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Blood from a Turnip: Searching for assets of “bankrupt” debtors

Over the years we have seen many cases in which a client sues and is awarded a judgment in response to some tortious act, only to have the defendant seek protection in bankruptcy court. It is not uncommon for judgment debtors to further attempt to hide assets from the bankruptcy process. Often the bankruptcy trustee will uncover such illicit activity; however, there are times when the underhanded schemes elude court scrutiny.

It is always a good idea to employ the services of a skilled, experienced private investigator to take a second look. An extra set of sharp eyes can analyze the bankruptcy filings and then develop a plan to seek and identify undeclared assets or improper liabilities that can be addressed in adversarial litigation.

Among the most common attempts to defraud the bankruptcy creditors are the transfer of holdings to family members or associates who have no valid controlling interest. Likewise, falsely stated liabilities or preferential payments to such parties can improperly diminish the assets available to creditors. In a particular case handled by ResultQuest, the married judgment debtor was revealed to have concealed millions in real estate by fraudulently deeding the property to his long-divorced ex-wife–without her knowledge. One subject we investigated claimed a massive, fabricated debt to a company with a circuitous ownership trail that ultimately led to a man determined to be the son of his brother-in-law.

Another widespread tactic to shield the personal ownership of all types of assets is the utilization of entities such as corporations, LLCs, and limited partnerships in jurisdictions where identities of officers and/or owners are restricted. In another assignment, ResultQuest specialists uncovered several priceless automobiles cloaked in a Delaware LLC. The defendant, however, was proven to have publicly boasted about his personal ownership of the cars, and unwisely paid their storage and insurance expenses by personal check.

If you anticipate or have been awarded a significant judgment, you should contact the specialists of ResultQuest, especially if the opponent has sought bankruptcy protection. Our sharp eyes will diligently and methodically pursue assets you can recover. Call us at 713/781-9040.