1 IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF PUERTO RICO 2 3 IN RE: : CASE NO. 12-01684 (ESL) 4 : LUIS A. GONZALEZ DE JESUS : CHAPTER 13 5 : : 6 Debtor : ____________________________________: 7 OPINION AND ORDER 8 This case came before the court for a hearing on June 11, 2012 to consider the answer filed 9 by petition preparer Mr. Valentín Valdés Ayala (Hereinafter “Valdes”) (Dkt. # 15) to the order to 10 show cause entered sua sponte by this court on March 26, 2012 (Dkt. #13). The court also scheduled 11 a hearing on confirmation of Chapter 13 plan. On the same date the court considered three additional 12 cases filed by petition preparer Mr. Valentin Valdés (Cases number 12-01840, 12-01842 and 12- 13 01919). The court dismissed the petition for debtor’s failure to appear at the 341 meeting of creditors, 14 failure to file a Chapter 13 plan, failure to file schedules and failure to appear at the hearing on 15 confirmation scheduled for June 11, 2012. 11 U.S. C. § 1307 (c) (1, 3, and 10). The court retained 16 jurisdiction to determine if any sanctions should be imposed against Mr. Valdés. After considering 17 all relevant facts, the court finds and concludes that sanctions are appropriate and imposes the same 18 as detailed below. 19 A. The order to show cause: 20 In order to provide the background leading the court to sua sponte enter an order to show case 21 against Mr. Valdés, relevant parts of the order are summarized herein. 22 This case is before the court upon the letter filed by petition 23 preparer Mr. Valentin Valdés and/or “Tears in Prison, Inc.” on March 8, 2012 (dkt. #7). The letter is in the nature of a motion. However, the 24 factual basis, the legal support and the request to this court are either unintelligible or nonexistent. The only facts which this court can 25 discern from the letter/motion are that the debtor filed a petition under chapter 13 on March 6, 2012, that the petition was filed unsigned by 26 Mr. Luis González De Jesús, that there are documents pending to be filed and that the petition was filed by Mr. Valentin Valdés. The court 27 also can infer that the petition preparer is requesting clemency for the debtor in order to avoid the dismissal of the case. 28 The filing of such a defective letter/motion prompted this court to sua sponte review the documents filed in this case. The record 1 shows that a petition was filed under the name of Luis A. González De Jesús on March 6, 2012. The debtor’s signature in the documents filed 2 with the bankruptcy petition is not consistent. The signature in the petition, in Exhibit D to Official Form 1, in the Declaration in Official 3 Form 6, in the verification of creditor matrix, and in the Official Form 19 are not the same. This inconsistency highlights the statement by the 4 petition preparer that the petition was not signed by the debtor. It is also clear that Mr. Valentin Valdés and/or “Tears in Prison, Inc.” acted 5 as petition preparer for the debtor. 6 Section 110 of the Bankruptcy Reform Act of 1994, 11 U.S.C. 110, was intended to protect consumers and deter the unauthorized 7 practice of law by non-lawyers who were advising and assisting debtors in filing petitions. King, 2 Collier on Bankruptcy, 15th 8 edition rev'd, ¶ 110.01 at 110-5; In re Hartman, 208 B.R. 768, 776 (Bankr. D. Mass. 1997); In re Moore, 232 B.R. 1, 5 (Bankr. Me. 9 1999); In re Pavlis 264 B.R. 57 (Bankr. D.R.I. 2001). The statute allows petition preparers to go beyond mere typing services. Petition 10 preparers may meet with the clients, type the documents, and review the documents before signing. In re Moran et als, 256 B.R. 842, 849 11 (Bankr. N.H. 2000). 12 Section 110 of the Bankruptcy Code sets standards and penalties for bankruptcy petition preparers. This court will not 13 consider, at this time, the criminal counterpart to Section 110, that is, 18 U.S.C. §156, which makes it a misdemeanor for non-lawyer 14 bankruptcy petition preparers to knowingly attempt to disregard the requirements of the Bankruptcy Code or Rules resulting in the 15 dismissal of the petition. This court will not consider where Mr. Valdés fits in this spectrum of bankruptcy preparers. However, the 16 following articles provide a good reference background. Hon. A. Jay Cristol, "The Non-Layer Provider of Bankruptcy Legal Services: 17 Angel or Vulture ?" 