Bankruptcy Fraud: New Wave of Prosecutions

by | Jun 19, 2020 | Fraud, White Collar Crimes

The affect of the COVID-19 pandemic has undoubtedly disrupted businesses across the nation and has caused financial instability, which will lead to an unprecedented amount of bankruptcy filings. It is foreseeable that there will also be an uptick in bankruptcy fraud prosecutions relating to concealment of assets, intentional filing of false bankruptcy forms, or submitting fraudulent information.

Bankruptcy fraud charges have typically been filed to prosecute individual bankruptcy filers and not corporate entities. However, corporate officers, agents, and board members could face liability under the bankruptcy fraud statutes.
The U.S. Department of Justice (DOJ) recently published a bulletin in 2018 directing prosecutors to add bankruptcy fraud to other criminal charges when they will either reflect the nature and extent of the defendant’s criminal conduct or otherwise significantly strengthen the case against the defendant. In pursuing bankruptcy fraud charges, prosecutors evaluate evidence showing the defendant knowingly and fraudulently misrepresented material facts before, in the course of, or after bankruptcy proceedings.

Bankruptcy fraud is most frequently prosecuted under Sections 152 and 157 of Title 18 of the United States Code. Section 152 focuses on fraudulent actions such as intentional concealment of assets, destruction of records, falsification of documents, fraudulent transfers of property or obligations, and perjury. Section 157 focuses on fraudulent statements, and fraudulent representation, claim or promise related to a bankruptcy filing. Bankruptcy fraud carries a sentence of up to five years in prison, or a fine of up to $250,000, or both.

Should you need assistance with a bankruptcy fraud matter, please contact our law firm.

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