Types of Bankruptcy Fraud (Part V)

Dear readers,

Today we will continue our discussion on types of bankruptcy fraud.

Type 6: False Statements, Oaths and Declarations

This scam can also be referred as lying. According to Tighe (1998), false statement is "a statement or assertion which is known to be untrue when made or when used". It can also be defined as "knowing omission of fact with the intent to deceive or to conceal".  Typical false statement scams are as follows:

1. Debtor's failed to disclose an interest in certain corporate assets;
2. Misrepresentation about number of bank accounts a debtor has;
3. False statement concerning the highest bid for property; 
4. Omitting required information on the bankruptcy schedule;
5. False statement also associated with other fraud committed in bankruptcy context such as identity theft. (The perpetrators used another individual's name for credit application or rent an apartment. Later they file bankruptcy in the assumed name.)

Type 7: Collusive Involuntary Bankruptcy

This scam happen when creditors file an involuntary case at the debtor's direction or with his approval. This scam usually is a part of a larger scheme, involving real estate foreclosure (Brown, Netoles, Rasnak & Tighe 1999). For example, the perpetrator get his co-conspirators to file an involuntary bankruptcy against him or his company. The involuntary is used if the debtor has been prohibited from filing for a period of time.

We have discussed seven types of bankruptcy fraud in our posting. After this, we are going to look at red flags on bankruptcy fraud and examples of cases. Thank you for reading and please visit us again for interesting discussion on bankruptcy fraud...

References:

Brown, J.B, Netoles, B., Rasnak, S.T., & Tighe, M. (1999). Identifying Bankruptcy Fraud, Credit Research Foundation.

Tighe, M.A. (1998). Bankruptcy Fraud: Article: A Guide To Making A Criminal Bankruptcy Fraud Referral. American Bankruptcy Institute Law Review.