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The Giudice Bankruptcy and Federal Indictment (with Links to Official Documents)
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 through 2008; lied on bank loan applications from 2001 through 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 1576 Maple Avenue Associates LLC. The revenues generated by Teresa’s book, Skinny Italian, alone exceeded $280,000. [Source]
Maple Avenue Associates LLC, which Joe didn’t disclose as an asset in his bankruptcy petition filed in October 2009, is the pizzeria and laundromat with the apartments above which was featured on the show in season 3. Joe paid $575,000 cash for the investment property in April 2008, at the time season 1 was taping. Joe’s attorney, James Kridel, told People magazine in July 2010 that the building was in Joe’s father’s name and therefore should never have been considered an asset at the time of the bankruptcy filing, but that is a lie: the building was in Joe’s business name, 1576 Maple Avenue Associates LLC, which has Giuseppe Giudice listed as the Principal.
The following is a report of the all-cash transaction for the sale of 1576 Maple Avenue in Hillside, NJ. in the May 9 – 22, 2008 issue of the Mid Atlantic Real Estate Journal (page 4).
The Kislak Company, Inc. completes $575,000 sale of 1576 Maple Ave. in Hillside
HILLSIDE, NJ – The Kislak Company, Inc., the dominant multi-family and retail investment sales firm in the tri-state region, recently completed the $575,000 sale of 1576 Maple Ave., a 10-unit, mixed-use building in Hillside. Sales Associate Jeff Squires represented the seller, a private individual, and VP Joni Sweetwood represented the buyer, a private individual, in this all-cash transaction.
“This transaction was a unique opportunity for The Kislak Co.,” said Squires. “Our firm generally completes investment sales transactions for income-producing properties. However, at the time of the sale, 1576 Maple Ave. was gutted down to the studs and was essentially a vacant brick shell.
The buyer is completely rebuilding the inside of the property, from installing sheetrock and electrical systems to new plumbing and kitchens before the property can be leased and turned into a value-added opportunity.”
1576 Maple Ave. is a two-story, mixed-use building that is comprised of five retail units and five apartments and includes a lot that will be paved for parking. Many future tenants await the completion of this project located in the center of town.
Attorney Fred Roughgarden represented the buyer in this transaction. Attorney Michael Rasso represented the seller in this transaction.
Joe and Teresa withdrew their bankruptcy filing two years later, in late 2011, after the bankruptcy trustee alleged that they had committed fraud on their petitions:
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 – $25,442Primary 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)
- 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
Other Debt:
- $11,769 fertility treatments
- $2,239 phone bill
- $840 utility bill
Legal Fees and Judgments:
- $586,000 settlement awarded to former business partner (of which Juicy paid $300,000)
- $129,826 (settlement awarded by default to tenant for apartment stairs left in disrepair)
- $6,220 legal services
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 $282,305 of that being unsecured debt (credit cards, utilities, home repairs/improvements, services, etc.), excluding legal fees and judgments. In their bankruptcy petition, the mortgages on the apartment buildings were qualified as unsecured because they were all in foreclosure, and the money from cash-out refinances of the apartment buildings appears to have been spent on their mansion and other properties and expenses rather than improving and maintaining the buildings:
| $5,123,103 | mortgages on 3 apartment buildings (in foreclosure) |
| $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 |
The Giudices should have worked with their banks to short-sale apartments buildings if those buildings were the real reason for their financial hardship. And why not use the financial windfall from Bravo to pay off some of the debt? The Giudices 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? 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 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 federal indictment on money fraud. What a terrible decision on their part!
Giudice’s Chapter 7 Bankruptcy Filing, October 29, 2009:
http://www.jdsupra.com/legalnews/voluntary-petition-for-chapter-7-bankrup-54212//
First Amendment to Giudice’s Bankruptcy Petition, December 17, 2009:
http://www.jdsupra.com/legalnews/amendments-to-bankruptcy-petition-in-re-54627/
Second Amendment to Giudice’s Bankruptcy Petition, January 8, 2010:
http://www.jdsupra.com/legalnews/amendments-to-bankruptcy-petition-in-re-54869/
Summary of the U.S. Government’s Case Against the Giudices for Bankruptcy Fraud, September 2, 2010:
http://mnconsumerattorney.files.wordpress.com/2011/09/giudice_ust_cplt_obj_to_discharge1.pdf
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.
