50 Cent filed for Chapter 11 bankruptcy last July, but since October the rapper, who got famous for his 2003 album called “Get Rich or Die Tryin” has posted numerous photos to his Instagram of him playing with cash. In one of the photos, he’s surrounded by dozens of stacks of $100 bills — easily $50,000 in that picture alone — as he lays in bed.
In another photo, he’s laying in front of stacks Benjamins that spell out “B-R-O-K-E.”
According to the rapper, real name Curtis J. Jackson III, he’s still making millions, but the numerous lawsuits that he is facing are the reason behind the bankruptcy.
When a person files for bankruptcy, an automatic stay kicks in that protects them from creditors and bill collectors, collection agencies, government entities or other persons that are seeking money. This automatic stay is a powerful tool that can protect people who are behind on child support payments, about to be evicted from their homes, or who are facing large settlement payments.
When 50 Cent filed for his bankruptcy, it was largely due to the fact that an automatic stay would be put in place. That automatic stay was a protective financial move that happened just three days after a judge ordered the rapper to pay for an invasion-of-privacy lawsuit involving Lastonia Leviston. “Fiddy” was sued for posting a sex tape of Leviston who alleged 50 Cent acquired the video she made with her boyfriend and then added himself to it as a crude commentator and posted it online without her knowing about it.
“Mr. Jackson’s business interests will continue unaffected in the ordinary course during the pendency of the Chapter 11 case,” said 50’s attorney William A. Brewer III at the time of the filing. “This filing for personal bankruptcy protection permits Mr. Jackson to continue his involvement with various business interests and continue his work as an entertainer.”
While 50 Cent made light of the situation, in mid-February U.S. Bankruptcy Judge Ann M. Nevins wondered if the rapper was being outright dishonest and called him back to bankruptcy court. As she told the rapper’s attorney, James Berman, during that court session: “I’m concerned about allegations of nondisclosure or a lack of transparency in the case.”
“There’s a purpose of having a bankruptcy process be transparent, and part of that purpose is to inspire confidence in the process,” the judge said. She added that bankruptcy court is where “an honest but unfortunate debtor can come into court and seek relief.”
“When that process becomes very public, the need for transparency, I believe, is even higher,” she said.
Additionally, Judge Nevins ordered the rapper to appear in court. The rapper’s legal team issued a statement saying he would appear in court “to make sure that all questions have been addressed.”
Meanwhile, his lawyers assured the judge that “Mr. Jackson has been forthcoming and transparent with all creditors.”
But that’s not the story that his creditors are claiming. The issue of 50 Cent’s potential mockery of bankruptcy court was brought up in court papers that were filed this past January. In those papers, three claimants in the bankruptcy case – headphone maker Sleek Audio, SunTrust Bank, and 50 Cent’s ex-girlfriend Lastonia Leviston – claim that they’re owed a combined $29 million.
The claim also raises the issue that in addition to posting pics of him swaddled in money, the rapper has also posted pictures of huge public performances he most likely was paid for – despite the fact that he hasn’t reported the earnings to bankruptcy court.
The January court papers also point out that while 50 Cent never admitted to owning property, he later showed off a picture on his Instagram with the caption: “My crib is almost finished in AFRICA. I’m gonna have the craziest housewarming party ever.”
The trio of claimants also allege that the rapper hid in court papers the fact that he trademarked the “50 Cent” brand back in 2004.
Posting MORE Pictures
Now, just days after the judge asked him to be more transparent, the rapper is back to posting pics to his Instagram.
In the latest, the rapper poses with towers of money behind him. The caption reads: “The KANAN Tape now playing, I’m Too Rich,” in reference to his song “Too Rich for the B—h.”
But this time, it’s not the judge that’s admonishing him for his antics. One follower wrote:
“Didn’t the judge just speak to you about this? A hard head gonna make a broke a–!”
“50 does not give a f–k,” said another. “They want him back in court for takin pics with money and he does it again. Hahaha.”
So, if a person has declared bankruptcy, but then posts a number of pictures to Instagram is that considered bankruptcy fraud?
Bankruptcy fraud is taken very seriously, by courts, and also bankruptcy trustees who have been appointed to handle the case. The actions a trustee makes when bankruptcy fraud is suspected is based on the specifics of the case, who is suspected, and what form of fraud is being committed.
When a trustee suspects that fraud is occurring, but does not have sufficient evidence, the trustee is able to compel testimony and document production from almost anyone, anywhere, as part of a Bankruptcy Rule 2004 examination.
The Bankruptcy Rule 2004 examination authorizes the bankruptcy trustee to examine the following:
- the actions, conduct, property, liabilities, or financial condition of the debtor
- any matter that may affect the administration of the bankruptcy estate, or
- any matter that may affect the debtor’s right to a discharge.
In taking a closer look at 50 Cent’s case, it seems that his actions are proving that he has enough money to pay back creditors, or at least that he has enough money to flaunt it.
If a trustee is able to gather enough evidence to support the fact that fraud might be occurring, that trustee is able to file a lawsuit against the appropriate party (this can be anyone, not just debtors or creditors) as part of what is called an adversary proceeding.
Adversary proceedings are similar to typical lawsuits, but they usually proceed to trial much more quickly. A summons and complaint are served, usually through first class mail.
An adversary proceeding can be used to perform the following:
- remedy fraudulent transfers (transfers for less than full value) and recover property or money from the person or entity who received the fraudulent transfer
- obtain hidden or undisclosed property from whomever is in possession of the property
- either object to or revoke the discharge of a bankruptcy debtor who has been found guilty of hiding assets or attempts to transfer assets without the trustee’s awareness
- recover property from employees who have wrongfully taken assets of businesses in bankruptcy
- recover property wrongfully seized by creditors
- determine the validity, priority, and amount of liens fraudulently placed on bankruptcy assets, and
- recover money from people who have used a bankrupt business to operate a ponzi scheme.
Temporary Injunctions and Restraining Orders
In cases where a trustee has enough evidence to show that the bankruptcy estate is being irreparably harmed because of fraudulent transfers and does not have time to wait for an adversary proceeding to be concluded, the trustee is able to seek emergency relief through a temporary restraining order or a temporary injunction.
With this motion, the court is able to prohibit the transfer of disputed assets and can also use this to allow the trustee to take possession of the assets once the adversary proceeding has occurred. If the trustee has enough evidence and an affidavit stating that if the person committing the fraud is notified of the upcoming adversary proceedings that they will deplete the assets even more, then a temporary relief is able to be granted without first notifying the person in possession of the assets. Typically, a full hearing will take place within 10 days of the order being requested.
Bankruptcy crimes are not prosecuted in the bankruptcy court. They are actually treated like federal crimes and are prosecuted by the United States Attorney in the Federal Courts.
Examples of bankruptcy crimes include:
- filing a false claim
- knowingly concealing assets
- making false oaths
- embezzlement, and
- filing fraudulent petitions.
Bankruptcy crimes are punishable by fines and/or up to five years in prison.
While it’s unclear if 50 Cent is committing bankruptcy fraud, it definitely seems as if the rapper has enough money to satisfy debtors. We will have to wait and see if any further motions are filed against the rapper.
Working with a Bankruptcy Attorney
Bankruptcy law can be hard to understand. Because of this, it’s highly advised that you work with a bankruptcy attorney that can walk you through the process and clarify any questions or concerns you might have. There can be a lot of questions during this extremely stressful time. Let the lawyers at Resnik Hayes Moradi LLP walk you through the process so you can achieve the best outcome possible.