Subsection (5) prohibits the fraudulent receipt of a material amount of property from the debtor. This paragraph is specifically designed to reach defendants, including creditors, who receive assets from a debtor. In addition, the transfer of the assets must have occurred after the commencement of the bankruptcy case--i.e., after the filing of the bankruptcy petition.
Subsection (5), provides:
A person who...knowingly and fraudulently receives any material amount of property from a debtor after the filing of a case under title 11, with the intent to defeat the provisions of title 11;...shall be fined... and imprisoned...or both.
The elements are:
- the defendant receives a material amount of property from a debtor;
- such transfer occurred after the filing of a case under Title 11; and
- the acts were done with the intent to defeat the provisions of Title 11.
Although the statute does not specify that the property received must be property of the bankruptcy estate, that appears to be the intent of the Congress. In addition, the statute requires that the property be received from the "debtor." The "debtor" is defined in 18 U.S.C. § 151 as "a debtor concerning whom a petition has been filed under Title 11." However the receipt of the property does not have to be directly from the debtor. United States v. Cardall, 885 F.2d 656 (reh'g denied)(10th Cir. 1989). In addition, the term "property" includes cash. United States v. Wernikove, 206 F.Supp 407 (E.D. Pa. 1962).
The term "material amount" is not defined in the statute. An early case held that $500 is a material amount of property. Knoell v. United States, 239 F. 16 (3d Cir. 1917), writ dismissed, 246 U.S. 648 (1918). Other factors, in addition to value of the property, which may be relevant are the value of the property received as compared to the size of the bankruptcy estate, and the effect the improper receipt of property had on the distribution of the assets of the bankruptcy estate.
In addition to proof that the property was knowingly and fraudulently received from the debtor it must also be proven that the transfer in question was done "with the intent to defeat the provisions of [the Bankruptcy Code]. [T]he provisions of Title 11 of the Bankruptcy Law are defeated when a person without Court approval acts in a manner that diminishes the estate of the debtor, and thus interferes with the equitable use of distribution of any 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). The indictment need not specify the particular clause or provision of law which is intended to be defeated. Lurie v. United States, 20 F.2d 589 (6th Cir. 1927), cert. denied, 275 U.S. 563 (1927).
[cited in JM 9-41.001]