CFE – Law — Question 47

Bob runs a struggling business called Bob’s Limos, which owns five limousines and three additional luxury vehicles. A week before Bob’s Limos files for bankruptcy, Bob transfers ownership of one of the luxury vehicles to his wife. Which type of fraud scheme has Bob MOST LIKELY committed?

Answer options

• A. A fraudulent bankruptcy
• B. A concealed transfer
• C. A planned bustout
• D. A fraudulent conveyance

Correct answer: D

Explanation

Bob has likely committed a fraudulent conveyance, as he transferred an asset to his wife to keep it away from creditors, which is a common tactic before declaring bankruptcy. The other options do not accurately describe the act of transferring ownership to avoid asset seizure, as a fraudulent bankruptcy refers to the act of unlawfully declaring bankruptcy while a concealed transfer involves hiding an asset that hasn't been transferred.