Owner of Payday Loan Company Sentenced for Bankruptcy Fraud
KANSAS CITY, Mo. – 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.
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