Complaint Objecting to the Discharge of the Giudice’s Debt, Submitted by John Sywilok, June 30, 2010:
http://www.thesmokinggun.com/file/desperate-housewife
Application by Chapter 7 Trustee to Proceed to Public Sale (Auction of Home Furnishings), August 15, 2010:
Click to access TeresaGiudiceDocs.pdf
Denial of Discharge of Debt and Consent Order Waiving Discharge of Teresa Giudice, December 5, 2011:
http://cdn2.getoutofdebt.org/wp-content/uploads/2012/03/118132468022.pdf
Mastropole v. Giudice, Opinion Letter by Bankruptcy Judge Morris Stern, January 3, 2011:
http://www.leagle.com/decision/In%20BCO%2020110103227
Mastropole v. Giudice, Opinion Letter Summary, January 3, 2011:
http://www.meislik.com/cases/giudice/
Federal Indictment Against the Giudices for Money Fraud, July 29, 2013:
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.”
U.S. Attorney’s Office Rejects Teresa’s Attempt to Make a Plea Deal to Avoid Prison; Giudice’s Federal Trial for Money Fraud Postponed Until April 2014 (Updated 3/4/2014)
UPDATE 3/4/2014: 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 will be sentenced on July 8, 2014. 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.” Click here for more on the story.
UPDATE 11/20/2013: According to NJ.com, the Giudice’s federal trial for money fraud has been postponed until April 2014. After a November 20, 2013 hearing for two additional counts added to the 39-count federal indictment, the lawyers on both sides of the case met privately with the judge for several minutes and emerged to announce that the February 24, 2014 trial date will be pushed back a “short while.” Joe’s attorney Miles Feinstein indicated that the new trial start could be in early April.
UPDATE 9/6/2013: Teresa and Joe Giudice’s federal trial for money fraud has also been postponed until February 24, 2014. The Giudices had been scheduled to stand trial in Newark on October 8, 2013 on charges of conspiring to fraudulently obtain mortgages and other loans, and hiding assets and income from the bankruptcy court. The following is the report from NorthJersey.com:
Prosecutors allege that they used fake pay stubs, tax returns and W-2 forms to secure nearly $5 million in loans between 2001 and 2008 and concealed income from the Bravo cable television show and other business ventures after they filed for bankruptcy in 2009.
Indicted in July, the couple entered not-guilty pleas in August. Lawyers for the government and the defendants later jointly requested a continuance.
In setting a new trial date of Feb. 24, 2014, U.S. District Judge Esther Salas took note in a court order of the large amount of financial and other documentary evidence that defense lawyers must review in order to adequately prepare for trial.
The judge also cited Joe Giudice’s upcoming trial on state charges and said “the failure to grant a continuance would unreasonably deny [him] continuity of counsel and the reasonable time necessary for effective preparation in this case.”
Joe Giudice is facing state criminal charges for allegedly presenting marriage and birth certificates belonging to his brother Pietro to obtain a driver’s license at the Motor Vehicle Commission office in Paterson in 2010. At the time, Joe Giudice’s license was suspended for driving while intoxicated after he flipped his pickup in Montville. The trial in that case is set for Oct. 28.
The 39-count federal indictment charges the couple with conspiracy to commit mail and wire fraud, bank fraud, loan application fraud and bankruptcy fraud.
On August 14, 2013, Joe and Teresa Giudice plead not guilty to financial fraud. In Touch reported on August 15, 2013 that the U.S. Attorney’s office has rejected Teresa’s attempt to make a plea deal to avoid jail time:
“They were originally going to plea down for Teresa, but the U.S. Attorney’s office said no,” says an insider close to the case. Teresa’s attorney, Henry Klingeman, said, “I’m not discussing it. If there ever were a deal, I would never discuss any conversations with the government about any client.”
However, a second source says that a plea deal was definitely discussed by Teresa: “I have never seen any kind of case where that hasn’t happened. And discussion about a plea deal took place here.”
Both Teresa and Joe will face up to 50 years in prison if found guilty, with the possibility of Joe’s deportation.
The Giudice’s trial date is scheduled for October 8 at 9 a.m. to face their recent charges of bank fraud, conspiracy to commit mail and wire fraud, and tax evasion, among others.
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CBS 2′s Dick Brennan reported that neither Teresa nor Joe spoke in court, only whispering to each other:
At one point, Teresa wiped sweat from her husband’s brow. The couple also declined to speak to reporters outside the courthouse.
