They include a number of facts: the quickly agreed upon split of property, the completion of the divorce proceeding on a "fast-track," the fact that one of the spouses was not represented by counsel in the divorce proceeding, the existence of a short interval between the entry of the divorce decree and the bankruptcy filing, the fact that spouses continue to live together after the divorce in the very house that was transferred to one of the spouses, the fact that the transferor spouse continues to pay the mortgage, taxes, and other costs on the transferred house, the inequitable distribution of debts and assets in the divorce, and the fact that the couple holds themselves out in the public as still being married. See Id; In re Pilcher, 2008 WL 2682858, * 4 (Bankr. CD. Ill. Jun. 25, 2008); In re Hill 342 B.R. 183, 199-200 (Bankr. D.N.J. 2006); In re Zamudio. 2005 WL 2035969, *9-10 (Bankr. N.D. Ill. Aug. 23, 2005); In re Rodgers, 315 B.R. 522, 531 (Bankr. N. D. 2004): In re Boba, 280 B.R. 430, 434-35 (Bankr. N.D. Ill. 2002); In re Dunham, 2000 WL 33679421, * 4 (Bankr. D.N.H. 2000). The court should be careful not to infer fraudulent intent based solely on a lack of acrimony between the divorcing spouses.
See, e.g., In re Rodgers, 315 B.R. 522, 533 (Bankr.D.N.D.2004) (finding against creditor's claim of sham divorce in bankruptcy proceedings). Sham divorce, if the alien willfully misrepresents the truth and if the alien's genuine marital status is a material fact, can serve as a perfectly legitimate basis for a finding of immigration fraud and attendant inadmissibility under the INA. 8 U.S.C. § 1182(a)(6)(C)(i).
Factors to consider in determining whether a debtor acted with intent to hinder, delay or defraud are: (1) lack or inadequacy of consideration; (2) family, friendship or other close relationship between the transferor and transferee; (3) retention of possession, benefit or use of the property in question; (4) financial condition of the transferor prior to and after the transaction; (5) conveyance of all of the debtor's property; (6) secrecy of the conveyance; (7) existence of trust or trust relationship; (8) existence or cumulative effect of pattern or series of transactions or course of conduct after the pendency or threat of suit; (9) instrument affecting the transfer suspiciously states it is bona fide; (10) debtor makes voluntary gift to family member; and (11) general chronology of events and transactions under inquiry. MWIVeterinary Supply Co. v. Rodgers (In re Rodgers), 315 B.R. 522, 531 (Bankr. D.N.D. 2004). There is a presumption of fraud in § 727(a)(2) cases when a debtor transfers valuable property without payment.
Caterpillar Fin. Serv. Corp. v. White (In re White), Case No. 13–4010, 2014 WL 555212 at *5 (Bankr.D.Neb. February 12, 2014) (citing MWI Veterinary Supply Co. v. Rodgers (In re Rodgers), 315 B.R. 522, 531 (Bankr.D.N.D.2004)). An examination of the evidence reveals that most of these factors are present in this case, which is a strong indication of fraudulent intent.
Such sham divorces often share certain "badges of fraud," including: (1) a quickly agreed upon property division; (2) the completion of the divorce proceeding on a "fast-track;" (3) the fact that only one of the spouses is represented by counsel in the divorce proceeding; (4) the fact that the spouses continue to live together after the divorce decree in the very house that was transferred; (5) the fact that the transferor spouse continues to pay the mortgage, taxes, and other costs on the transferred house; and (6) the inequitable distribution of debts and assets in the divorce. Id.; see also In re Pilcher, No. 05-8044, 2008 WL 2682858, at *4 (Bankr. C.D. Ill. Jun. 25, 2008); In re Hill, 342 B.R. 183, 199-200 (Bankr. D.N.J. 2006); In re Zamudio, No. 04 A 02922, 2005 WL 2035969, at *9-10 (Bankr. N.D. Ill. Aug. 23, 2005); In re Rodgers, 315 B.R. 522, 531 (Bankr. N.D. 2004); In re Boba, 280 B.R. 430, 434-35 (Bankr. N.D. Ill. 2002); In re Dunham, No. 98-1466-MWV, 99-1054-MWV, 2000 WL 33679421, at *4 (Bankr. D.N.H. 2000). Here, the Bankruptcy Court found sufficient "badges of fraud present indicative of a sham divorce."
