Q: What ERISA means here. I guess it includes the whole life insurance(with investment), and annuity etc.
I am assuming how this defendant act as follows. Could you help me understand how he is able to file for bankruptcy or hide his asset and protect his IRA or other retirement assets?
A: The answer is in Section 522(b)(3)(c) of the Bankruptcy Code, which exempts "retirement funds to the extent that those funds are in a fund or account that is exempt from taxation under section 401, 403, 408, 408A, 414, 457, or 501(a) of the Internal Revenue Code of 1986"
So basically, if the annuity or IRA is covered under those sections of the Internal Revenue Code, then it is exempt per the Bankruptcy Code that I cited, and, unfortunately, he can keep it after filing for bankruptcy. You can review the Internal Revenue Code here: CLICK HERE.
Q: After the lawsuit was filed, he started to transfer his non-retirement asset away, or sold those assets to liquidate or did re-refinancing (on real-estate) to take money out of real-estate. After the judgement arrived, he then files for bankruptcy.
A: That is considered a fraudulent transfer. First and foremost, you can take action and ask the judge to reverse the transfers. Even if you do nothing, however, the bankruptcy trustee would never let him get away with it. The bankruptcy trustee will reverse the transfer himself once the bankruptcy is filed, so long as the transfer occurred within 2 years of when the bankruptcy is filed. If actual fraud is proved, then the bankruptcy trustee can go after the assets even if more than 2 years have passed. And there's no doubt that the bankruptcy trustee would do it because they are paid a percentage of the assets that they recover for the bankruptcy estate (i.e., for creditors).
Q: Generally speaking, if a person committed financial fraud or scam, it seems his retirement fund can be protected even if he goes to jail. For example, Madoff can keep his retirement assets even if he committed scam and fraud and in jail. Is that understaning correct?
A: It depends. If the retirement account was funded with money obtained by fraudulent means, then it can be attacked. But if the retirement account was funded legitimately, then it is likely safe.