How to Report Suspected Bankruptcy Fraud
Although it doesn't happen as often as some people suspect, bankruptcy fraud has been an issue as long as we've had a system of bankruptcy courts in place. What should you do if you suspect that someone or some company is hiding assets from the bankruptcy court or is committing some other type of bankruptcy fraud, like misrepresenting income or expenses, lying under oath, or charging up credit cards before filing a bankruptcy case?
You can report your suspicions to the proper authorities. Be aware, however, that if you use your name, you will not remain anonymous and could be sued by the debtor if what you say turns out to be false.
Types of Bankruptcy Fraud
A debtor can commit bankruptcy fraud not only against the court but against creditors, also. Creditors can commit bankruptcy fraud against the court. In some instances, even the trustee and third parties can commit bankruptcy fraud. Here are some examples:
- A creditor files a claim in a bankruptcy case knowing that the debtor owes less than the creditor is claiming
- A debtor conceals jewelry by giving it to a relative to hold until after the case is completed
- A debtor purposefully undervalues shares of stock on their schedules, and signs as to the accurateness under penalty of perjury or testifies about the incorrect value in court under oath
- A debtor knowingly fails to report freelance income on their schedules
- Either a debtor or a creditor attempts to gain favor with the trustee through bribery
- The trustee embezzles money they've collected for the bankruptcy estate
- A mortgage counselor files a bankruptcy petition in a client's name, but without the client's knowledge, to stop a foreclosure
Information Needed to Make a Report of Bankruptcy Fraud
The Department of Justice has been charged with the responsibility for investigating and prosecuting cases of bankruptcy fraud either directly or through the Office of the United States Trustee. To report suspected cases of bankruptcy fraud, the Justice Department asks that you provide a written summary with the following information:
- Name and address of the person or business you are reporting
- The name of the bankruptcy case, case number, and the location of where the case was filed
- Any identifying information you may have regarding the individual or the business
- A brief description of the alleged fraud, including how you became aware of the fraud and when the fraud took place. Please include all supporting documentation
- Identify the type of asset that was concealed and its estimated dollar value, or the amount of any unreported income, undervalued asset, or other omitted asset or claim
- Your name, address, telephone number, and email address
Please note that you are not required to identify yourself, but knowing who made the report could be helpful to the investigation, especially if further questions arise.
Vague general assertions are less likely to lead to an investigation and prosecution but providing detailed specific facts supported by appropriate documentation just might.
Where to Report Bankruptcy Fraud
Here's how to get the information to the appropriate authorities:
Office of the U.S. Trustee
ATTN: Office of Criminal Enforcement
George C. Young Federal Building and Courthouse
400 W. Washington Street, Suite 1100
Orlando, FL 32801
Most states have a local office where you may contact your state's US Trustee or Bankruptcy Administrator.
What Happens When You Report Bankruptcy Fraud
The Justice Department's policy is that criminal investigations will not be disclosed. The Justice Department and the U.S. Trustee's office will not confirm or deny if an investigation is taking place or even if a matter has been referred to them. Consequently, you will not receive an acknowledgment that you submitted this information and you may not learn the results of your submission unless the Justice Department or the U.S. Trustee's office needs to contact you for further information or if a prosecution goes forward.
The information you submit will be reviewed promptly. If it establishes a reasonable belief that a criminal violation has occurred, the matter will be referred to the U.S. Attorney. If the U.S. Attorney deems the report has merit, it will be referred to the appropriate law enforcement agency for investigation.
Identity Protection If You Report Fraud
You cannot be assured that your identity will be protected, but you can report fraud anonymously. Furthermore, you are not immune from a lawsuit. If the debtor or the accused person is later acquitted in a criminal proceeding, you may be sued for malicious prosecution if your identity is disclosed. Even if there is no criminal proceeding, you could face a lawsuit for slander, libel, or other defamation.