Lessons From the Madoff Bankruptcy Case
If there is one important lesson that debtors should learn from Bernie Madoff case it is-never pull your loved ones into unethical or illegal activity in the name of “saving” assets during bankruptcy or covering up the truth. If you do this, you could literally destroy your relationship with those individuals and potentially destroy their life. And that takes us to the latest development in the Madoff Ponzi scheme, bankruptcy debacle.
The bankruptcy trustee in this case has decided to go after four of the investor’s former employees in an effort to recover $48 million which were allegedly obtained by the employees through fraudulent transfers prior to the bankruptcy filing. And while the bankruptcy trustee accuses at least one of these individuals of being aware of the fraud, it is plausible that many of them were unaware of the scandal in which they were unwittingly involved.
Unfortunately, if the money they received was received via fraudulent transfers prior to bankruptcy they will need to repay it to the bankruptcy estate. If they fail to repay the money to the bankruptcy estate they could face severe consequences, including but not limited to imprisonment. This is the cost of bankruptcy fraud and other types of fraud as demonstrated by Madoff’s 150 year prison term.
Debtors must avoid attempting to manipulate the bankruptcy system in any way and they must also avoid involving their loved ones in any manipulation. This includes transferring assets such as home or bank account into a friend or family member’s name in an attempt to avoid the asset’s seizure in bankruptcy.
This also includes asking friends or family members to hide assets in their home, storage space, vehicle etc. in an attempt to keep it out of reach of creditors as you prepare to file for bankruptcy. Remember, bankruptcy offers many generous exemptions and if you work with an experienced bankruptcy attorney, he/she will help you take advantage of those exemptions to protect your assets during bankruptcy.