The Death Penalty for Bankruptcy Fraud

14 Aug The Death Penalty for Bankruptcy Fraud

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

The article, Hanging Bankrupts, is a good read. But don’t worry–the death penalty 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.”

In 1706,a “fraudulent bankruptcy” was made a “felony without benefit of clergy”. The normal punishment for a felony at the time was hanging. “Benefit of clergy” might give a first offender a lesser punishment. The statute defined “fraudulent bankrupt” as a “person who neglects or omits to discover and deliver his, her, or their estates and effects, and in every thing act and do as in this act is directed.”

The death penalty for fraudulent bankruptcy was repealed in 1811.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persons found guilty of such offenses, or either of them, to suffer as felons without benefit of clergy, should be repealed: and that, in lieu thereof, the punishment of transportation for life, or for any period not less than fourteen years, should be enacted.”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!

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Brett Weiss, a senior partner at The Weiss Law Group, LLC, represents people and businesses in all phases of bankruptcy. He has experience in complex individual Chapter 7, Chapter 11, and Chapter 13 bankruptcy cases, and in Chapter 11 small business restructuring and reorganization. Mr. Weiss lectures nationally on bankruptcy issues. He has testified before the Federal Bankruptcy Rules Committee, the Consumer Financial Protection Bureau, and has twice testified before Congress on bankruptcy and credit issues. Brett Weiss is the co-author of Chapter 11 for Individual Debtors, and has written Not Dead Yet: Bankruptcy After BAPCPA, for the Maryland Bar Journal, as well as hundreds of blogs for the Bankruptcy Law Network. With his colleague, Daniel Press, he recorded a 13-hour basic bankruptcy training series, and leads intensive three-day Chapter 11 training boot camps. Mr. Weiss has received international media attention in connection with his work. He was interviewed by Barbara Walters on The View, has appeared on the Today Show, Good Morning America, ABC News with Peter Jennings, the Montel Williams Show, National Public Radio, AARP-TV, the BBC World Service, German state television, and numerous local radio and television programs, and been quoted in Money magazine, The Washington Post and The Baltimore Sun, among others. Brett Weiss is the previous Maryland State Chair for the National Association of Consumer Bankruptcy Attorneys, a founding member of the Bankruptcy Law Network, on the board of the Maryland State Bar Consumer Bankruptcy Council, and a member of the American Bankruptcy Institute and the Bankruptcy Bar Association of Maryland. He has received the Distinguished Service Award from the National Association of Consumer Bankruptcy Attorneys for his work on behalf of consumers across the country. Mr. Weiss is admitted to practice before Maryland and District of Columbia federal and state courts, the United States Courts of Appeals for the DC, Fourth and Eighth Circuits, the United States Tax Court, and the Supreme Court of the United States, and has been practicing law since 1983.
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