agreement.
Attorney John Testa took the witness stand and said he represented the Giudices in the business divorce litigation with Mastropole, which was to have culminated with the June 13, 2007 settlement agreement. Testa identified the personal guarantee in the settlement agreement appeared to have been signed by Teresa and Joe Giudice and witnessed by himself. As to his witnessing the Giudices’ signatures, Testa said that J. Giudice signed in his presence, but Teresa’s signature was already on the guarantee when her husband brought it to him. Testa said he “would not accept that that way,” and said he telephoned Teresa to question her about the document. Testa said he went through it with her “and made sure that was, in fact, her signature.”
Teresa confirmed that she did not work in her husband’s real estate business or with Mastropole-J. Giudice business ventures. “I was not involved in their business,” as she put it. She said she recently became aware that her name was “on” certain real estate. She testified that she never met Testa and that she did not recall the guarantee nor any telephone conversation with Testa about the guarantee.
Wrote Judge Morris Stern: “Teresa was vague throughout most of her testimony, and particularly so in this regard. The singular area of Teresa’s testimony which was firm and emphatic was as to her purported signature on the personal guarantee. She said she did not sign the document.”
On cross-examination regarding Teresa’s signature on the guarantee, J. Giudice said: “I might have signed that . . . I don’t know.” He also said he did not know if Testa had called Teresa about the guarantee. J. Giudice also confirmed that he didn’t tell Testa about the Mastropole discharge of mortgage.
When the plaintiff’s case ended and the defense moved for dismissal, the court denied the motion as to J. Giudice; however, the court dismissed the case against Teresa in its entirely based upon the total absence of evidence connecting her (other than as a spouse) to her husband’s real estate business affairs, not because they believed her testimony.
UPDATE MAY 5, 2014: NJ.com reported on May 5, 2014, that a Bergen County Superior Court judge dismissed a lawsuit against Teresa, saying she played no role in a fraud perpetrated by her husband against his former business partner Joseph Mastropole:
Judge Robert Polifroni also dismissed much of Mastropole’s case against Joe Giudice, although he left the door open for Mastropole to seek punitive damages against his former partner for forging his name on documents related to the discharge of a mortgage on an East Orange apartment building, part of their so-called “business divorce” in 2007.
Mastropole’s name was taken off the mortgage, and Joe Giudice refinanced the property without paying him the $260,000 Mastropole was due.
The case predates the Morris County couple’s rise to fame on “Real Housewives,” but it became part of the show’s drama as Mastropole filed suit to have the debt excluded from the couple’s 2009 bankruptcy filing.
In 2011, U.S. Bankruptcy Court Judge Morris Stern sided with Mastropole, saying the debt should be excluded from the bankruptcy due to the forgery and calling Joe Giudice “unbounded as a prevaricator in spinning a tale,” and that “the extraordinary web of lies and misrepresentations woven by Giudice to implement and cover his misconduct reflects on his approach to business matters, and suggests his disregard for legal restraints which would bind others.”
The Giudices later withdrew their bankruptcy application amid accusations that the couple hid assets and income, and were indicted in 2013 for bankruptcy and bank fraud. They reached a plea deal earlier this year in which Joe Giudice faces up to nearly four years in prison and Teresa Giudice as much as 27 months.
The couple still owes $13.4 million to various creditors.
In his ruling, Polifroni reasoned the debt was eventually paid to Mastropole via a foreclosure on the property, and ruled against Mastropole’s request for attorney’s fees, which exceed the actual amount of the original debt. Polifroni also sided with Teresa Giudice, saying Stern had made a detailed a review of her involvement and found an absence of evidence connecting her to her husband’s real estate affairs.
Michael DeMarco, who represents the Giudices, says he is “extremely pleased” with Polifroni’s ruling, but Mastropole’s attorney William Michelson says he will likely appeal Polifroni’s ruling and seek punitive damages against Giudice for the mortgage fraud.
UPDATE MARCH 7, 2014: Joe Mastropole told RadarOnline in January 2011 that when Teresa took the stand in Mastropole v. Giudice she acted as if she was clueless about their financial affairs, even stating that she did not sign their bankruptcy petition. And under cross examination, when asked about her beach house, she acted befuddled, saying, “Is that in my name?”
However, according to Mastropole, Teresa was at every real estate closing. Mastropole told ibuysss.com:
“She knew every mortgage and attended every closing on all properties in her name and paid by way of her American Express card. Who is she kidding?” [Mastropole named Fred Roughgarden as the closing attorney.]
