California Penal Code Section 531 PC: Participating In A Fraudulent Conveyance

1. Definition and Elements of the Crime

fraudulent conveyance

Under California Penal Code Section 154 PC and California Penal Code Section 155 PC, it is illegal for a debtor to fraudulently transfer or convey property to avoid payment on a debt or judgment. However, when this type of offense occurs, it is not just the debtor who can be punished. Under California Penal Code Section 531 PC, any party who participates in a fraudulent conveyance can be criminally liable.

Someone can be prosecuted for participating in fraudulent conveyance for the following actions:

  1. Being the person to whom the fraudulent conveyance is made (being a party to the conveyance)
  2. Defending the conveyance as being valid while knowing it to be false or fraudulent
  3. Selling or giving away fraudulently conveyed property

California Penal Code Section 531 PC expands penalties to any party associated with a debtor's fraudulent conveyance, not just the debtor himself. Thus it is considered a powerful protection for creditors.

2. Related Offenses

Similar offenses include the following:

  1. Fraudulent Conveyance by a Debtor/Judgment Debtor - California Penal Code Section 154 PC, California Penal Code Section 155 PC
  2. Receiving Stolen Property - California Penal Code Section 496(a) PC

3. Examples

As part of a divorce decree a man is required to pay spousal maintenance and child support to his ex-wife. The man decides to stop paying and knows that doing so will cause his bank accounts to be garnished and his property to be seized. To avoid this, his new girlfriend agrees to have all accounts put in her name. In addition, the man transfers title in all of his property to his girlfriend. While the man could be charged with fraudulent conveyance under California Penal Code Section 154 PC, the girlfriend could be also be charged with participating in the fraudulent conveyance pursuant to California Penal Code Section 531 PC, as she was a knowing party to the fraudulent conveyance.

In another example, a man is sued and a substantial judgment is issued against him. The man owns many high-ticket assets, such as sports cars, boats and electronics. The man transfers title to a friend to avoid losing the property as part of the judgment. Even though the man transfers title, he physically keeps all of the property. The plaintiff in the lawsuit brings the fraudulent conveyance to the court's attention. When this happens, the man has a third friend come forward to falsely defend the legitimacy of the conveyance. In this situation, both friends could be prosecuted for being a party to a fraudulent conveyance and for defending the fraudulent conveyance.

4. Defenses to Participating in a Fraudulent Conveyance

There may be instances where a person may not be aware that they are, in fact, a party to a fraudulent conveyance. The person may have legitimately thought they were purchasing property and not participating in a scheme to help a debtor avoid judgment. In these situations, the person would not be criminally liable for participating in a fraudulent conveyance, as he or she did so unknowingly. However, courts and prosecutors will often examine the details of the conveyance and will evaluate the transaction. If goods were sold for far below their actual value or other suspicious circumstances exist, charges of participating in a fraudulent conveyance may be appropriate.

5. Penalties

Participating in a fraudulent conveyance is a misdemeanor offense. A person who is convicted can be sentenced to up to a year in jail and may be assessed hefty court fines.

6. Criminal Defense for Participating in a Fraudulent Conveyance Cases

Participating in a fraudulent conveyance is a white collar offense that can carry significant penalties for those convicted. If you have been charged with this offense, it is very important that you consult with a Los Angeles Criminal Defense Attorney immediately. Los Angeles Criminal Defense Attorney Michael Kraut is a former Deputy District Attorney with over 14 years of prosecutorial experience, including an assignment to the elite Major Fraud unit of the Los Angeles County District Attorney's Office. Mr. Kraut is highly skilled at defending those charged with white collar offense and works hard to ensure his clients’ rights are absolutely protected.

For more information about participating in fraudulent conveyance charges, and to schedule your free consultation, contact Los Angeles Criminal Defense Lawyer 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.

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