Multiple filings is a type of bankruptcy fraud that is generally more innocuous than petition mills, while being possibly more serious than concealment of assets. This is because multiple filings cannot be made without direct intent of the filing party, and therefore cannot be accidents, as concealment of assets can be, but simultaneously, multiple filings are often not blatantly illegal in and of themselves, so much as they are used for fraudulent purposes and may therefore violate provisions of bankruptcy law.
A party filing for bankruptcy
The objective of multiple filings like this is not to, in and of themselves, obtain a wrongful benefit. But multiple filings will slow down the overall processing of a bankruptcy claim, and will prevent liquidation of assets from occurring sooner. Generally, then, multiple filings will be used as a kind of mask, or a block to provide more time for concealment of assets. They confuse the bankruptcy system, without necessarily setting off any fraud alerts.
Of course, savvy fraud investigators would know to begin a fraud investigation when they see evidence of such multiple filings. While the multiple filings would slow down the actual functioning of the court, and the processing of bankruptcy, they would also tip off a fraud investigation that it’s likely there is another type of bankruptcy fraud going on. In their own way, then, multiple filings actually act as fraud alerts, assuming they can be successfully connected with the same party.
The problem is exactly that, connecting multiple filings with a single party, such that a fraud investigation can be launched against that part. While multiple filings can as fraud alerts for investigators, the problem is first determining that multiple filings have been made by the same party. If the person uses his or her same identity twice, then it would seem easy enough to determine that there had been multiple filings.
But the problem is that even so, it would take time to process each claim to such a point that the processing court might “discover” the other claim, and then it would take time to investigate exactly why this had happened. To put it in another light, by filing two claims, the fraudster would essentially be starting two different balls rolling down two different tracks, and they would eventually meet, collide with one another, and slow each other down. By the point that the multiple filings have been detected, the fraudster will likely have completed all necessary concealing of assets.
As earlier mentioned, multiple filings are not in and of themselves illegal or fraudulent, per se, so assuming that the individual did not break any provisions of bankruptcy code, then no fraud investigation could be rightfully launched against such an individual, even though multiple filings generally indicate fraud.