What Is Bankruptcy Fraud?

Illionois defense attorney,  Illinois criminal defense lawyerIn February 2019, a man from Madison, Wisconsin was sentenced to one year in federal prison for bankruptcy fraud. Before a guilty plea was entered, it was found that the man lied about a real estate property on his bankruptcy claim, lied at the Meeting of Creditors, and then lied again while testifying in federal court.

While this man may have attempted to hide assets, what about those that simply make a mistake when filing for bankruptcy? Do they face the possibility of bankruptcy fraud charges, too? What exactly is bankruptcy fraud?

What Is Bankruptcy Fraud?

When a person is suspected of bankruptcy fraud, they are first investigated by the Federal Bureau of Investigation. They are then prosecuted by the U.S. Department of Justice in federal court and, if convicted, are sentenced to federal prison. The amount of time they spend is often at the discretion of the judge.

Most of these crimes are committed by the debtor, or the person filing the bankruptcy claim. There are times though, when creditors, bankruptcy trustees, court personnel, and other third parties are found guilty of bankruptcy fraud.

Types of Bankruptcy Fraud

Bankruptcy fraud is covered in the federal statute 18 of the United States Code, Sections 152 and 157. This statute identifies many different types of bankruptcy fraud including:

  • Failure to include assets in the bankruptcy claim;
  • Asking someone to help hide assets;
  • Not including a transfer of property that occurred before the claim was filed;
  • Filing an incomplete or inaccurate bankruptcy form;
  • Destroying records, or attempting to hide records;
  • Failing to use one’s own identity when filing for bankruptcy;
  • Filing for multiple bankruptcies in different jurisdictions;
  • Filing a bankruptcy claim for someone else, without their permission;
  • Offering bribes to a bankruptcy trustee or court official; and
  • Embezzling funds from the bankruptcy estate.

To ensure one is not charged with bankruptcy fraud, it is critical that when filing for bankruptcy, all forms are filled out as accurately as possible, and that they are complete.

It is easy to make a mistake though, as people are sometimes prone to do. This does not necessarily mean one will face bankruptcy fraud charges. For example, making a mistake when filling out the amount of debt one owes is a small mistake that will likely not result in bankruptcy fraud charges. Failing to list a real estate property, as in the most recent case, and continuing to not disclose that information, will likely result in charges.

Bankruptcy Fraud Penalties

Like any other crime, after conviction, a person will face several formal sentences. In addition to this though, their rights are sometimes also restricted. In some cases, these restrictions are set for life.

The formal sentences one could face if convicted of bankruptcy fraud include:

  • Monitoring, or probation;
  • Up to 20 years in federal prison;
  • Maximum fines of $250,000 for each count of fraud;
  • Restitution; and
  • Community service.

A judge may also remove some of a person’s rights after a bankruptcy fraud conviction. These include:

  • The right to vote;
  • The right to travel outside the country;
  • The right to own a firearm;
  • The right to serve on a jury;
  • The right to qualify for certain types of employment;
  • The right to qualify for certain security clearances; and
  • The right to obtain welfare and housing assistance.

Call an Experienced Chicago Federal Fraud Defense Lawyer

Even with a lower prison sentence, the penalties for bankruptcy fraud can remain with a person throughout their entire life. It is for this reason that it is so important that anyone charged with bankruptcy fraud speak with a skilled Chicago federal criminal defense attorney right away. If you have been charged with bankruptcy fraud or any other type of federal fraud, contact the Law Offices of Hal M. Garfinkel today at 312-270-0999. We will build a solid defense to help prove your innocence so you can retain your freedom and your rights. Call us today for your free consultation.

Sources:

https://www.govinfo.gov/app/details/USCODE-2011-title18/USCODE-2011-title18-partII-chap213-sec3282

https://www.justice.gov/usao-wdwi/pr/man-sentenced-year-prison-bankruptcy-fraud

This entry was posted in Fraud and tagged , , , , , . Bookmark the permalink.

225 WEST WASHINGTON STREET, SUITE 2200A, CHICAGO, IL 60606

PHONE: 312-270-0999

FAX: 312-924-0201