At the Aldrich Law Firm, we appreciate how hard it can be to manage the finances of a company in Las Vegas. From everyday operating expenses to investments in new business projects, there are a million ways that a business can have trouble balancing the books. When this occurs, many companies turn to bankruptcy to proactively handle their debts. Sometimes, however, businesses can create more problems for themselves by inadvertently committing bankruptcy fraud.
According to the Cornell University Legal Information Institute, there are four categories of bankruptcy fraud:
- Concealing assets to avoid forfeiture.
- Filing incomplete or false forms intentionally.
- Filing multiple times in different states.
- Bribing court-appointed trustees.
Concealment of assets is the most common type of bankruptcy fraud, involved in almost 70 percent of cases. In such offenses, debtors neglect to include all of their assets in their filings, allegedly in an attempt to keep those assets from liquidation. Those who do this intentionally may transfer assets to others in order to obfuscate them.
Filing multiple times causes court proceedings to slow down, which also affects the time it takes to liquidate assets. Some may use this as a strategic tactic, often in concert with efforts to conceal assets.
Bankruptcy fraud is a criminal offense, and charges are brought by federal prosecutors. Those convicted of these offenses face up to five years imprisonment, a maximum fine of $250,000, or both. As bankruptcy fraud is often accompanied by additional crimes, including public corruption, money laundering and identity theft, other criminal charges may also apply.
If your company is currently facing bankruptcy and you are concerned about potential bankruptcy fraud issues, please visit our page on business litigation.