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Bankruptcy fraud is a federal crime that occurs when a person knowingly and fraudulently commits certain prohibited acts in connection with their bankruptcy case. Examples of bankruptcy crimes include: filing false claims, knowingly concealing assets, making false oaths, bribery, embezzlement, and filing fraudulent petitions.

According to the report by the U.S. Department of Justice, in fiscal year 2016, the United States Trustee program filed 2,158 bankruptcy and bankruptcy-related criminal referrals, a 1.3 percent increase over the 2, 131 criminal referrals made during fiscal year 2015.

There are four ways that bankruptcy fraud can be committed:

  1. A debtor conceals assets to avoid having to forfeit them. For example you give family, friends, or relatives property or assets in order to hide your assets.
  1. An individual intentionally files false or incomplete forms. Including false information on a bankruptcy form may also constitute as perjury.
  1. An individual files multiple times using either false information or real information in several jurisdictions
  1. An individual bribes a court-appointed trustee

In order to convict a person of bankruptcy fraud, it must be proven that the individual intended to commit the crime. There must be an actual intent to deceive, which requires evidence that there was planning involved. If a person makes a mistake when preparing the bankruptcy documents, this would not be considered bankruptcy because intent is a necessary element of the crime. Federal prosecutors can bring criminal charges for suspected bankruptcy fraud under 18 U.S.C. Chapter 9.

Bankruptcy fraud carries a sentence of up to five years in prison, or a fine of up to $250,000 or both. Victims of bankruptcy fraud may also seek civil remedies such as monetary damages.

If you have been charged with the crime of bankruptcy or you would like to ensure you move through the bankruptcy process without problems, please be sure to consult with a local attorney near you such as the criminal defense attorney San Francisco CA locals turn to.  


Thanks to authors at The Law Offices of Christopher Morales for their insight into Criminal Defense Law.


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