In season 3 episode 8, Teresa and Joe’s bankruptcy attorney, James Kridel, said both Teresa and Joe signed the bankruptcy petition, and although they filed it jointly, the court had chosen to handle the resolution for each of them separately (clip here for a recap; click here for the clip).
The following is a December 16, 2010 report by the New York Post on Teresa’s testimony in the fraud case filed by Mastropole against the Giudices.
Befuddled and broke “Real Housewives of New Jersey” star Teresa Giudice told a federal judge yesterday she had no clue she declared bankruptcy until well after papers were filed — and her shady husband admitted he forged her name on everything from their mortgage to his business documents.
“I’ll sign my name right now; it’s not my signature,” said Giudice after being questioned on a slew of documents — including the mortgage to the family’s New Jersey mansion and a handful of investment properties — purporting to bear her loopy John Hancock.
At one point, she was asked during cross-examination if she signed the mortgage to the couple’s Jersey Shore beach house.
She gulped, “Is that under my name?”
She said she left all matters up to her husband, Joe, who later claimed that he and others stuck her name on all kinds of documents that she knew nothing about.
He also copped to forging his business partner’s signature, in addition to that of a notary and an employee.
“My husband, if he had to tell me something, I’m sure he would,” Giudice said.
The couple — who are almost $11 million in debt — declared bankruptcy last spring.
The clueless cable-TV star — who once declared she was “too pretty to work” — even had to turn to her husband for help when the lawyer asked her what year they got married. “1999?” she said, looking at her husband.
“I’m drawing a blank.”
Giudice was in court for a hearing on a lawsuit filed by her husband’s former business partner. During a break from testifying, Giudice’s famous temper erupted at the wife of the ex-business partner’s lawyer. She accused Monica Ciccone [who later changed the spelling of her last name to Chacon] of spreading rumors about her.
“You’re violating ethnics!” screamed Giudice, who’s famous for her malapropisms.
Her husband’s former partner, Joe Mastropole, has sued the Giudices and accused them of forging his name on mortgage documents in order to pocket $1 million.
Yesterday’s hearing stemmed from a related case, in which Mastropole is trying to get back $260,000 he says that Joe Giudice owed him before he went bankrupt.
Mastropole testified that he didn’t believe Teresa Giudice was ignorant of her husband’s machinations. He called her a “good actor.”
A defiant Joe Giudice took the stand and blatantly admitted to a slew of forgeries. “Everybody does it,” he said, adding he “didn’t think it was a big deal.”
Joe Mastropole also told RadarOnline in January 2011 that he’ll never recover any debt because Teresa’s the one with the money (Teresa herself has proclaimed that “I do work hard and make my own money” and that “my money is mine and Joe’s money is mine,” which must mean that Joe can’t use “her” money to pay off the debt):
“I’m disappointed because she’s [Teresa] the one making income and his money is fraudulent, untraceable and untaxed. She’s the only one bringing money in right now… You can’t really go after him. Even though I’m an exception to his discharge, I think his money is untraceable so it will be hard for me to recover any debt.”
During the reunion special for season 3, Andy Cohen asked about the case and whether they paid off Mastropole. Teresa said he’s paid in full and declined to comment further. However, in the wake of the Giudices’ federal indictment on money fraud, Mastropole told RadarOnline in August 2013 that the Giudices still have not paid him the balance due:
“I never received a penny from them.”
Public records show that the $255,000 owed to Joe Mastropole (the initial judgment of $260,000 was reduced to $255,000 by the court) is still an open judgment against Joe Giudice.
According to reports at ibuysss.com, the Giudices were never well off — the true source of their income was flipping mortgages. They would refinance or get second and third mortgages well over the values of their properties and basically use money from the new loans to make payments on the old ones loans. Then, on some of the properties, they would stop making payments and let them go into foreclosure (the apartment buildings, in particular). It was essentially a mortgage Ponzi scheme where they committed mortgage fraud over and over again.
When the Giudices filed bankruptcy in October 2009, they had 11 mortgages on six properties. Mastropole told ibuysss.com that together he and Joe owned 134 apartment units:
Joe’s job was to collect rents, but instead of paying fees and bills and making repairs, he spent it on their mansion and funded Teresa’s extravagant spending habits.
Mastropole told People magazine in June 2010 that Joe “raked in $150,000 a month without paying the bills, utilities or taxes on the buildings”:
“They got money from me that was supposed to go to one of his apartment buildings, but I found out they spent it on their house. He wanted to collect rent and not pay the bills. He raked in $150,000 a month without paying the bills, utilities or taxes on the buildings.”
