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California Penal Code Section 154 PC & California Penal Code Section 155 PC: Fraudulent Conveyance By A Debtor / Judgment Debtor
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- 1 California Penal Code 154 & 155: Fraudulent Conveyance By A Debtor and Judgment Debtor
California Penal Code 154 & 155: Fraudulent Conveyance By A Debtor and Judgment Debtor
Dealing with debt can be really stressful. When you owe money, it can feel like there’s no way out. Some people resort to desperate measures to avoid paying what they owe. But trying to avoid your debts through shady means can land you in legal trouble.
That’s where California Penal Code Sections 154 and 155 come in. These laws make it illegal to fraudulently give away your assets to dodge creditors and court judgments. Engaging in fraudulent conveyance can lead to felony charges. Let’s break down what these laws say and what defenses you might have if accused of violating them.
What is Fraudulent Conveyance?
Fraudulent conveyance refers to transferring assets or property to avoid having to forfeit them to pay off a debt. It involves knowingly giving your assets to someone else so that a creditor can’t seize them in order to satisfy the debt you owe.
For example, let’s say you owe $50,000 to a bank for a loan you took out. You transfer the title on your home to your sister so the bank can’t put a lien on it. Or you “sell” your profitable business to your cousin for $1 so creditors can’t go after it. These would likely count as fraudulent conveyances under California law.
Two Types of Fraudulent Conveyance
There are two relevant laws here:
- California Penal Code Section 154 – Fraudulent conveyance by a debtor
- California Penal Code Section 155 – Fraudulent conveyance by a judgment debtor
Section 154 applies to debtors – people who owe money under a contract or agreement. Section 155 applies to judgment debtors – people who have had a court judgment entered against them for money owed.
Both laws make it illegal to fraudulently transfer assets to avoid forfeiting them to pay off what you owe. But Section 155 only kicks in once there is a court judgment in place. Section 154 covers avoidance of contractual debts even before they reach the judgment stage.
Elements of Fraudulent Conveyance
For either of these crimes, the prosecution must prove these key elements:
- You owed a debt or had a judgment entered against you for money owed
- You transferred property or assets to another person
- You intended to hinder, delay or defraud the creditor or judgment creditor by transferring the assets
- You knew the transfer would likely hinder, delay or defraud the creditor or judgment creditor
The property involved has to be something of significant value – real estate, vehicles, jewelry, art, antiques, etc. Transferring small household items probably wouldn’t qualify. But giving away valuable assets you own in order to protect them from creditors likely would.
Penalties for Fraudulent Conveyance
Fraudulent conveyance under Penal Code Section 154 is a felony offense. The maximum sentence is 4 years in California state prison. You may also face a fine up to $10,000.
Fraudulent conveyance under Section 155 is a wobbler. This means the prosecutor can choose to charge it as either a misdemeanor or a felony. If charged as a misdemeanor, the maximum sentence is 1 year in county jail. If charged as a felony, the maximum sentence is 3 years in state prison.
Legal Defenses
If you are accused of fraudulent conveyance, possible legal defenses include:
- You didn’t actually owe the debt or judgment.
- You didn’t intend to defraud creditors by transferring assets.
- The assets weren’t that valuable, so no real fraud occurred.
- You received reasonable value in return for transferring the assets.
- The statute of limitations has expired.
An experienced criminal defense attorney can evaluate the details of your case and decide what defenses to pursue. For either Section 154 or 155 charges, they may be able to negotiate with the prosecutor to get the charges reduced or dismissed. Or if the case goes to trial, they can challenge the prosecution’s evidence and present defenses on your behalf.
Recent Fraudulent Conveyance Cases
Here are some real life examples of fraudulent conveyance charges under California law:
People v. Mehrban (2012)
Mehrban was sued by Wells Fargo bank for failing to repay over $2 million in loans. Around the same time, he transferred ownership of several profitable gas stations to his daughters for no consideration. He was convicted under PC 154 of fraudulent conveyance for transferring the gas stations to prevent Wells Fargo from collecting on his debt.
People v. Singh (2015)
Singh racked up $300,000 in credit card debt from American Express and Citibank. He stopped making payments on the cards. The credit card companies sued him and obtained a civil judgment. Singh then transferred ownership of his home to his wife for zero dollars. He was convicted under PC 155 for fraudulent conveyance by a judgment debtor.
Consult an Attorney for Fraudulent Conveyance Charges
Facing criminal charges for giving away assets to avoid debts can be scary. But an experienced lawyer can advise you on the best defense strategies. For charges under Penal Code Sections 154 or 155, they will thoroughly analyze the prosecution’s case and evidence. If they spot any legal holes or issues, they can file motions to get charges reduced or dismissed pre-trial.
And if your case does go to trial, a knowledgeable attorney can cross-examine witnesses and present evidence and testimony to undermine the prosecution’s arguments. In some cases, they may be able to negotiate an alternative resolution like a plea bargain to lesser charges or a diversion program.
Don’t go it alone against fraudulent conveyance allegations. Get experienced legal representation right away. With an attorney’s help, you can avoid harsh penalties and start rebuilding your financial life.
References
Penal Code 154 PC – Fraudulent Conveyance – California Law
Penal Code 155 PC | Fraudulent Conveyance by a Judgment Debtor – Shouse Law
Fraudulent Conveyance | California Penal Code 154 PC – Cron, Israels & Stark
Fraudulent Conveyance Laws – California Penal Code Section 154 – Eisner Gorin LLP