Recently, in Ontario, Canada, one Dellen Millard was arrested and charged with the murder of Tim Bosma. As this article details, shortly after his arrest, Millard sold three properties he owned to his mother for the princely sum of one buck. Presumably, he did this to shelter his assets from any future civil actions.
Now, I know the law will vary among jurisdictions. Still, I ask, are there any common principles of law (in the US and Canada, in particular) that prohibits what he’s done? Does/do the law(s) apply to those who haven’t been convicted of a thing, and against whom no civil actions have been started. Can the law be applied pre-emptively?
In Ontario, the relevant law, a provincial one, seems to be the Fraudulent Conveyances Act. As per the The Star article cited above, “The act clearly states that the transfer of property to ‘defeat, hinder, delay or defraud creditors or others of their just and lawful actions’— including suits or damages — is void if not done in ‘good faith’ or with knowledge of such action against them”. It seems to me, that this law can apply only to those *convicted *of a crime, and not to someone who has not been convicted. Likewise, from a different perspective, does the law apply to someone against whom no civil actions have been initiated? Can it be used pre-emptively?
Does this law, in particular, and similar statutes elsewhere, apply only to the convicted and/or to those with civil suits launched against them or can it be used pre-emptively?
ETA: A fair analogy may be with the OJ Simpson case. Could he have transferred his assets to a third party before his criminal trial had even started, say, the day after his arrest?
A somewhat related idea, but not from criminal law, applies to asset evaluation to qualify for Medicaid in the US. This is looked at particularly hard in relation to nursing home coverage.
There is a “look back” period in which the government can examine prior asset transfers. If transfers are found to be below market transfers then Medicaid can deny benefits for a period of time.
Not sure if something similar might apply to civil judgements.
Excellent, both examples seem to suggest that “pre-emptive” use of such laws exists. In fact, it really can’t be clearer than the New York law cited by brazil84. And, the “look back” provision that Iggy notes seems to be a great analogy (and, in some sense, precedent). Very helpful!
The doctrine of fraudulent conveyance goes back to 1601. Most US states have adopted the Uniform Fraudulent Transfer Act. New York, cited above, is unusual in that it has not. The UFTA contains similar language, though:
In Canada, even nonfraudulent transactions can be rolled back. Any transaction in anticipation of bankruptcy can be reversed by the judge if it happened in the previous 6 months.
The case I recall reading about… A carpet store was well on the road to bankruptcy. One supplier demand their stock back, then offered to provide a small amount of stock on consignment (supplier kept ownership) and advance new stock COD. Of course, all this did was accelerate the fall into bankruptcy.
During the hearings, the court decided the original stock return was done specifically due to anticipated bankruptcy. Because one potential creditor was gaining an advantage over others it was unfair and the transaction was reversed by the court. However, since it was not an attempt to hide assets, it was not “fraud”.