RECOMMENDATION 21

Part: 
Three
Chapter: 
2

State and Local prosecutors should use the bankruptcy laws to collect unpaid fines

Courts frequently impose a monetary fine after a conviction for an obscenity violation. In a number of cases, especially those involving corporate defendants, these fines may go unpaid. Once conventional means of collecting of such fines have been exhausted these outstanding judgments can be satisfied by the use of bankruptcy laws.[250] When a defendant accumulates two or more outstanding debts the prosecutor can file an involuntary bankruptcy petition and the court can ultimately take custody of any assets and liquidate them to satisfy those debts including unpaid fines. The liquidation should include items of value such as real property, structures and fixtures. The liquidation would not include the sale or distribution of obscene material which may be a part of the inventory. All such material would be disposed of in the manner provided by law.

The prosecutor in Atlanta, Georgia, successfully used the bankruptcy laws to collect fines and made it unprofitable for many dealers in obscene material to stay in business.[251]

The bankruptcy proceedings are also useful in determining the true ownership of the businesses who deal in obscene materials. This is particularly helpful when "sham" or "shell" corporations are used to conceal ownership. The results may also assist prosecutors to target the culpable individuals for subsequent criminal prosecution.

State and local prosecutors also may enlist the assistance of federal investigators and prosecutors when dealing with a major obscenity distributor with substantial resources. These federal agents and prosecutors could assist in identifying the resources and their location for inclusion in the bankruptcy action.

Notes

  1. 11 U.S.C. S302 (Supp. II 1984).
  2. Chicago Hearing, Vol. II, Hinson McAuliffe, pp. 183-84.