The crime of “fraudulent conveyance” is covered under California Penal Code Section 154. In simple language, this law makes it unlawful give away or even sell your property to avoid a debt.
This means if you can't pay your debts and you attempt to unlawfully avoid paying through fraudulent conveyances and property transfers, you could harsh legal consequences.
Penal Code 154 deals with fraudulent conveyance by a debtor and Penal Code Section 155 deals with fraudulent conveyance by a judgment debtor.
Both of these white collar crimes typically occur when someone is seeking a way to avoid a huge debt. In many cases, a defendant transfers their property to someone else in an attempt to conceal it so they won't have to pay a judgment against them.
In other words, this crime can occur when you conceal your assets from creditors. It's no secret that in situations where a person owes more than they can financially handle, the people or lenders who are owed the money will often attempt to obtain their most valuable property.
This could include houses, cars, boats, wedding rings and just about anything of value.
When this happens, many have attempted to hide their valuable possessions to keep the lender from taking possession. An example of fraudulent conveyance includes a situation where someone was ordered to pay $250,000 in restitution to a victim after being convicted and sentenced for a crime.
The restitution that was ordered was changed to a civil judgment. The defendant then transfers ownership of his house to a relative, but continues to live there. In this example, he violated PC 154 and committed fraudulent conveyance because he transferred his property to his relative to avoid paying restitution.
If you have been accused of fraudulent conveyance, you need to remain silent and contact the Los Angeles criminal defense attorneys at Eisner Gorin LLP.
We need to closely examine the details in order to start planning your defense to obtain the best possible outcome on your case. Let's take a closer look at the legal definitions, penalties, and defenses below.
Legal Definition of Fraudulent Conveyance
California Penal Code Section 154 describes the criminal offense of fraudulent conveyance by a debtor as follows:
- (a) Every debtor who fraudulently removes their property out of this state, or fraudulently sells, assigns or conceals their property with intent to defraud, hinder or delay creditors their rights, or claims, can be sentenced to county jail for up to one year and fined up to $1,000, or both jail and fine.
California Penal Code Section 155 describes the criminal offense of fraudulent conveyance by judgment debtor as follows:
- (a) Every person against who has an action pending, or against who has a judgment rendered for the recovering personal property, who fraudulently conceals, sells, or disposes of the property, with intent to hinder, delay, or defraud the person who brought the action or recovering the judgment, or with intent removes the property out of the county can be sentenced to county jail for up to one year and fined up to $1,000, or both jail and fine.
In spite of legal sounding language in these definitions above, it's actually very simple. A "fraudulent conveyance" crime in California occurs when you sell, transfer, or give away your property with the intent to prevent creditors from taking it to pay off the debt.
Elements of the Crime
In order for the Los Angeles County prosecutor to convict you of fraudulent conveyance in violation of California Penal Code Section 154, they must be able to prove, beyond any reasonable doubt, what is known as the “elements of the crime.”
These include the following:
- You are the debtor responsible for paying money to a creditor, and you;
- Sold your property to another person,
- Gave away your property for free to another person,
- You hid or concealed your property, or
- You moved your property out of California, and
- Your intent was to obstruct or delay the creditors ability to be paid.
The similar crime under California Penal Code Section 155 applies to anyone who fraudulently transfers their property with intent to avoid collection on a civil judgment against them.
In other words, it's also unlawful to transfer or conceal property to avoid paying damages from a lawsuit, which is called fraudulent conveyance by a judgment debtor. It also applies to situations while the lawsuit is pending and you have yet to be ordered to pay anything.
Additionally, California Penal Code Section 531 covers situations where you could be charged with fraudulent conveyance when you are not actually the person who owes money to a creditor. You can be charged under PC 531 if you just participate in fraudulent conveyance.
In other words, if you willingly get yourself involved by accepting the transfer of the property with the specific intent to prevent creditors from getting paid back. The word “intent” is the key and California law punishes anyone involved in a transaction that has a specific goal to prevent a creditor from getting paid.
Legal Penalties for PC 154 Fraudulent Conveyance
If you are convicted of fraudulent conveyance in violation of California Penal Code Section 154, it's typically a misdemeanor crime with the following legal penalties:
- Up to one year in a Los Angeles County jail,
- A fine up $1,000, or
- Both, jail and a fine.
It should be noted that fraudulent conveyance is a felony crime if the property is "stock in trade" that the debtor might sell in their business and its worth over $250. If convicted of a felony case, the legal penalties include up to three years in a California state prison and a fine.
It should be noted that you could face federal charges for fraudulent conveyance in situations where you file bankruptcy, transfer your property to another person before actually filing for the bankruptcy with the specific intent to prevent that property from inclusion in your assets to pay creditors.
In other words, you could be charged under federal law when you intentionally prevent your property from being included bankruptcy process.
You could face mail fraud charges if you send or receive any materials related to a scheme to commit a fraud crime. If convicted of federal fraudulent conveyance, you could be sentenced up to five years in a federal prison, and ordered to pay a fine.
Legal Defenses for PC 154 Fraudulent Conveyance
Our Los Angeles criminal defense lawyers can use a wide range of strategies to defend you against charges of fraudulent conveyance in violation of California Penal Code Section 154, 155, or 531 discussed above.
It's important to note that all fraud cases are unique and have their own set of circumstances and evidence, meaning we need to first carefully review the details to formulate an effective defense strategy. However, the most common legal defense includes the following:
No intent: Clearly, the most common legal defense is to challenge the critical element of the crime of intent. Our lawyers might be able to argue the transfer of your property was not completed with specific intent to avoid paying a creditor.
Perhaps we could argue you were simply going through your normal business transactions without considering any impact on paying a judgment. Maybe you didn't know the transfer was unlawful and the prosecutor has the burden of proof to show our committed the crime without any doubt.
This is commonly known as the “lack of intent” defense.
Contact our Criminal Defense Law Firm
If you are facing allegations of fraudulent conveyance, you need to call the Los Angeles criminal defense attorneys at Eisner Gorin LLP. You have much at stake and a conviction could be life-altering.
Most white collar fraud cases are complex and you will need an experienced lawyer who understands complicated financial transactions and knows how to apply them in your lack of intent defense.
We have a long history of success in all types of fraud related cases, but need to first closely examine the details of your situation to let you know how we can help you. We serve clients throughout Southern California, including Los Angeles County and the San Fernando Valley. Call our law firm at 877-781-1570.
Eisner Gorin LLP 1875 Century Park E #705 Los Angeles, CA 90067 310-328-3776 www.egattorneys.com