18 U.S.C. § 152 - Concealment of assets; false oaths and claims; bribery
Bankruptcy fraud can be charged under 18 USC 157, which makes it illegal to knowingly conceal assets or file a misleading financial statement in a bankruptcy petition.
Several other federal statutes can be used to indict someone related to bankruptcy fraud, including 18 U.S.C. 152, concealing assets, 18 U.S.C. 1343 wire fraud, 26 U.S.C. 7201 tax evasion, and 18 U.S.C. 1028 identity theft.
A bankruptcy fraud crime could occur in many ways, such as submitting a false declaration to the bankruptcy court and intentionally withholding documents from the bankruptcy administrator. Other methods are to conceal property belonging to the debtor and conceal or destroy documents related to the debtor or bankruptcy.
One of the most common federal statutes prosecutors use in bankruptcy cases is Section 152, “Concealment of assets, false oaths and claims; bribery.”
18 U.S. Code 152 says, “A person who— (1) knowingly and fraudulently conceals from a custodian, trustee, marshal, or other officer of the court charged with the control or custody of property, or, in connection with a case under title 11, from creditors or the United States Trustee, any property belonging to the estate of a debtor;
(2) knowingly and fraudulently makes a false oath (3) makes a false declaration, certificate, verification, or statement (4) presents any false claim for proof against the estate of a debtor (5) receives any material amount of property (6) gives, offers, receives, or attempts to obtain any money or property
(7) fraudulently transfers or conceals any property (8) conceals, destroys, mutilates, falsifies, or makes a false entry (9) withholds from a custodian, trustee, marshal, or a United States Trustee any recorded information relating to the property or financial affairs of a debtor.”
What is Federal Bankruptcy Fraud?
Federal bankruptcy fraud generally involves making or attempting unlawful use of the protections offered by the United States Bankruptcy Code, including Chapters 7, 11, and 13.
While the bankruptcy code permits qualifying debtors to secure relief and reorganize their debts, it also protects creditors. Suppose you attempt to manipulate these creditor protections through misrepresentations and other prohibited acts. In that case, you may have committed federal bankruptcy fraud.
When somebody files for bankruptcy, they are expected to truthfully disclose all of their assets to the bankruptcy court to assess what the bankruptcy filer can keep or relinquish accurately. When assets are deliberately not disclosed, they could be charged with violating 18 U.S.C. 152 concealment of assets.
Bankruptcy Fraud - Quick Facts
Let's review some essential quick facts about federal bankruptcy fraud, such as the following:
- Bankruptcy is primarily designed to provide people experiencing financial hardship some relief from overwhelming debt.
- Based on the potential for fraud, authorities closely monitor Chapter 7, 11, and 13 bankruptcy filings and proceedings.
- Potential cases are sent to the Federal Bureau of Investigation (FBI) or the United States Department of Justice for an investigation.
- The victims are the federal government or creditors who are allegedly not shown all of the debtor's assets to avoid losing money or property.
- Bankruptcy fraud involves filing a petition for bankruptcy protection as part of a scheme to defraud creditors.
- 18 U.S.C. 157 bankruptcy fraud makes it a crime to make false statements in a bankruptcy filing and to knowingly conceal assets or file a misleading financial statement in a bankruptcy petition.
- Bankruptcy fraud also involves making false claims, representations, or promises in a bankruptcy proceeding.
- United States Bankruptcy Code Section 523(a)(2)(A) prohibits discharging debt acquired through false pretenses, representation, or fraud.
- The term “debtor” means a debtor concerning whom a petition has been filed under title 11.
- Bankruptcy fraud is a felony with up to 5 years in federal prison, a $250,000 fine, restitution, and forfeiting acquired assets.
What is Concealing Assets?
18 U.S. Code 152 concealment of assets; false oaths and claims; bribery law prohibits any of the following knowing and fraudulent acts related to a bankruptcy filing:
- Concealing property from a creditor or United States Trustee;
- Make a false sworn statement, false oath, or present any false claim or proof about a bankruptcy case;
- Receive any material property from somebody filing for bankruptcy to help them avoid losing it through the bankruptcy process;
- Transfer property to another person to conceal assets;
- Give, offer, or receive money or property to help conceal assets;
- Falsify, conceal, alter, or destroy any recorded information related to the property of the debtor during a bankruptcy;
- Withhold any information relating to the property from the court or any authorized officer of the court.
Notably, any combination of these acts can result in multiple criminal counts. Suppose it's determined any of these acts occurred. In that case, your bankruptcy filing could be dismissed. This means you would still owe all the debts and have to wait a certain amount before re-filing for bankruptcy protection.
What Are the Related Federal Statutes?
18 U.S. Code Chapter 9 Bankruptcy has numerous federal statutes that are related to 18 U.S.C. 152 Concealment of assets; false oaths and claims; bribery, such as the following: within this chapter include:
- 18 U.S.C. 151 – Definition;
- 18 U.S.C. 153 – Embezzlement against estate;
- 18 U.S.C. 154 – Adverse interest and conduct of officers;
- 18 U.S.C. 155 – Fee agreements in cases under title 11 and receiverships;
- 18 U.S.C. 156 – Knowing disregard of bankruptcy law or rule;
- 18 U.S.C. 157 – Bankruptcy fraud;
- 18 U.S.C. 158 – Designation of United States attorneys and Federal Bureau of Investigation agents to address abusive debt reaffirmations and materially fraudulent statements in bankruptcy schedules.
What Are the 18 U.S.C. 152 Penalties?
Suppose you are convicted of violating this federal law. In that case, you could face the following penalties:
- Conceal assets and bankruptcy fraud is a felony that carries up to five years in federal prison and a $250k fine by the federal sentencing guidelines.
- Other crimes within the statute carry a five-year maximum sentence, including section 153 embezzlement against estate;
- Adverse interest and conduct of officers under section 154 carry a maximum penalty of one year in jail and a fine;
- A bankruptcy fraud conviction typically results in the judge ordering you to pay restitution and forfeit assets you acquired.
What are the Legal Defenses?
When a bankruptcy fraud indictment is filed, the burden of proof falls on the government prosecutor. They will have to prove that you concealed assets with the intent to deceive.
The primary terms are “knowingly and fraudulently,” meaning the prosecutor must show, beyond a reasonable doubt, that you deliberately took some action to conceal assets during a bankruptcy proceeding.
Perhaps we can argue that you did not knowingly conceal assets. Maybe there was a lack of knowledge, capacity, or mistake, which could be a complete defense to the charges.
Financial documents can be complex, especially when you have substantial assets. This means you can accidentally represent incorrect numbers in a good-faith manner in light of financial complexity.
Maybe we can argue that your act had a legitimate purpose. Perhaps there is insufficient evidence to obtain a conviction. Maybe the statute of limitations has expired.
If you are under a federal investigation for bankruptcy fraud or concealment of assets, contact our federal criminal defense lawyers for a free case evaluation. Perhaps we can negotiate a favorable plea deal or convince the prosecutor to dismiss the case. The Hedding Law Firm has offices in Los Angeles, California.