Felony Hotline
Felonies: Call Now For Immediate Legal Assistance

1-888-LAW-EXCEL
1-888-529-9235
العربية 中國人 Deutsch English Français 日本語 русский язык Español
Offices | Contact Us
Client Login | Blog | Print | Email | Sitemap
 

Federal - Bankruptcy and Concealment of Assets

Bankruptcy is defined as the legal discharge of indebtedness. Bankruptcy may either be voluntary, if brought by the debtor, or involuntary, if brought by a group of three or more disgruntled creditors. Individuals commonly file under chapter 7 to discharge personal debts, which is now subject to a means test but they can also file under chapter 11 by which they adopt a plan to pay back some creditors a fraction of the debt. Additionally, under individuals can file under chapter 13 if they are currently earning substantial wages but are unable to pay their debt. Businesses on the other hand almost always file for a chapter 11 reorganization allowing them to continue to operate the business as the develop a plan and pay back creditors.

Title 18 of the United States Code 152 deals with concealment of assets, false oaths and claims, and bribery within the context of a bankruptcy proceeding and states as follows :

A person who -

  1. knowingly and fraudulently conceals from a custodian, trustee, marshal, or other officer of the court charged with the control or custody of property, or, in connection with a case under title 11, from creditors or the United States Trustee, any property belonging to the estate of a debtor;
  2. knowingly and fraudulently makes a false oath or account in or in relation to any case under title 11;
  3. knowingly and fraudulently makes a false declaration, certificate, verification, or statement under penalty or perjury as permitted under 1746 of title 28, in or in relation to any case under title 11;
  4. knowingly and fraudulently presents any false claim for proof against the estate of a debtor, or uses any such claim in any case under title 11, in a personal capacity or as or through an agent, proxy, or attorney;
  5. knowingly and fraudulently receives any material amount of property from a debtor after the filing of a case under title 11, with intent to defeat the provisions of title 11;
  6. knowingly and fraudulently gives, offers, receives, or attempts to obtain any money or property, remuneration, compensation, reward, advantage, or promise thereof for acting or forbearing to act in any case under title 11;
  7. in a personal capacity or as an agent or officer of any person or corporation, in contemplation of a case under title 11 by or against the person or any other person or corporation, or with intent to defeat the provisions of title 11, knowingly and fraudulently transfers or conceals any of his property or the property of such other person or corporation;
  8. after the filing of a case under title 11 or in contemplation thereof, knowingly and fraudulently conceals, destroys, mutilates, falsifies, or makes a false entry in any recorded information (including books, documents, records, and papers) relating to the property or financial affairs of a debtor; or
  9. after the filing of a case under title 11, knowingly and fraudulently withholds from a custodian, trustee, marshal, or other officer of the court or a United States Trustee entitled to its possession, any recorded information (including books, documents, records, and papers) relating to the property or financial affairs of a debtor, shall be fined under this title, imprisoned not more than 5 years, or both.

Title 18 of the United States Code 153 addresses the crime of embezzlement against the debtor's estate in a bankruptcy proceeding as follows :

  1. Offense. --A person described in subsection (b) who knowingly and fraudulently appropriates to the person's own use, embezzles, spends, or transfers any property or secretes or destroys any document belonging to the estate of a debtor shall be fined under this title, imprisoned not more than 5 years, or both.
  2. Person to whom section applies. --A person described in this subsection is one who has access to property or documents belonging to an estate by virtue of the person's participation in the administration of the estate as a trustee, custodian, marshal, attorney, or other officer of the court or as an agent, employee, or other person engaged by such an officer to perform a service with respect to the estate.

Title 18 of the United States Code 154 sets forth guidelines pertaining to adverse interests and the conduct of officers throughout the bankruptcy proceeding and states as follows :

A person who, being a custodian, trustee, marshal, or other officer of the court -

  1. knowingly purchases, directly or indirectly, any property of the estate of which the person is such an officer in a case under title 11;
  2. knowingly refuses to permit a reasonable opportunity for the inspection by parties in interest of the documents and accounts relating to the affairs of estates in the person's charge by parties when directed by the court to do so; or
  3. knowingly refuses to permit a reasonable opportunity for the inspection by the United States Trustee of the documents and accounts relating to the affairs of an estate in the person's charge, shall be fined under this title and shall forfeit the person's office, which shall thereupon become vacant.

Title 18 of the United States Code 156 defines the crime of knowingly disregarding bankruptcy law or rule and states as follows :

  1. Definitions. - In this section -
    1. the term "bankruptcy petition preparer" means a person, other than the debtor's attorney or an employee of such an attorney, who prepares for compensation a document for filing; and
    2. the term "document for filing" means a petition or any other document prepared for filing by a debtor in a United States bankruptcy court or a United States district court in connection with a case under title 11.
  2. Offense. -- If a bankruptcy case or related proceeding is dismissed because of a knowing attempt by a bankruptcy petition preparer in any manner to disregard the requirements of title 11, United States Code, or the Federal Rules of Bankruptcy Procedure, the bankruptcy petition preparer shall be fined under this title, imprisoned not more than 1 year, or both.

Title 18 of the United States Code defines bankruptcy fraud as follows :

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 -

  1. files a petition under title 11, including a fraudulent involuntary bankruptcy petition under section 303 of such title;
  2. files a document in a proceeding under title 11, including a fraudulent involuntary bankruptcy petition under section 303 of such title; or
  3. makes a false or fraudulent representation, claim, or promise concerning or in relation to a proceeding under title 11, including a fraudulent involuntary bankruptcy petition under section 303 of such title, 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, shall be fined under this title, imprisoned not more than 5 years, or both.

The Federal Jury Instructions in 26.03 addressing the crime of concealing assets in bankruptcy as follows :

In order to sustain its burden of proof for the crime of concealing assets in bankruptcy as charged in Count of the indictment, the government must prove the following three (3) essential elements beyond a reasonable doubt:

One: On or about the date alleged in the indictment, the proceeding in bankruptcy was in existence;

Two: Defendant fraudulently concealed the property described in the indictment from the custodian of the bankruptcy court; and

Three: The property concealed belonged to the estate of the debtor.

The Federal Jury Instructions in 26.04 goes further to define the term "fraudulently conceals" as follows :

A person "fraudulently conceals" property of the estate of a debtor when that person knowingly withholds information or property or knowingly acts for the purpose of preventing the discovery of such property intending to deceive or to cheat a creditor, a trustee, a custodian, or a bankruptcy judge.

Fraudulently concealing property of the estate of the debtor may include transferring property to a third party or entity, destroying the property, withholding knowledge concerning the existence or whereabouts of property, or knowingly doing anything else by which that person acts to hinder, delay or defraud any of his creditors.

The Federal Jury Instructions in 26.07 defines the essential elements of the crime of knowingly and fraudulently making a false statement, oath, account, or declaration in a bankruptcy proceeding which the government must prove beyond a reasonable doubt as follows:

One : On or about the date alleged in the indictment, the proceeding in bankruptcy was in existence;

Two : Defendant made, or caused to be made, a false statement [oath, account, declaration] in that bankruptcy proceeding or in relation to that bankruptcy proceeding;

Three : Defendant knew that the statement [oath, account, declaration] made was false and;

Four : The false statement related to a material matter.

Federal Jury Instruction in 26.08 defines a "false statement as :

The term "false statement" means an assertion which is known to be untrue when made or when used. The term false statement can also mean any knowing omission of fact done with the intent to deceive or to conceal.