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Last Updated on: 28th July 2023, 07:21 pm
Allegations of bankruptcy fraud under 18 U.S.C. § 157, a federal statute, should be taken very seriously. Convictions can result in years in prison, massive fines, and a permanent federal felony record. With so much at stake, building an aggressive legal defense with an experienced federal bankruptcy fraud attorney is crucial.
This guide will provide an in-depth exploration of:
The elements and penalties of bankruptcy fraud under 18 U.S.C. § 157
Where to find qualified federal defense attorneys
How an experienced lawyer defends against § 157 charges
Fighting intent and knowledge elements
The power federal prosecutors wield in fraud cases
Sentencing consequences if convicted
Related bankruptcy crimes that may apply
How and why bankruptcy fraud gets charged federally
Whether you are being investigated or have already been indicted, understanding the intricacies of these statutes and finding expert legal counsel is vital to protecting yourself. Let’s dive in.
Under 18 U.S.C. § 157, the federal crime of bankruptcy fraud has two main provisions:
§ 157(1) – Scheme to Defraud
Knowingly and fraudulently concealing assets, making false statements or claims, or using other schemes intending to defraud creditors or the trustee in a bankruptcy case.
§ 157(2) – False Declarations and Certifications
Knowingly and fraudulently making false material declarations, certificates, verifications, or statements under penalty of perjury in relation to a bankruptcy case.
Penalties under § 157 include up to 5 years in federal prison and fines up to $250,000 per offense. Subsequent convictions garner harsher sentences. Restitution to victims is also required.
Retaining legal counsel experienced with bankruptcy fraud defenses in federal court requires research:
American Bar Association directory searchable by practice area and location
State bar association referral services listing bankruptcy and federal crime capabilities
National Association of Criminal Defense Lawyers member directory
Top results from Google searches for terms like “[state] 157 defense attorney”
Legal aid groups providing federal criminal defense resources
Be thorough in vetting any prospective lawyer’s expertise defending § 157 cases specifically before retaining them. The complexities of bankruptcy law and federal fraud crimes demand specialized experience.
Seasoned federal bankruptcy fraud defense lawyers utilize a variety of pre-trial strategies to achieve dismissal or acquittal:
File motions contesting evidence collection methods, interrogations, searches or arrests
Retain certified fraud examiners to analyze financial records, transactions, statements and tax returns related to alleged deception
Challenge credibility of cooperating witnesses through background checks and communication/payment records casting doubt
Seek jury instructions requiring prosecutors prove “knowing and fraudulent” intent rather than just unintentional mistakes
Raise lack of proof the defendant knew making certain claims or representations was illegal at the time
Interview all prosecution witnesses to identify inconsistencies in accounts that undermine allegations
Secure experts able to critique forensic accounting methodology and conclusions
The focus is creating reasonable doubt regarding both intentional deception and knowledge of illegal activity given complex bankruptcy laws. This provides grounds for dismissal or acquittal.
Two elements prosecutors must prove are:
Intent to Defraud
Argue questionable claims or representations were mere inadvertent errors
Contend suspect behavior stemmed from misunderstanding or unclear bankruptcy codes versus intent
Assert the prosecution relies only on circumstantial evidence of intent without direct proof
Demonstrate through records the defendant consulted attorneys and accountants indicating desire to comply in good faith
Show no attempt to actually conceal cited transactions, communications or records to avoid trustee discovery
Prove through evidence the defendant’s conduct was consistent with past routine practices pre-bankruptcy and thus no knowledge of illegality
Skilled § 157 defense lawyers erode these two foundations of the prosecution’s case requiring both deceptive motive and awareness of illegal acts. This can defeat charges.
Unfortunately, those accused of bankruptcy fraud face formidable prosecutorial power:
Grand juries nearly always approve prosecutors’ requested indictments
Over 95% conviction rate through guilty pleas or trial convictions in federal cases generally
Harsh sentencing guidelines with mandatory minimums in many fraud cases
Intimidating nature of allegations and proceedings pressures cooperation
Able to subpoena expansive records and conduct invasive surveillance using warrants
Witnesses offered incentives to provide information favoring prosecution theories
Facing this federal machinery makes retaining experienced defense counsel critical. Bankruptcy fraud defendants must not take allegations lightly or underestimate the battle required to overcome charges.
If indicted and convicted of bankruptcy fraud under 18 U.S.C. § 157, possible sentences include:
Up to 5 years in federal prison (up to 20 years for subsequent convictions)
Massive fines up to $250,000 per offense
Forfeiture of any proceeds obtained through the fraud
Restitution to creditors and repayment of trustee costs
Lifelong felony criminal record
Permanent bar from holding certain professional licenses
An experienced federal bankruptcy fraud defense lawyer knows how to argue for mitigation of sentencing mandates and penalties to lessen consequences whenever possible. But avoiding conviction altogether through dismissal or acquittal is the true goal.
Prosecutors often bring additional charges from other statutes in conjunction with 18 U.S.C. § 157 allegations:
18 U.S.C. § 152 – Concealment of assets, false claims, bribery
18 U.S.C. § 153 – Embezzlement against estate by trustee or officer
18 U.S.C. § 154 – Adverse interest and conduct of officers
18 U.S.C. § 155 – Fee fixing regarding bankruptcy proceedings
18 U.S.C. § 156 – Knowing disregard of bankruptcy law or rule
These supplementary charges complicate the defense and expand penalties. Retaining counsel capable of navigating complex multiprong federal indictments is critical.
Bankruptcy fraud falls under federal jurisdiction because:
Bankruptcy courts are units of federal district courts
Federal interest in protecting integrity of bankruptcy process as a collective debt recovery mechanism
Interstate nature of major corporate bankruptcies involving parties located across multiple states
Powers wielded by federal bankruptcy judges and trustee officers
Desire for uniformity – federal code seeks to make bankruptcy laws consistent nationwide
Facing federal prosecutors in bankruptcy fraud cases means contending with more resources and harsher sentencing practices. This makes experienced counsel even more indispensable.
In summary, charges under 18 U.S.C. § 157 alleging bankruptcy fraud warrant grave concern. The intricacies of bankruptcy law coupled with rigid federal fraud enforcement means the accused face an uphill fight.
Retaining an attorney with expertise in both bankruptcy and federal white collar criminal defense is essential immediately upon learning of an investigation or indictment. Swift response maximizes chances of exposing flaws to defeat charges pre-trial.
The risks are immense if convicted – years in federal prison, massive fines, and lifelong status as a felon. With assistance from a skilled 18 U.S.C. § 157 defense lawyer, daunting bankruptcy fraud allegations become carefully manageable. But time is of the essence, so don’t leave your future up to chance. The stakes are far too high.
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