Investors Can Force Bankruptcy in Madoff Case

Article by Tom Hays
Posted by Kaitlin Lanier

A Manhattan judge has given investors a green light to go after Bernard Madoff's personal property by forcing the disgraced financier into bankruptcy.

In a ruling in federal court on Friday, U.S. District Judge Louis L. Stanton lifted a temporary order barring involuntary bankruptcy for Madoff while the government continues its pursuit of his ill-gotten gains.

Victims of the massive fraud would benefit from a bankruptcy court's "orderly and equitable administration of his individual estate," the judge wrote.

Madoff, 70, pleaded guilty last month to federal charges that he cheated investors of billions of dollars over several decades with a gigantic Ponzi scheme that paid longtime investors with money from new investors. He is jailed, awaiting a June sentencing for charges that carry a sentence of up to 150 years in prison.

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Charity Moved $1 Million Before Bankruptcy Filing

Posted By: Asim Mohammed

Two days before it sought Chapter 11 bankruptcy protection, calling itself "unable to meet its obligations,'' the National Heritage Foundation wired $1 million to an affiliate charity, new court filings show.

The transfer by the large, controversial Falls Church, Va., nonprofit to Congressional District Programs Inc. kept the money, at least for the time being, out of the potential reach of NHF's outside creditors. However, the move raises many questions and is likely to be a focus of attention when those creditors gather to question an NHF representative under oath on Thursday.

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Types of Bankruptcy Fraud

Posted by Connie Yee
Committing bankruptcy fraud by any individual is a federal crime that can result in a fine up to $250,000 and/or up to 5 years in prison. As the number of bankruptcy filing increase, the number of bankruptcy fraud tends to increase. In 2003, there were 1.7 million cases of fraud committed in the United States.

There are three ways to commit bankruptcy fraud including: concealment of assets, multiple filings and petition mills.

Concealment of assets is the most common type and make up 70% of fraudulent bankruptcy cases. This occurs when the debtor purposely fails to list all his assets on the bankruptcy claim; in an attempt to avoid liquidation on those assets. This includes transferring their assets to their friends or family, or moving it into off-shore accounts.

Multiple filings occurs when a debtor file for bankruptcy in more than one state. The debtor tends to file an incomplete listing of their assets in each state.

Petition mills is a scheme that targets financially strapped tenants from getting evicted from their home. The scheme occurs when the tenants uses a “typing service” to get advice on how to avoid eviction. However, instead of filing to stop the eviction, the “typing service” files for bankruptcy in the tenant’s name. This scheme ruins the tenant’s credit, and drain their savings.

References:
What is Bankruptcy Fraud?
Types of Bankruptcy Fraud
Bankruptcy Fraud