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Attorney Sanctioned for Allowing Client to Defaud the Bankruptcy Court

As reported by Robin Miller of CBAR, Code § 526(a)(2) prohibits a debt relief agency from “counsel[ing] or advis[ing] any assisted person or prospective assisted person to make a statement in a document filed in a case … that is untrue or misleading,” applies regardless of whether the counseled person files a document in the bankruptcy case embodying the untrue statement.

The debtor’s former attorney violated this provision by advising the debtor to omit any reference to a potentially preferential prepetition transfer to the debtor’s mother in documents filed in the debtor’s bankruptcy case, even though the debtor chose instead to have her mother repay the proceeds that might have been challenged as a voidable preference. In re Clink, 770 F.3d 719 (8th Cir., Oct. 21, 2014) (case no. 13-3039)