BANKRUPTCY FRAUD RISES AS ECONOMY FALLS

Survey discloses that Overseers know of Fraud

NEW YORK, NY… September 10, 2001...Bankruptcy fraud, the white-collar crime most people tend to know little about, is steadily increasing and negatively affecting corporations and individuals alike.

An anonymous nationwide survey of bankruptcy judges, administrators, trustee, and lawyers conducted by Kessler International, found that 31 percent of those polled, knew of "flagrant abuses" of bankruptcy laws in cases they have handled, 63 percent stated they knew of some abuse and only six percent stated that they thought bankruptcy laws were followed and each filing was honest.

"This type of fraud drips down and affects the prosperity of corporate economies," said Michael G. Kessler, President & CEO of Kessler International, the world’s leading certified forensic accounting and investigative consulting firm, headquartered in New York City and with offices that span the entire globe.

Kessler said fraudulent bankruptcy not only undermines the integrity of the bankruptcy system but it negatively affects the growth of businesses. He referred to bankruptcy fraud as a "cyclical evil that prospers in poor economic times."

Statistics from the American Bankruptcy Institute show that in the year 2000, over one and quarter million bankruptcy filings occurred. In the first quarter of 2001, bankruptcy filings were up to 366,841, higher than last year’s average and in the second quarter of 2001 filings topped at 400,394 a 24% increase over last year’s same period.

Kessler said that most of the fraudulent bankruptcy petitions his firm has examined contain overstated expenses and are missing assets that the applicant is hiding or have understated income.

Kessler also said bankruptcy is one of the simplest ways to steal and your chances of being caught are slim to none. According to statistics obtained from the U S Department of Justice only 188 cases of bankruptcy fraud were prosecuted in 1999. Kessler further added that anyone can get step by step instructions on how to commit the fraud on the Internet by purchasing one of the many credit repair and bankruptcy guides offered for less than $15.00 that teaches them the abc’s of this crime.

"Fraud can sometimes be the difference between a company posting a profit or a loss," said Kessler. "The number of companies coming to us to challenge bankruptcies are indicative of the tightening economy that is causing companies to hunt down any threat to their financial well being."

Under federal law creditors should be alerted within ten days of any filing. Kessler recommends that the creditor immediately examine the bankruptcy petition carefully, keeping an eye out for signs of fraud and abuse. The task of exposing bankruptcy fraud is not an easy one and usually requires thorough research and an in-depth investigation. But Kessler stated that if the bankruptcy fraud is exposed, the creditor could recover significant assets that would have otherwise been lost.

Kessler International has conducted thousands of successful audits and investigations for clients wishing to contest a bankruptcy and has helped them recoup millions of dollars. Michael Kessler and his team of certified forensic accountants, CPA’s, investigators, and researchers are internationally renowned in the field, with years of sleeves-up service and training in their disciplines. Kessler, the former Assistant Chief of the NYS Special Prosecutor and Chief of Investigations for NYS Tax, employs a diversified staff that includes former state and federal prosecutors, accountants and law enforcement agents.

For more information about Kessler International, contact Michael G. Kessler at 212-286-9100 or visit their website at www.investigation.com.