Federal Jury Finds Kentucky Woman Guilty of Committing Social Security Fraud and Bankruptcy Fraud

March 14, 2014

Article from Kentucky.com here

A federal jury on Thursday found a Jessamine County woman guilty on all 14 counts of an indictment charging her with Social Security fraud and bankruptcy fraud.

Sheryl A. Bruner was indicted in January on charges of receiving disability checks from the Social Security Administration when she could work, lying about her eligibility for disability, concealing assets from the agency, and making false statements when she filed for bankruptcy in May.

The trial began Monday in U.S. District Court in Lexington. The six men and six women on the jury deliberated for a little more than two hours before returning the unanimous verdict.

Assistant U.S. Attorney Kenneth Taylor had no comment after the trial.

Defense attorney Michael Khouri of Irvine, Calif., said Bruner “was very disappointed by the verdict. She was in tears.”

A date for sentencing was not immediately scheduled. U.S. District Judge Karen Caldwell suggested June 17, but that date did not work for Khouri.

The penalties for each of the first four counts of Bruner’s crimes range from five to 10 years in prison and a $250,000 fine. Each of the 10 counts of money laundering is punishable by 20 years in prison and a $500,000 fine, or twice the value of the property concealed.

In his closing argument to the jury, Taylor said, “This is a case about a woman who never misses an opportunity to game the system,” that is, to cheat the government for her own benefit.

Bruner took disability checks over a 10-year period when she was not disabled, could work and did work, Taylor said. When she was recertified to continue receiving disability checks, Bruner lied, Taylor said.

In 2003, for example, she started a business called Support Source, which provided services to people with disabilities, and received “substantial compensation” through 2012, the indictment alleged.

Bruner started work in 2012 for another business that received Medicaid payments to serve people with disabilities, the indictment said.

On a recertification form, “in every category, she lied about what she was doing, her ability to work, and she was still receiving income,” Taylor told the jury. “… Her claim that she is disabled is patently false. … This woman is not now, nor has she ever been, disabled.”

When she filed for bankruptcy, Bruner concealed assets that she had, such as $493,000 in an TD Ameritrade account and $220,000 in a safe in the attic of her house. A bankruptcy trustee also testified that Bruner had a number of assets she did not disclose in her bankruptcy petition, including trust accounts, rental properties and several vehicles. The vehicles included a Cadillac Escalade that Bruner paid for with $30,000 in cash.

Bruner is also charged with 10 counts of laundering money to conceal assets.

Taylor attacked Bruner’s defense that she thought certain assets were protected from bankruptcy because they were in trusts or limited liability corporations.

“If that could be done, ladies and gentlemen, we would all do it” and “ride off into the sunset” of retirement, Taylor told the jury. He asked for a conviction on all 14 counts of the indictment.

But Khouri, Bruner’s attorney, asked the jury to return a not-guilty verdict on all counts because “Sheryl Bruner never had a state of mind that is required by the law to bring a conviction back.”

Khouri argued that Bruner was misled by attorneys.

“Please don’t convict Sheryl Bruner,” Khouri told the jury. “She’s a good woman who was misled by some very bad lawyers.”

Khouri argued that one lawyer filed a bankruptcy petition on Bruner’s behalf without her signature or without her seeing it before it was filed.

“I think there is reasonable doubt that my client … saw that (bankruptcy) petition or … signed that petition,” Khouri said.

“Why in the world would Sheryl Bruner file a bankruptcy petition and then a little while later disclose everything that she didn’t disclose in the petition?” Khouri asked the jury. “That makes no sense. If you have the intent to defraud, you’re going to do that at” a bankruptcy hearing.

“There’s only one reason for that — she never saw the petition,” Khouri said. “… How can she be guilty of a crime when she did everything as a lawyer told her to do?”

On rebuttal, Taylor played a snippet of a recorded bankruptcy hearing in which Bruner said she saw, read and signed the bankruptcy petition.

Once the closing arguments had ended — but outside the jury’s hearing — Judge Caldwell expressed displeasure with Khouri’s statements to the jury “when there is absolutely no evidence in the record” of alleged malpractice by Bruner’s previous attorneys.

“This is a very serious allegation with really no direct evidence,” Caldwell said.

Under questioning from the judge, Khouri acknowledged that Bruner had made no complaints to the bar association and had filed no malpractice complaint against the lawyers who advised her.

Khouri said he was merely aggressively defending his client, and to do any less would have been a breach of his obligation to Bruner.

“I am concerned that obligation may have crossed the line,” Caldwell said.

Caldwell said she intended to investigate the matter.

“I’m going to hold you accountable,” Caldwell told Khouri.

Greg Kocher: (859) 231-3305. Twitter: @HLpublicsafety