Two California men have been convicted of filing fraudulent bankruptcy petitions on behalf of Kansas homeowners who were behind on their mortgages and in danger of losing their homes to foreclosure, according to a U.S. Department of Justice press release (“Los Angeles Men Convicted On Charges Of Filing False Claims In Kansas Bankruptcy Courts,” Jan. 20, 2009).

Operating through a company called Stopco, Isaac Yass and Robert Blechman of California told homeowners that for a monthly fee their company could prevent homes from going into foreclosure or stop foreclosure proceedings. As part of Stopco’s service, the two Los Angeles men would send fraudulent bankruptcy petitions through the United States Postal Service to bankruptcy courts in Topeka, Wichita, and Kansas City, Kansas in order to automatically suspend home foreclosure proceedings.

The illegal bankruptcy petitions contained false names, Social Security numbers, and addresses for the bankruptcy creditors. The addresses listed for the creditors were actually mailboxes at UPS stores located in Kansas.

Yass and Blechman were each convicted of six counts of mail fraud and six counts of aggravated identity theft, as well as one count of conspiracy to commit mail fraud and aggravated identity theft.

Each man faces up to 30 years in federal prison and a fine of as much as $1 million for each count of mail fraud and two years in prison, along with a fine of up to $250,000 for each count of identity theft.

Richard Wieland, U.S. trustee for Kansas, Oklahoma, and New Mexico said, “The defendants used the bankruptcy system to operate an illegal foreclosure rescue scheme, causing harm to financially distressed homeowners and threatening the integrity of the bankruptcy system.”

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