In determining the intent behind property distributions in a divorce, bankruptcy courts have covered the spectrum of out-comes. Compare MWI Veterinary Supply Co. v. Rodgers (In re Rodgers), 315 B.R. 522 (Bankr. D.N.D. 2004) (Holding the debtor's divorce was not a sham and the property distribution was not a fraudulent transfer even when the marital property was not evenly divided, the debts were assumed by the debtor, the debtor traveled with his ex-wife days before their divorce was finalized, the debtor regularly continued to use property awarded to his ex-wife, the ex-wife continued to work for the debtor, and they continued to live together.), with Rogers v. Boba (In re Boba), 280 B.R. 430 (Bankr. N.D. Ill. 2002) (Holding that property division at divorce was a fraudulent transfer. The court granted summary judgment, holding no reasonable fact finder could find anything but an intent to defraud creditors when the debtor and his ex-wife entered an agreed transfer of property through a "fast-track divorce" on the eve of bankruptcy and the property distribution was not disclosed in his schedules.
Factors to consider in determining whether a debtor acted with intent to hinder, delay or defraud are: (1) lack or inadequacy of consideration; (2) family, friendship or other close relationship between the transferor and transferee; (3) retention of possession, benefit or use of the property in question; (4) financial condition of the transferor prior to and after the transaction; (5) conveyance of all of the debtor's property; (6) secrecy of the conveyance; (7) existence of trust or trust relationship; (8) existence or cumulative effect of pattern or series of transactions or course of conduct after the pendency or threat of suit; (9) instrument effecting the transfer suspiciously states it is bona fide; (10) debtor makes voluntary gift to family member; and (11) general chronology of events and transactions under inquiry. MWI Veterinary Supply Co. v. Rodgers (In re Rodgers), 315 B.R. 522, 531 (Bankr. D.N.D. 2004).
(1) lack or inadequacy of consideration; (2) family, friendship or other close relationship between the transferor and transferee; (3) retention of possession, benefit or use of the property in question; (4) financial condition of the transferor prior to and after the transaction; (5) conveyance of all of the debtor's property; (6) secrecy of the conveyance; (7) existence of trust or trust relationship; (8) existence or cumulative effect of pattern or series of transactions or course of conduct after the pendency or threat of suit; (9) instrument affecting the transfer suspiciously states it is bona fide; (10) debtor makes voluntary gift to family member; and (11) general chronology of events and transactions under inquiry.Id. (citing MWI Veterinary Supply Co. v. Rodgers (In re Rodgers), 315 B.R. 522, 531 (Bankr.D.N.D.2004) ). The badges represent generally-recognized indicia of fraud.
Accordingly, the Court finds Defendant accepted the transfer of Debtor's interests in real property in good faith. See, e.g.,MWI Veterinary Supply Co. v. Rodgers (In re Rodgers), 315 B.R. 522, 531 (Bankr.D.N.D.2004) (finding a divorce agreement was entered in good faith despite the allegedly close relationship after the divorce and the shift of all the debt to the debtor and all the assets to his wife in the divorce agreement). Having established good faith, Defendant must meet her burden of showing she gave value for the property interests Debtor transferred to her. 11 U.S.C. § 548(c).
Factors to consider in determining whether a debtor acted with intent to hinder, delay or defraud: (1) lack or inadequacy of consideration; (2) family, friendship or other close relationship between the transferor and transferee; (3) retention of possession, benefit or use of the property in question; (4) financial condition of the transferor prior to and after the transaction; (5) conveyance of all of the debtor's property; (6) secrecy of the conveyance; (7) existence of trust or trust relationship; (8) existence or cumulative effect of pattern or series of transactions or course of conduct after the pendency or threat of suit; (9) instrument affecting the transfer suspiciously states it is bona fide; (10) a voluntary gift from the debtor to family member; and (11) general chronology of events and transactions under inquiry. MWI Veterinary Supply Co. v. Rodgers (In re Rodgers), 315 B.R. 522, 531 (Bankr. D.N.D. 2004).