Man sentenced to prison for defrauding 28 bankruptcy courts, including in Puerto Rico

By The Star Staff

A Maryland man was sentenced to 90 months (seven years and six months) in jail this week for a scheme to defraud 28 federal bankruptcy courts, including in Puerto Rico.

The man, Osakwe Ismael Osagbue, had been indicted on charges of mail and wire fraud, falsification of bankruptcy records, and aggravated identity theft, W. Stephen Muldrow, United States Attorney for the District of Puerto Rico, said Tuesday.

The defendant was indicted on April 3, 2024 and pleaded guilty on Feb. 19 of this year. He was sentenced on Tuesday.

According to court documents, from 2022 through April 2024, Osagbue devised a scheme to obtain money held by various U.S. bankruptcy courts by submitting false documents that impersonated unsuspecting individuals and requested the withdrawal of unclaimed funds. He utilized the federal judiciary’s Public Access to Court Electronic Records system to search for and identify bankruptcy cases with unclaimed funds. Osagbue would then send fraudulent applications for payment of these funds to the corresponding bankruptcy courts. The applications included the personal identifying information of real people, such as names, social security numbers and signatures. The fraudulent applications sought payment to bank accounts controlled by Osagbue, which were in the names of the individuals he victimized.

Occasionally, Osagbue followed up by sending emails to court personnel using fake email accounts in the names of the unsuspecting victims. Once payment was received, he would withdraw funds from automatic teller machines and deposit the cash into his own personal bank account under his true name.

As part of his scheme, Osagbue submitted applications for over $1.8 million in unclaimed funds. Besides the District of Puerto Rico, some of the many U.S. bankruptcy courts involved were in the Northern District of Alabama, the District of Colorado, the Middle District of Florida, the District of Hawaii, the Northern District of Illinois and the Eastern District of New York.

The United States Secret Service investigated the case as part of its mission to combat complex financial crimes that threaten the federal government and the nation’s economic security. The United States Bankruptcy Court for the District of Puerto Rico reported the fraudulent scheme to federal authorities.

“This sentencing reflects the U.S. Attorney’s Office’s ongoing commitment to prosecuting sophisticated fraudsters who abuse the system,” Muldrow stated. “Thanks to the relentless efforts of our multi-agency partners, we will continue to aggressively pursue accountability for those whose actions undermine the integrity of the United States courts and the bankruptcy system.”