Newport Beach Private Investigator - Fraudulent Asset Transfers

[Sam]

When financial transactions hide assets the subject of a debt
collection, divorce, or bankruptcy case, the Court looks for badges of
fraud. As explained in Wall Street Associates v. Brodsky, 257 A.D.2d
526, 529 (1st Dept 1999), the badges of fraud for fraudulent asset
transfers are:

•A Close Relationship Between The Parties
•A Transfer Outside The Ordinary Scope Of Business
•Inadequate Consideration
•Knowledge Of A Creditor’s Claim
•Retention Of Control Of The Property

For example, in AMP Servs. Ltd. v. Walanpatrias Found. a.k.a. Doraw,
2006 slip op. 7985 ; 34 A.D.3d 231; 824 N.Y.S.2d 37 (1st Dept, 2006),
the Appellate Division upheld an injunction against a debtor dodging a
debt collection proceeding. In applying New York Debtor and Creditor
Law, the Appellate Division ruled that the debtor could not transfer a
stock portfolio offshore to Europe because there were badges of fraud
as mentioned by Wall Street Associates, 257 A.D.2d 526.


In another Appellate Division case, Dempster v. Overview Equities,
Inc., 2004 slip op. 01149 ; 4 A.D.3d 495; 773 N.Y.S.2d 71 (2d Dept
2004), a divorcing husband transferred his residence to a Delaware
corporation just before his valuation/equitable distribution hearing.
Since the Delaware corporation had filed for bankruptcy, the residence
was eventually sold by the bankruptcy court as a corporate asset. The
husband in Dempster had also diminished his net worth by alleging he
had a $1,473,362.74 debt because of two confessions of judgments from
construction loans.