Fraudulent Transfer or Concealment18 U.S.C. §
As indicated previously the concealment of property can be charged
under either 18 U.S.C. § 152(7) or § 152(1). An important
between these two paragraphs is that subsection (7) is not restricted to
of the bankruptcy estate.|
Subsection (7) provides:
A person who...in a personal capacity or as an agent or
of any person or corporation, in contemplation of a case under title 11 by
against the person or any other person or corporation, or with intent to
the provisions of title 11, knowingly and fraudulently transfers or conceals
of his property or the property of such other person or corporation;...shall
fined..., imprisoned..., or both.
The elements of the offense under subsection (7) which the
must prove are:
- the defendant fraudulently transferred or concealed the
defendant's property or the property of another; and
- such act of transfer or concealment was done with the intent to
the provisions of Title 11, or in contemplation of a case under Title
Subsection (7) of Section 152 reaches both pre-petition and
post-petition transactions and prohibits not only concealment of assets, but
transfers of assets. "Transfers or conceals" is to be read in the
so that proof of either in conjunction with the other elements of the
sufficient. Concealment is not a necessary element of a prohibited
Burchinal v. United States, 342 F.2d 982, 985 (10th Cir.), cert.
denied, 382 U.S. 843 (1965).
To the extent this statute prohibits the concealment of property of
bankruptcy estate, this subsection overlaps with subsection (1). However,
subsection (7) is not limited to property of the bankruptcy estate. This
prohibits a defendant, with the requisite intent, from transferring or
"any of his property or the property of such other person or corporation."
Therefore a pre-petition concealment or transfer, with the necessary intent,
the defendant's own property is prohibited. For example, the disposal of an
individual debtor's pre-petition property with the intent to defeat the
provisions of the Bankruptcy Code would be covered. Moreover, the property
is concealed or transferred does not have to be property of the defendant.
example, an individual could transfer or conceal property of a corporation.
NOTE: Subsection (7) does not specify from whom the property must
concealed. It is safe to assume that the same group listed in subsection
a custodian, United States Trustee, United States Marshal, or other officer
the court-- would be included but others interested in the bankruptcy may
NOTE: In addition to being done "knowingly and fraudulently" under
subsection (7), the concealment or transfer of the property has to be done
a special mens rea. The special mens rea required is that the
concealment or the transfer be done either (1) in contemplation of the
a bankruptcy case, or (2) with the intent to defeat the provisions of the
Bankruptcy Code. The first alternative mens rea-- that the
or the transfer was done in contemplation of the filing of a bankruptcy case
requires proof of a connection between the defendant's actions and the
the bankruptcy case. In most cases this is not a problem since the
frequently controls both the acts in question and the filing of the
petition. In the case of an involuntary bankruptcy, however, the necessary
connection between the bankruptcy filing and the defendant's actions may be
harder to prove. Frequently, inferences based upon statements about the
defendant's financial condition or attempts to avoid creditor collection
can establish that the acts in question were done in contemplation of a
bankruptcy case. United States v. Haymes, 610 F.2d 309 (5th Cir.
1980)(statements that company would go bankrupt unless sales were increased
that any money left in the company's account would be tied up in the
were admissible to establish that the transfers were in contemplation of
The second alternative mens rea-- that the concealment or
transfer was done with the intent to defeat the provisions of the Bankruptcy
Code-- requires that defendant's actions lessen or reduce the bankruptcy
In the context of an 18 U.S.C. § 152(5) violation, the Tenth Circuit
the intent to defeat the provisions of the Bankruptcy Code as follows:
[T]he provisions of Title 11 of the Bankruptcy Law are
when a person without Court approval acts in a manner that diminishes the
of the debtor, and thus interferes with the equitable use of distribution of
material part of the assets of the estate.
United States v. Cardall, 885 F.2d 656, 678 n. 43 (reh'g
denied)(10th Cir. 1989).
NOTE: The concealment of the assets of a debtor is a continuing
offense. The statute of limitations does not begin to run until the debtor
granted or denied a discharge. See this Manual at
869 Statute of Limitations: 18 U.S.C. § 3284.
[cited in USAM 9-41.001]