ARLESTON, W.Va. - The U.S. Attorney's Office unveiled an initiative Thursday to combat fraud during bankruptcy proceedings in West Virginia's Southern District.

U.S. Attorney Chuck Miller said he had noticed more suspected frauds reported to his office by the U.S. Trustees Office, the branch of the Department of Justice that oversees federal bankruptcy cases.

"It's a system designed to relieve people of their debts, not to allow them to cheat their creditors," Miller said.

Thursday's announcement followed the indictment by a federal grand jury on Wednesday of three West Virginians on charges of concealing assets and making false statements during bankruptcy proceedings.

Victoria Ann Caudill, 51, of Bluefield, allegedly hid $60,000 she received as part of a workers' compensation settlement from the Florida Department of Labor and Employment Security by transferring the payments to another person's bank account.

Clinton Lee Smith, 62, of Huntington, is accused of falsely declaring that his ex-wife still owned 50 acres of land in Cabell County that the couple bought in 1977. According to the indictment, Smith and his ex-wife sold the land in 2003 for roughly $207,000.

She received a lump payment of around $103,000, and he set up a payment schedule where he received $2,000 a month until he had been paid his half of the proceeds. He did not disclose this source of income during his 2004 bankruptcy proceedings, the indictment alleges.

Jennifer Michelle Longwood, 38, of Williamstown, allegedly misrepresented the proceeds of the sale of two properties. In one instance, she said she sold a Williamstown property for $20,000, when she had actually sold it for $69,000, according to the indictment.

At another point, she said she intended to keep a Parkersburg property, when in fact she had sold it the day before, the indictment alleges.

ARLESTON, W.Va. - The U.S. Attorney's Office unveiled an initiative Thursday to combat fraud during bankruptcy proceedings in West Virginia's Southern District.

U.S. Attorney Chuck Miller said he had noticed more suspected frauds reported to his office by the U.S. Trustees Office, the branch of the Department of Justice that oversees federal bankruptcy cases.

"It's a system designed to relieve people of their debts, not to allow them to cheat their creditors," Miller said.

Thursday's announcement followed the indictment by a federal grand jury on Wednesday of three West Virginians on charges of concealing assets and making false statements during bankruptcy proceedings.

Victoria Ann Caudill, 51, of Bluefield, allegedly hid $60,000 she received as part of a workers' compensation settlement from the Florida Department of Labor and Employment Security by transferring the payments to another person's bank account.

Clinton Lee Smith, 62, of Huntington, is accused of falsely declaring that his ex-wife still owned 50 acres of land in Cabell County that the couple bought in 1977. According to the indictment, Smith and his ex-wife sold the land in 2003 for roughly $207,000.

She received a lump payment of around $103,000, and he set up a payment schedule where he received $2,000 a month until he had been paid his half of the proceeds. He did not disclose this source of income during his 2004 bankruptcy proceedings, the indictment alleges.

Jennifer Michelle Longwood, 38, of Williamstown, allegedly misrepresented the proceeds of the sale of two properties. In one instance, she said she sold a Williamstown property for $20,000, when she had actually sold it for $69,000, according to the indictment.

At another point, she said she intended to keep a Parkersburg property, when in fact she had sold it the day before, the indictment alleges.

If convicted, each defendant faces up to 15 years in prison and fines of up to $750,000.

Prosecutors also filed an information Thursday against a fourth defendant, Tracy Helms, 42, of Charleston. Helms allegedly concealed guns and jewelry from her creditors during proceedings earlier this year. She faces up to 5 years in prison if convicted.

In the current economic downturn, it's natural that the number of bankruptcies filed has increased, Miller said. But it's unusual for four cases of alleged bankruptcy fraud to be referred to his office at the same time, he said.

"The United States Trustees Office takes these filings very seriously," he said. "If they see something suspicious, they'll bring it to our attention right away."

The FBI handles the cases, and if agents uncover criminal activity, the U.S. Attorney's Office will prosecute, he said.

"It's pretty straightforward in bankruptcy: You list what you have, you list what you owe, and you get a clean slate. It's when you hold [assets] back that [you] get into trouble," he said.

Reach Andrew Clevenger

at acleven...@wvgazette.com

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