2 Am. Bankr. Inst. L. Rev. 353 (1994), and Hon. Geraldine Mund, "Paralegals: The Good, The Bad and The 18 Ugly", 2 Am. Bankr. Inst. L. Rev. 337 (1994). 19 Based on the above, the court concluded that “ Mr. Valdés is a bankruptcy petition preparer 20 as defined in 11 U.S.C. §110(a). The issues are whether Mr. Valdés has violated any of the 21 provisions of section 110 and whether he should be enjoined from further acting as a bankruptcy 22 petition preparer pursuant to § 110(j). There appear to be prima facie violations to § 110.” and 23 ordered as follows: 24 1. Mr. Valdés shall show cause within twenty-one (21) days 25 why he should not be found to have violated § 110(d)(1) which provides that “[a] bankruptcy petition preparer shall, not later than the 26 time at which a document for filing is presented for the debtor's signature, furnish to the debtor a copy of the document.” Mr. Valdés 27 is advised that “ [a] bankruptcy petition preparer who fails to comply with paragraph (1) may be fined not more than $500 for each such 28 failure unless the failure is due to reasonable cause.” 2 1 2. Mr. Valdés shall show cause within twenty-one (21) days why he should not be found to have violated § 110((e)(1) which 2 provides that “[a] bankruptcy petition preparer shall not execute any document on behalf of a debtor.” Mr. Valdés is advised that “[a] 3 bankruptcy petition preparer may be fined not more than $500 for each document executed in violation of paragraph (1).” 4 3. Furthermore, Mr. Valdés shall show cause within twenty- one (21) days why he should not be sanctioned for engaging in the 5 unauthorized practice of law by assisting and advising the debtor regarding the filing of the instant bankruptcy petition, including being 6 enjoined from further acting as a bankruptcy petition preparer. 7 B. Mr. Valdés’ Answer: 8 The written response by Mr. Valdés alleges that the Mr. Luis A. González De Jesus 9 (Hereinafter “Debtor”) signed all documents before “Irimer Alvarez Castro one of the Attorneys for 10 Tears in Prison Inc. [sic]” while he was still in prison. Mr. Valdés denies having given any legal 11 advise to the Debtor. 12 C. Mr. Valdés at the hearing: 13 Mr. Valdés displayed a cavalier attitude during the hearing when addressing Ms. Monsita 14 Lecaroz, Assistant U. S. Trustee for the District of Puerto Rico, and asking her to be his interpreter 15 because she has knowledge of all his cases and is the “woman” bothering him “every time.” His 16 apparent lack of fluency in the English language made it difficult to have a meaningful hearing. Mr. 17 Valdés was not assisted by counsel. Mr. Valdés’ conclusory statements merely accommodated his 18 position. There was no evidence presented to the court. 19 D. Discussion: 20 In the order to show cause the court found that there were prima facie violations to § 110. 21 However, Mr. Valdés failed to address with particularity the issues in the order to show cause and 22 failed to meet his burden of showing cause that he has not violated § 110(d) and § 110(e)(1). There 23 is no evidence in the record that the petition preparer furnished the Debtor with copies of documents 24 submitted by the petition preparer on Debtor’s behalf.
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1 IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF PUERTO RICO 2 3 IN RE: : CASE NO. 12-01684 (ESL) 4 : LUIS A. GONZALEZ DE JESUS : CHAPTER 13 5 : : 6 Debtor : ____________________________________: 7 OPINION AND ORDER 8 This case came before the court for a hearing on June 11, 2012 to consider the answer filed 9 by petition preparer Mr. Valentín Valdés Ayala (Hereinafter “Valdes”) (Dkt. # 15) to the order to 10 show cause entered sua sponte by this court on March 26, 2012 (Dkt. #13). The court also scheduled 11 a hearing on confirmation of Chapter 13 plan. On the same date the court considered three additional 12 cases filed by petition preparer Mr. Valentin Valdés (Cases number 12-01840, 12-01842 and 12- 13 01919). The court dismissed the petition for debtor’s failure to appear at the 341 meeting of creditors, 14 failure to file a Chapter 13 plan, failure to file schedules and failure to appear at the hearing on 15 confirmation scheduled for June 11, 2012. 