California Penal Code Section 154 PC & California Penal Code Section 155 PC: Fraudulent Conveyance By A Debtor / Judgment Debtor
1. Definition and Elements of the Crimes
Although we no longer send people to debtor prisons if they are unable to pay their debts, attempting to unlawfully avoid a debt through fraudulent conveyances and property transfers can result in severe punishments.
These offenses are considered White Collar Crimes committed by those looking for an illegitimate way to escape crushing debt. The offense involves transferring property to another in order to conceal the property and avoid payment of a debt or judgment.
To prove a charge of Fraudulent Conveyance by a Debtor, a prosecutor must establish the following elements:
- That the defendant is a debtor who is responsible for repaying money to a creditor
- That this debtor committed one of the following acts:
- Sold his or her property
- Gave away his or her property
- Hid or concealed property
- OR moved property out of state
- AND the Debtor did this intentionally to prevent, delay or obstruct a creditor's ability to be repaid.
Penal Code Section 155 PC is similar except that it applies to people who fraudulently transfer property to avoid collection on a civil judgment that has been ordered against them.
Whether or not a sale or transfer can be considered a "fraudulent conveyance" can vary depending on the circumstances. Investigators and prosecutors tend to look at the following factors in determining whether a conveyance can be considered a fraudulent attempt to avoid a debt or judgment:
- Whether the transfer was made to someone that the debtor has close ties with and what, if anything, was provided in return for property.
- Whether the debtor continues to control the property after the transfer (i.e. remaining in a house as a "renter")
- Whether there were attempts to conceal the transfer
- The timing of the transfer in relation to efforts to collect the debt or issuance of the judgment.
A man is convicted of Gross Vehicular Manslaughter While Intoxicated in violation of California Penal Code Section 191.5(a) PC after he was involved in a DUI accident that killed another person. As part of his sentence, the man is required to pay $500,000 in restitution to the victim's family. This restitution amount eventually is converted to a civil judgment against the man. The man owns an opulent house and many vehicles. In order to avoid the civil judgment, the man transfers ownership of the house and vehicles to his adult daughter, even though he continues to live in the house and drive the vehicles. This man could be prosecuted for Fraudulent Conveyance if it can be proved that he made the transfer to his daughter to avoid paying the judgment against him.
3. Related Offenses
People who are involved in a fraudulent conveyance, but are not the debtor or judgment debtor may be prosecuted as a Party to a Fraudulent Conveyance under California Penal Code Section 531 PC. People who receive the unlawful property transfer, who defend the transfer as not being fraudulent when they know differently, and who sell or otherwise give away property that has already been transferred fraudulently can be prosecuted under this statute.
4. Defenses to Fraudulent Conveyance by a Debtor/Judgment Debtor Charges
The most common defense to charges of this nature is that the transfer was performed without the intent to avoid a debt or judgment. Often people conduct numerous transactions and property transfers in their normal course of business without thinking about the effect they may have on potential debts or judgments. To be criminally liable for making a Fraudulent Conveyance, the prosecutor must be able to show that the defendant intended to avoid a debt or judgment.
In the majority of cases, a Debtor or Judgment Debtor who makes a Fraudulent Conveyance is guilty of a misdemeanor offense, which is punishable by up to a year in jail and substantial court fines and restitution.
Fraudulent Conveyance is a felony when the property in question is "stock in trade" that the debtor would sell as part of his normal course of business and where the value of the "stock in trade" fraudulently conveyed is more than $250. In these cases, the Fraudulent Conveyance is a felony level offense that can carry a prison sentence of up to three years in addition to fines and restitution.
6. Criminal Defense for Fraudulent Conveyance by a Debtor/Judgment Debtor Cases
If you or someone you know has been charged with or is under investigation for Fraudulent Conveyance by a Debtor/Judgment Debtor, it is critical that you consult with a Los Angeles Criminal Defense Attorney who has extensive White Collar Crime Defense experience immediately. Los Angeles Criminal Defense Attorney Michael Kraut is a former Deputy District Attorney with over 14 years of prosecutorial experience who formerly served in the elite Major Fraud Division of the Los Angeles County District Attorney's Office. Mr. Kraut is highly skilled at representing people charged with offenses of this nature and is widely regarded as a knowledgeable and effective litigator.
For more information about Fraudulent Conveyance by a Debtor/Judgment Debtor, and to schedule your free consultation, contact Los Angeles Criminal Defense Attorney Michael Kraut at the Kraut Law Group located at 6255 Sunset Boulevard, Suite 1520, Los Angeles, CA 90028. Mr. Kraut can be reached 24/7 at 888-334-6344 or 323-464-6453.