Fraud Is Legal Over Time

August 11, 2023

A bold yet accurate statement is that fraud becomes legal over time. Time alone is rule number one in any asset protection plan. This is because of firm time limits for when creditors can try to unravel fraudulent transfers to satisfy their judgment. These time limits can be devastating to creditors that were ripped off, who might then no longer be able to pay to attempt to unravel fraudulent transfers. The police are never interested in fraud alone, because common fraud is a civil matter.

This article is my opinion, and not legal advice. I am a judgment broker, and am not a lawyer. If you ever need any legal advice or a strategy to use, please contact a lawyer. When you sell something and get paid in a regular transaction, that is not a fraudulent transfer. Fraudulent transfer is when you move your assets without fair compensation, with the purpose of trying to defeat creditors.

When fraud is involved, simple asset protection schemes only work after the statute of limitation time limits are reached. Fraud does not work if you transfer your assets right before you are sued, during the lawsuit, or shortly after you are sued. If you are going to get sued, make sure it is after the statute of limitation has passed, if you have transferred an asset.

The fraudulent transfers laws for each state have minor differences, and the largest difference is their time limits. Most states use the Uniform Fraudulent Conveyances Act (UFCA), while other states use the newer Uniform Fraudulent Transfer Act (UFTA), and a few use neither.

The UFTA has another standard for creditors to meet, that they act within one year of when the fraudulent transfer “was or could reasonably have been discovered”. This is in addition to the general time limits. I believe this list of the fraudulent state time limits (in years) is accurate:

These states do not use either the UFCA or the UFTA: Alaska (4), Louisiana (the lesser of 1 year of learning of the transfer and 3 years after the occurrence), Puerto Rico (31 LPRA section 3492), and Virginia (VA Code section 55-80, No time limit, only the laws concerning laches).

These states use the UFCA: Kentucky (5), Maryland (3), New York (6 years, and a heightened pleading requirement for fraud, see CPLR 3016), Tennessee (4), and The Virgin Islands (see 28 VIC sections 201 to 212).

These states use the UFTA: Alabama (4), Arizona (4), Arkansas (3), California (4, 7 regardless of discovery, see California Civil Code 3439.09), Colorado (4), Connecticut (4), Delaware (4), District of Columbia (4), Florida (4), Georgia (4), Hawaii (4 years), Idaho (4), Illinois (4), Indiana (4), Iowa (5), Kansas (4), Maine (6), Massachusetts (4), Michigan (6), Minnesota (6), Mississippi (3), Missouri (4) years, Montana (4), Nebraska (4), Nevada (4), New Hampshire (4), New Jersey (4), New Mexico (4), North Carolina (4), North Dakota (4), Ohio (4), Oklahoma (4), Oregon (4), Pennsylvania (4), Rhode Island (4), South Carolina (3), South Dakota (4), Texas (4), Utah (4), Vermont (4), Washington (4), West Virginia (4), Wisconsin (4), and Wyoming (4).

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