A TV camera points to the U.S. Supreme Court as justices inside heard arguments in Gonzalez v. Google at the court in Washington, February 21, 2023
Kevin Lamarque | Reuters
The Supreme Court in a unanimous decision Wednesday ruled that a woman could not use protection under the U.S. bankruptcy code to avoid paying a debt that resulted from fraud by her partner.
The court said that the woman, Kate Bartenwerfer, owed the debt even if she did not know or could not have known about her partner’s fraud in connection with the sale of a home they had remodeled.
The 9-0 ruling written by Justice Amy Coney Barrett underscored a Supreme Court decision in 1885, which found that two partners in a New York wool company were liable for the debt due to the fraudulent claims of a third partner even though they were not themselves “guilty of wrong.”
Barrett dismissed Bartenwefer’s grammatically focused argument that the relevant section of the bankruptcy code, written in a passive voice as “money obtained by fraud,” refers to “money obtained by the individual debtor’s fraud.”
“Innocent people are sometimes held liable for fraud they did not personally commit, and, if they de-
clare bankruptcy, [the bankruptcy code] bars discharge of that debt,” Barrett wrote.
“So it is for Bartenwerfer, and we are sensitive to the hardship she faces,” she wrote.
Justice Sonia Sotomayor, in a concurring opinion joined by Justice Ketanji Brown Jackson, noted that the ruling involves people who acted...
This story is the second in an ongoing series on the Cost of Fraud, as Open the Books tallies the hidden fees on American tax returns. Click here to read the first story on fraudulent autism billi...