A fraudulent transfer, also known as a “fraudulent conveyance” or “fraudulent disposition,” is an attempt to illegally move, conceal, or otherwise dispose of an asset to defraud creditors or other interested parties. This type of transfer can be deliberate or unintentional and is a violation of both state and federal law in the United States. By recognizing the signs of a fraudulent transfer and knowing how to protect yourself against such transactions, you can help prevent the loss of funds and assets.
Red Flags of Fraudulent Transfers
Fraudulent transfers may be difficult to detect and can occur in many ways. However, there are certain common red flags or indicators of fraud to watch out for:
- Transfers of assets for substantially less than their value
- Transfers made to obscure or shell companies or companies without an established track record
- Transfers made with the intent to hinder, delay, or defraud creditors
- Transfers made to avoid, diminish, or otherwise evade financial obligations
- Transfers made to remove assets outside of the reach of legal proceedings
Protecting Yourself From Fraudulent Transfers
The simplest way to protect yourself from fraudulent transfers is to ensure that you are aware of how funds and assets are being moved in and out of your companies and accounts. Review any transfers carefully and ask for more information if something looks suspicious. Additionally, you should consult with an experienced attorney if you believe you may be a victim of a fraudulent transfer and, if applicable, file a complaint with the relevant authorities.
By understanding more about fraudulent transfers and taking steps to prevent them, you can better protect yourself and your business from avoidable harm.