Insider trading is the trading of stocks by shareholders who have “insider” knowledge not available to the public. The employees and key directors of a corporation may trade their stock as long as they can prove they did not use information only known by employees of the company. Think of the 2001 Enron scandal, many of the directors who caused the collapse of Enron were eventually convicted of insider trading, conspiracy, and wire tapping.
A recent article posted on a bankruptcy forum compared insider trading with the actions of a bankruptcy petitioner who sells their assets to family or friends, or attempts to hide their assets to defraud the bankruptcy court.
Fay and Gerald Schuerer, a couple from Iowa, were sentenced to prison in 2011 for defrauding creditors of more than $350,000 in property. The Schuerers were found guilty of bankruptcy and mail fraud. They sold their assets to family and friends for $380,000 and then moved to Florida where they filed for bankruptcy. After their assets were discharged, the Schuerers moved back to Iowa and repossessed their assets.
It is the trustee’s responsibility to report and investigate fraudulent activity. If the trustee finds fraudulent activities they can sue, not only the debtor, but anyone else who is involved in perpetuating the fraud, and it is up to the accused to prove to the court they did not have knowledge of the debtor’s intent to defraud. Most states allow the bankruptcy court to investigate a debtor’s transactions for a period of 12 months.
Family members who are convicted of knowingly participating in fraudulent activities can be sent to jail. These cases are harder for a bankruptcy court to prosecute, and most bankruptcy courts focus on the fraudulent activities of the debtor, but family members should be aware of the potential consequences of their illegal actions.
Bankruptcy fraud is a crime. Common fraudulent actions can include: concealment of assets, concealment or destruction of documents, conflicts of interest, fraudulent claims, false statements or declarations, and fee fixing. Falsifications on bankruptcy forms can also constitute perjury. The new bankruptcy laws, which are more generous to honest debtors, were never intended to allow criminals to defraud.
If you need relief from debt and you live in or around the metropolitan area of Wichita, Kansas, contact us at www.betterbankruptcy.com .We will help you find a bankruptcy attorney in your area who can answer your bankruptcy questions.
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