A federal plea bargain by a Milwaukee man for failing to disclose taxpayer-subsidized daycare center income on his bankruptcy petition will likely send him to jail for at least one year. Sentencing is expected sometime in 2010. The man’s wife, who pleaded not guilty, is facing related charges that will go to trial separately, assuming she doesn’t eventually enter into a plea deal too.

The couple, who are now in the process of divorcing, apparently filed for a Chapter 13 bankruptcy in Milwaukee in November 2001. After starting a daycare business in 2003, the duo apparently received over $100,000 from the state of Wisconsin in public childcare funds. After converting their pending bankruptcy case to a Chapter 7 in 2004, they allegedly pocketed an additional $40,000 from the state. The couple evidently never included any of this income in their bankruptcy papers or disclosed it to their Wisconsin bankruptcy lawyer according to FBI investigators. Between 2003 and 2008, the business allegedly received over $700,000 in public money. The man has paid back the $40,000 he received after going Chapter 7. The Milwaukee Journal Sentinel has the whole story.

When compared to the many good, hardworking people in Wisconsin who might find themselves overextended in today’s difficult financial climate, this story is of course very much the exception. However, when discussing a possible individual bankruptcy in Wisconsin with a debt consolidation lawyer, please remember to put all of your cards on the table. By law, you must list all your sources of income and the amounts, along with all of your debts and assets. It is illegal and unethical to try to conceal any financial information or file any false reports in bankruptcy court. Given the stiff criminal penalties contained in federal law, it is a bad idea to try any smoke-and-mirrors tactics in connection with a bankruptcy case.