A 33 page indictment against Joe and Teresa Giudice enumerates the 39 counts of fraud, tax evasion and misrepresentation of certain facts to the Bankruptcy Court. It’s a scary document, for sure, and, if any or all of the charges are true, their future is looking very bleak. Reading through the indictment, it appears that the Giudices are ignorant, arrogant or a horrible combination of both.
When we lived in Florida between 2005 and 2007, houses were being built at break neck speed and mortgages were handed out to just about anybody with a pulse. Billboards tempted even the worst risks with offers of guaranteed loans without proof of income, credit checks and with nothing down. All the potential home buyer had to do was apply and the home was theirs, sort of. Many of those who grabbed up those loans soon realized that getting them and paying them were two very different things. The higher the risk, the higher the rate of interest and those same people who thought that a bank or lender wouldn’t give them a mortgage they couldn’t handle soon found out differently. As the housing bubble began to deflate, so did home values and people found that their new homes not only weren’t building equity but were actually becoming worth less than they’d mortgaged them for. Many simply walked away, leaving behind abandoned homes and unpaid loans all over the country.
Between 1998 and 2006, the price of a home in New Jersey, adjusted for inflation, appreciated by more than 80%, making the market a perfect breeding ground for predator lenders and fraudulent buyers. This is not to say that all mortgages were gotten or given by nefarious means. In order to give the appearance that loans were still following the “rules”, so to speak, banks still required anyone who had a real source of income and above average credit rating to prove it and, oh, by the way, ensure that they had the traditional 20% to put down on the home.
All of that came to a grinding halt on September 29, 2008 when the bubble burst – no it didn’t just burst, it exploded – and we watched as the Dow lost nearly 700 points in one day. Soon after, applications for foreclosures doubled, then tripled, as the banks and those high risk home buyers came face to face with the awful, albeit predictable reality that the shit had finally hit the fan.
Smack dab in the middle of those bad mortgages sat the Giudices, who provided banks and other lenders with information that appears not only to be untrue but unbelievable. Jobs and incomes were reported that just couldn’t be – unless Teresa had several clones who never slept. She claimed to be an administrative assistant and the sole owner of a stucco company in overlapping years, among other things. The indictment charges that they provided phony W-2s to back up their claims, and, apparently, the banks took them and ran with them, no questions asked. One of the banks was the now defunct Wachovia, whose lending practices came under fire and eventually sunk their ship, leaving them with no option but to be taken over by Wells Fargo.
As the housing market continued to fall, the Giudices asked the Bankruptcy Court for forgiveness of much of their debt, with creditors demanding something, anything, in way of recompense. They should have played by the rules and saved themselves the boatload of trouble they’re now facing. People got caught up in the housing frenzy and made some mistakes – we get it. Instead, the feds further charge that they chose to make matters even worse, by trying to pull the wool over the Court’s eyes. Income they had or were soon to have was hidden from the Trustee. They swore that they had provided the Court with everything they had, but that just doesn’t ring true. It didn’t take the feds long to figure out – maybe they watch Bravo – that there was plenty of income coming in from Teresa’ s Fabulicious brand, rental properties and other businesses, all of which both Joe and Teresa chose to keep quiet about.
To compound their idiocy, the Giudices, according to the indictment, failed to file income tax returns for the years between 2004 and 2008. That can’t be an oversight. You just don’t forget to file your taxes. It has to be a deliberate and intentional act to not file taxes for 4 years. I don’t know what they were thinking or if they thinking at all, but they certainly didn’t help themselves with this one. Unless you’re a United States Congressman or the Secretary of the Treasury, regular people go to prison for this kind of thing. Just ask Wesley Snipes.
I could almost understand their financial situation, as I explained above regarding the housing bubble, but what I can’t understand is their choice to obfuscate. You need look no further than the matter involving Martha Stewart. The feds couldn’t prove that she was engaged in insider trading but they sure as hell hated when she lied to them. She served a 5 month sentence plus 2 years of supervised release, along with fines. The Giudices are facing much more in terms of sentencing, due in large part to their continued failure to just come clean. I guess they haven’t figured out, that in most of these types of things, it’s never the act, but the attempt to cover it up that gets you in the most trouble. I don’t think that any judge is going to sentence both or either of them to the kind of punishment that the sentencing guidelines allow, but someone’s going to prison. They asked the Bankruptcy Court for forgiveness and then handled the thing all wrong. For their sake – well, for the sake of their girls – I hope they start playing by the damn rules and listening to someone besides those foolish voices in their foolish heads. I guess we’ll just have to wait and see.
Link to the indictment (PDF):
I added these photos just so we’re clear as to how Frank Giudice feels about the whole thing.