This property on Harmons Branch Road in Poca is at the center of a criminal case against Winfield attorney Patrick Anderson. A federal grand jury recently indicted Anderson on charges he fraudulently transferred ownership of the property belonging to Herman and Peggy Matney to their daughter in an attempt to hide assets from creditors in the Matney's bankruptcy case. (Photo by Lawrence Smith)

HUNTINGTON - A Putnam County attorney has been indicted for committing fraud in a bankruptcy case.

The federal grand jury on Oct. 21 indicted Patrick B. Anderson on one count each of bankruptcy fraud, and fraudulent transfer and concealment of assets, both felonies. According the indictment, Anderson, 54, a sole practitioner in Winfield, transferred property belonging to a Poca couple to their daughter so it would be unavailable to creditors when the couple filed for bankruptcy.

Court records show, the couple was not a party to Anderson's scheme, and notified authorities immediately becoming aware of it

Deception immediately detected

In early 2007, the indictment alleges Anderson was approached by the couple to file for bankruptcy. Specifically, the couple wanted to file for Chapter 7.

Known as "liquidation" bankruptcy, Chapter 7 allows the debtor, either an individual, a couple or a business, to sell all non-exempt property via a court-appointed trustee to pay off creditors. One stipulation of Chapter 7 bankruptcy is that the debtor must receive approved credit counseling at his or her own expense.

Throughout the indictment, the couple is only identified as the "known couple." However, via the subsequent petition Anderson filed for them on May 1, 2007, they are identified as Herman Clayton and Peggy Ann Matney of Harmon's Branch Road.

In an attempt to keep the Matneys in their mobile home on the one acre of property they own, the indictment alleges Anderson devised a scheme to transfer ownership of the property to their daughter, Melissa Davis. Records in the Putnam County Clerk's Office show Anderson preparing a deed dated Feb. 16 which was recorded on April 30.

Anderson's scheme was doomed from the start as in the Matney's petition he failed to disclose any real property they owned. This included any property they've transferred within the preceding year.

In a letter dated May 2, Peggy Matney alerted the U.S. Trustee's Office to incorrect information contained in the petition. In her letter, she averred that the erroneous information was all Anderson's doing, and it was not their intention to have the petition with the incorrect information filed.

Nothing to do with incorrect info

According to her letter, Peggy and Herman paid Anderson $1,200 to prepare the bankruptcy petition between Dec. 6, 2006, and Jan. 31, 2007. This included $150 to transfer the deed.

Apparently, they waited for Anderson to file the deed, and, on an unspecified date, called his office "when we didn't get results." When Anderson said he needed an additional $300 to file the bankruptcy, Matney says they promptly paid him.

Later on an unspecified date, Matney says they made the required consultation with the credit counselor. After not hearing anything from Anderson about filing the petition, Matney said they approached one of his employees, Belinda Fike, for help.

According to Matney, Fike told them she would fill out all the paperwork, and they could file the petition themselves. After Fike filled out the paper, and had them to sign it, Matney said they later took the petition to the bankruptcy clerk's office.

However, she said that one of the clerks told them it could not be filed since it was missing some information. Immediately, Matney said they retained another attorney, Jeremiah McCormick of Nitro, who advised them to discharge Anderson.

Before they could do that, Matney says Anderson filed the petition containing the erroneous information about their property ownership. In her letter, Matney says she and Herman were eager to get their bankruptcy filed, but do so properly, and correctly.

"We went to Belinda Fike and she filed out the paperwork and told us to sign them," Matney said. "We signed them without reading them, we did not know they were incorrect."

"We did not want Pat Anderson to file the bankruptcy case with the wrong information on them," Matney added.

Investigations launched

Records show immediately upon receiving Matney's letter, the trustee notified U.S. District Bankruptcy Judge Ronald Person about the erroneous information. Later that day, Pearson ordered Anderson to appear in court on May 23 to explain his actions.

A week following the hearing, Pearson ordered Anderson to forward $1,349, and documents related to the Matney's case to McCormick. Anderson apparently admitted to knowingly filing the petition erroneously as in his order Person said "By Mr. Anderson's own admission, he advised the Debtors to transfer their real property to their daughter immediately preceding the bankruptcy filing so as to remove the asset from the bankruptcy estate."

In his order, Pearson barred Anderson from filing any future bankruptcies until he could prove to the state Bar he was otherwise fit. Also, Pearson forwarded his order and transcripts of the May 23 hearing to the Bar's Office of Disciplinary Counsel to begin its own ethics investigation.

According to ODC, Pearson's complaint is one of four Anderson has pending against him.

Ten days after Anderson transferred the Matney's property to Davis, McCormick had it transferred back. According to the Putnam County Clerk's and Assessor's offices, the Matneys first purchased the property in 1993, and it has an assessed value of $17,880.

Bankruptcy records show the Matney's case was closed on Nov. 19, 2007. Minus the property, they listed $2,920 in assets and $71,775 in liabilities, mostly from credit card debt.

If convicted, Anderson faces up to 10 years in prison with three years supervised released, and a maximum $500,000 fine. The case is assigned to Judge Robert C. "Chuck" Chambers.

U.S. District Court for the Southern District of West Virginia, case number 09-cr-233; U.S. Bankruptcy Court, case number 07-bk-20452