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A Ponzi scheme victim seeks Chapter 7 protection

As many in New Jersey are aware, even the most sophisticated of investors may fall prey to some who have less than genuine intentions. Such instances can include Ponzi schemes. When a person who invested in such a scheme loses their investments, they may be forced to consider a Chapter 7 bankruptcy filing.

Recently the former owner of the restaurant chain Champps was forced into such a filing after he found that he had been victimized in a Ponzi scheme. The man invested a total of $26 million in the scheme, according to reports. However, there are additional reports claiming that he may have taken several million dollars in false profits from the scheme before becoming aware of the fraud.

In his Chapter 7 filing, the restaurant owner told the bankruptcy court that he had a total of $11.8 million in debts. This includes owing nearly $240,000 in back taxes and $7.6 million owed to one bank. He listed a mere $45,812 in assets in the bankruptcy petition. In addition, the man earns a reported $11,538 per month as a restaurant manager.

Like people in New Jersey who are facing overwhelming debt, the man in this case found that he had no other option but to seek bankruptcy protection under Chapter 7. The discharge of debt that can be offered as a result of this type of bankruptcy filing can assist a debtor in obtaining a fresh financial start. In this case, the restaurant owner likely believes that he can recover financially if he is able to overcome these issues of overwhelming debt created by the alleged ruse of another individual.

Source: StarTribune.com, "Fooled by pal Petters, restaurateur now bankrupt," David Phelps, May 21, 2012

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