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Did the Eighth Circuit err in a bankruptcy fraud instruction?

As noted here the other day, there is no generally applicable federal attempt statute. The statute must specifically include attempt language, or the crime may not be prosecuted as an attempt.

Title 18 U.S.C. § 152 provides an example. The statute sets out in separate paragraphs nine ways to commit bankruptcy fraud. The word "attempt" appears in paragraph (6) ("knowingly and fraudulently gives, offers, receives, or attempts to obtain any money or property, remuneration, compensation, reward, advantage, or promise thereof for acting or forbearing to act in any case under title 11"), but nowhere else in the statute. One would conclude from that scheme that the government can prosecute for attempted bankruptcy fraud under paragraph (6), but not otherwise.

Paragraph 152(1) criminalizes knowingly and fraudulently concealing property that was part of the bankruptcy estate. It says nothing about attempt, so the government cannot prosecute it as an attempt. One can imagine examples of attempted concealment that would not constitute concealment. A suspect who acts while under surreptitious surveillance does not "conceal" anything. Or consider a circumstance where the suspect falsely denies the existence of a bank account to a custodian who knows for certain that account exists. Finally, what if the defendant attempts to conceal something he that he thinks is part of the bankruptcy estate, but isn't? In each case, the suspect is attempting to conceal, but does not conceal property of the estate. There is attempted concealment, but not concealment, and consequently not a crime under paragraph 152(1).

However, Eighth Circuit Model Criminal Instruction 6.18.152A tells jurors that they can convict under paragraph (1) where the defendant "attempted to conceal" the property. This language, the Judicial Committee asserts, "should be used where an attempted concealment was unsuccessful. It is no defense that the defendant's attempt to conceal was unsuccessful. See United States v. Cherek, 734 F.2d 1248, 1254 (7th Cir. 1984); United States v. Porter, 842 F.2d 1021, 1024 (8th Cir. 1988)."

Cherek says that "[e]ven if the asset is not ultimately determined to be property of the estate under the technical rules of the Federal Bankruptcy Code, Section 152 properly imposes sanctions on those who preempt a court's determination by failing to report the asset." But this is likely dicta. There was a genuine issue about whether the property was part of the bankruptcy estate, and the case was affirmed on plain-error review. Even more to the point, the assertion cannot possibly be true; the statute says "conceals ... any property belonging to the estate of a debtor." 18 U.S.C. § 152(1) (emphasis added).

Porter has nothing to say about the issue.

An attempt requires a substantial step, so proof of "attempt" looks very much like proof of an unsuccessful concealment. It is certainly true that an unsuccessful concealment can amount to a concealment. Paragraph § 152(1) prosecutions, almost by definition, involve botched concealments. The defendant hides property, and somebody finds it. That is an unsuccessful concealment in the normal understanding of the term.

But, as the examples above illustrate, it is more than an attempt. Note also that factual impossibility is not a defense to attempt, but is almost certainly a defense to concealing.

The Committee should have been clarified this issue in a separate definition of "conceal," not by adding "attempted concealment" to the elements list. Congress could have made attempted concealment a crime, but did not do so.

None of the other circuits include "attempted concealment" in the elements section of their § 152(1) model instructions.

(6/12/2019)

 
 
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