The recent economic downturn has spawned an increase in "fraudulent conveyance" charges in Nevada criminal courts: These cases involve debtors being accused of unlawfully hiding their assets to get out of paying back their creditors.
Penalties for making a fraudulent conveyance can be harsh, including high fines and even incarceration. But a skilled Nevada criminal defense attorney may be able to get the charges lessened or dismissed altogether.
This article explains the Nevada law of "fraudulent conveyances." Continue reading to learn the laws, defenses, and penalties for concealing assets from creditors.
Definition of "fraudulent conveyance" in Nevada
The legal definition of a "fraudulent conveyance" is typically divided into two separate but similar offenses: 1) Fraudulent conveyance by a debtor, and 2) Fraudulent conveyance by a judgment debtor:
1) Fraudulent conveyance by a debtor (NRS 205.330):
A fraudulent conveyance by a debtor in Nevada occurs when people owing a debt ("debtors") either sell, give away, conceal, or move their assets for the purpose of preventing their lenders ("creditors") from accessing them. The property in these cases tends to be real estate, vehicles, jewelry, or family heirlooms.
To illustrate the Nevada crime of fraudulent conveyance by a debtor, Reno criminal defense attorney Michael Becker gives an example:
George in Henderson has a high credit card debt. His only valuable asset is a vintage Ferrari he inherited from his grandfather. Frightened that the credit card company might go after the Ferrari to pay off the debt, George gives it to his best friend Sam on the understanding that Sam will give it back once the credit card company stops pursuing George. If caught, George could be booked by the Henderson Police at the Henderson Detention Center for making a fraudulent conveyance because he intentionally gave away the Ferrari to avoid paying back money he borrowed.
Note that Sam in the above example could be arrested, too, for the related Nevada crime of receiving a fraudulent conveyance in Nevada (NRS 205.360). Like it sounds, this crime occurs when someone takes possession or ownership of property that he/she knows was fraudulently transferred by someone else.
2) Fraudulent conveyance by a judgment debtor (NRS 205.355):
Fraudulent conveyance by a judgment debtor occurs when defendants in a lawsuit ("judgment debtors") either sell, give away, conceal, or move their property so they don't have to use it to pay the plaintiffs in the case ("creditor"). A judgment debtor is liable for this crime regardless of whether he/she moves the assets before or after a verdict is rendered in the case.
Intent to defraud:
A key element in the Nevada crime of making a fraudulent transfer is that the person intends to defraud in order to avoid paying a debt. Debtors are allowed to transfer their assets as long as the purpose isn't to elude creditors. Laughlin criminal defense attorney Neil Shouse provides an illustration:
Brad in North Las Vegas is several months behind on his car payments. For his brother's birthday, Brad gives him his Rolex watch. The car company gets wind of this gift and reports it to the North Las Vegas police, who then book Brad at the North Las Vegas
Detention Center for making a fraudulent conveyance.
In the above example, Brad meant the watch to be nothing more than a birthday present. Therefore, Brad should not be convicted because he had no intention of defrauding the car company out of their payments by gifting his watch to his brother.
Obtaining Money by False Pretenses (NRS 205.380):
The Nevada crime of fraudulent conveyances is similar but fundamentally distinct from the Nevada crime of obtaining money by false pretenses. The main difference between the crimes centers around whether the defendant is being accused of taking the property or hiding the property:
Obtaining money by false pretenses is when a person intentionally misrepresents him/herself in order to cheat money out of someone who's relying on that misrepresentation. Typical examples include:
- getting payments for a job that the employee never performs, or
- selling property that the seller never conveys to the purchaser after payment
In contrast, a fraudulent conveyance is when someone who's already taken or borrowed money then conveys it to another person or location to keep the creditor from getting to it. Learn more about the Nevada crime of obtaining money by false pretenses.
Note that fraudulent conveyances are considered "white-collar crimes" because they're executed through property transactions instead of physical actions. But anyone ... whether they're white-collar professionals or not ... may be convicted of making fraudulent conveyances.
Defenses to "fraudulent conveyance" charges in Nevada
There are two primary defenses to fight allegations of fraudulent conveyances in Nevada: 1) No intent to defraud, and 2) Insufficient evidence.
- Lack of intent to defraud. Selling or giving away assets is no crime as long as the person's purpose isn't to keep creditors from getting paid. As long as the prosecution can't show that the defendant intentionally tried to defraud his/her creditors by moving his/her property, the defendant should not be liable.
- Insufficient evidence. No one should be convicted of making a fraudulent conveyance unless the prosecution can prove the defendant's guilt beyond a reasonable doubt. If the defense attorney can demonstrate that there isn't enough reliable evidence to support a conviction, the charges should be dropped.
Penalties for "fraudulent conveyance" convictions in Nevada
The crime of a debtor or judgment debtor making a fraudulent conveyance is prosecuted as a gross misdemeanor in Nevada. The punishment includes:
- up to 364 days in jail and/or up to $2,000 in fines, and
- restitution in Nevada
Meanwhile, receiving a fraudulent conveyance is a misdemeanor in Nevada, with a laxer sentence of:
- up to six months in jail and/or up to $1,000 in fines, and
- restitution in Nevada
In addition, alleged debtors in these cases may face civil lawsuits pursuant to the Uniform Fraudulent Transfer Act under NRS 112. Creditors may sue debtors for property the debtors fraudulently conveyed whether or not the debtors still own the property.
Charged with Fraudulent Conveyance? Call us for help...
If you've been accused of making or receiving a fraudulent conveyance in Nevada, call our Las Vegas criminal defense attorneys at 702-DEFENSE (702-333-3673) for help. We may be able to get the offenses reduced or dropped so your record stays clean.
We represent client throughout Nevada, including Las Vegas, Henderson, Washoe County, Reno, Carson City, Laughlin, Mesquite, Bunkerville, Moapa, Elko, Pahrump, Searchlight and Tonopah.
For information on California Fraudulent Conveyances Law, please see ourt articles on Penal Code 154 - California fraudulent conveyance law, Penal Code 155 - fraudulent conveyance by a judgment debtor in California, and Penal Code 531 - participating in a fraudluent conveyance in California.