A prosecutor on Friday urged a federal judge to sentence "Dance Moms" star Abby Lee Miller to prison instead of probation for bankruptcy fraud.
Assistant U.S. Attorney Gregory Melucci called witnesses to buttress his contention that the reality TV show star tried to avoid repaying hundreds of thousands of dollars in debt by hiding about $775,000 in income from a bankruptcy court.
Miller's attorneys will call witnesses when the hearing continues Feb. 24, after which she'll be sentenced. Miller and her attorneys said they won't comment until then.
Melucci faces an uphill battle to convince U.S. District Judge Joy Flowers Conti that Miller deserves two to 2 1/2 years in prison.
That's because the judge filed tentative findings on the eve of Friday's hearing essentially agreeing with the defense argument that Miller deserves probation because no creditors lost money once the bankruptcy fraud was discovered.
But Melucci said the law allows Conti to sentence Miller based on the amount of money she intended to avoid repaying.
He said the only reason for Miller to hide income was to avoid repaying everything she owed. "No one would rob a bank if he knew it had no money in it," Melucci argued.
Miller filed for bankruptcy largely because she had defaulted on a $245,000 mortgage on a Florida condominium and a $96,000 mortgage on her dance studio in Penn Hills, a Pittsburgh suburb. She listed nearly $60,000 in other debts, including unpaid property taxes.
Miller wanted the Chapter 11 bankruptcy court to let her repay only $150,000 of the condominium mortgage at a lower interest rate — and at one point offered to forfeit the property to avoid repaying anything. She sought to repay her other debts in full, but without interest or at lower rates.
The outraged bankruptcy judge eventually ordered Miller to repay every penny.
Miller pleaded guilty in June to purposely hiding her income in financial disclosure statements filed with the bankruptcy court starting in 2012. People who file Chapter 11 must honestly disclose their assets so the creditors can fairly assess whether to approve any court-approved repayment plan.
"The entire Chapter 11 system is based on full disclosure, and if there's not full disclosure, the whole system falls apart," U.S. Bankruptcy Trustee Larry Wahlquist testified.
But Miller repeatedly hid her true income — as well as contracts for future income from her TV shows — until her channel-surfing bankruptcy judge saw her on TV and concluded Miller must be making far more than the $8,899 in monthly income she initially declared.
Wahlquist testified Miller earned $8,000 to $25,000 per episode as her popularity exploded, and deposited money in nonapproved bank accounts to hide assets.
Miller eventually coughed up $288,000 in TV income she'd received. Federal investigators later determined she had hidden nearly $550,000 more from personal appearances, dance sessions and merchandise sales.
Miller made a major concession on an unrelated charge that she also pleaded guilty to in June, sneaking $120,000 in foreign currency into the country from Australia in 2014.
Miller agreed to forfeit that money, which she previously sought to avoid. In return, prosecutors won't ask the judge to enhance Miller's sentence for using children to help in that scheme.
Prosecutors can't comment on that and haven't named the children. They have said in court documents that Miller divvied up money and hid it in the luggage of others in her party to avoid a federal law requiring people to report bringing more than $10,000 in foreign currency into the country.