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The Giudice Bankruptcy and Federal Indictment (with Links to Official Documents)

October 19, 2013 217 comments

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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 – $25,442

Primary Residence at 6 Indian Lane, Towaco, NJ (Amount Owed – $1.72 million):

  • 1st mortgage of $1.72 million with Community Bank of Bergen County (in Joe’s and Teresa’s name), September 2008 (this was initially a construction loan for $1.7 million in February/March 2008 that was converted to a $1.72 million mortgage loan) – the Giudices were making their mortgage payments and the bank had not begun any foreclosure procedures

Shore House at 49 Sylvia Lane, Stafford, NJ (Amount Owed – $550,266):

  • 1st mortgage of $266,365 with America’s Servicing Co. (in Teresa’s name)
  • 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:

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:

http://images.eonline.com/static/news/pdf/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:

http://www.justice.gov/usao/nj/Press/files/pdffiles/2013/Guidice,%20Giuseppe%20and%20Teresa%20Indictment.pdf

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)

August 15, 2013 149 comments

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.


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.


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:

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)

July 29, 2013 373 comments

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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:

“The two additional counts stem from a $361,250 mortgage loan that Teresa Giudice obtained in July 2005. In the course of obtaining the loan, she and Giuseppe Giudice prepared a loan application which falsely stated that Teresa Giudice was employed as a realtor and that she had a monthly salary of $15,000. Teresa Giudice was not employed outside the home at the time.”

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.

“Today is a most difficult day for our family. I support Joe and, as a wonderful husband and father, I know he wants only the best for our lovely daughters and me,” Teresa tells Us Weekly in a statement. “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.”

The indictment also charges Joe with failure to file tax returns from 2004 through 2008, during which time he allegedly earned nearly $1 million.

“The indictment returned today alleges the Giudices lied to the bankruptcy court, to the IRS and to a number of banks,” Fishman said in a statement. “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.”

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.

“The privilege of living well in the United States carries certain real responsibilities, including filing tax returns when required and paying the correct amount of tax,” Shantelle P. Kitchen, Special Agent in Charge, IRS-Criminal Investigation, Newark Field Office, said. “Today’s indictment alleges the Giudices did not live up to their responsibilities by failing to file tax returns, falsifying loan applications and concealing assets in their bankruptcy petition. The reality is that this type of criminal conduct will not go undetected and individuals who engage in this type of financial fraud should know they will be held accountable.”

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:

“Teresa will plead ‘not guilty.’ The judicial process that begins today with an indictment is a search for the truth. As it moves forward, we look forward to vindicating her.”

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.

“Joe maintains his innocence,” his attorney, Miles Feinstein, tells Us Weekly in its July 29 issue. “It will be tough to choose a jury because of the high-profile defendant.”

NJ.com (Excerpt)
July 29, 2013

Authorities, citing the indictment, said that between September 2001 and September 2008, Giuseppe and Teresa Giudice, both of Towaco, allegedly committed mail and wire fraud conspiracy by giving lenders fraudulent mortgage and other loan applications and supporting documents in an effort to obtain mortgages and other loans.

In addition, the Giudices falsely represented on loan applications and supporting documents that they were employed and/or taking home substantial salaries when, in fact, they either were not employed or were not receiving such salaries, authorities said of the indictment’s allegations.

For example, authorities said, in September 2001, Teresa Giudice applied for a mortgage loan of $121,500 for which she submitted a loan application that falsely stated she was employed as an executive assistant. She also turned in phony W-2 Forms and fake pay-stubs purportedly issued by her employer, authorities said.

The indictment also points to specific instances of the Giudices allegedly committing bank fraud and loan application fraud in the course of securing loans from several banks, authorities said.

On Oct. 29, 2009, the Giudices filed a petition for individual Chapter 7 bankruptcy protection in U.S. Bankruptcy Court in Newark, authorities said. Then during the next few months, they filed several amendments to the bankruptcy petition.

But as part of the bankruptcy filings, the Giudices were required to disclose to the United States Trustee, among other things, assets, liabilities, income, and any anticipated increase in income, authorities said. But the indictment alleges that the Giudices intentionally concealed businesses they owned, income they received from a rental property, and Teresa Giudice’s true income from the television show “Real Housewives of New Jersey,” website sales, and personal and magazine appearances, authorities said.

In addition, the Giudices allegedly hid an anticipated increase in income they expected to get from the then-upcoming Season Two of the “Real Housewives” show.

The Giudices are charged with multiple counts of bankruptcy fraud for concealing and making false oaths and declarations about assets and income during their bankruptcy case, authorities said.

The indictment also contends that during the tax years 2004 to 2008, Giuseppe Giudice received $996,459 in income, but failed to file tax returns for those years, according to authorities.

The conspiracy to commit mail and wire fraud counts brought against the Giudices carries a maximum potential penalty of 20 years of in prison, authorities said. The bank fraud and loan application fraud counts each carry a maximum penalty of 30 years in prison and a $1 million fine, Fishman’s office added. The bankruptcy fraud counts each carry a maximum penalty of five years in prison, authorities also said. And the failure to file a tax return counts against Giuseppe Giudice each carry a maximum penalty of one year in prison, they added.

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The following is Teresa’s Bravo blog for season 5 episode 9.