In Nevada, a fraudulent conveyance is the transferring of assets for the purpose of keeping creditors from claiming them. The key element of this crime is that you have the intent to defraud your creditors.
Making a fraudulent conveyance is a gross misdemeanor, carrying up to 364 days in jail and/or $2,000 plus restitution. Meanwhile, knowingly receiving a fraudulent conveyance is a misdemeanor that carries up to six months in jail and/or up to $1,000, plus restitution.
In this article, our Las Vegas criminal defense attorneys discuss:
- 1. What is a fraudulent conveyance?
- 2. Can the charges be fought?
- 3. How severe are the penalties?
- 4. Can I seal the record?
1. What is a fraudulent conveyance?
The legal definition of a fraudulent conveyance is transferring assets in order to keep creditors from taking possession of them. Nevada law has three separate fraudulent conveyance crimes:
1.1. Fraudulent conveyance by a debtor
A fraudulent conveyance by a debtor is when you
- sell,
- give away,
- conceal, or
- move
your assets for the purpose of preventing creditors from taking possession of them.1 The property in these cases tends to be real property, vehicles, jewelry, or family heirlooms.
Example: George maxed out his credit cards. He gives his Ferrari to his best friend Sam on the understanding that Sam will give it back once his creditors quit hounding him for payment.
If caught, George could be charged for making a fraudulent conveyance because he intentionally gave away the Ferrari to avoid paying back his creditors. (Note that Sam could be charged with knowingly receiving a fraudulent transfer, discussed further down.)
1.2. Fraudulent conveyance by a judgment debtor
A fraudulent conveyance by a judgment debtor is when you
- sell,
- give away,
- conceal, or
- move
your property so you do not have to pay them to the creditors who are currently suing you.2 This is a crime whether you move the assets before or after the lawsuit reaches a verdict.
Example: Brad is suing Greg for not paying back a $100,000 loan. Greg takes all his cash and puts it in an off-shore LLC so that Brad cannot access it.
If caught, Greg could be charged with making a fraudulent conveyance for hiding his assets from Brad. It makes no difference that the judge has not ruled on the lawsuit yet.
NRS 203.330 and 203.355 prohibit the transfer of property or real estate with the intent to defraud creditors.
1.3. Knowingly receiving a fraudulent conveyance
You knowingly receive a fraudulent transfer when you:
- take possession of property, and
- you know the property is being transferred for the purpose of avoiding creditors.3
Example: Mary is being sued for divorce. Mary gives her new boyfriend her stash of gold coins to hold on to until the divorce is over.
Here, her boyfriend (the “transferee”) could be charged with knowingly receiving a fraudulent transfer if he knows that Mary is trying to hide the coins so she does not have to list them as assets during the divorce.
2. Can the charges be fought?
Based on our experience in these types of cases, the most effective legal defense is to argue that you had no actual intent to avoid paying your debtors. This is because intent is a difficult thing for prosecutors to prove, especially beyond a reasonable doubt.
Example: Brad is several months behind on his car payments when he gives his brother a Rolex watch for his birthday. The car company gets wind of this gift and reports it to the police.
Here, there is no evidence that Brad intended to defraud the car company out of their payments. He in good faith wanted the watch to be nothing more than a birthday present.
Debtors are allowed to transfer assets as long as the purpose is not to elude creditors. If the prosecution cannot show that you intended to defraud your creditors by moving your property, any fraudulent conveyance charges should be dropped.4
3. How severe are the penalties?
Making a fraudulent conveyance is prosecuted as a gross misdemeanor under Nevada state law. The punishment includes:
- up to 364 days in jail and/or up to $2,000 in fines, and
- restitution.5
Meanwhile, receiving a fraudulent conveyance is a misdemeanor. This carries a laxer sentence of:
- up to 6 months in jail and/or up to $1,000 in fines, and
- restitution.6
In addition, debtors face civil lawsuits according to the Uniform Fraudulent Transfer Act under NRS 112.7
4. Can I seal the record?
Yes. If you are convicted of making a fraudulent conveyance (a gross misdemeanor), you can petition for a record seal two years after the criminal case ends. If you are convicted of receiving a fraudulent conveyance (a misdemeanor), then you must wait one year after the case ends to petition for a seal.
Note that you can petition for a record seal right away if the charge gets dismissed.8 Learn more about how to seal criminal records in Nevada.
Fraudulent transfer claims invite both criminal charges and civil lawsuits.
In California? See our articles on Penal Code 154 PC, Penal Code 155 PC, and Penal Code 531.
Legal References
- Nevada Revised Statute 205.330. Fraudulent conveyances. Every person who shall be a party to any fraudulent conveyance of any lands, tenements or hereditaments, goods or chattels, or any right or interest issuing out of the same, or to any bond, suit, judgment or execution, contract or conveyance, had, made or contrived with intent to deceive and defraud others, or to defeat, hinder or delay creditors or others of their just debts, damages or demands; or who, being a party as aforesaid, at any time shall wittingly and willingly put in use, avow, maintain, justify or defend the same, or any of them, as true and done, had, or made in good faith, or upon good consideration, or shall alien, assign or sell any of the lands, tenements, hereditaments, goods, chattels or other things before mentioned, conveyed to him or her as aforesaid, or any part thereof, is guilty of a gross misdemeanor.
See also , U.S. Jurisdictions that Criminalize Fraudulent Transfers, Forbes (November 22, 2015). - NRS 205.355. Fraudulent sale or concealment of personal property after action commenced or judgment rendered. Any person against whom an action is pending, or against whom a judgment has been rendered for the recovery of any personal property or effects, who shall fraudulently conceal, sell or dispose of such property or effects, with intent to hinder, delay or defraud the person bringing such action or recovering such judgment, or shall, with such intent, remove such property or effects beyond the limits of the county in which it may be at the time of the commencement of such action, or the rendering of such judgment, shall, on conviction, be punished as provided in NRS 205.350.
- NRS 205.360. Knowingly receiving fraudulent conveyance. Every person who shall receive any property or conveyance thereof from another, knowing that the same is transferred or delivered in violation of, or with the intent to violate, any provision of NRS 205.345, 205.350 and 205.355, shall be guilty of a misdemeanor.
- See, for example, Schertz v. State, (Nevada Supreme Court, 1993) 109 Nev. 377, 849 P.2d 1058, 109 Nev. Adv. Rep. 58; Amen v. State, (1990) 106 Nev. 749, 801 P.2d 1354, 106 Nev. Adv. Rep. 130.
- See notes 1 and 2.
- See note 3.
- NRS 112.210. NRS 112.220.
- NRS 179.245. NRS 179.255.