In fact, the stairs in one of their apartment buildings in East Orange, NJ, were in such disrepair that a tenant fell and was injured. The tenant, Ruby Persha, won a $129,826 settlement by default when Joe Giudice didn’t show up to court; the balance remained unpaid at the time of the Giudice’s bankruptcy filing:
“I haven’t seen a cent,” she told People magazine in June 2010, adding that Joe often let the city cut off water and even heating oil at times for lack of payment. “He did everyone here extremely dirty,” she added.
The Giudices tried to have the $129,826 judgment in Persha’s favor discharged when they filed bankruptcy.
On his October 2009 bankruptcy petition, Joe listed mortgages totaling $5,123,103 mortgages on three apartment buildings: the mortgages were qualified as unsecured because they were all in foreclosure.
In his December 2009 testimony in Mastropole v. Giudice, Joe Giudice confirmed that two of his apartment buildings, Webster Place and Glenwood Avenue, were in foreclosure (see images above and below) — one of those apartment buildings, Webster Place, was the property Joe had refinanced two years earlier, in December 27, 2007, whereby a preexisting $994,565 mortgage was replaced with $1,675,000 mortgages, netting him $680,435 cash at settlement, which was supposed to be used to renovate the building.
In Mastropole v. Giudice, Joe Giudice testified that Webster Place was in need of a full renovation, requiring substantial funding; he said he considered the refinancing of Webster Place to be necessary to fund its renovation; he also testified that without the refinancing deal, “nobody would have got anything, the building would have just sat there.”
The money Joe netted in the refinance of Webster Place must not have been used to renovate the building since the property went into foreclosure. Coincidentally, in May 2008, five months after receiving the $680,435 in cash resulting from the refinance of Webster Place, Joe paid $575,000 cash for 1576 Maple Avenue in Hillside, NJ, the pizza parlor with the apartments above, which was featured on the show in season 3 — this is one of the assets that the Giudices intentionally did not disclose in their original bankruptcy filing.
The following is an excerpt from the June 28, 2010 issue of People magazine.
Critics-and creditors-are coming forward to blame the Giudice’s over-the-top spending habits and risky business decisions for their predicament.
“He did have money at one time,” says Jon Fellgraff, an architect who, according to bankruptcy documents, is owed $7,000 for his services. “But their spending got out of control, and they thought they could keep replenishing it. That didn’t happen, so they just stopped paying their bills. They blew all their money.”
Adds Bob Kaslander, owner of Excelsior Lumber, who is owed $91,000:
“These are not innocent people who got caught in circumstances beyond their control. They charged everything. Then they file for bankruptcy, so they don’t have to pay.”
An attorney for the couple, Jim Kridel, admits those who are owed are in for a wait.
“The whole point is that bankruptcy forces you not to treat creditors preferentially,” says Kridel, meaning that the Giudices can’t pay one creditor at a time. (Instead, assets surrendered to a trustee are liquidated and proceeds are divided equally.)
Fame: they failed to disclose all their assets so that they wouldn’t have to use turn over those assets or liquidate them to pay off creditors.
Fans of the show may be shocked that Teresa, who earned a reputation as a big spender on Housewives, no longer had the cash to back up her flash. During the first season, the mom of four-daughters Gia, 9, Gabriella, 5, Milania, 4, and Audriana, 9 months-boasted that her husband “is very successful and lets me spend money.”
And plenty of it. Joe ponied up more than $8,000 on a breast augmentation for his wife, and she showed her credit cards no mercy.
Meital Benaroya, owner of the high-end Englewood, N.J., boutique Reve, where Teresa continues to shop, says her friend’s love of luxury is undeniable. “Teresa is a woman of good taste,” she explains. “And good taste doesn’t come cheap.”
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.”
Teresa also ploughed considerable funds into daughter Gia’s modeling and acting career-hiring photographers and acting and dialect coaches.
“Parents can spend a few thousand dollars on acting classes alone,” says Gia’s manager Maria DeSantis of Xist Model and Talent in Caldwell, N.J.
Nevertheless, Teresa still insists, “we were living within our means.”
While Teresa’s personal shopping habit ($695 Christian Louboutins, $1,400 cocktail dresses) helped pile up more than $80,000 of credit-card debt, building and furnishing the family’s mansion was the most intense drain on the family finances.
“She couldn’t make up her mind about the plans,” says their former architect Fellgraff. “She went on flights of fancy that were totally impossible to execute. A huge kitchen, fancy stairways. She wanted all the most luxurious features. It was unrealistic. I don’t think she had any concept of the finances.”
