Penal Code § 155 PC – Fraudulent Conveyance by a Judgment Debtor

Penal Code 155 PC is the California statute that defines the offense of fraudulent conveyance by a judgment debtor. This section makes it is a crime for a person to conceal or transfer personal property in order to avoid paying damages owed as a result of a lawsuit.

The language of the statute reads as follows:

155. (a) Every person against whom an action is pending, or against whom a judgment has been rendered for the recovery of any personal property, who fraudulently conceals, sells, or disposes of that property, with intent to hinder, delay, or defraud the person bringing the action or recovering the judgment, or with such intent removes that property beyond the limits of the county in which it may be at the time of the commencement of the action or the rendering of the judgment, is punishable by imprisonment in a county jail not exceeding one year, or by fine not exceeding one thousand dollars ($1,000), or by both that fine and imprisonment.

(b) Where the property so concealed, sold, disposed of, or removed consists of a stock in trade, or a part thereof, of a value exceeding two hundred fifty dollars ($250), the offenses shall be a felony and punishable as such.

Examples

• Upon losing a defamation lawsuit, Barbara transfers most of her money into overseas trusts to avoid paying the damages awarded in the case.
• In the middle of a personal injury case involving his misdemeanor hit and run charge (per Penal Code 20002), Paul fears he will lose and sells off his two cars to avoid paying any damages.
• After a judge orders Kayla to pay money for the property damage she caused in her DUI case, Kayla gives her expensive jewelry collection to her sister and says she has no money to pay.

Luckily, there are several legal defenses that a person can raise if accused of engaging in a fraudulent conveyance. These include showing that an accused:

• had no intent to defraud;
• acted under duress; and/or,
• was arrested without probable cause.

Penalties

A violation of PC 155 is charged as a misdemeanor (as opposed to a California infraction). The crime is punishable by:

• imprisonment in the county jail for not more than one year; and/or,
• a maximum fine of $1,000.

If the fraudulent conveyance involves stock in trade valued at more than $250, the crime will be charged as a felony. As such, it is punishable by imprisonment in the California state prison for:

• 16 months,
• two years, or
• three years.

Our California criminal defense attorneys will highlight the following in this article:

• 1. What is a fraudulent conveyance by a judgment debtor?
• 2. What are the legal defenses?
  • 2.1. Lack of intent
  • 2.2. Duress
  • 2.3. No probable cause
• 3. Penalties, punishment, and sentencing
• 4. Related offenses
  • 4.1. Fraudulent conveyance – PC 154
  • 4.2. Participation in a fraudulent conveyance – PC 531
  • 4.3. Check fraud – PC 476

1. What is a fraudulent conveyance by a judgment debtor?

Under California Penal Code 155 PC, it is a crime for a judgment debtor to conceal or transfer “personal property,” or to move such property to a different county, in order to avoid paying damages owed as a result of a lawsuit.¹

California law says that a “judgment debtor” is basically a person that has to pay another party a sum of money (or damages) as a result of a court case.

A person can violate this section by either:

1. transferring property after he has already been ordered to pay money in a court case; or,
2. transferring property while a lawsuit is still pending and before the party has been ordered to pay anything.²

Please note that for a party to commit the crime, he must act with the specific intent to defraud the person that is trying to recover the money or damages. The “intent to defraud” is an intent to either:

• prevent a person from getting paid;
• make it more difficult for a person to get paid; or,
• delay a person from getting paid.³

According to California Penal Code 7 PC, “personal property” includes:

• money,
• goods,
• chattels (or property other than real estate), and
• things evidencing debt.⁴

2. What are the legal defenses?

A person accused under PC 155 can challenge the accusation by raising a legal defense. A good defense can often get a charge reduced or even dismissed. Please note, though, that it is critical for an accused to hire an attorney to get the most effective defense.

Three common defenses to PC 155 accusations are:

1. lack of intent;
2. duress; and/or,
3. no probable cause.

2.1. Lack of intent

Recall that a defendant is only guilty under Penal Code 155 if he transfers, moves or conceals property with the specific intent to defraud. Therefore, it is a solid defense for an accused to fight a Penal Code 155 charge by showing that he did not have this requisite intent. For example, it is quite possible that a defendant transferred property to help a relative in need, as opposed to hiding it from a judgment creditor.

