Insolvency fraud encompasses the improper handling of assets with the intent to deceive creditors in situations where bankruptcy or insolvency is imminent. According to New York Penal Law § 185.00, you could be subject to legal action for insolvency fraud if, with the intention to defraud a creditor and awareness of your impending bankruptcy or insolvency:
- Remove, hide, transfer, or destroy property that belongs to the debtor’s estate, or acquire a significant interest in the debtor’s estate.
- Forge a document related to the debtor’s estate.
- Provide false information about the existence or whereabouts of property within the debtor’s estate, or misrepresent any other vital information required for the proper administration of bankruptcy or insolvency proceedings.
Insolvency fraud is categorized as a Class A misdemeanor, and if you are found guilty of this offense, you may face a potential jail term of up to one year. Additionally, you could be subject to a probationary period lasting as long as three years and be obligated to pay a fine.
To be found guilty of this offense, your actions must demonstrate a level of awareness known as “knowing.” In other words, you must have been conscious that your actions were in direct contravention of the law. For instance, if you provided false information about property within the debtor’s estate but were unaware of the inaccuracies in your statement, you would not have breached this statute.
New York Penal Law § 185.00: Fraud in Insolvency
- A liquidator, receiver, assignee, trustee for the benefit of creditors, or any other person authorized to manage property for the benefit of creditors is referred to as an “administrator” in this section.
- Fraud in insolvency occurs when an individual, with the intention of deceiving a creditor and being aware that actions are underway or imminent for appointing an administrator or that a settlement agreement or another arrangement benefiting creditors is in progress or impending, engages in any of the following actions:
(a) Conveying, transferring, relocating, concealing, destroying, encumbering, or otherwise disposing of any portion of or any stake in the debtor’s assets.
(b) Acquiring a substantial portion of or stake in the debtor’s assets.
(c) Presenting any written document or record pertaining to the debtor’s assets to a creditor or administrator, knowing it contains a false significant statement.
(d) Misrepresenting or neglecting to reveal to the administrator the presence, extent, or whereabouts of any portion of or stake in the debtor’s assets, or any other information that they are legally obligated to provide to the administrator.
- Fraud involving a security interest: New York Penal Law § 185.05
- Fraudulent disposition of mortgaged property: New York Penal Law § 185.10
- Fraudulent disposition of property subject to a conditional sale: New York Penal Law § 185.15
Hiring A New York Lawyer For Fraud in Insolvency Case
Hiring a New York lawyer for a fraud in insolvency case is crucial for navigating complex legal terrain. Insolvency cases involve financial intricacies, making it vital to have a skilled attorney versed in both state and federal laws. A seasoned New York lawyer will investigate the alleged fraud, examine financial records, and build a robust defense or pursue justice if you’re the victim. Their expertise can mean the difference between protecting your assets or facing severe legal consequences. With their knowledge of local courts and regulations, a New York lawyer is your best ally in safeguarding your interests in insolvency fraud cases.