As they sank money into building the house, Teresa shopped for luxurious furnishings. In one Housewives episode, she dropped $120,360-cash-on furniture for a single room.
“That was just for the show, and I would never do that again,” Teresa insists. (Both the Giudices and the store, Unique Furniture and Design, were subsequently audited by the IRS. A store source says Teresa normally wrote checks and had opened lines of credit in her parents’ names to pay for her purchases.)
Teresa began showing signs of financial strain last year when she stopped decorating the home with four rooms complete.
“She still hadn’t even done the dining room,” says the source.
By then Joe was busy fighting off debt associated with his real estate ventures; Teresa didn’t realize the extent of their money problems.
“She knows nothing about the finances. She hates it all,” says Joe.
A successful businessman with multiple small companies-including pizzerias, laundromats and a stucco and stone distribution service-Joe had invested in several inner-city apartment buildings, becoming vulnerable to the volatile downturn in the market.
But sources tell PEOPLE the market alone wasn’t to blame for their increasingly dire money problems.
“They got money from me that was supposed to go to one of his apartment buildings, but I found out they spent it on their house,” says Joe’s former partner Joe Mastropole, who is embroiled in a separate lawsuit with Joe Giudice; bankruptcy documents show the Giudices owe him $586,000. “He wanted to collect rent and not pay the bills. He raked in $150,000 a month, without paying the bills, utilities or taxes on the buildings.”
Joe Giudice’s attorney Jim Kridel explains that while it became impossible to afford the mortgage payments as tenants left the building en masse, “whatever money he did collect in rent, he was putting back into fixing the buildings.”
That’s one claim that has been disputed. Tenant Ruby Persha sued Joe after falling down stairs that she said had been left in disrepair; she won a $129,826 settlement by default when Joe didn’t show up to court. The balance remained unpaid at the time of the bankruptcy filing.
“I haven’t seen a cent,” she says, adding that Joe often let the city cut off water and even heating oil at times for lack of payment. “He did everyone here extremely dirty.”
Joe says he never heard of the incident until court papers were filed, and that his buildings all had active superintendents-in fact he even spruced up the buildings himself.
“These were crack houses. They were disgusting!” Teresa says, adding that once her husband fixed them up, “they were absolutely gorgeous.”
As for utilities being out of commission, Joe acknowledges that “maybe that would happen, but they never went a whole night without heat or anything. They’re exaggerating.”
When they filed for bankruptcy last fall, Teresa and Joe surrendered two properties, two cars and other personal property in order to pay back creditors as required, but their main residence remains safe for now.
“If they can’t afford it, they’ll surrender it at a later date,” says attorney Kridel. (The home was briefly listed for $3.99 million before Joe pulled it from the market on June 11, 2010.)
As for their lifestyle today, the bankruptcy only affects the assets they held prior to filing, so the couple are free to spend any newly earned cash as they please. Teresa’s cookbook Skinny Italian is on the bestseller list (a second book is in the works), and Joe has started a new business.
“You gotta spend money. You gotta buy things,” says Joe.
But Teresa insists they’re being careful. “I don’t spend money that I don’t have,” she says heatedly.
“Believe me, going forward, I’ll show that.”
The following is a recap by the Daily Mail of Joe and Teresa’s interview with Andy Cohen on WWHL shortly after they were indicted on July 29, 2013.
‘We’ve never lived beyond our means’: Joe and Teresa Giudice discuss fraud charges… but say reality in-laws will NOT care for their children if sent to jail.
They are each facing 50 years in jail if found guilty of 39 separate counts of financial fraud – charges they both deny.
But should anything happen to Real Housewives Of New Jersey stars Joe and Teresa Giudice, their four children will not be sent to live with their aunt and uncle Melissa and Joe Gorga.
‘They wouldn’t want to go there,’ Joe told Andy Cohen on Sunday’s special edition of his Bravo talk show Watch What Happens Live. ‘Because of all the things they say on television about their mom.’
‘It wouldn’t be Melissa and Joe. It would be my sister and brother,’ he said, adding that the Teresa’s brother and his wife had ‘not really’ been supportive.
However, Teresa said she hadn’t even considered the possibility of losing the case when it goes to trial in February.
‘I’m not really thinking about that now,’ she said. ‘I’m just focusing on my family.’
Having agreed to refrain from discussing specifics about the allegations against them on their lawyers’ advice, Joe was adamant that neither of them have ever lived beyond their means.
‘Whatever I could afford to buy I would buy,’ said Joe. ‘We work hard, so what, we are allowed to make money. It’s part of that’s what we do, I’m a business man and I make money.’
