MIAMI AND FORT LAUDERDALE BANKRUPTCY ATTORNEY

Attorney Representation in Miami, Florida Since 1984

• bankruptcy fraud •

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Bankruptcy fraud happens when a person hides property, in any form, that belongs to the estate of a debtor in a bankruptcy case.

In federal jurisdictions, to be convicted of bankruptcy fraud, an Assistant United States Attorney (AUSA) must present sufficient evidence that when submitted to a jury or judge would prove beyond a reasonable doubt:

1. That there did exist a proceeding in bankruptcy;
2. that certain property and/or assets did belong to the bankrupt estate;
3. Such said defendant willfully concealed such property from the creditors, custodian, trustee, marshal, or other individuals charged with control or custody of such property; and
4. Such said defendant did so knowingly and fraudulently.

How have the courts defined bankruptcy crime violations?

A. When the government declared that an attorney who co-owned a trucking company purposely hid over $400,000.00 in a bankruptcy case, yet could only prove the hiding of $26,000.00, the court stated that in determining the amount of loss in a bankruptcy fraud, a sentencing court may consider relevant conduct that has not been charged and proven at trial, if it is shown by a preponderance of the evidence at sentencing. The attorney's sentence was thereby assessed on the greater amount. United States v. Butner, 277 F.3d 481 (4th Cir. 2002).
B. Most courts agree that a sentencing enhancement is appropriate where a defendant makes a false statement or misrepresentation during bankruptcy proceedings with respect to the existence or nature of the debtor's assets, to shield the assets from creditors. The rationale in these cases is that the defendant works a fraud on the bankruptcy process by seeking the court's protection to discharge his outstanding liabilities, and then evade collection by misrepresenting the debtor's assets, which the creditor is entitled to reach. Plainly, that sort of bankruptcy fraud evidences the aggravated criminal intent justifying the enhancement. United States v. Berg, 250 F.3d 139 (2d Cir. 2001).
C. Where defendant concealed funds during a bankruptcy proceeding and then used the funds in a concealing manner in order not to alert authorities as to their existence, this continuous act constituted as money laundering. The court stated that funds are "based on criminal actions" if they are "derived from an already completed offense, (bankruptcy fraud) or a completed phase of an ongoing offense." In addition to bankruptcy fraud, the defendant was convicted of money laundering. United States v. Butler, 211 F.3d 826 (4th Cir. 2000).

Possible Penalties:

A person may be found guilty of a felony, put in prison up to 5 years, and fined up to $250,000.

Very often times, the State’s Assistant U.S. Attorney (AUSA) will secure a Federal Indictment from a Federal Grand Jury and charge a defendant not only with bankruptcy fraud, but also with money laundering, mail fraud, wire fraud, bank fraud, and conspiracy to commit the aforementioned crimes. One should also be aware that since 1987 parole has been abolished in the Federal System. Expungement (removal of conviction from public records) is also not available.

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