Man Pleads Guilty in Bankruptcy Fraud Scheme

A South-Central Los Angeles man pleaded guilty Thursday to conspiracy, perjury, and filing false tax returns and unauthorized bankruptcy petitions for poor people as part of a sophisticated fraud scheme to get phony credit cards that he used to buy cars and other goods.

Eugene J. Hawkins admitted to U.S. District Judge John G. Davies that he committed the crimes after telling needy people that he would help them forestall evictions or ameliorate their credit problems.

In reality, Hawkins, 45, who operated three paralegal firms in low-income neighborhoods from 1988 to 1994, provided little assistance, harmed credit records for some, filed 400 unauthorized bankruptcy petitions and created havoc in the Los Angeles Bankruptcy Court, according to court documents.

In one instance, Hawkins persuaded a Compton woman, who was $400 behind on some payments, to give him her credit cards so she would not accumulate more charges. Then he used the cards to obtain thousands of dollars in cash advances for himself without her authorization, purchased a car and cellular phones in her name and filed a bankruptcy in her name, according to court records. Assistant U.S. Atty. Maureen A. Tighe said the woman still is laboring to fix her credit record.

Under the plea agreement, approved by Davies, Hawkins pleaded guilty to conspiring to defraud the Bankruptcy Court and the Internal Revenue Service, making two false statements in bankruptcy filings, making a false statement to a federally insured bank, and assisting in the preparation of a false tax return. He could go to federal prison for up to 26 years and face a $1.2-million fine when he is sentenced May 22. Tighe said in court Thursday that she also would ask that Hawkins be ordered to pay restitution to his victims.

Hawkins, who ran HDI Financial & Legal Services, was ensnared by a joint FBI-IRS undercover operation and is the 15th person convicted as part of an extensive probe of bankruptcy fraud stemming from evictions in Los Angeles, Tighe said.

In 1991, 16% of the bankruptcies filed in Los Angeles were attempts to forestall evictions--most of them bogus bankruptcies. Last year, that was reduced to 3% because of the federal task force’s work.

*

Hawkins’ guilty plea came a week after federal officials announced in Washington that they were cracking down on bankruptcy fraud nationwide, particularly in the Los Angeles area.

Tighe said two of Hawkins’ co-defendants, his former wife and another woman, pleaded guilty this year. The trio filed bankruptcy petitions for their clients without permission after promising to help with pending evictions, Tighe said. A federal probe was launched after the U.S. attorney’s office received complaints from bankruptcy judges, landlords and people in the community.

“The reason I think this case is important is that there are a lot of these phony paralegal services operating in poor communities,” Tighe said.

“Indigent people think they’re getting legitimate help but they’re not. Many of the victims still don’t know what happened to them. This points to the need for legitimate legal services in poor communities,” said Tighe, who stressed that Rod Field, a veteran legal aid lawyer who specializes in representing tenants, had helped her on the case.

Federally funded Legal Services programs have been severely cut in Los Angeles, as in the rest of the country, as a result of reductions in appropriations.