“They were relieved that they could stand up in court through their attorneys and say ‘not guilty,’” said Miles Feinstein, Joe Giudice’s attorney.
Feinstein said there is no truth to a rumor that Joe might plea bargain by testifying against Teresa.
“At least one magazine had an article that Joe, my client, was going to testify against Teresa,” Feinstein said. “That’s absolutely not true.”
After the court hearing Wednesday, instead of laying low, Teresa Giudice went to mingle with her fans at a book signing. She was all smiles as she signed her new cookbook for more than 100 people at a small boutique in Wayne, N.J.
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At her cookbook signing at Posche in Wayne, NJ, hours after Joe and Teresa plead not guilty to financial fraud on August 14th, Life & Style chatted with Teresa about Melissa and season 5:
“We’re all good,” the mother of four told Life & Style about their relationship at her cookbook signing at Posche in Wayne, N.J. on Wednesday. “We’re only getting better from here on. Til death do us part.”
“It’s going really well,” said Teresa, who traded in her pantsuit from court for a sexy Boulee Kirsten dress. “As you saw, we’re in a much better place and you’re going to see us taking a trip to Arizona for some Zen.”
She even poked fun at her current situation:
Teresa was seen greeting fans of all ages, including a devoted pair of friends from Roxbury, N.J., wearing “FREE TRE” T-shirts. She even signed the back of the shirt!
While Joe and Teresa were in court to plead not guilty to the federal charges, Gabriella and Milania Giudice were with Melissa to celebrate Antonia’s 8th birthday (photos above and below plus more photos on Melissa’s instagram). Take note of the mixed drinks and wine on the table below and the short-shorts and see-through top that Melissa is wearing at this fine-dining gathering – it looks like the event is centered around the adults more so than the children.
Because Melissa is cheap (per her former friend Jan Marie DeDolce,) and didn’t want to pay for the birthday dinner, she chose a restaurant that would give her free meals in exchange for promoting the establishment on Twitter:
“@empiresteaknyc: We Hope Antonia Had a Happy Birthday! Thanks to @melissagorga for choosing @empiresteaknyc to celebrate!” – Retweeted by Melissa Gorga, August 20, 2013
Just twelve days earlier, on August 2, 2013, Melissa told TheWrap that Teresa was “was guilty by association” for the rumors circulating about her:
FAMEWHORGAS 
Joe and Teresa Giudice Indicted on Money Fraud; Teresa Says “Nothing About Melissa’s Marriage Has Ever Come Out of My Mouth” (Updated 11/18/2013)
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 mortgage loans, 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:
Click here to read details about their bankruptcy and federal indictment on money fraud.
…
Us Weekly
July 29, 2013
Real Housewives of New Jersey’s Teresa Giudice and Joe Giudice — who have been plagued with financial problems for years — were indicted on fraud and tax charges on Monday, July 29. In his 39-count indictment, U.S. Attorney Paul J. Fishman charged the Bravo reality stars with conspiracy to commit mail and wire fraud, bank fraud, making false statements on loan applications and bankruptcy fraud.
The indictment also charges Joe with failure to file tax returns from 2004 through 2008, during which time he allegedly earned nearly $1 million.
Garden State natives Teresa, 41, and Joe, 43, are parents to daughters Gia (born 2001), Gabriella (born 2004), Milania (born 2005) and Audriana (born 2009). Teresa, who has authored several cookbooks, began appearing on The Real Housewives of New Jersey when the series — now in its fifth season — premiered in 2009.
Conspiracy to commit mail and wire fraud carries a maximum prison sentence of 20 years, while bank fraud carries a maximum of 30 years. The remaining charges could result in more prison time — not to mention the hefty fines associated with each penalty.
The Giudices are scheduled to appear before Judge Cathy Waldor at the United States District Court in Newark, New Jersey, on Tuesday, July 30. A rep for Bravo had no comment when contacted by Us.
Teresa’s attorney, Henry Klingeman, tells Us:
Joe, a former pizza parlor owner, also faces 10 years behind bars for allegedly using his brother’s ID to obtain a driver’s license in 2010; he will appear in court on Oct. 28.
NJ.com (Excerpt)
July 29, 2013
The following is Teresa’s Bravo blog for season 5 episode 9.