18 U.S.C. § 152(8) prohibits the concealment, obstruction, mutilation or falsification of recorded information -- i.e., books, documents, records, and papers-- before or after the filing of a bankruptcy petition. This section applies to not only existing information but also to fabricated information. The recorded information must relate, however, "to the property or financial affairs of a debtor."
Subsection (8) provides:
A person who...after the filing of a case under title 11 or in contemplation thereof, knowingly and fraudulently conceals, destroys, mutilates, falsifies, or makes a false entry in any recorded information (including books, documents, records, and papers) relating to the property or financial affairs of a debtor; shall be fined..., imprisoned..., or both.
To sustain the charge that a person concealed, destroyed or falsified records after the filing of a case in bankruptcy, the government must prove that:
- a bankruptcy proceeding existed;
- the defendant concealed, destroyed, or mutilated the documents;
- such documents related to the property or financial affairs of the debtor; and
- the defendant acted knowingly and fraudulently.
Devitt & Blackmar, 2 Federal Jury Practice and Instructions, §§ 48.14 & 48.15 (1990 Supplement)(deleted in later editions).
The act of concealing, destroying or falsifying records can occur either before or after the bankruptcy case is filed. Documents or information relating to the financial affairs of a debtor include anything that would provide the names and locations of possible sources of funds or assets or means of reorganization of the estate. United States v. Roberts, 783 F.2d 767 (9th Cir. 1985); United States v. Metheany, 390 F.2d 559 (9th Cir.), cert. denied, 393 U.S. 824 (1968).
An entry that accurately logs a fraudulent transaction is a "fraudulent entry" when the party making the entry is aware of the fraudulent nature of the transaction. United States v. Center, 853 F.2d 568, 571 (7th Cir. 1988). A credit placed on a company's books as a fabrication to cover up the transfer of an accounts receivable in contemplation of bankruptcy is a false entry in a document relating to property of the bankrupt. United States v. Falcone, 544 F.2d 607, 610 (2d Cir. 1976), cert. denied, 430 U.S. 916 (1977).
[cited in JM 9-41.001]