​Bankruptcy Fraud

Bankruptcy Fraud is when someone who is pursuing Chapter 11 bankruptcy protection tries to defraud the Bankruptcy Court by intentionally filing fraudulent documents or making false claims and falls under federal statutes 18 U.S.C. § 1344 and 18 U.S.C. §§ 151-152.

The most typical fraudulent act that may bring about prosecution is concealing assets to avoid having to forfeit them. Other fraudulent acts include destroying paperwork or records or making false declarations during bankruptcy proceedings. During fraudulent bankruptcy proceedings, individuals sometimes fraudulently file multiple times using either false information or real information in several states. Another form of bankruptcy fraud involves bribing a court-appointed trustee.

Bankruptcy fraud is often carried out in tandem with other crimes such as identity theft, mortgage fraud, money laundering, and public corruption.

An increasingly common form of bankruptcy fraud is “petition mills,” which involves fraudsters that purport to help tenants from being evicted from their homes by pretending to be a consulting service. While the tenant believes that they are being helped to avoid eviction, the petition mill actually files the tenant for bankruptcy and prolongs the case. Meanwhile, the petition mill charges the tenant exorbitant fees, taking all of his/her money and ruining his/her credit score.

Bankruptcy fraud is a serious crime and, if convicted, you can face up to five years in federal prison, and/or a fine of up to $250,000.

Examples of Defenses Against Bankruptcy Fraud

​No two bankruptcies are exactly alike, and the specific circumstances of your case will determine which defense strategy would be the most effective to fight the fraud charges. Walk Free Law has employed a common defense strategy for this offense, which is to show a lack of intent to defraud. Bankruptcies are complex processes and courts fully expect that people will make honest mistakes when completing and submitting paperwork. Our firm will show that you have always acted in good faith and never deliberately set out to fool the system. If this strategy is successful, you should not be held criminally culpable.

In bankruptcy proceedings, as with all criminal investigations, the prosecution bears the burden of proof to demonstrate to the court that the defendant is guilty beyond a reasonable doubt. Therefore, we always carry out a thorough investigation to demonstrate that there is inadequate evidence to justify a criminal conviction.

On occasions, an entire criminal case can be dropped based solely on police misconduct. If law enforcement conducted an illegal search to find evidence in a bankruptcy fraud investigation, then the defense could file a motion to suppress evidence. If the court grants the motion, any illegally obtained evidence will be disregarded during the case in chief, and it may be that the prosecution will dismiss the entire case because of insufficient evidence to convict.