AFSA Enforcements

AFSA EnforcementsBankruptcy Trustees are required to report any evidence of an alleged offence committed by a Bankrupt against the Bankruptcy Act. Trustees need to ensure that potential offences are referred as soon as possible in order to ensure that prosecution is possible. Offences proven to be committed can lead to fines or even imprisonment.

Offences can be difficult to pursue. However, according to the Australian Financial Security Authority (“AFSA”), the most common offences that lead to finding the guilt of bankrupts include the failure of individuals to complete and file their Statement of Affairs with the Official Receiver, conceal or remove property, make false declarations and leave Australia without the consent in writing of their trustee.

AFSA recently released prosecution outcomes in their September 2014 Newsletter Personal Insolvency Regulator, an example of the prosecutions are listed below:

Disposing of property prior to bankruptcy.

Mr Riddell (the Bankrupt), sold a property a few months prior to his Bankruptcy and received a total of $150,000 surplus proceeds from the sale. The Bankrupt was questioned about the sale and stated that he intended to pay his debts with a portion of the funds but the funds were subsequently taken by the Australian Taxation Office. He was then requestioned and his story changed stating that he thought that his debts were dealt with prior to receipt of the funds and the surplus from the sale of the property were transferred to his spouse. After pleading not guilty, he was convicted and sentenced by the Magistrate to a two (2) month jail sentence.

False declaration, failure to disclose income and travelling overseas without Trustee’s consent.

Mr Casset (the Bankrupt), failed to declare all his aliases, income earned and omitted a bank account on his Statement of Affairs. The Bankrupt also travelled overseas without the Trustee’s consent. The Magistrate hearing the case sentenced the Bankrupt to four (4) months imprisonment to be released on a self-recognizance in the sum of $5,000 and be on good behaviour for 2 years.

Obtaining credit and monies without disclosing Bankruptcy.

Mr Panther (the Bankrupt), was convicted and sentenced to 19 months of imprisonment, to be released on a recognizance after serving 6 months for obtaining credit totalling to $18,579 and an additional $275,000 to produce boat moulds for a couple without disclosing that he was an undischarged Bankrupt. During the sentencing, the Judge stated that Bankruptcy laws were used to protect the community from persons who have demonstrated the inability to manage their finances.