Federal Bankruptcy Fraud
A conviction for Bankruptcy Fraud will carry a lengthy prison sentence.
Under 18 U.S.C. § 152 and 18 U.S.C. § 157, the federal crime of Bankruptcy Fraud is committed when a person makes a false statement or misleading claim in a bankruptcy proceeding or willfully files a fraudulent bankruptcy petition or document as part of a larger scheme to defraud.
Bankruptcy Fraud Examples
Bankruptcy fraud can take on many forms, the most common examples of Bankruptcy Fraud include:
- Concealment of Assets
- Depletion of Assets
- False Statements in Bankruptcy Filings
- Invoking Automatic Stay Provision as Part of Scheme to Defraud
- Serial Bankruptcy Law Suits
- Sham Bankruptcy Law Suits
Conspiracy to Commit Bankruptcy Fraud
Pursuant to 18 U.S.C. § 371, Conspiracy to Commit Bankruptcy Fraud occurs when two or more people conspire to commit Bankruptcy Fraud.
The government often charges minor participants with Conspiracy to Commit Bankruptcy Fraud because under 18 U.S.C. § 371, the penalties for Conspiracy to Commit Bankruptcy Fraud are the same as Bankruptcy Fraud, which results in minor participants cutting deals to testify against major participants in order to avoid the significant penalties Bankruptcy Fraud carries.
Penalties for Bankruptcy Fraud
Under federal law, the crime of Bankruptcy Fraud is a Class D felony, punishable by up to five years in prison, three years of supervised release, and $250,000 in fines. Additionally, the defendant would be required to pay restitution and forfeit any money or property obtained from the scheme to defraud.
Under the United States Sentencing Commission, Guidelines Manual, §2B1, a person convicted of Bankruptcy Fraud would be assigned a base offense level between 8-36, which carries a guideline range of probation up to 33 months in prison before taking into account any mitigating or aggravating circumstances.
Importantly, probation is rarely given in federal cases and the amount of financial loss or the existence of aggravating offense characteristics associated with a particular Bankruptcy Fraud case can result in a significantly greater prison sentence than 33 months in prison.
As of 2018, the average federal sentence imposed for Bankruptcy Fraud fell between 20-24 months in prison. [1]
Defenses to Bankruptcy Fraud
In addition to the pretrial defenses and trial defenses that can be raised in any criminal case, common defenses to the federal crime of Bankruptcy Fraud include:
Good Faith Belief
It is a defense to the federal crime of Bankruptcy Fraud if a defendant honestly and in good faith believed the deceptive statements or promises made as part of the scheme were true. [2]
However, a defendant cannot engage in willful blindness by ignoring the truth of the statements. Nor is it a defense if the defendant intends to deceive but feels the victim will ultimately profit or be unharmed.
Substantial Assistance
While not technically a defense, Substantial Assistance is the most commonly utilized method to avoid the significant penalties Bankruptcy Fraud carries.
The prosecutor is authorized by statute to ask the court to reduce or suspend a sentence of any person who is convicted of Securities fraud when the person provides substantial assistance in the identification, arrest, or conviction of any other person engaged in the scheme to defraud.
Unlawful Search and Seizure
Often, law enforcement exceed the scope of their authority and require people to submit to a vehicle, home, or property searched when they otherwise would not be required to, coerce people into agreeing to a search, arrest people without probable cause, or obtain search warrants in bad faith.
If any of these can be proven through the filing of a Motion to Suppress, the courts will suppress the resulting evidence as having been unlawfully obtained in violation of the Fourth Amendment of the United States; which can lead to an outright dismissal of the case or reduced charges.
Contact Federal Defense Lawyer Richard Hornsby
If the Federal government is prosecuting you for the crime of Bankruptcy Fraud in federal court, contact Orlando Federal Criminal Defense Lawyer Richard Hornsby today.
The initial consultation is free and I am always available to advise you on the proper course of action that can be taken.