Joseph Smith’s Bankruptcy Fraud
A new bankruptcy law goes into effect on January 1, 1841 allowing private citizens to file for solvency with the exception that properties could not be transferred to others to avoid paying debts owed. Before this time only corporations were afforded the ability to declare bankruptcy.
January 30 – February 1, 1841
After going through a tumultuous financial time and trying to recuperate from one crisis after another, the LDS Church held a special conference on January 30, 1841 where they proposed to sign over everything it collectively owned to the care of Joseph Smith. A week later on February 8, 1841, they did just that by officially electing him as the sole trustee in trust for distribution of monetary funds and properties in whatever manner he deemed necessary. The lines of what Joseph personally owned and what belonged to the Church became blurred and the ownership of who owned what became indistinguishable. – Joseph Smith and Legal Process: In the Wake of The Steamboat Nauvoo, p 746
While this may not seem like a big deal, the issue got sketchy with events that transpired over the next fifteen or so months…
December 1841 – August 16, 1842
According to records in Hancock County, Illinois, Joseph and Emma Smith made several major transfers of property and deeds to their minor children from December 1841 to August 16, 1842 with the last date being just two days before filing for personal bankruptcy with the state. They ‘sold’ their properties to their minor children for $100 when in fact the properties were worth thousands of dollars. – History of the Saints, pp 96-97
This was a huge problem in the eyes of the feds. The new law left no wiggle room for such shady dealings so clearly, Joseph and Emma were soon to be in direct violation of the law.
April 18, 1842
On 18 April 1842 Joseph Smith along with brothers Hyrum and Samuel and many other Mormons filed for bankruptcy. – See Joseph Smith Papers and Today in Church History
May 7, 1842
In May 1842 a public notice was published in the local paper declaring the bankruptcy by a new found Quincy law firm (The Red Brick Store, p 18) –
J.H. Rolston, Warren & Wheat Solicitors for Petitioner – The Wasp, 7 May 1842;
“District Court of the United States, within and for the District of Illinois, In the matter of the Petition of Joseph Smith, of Hancock County to be declared bankrupt and to be discharged from his debts. Notice is hereby given, that Joseph Smith, of Hancock county has filed his petition to this Court to be declared a Bankrupt and to discharged from his debts under the Act of Congress, in such case made provided: and that an order has been duly entered in this Court appointing the 6th day of June next, at the District court room in the City of Springfield in this District, as the time and place for the hearing of said petition: all persons interested may then and there appear and show cause, if any they have, why the prayer of said Petition should not be granted. Dated this 28th day of April A. D. 1842
According to records Smith owed more than $73,000 to creditors.
In October 1842 US Attorney Justin Butterfield traveled to Nauvoo to assess claims made by John C. Bennett that Smith had been unloading his property to avoid paying his creditors. Upon his arrival he determined the allegations made by Bennett were under reported and made the determination that Smith could not be released of his debts owed. – Joseph Smith and Legal Process: In the Wake of The Steamboat Nauvoo, p 756
J. Butterfield, U.S. Attorney for the District of Illinois Letter to C. B. Penrose, Solicitor of the Treasury, 13 October 1842, National Archives of the U.S.;
“On the 8th day of Sept last I left Chicago for Nauvoo the place of residence of Joseph Smith & Hyrum Smith applicants for the benefit of the Bankrupt Act, in order to obtain the necessary evidence to oppose them as I informed you…Upon my arrival at Nauvoo I made a very full examination into the transfers of property made by Joseph Smith upon the eve of his application for the benefit of the said act, and I succeeded beyond my expectations; I found that after the passage of the Bankrupt Act, and after he had contracted the debt upon which the judg’t in favor of the United States was rendered against him, he made voluntary conveyances of real estate of an amount much more than sufficient to satisfy the said judgment to his wife and to his infant children and friends, without any consideration whatever; I found that all the statements made by Gen’l Bennett in relation to Joseph Smith’s fraudulent transfers of his property were true; and that there were several other fraudulent conveyances not mentioned by him…I shall be ready to establish such fraudulent acts on the part of Joseph Smith as will prevent his discharge.”
So how do we take all that info and still see Joseph Smith as a true prophet of God? Well, according to the Bible we can’t.
Mark 12:17; “And Jesus answering said unto them, Render to Caesar the things that are Caesar’s, and to God the things that are God’s. And they marvelled at him.”
Romans 13:7-8; “Render therefore to all their dues: tribute to whom tribute is due; custom to whom custom; fear to whom fear; honour to whom honour. 8 Owe no man anything, but to love one another: for he that loveth another hath fulfilled the law.”
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