Fraudulent Conveyance Laws – California Penal Code 154
The criminal offense “fraudulent conveyance” is defined under California Penal Code 154, which makes it a crime to give away or sell your property avoid a debt.
In basic terms, if you are unable to pay your debts and attempt to avoid paying through fraudulent conveyances and property transfers, you could be face harsh penalties.
Penal Code 154 describes fraudulent conveyance by a debtor. The closely related California Penal Code 155 PC describes fraudulent conveyance by a judgment debtor. These white collar crimes occur when anyone is attempting to avoid paying a large debt.
Typically, a defendant will transfer their property to another person to conceal it from creditors who will often attempt to obtain their property to pay their debt.
This most common property includes a home, cars, boats, jewelry, or other items of value. When someone attempts to hide valuable possessions to prevent a lender from taking them, they can be charged under Penal Code 154.
Let's say somebody was ordered to pay $100,000 in restitution to a victim after being convicted of a crime, and it was changed to a civil judgment. Next, the defendant transfers ownership of their home to a relative, but remains living there.
In this scenario, the defendant is in violation of PC 154 fraudulent conveyance because they transferred their property to a relative to avoid paying restitution.
To give our readers a better understanding of fraudulent conveyance laws, our criminal attorneys are providing an overview below.
Definition of Penal Code 154 Fraudulent Conveyance
California Penal Code 154 PC defines the criminal offense of fraudulent conveyance by a debtor:
Every debtor who fraudulently removes their property out of California, or fraudulently sells, or conceals their property with intent to defraud, hinder or delay creditors their rights, could be sentenced to county jail for up to one year, a fine up to $1,000, or both.
California Penal Code 155 defines the criminal offense of fraudulent conveyance by judgment debtor:
Any person against who has a pending action, or against who has a judgment rendered for recovery of personal property, fraudulently conceals, sells, or disposes of property, with intent to hinder, delay, or defraud person who brought the action or recovering the judgment, or removes the property out of the county, could sentenced to county jail for up to one year, a fine up to $1,000, or both.
In other words, in California, a “fraudulent conveyance” occurs when you sell, transfer, or give away your property with a specific intent to prevent creditors from taking it to pay off your debt.
In order to be convicted of Penal Code 154, the prosecutor must be able to prove all the elements of the crime, beyond any reasonable doubt. These include:
- Defendant was a debtor responsible for paying money to a creditor, but they;
- Sold their property to someone else
- Gave away their property for free to someone else
- Hid or concealed their property, or
- Moved their property out of California, and
- Their intent was to obstruct or delay creditors ability to be paid
The closely related crime under Penal Code 155 applies to anyone who fraudulently transfers their property with an intent to avoid collection on a civil judgment against them.
In simple terms, it's unlawful to transfer or conceal property to avoid paying an award from a lawsuit. This is commonly known as fraudulent conveyance by a judgment debtor. This statute also applies to a situation where the lawsuit is pending and haven't yet been ordered to pay.
Also, California Penal Code 531 PC, participating in a fraudulent conveyance, describes when you would face fraudulent conveyance charges when you are not the person who owes money to a creditor.
If you participate in the fraudulent conveyance, you can be charged with a crime under Penal Code 531. This means if you willingly get involved by accepting transfer of the property, with specific intent to prevent creditors from getting paid, you could be charged.
The key word here is “intent,” and the statute provides penalties for anyone involved in a transaction with a specific goal to prevent creditors from getting paid.
Penalties for PC 154 Fraudulent Conveyance
If convicted of Penal Code 154, fraudulent conveyance, it's normally a misdemeanor offense. You could be facing the following penalties:
- Up to one year in a county jail
- A fine up $1,000, or
- Both, jail and a fine
A fraudulent conveyance is a felony offense if the property is “stock in trade” that the debtor sells in their business with a value over $250. If convicted of a PC 154 felony offense, the penalties are up to 3 years in a California state prison, and a fine.
Federal Fraudulent Conveyance Charges
It's possible to be charged with a federal crime of fraudulent conveyance in a situation where someone files for bankruptcy – transfers property to someone else before actually filing with the intent to prevent that property from being included in list of assets to pay creditors.
This means you can be charged under federal law if you intentionally prevent property from being included in the bankruptcy process. If convicted federal fraudulent conveyance, the penalties include up to 5 in a federal prison, and a fine.
Fighting PC 154 Fraudulent Conveyance Charges
Our criminal defense lawyers can use a variety of strategies to fight charges of fraudulent conveyance that are defined under the California Penal Code Sections above. All cases are unique and will need to be closely examined to determine best strategy. The most common defenses include:
Lack of intent defense
Obviously, the best defense to a PC 154 crime is to challenge the critical element of intent. We might be able to make a reasonable argument that the transfer or sale of your property was not completed with an intent to avoid paying a creditor.
Maybe we could make a claim you were only going through a routine business transaction without any consideration on having to pay a judgment. Perhaps you were unaware the transfer was unlawful. Recall that the prosecutor has the burden of proof to show you committed a PC 154 offense beyond any reasonable doubt.
If you have been accused of fraudulent conveyance in violation of California Penal Code 154, you should consult with our Los Angeles criminal defense attorneys to review the case and options.
This type of fraud crime is often complex and you need a law firm with experience dealing with these types of offenses. A conviction can have life-altering consequences.
We have a track record of success in white collar cases, but need to first examine all the details to develop a strategy. We serve clients throughout Southern California.
Cron, Israels & Stark is a criminal defense law firm located at 11755 Wilshire Blvd, 15th Floor, Los Angeles, CA 90025. Contact us for a free case consultation at (424) 372-3112.