Federal Crimes Blog

What is Bankruptcy Fraud Under Federal Law?

Posted by Hedding Law Firm | May 28, 2020

In my experience, bankruptcy fraud is usually prosecuted at the federal level. Of course, it has to do with individuals who are trying to utilize the bankruptcy system in a fraudulent manner. For example, making claims that they are not receiving money, don't have money, or filling up paperwork to try to file for bankruptcy to avoid debts, is considered bankruptcy fraud under 18 U.S.C. § 157.

The government then becomes aware of the fact, and they make it clear that the person either lied on paperwork, or is not telling the truth about certain assets or money that they have. Bankruptcy fraud is very serious because you're basically attempting to avoid paying money.

You are  trying to get money under circumstances that exhibits vulnerability, but are really taking advantage of the bankruptcy fraud system. it really puts you in a bad position if the prosecutors believe that you're trying to avoid debt and manipulate the system in an unlawful manner.

Bankruptcy fraud is a white collar crime that can many different forms. I've handled a number of these cases at the federal level. If you retain us, we get you into the office, and I encourage you to tell me the truth about what's going on so that I can sort out the best approach for your case. Our federal criminal defense lawyers are providing an overview below.

Developing a Defense Strategy Against Bankruptcy Fraud Charges

Once I have your version of events, I use my experience and the other two pieces of the puzzle, which are 1) I need to speak to the prosecutor to see what their thoughts are in regard to what they're claiming you're doing wrong; and, 2) I speak to the agents who are investigating the case to get their perspective on it.

Finally, I typically want to see the discovery or evidence that they're trying to use to prove that you committed bankruptcy fraud.

What is Considered Bankruptcy Fraud Under Federal Law?

Once I have all of this information, that puts me in a pretty good position to evaluate everything. I use my experience handling these types of cases to help guide you through the system and make decisions that are in your best interest.

I will advise you on whether or not we're going to fight the case and litigate it, file motions, and take the case to trial. Or, if it's a circumstance where it would only dig you deeper into a hole, maybe the best course of action would be to try and do damage control, cooperate with the prosecutors, and try to come up with a resolution before any more damage is done.

It is always sensible to do damage control before you put yourself in a position that you can't get out of and looking at multiple years in federal custody.

Therefore, if you have a federal bankruptcy fraud case that you need help with, pick up the phone now and make a call. I'm ready to make a move to put you in the best possible position.

If The Bankruptcy Fraud Was Unintentional, Won't The Prosecutor Understand That?

If somebody makes a mistake, and they are being accused of some sort of fraudulent activity, the issue's going to be whether they knew, or whether they should have reasonably known that their actions were fraudulent.

That's always an issue in a bankruptcy fraud case, in fact, it's an issue in any fraud related claim that the government may make. Of course, if you made an honest mistake, they wouldn't even try to prosecute you. But, the issue is going to surround the facts of your case.

The prosecutors and agents don't look at the defense's side of things completely. However, that's why you enlist your criminal defense attorney to enlighten them about your side of the story. If someone was to look at it with a neutral eye, would they think that you were trying to get away with fraud or would they think that you made an honest mistake?

That's what it really comes down to. That's the factual issue when you are talking about bankruptcy fraud, doing something with some sort of intent, or trying to defraud the government, your debtors, or somebody else.

In that sort of situation, you will need to get as many details in your attorney's hands as possible. In other words, give your attorney, your side of the story, but also get into your side of the story.

If you have an idea of what the other side or government is claiming, give that information to your attorney as well. Your attorney can evaluate things, give you the best advice, and let you know about the outcomes.

Your attorney is going to need your version, the government's version, and use their common-sense and experience to really get down to the nitty-gritty to determine whether you can win the case when it goes to trial because that's what it boils down to.

If the government can beat you at trial, then you need to plea bargain and work out a deal. If you believe that you're innocent, and your attorney agrees that there are facts and evidence that can prove that you're innocent, then you're going to need to fight the case by taking it to trial.

