Recognizing and Addressing Fraud in Bankruptcy Cases

Agenda

Frauds in Bankruptcy Cases

• Hiding Assets
• Diverting Assets
• False Testimony
• False Record Keeping
• Hiding Records
• Bribery
• Collusive Auctions

Bankruptcy Crimes

• 18 U.S.C. § 152 - Concealment of Assets; False Oaths and Claims; Bribery
• 18 U.S.C. § 153 - Embezzlement Against the Estate
• 18 U.S.C. § 154 - Adverse Interest and Conduct of Officers
• 18 U.S.C. § 155- Fee Agreements in Cases Under Title 11 and Receiverships
• 18 U.S.C. § 156- Knowing Disregard of Bankruptcy Law or Rule
• 18 U.S.C. § 157- Bankruptcy Fraud
• 18 U.S.C. § 1961- RICO
• 18 U.S.C. § 3284 - Concealment of Bankrupt's Assets

Using Bankruptcy to Accomplish Frauds

• Bust out Schemes
• Laundering Transactions
• Bankruptcy to Hide a Fraud
• Equity Skimming
• Hijacking
• Racketeering

Methods for Detecting Fraud

• 11 U.S.C. §§ 341 - First Meeting of Creditors, Examination of the Debtor
• 11 U.S.C. § 521 - Debtor's Duties - Schedules and Statements
• Fed.R.Bankr.P. 2004 - Examination:
• Fed.R.Bankr.P. 2005 - Apprehension and Removal of Debtor to Compel
• Attendance for Examination
• 11 U.S.C. § 344 - Self Incrimination; Immunity (and Its Uses)
• Fed.R.Bankr.P. 2002 - Notices
• Adversary Proceedings
• 18 U.S.C. § 3284 - Concealment of Bankrupt's Assets
• 18 U.S.C. § 3057- Bankruptcy Investigation

Civil Consequences and Remedies for Bankruptcy Frauds

• 11 U.S.C. § 1112 Conversion of Case
• 11 U.S.C. § 1104 Appoint of Chapter 11 Trustee
• 11 U.S.C. §§ 544 and 548 Avoiding Pre-Petition Fraudulent Transfers
• 11 U.S.C. § 549 Voiding Postpetition Transactions
• 11 U.S.C. § 727 Denial of Discharge
• 11 U.S.C. § 523 Denying Discharge of Individual Claims
• 11 U.S.C. § 510( c ) Equitable Subordination
• 11 U.S.C. § 1961 Civil RICO
• Common Law Fraud Actions
• Involuntary Petitions
• Ethical Ramifications

Criminal Consequences and Remedies for Bankruptcy Frauds

• Referral to the United States Trustee
• Referral to Other Government Agencies

What to Do When It's Your Client

• Initial Interviews
• Preparing Schedules and Statements
• Detection
• Response

Credits

Faculty

Wayne Greenwald

Wayne Greewald, P.C.

• Decades of experience in all aspects of bankruptcy practice
• Recognized for his curious niche where bankruptcy and criminality meet
• Chaired the American Bankruptcy Institute’s Commercial Fraud Task Force and appears on an ABI panel discussing what to do when your client’s problem extends beyond bankruptcy and chairs the Federal Bar Association’s, SDNY Chapter, Bankruptcy Committee
• Writing a treatise on involuntary bankruptcy petitions, on which he lectures
• Frequent speaker and published author
• Recently represented 800 consumer-fraud creditors in Ditech Holding Corporation’s mega chapter 11 case
• He helped to obtain a separate Consumer Creditors’ Committee and denial of the debtor’s second amended plan of reorganization The decision denying confirmation notes his oral argument that 18 U.S.C. § 157 prohibits against using a bankruptcy case to further a fraudulent scheme precluded confirmation
• Recognized as a multiyear New York Super Lawyer and fellow in the center for international legal studies and in addition the National Coalition of Concerned Legal Professionals honored him for his work