Bankruptcy fraud is a white-collar crime. While difficult to generalise across jurisdictions, common criminal acts under bankruptcy statutes typically involve concealment of assets, concealment or destruction of documents, conflicts of interest, fraudulent claims, false statements or declarations, and fee fixing or redistribution arrangements. Falsifications on bankruptcy forms often constitute perjury. Multiple filings are not in and of themselves criminal, but they may violate provisions of bankruptcy law. In the U.S., bankruptcy fraud statutes are particularly focused on the mental state of particular actions. Bankruptcy fraud is a federal crime in the United States.
Bankruptcy fraud should be distinguished from strategic bankruptcy, which is not a criminal act, but may work against the filer.
All assets must be disclosed in bankruptcy schedules whether or not the debtor believes the asset has a net value. This is because once a bankruptcy petition is filed, it is for the creditors, not the debtor to decide whether a particular asset has value. The future ramifications of omitting assets from schedules can be quite serious for the offending debtor. A closed bankruptcy may be reopened by motion of a creditor or the U.S. trustee if a debtor attempts to later assert ownership of such an "unscheduled asset" after being discharged of all debt in the bankruptcy. The trustee may then seize the asset and liquidate it for the benefit of the (formerly discharged) creditors. Whether or not a concealment of such an asset should also be considered for prosecution as fraud and/or perjury would then be at the discretion of the judge and/or U.S. Trustee.
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Famous quotes containing the word fraud:
“Things gained through unjust fraud are never secure.”
—Sophocles (497406/5 B.C.)
“There exists in a great part of the Northern people a gloomy diffidence in the moral character of the government. On the broaching of this question, as general expression of despondency, of disbelief that any good will accrue from a remonstrance on an act of fraud and robbery, appeared in those men to whom we naturally turn for aid and counsel. Will the American government steal? Will it lie? Will it kill?We ask triumphantly.”
—Ralph Waldo Emerson (18031882)
“The disfranchisement of a single legal elector by fraud or intimidation is a crime too grave to be regarded lightly.”
—Benjamin Harrison (18331901)