Badges of Fraud

Proof of actual intent is rarely available to financial institutions because it would need proof of somebody’s inner thoughts and intentions. Due to the fact that financial institutions often have to depend on circumstantial proof of fraud, to prove actual intent, the courts have developed “badges of fraud,” which, while not definitive, are thought of by the courts as circumstantial evidence of fraud:

  • The basic chronology of events.
  • Lack of or insufficient consideration.
  • Family, or expert relationships among parties.
  • The retention of belongings, advantages, or usage of property in concern.
  • Becoming insolvent due to the transfer; The existence of the risk of lawsuits.
  • The financial position of the debtor at the time of transfer or after the transfer is made.
  • The existence or a cumulative result of a series of transactions after the start of the debtor’s monetary troubles.
  • The secrecy of the transaction in concern; and
  • Deviation from the usual approach or course of business.
  • Individual jurisdictions
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