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Bankruptcy Fraud: How To Identifying And Wich Are Common Fraud Schemes

Bankruptcy Fraud Warning Signs

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  1. Concealment of assets
  2. Serial bankruptcy cases
  3. Failure to keep usual business records
  4. Incomplete or missing books and records
  5. Conduct well outside ordinary business or industry standards and practices
  6. Unusual depletion of assets shortly before the bankruptcy filing
  7. Recent departure of debtor’s officers, directors or general partners
  8. Unanswered questions or incomplete information on debtor’s schedules and statement of financial affairs
  9. Frequent amendments to schedules, statements of financial affairs and monthly operating reports
  10. Inconsistencies among recent financial statements, tax returns and debtor’s schedules and statements of financial affairs
  11. Absence of knowledgeable officers to testify at the Section 345 meeting
  12. Inability to contact principals of debtor at debtor’s stated location
  13. Frequent dealings in cash rather than recorded transactions
  14. Sudden depletion of inventory post-petition without plausible explanation
  15. Inflated salaries, payments of bonuses or cash withdrawals byofficers, directors, shareholders or other insiders
  16. Transfer of property to insiders, shareholders and relatives shortly before bankruptcy
  17. Payoff of loans to directors, officers, shareholders, relatives or other insiders shortly before filing.
  18. Transactions with non-debtor subsidiaries, parent companies or affiliated corporations owned by the same or related persons or entity
  19. A history of prior litigation or post-petition litigation involving breech of contracts, fraud misrepresentations, etc
  20. Complicated corporate structures and relationships.
  21. Creditor confusion concerning corporate structure.
  22. Fire, theft or loss prior to or after filing.
  23. Failure to pay withholding and sales tax.
  24. Startup of a similar business near the time of bankruptcy filing.

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