Most times, the federal courts will prosecute bankruptcy fraud as a white-collar crime. Normally, a white-collar crime doesn’t involve violence, but the criminal act could mean large sums of cash were stolen using one method or another—in this case, it’s bankruptcy fraud. Statutes mean that Congress has passed laws around a specific topic like bankruptcy.
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Under 18 U.S. Code
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In most cases, you can learn about federal criminal statutes under 18 U.S. Code. For the one specific to bankruptcy fraud, you will identify this under 18 U.S. Code § 152, which means that you were attempting to conceal your assets or other forms of cash. Under Section 152, we see a list of some of the fraudulent behaviors that someone can do to get prosecuted for bankruptcy fraud. In fact, nine distinguished behaviors were outlined under Section 152, but they all include the same basic message, which means that the individual had the intention of concealing assets.
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For example, under Section 152, the individual knowingly concealed assets from a marshal, trustee, officer or custodian. This qualifies as bankruptcy fraud because any property when someone files for bankruptcy will classify as belonging to the debtor. Another thing that you have to prepare for is if you knowingly destroyed, falsified or mutilated recorded information about your financial affairs or your assets. The federal courts could prosecute this as bankruptcy fraud.
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The Consequences for Bankruptcy Fraud
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If someone commits bankruptcy fraud, the consequences can crush you financially and send you to prison for up to five years. After you get a bankruptcy fraud conviction, your creditors can file a lawsuit and take even more from you. This means that you can lose everything—your freedom and your finances.
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Why Does Bankruptcy Exist?
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We should first understand why bankruptcy exists in the first place. Bankruptcy exists because it allows a financially troubled corporation, business or an individual to start fresh. They don’t have a bunch of debts weighing them down. Under the system for American bankruptcy, they have structured it in such a way that you must declare all assets on the bankruptcy form. This allows the debtor to reclaim a portion of their money through the bankruptcy. If someone tries to manipulate this system, they can get prosecuted under federal law. The FBI and the United States Attorneys’ Office do not treat this as a victimless crime and neither should anyone else.
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Acting Fraudulently with the Intent to Deceive
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As long as the federal courts can prove that you acted deceitfully and with the intention of frauding your debtors, you could face up to five years in prison for the crime. To act fraudulently means that you acted with the intent of deceiving people.
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History of Bankruptcy Fraud
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In the past, many people were using bankruptcy as a way of scamming the system. Some of the
