Bankruptcy and Fraud

Imagine you are working in order to pay for your home for the family. You are paying for a car that gets you to work and the kids to school. There are car payments and car repairs. There are house payments and home repairs. Sooner or later, your debt begins to take over your income. You now cannot pay monthly payments and your bank accounts are depleting. For individuals and businesses that are unable to pay debts to creditors, you can go bankrupt.

Bankruptcy allows individuals to avoid the debts get a fresh start. There is a catch. Creditors can liquidate your assets to help pay for some of the debt. The remaining debts are discharged. When opportunities, such as bankruptcies, become available, some individuals will fraudulently take advantage of the process. One type bankruptcy fraud involves the concealment of assets. Creditors can only liquidate those assets listed by the debtor. If the debtor fails to reveal certain assets, the debtor can keep the assets even with having an outstanding debt. To further conceal the assets, businesses or individuals may transfer these unrevealed assets to friends and relatives so that the asset cannot be located, known as fraudulent transfer.

Lenny Dykstra is a former major league baseball center fielder. Dykstra played for the New York Mets and the Philadelphia Phillies. Dykstra acknowledged that he took more $200,000 in assets out of the home and other locations as he struggled to pay creditors. He pleaded guilty to bankruptcy fraud, concealment of assets and money laundering. He was indicted by a Federal Judge for bankruptcy fraud and theft. Prosecutors say that either he sold, destroyed or removed a stove, chandelier and other items worth $400,000 from his $18.5 million home after filing for bankruptcy. He was also accused of lying about the value of his estate so that he could keep profiting while hiding assets from the bankruptcy courts. Dykstra also admitted that he concealed property from the bankruptcy estate, items...