Faced with millions of dollars in debt exacerbated by high medical bills due to a serious heart condition, Grammy award-winning singer Toni Braxton filed for bankruptcy for the second time in 15 years. Ms. Braxton is now being accused of bankruptcy fraud after transferring more than $53,000 to her estranged husband, Keri Lewis. The trustee in the case asserts that Lewis received the money after it was earmarked to repay creditors.
Bankruptcy fraud can be committed unintentionally and carries steep penalties for conviction. Federal prosecutors can bring criminal charges under Section 18 of the U.S. Bankruptcy Code if they can show that a debtor knowingly and fraudulently misrepresented a material fact. The maximum penalties include five-year prison terms and fines of up to $250,000.
Creditors or the U.S. Trustee can petition to revoke discharges if they were obtained fraudulently or the debtor failed to explain misinformation uncovered during an audit.
Some common examples of bankruptcy fraud include:
Concealment of assets. Filers might attempt to transfer assets from their names to their relatives or friends' names, or they might simply fail to report ownership of a piece of property or sum of money. Concealment of assets accounts for nearly 70 percent of all fraudulent bankruptcy cases filed by individuals.
Failure to list future income. Filers fail to mention income they expect to receive in the future, such as a retirement account or other deferred compensation.
Multiple filings take place when debtors file for bankruptcy in more than one state. These debtors may use their real names and information, false names and information, or a combination of the two to file the claims but list different assets in each case.
Consult with one of our experienced bankruptcy attorneys. We will explain the procedures of the bankruptcy court to ensure avoiding mishaps that could delay or derail your case.