A Point Loma couple who fled the area to avoid bankruptcy fraud charges were sentenced Oct. 23 to federal prison terms, though they have already served most of their time in Mexico since being arrested there in 2003.
Terry Linn Brunning, 45, received a 33-month term and Susan Jennifer Brunning, 55, got six months in prison from U.S. District Court Judge Napoleon Jones, Jr. He ordered Terry Brunning to pay a $300 penalty assessment fee.
Assistant U.S. Attorney John Owens said federal prison officials will look at how much time the couple spent in a Mexican prison while fighting extradition, and may count some or all of it towards their respective terms. Susan Brunning has served her full sentence if her other incarceration counts.
The couple operated two Postal Annex franchises, one of which was in Point Loma. They filed for bankruptcy on Aug. 20, 2002, but the prosecutor said they had previously transferred $1 million to an offshore financial institution located on an island near Great Britain.
They claimed not to have many assets and concealed ownership of a Rolls Royce, a Jaguar, a 57-foot sailing yacht and a promissory note worth $155,000.
After a U.S. Bankruptcy Court trustee discovered some of the assets, Terry Brunning created a fictitious claim against the bankruptcy estate in order to obtain some of the proceeds.
The trustee learned of the $1 million in the offshore account but refused to turn it over. After three years of litigation, a court on the island ordered the funds to be turned over to the bankruptcy trustee.
“If you hide your money offshore, we will find it,” said Kenneth Hines, special agent with the Internal Revenue Service criminal investigation in San Diego.
The Brunnings were arrested in July, 2003, in Puerto Vallarta, Mexico.
Most defendants don’t contest extradition, but they did, and after all appeals were exhausted, they were returned to the U.S. in December 2005 to face charges in San Diego.
“The Brunnings tried to run from their financial obligations and hide their assets, but law enforcement did not stop until they repatriated both the assets and the Brunnings,” said U.S. Attorney Carol Lam in a press release.
On Aug. 22, Terry Brunning pleaded guilty to two counts of bankruptcy fraud and money laundering. Susan Brunning pleaded guilty to bankruptcy fraud.
“The convictions in this case demonstrate that such conduct, as well as other crimes committed in connection with a bankruptcy case, will be aggressively pursued,” said Steve Katzman, the U.S. bankruptcy trustee for Region 15, in a press release.