‘Dance Moms’ Star Abby Lee Miller Busted for Bankruptcy Fraud

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Abby Lee Miller, the 50 year old reality TV dance instructor on ‘Dance Moms,’ is readying herself for the possibility of going to prison after she pleaded guilty to bankruptcy fraud in June 2016.

If she is convicted, she is facing up to 10 years in prison. Her sentencing hearing has been rescheduled for May 2017.

The federal beef goes back to October 2015 when she was accused by the Department of Justice of trying to hide $775,000 of income from Dance Moms and various spin off projects from the show when she filed for Chapter 11 bankruptcy. At that time, she pleaded not guilty.

In 2016, she was hit with 20 counts of bankruptcy fraud, hiding assets and a criminal count regarding international monetary information. In that separate matter, she alleged separated thousands of Australian dollars into plastic bags each containing less than the $10,000 that is required to be reported by law at airports. She then gave those bags of money to her dance students and told them to carry it into the US.

The judge in the bankruptcy fraud case stated that the dance star could face a $500,000 fine and six to 10 years in prison.

Bankruptcy Case Goes Back to 2012.

Her initial bankruptcy case was discharged in 2012, but the judge then started to surf through various TV channels and he came across Miller’s show Dance Moms on Lifetime. Remembering the bankruptcy case, the judge started to wonder why the funds from the show was not on her declared income.

It is hard to imagine, but the entire federal bankruptcy fraud charge comes from a night of a judge channel surfing.

In Miller’s sentencing memo, her attorneys claim that her fast rise to fame on the show is the reason the fraud happened. They are trying to play her as the victim, according to media reports.

Her attorneys stated that Miller was overwhelmed and not equipped for her sudden success. This caused her  to not respect the bankruptcy process. Her use of attorneys, accountants and other financial professionals was haphazard, and this led to certain things being overlooked.

Her lawyers further note that she has already suffered serious consequences in terms of major public humiliation through the obsessive press coverage of these proceedings. Also, after the indictment, Miller has surrounded herself with attorneys, accountants and others to ensure that this type of situation will not happen again.

Sentencing Reset for May 8

Her sentencing was scheduled for February 24, but it has been continued until May 8 in Pittsburgh. The complicated sentencing started on January 24, but prosecutors postponed it and the judge has now continued it for two more months.

According to court documents, Miller hid $228,000 in income from her appearances on Dance Moms and also $550,000 from personal appearances and the sale of merchandise.

Media reports state that Miller is terrified of having to go to prison for several years. She noted in public statements that she made mistakes and that she thought she was doing the correct thing. It is unclear what she means as the bankruptcy code is very clear that all income and assets must be declared in the bankruptcy application or you can be charged with bankruptcy fraud.

The 50 year old reality star also stated that if she didn’t have a good sense of humor she would have gone insane. She also stated that she finds the situation humiliating and embarrassing.

Regarding the Australian currency charge, federal prosecutors in Pittsburgh want her to have to forfeit $120,000 of the money that she brought into the US without reporting it as she is required to do.

Federal prosecutors want her to give up the money when she is sentenced in May on the currency charge and on the bankruptcy fraud charge.

Prosecutors say that sentencing guidelines will require a term of 24 to 30 months in federal prison. But her attorneys argue that her bankruptcy creditors did not lose any money so the sentence should only be from probation to six months in jail.

About Bankruptcy Fraud

Bankruptcy judges and trustees take fraud extremely seriously. If the trustee suspects fraud, what he or she will do will depend upon the facts of the case, who has been suspected of fraud and the type of fraud committed.

Many do not realize that bankruptcy fraud cases are not prosecuted in the bankruptcy court. They actually are prosecuted by the United States Attorney in the federal courts across the US.

If the trustee suspects fraud, he or she will make a criminal referral to the Office of the United States Trustee. The criminal matter is then given to the relevant US Attorney or FBI.

Common bankruptcy fraud crimes include filing false tax returns, hiding assets, bribery and embezzlement.

 

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