[CNYBBA-LISTSERV] Random Audits start 10/20/06

[Mary Fangio]

Well you certainly can't sign the form without your client's permission
can you?  What are the consequences if they want to comply with records
required but don't want to waive their right to counsel during the
audit.  Also the fee agreement must address this issue with the client.
 
Mary

-----Original Message-----
From: cnybba-bounces at cnybba.org [mailto:cnybba-bounces at cnybba.org] On
Behalf Of Richard Ruswick
Sent: Friday, September 22, 2006 9:19 AM
To: lhwilson at cnytrustee.com; Central New York Bankruptcy Bar Association
Subject: Re: [CNYBBA-LISTSERV] Random Audits start 10/20/06


Given the possible penalties involved, how can the debtor's attorney
possibly allow direct contact between the UST and the debtor?  This is
just another time-taking monster that we have to build into our fee
schedule.
 
Dick Ruswick

Lynn Harper Wilson <lhwilson at cnytrustee.com> wrote:

I was at a conference last week and one of the speakers was the U.S.
Trustee from Region 6.  He gave some information about the upcoming
audits, that I thought you might be interested in.  (I also heard this
at the NACTT conference in Denver but didn't write it down then.)  I'm
sure Guy will let us know if I have any of this information wrong.
 
The audits are going to start on 10/20/06 and one out of every 250
Chapter 7 & 13 cases will be audited.  The cases will be selected at
random by a computer program.  A team in Washington will notify the
auditor when documents are filed in the case.  The local UST will send
an audit notification to the debtor (& atty, I presume) & Trustee with a
list of documents for the debtor to produce, a form for the debtor's
attorney to allow direct contact with the debtor, and an information
sheet.  A notation will be made on CM/ECF that the case is being
audited, and the Court Clerk will not close the case until the audit is
completed.
 
The debtor will have 21 days to provide the requested documents.  Then
the auditor will have 21 days to complete the audit, although they make
take a little longer.  The whole process should be completed within 70
days of the petition being filed.  "Targeted audits" will also be
selected by the Washington D.C. team.
 
The audit will be a "desk audit."  Two commercial database searches will
be performed, and the debtor will be given an opportunity to explain any
apparent "material misstatements" in the petition.  They do not
contemplate having face-to-face meetings or site visits.
 
The information required will be paystubs for six months; tax returns
for two years with attachments; account statements for six months before
the petition was filed and the month the petition was filed; copies of
divorce decrees, property settlements, and child support documents.
They will only be looking at the original schedules, not amendments.
They will not say what is on the list of "material misstatements" they
are looking for.
 
Reports will be filed with the Bankruptcy Court.  One of three kinds of
reports will be filed:  1) report that discloses material misstatements,
2) report of no material misstatements, or 3) report of no audit (i.e.
case was dismissed before audit was completed or debtor failed to
coopertate).  The clerk will send notice to creditors if material
misstatements were discovered, although the notice will not say what the
material misstatements are.  The creditor can look at the report on
CM/ECF if they want to know.
 
"Enforcement options" include:  criminal referral, objection to
discharge or action to revoke discharge, motion to dismiss with
prejudice, objection to confirmation, motion to modify plan (or request
for Chapter 13 Trustee to do it), motion to convert, avoidance actions
(by panel Trustees), discovery (motions to compel), sanctions against
attorney, motions to compel amended schedules.
 
***************************************
Lynn Harper Wilson, Staff Attorney
Standing Chapter 12 & 13 Trustee's Office
Syracuse, New York
    e-mail:  <mailto:lhwilson at cnytrustee.com> lhwilson at cnytrustee.com
        web site:  <http://www.cnytrustee.com/>
http://www.cnytrustee.com 
 
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