Articles Posted in Fraud

Debtors.jpgIf you owe someone a debt and you attempt to avoid paying that debt by transferring your assets to a family member or another entity you control to try to keep it out of the reach of your creditors you may be violating the Texas Uniform Fraudulent Transfers Act (UFTA). UFTA is found in Chapter 24 of the Texas Business and Commerce Code.

Sec. 24.005 of UFTA covers transfers that are fraudulent as to present and future creditors. This section provides that a transfer made or obligation incurred by a debtor is fraudulent as to a creditor, regardless of whether the creditor’s claim arose before or within a reasonable time after the transfer was made or the obligation was incurred, if the debtor made the transfer or incurred the obligation:

(1) with actual intent to hinder, delay, or defraud any creditor of the debtor; or (2) without receiving a reasonably equivalent value in exchange for the transfer or obligation, and the debtor:

Fraud.jpgChapter 27 of the Texas Business and Commerce Code provides an additional remedy to persons who are victims of fraud in connection with real estate and stock transactions. The elements of statutory fraud are essentially the same as common-law fraud, except to establish statutory fraud the plaintiff does not have to prove the defendant’s knowledge or recklessness.

To bring an action for statutory fraud, the plaintiff must establish that there was fraud in connection with a transaction involving real estate, stock in a corporation or stock in a joint-stock company. A transaction means that there is either a sale of real estate or a stock or there was a contract to sell real estate or stock entered into between the parties. Real estate includes land, the structures or improvements on the land and any assets of the real estate, such as minerals and water. A transaction involving the purchase of a stock option, however, is not considered a transaction involving stock in a corporation under Chapter 27.

To prevail in an action for statutory fraud, the plaintiff must prove that the defendant: