Payday Loan Owner Sentenced for Bankruptcy Fraud

A Mission Hills, Kansas, man was sentenced in federal court today for a bankruptcy fraud scheme related to his online payday loan company.

“It’s ironic that someone who made a fortune loaning money to others, would try to cheat his own creditors,” said Acting U.S. Attorney Teresa Moore. “This business owner engaged in a two-year scheme of lies and deception during his bankruptcy proceedings by secretly holding onto assets instead of paying what he owed. The bankruptcy system relies on the honesty, openness, and accuracy of debtors, and in return grants those debtors a fresh start free of debt. This defendant made a mockery of the system in the hope that he could discharge over $7.5 million in debt while maintaining a luxurious lifestyle for himself.”

Del Hodges Kimball, 54, was sentenced by U.S. District Judge Steven R. Bough to one year and a day in federal prison without parole. The court also ordered Kimball to pay $909,323 in restitution.

“This sentence should convince others that such behavior and actions will not be tolerated in the bankruptcy system,” said Acting United States Trustee Daniel J. Casamatta.

On Jan. 19, 2021, Kimball pleaded guilty to one count of bankruptcy fraud. Kimball admitted that he engaged in a scheme to defraud the Bankruptcy Court by concealing assets, bank accounts, and claims against third parties, and by making false statements and material omissions regarding his assets and financial transfers to and from third parties.

Three of Kimball’s creditors filed an involuntary bankruptcy petition against Kimball, his partner, and their company, LTS, an online payday loan company based in Kansas City, on Aug. 5, 2015. The claims of the three creditors totaled more than $15 million.

The U.S. Bankruptcy Trustee filed a complaint to deny Kimball’s discharge on March 10, 2017, and the Bankruptcy Court conducted a trial on Jan. 11, 2018. After the trial, U.S. Bankruptcy Judge Cynthia Norton ruled that Kimball had transferred property with the intent to hinder, delay, or defraud creditors, made numerous false oaths in connection with this bankruptcy case, and concealed property from the bankruptcy estate. He did not disclose assets until he was caught and had no choice. The court found that the evidence was “overwhelming” that Kimball made false statements under oath. The court denied Kimball’s discharge due to his fraudulent concealment.

For example, Kimball failed to disclose $86,200 in transfers to friends and relatives. He undervalued collectibles by $24,000. He omitted transfers to Claw Consulting, LLC, another company he owned (with no employees). Kimball established a bank account for Claw Consulting, and caused the bank statements to be mailed to an attorney at the attorney’s business address in order to stash income and proceeds of sales he wanted to conceal from creditors.

According to court documents, Kimball claimed that he lost millions of dollars in 2013 and 2014, although he actually had gross income of $213,231 in 2014 and $158,679 in 2013.

From 2015 to 2018, Kimball arranged that $479,585 in payday company income and/or profits from Red Stag Holdings be paid into his wife’s personal bank account to conceal the payments from creditors and the U.S. Bankruptcy Trustee. Kimball arranged that $45,300 in payday company income and/or profits from S. Bean Finance and $16,300 from Agile Fish be paid into his wife’s personal bank account to conceal money from creditors and the U.S. Bankruptcy Trustee.

Kimball initially or totally omitted to schedule the transfer and sale of his interest in Red River Exploration for $116,280, as well as his ownership or interest in a number of companies.

This case was prosecuted by Assistant U.S. Attorney Kathleen D. Mahoney. It was investigated by the FBI and the U.S. Bankruptcy Trustee.

Source: https://www.justice.gov/usao-wdmo/pr/owner-payday-loan-company-sentenced-bankruptcy-fraud

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