Bankruptcy Fraud Case: Mr.KT v The Official Assignee of the property of Mr.KL (Part II)

Bankruptcy Fraud Case: Mr.KT v The Official Assignee of the property of Mr. KL (Part II)


The Modus Operandi 

The modus operandi for this case is transfer of assets prior and post the bankruptcy petition. As we can see, BC company  had entered judgment against Mr.KL on December 1989 which amounted to RM5.13 million. Knowing that a bankruptcy petitition will be made against him soon, Mr.KL had sold his property in Jalan Yap Kwan Seng to his son KT for RM1 million on September 1990. The transfer of the property was registered on March 1991 which was less than 6 month before the bankruptcy petition was made against him. Two years later Mr.KL had granted financial facilities to Mr.KT whereby the property was set as collateral. This somehow shows an attempt of Mr.KL to attained the property. 

Fraud Risk Indicators     

In this case the fraud risk indicators that we are able to identify are as follows:

1. Concealed his property and transferred it to his son. By doing this, Mr.KL able to retained his property from being forfeited. 
2. The act of concealing and transferring was done after judgment was filed against him on December 1989 and before bankruptcy petition was presented against him on August 1991.
3. Although had been declared bankrupt, Mr.KL had managed to grant financial facilities to Mr.KT and making the property as their collateral.

Conclusion

Transfer of asset to family members can be done either pre or post bankruptcy petition being presented. In order to transfer, perpetrators might need to concealed the property and not disclosing it to the authority once they were declared as bankrupt. The act of transferring asset can be regard as fraudulent conveyance and it is against the Bankruptcy Act.

Reference:

Bankruptcy Act 1967

Malayan Law Journal/2003/Volume October 2009