In re Johnson

Dorothy Johnson and her son, Joseph Johnson, owned two properties about to go into foreclosure. Peter Balas held the note on one property. Dorothy and Joseph hired Virginia attorney Andrew Adams to file multiple bankruptcy actions on their behalf, relying on the automatic stays to delay foreclosure. These filings were intended only to delay the foreclosures, via the automatic bankruptcy stay. The court dismissed each of these invalid actions. Adams violated multiple court orders, with each violation further delaying the foreclosures. On at least two occasions, the bankruptcy court threatened to sanction Adams for violating the rules of professional conduct. To avoid sanctions, Adams agreed to take continuing-education classes and have his business audited by the Virginia state bar, but he repeatedly missed the deadlines to complete these remedial actions. When Dorothy and Joseph could not get another automatic stay of the foreclosures by filing their own bankruptcy, Joseph brought his 18-year-old daughter, Jessica Johnson (debtor), to meet Adams. Jessica had just graduated from high school and had no real debt, bank account, or employment history. Dorothy and Joseph transferred the two properties into Jessica’s name and asked Adams to file bankruptcy for her. The scheme was designed to trigger another automatic stay while Jessica’s bankruptcy proceeded. Adams did not inform Jessica that she would gain nothing from the bankruptcy, that it would harm her credit for years, or that it was intended to defraud Balas and other creditors. After Adams filed Jessica’s bankruptcy, Balas moved for relief, alleging fraud. Adams represented Jessica in the fraud hearing and charged her for it—but Adams offered no arguments in her defense. The court ordered Adams to show cause why he should not be sanctioned for his conduct relating to Jessica’s bankruptcy.