California Businessman Sentenced for Bankruptcy Fraud

Steven K. Zinnel, 50, has been sentenced to 17 years and eight months in prison for 15 counts of bankruptcy fraud and money laundering. The sentence, which was handed down by the United States District Court in Sacramento, is thought to be the longest ever imposed in the district’s history.  Zinnel was also ordered by Judge Troy Nunley to forfeit real estate and corporate interests worth nearly $3 million and pay fines totaling nearly $500,000.

Evidence shown at the trial confirms that Zinnel is guilty of concealing assets from the bankruptcy court including his “silent” investment in an electrical infrastructure company.  Zinnel had invested hundreds of thousands of dollars and prepared court filings, but his name ever appeared in any public filing of this company.  The company paid distributions to Zinnel as an owner, but those distributions were disguised as payments to a shell company held in the name of co-defendant Derian Edison.  The court ordered Zinnel’s interest in that company forfeited, and the government is to receive $2.8 million from its sale to its records owner.

After successfully concealing the property and the discharge of his bankruptcy, Zinnel laundered funds back to himself through Derian Edison’s company, her attorney-client trust account, and her personal bank accounts.  Zinnel used several different corporations registered in others’ names to disguise his control of property and to direct the disposition of the money.

The investigation of Zinnel began after he called the Federal Bureau of Investigation to investigate his wife.  According to documents on file with the court, when agents followed up on Zinnel’s call to the FBI, his own bankruptcy crimes were discovered.

This case is a product of an investigation by the Federal Bureau of Investigation and the IRS-Criminal Investigation.  Assistant United States Attorneys Matthew D. Segal and Audrey B. Hemesath prosecuted the case.

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