WHAT IS BANKRUPTCY FRAUD?
The primary statute, 18 U.S.C. § 157, proscribes devising or intending to devise a scheme to defraud by filing a fraudulent bankruptcy petition, a document in a bankruptcy proceeding, or making a false statement or claim in relation to a bankruptcy proceeding.
Note that there are other related federal statutes prohibiting specific types of bankruptcy fraud and each carries its own penalties. For example, bankruptcy fraud can also be prosecuted under 18 U.S.C. § 152 (Concealment of assets; false oaths and claims; bribery) which proscribes certain conduct in relation to a bankruptcy proceeding including knowingly and fraudulently concealing property belonging to the debtor and knowingly and fraudulently making false statements in relation to a bankruptcy proceeding.
ELEMENTS OF BANKRUPTCY FRAUD
The elements of bankruptcy fraud, as defined by 18 U.S.C. § 157, are:
A person who, having devised or intending to devise a scheme or artifice to defraud and for the purpose of executing or concealing such a scheme or artifice or attempting to do so—
- files a petition under title 11, including a fraudulent involuntary petition under section 303 of such title;
- files a document in a proceeding under title 11; or
- makes a false or fraudulent representation, claim, or promise concerning or in relation to a proceeding under title 11, at any time before or after the filing of the petition, or in relation to a proceeding falsely asserted to be pending under such title
PENALTIES FOR BANKRUPTCY FRAUD
Penalties for an individual convicted of bankruptcy fraud under 18 U.S.C. § 157 or 18 U.S.C. § 152 include fines and/or up to five years' imprisonment.
POTENTIAL DEFENSES AGAINST BANKRUPTCY FRAUD CHARGE
Lack of Intent or Mistake.
Defendant did not intend to devise a scheme to defraud and/or defendant's failure to disclose was an unintentional error.
Withdrawal or Renunciation.
Defendant corrected the erroneous document filed in the bankruptcy proceeding soon after discovering the error or Defendant renunciated their decision to withhold information.
Defendant's alleged offense was taken to achieve a lawful and legitimate purpose.
The prosecution has the burden to prove every element of the crime of bankruptcy fraud beyond a reasonable doubt. Defendant cannot be convicted if there is any reasonable doubt and the prosecution does not have sufficient evidence to show that Defendant committed the crime.
CONTACT LEAF LEGAL, P.C. TODAY
Are you or your company facing federal bankruptcy fraud charges in the SDNY, EDNY, or elsewhere in the United States? Our team at Leaf Legal, P.C. is prepared to work tirelessly to help you mount your defense. To request a consultation, contact us online or call us at 212-933-9420.