Abbey Lee Miller, star of Lifetime show “Dance Moms” was recently indicted on charges of bankruptcy fraud.

Based on the show description- I’m not surprised that I’ve never heard of it:

According to Wikipedia, ‘Dance Moms’ ” follows the Abby Lee Dance Company’s Junior Elite Competition Team of mostly preteen girls as they travel week-to-week to various dance competitions, winning awards and preparing for Nationals…while at the same time being prepared by Miller to be ‘professional, employable working dancers.’ The series depicts the doting mothers as rivals of each other on behalf of their own daughters, sometimes closing ranks against rival teams.”

Anyhow- back to the point:

The team at the Wall Street Journal Bankruptcy Beat are reporting that “Ms. Miller has been indicted on bankruptcy-fraud charges that she concealed income she earned from the show. Ms. Miller said her show wouldn’t bring in separate revenue—only publicity. A Pittsburgh jury has now accused her of concealing more than $750,000, according to the indictment. Ms. Miller filed for bankruptcy in December 2010 with about $356,000 in debt.” TMZ (who apparently broke the story, in addition to showing great tips on “Guess The Bunny Tail See Whose Hare-Raising Rear!”) also reports that “The indictment, which includes 20 counts related to the alleged scheme, also says Abby lied on monthly financial reports for her dance studio and did NOT report some of her income.”

All of the federal bankruptcy crimes are found in Title 18, Chapter 9 of the Bankruptcy Code. These include:

• § 152 – Concealment of assets; false oaths and claims; bribery
• § 153 – Embezzlement against estate
• § 154 – Adverse interest and conduct of officers
• § 155 – Fee agreements in cases under title 11 and receiverships
• § 156 – Knowing disregard of bankruptcy law or rule
• § 157 – Bankruptcy fraud

18 U.S.C. § 157 prohibits devising or intending to devise a scheme or artifice to defraud and, for purposes of executing or concealing the scheme either (1) filing a bankruptcy petition; (2) filing a document in a bankruptcy proceeding; or (3) making a false statement, claim, or promise (a) in relationship to a bankruptcy proceeding either before or after the filing of the petition; or (b) in relation to a proceeding falsely asserted to be pending under the Bankruptcy Code.

So- it appears that Ms. Miller has been accused of not disclosing $750,000 of her income to the Bankruptcy Court. The maximum punishment for this crime is up to five years in federal prison.

It should be noted that Ms. Miller has only been accused of this. While the Wall Street Journal team states that a “jury” has accused her- this is a “grand jury.” She has not bee convicted yet. I can think of a number of defenses for Ms. Miller (namely- her statements on her future income appear to be purely speculative).

It is absolutely critical to be completely honest in your bankruptcy papers. The worse thing you can do is undertake to conceal assets from the lawyer and the court. It is also crucial to accurately disclose all sources of income in your bankruptcy papers. Trying to keep (and hide) your 2008 Ford F-350 is not worth spending 5 years in prison away from your family.

Bankruptcy provides for the honest, yet unfortunate debtor, a new opportunity in life.