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Contact: Jim Cross
PHONE: 316-269-6481
FAX:      316-269-6420

March 4, 2008

DEFENDANT CHARGED IN BANKRUPTCY FRAUD A FLIGHT RISK, FEDERAL PROSECUTORS SAY

Federal judge orders Isaac Yass held pending trial after prosecutors say the Israeli citizen may have filed more than 80 fraudulent bankruptcy petitions in Kansas, California, Maryland and Tennessee to stop $50 million worth of foreclosures

 TOPEKA, KANSAS—The defendant in a $50 million bankruptcy fraud case will not be allowed out on bond because he is a flight risk, a federal judge ruled Monday.

“When Isaac Yass was arrested last week in Los Angeles, agents found $10,000 in cash on a counter in his apartment and four packed travel bags near the front door,” said U.S. Attorney Eric Melgren.

Yass, 41, was charged in an indictment unsealed last week in Topeka with six counts of mail fraud and six counts of aggravated identity theft. The indictment accused him of running a scam in which homeowners who were behind on their mortgage payments paid him to hold off foreclosure by filing fraudulent bankruptcy petitions. The indictment says Yass filed petitions on behalf of fictitious persons who claimed to have a fractional interest in the properties in foreclosure. The result was an automatic stay in the foreclosures, halting any further actions by creditors against the properties.

Following the arrest of Yass, a magistrate judge in Los Angeles denied the government’s motion to keep Yass in jail pending trial and ordered that Yass could be released on a $500,000 cash or secured bond. At the hearing, Yass told the court that he could afford to post up to a $1 million secured bond. The magistrate judge stayed his release order to give the government time to appeal his order.

Yesterday, U.S. District Judge Julie Robinson heard—and granted—the government’s motion to revoke the order of release and held Yass pending trial. According to the government’s motion keep Yass in custody:

• Yass operated a company called STOPCO that offered to keep homeowners out of foreclosure if they paid a monthly fee for STOPCO’s services. Yass then filed fraudulent bankruptcy petitions that automatically caused the foreclosure proceedings to stop.

• Yass used the PACER electronic court filing system to obtain information that he used for fraudulent purposes.

• The U.S. Trustees Office in Kansas estimates that since 2006 Yass has stopped foreclosures to properties valued at more than $50 million. Bankruptcy clerks in California, Maryland and Tennessee are investigating bankruptcy filings that may be tied to Yass. Investigators say Yass may have filed more than 80 fraudulent bankruptcy filings in California alone.

• Yass is a citizen of Israel who entered the United States on a visa. In 2005 he was stopped in the United States and presented false identification papers, which led to his being convicted for perjury. Immigration and Customs Enforcement began deportation proceedings against him in 2005. He is fighting deportation.

“We know of no legal employment or occupation the defendant has been involved in,” Melgren said. “He travels freely and has access to large sums of money. He has no ties to the United States.”

Yass faces a maximum penalty of 30 years in federal prison and a fine up to $1 million on each count of mail fraud, and a mandatory 2 years and a fine up to $250,000 on each count of aggravated identity theft. The Federal Bureau of Investigation, the U.S. Postal Inspection Service, the Social Security-Office of Inspector General and the U.S. Trustees Office worked on the case. Assistant U.S. Attorney Richard Hathaway and Assistant U.S. Attorney Christine Kenney are prosecuting.As in any criminal case, a person is presumed innocent until and unless proven guilty. The indictment filed merely contains allegations of criminal conduct.