Former Crystal Lake Business Owner Sentenced for Concealing Assets

A former Crystal Lake business owner has been sentenced to nine months in federal prison after pleading guilty to concealing assets from a bankruptcy trustee, according to a United States Attorney’s Office Northern District of Illinois press release.

Joseph Michael Phelan, 52, who formerly lived in Bull Valley but now resides in Augusta, Ga., was also ordered during a sentencing hearing Wednesday to be placed on three months of home confinement following his release from prison. He will will also be placed on three years of supervised release and was ordered to pay over $80,000 in restitution.

Phelan, the former president of Phezar Enterprises, Inc., in Crystal Lake, pleaded guilty in September to a charge of concealment of assets from a bankruptcy trustee.

Here is more about the charges brought against Phelan from the United States Attorney’s Office press release:

Phelan, who pleaded guilty to the charge on Sept. 17, 2015, caused a Chapter 7 Bankruptcy Petition to be filed for Phezer Enterprises on Aug. 18, 2008. According to the written plea agreement, after Phelan closed Phezer Enterprises on Aug. 13, 2008, Phelan had three Phezer employees start cutting up and scrapping unused and used Phezer assets, including sheets of stainless steel and various metals.

On Aug. 18, 2008, the day Phezer filed for bankruptcy, Phelan sold 21,182 pounds of stainless steel to a scrap metal company. Phelan personally received $15,251.04 for the steel. As Phelan admitted in the plea agreement, between Aug. 18, 2008 and Aug. 29, 2008, two Phezer employees sold $13,399.24 worth of Phezer metals to a second scrap metal company. The two employees received cash for the scrap and provided the cash to Phelan.

As further stated in the plea agreement, in September and October 2008, Phelan received two checks totaling $51,968.50 issued to him from another scrap metal company for Phezer metals sold to that company.

Phelan deposited both checks in his personal bank account. Phelan did not advise the trustee or a secured creditor that corporate assets had been sold to the three scrap metal companies, or account and deliver to the trustee or the secured creditor the proceeds from the sales of Phezer assets.