Posted on Oct 20, 2015

One of the simplest and easiest ways to get into trouble (and go to jail) in your bankruptcy is to lie on your petition. Whenever you file for bankruptcy you sign a document, under oath, that you have fully disclosed everything you own, everyone you owe, everything you earn, and everything you spend.

Unfortunately, Abby Lee Miller, the star of the reality TV show “Dance Moms,” decided to hide a large portion of her income.

What She Filed

On December 3, 2010, Ms. Miller filed a chapter 11 bankruptcy to reorganize and repay debt owed to two mortgage banks and unsecured debt of $356,466.52. Ostensibly she filed a chapter 11 rather than a chapter 13 because her debt exceeded the chapter 13 maximum at the time.

She listed four sole proprietorship businesses that she owned and that she derived $8,899 in income from them. She ultimately received a discharge on December 31, 2013.

What She Left Out

But trouble for Ms. Miller began months before that when the judge in her case was channel-surfing and ran across her “Ultimate Dance Competition” show. Her lawyers argued that the show only had the potential to profit from the show.

She herself stated that the show would bring in publicity, but not income. It turned out, though, that in 2012 alone, she earned $288,137.57 from these businesses!

She Did It On Purpose!

To be clear, this is not something that she just “forgot to mention.” This was an intentional fraud on the court. According to a report in The Wall Street Journal, she:

  • Told Hollywood officials to withhold paychecks and to direct some of the money to her mother
  • Wrote an email to her accountant with the subject line “LETS MAKE MONEY AND KEEP ME OUT OF JAIL”
  • Failed to disclose ticket sales to dance classes and apparel sold on

Debtors in a chapter 11 bankruptcy must file regular reports on income, so she had regular opportunities to disclose this income, but did not.

Then Came the Criminal Charges

In a 20 count indictment filed on October 13, 2015, she was accused of concealing a total of $755,492.85 in income and

  • Knowingly and fraudulently concealing assets from an officer of the court
  • Knowingly and fraudulently making false statements under oath in a bankruptcy
  • Committing bankruptcy fraud by making a false or fraudulent representation

These crimes each carry a penalty of fines and up to 5 years in prison or both! This is why it is never a good idea to lie on a bankruptcy petition or when testifying before a trustee or a judge. Even though it was almost two years after she received her discharge, she is still facing jail because her judge couldn’t decide what to watch on TV!

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Steven J. Richardson
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Bankruptcy, Collections, Student Loan, DUI and Traffic Court attorney in Woodbury, NJ.