11 U.S. C. § 1307 (c) (1, 3, and 10). The court retained 16 jurisdiction to determine if any sanctions should be imposed against Mr. Valdés. After considering 17 all relevant facts, the court finds and concludes that sanctions are appropriate and imposes the same 18 as detailed below. 19 A. The order to show cause: 20 In order to provide the background leading the court to sua sponte enter an order to show case 21 against Mr. Valdés, relevant parts of the order are summarized herein. 22 This case is before the court upon the letter filed by petition 23 preparer Mr. Valentin Valdés and/or “Tears in Prison, Inc.” on March 8, 2012 (dkt. #7). The letter is in the nature of a motion. However, the 24 factual basis, the legal support and the request to this court are either unintelligible or nonexistent. The only facts which this court can 25 discern from the letter/motion are that the debtor filed a petition under chapter 13 on March 6, 2012, that the petition was filed unsigned by 26 Mr. Luis González De Jesús, that there are documents pending to be filed and that the petition was filed by Mr. Valentin Valdés. The court 27 also can infer that the petition preparer is requesting clemency for the debtor in order to avoid the dismissal of the case. 28 The filing of such a defective letter/motion prompted this court to sua sponte review the documents filed in this case. The record 1 shows that a petition was filed under the name of Luis A. González De Jesús on March 6, 2012. The debtor’s signature in the documents filed 2 with the bankruptcy petition is not consistent. The signature in the petition, in Exhibit D to Official Form 1, in the Declaration in Official 3 Form 6, in the verification of creditor matrix, and in the Official Form 19 are not the same. This inconsistency highlights the statement by the 4 petition preparer that the petition was not signed by the debtor. It is also clear that Mr. Valentin Valdés and/or “Tears in Prison, Inc.” acted 5 as petition preparer for the debtor. 6 Section 110 of the Bankruptcy Reform Act of 1994, 11 U.S.C. 110, was intended to protect consumers and deter the unauthorized 7 practice of law by non-lawyers who were advising and assisting debtors in filing petitions. King, 2 Collier on Bankruptcy, 15th 8 edition rev'd, ¶ 110.01 at 110-5; In re Hartman, 208 B.R. 768, 776 (Bankr. D. Mass. 1997); In re Moore, 232 B.R. 1, 5 (Bankr. Me. 9 1999); In re Pavlis 264 B.R. 57 (Bankr. D.R.I. 2001). The statute allows petition preparers to go beyond mere typing services. Petition 10 preparers may meet with the clients, type the documents, and review the documents before signing. In re Moran et als, 256 B.R. 842, 849 11 (Bankr. N.H. 2000). 12 Section 110 of the Bankruptcy Code sets standards and penalties for bankruptcy petition preparers. This court will not 13 consider, at this time, the criminal counterpart to Section 110, that is, 18 U.S.C. §156, which makes it a misdemeanor for non-lawyer 14 bankruptcy petition preparers to knowingly attempt to disregard the requirements of the Bankruptcy Code or Rules resulting in the 15 dismissal of the petition. This court will not consider where Mr. Valdés fits in this spectrum of bankruptcy preparers. However, the 16 following articles provide a good reference background. Hon. A. Jay Cristol, "The Non-Layer Provider of Bankruptcy Legal Services: 17 Angel or Vulture ?" 2 Am. Bankr. Inst. L. Rev. 353 (1994), and Hon. Geraldine Mund, "Paralegals: The Good, The Bad and The 18 Ugly", 2 Am. Bankr. Inst. L. Rev. 337 (1994). 