Fraud in Bankruptcy Proceedings: Commentary on Judgment No. 34517 of 2023

Judgment No. 34517 of July 5, 2023, offers an important reflection on the distinction between the crimes of fraud and embezzlement, particularly in the context of bankruptcy proceedings. The Court of Cassation, with this decision, reiterated that the conduct of a private individual who misleads the organs of a bankruptcy proceeding constitutes the crime of fraud, thereby excluding the applicability of embezzlement through misdirection.

The Context of the Judgment

The case concerned a defendant, G. D., accused of using artifices and stratagems to improperly obtain sums of money within a bankruptcy proceeding. The Court examined the facts, highlighting that the individual's conduct was not limited to mere misdirection of public officials, but constituted a fraudulent action aimed at obtaining an unjust profit.

The Ruling of the Judgment

Deceptive conduct by a private individual to the detriment of the organs of a bankruptcy proceeding - Embezzlement through misdirection of public officials - Exclusion - Fraud - Applicability - Reasons - Factual Scenario. The conduct of an "extraneus" (outsider) who, within the framework of a bankruptcy proceeding, through artifices and stratagems, misleads the trustee and the delegated judge, thereby obtaining an unjust profit in the distribution of assets due to such deceptive conduct, consisting of the allocation of sums not due, constitutes the crime of fraud, and not that of embezzlement through misdirection under Articles 48 and 314 of the Criminal Code. (In the factual scenario, the agent, by declaring the credits subject to a previous claim for admission to liabilities as current, despite having been settled in the interim through a settlement, and by depositing the original related securities, obtained the liquidation of items charged to the estate that were merely simulated).

Legal and Jurisprudential Implications

This judgment marks a firm point in Italian jurisprudence, clarifying that fraud presupposes active and fraudulent conduct, distinct from mere misdirection that characterizes embezzlement. The reasons underlying this distinction are manifold:

• The need to protect the integrity of bankruptcy proceedings.
• The protection of the interests of creditors and the bankruptcy estate.
• The safeguarding of trust in institutions and public officials involved in the proceedings.

Furthermore, the Court referred to specific criminal provisions, such as Article 640 of the Criminal Code, which governs fraud, and Articles 48 and 314, which regulate embezzlement. These legislative references reinforce the Court's position and provide a clear legal framework for understanding the seriousness of illicit conduct in bankruptcy matters.

Conclusions

Judgment No. 34517 of 2023 represents an important guide for legal practitioners and those who have to manage complex situations in bankruptcy matters. It underscores the importance of transparent and honest conduct by all parties involved in bankruptcy proceedings. The distinction between fraud and embezzlement, clarified by the Court, is fundamental to ensuring justice and correctness in operations concerning the assets of debtors and creditors.