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For 'Real Housewives' couple, a real lesson

On The Real Housewives of New Jersey, Teresa and Joe Giudice have been lightning rods, known for their brawls with others complete with harsh words, table-flipping tirades, and backstabbing strategies. And, of course, they flaunted a lavish lifestyle: A five-bedroom, $1.7 million house. A Maserati, Cadillac Escalade, Ford 350, and toys like a Sea-Doo, a Kawasaki quad, and two go-carts.

It was all built on a facade.

A bankruptcy trustee overseeing the couple's case this week submitted a report that estimates the Giudices owe creditors $13.4 million.

They have just $140,000 in equity in their house. In their cars and toys, they have no equity whatsoever. And they are both facing prison terms for financial fraud.

Their debts include $5.4 million to Wachovia bank, $1.7 million to the Community Bank of Bergen County, $1.3 million to Dime Savings Bank, $500,000 in New Jersey state taxes, and $386,000 to the Internal Revenue Service.

The couple's fall began in 2009, when they filed for bankruptcy, blaming the recession's impact on Joe Giudice's construction business. While the couple's goal was to get out from under their debts, they had in fact put themselves on a self-destructive path.

John Sywilok, a court-appointed trustee, soon came to the conclusion that the couple had hidden assets and income. Joe Giudice invoked the Fifth Amendment against self-incrimination and later agreed to a settlement in which the court denied discharge of his debts. His wife followed suit.

Both also admitted that they conspired to defraud banks and other lenders by submitting fraudulent documents in connection with nearly $5 million in mortgages, construction loans and lines of credit between 2001 and 2008.

Sywilok, the bankruptcy trustee, sought to satisfy creditors via the Giudices' possessions, but they were mostly financed to the hilt. Sywilok has been able to secure just $15,000 from the couple.

But with a judge previously having denied the discharge of the Giudices' debts, it means that creditors can pursue the money owed to them, said Ronald LeVine, a bankruptcy attorney in Hackensack not affiliated with the case. "So they're in the same boat as before," he said. "Whatever they owed, they owe now. It was a terrible decision to file for bankruptcy. They might have gotten away under the radar otherwise."

In March, the Giudices pleaded guilty to financial fraud. They will be sentenced in July. Teresa Giudice, 41, faces up to 27 months in prison, while Joe, 43, faces up to 46 months. He is an Italian citizen and could be deported if convicted.

Their prison terms could be staggered to keep one parent at home with their four children — ages 4 to 14 — while the other is behind bars, officials say.

Teresa Giudice will continue to film her Bravo show. "She's currently in production for season six," her lawyer told reporters last month.

Since starring on Housewives, Giudice has co-authored three successful cookbooks: Skinny Italian, Fabulicious, and Fabulicious!: Fast & Fit. All three made the New York Times best seller list.

Reporting: New York Daily News, Star Ledger (Newark, N.J.), The Record (Bergen County, N.J.), People.com, Associated Press.

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