Fraudulent Transfers Archives - Wetherington Hamilton, P.A.

Should I accept a payment or check from someone other than the individual or entity who owes the money?

Picture this scenario, it has likely happened to most of us. Someone owes you money for some reason, be it rent, paying a bill, paying back a note or any number of other reasons. When you get the payment, however, the person or company writing the check is unfamiliar to you. Someone else or another company, for whatever reason, is paying and you have no idea why. Most people don’t really care where the money comes from, you are just getting paid, that is what is important. In reality, however, under Florida law you may be subjecting yourself to an unwanted lawsuit by accepting these funds.

The Florida Uniform Fraudulent Transfers Statute make you potentially liable to creditors of a corporation or individual from whom you accept payment for amounts due to you from another person. For example, a contractor does work on a home owned by the president of a company, and then the company pays the contractor for this work. In this case, the contractor could be forced to turn this money over to creditors of the company if the company is having financial troubles at the time. In other words, the contractor could at some point, even up to four years later, be forced to pay back this money to the Company and its creditors.

In the example above, if the purpose of the payment was to hinder, delay, or defraud a creditor or if the Company didn’t get some type of value for the payment to you and the Company is on its last leg financially, the transfer could be fraudulent. This law applies regardless of whether you knew about the financial condition of the Company or not. If a creditor of the Company finds out about this payment to the Contractor, they might have to pay the money back or at the very least defend an expensive lawsuit.

The best course of action is not to accept payments on money due to you from anyone except the person who owes it to you. Checks from those who are not your client or who don’t owe the money should cause you to raise a red flag. If it happens all the time, you need to ensure you ask why these payments are coming from a different person or company. Due diligence in such a case will save you grief and an expensive attorney’s fee bill in the long run.

Ted Hamilton, Esq.

Often a creditor, in the attempt to collect on a judgment will find the judgment debtor has placed some or all assets into a joint bank account held with the judgment debtor’s spouse or the assets have been transferred in some way to a spouse. This may seem like a lost cause, but our recent experience has proven otherwise.

In Florida, under the Uniform Fraudulent Transfer Statute, transfers made to a spouse within 4 years of the transfer may result in a judgment against the judgment debtor’s spouse for the amounts transferred. To pursue the claim against the Spouse, the judgment creditor may either bring a separate action against the spouse who received the Fraudulent Transfer of assets or may use the Proceedings Supplementary Statute at 56.29 Florida statutes to execute on the existing Judgment.

The Florida Uniform Fraudulent Transfer Statutes at Chapter 726 defines a transfer as “every mode, direct or indirect, absolute or conditional, voluntary or involuntary, of disposing of or parting with an asset or an interest in an asset, and included payment of money, release, lease, and creation of a lien or other encumbrance.” This broad definition gives creditors extreme latitude in discovering and suing for transfers to a spouse. The definition would likely include, movement of assets into a bank account solely held by the spouse, paying for “stuff” which the debtor states is exclusively owned by the spouse, paying the spouse a salary for work not performed, and giving the spouse property of any kind which the spouse did not earn in any way. These fraudulent transfers will also occur if the judgment debtor transfers individual assets into jointly held property.

Debtors are clever in disguising their transfers. Other clever means of moving assets to the spouse include having the spouse own the shares of the company run, managed and controlled by the judgment debtor. The Spouse may receive a large salary for doing clerical work for the company along with stock payment distributions. This type of arrangement is difficult to spot due to the fact that judgment debtor will defend the quality and quantity of work of the spouse. What gives the judgment debtor away in this instance is the small salary paid to the judgment debtor for doing most if not all work for the company. Such an arrangement is actionable as a fraudulent transfer and can be pursued against the spouse.

Once the transfer exists, the determination as to whether it is fraudulent is defined by Florida Statutes Chapter 726. These sections make fraudulent transfers fairly easy to prove when they are made by the Judgment Debtor to the spouse after the Debtor knows there is a pending collections claim.

The creativity in disguising fraudulent transfers never ceases to amaze the attorneys at Wetherington Hamilton, P.A. With technology making transfers of money easier every day, the type fraudulent transfer will also expand. Our hope is that you will decide to pursue these claims to ensure that this type of activity is limited in the future.

Theodore J Hamilton, Esq.

SHOW ME THE MONEY – The Cost of Fraudulent Transfers

Collection of Fraudulent Transfers Made to a Spouse in the State of Florida

Wetherington Hamilton, P.A.

Wetherington Hamilton, P.A.

Tag Archive for: Fraudulent Transfers

Wetherington Hamilton, P.A.

Wetherington Hamilton, P.A.