For honest individuals who are overwhelmed by debt, filing for bankruptcy can be a lifesaver, especially when their debt was a result of a divorce, unemployment, an accident, illness or disability.
While the majority of debtors file bankruptcy for legitimate reasons, there are unscrupulous individuals who try to get out of paying their debts by committing bankruptcy fraud, even when they have the assets to do so. Often, bankruptcy fraud will go hand-in-hand with white collar crimes.
Bankruptcy Fraud is a Federal Crime
Bankruptcy fraud is a federal crime investigated by the Federal Bureau of Investigation (FBI). It is an umbrella term that includes a number of illegal acts in a bankruptcy case, such as:
- Concealing assets
- Falsifying documents
- Destroying documents
- Making false statements about one's assets
- Illegally transferring money to family members
- Shifting assets to an offshore account
- Failing to report income
- Multiple bankruptcy filings in different states
The FBI is the prime agency that investigates reports of bankruptcy fraud. Whenever the U.S. Trustee Program, which is a part of the Department of Justice, suspects bankruptcy fraud, the organization will refer the case to the FBI and the U.S. attorney.
From that point forward, the local field office will open a case and start reviewing the suspect's financial documents. As the FBI works closely with the U.S. Attorney's Office, the FBI will use electronic surveillance to gather evidence about the suspected fraudster.
According to the FBI, bankruptcy fraudsters can include everyday citizens, small business owners, realtors, loan officers, politicians and CEOs of major companies. The majority however, concealed their assets, committed tax fraud, or provided false documentation to the court.
The punishment for bankruptcy fraud is up to five years in federal prison, or a fine up to $250,000, or both.
If you are interested in filing for bankruptcy, reach out to an experienced bankruptcy attorney in this directory!