He told Cohen that the couple’s accountants as well as himself were in charge of the couple’s money affairs, and admitted he had made mistakes relating to his finances.
‘Nobody’s perfect,’ he claimed. ‘Everybody makes mistakes. I make mistakes every day.’
Meanwhile, Teresa said she had suffered from sleepless nights since they were charged in June.
‘It’s devastating,’ she said. ‘I have anxiety and sleepless nights. I used to sleep like a baby, now I get up. It feels like a dream. I have to be strong, for my husband – for my children. I’m trying to do the best I can. I can’t fall apart, Andy. I have my daughters. They mean the world to me. Maybe out of all this… I don’t know. You go through things in life, I don’t know why. I’m asking like, why is this happening to me?’ she adds. ‘So maybe something my daughters can learn from this is, my mom was really strong through all this, she was there for us, and I hope they always have that there with them.’
The 41-year-old star then wiped away a tear, while clasping the hand of her husband Joe, 43. They were adamant they would remain in the public eye – they will both appear on the Housewives reunion show on October 6.
‘I’m not crawling under a rock and hiding,’ said Teresa. ‘That’s not me. I am still going to be the person who I am and the day I go to court, when we resolve this, everyone will see who Joe and I really are. I am not just running away.’
However, they went some way into blaming the show for their current predicament.
‘Absolutely. Because if I wasn’t on the show, nobody would care,’ said Joe when asked if being on Real Housewives ‘brought the charges on.’
Teresa was reluctant to even consider the possibility of a jail sentence, telling Andy:
‘I don’t even think about that. Because I haven’t done anything.’
The couple, who have four daughters, also revealed their oldest Gia, 12, ‘knows there’s something going on but I don’t know if she knows exactly what the charges are.’
Back in July, a federal grand jury released an indictment which details charges of conspiracy to commit mail and wire fraud, bank fraud, making false statements on loan applications, and bankruptcy fraud.
Teresa’s attorney says she will plead not guilty and that ‘we look forward to vindicating her.’
The charges all stem from between 2001 and 2008 – prior to their TV fame – when the couple allegedly defrauded the IRS as well as several banks. The US Attorney claims the Giudices conspired to illegally obtain mortgages and other loans from multiple banks by intentionally overestimating their incomes in order to get more money.
When Teresa filed for a mortgage loan of $121,000 in 2001, she falsely claimed she worked as an executive assistant, submitting fake W-2 forms and fake paystubs as part of the ruse, the indictment said.
‘The indictment returned today alleges the Giudices lied to the bankruptcy court, to the IRS and to a number of banks,’ U.S. Attorney Paul Fishman said. ‘Everyone has an obligation to tell the truth when dealing with the courts, paying their taxes and applying for loans or mortgages. That’s reality.’
Teresa has previously stated: ‘I am committed to my family and intend to maintain our lives in the best way possible, which includes continuing my career. As a result, I am hopeful that we will resolve this matter with the Government as quickly as possible.’
Joe, 43, is further accused of failing to file income tax returns for the years 2004-2008, during which he allegedly earned $1 million. Then when the couple declared bankruptcy, they are alleged to have underestimated their net worth.
The couple, who have four children, first filed for bankruptcy in 2009, claiming more than $10 million in debts. In their petition for bankruptcy protection, initiated in October 2009, the couple concealed businesses they owned, rental income they received, and 41-year-old Teresa’s true income from the Real Housewives, website sales and personal appearances, the indictment said.
Prosecutors said they also hid their anticipated increase in income from the then-upcoming second year of the show, which is now in its fifth season.
Teresa’s New Fabellini Commercial (click here to compare to the SNL skit, “Swarovski Crystal”)
UPDATE MARCH 12, 2014: On March 12, 2014, insiders told In Touch that Teresa has already found a silver lining in her crisis:
“Teresa thinks that if she goes to jail, it’ll only make her more famous,” an insider close to the couple tells In Touch. “She thinks she’ll be redeemed — and then become even more popular and be able to make a fortune.”
Teresa already uses her legal woes to her advantage. Sources confirm that RHONJ cameras have been following her family’s every move in the days leading up to her court date. A production insider tells In Touch, “She knows she has to let them film in order to be the star and central story line of the show. This is her moment.”
Four months after she and husband Joe were indicted on 41 counts of fraud, the couple pleaded guilty to nine felony charges, admitting that they were engaged in a nearly decade-long scheme to defraud banks, the IRS and bankruptcy court of millions.