19 Based on the above, the court concluded that “ Mr. Valdés is a bankruptcy petition preparer 20 as defined in 11 U.S.C. §110(a). The issues are whether Mr. Valdés has violated any of the 21 provisions of section 110 and whether he should be enjoined from further acting as a bankruptcy 22 petition preparer pursuant to § 110(j). There appear to be prima facie violations to § 110.” and 23 ordered as follows: 24 1. Mr. Valdés shall show cause within twenty-one (21) days 25 why he should not be found to have violated § 110(d)(1) which provides that “[a] bankruptcy petition preparer shall, not later than the 26 time at which a document for filing is presented for the debtor's signature, furnish to the debtor a copy of the document.” Mr. Valdés 27 is advised that “ [a] bankruptcy petition preparer who fails to comply with paragraph (1) may be fined not more than $500 for each such 28 failure unless the failure is due to reasonable cause.” 2 1 2. Mr. Valdés shall show cause within twenty-one (21) days why he should not be found to have violated § 110((e)(1) which 2 provides that “[a] bankruptcy petition preparer shall not execute any document on behalf of a debtor.” Mr. Valdés is advised that “[a] 3 bankruptcy petition preparer may be fined not more than $500 for each document executed in violation of paragraph (1).” 4 3. Furthermore, Mr. Valdés shall show cause within twenty- one (21) days why he should not be sanctioned for engaging in the 5 unauthorized practice of law by assisting and advising the debtor regarding the filing of the instant bankruptcy petition, including being 6 enjoined from further acting as a bankruptcy petition preparer. 7 B. Mr. Valdés’ Answer: 8 The written response by Mr. Valdés alleges that the Mr. Luis A. González De Jesus 9 (Hereinafter “Debtor”) signed all documents before “Irimer Alvarez Castro one of the Attorneys for 10 Tears in Prison Inc. [sic]” while he was still in prison. Mr. Valdés denies having given any legal 11 advise to the Debtor. 12 C. Mr. Valdés at the hearing: 13 Mr. Valdés displayed a cavalier attitude during the hearing when addressing Ms. Monsita 14 Lecaroz, Assistant U. S. Trustee for the District of Puerto Rico, and asking her to be his interpreter 15 because she has knowledge of all his cases and is the “woman” bothering him “every time.” His 16 apparent lack of fluency in the English language made it difficult to have a meaningful hearing. Mr. 17 Valdés was not assisted by counsel. Mr. Valdés’ conclusory statements merely accommodated his 18 position. There was no evidence presented to the court. 19 D. Discussion: 20 In the order to show cause the court found that there were prima facie violations to § 110. 21 However, Mr. Valdés failed to address with particularity the issues in the order to show cause and 22 failed to meet his burden of showing cause that he has not violated § 110(d) and § 110(e)(1). There 23 is no evidence in the record that the petition preparer furnished the Debtor with copies of documents 24 submitted by the petition preparer on Debtor’s behalf. Also, the very letter that prompted the court 25 to enter the order to show cause is evidence that the petition preparer went beyond preparing a 26 document for filing. Appearing before the court on behalf of the debtor through a letter/request 27 constitutes the practice of law, and in this case, the unauthorized practice of law. The motion for 28 clemency is tantamount to legal advise on Debtor’s behalf. This conduct by Mr. Valdés is a clear 3 1 violation of § 110(e)(1), which provides that “[a] bankruptcy petition preparer shall not execute any 2 document on behalf of a debtor.” 3 Although Mr. Valdés failed to show cause why he should not be enjoined from further acting 4 llas a bankruptcy petition preparer, there was no evidence presented or request made by any party in 5 |linterest in this case to such effect. Notwithstanding, orders being entered on even date in cases 6 number 12-0140 and 12-01242 do enjoin Mr. Valdés from further acting as a bankruptcy petition 7 |\preparer. 8 CONCLUSION 9 In view of the foregoing the court fines Mr. Valdés in the amount of $500 for having violated 10 ]}§110¢d), and an additional $500 for having violated § 110(e)(1). Mr. Valdés shall pay the sanctions 11 the amount of $1,000 to the United States Trustee within twenty-one (21) days. 11 U.S.C. § 12 #1100)(4)(A). 13 SO ORDERED. 14 In San Juan, Puerto Rico, this 14th day of September, 2012. 15 16 17 Ataerilte ig ique S. Lamoutte United States Bankruptcy Court 19 20 21 22 23 24 25 26 27 28