White-Collar Crime

Bankruptcy Fraud: Types of Schemes

Concealment of Assets—The most committed offense in relationship to bankruptcy fraud investigations. Fraudulent filers understate the value of their assets so they can keep more of what they have amassed.

False Filings—When a business or individual files for bankruptcy protection, a bankruptcy petition must be completed. Filers can make false statements if they intentionally leave questions unanswered.

Multiple Filings—Individuals sometimes commit bankruptcy fraud by introducing multiple false filings. This can be done by either using a false name and/or Social Security number to file bankruptcy in the same or different state, or by filing for bankruptcy in different states utilizing true identifiers such as Social Security numbers, names and dates of birth.

Trustee Fraud —The most disturbing type of bankruptcy fraud because it involves a court-appointed official. In general terms, this is when a court-appointed private-sector trustee conspires with the debtor to deceive the court by not disclosing assets or by manipulating the process to receive kickbacks or bribes. Although rare, it is aggressively addressed by law enforcement because the trustee position is the main extension between the debtor and the court and is responsible for ensuring the integrity of the bankruptcy system is maintained.