The Death Penalty for Bankruptcy Fraud

An interesting article posted recently on CreditSlips.org talked about the imposition of the death penalty for filing a fraudulent bankruptcy.

The article, Hanging Bankrupts, may be found at http://www.creditslips.org/creditslips/2007/08/hanging-bankrup.html#more. But don’t worry—the law applied only in England between about 1706 and 1811.
According to this fascinating history, the penalties for fraudulent bankruptcy before that were first, from 1543, that for concealment of assets, the bankrupt “should lose and forfeit double the value of the property; and for non-surrender, that he should be taken and deemed out of the king’s protection, and all his property divided amongst his creditors.” This was the law until 1604 when the commissioners were given the power to arrest bankrupts who did not surrender to them, and bankrupts who committed perjury in their examinations were made to “stand in the pillory for two hours, and have one of [their] ears nailed to the pillory and cut off.”

The death penalty for fraudulent bankruptcy was repealed in 1811. The article states that, “After hearing testimony of many attorneys and former bankrupts, the committee suggested to the House of Commons, “that the law by which capital punishment is ordered to be inflicted upon fraudulent bankrupts, and upon those who do not surrender, is so severe, and so repugnant to the common sentiments of mankind, that it becomes totally inefficient in its operation, and hence the most flagitious individuals escape with impunity. That it is the opinion of the committee, the severity of the law against bankrupts, in the cases of non-surrender, or for concealment to the amount of 20 £ has a tendency to defeat the object of the Legislature: it is therefore recommended, that so much of the 5 Geo II, c. 30, as subjects persons found guilty of such offenses, or either of them, to suffer as felons without benefit of clergy, should be repealed: and that, in lieu thereof, the punishment of transportation for life, or for any period not less than fourteen years, should be enacted.”

It’s a lot better in the United States. The current criminal law for bankruptcy fraud makes it a felony, and can result in your being jailed for 5 years and paying a fine of up to $250,000 (and losing your discharge). Not enjoyable, but better than having your ear nailed to a pillory!