9-41.000 - Bankruptcy Fraud

9-41.010 - Report of Violations of Bankruptcy Fraud

Section 3057(a) of Title 18, United States Code, requires a judge, receiver or trustee having reasonable grounds for believing that any violation of laws of the United States relating to insolvent debtors, receiverships or reorganization plans has been committed, to report all the facts and circumstances to the appropriate United States Attorney (USA). Upon receipt of this report, the USA determines whether an investigation should be commenced; and upon completion of this investigation, the USA decides whether criminal action is warranted. A report by a judge, receiver or trustee of possible violations is not a condition precedent to the initiation of an investigation.

When a matter referred to the USA pursuant to 18 U.S.C. § 3057(a) by a judge, receiver or trustee is declined, 18 U.S.C. § 3057(b) requires that the USA "report the facts of the case to the Attorney General for his direction." This statutory directive is satisfied by providing the Department's United States Trustee Program a concise summary of the facts of the case and the reasons for declining it.

The personal opinion of the judge or trustee as to whether a criminal offense has occurred or as to whether criminal proceedings should or should not be commenced is in no way binding on the USA or determinative of the issues involved. Similarly, the decision of an officer of the Bankruptcy Court not to refer a matter to the USA should not be determinative in any prosecutive analysis.

[cited in JM 9-2.111]

[updated April 2018]

Updated January 29, 2020