Former U.S. Bankruptcy Trustee Marika Tolz, who was convicted of misappropriating bankruptcy estate funds, was sentenced to 81 months in jail, followed by 3 years of supervised release, 18 months of which will be served under house arrest.
For more than 20 years, Tolz had been a Chapter 7 bankruptcy trustee, required to collect property of bankruptcy estates and convert them to cash. She was required to safeguard the assets, keep detailed and accurate financial records of funds received and disbursed, and make reports of activities occurring in administration of the estates.
According to the U.S. Attorney's Office, from 2003 through May 20, 2010, Tolz and her co-conspirators conspired to misappropriate money from bankruptcy estates and receiverships by writing unauthorized checks from various fiduciary accounts.
Unfortunately, this is the second bankruptcy trustee this year convicted of misappropriating bankruptcy estate funds. Only $400,000 of the $16 million dollars which were misappropriated by Tolz has been recovered. However, some bankruptcy officials are confident that they will be able to recover even more money. The attorney representing Tolz argued that she was not your "typical" fraudster because she didn't begin stealing the bankruptcy estate money until after her mother fell ill. However, there is really no excuse for pocketing the money of companies and individuals who are facing serious financial troubles.
A matter of fact, some would describe a bankruptcy trustee stealing money from desperate debtors as cruel and callous. Those of us in power making decisions about the financial lives of imperiled debtors must always operate with the highest moral standards despite any financial difficulties we may be facing.