The main thing is that your attorney is going to need all of the information in order to make a final decision, of course, with you being involved in that decision as well.

Do I Need A Bankruptcy Attorney Or Federal Criminal Defense Attorney?

If you have a federal criminal case pending, then you definitely need a federal criminal defense attorney. If there is a civil bankruptcy attorney that's already involved in your case, that attorney can collaborate with your criminal defense attorney. But, in regard to civil attorneys versus criminal attorneys, they are two totally different individuals.

A civil attorney is not going to know all of the ins and outs of the federal criminal system. So, the issue then becomes, if you had an attorney at the time, did that attorney assist you in the filing paperwork and making decisions related to the bankruptcy?

If so, did that attorney have any culpability or responsibility for what happened? Or, is the attorney going to argue that they believed what their client told them and didn't know that they were lying?

In that circumstance, your federal criminal attorney is going to want to talk to the bankruptcy attorney to see what they have to say about the situation. Then, your criminal defense attorney will talk to you about it.

Of course, their loyalty will lie with you as far as defending the federal bankruptcy fraud action. Therefore, if you have a case or some sort of federal bankruptcy in the criminal court, you don't want to hire a civil lawyer. In fact, the civil lawyer most likely will not take the case.

They are going to realize that they are not equipped to deal with the issues in criminal court. Accordingly, it is best to go to a federal criminal attorney who knows how to handle federal bankruptcy fraud cases in the courthouse where your case is pending.

What Are The Penalties For A Federal  Bankruptcy Fraud Conviction?

In regard to federal bankruptcy fraud at the criminal level, the punishment and penalties will depend on a number of factors. One of the main factors is the amount of money involved. Are you talking about $10,000, a $1 million dollars, or a number in-between?

One of the big enhancements, when it comes to fraud cases, bankruptcy fraud or any type of fraud, is what the loss is or what the intended loss was. You need to first get that information when deciding what kind of exposure you might have in a federal bankruptcy fraud case.

Another issue is that they are going to look at your criminal history. Are you someone who has no criminal record? In which case, they'll be looking at the low-end of the guideline range in a federal criminal case. Or, are you somebody who has a criminal record in the last 10 years?

That would add points to your criminal history, and you would be looking at more time. Also, they are going to look at your modus operandi. In other words, how did you commit the crime? Was it sophisticated or simplistic? That's another issue that the Feds look at when deciding how they're going to deal with your case.

They may also look at the number of affected victims. Was there one victim? Multiple victims? What exactly where you doing? Who was impacted? And, how much were they impacted? You can start to get the sense that federal sentencing for a bankruptcy fraud charge is complicated and complex.

Federal Criminal Defense Lawyer

Your attorney is going to have to look at a lot of different factors in deciding the best way to defend you, and the best arguments to make relating to your case. And, of course, you first have to accept whether you're going to fight the case and take it to trial.

In which case, you're going to be more worried about the defenses to the charge against you versus the type of defense you might get in the case. Or, are there circumstances where you can clearly see you've done something wrong?

If you know that the government can prove the case against you, then you're just zeroing in on it by trying to get the least amount of charges with the most impact, which will affect the sentence, and figuring out how to put yourself in the best position to argue for and achieve the lowest sentence.

Also, you have to realize that the judge in a federal criminal case will have the ultimate say, and before you go into that sentence, you will probably not know exactly what your sentence is going to be. You'll have an idea, guideline, or range where you should be based on the circumstances of the case.

That's why it is important to choose a strong criminal defense attorney who can make the right argument, and help you achieve the best result. Hedding Law Firm is a criminal defense law firm located at 160000 Ventura Blvd #1208 Encino, CA 91436. Contact us for a free case evaluation at (213) 542-0994.

Related Content:

About the Author

Contact Us Today

Hedding Law Firm is committed to answering your questions about Federal Criminal Defense issues in Los Angeles and Encino California. We'll gladly discuss your case with you at your convenience. Contact us today to schedule an appointment.