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A Fuzzy Stipulation Vacates A Conviction In A Bankruptcy Fraud Trial in the First Circuit Court of Appeals

Perhaps Ramie Marston was confused?

She filed for bankruptcy on her own – without a lawyer.

When you file for bankruptcy, you have to fill out a lot of paperwork. Here, Ms. Marston was asked what other names she’d used in the past.

She did not disclose the names “Susan Blake” or “Kristy Kromer” as names that she’d used in the past. These were the names of some of her friends.

875413_balance.jpgYet Ms. Marston had, in fact, used those names herself; she used them when she applied for credit cards in her friends’ names.

She was also asked to identify all of her creditors. She did identify Susan Blake as someone she owed money to. She didn’t disclose that she might owe credit card companies money based on the charges she made in her friends’ names.

The bankruptcy trustee challenged Ms. Marston’s petition, so she withdrew it.

Then she was indicted for bankruptcy fraud for not disclosing that she used her friends’ names and for not revealing the debt to the credit card companies from using her friends’ names.

A funny thing happened at trial. Instead of introducing evidence about what happened with Susan Blake, the prosecutor agreed to a stipulation drafted by defense counsel.

As the First Circuit describes it in United States v. Marston:

the government, instead of presenting a full scale case, accepted a stipulation in which Marston admitted inter alia that she had possessed credit cards bearing the names of both Marston and Blake, that she made purchases with those cards never authorized by Blake, and that the “fraudulent liabilities incurred in Blake’s name by Marston totaled approximately $61,545.”

The district court judge told the prosecutor not to agree to such a stipulation. Yet the prosecutor agreed.

In any event, Ms. Marston was convicted of all four counts of the indictment and sentenced to 37 months in prison.

Count Four of the Indictment is the one that dealt with the credit card debt relating to Susan Blake.

On appeal, Ms. Marston’s lawyer argued that the evidence wasn’t sufficient to convict her of that count.

In the First Circuit, and others,

A false oath conviction under 18 U.S.C. § 152(2) requires the government to prove (1) the existence of a bankruptcy proceeding; (2) that the defendant made a false statement in that proceeding under penalty of perjury; (3) that the false statement concerned a material fact; and (4) that the defendant made the false statement knowingly and fraudulently.

The statement in Count 4 that was allegedly false was that she didn’t owe the specific credit card companies that issued the fraudulently procured credit cards that Ms. Marston ordered using Susan Blake’s name. (or, rather, she didn’t list them on a part of the form that she said she had filled out completely – which amounts to the same thing).

The court of appeals found that the government had failed to prove that Ms. Marston’s statement was false.

The only evidence of Ms. Marston’s credit card fraud involving Susan Blake came from the stipulation. Yet the stipulation just said that the charges happened, were fraudulent, and involved Susan Blake.

The stipulation didn’t say that the debts were still outstanding at the time the bankruptcy petition was filed.

As the First Circuit said,

the missing element is proof that at the time that the bankruptcy petition was filed, there were still extant claims against Marston. The stipulation quoted above was enough to prove beyond a reasonable doubt that claims against Marston had arisen when the unauthorized purchases were made; but the prosecutor accepted a stipulation that nowhere said that these claims remained unpaid at the time Marston filled out the bankruptcy forms.

Because there was no proof on this essential part of the element of falsity, the case was remanded for resentencing.

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