Dallas Bankruptcy Fraud Defense Lawyer

bankruptcy fraud

The bankruptcy process should ideally end with an individual or business discharging debts that have become unmanageable while creditors receive their equitable share of the debtor’s assets. However, in some cases, creditors may accuse a debtor of cheating the process by hiding assets, giving false statements, or engaging in other forms of bankruptcy fraud. Instead of a fresh financial start, the debtor may suddenly face the prospect of significant civil and criminal penalties under federal law.

A Broden & Mickelsen, LLP, we know that going through a bankruptcy proceeding is challenging enough. To find yourself dealing with a white-collar crime, fraud investigation, civil action, or nonviolent criminal charges can make the situation seem overwhelming. We’re here to help. With more than 60 years of combined criminal defense experience, including handling numerous trials and appeals in federal courts in Texas and many other states, we will know how to protect your rights and fight for the best possible outcome for you.

A federal bankruptcy fraud case can move quickly. It will be essential to get legal help as early as possible. Call or contact us online today to discuss your case with a Dallas bankruptcy fraud lawyer if you have been charged or faced an investigation for bankruptcy fraud. Our initial consultations are free and confidential.

What Is Bankruptcy Fraud?

The federal government’s criminal bankruptcy fraud laws are set out in Chapter 9 of Title 18 of the U.S. Code. While all offenses defined in this chapter are associated with bankruptcy fraud, the statute the federal government most often relies on in a bankruptcy fraud prosecution is 18 U.S. Code § 157.

The statute makes it a crime for anyone to intentionally file a fraudulent bankruptcy petition or other documents in a bankruptcy proceeding or to otherwise make a “false or fraudulent representation, claim, or promise” related to a bankruptcy proceeding, including falsely claiming to be going through bankruptcy when one has not been initiated.

Additionally, Chapter 9 prohibits conduct such as knowingly and fraudulently concealing or transferring assets or making false oaths and claims in violation of 18 U.S. Code § 152.

While debtors are frequently charged with bankruptcy fraud, creditors can also face liability. For instance, under 18 U.S. Code § 152, it is illegal to file a false claim against a debtor in a bankruptcy proceeding with the intent to defraud or knowingly and fraudulently receive “any amount of material property” from a debtor after a bankruptcy petition has been filed with the intent to skirt federal bankruptcy laws.

Types of Bankruptcy Fraud

Bankruptcy fraud is a federal crime. Typically, the Federal Bureau of Investigation (FBI) will investigate cases of suspected fraud, while the local U.S. Attorney’s office will handle the prosecution of the case. However, other federal agencies, including the Internal Revenue Service (IRS), may become involved in a case.

Many types of bankruptcy fraud can be prosecuted. The FBI and prosecutors typically pursue cases in which an individual or business is suspected of:

  • Concealing assets or transferring them to another person. To keep assets from being liquidated and ultimately paid out to creditors, a debtor may try to hide the assets in different bank accounts or transfer them to another person or entity.
  • Filing for bankruptcy multiple times in different courts. Although an individual or business can file more than one bankruptcy, they must wait a certain period between filing and filing a petition for legitimate reasons. If a person becomes a serial bankruptcy filer, it can raise questions about criminal intent.
  • Providing false information or omitting material information. The bankruptcy process works only when debtors and creditors alike participate in the process with honesty and transparency. For example, if a debtor fails to list an asset to keep it from being liquidated or a creditor fraudulently stakes a claim to the debtor’s assets, it could lead to criminal charges.
  • Bribing a court-appointed trustee. A person or company facing bankruptcy can be under tremendous personal, professional, and financial strain. As a result, the debtor may communicate unclearly or improperly with a trustee and face exposure to being prosecuted for bribery.