Florida Criminal Defense Lawyers Tackle Bankruptcy Fraud Allegations


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Bankruptcy occurs on the federal level. If someone violates the federal laws related to bankruptcy, he or she may face serious penalties. It is important to understand what constitutes fraud in the bankruptcy context in order to avoid the possibility of being charged with a crime of this nature.

Bankruptcy Fraud Defined

Bankruptcy fraud is defined under Title 18 U.S.C. §152. The crime occurs when a debtor knowingly and fraudulently conceals any property that belongs to the debtor or his or her estate from a bankruptcy court, trustee, custodian or other officer who has been appointed to control or retain custody of the property of the debtor. Additionally, bankruptcy fraud
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consists of making a false statement that is material to the bankruptcy in a Chapter 7 or 11 bankruptcy filing. This crime is considered a white collar crime due to it not usually including violent criminal activity and the possible involvement of professionals committing the crime.

Bankruptcy Fraud Examples

During a bankruptcy filing, the debtor is required to declare all of his or her assets and liabilities. This information must be reported to the bankruptcy court and specifically to the bankruptcy trustee. Intentionally withholding information about the debtor’s assets is one example of bankruptcy fraud that can land the debtor in legal troubled waters. Bankruptcy fraud is committed when a person conceals assets from the bankruptcy trustee, such as not reporting a financial account or real property. Bankruptcy fraud is also committed when a person makes a false statement that is material. This can occur when an asset is omitted from necessary filings.

Some examples of acts that have resulted in conviction of bankruptcy fraud include individuals transferring funds from a business financial account to a personal account when the business is filing bankruptcy and the transfer is not disclosed, not reporting bank accounts in which a business or individual who has filed bankruptcy has, back-dating receipts so that recently sold assets could not be reached by the bankruptcy court and destroying documents related to the business or individual’s bankruptcy.

Third Party Liability

Other people may be criminally culpable even if they are not the ones who are undergoing the bankruptcy if certain circumstances exist. For example, it is criminal conduct for a third party to knowingly and fradulently receive property from a debtor when the third party knows that a bankruptcy is underway. It is also illegal for a third party to conceal property or information that is related to property or the bankruptcy proceeding. A third party also cannot destroy financial information related to the debtor’s financial affairs.

Criminal Penalty

A person found guilty of bankruptcy fraud can face up to five years imprisonment for each charge. Additionally, he or she may be subject to other criminal penalties, including having to pay fines or restitution based on the fraudulent conduct.

Disallowance

A debt that otherwise may have been discharged through the process of bankruptcy can be disallowed from discharge in bankruptcy if the debtor committed fraud.

Statute of Limitations

There is a statute of limitations for bankruptcy fraud. However, this statute of limitations does not begin to run until after the debtor is discharged from the debt during the bankruptcy process.

Proof for Bankruptcy Fraud

When determining whether bankruptcy fraud occurred, the prosecution must show that the debtor acted with the intent to deceive. Mere negligence is not sufficient. This is often a question of fact for the jury. However, certain types of bankruptcy fraud can be inferred by the jury. For example, failing to file an income tax return and to pay taxes for which the debtor is liable may be sufficient to show that a debtor willfully tried to evade or defeat tax. These penalties are often more serious and severe than simply failing to file on time.

Legal Assistance

If a person is facing bankruptcy, it is important for him or her to contact a bankruptcy lawyer for assistant. However, if he or she is charged with bankruptcy fraud, it is critical to contact a Florida criminal defense lawyer who has experience with federal and white collar crimes. A lawyer who has the requisite experience can help the individual navigate the complicated criminal justice system. He or she can try to negotiate for a plea bargain that does not involve jail time or try to correct mistakes made during the bankruptcy process in order to avoid criminal implications on the defendant. If a plea bargain is not forthcoming, he or she can discuss possible legal defenses to raise if the case goes to trial.

ABOUT THE AUTHOR: Attorney David Joffe
Joffe Law, P.A. is dedicated to protecting clients' rights during investigation and passionately advocating in their defense during prosecution of serious and complex state and federal charges, pursuing the most favorable outcomes.

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Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer. For specific technical or legal advice on the information provided and related topics, please contact the author.

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