A resident of Massachusetts, John Pregent, was found guilty to one count of bankruptcy fraud in the bankruptcy case of his business, Technical Fabrications, Inc. (TechFab). He was found guilty of scheming to defraud creditors.
He had filed for a Chapter 7 bankruptcy (only Chapter 7 and 11 can be filed for by businesses) on July 26, 2010, in the Massachusetts District Court, with the intention of getting the debts of the business discharged. Normally there wouldn’t have been any problem, but before filing for bankruptcy, Mr. Pregent had sold the valuable assets of his company, TechFab, to a newly-formed company for which the payment was done directly to him. He had done this in order to prevent his business creditors from getting any money by the liquidation of those assets. It took around two years to prove him guilty as he was also unable to disclose the transfers, even under the perjury’s penalty. Unfortunately, the FBI got involved in this case, which led to Pregent being found guilty of defrauding with imprisonment of up to 5 years, supervised visitation of three years and a hefty fine of $250,000. His sentencing took place on May 5, 2012.
Our legislators had designed bankruptcy in order to help the one in need of it while keeping the rights and needs of the creditors in mind. Thus, any attempt to cheat the bankruptcy system, which is already so liberal, is demeaning and exploitative. Such things give a bad name to everyone who require protection through bankruptcy.
To know more about the process of bankruptcy and to save yourself from committing any unintentional defraud, it is better to consult an experienced bankruptcy attorney. You can contact the Recovery Law Group (best in Los Angeles & Dallas, TX) at www.recoverylawgroup.com or on 888-297-6203.