New York Bankruptcy Fraud Attorney

Bankruptcy fraud investigations start quietly—a representative notices missing bank statements. An ex-business partner mentions assets that weren’t disclosed. A creditor questions whether a property transfer happened before or after filing. Then federal prosecutors get involved, and what began as a financial dispute becomes a criminal case.

As a former prosecutor, attorney Mehdi Essmidi knows that most clients never intended to commit fraud — they made financial decisions under pressure, misunderstood disclosure requirements, or relied on bad advice during desperate circumstances.

These cases require someone who understands both criminal law and bankruptcy procedure, as well as federal sentencing for financial crimes, and how to challenge the prosecution’s interpretation of complex business transactions. If you’ve been charged with federal bankruptcy fraud, contact us for a free consultation today.

Bankruptcy Fraud Laws

18 U.S.C. § 152 – Bankruptcy Fraud

Under federal law 18 U.S.C. § 152, it is a criminal offense to hide assets deliberately, lie under oath, submit false financial records, or file fraudulent claims in a bankruptcy case. This statute outlines nine specific types of fraudulent conduct related to bankruptcy proceedings, designed to protect creditors’ rights and interests.

18 U.S.C. § 157 – Scheme or Artifice to Defraud

Another critical statute, 18 U.S.C. § 157, addresses fraudulent schemes and false statements in the context of bankruptcy. It specifically targets individuals who devise or intend to devise a plan to defraud others by using misleading representations, false promises, or deceptive conduct connected to bankruptcy filings. This statute applies not only to actions taken during the filing itself, but also to conduct in anticipation of or in connection with a bankruptcy case.

NY Penal Law § 190.65 – Scheme to Defraud

New York Penal Law § 190.65 criminalizes schemes to defraud, applying when a person engages in systematic conduct with the intent to defraud more than one person or to obtain property from more than one person by means of false or fraudulent pretenses, representations, or promises.

Common Allegations in Bankruptcy Fraud Cases

Concealment of Assets

One of the most common allegations in bankruptcy fraud cases is the concealment of assets. This takes place when a debtor hides assets from the bankruptcy court to avoid having them liquidated or used to pay off creditors. It can also involve transferring assets to friends or family members, failing to list assets on bankruptcy documents, or undervaluing assets.

False Statements or Documentation

Another frequent allegation is making false statements or providing false documentation during the bankruptcy process. This could involve lying about income, expenses, debts, or other financial information on bankruptcy forms. It could also involve falsifying documents such as bank statements or tax returns.

Multiple or Repeat Filings

Another common allegation is filing multiple bankruptcy cases either in different jurisdictions or under different names to delay foreclosure proceedings or other collection actions.

Misuse of Bankruptcy Exemptions

Bankruptcy law allows debtors to exempt specified assets from being used to pay off debts. However, some individuals may be accused of claiming these exemptions in an attempt to protect more of their assets than they are legally entitled to.

Consequences of Bankruptcy Fraud on Federal and State Levels

A bankruptcy fraud conviction can happen at both the federal and state levels:

• On the federal level, bankruptcy fraud is punishable by up to five years in prison, fines of up to $250,000 for individuals or $500,000 for organizations, or both. The severity of the punishment depends on the type of fraud and the amount involved.
• Under 18 U.S.C. § 157, if convicted of a scheme or artifice to defraud in connection with a bankruptcy case, you could face up to five years in prison, fines, or both. The penalties can increase if the court finds that you intended to defraud more than one person.
• On the state level in New York, under Penal Law § 190.65, a scheme to defraud in the first degree is classified as a class E felony. This carries a potential sentence of up to four years in prison.

Defending Bankruptcy Fraud Charges

When facing bankruptcy fraud charges, you need a defense strategy tailored to your case. As a former prosecutor, attorney Mehdi Essmidi has the experience and knowledge to build a strong defense against these charges. Here are some of the defense strategies that we may use:

Lack of Intent: Bankruptcy fraud requires that the accused knowingly and intentionally commit fraudulent acts. If we can prove that any inaccuracies or omissions were due to honest mistakes or misunderstandings, rather than an intent to defraud, we may be able to get the charges reduced or dismissed.

Insufficient Evidence: The prosecution must prove that you committed bankruptcy fraud. Your defense might review all evidence and challenge any that is weak, irrelevant, or obtained improperly.

Violation of Rights: If your rights were violated during the investigation or arrest process, such as through an illegal search or failure to read your Miranda rights, we may be able to get specific evidence excluded, which could lead to a dismissal of the charges.

Contact Us for a Free Consultation

If you’re facing bankruptcy fraud charges in New York, you need an experienced attorney who understands both federal and state laws related to bankruptcy fraud and who can fight for you.

The Law Offices of Mehdi Essmidi provides aggressive representation for individuals facing serious criminal charges. As a former prosecutor, attorney Mehdi Essmidi knows how the other side thinks and operates. He uses this knowledge to anticipate their strategies and build the strongest possible defense for his clients. Contact us today for a free consultation.

Frequently Asked Questions

What qualifies as bankruptcy fraud under federal law?

Bankruptcy fraud involves making false statements, submitting a false claim, concealing property, or engaging in a fraudulent transfer during a bankruptcy proceeding. Under federal law, these actions can lead to criminal charges as well as federal charges for violations of the United States Code.

Can I go to federal prison for bankruptcy fraud in New York?

Yes. A conviction for federal bankruptcy fraud can result in serious penalties, including a sentence of up to five years in federal prison per offense. If you’re facing such allegations in New York, it’s critical to consult an experienced New York bankruptcy fraud attorney.

What role does the bankruptcy trustee play in investigating fraud?

The bankruptcy trustee reviews the bankruptcy filing and manages the debtor’s nonexempt assets. If the trustee suspects fraud—such as a false oath or attempts to defraud creditors—they can refer the matter to the federal bureau or the Internal Revenue Service for further investigation, and the case may be pursued in federal court.

What are the common types of bankruptcy fraud in New York City?

In New York City, the most common form of bankruptcy fraud includes hiding assets, filing under a false identity, or misrepresenting property values. Other schemes may involve credit card fraud or wire fraud in connection with a bankruptcy case. These are often prosecuted alongside other violations of federal law.  NYC bankruptcy fraud attorney Mehdi Essmidi has experience in all types of white-collar crimes.

How does bankruptcy protection become criminal fraud?

While bankruptcy protection is designed to offer a fresh start, it becomes criminal when a debtor acts with intent to defraud the court, creditors, or other parties. This could include submitting a false declaration, making a false oath, or hiding money or property.

Can filing for bankruptcy lead to a criminal defense case?

If the bankruptcy filing involves false information or fraudulent activity, the debtor may need a criminal defense attorney in addition to bankruptcy counsel. Criminal implications often arise when the government believes there’s evidence of defraud, especially in cases involving large debts or high-value assets.

Is a free consultation available in bankruptcy fraud cases?

Yes. If you’re being investigated or have been charged, NY bankruptcy fraud attorney Mehdi Essmidi offers a free consultation to evaluate your situation. Contact our law office today.