Sun, May. 08, 2005

Expatriating Assets Illegal?

CK - Washington.   Lawyers who assist Germans in establishing a business in the United States with assets from a German business may possibly become accessories to a German crime that consists of selling or removing assets from the reach of potential claimants. The criminal provision, Vereiteln der Zwangsvollstreckung, requires an intent to defeat the satisfaction of creditors and a threatened enforcement. The sale or removal is not limited to Germany.

The threat of enforcement is ordinarily considered an imminent or, at least, highly likely, execution of a judgment that finalizes a claim raised by a creditor against a debtor. A recent Berlin judgment in the matter 8 U 160/04, issued February 2, 2005, goes far beyond that interpretation.

The Lichtenrader Notizen blog questions whether the court really meant that §288 of the Criminal Code should apply to any potential claim. On its face, the decision does not require any active pursuit of the claim by the creditor--no dunning letter, no filing of a complaint, no motion for judgment, no holding of an executable title, and no steps for the enforcement of a judgment. Vertretbar Weblawg questions the constitutionality of the decision in light of Art. 103(2) of the Basic Law.


The decision appears dangerous in that the Kammergericht-court simply assumed the criminal intent of defeating the creditor to exist. The civil court that ruled on the criminal issue as an incidental question raised in a civil matter did not analyze the intent issue in the manner a court would in a criminal proceeding. In the international context, as a lawyer advising German business on setting up business in America, I would consider this decison when German assets are being transferred to an American venture.


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