Despite stiff penalties, when faced with the prospect of losing money or property, some people attempt to game the bankruptcy system. Hiding assets is a typical offense, but, creditors and others commit bankruptcy fraud, too. When you suspect that someone has committed a bankruptcy crime, you can report it to the proper authorities.
(For the basics, start by reading What Is Bankruptcy Fraud?)
Most types of bankruptcy fraud involve a scheme to deprive a creditor of money. Here are examples of activities that can lead to prosecution:
This list isn’t exhaustive, but it should give you an idea of the breadth of potentially fraudulent actions.
When you suspect that someone has committed bankruptcy fraud, you can contact any number of people involved in the bankruptcy case. Here's how to get the information to the appropriate authorities.
In each case, the bankruptcy court assigns a trustee whose job it is to oversee the case. One of the trustee’s duties is to review the matter for fraud, and it isn’t unusual for a trustee to receive information from people such as a disgruntled spouse or business partner. To find out the trustee in a particular matter, contact the local bankruptcy court clerk's office.
In all states (other than Alabama or North Carolina), the Office of the United States Trustee oversees the local bankruptcy trustees. You can make a report by contacting the local U.S. Trustee’s office. You can mail or email your concerns to the:
Office of the U.S. Trustee
ATTN: Office of Criminal Enforcement
George C. Young Federal Building and Courthouse
400 W. Washington Street, Suite 1100
Orlando, FL 32801
If the case is in Alabama or North Carolina, contact the Office of the Bankruptcy Administrator.
You can also report bankruptcy fraud to the Department of Justice (DOJ). A well thought out report with documentation will make it much easier for the authorities to follow through. The DOJ is less likely to put much energy into a report that contains vague assertions.
On its website, the DOJ suggests including the following information in your summary:
Many other agencies can become a part of a bankruptcy case, depending on the circumstances. The U.S. Trustee refers investigation of suspected bankruptcy fraud to the FBI, who might, in turn, elicit help from the IRS.
Every report of a bankruptcy crime gets taken seriously, even if made anonymously. Identifying yourself can make it easier if the investigators have questions, however, be aware that the government will not necessarily protect your identity.
(Learn what could happen next in Bankruptcy Fraud Consequences.)