2.2. Duress

To best understand this defense, think of a case where a bank robber holds a pedestrian at gunpoint and tells him to get into a running car and drive them away.

Duress is a legal defense in which an accused basically says: “He made me do it.” The defense applies to the very limited situation in which a person commits a crime (here, unlawfully transferring property to avoid paying damages), because somebody threatened to kill him if the crime was not committed.

2.3. No probable cause

The Fourth Amendment to the U.S. Constitution says that police must have probable cause before they can detain or arrest a suspect of a crime.

If a person was stopped or arrested for violating PC 155, and there was no probable cause to do so, then any evidence obtained following the improper stop/arrest could get excluded from the case. This exclusion could result in the dismissal of, or reduction in, charges.

“Probable cause” essentially means that there is a reasonable belief that someone committed a crime (based on all of the circumstances).

3. Penalties, Punishment, and Sentencing

A violation of Penal Code 155 PC is charged as a misdemeanor. The crime is punishable by:

• imprisonment in the county jail for not more than one year; and/or,
• a maximum fine of $1,000.⁵

If the fraudulent conveyance in the case involves stock in trade, valued at more than $250, the crime will be charged as a felony. As such, it is punishable by imprisonment in the California state prison for:

• 16 months,
• two years, or
• three years.⁶

4. Related Offenses

There are three crimes related to fraudulent conveyances by judgment debtors. These are:

1. fraudulent conveyance – PC 155;
2. participation in a fraudulent conveyance – PC 531; and,
3. check fraud – PC 476.

4.1. Fraudulent conveyance – PC 154

Under California Penal Code 154 PC, a fraudulent conveyance is what happens when someone sells, gives away, or otherwise transfers any kind of property. And, the party does so with the goal of preventing his creditors from getting at that property and using it to pay off the debt.⁷

Please note that a creditor is a person to whom a party owes money to. A debtor, in contrast, is the party that owes money to the creditor.

In a fraudulent conveyance, a defendant can only get convicted of the crime if he gives away property with the intent to either:

• prevent a creditor from getting paid;
• make it more difficult for the creditor to get paid; or,
• delay the creditor from getting paid.⁸

The penalties for violating PC 154 are the same as those for violating PC 155.

A violation of Penal Code 154 PC is charged as a misdemeanor (as opposed to a California infraction). The crime is punishable by:

• imprisonment in the county jail for not more than one year; and/or,
• a maximum fine of $1,000.⁹

If the fraudulent conveyance involves stock in trade, valued at more than $250, the crime will be charged as a felony. As such, it is punishable by imprisonment in the California state prison for:

• 16 months,
• two years, or
• three years.¹⁰

4.2. Participation in a fraudulent conveyance – PC 531

California Penal Code 531 PC makes it a crime for persons to participate in fraudulent conveyances.

Under PC 531, a person participates in a fraudulent conveyance if he:

• is a party to the conveyance (this typically means the person to whom the property is transferred or given to);
• willingly and knowingly defends the conveyance as not being fraudulent; and,
• gives away or sells the property that had already been fraudulently conveyed.¹¹

A person that violates PC 531 is guilty of a misdemeanor.¹² The offense is punishable by:

• imprisonment in the county jail for not more than six months; and/or,
• a maximum fine of $1,000.¹³

4.3. Check fraud – PC 476

Check fraud is a crime per California Penal Code 476.

Simply put, a person commits check fraud if he:

• makes,
• writes,
• passes,
• possesses,
• attempts to make,
• attempts to write, or
• attempts to pass,

a fake, altered, or forged check in order to obtain cash, property or services with fraudulent intent.¹⁴

Penal Code 476 is a wobbler offense. This means that prosecutors could file the charge as either a misdemeanor or a felony.

If a defendant is convicted of a misdemeanor, he faces:

• up to one year in a county jail, and
• a maximum $1,000 fine.

If he is convicted of a felony, the defendant faces:

• 16 months, or two or three years in county jail, and
• a maximum $10,000 fine.¹⁵

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