Prosecution of Bankruptcy Fraud -

     The U.S. Trustee's Office will follow up as it deems necessary and appropriate, and will often ask the panel trustee to conduct a review. If there is a reasonable belief that a bankruptcy crime has been committed, the case will be referred to the local office of the United States Attorney. At that point, if the case is believed to have prosecutorial merit, it will be sent out for further investigation. Once complete, the U.S. Attorney will make the ultimate decision as to whether or not to file a criminal complaint.

Making a Decision

     In making its decision, the U.S. Attorney will weigh the gravity of the offense, its impact on creditors and the bankruptcy system, and whether prosecution will serve the important interests of government, in addition to protecting particular individuals who may have been harmed by the proscribed conduct.

Sending a Message and the "Poster Child"

     In some instances, the primary goal of the prosecution may send a message that this type of conduct will not be tolerated, and to deter others from trying the same thing. Sometimes, the U.S. Attorney will find a true "poster-child" of bankruptcy fraud. This could be a local real estate mortgage broker falsifying trust deeds and mortgages, a prominent local physician trying to conceal expensive artwork or jewelry from the clutches of the trustee, or a lawyer filing false bankruptcy documents to keep assets away from his creditors.

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Written by Henry Rendler