Bankruptcy Fraud
Although filing for bankruptcy can potentially give you a fresh financial start, if you get greedy and try to obtain more than you are entitled to under the Bankruptcy Code you may find yourself in a world of trouble. That is why it is important to understand that having an experienced bankruptcy lawyer allows you to safely and legally navigate resolving your debt.
There are several criminal statutes that prohibit bankruptcy fraud in the United States, and the federal government is currently in the midst of cracking down on bankruptcy fraudsters. In fact, according to an article in the Southern Illinoisan, a man from Sesser, Illinois recently pled guilty to bankruptcy fraud charges in federal court after being indicted as part of this crackdown effort.
The details of this man’s bankruptcy fraud case follow a familiar pattern; he concealed assets that he was required to disclose to the bankruptcy court. In this instance, the man admits that he fraudulently failed to disclose a $28,129.55 workers’ compensation claim settlement that he had received. Additionally, he also admits to withholding copies of his tax returns after being ordered by the court to turn them over. The man pled guilty to one count of concealing assets and three counts of fraudulently withholding records in a bankruptcy case. According to the Southern Illinoisan, the man is facing up to five years in prison and/or a $250,000 fine and up to three years probation after being released from prison.
Common Bankruptcy Fraud Schemes
Although the case outlined above illustrates a common type of bankruptcy fraud, the crime can be committed in a variety of different ways. In fact, the Credit Research Foundation (CRF) has put together a helpful list of common bankruptcy fraud schemes, which includes:
- Retail Bustouts: A retail bustout involves a company that uses credit to obtain merchandise that it never intends to pay for. After selling the goods for cash, the company files for bankruptcy.
- Bleedouts: A bleedout is generally perpetrated by company insiders who slowly deplete their company’s assets over a long period of time while creating false statements to cover their tracks.
- Investor Fraud: Investor fraud often involves a pyramid or Ponzi scheme in which potential investors are promised a high rate of return on their investments. The idea is that early investors are paid with the money brought in by recruiting new investors. When the scheme is no longer able to bring in enough new investors to sustain itself the company collapses.
- Health Care and Welfare Fraud: Health care and welfare fraudsters often promise improved healthcare options and then file bankruptcy so that investigations into their activities will be delayed and they can continue their scam as long as possible.
- Concealment and False Statements: This type of bankruptcy fraud occurs when a debtor illegally conceals assets during a bankruptcy proceeding. This can occur by either undervaluing a listed asset or by failing to list an asset entirely.
How Can We Help?
No matter how bleak your financial situation is, committing bankruptcy fraud will only make things worse. If you are in the Chicago area and are considering filing for bankruptcy, contact the experienced bankruptcy lawyers at the Bentz Holguin Law Firm, LLC in order to discuss your options. Our lawyers are ready to help and can be reached at 312-647-2116.
