Quoted from investingdad:
If the house is taken, this is a clear example of how the kids are forced to endure the hardship of poor, and fraudulent, actions of the parents.
I'm sure blame will be placed at the feet of the creditors, rather than on the faces in the mirror that thought they could keep money that wasn't theirs to keep.
The ironic thing is, had he set up a proper business entity and paid himself a salary, filed taxes accordingly, etc...the bankruptcy would probably hold water and a lot of this wouldn't be happening.
At least, I assume that's the case.
If the business had good records but was still operated fraudulently it would at least be simpler for the court to figure out what's going on because there wouldn't be room for people to whine about where the money came or went. Fraud still breaks the shielding the business gives you, but good records mean the bankruptcy court will only take stuff that's due to the business.
What the fraud guys do after that is of course a separate matter.