A more thorough explanation:

Definition: Fraud, badge of is a circumstance that is considered by courts as an indicator that a party to a transaction intended to hinder or defraud the other party. This can include:

• A transfer of assets in anticipation of litigation
• A transaction that is outside the usual course of business
• A false statement

These actions are considered a "badge of fraud" because they suggest that the party was trying to deceive or cheat the other party in some way.

Examples:

• John is being sued by a former business partner for breach of contract. Just before the lawsuit was filed, John transferred all of his assets to his wife's name. This transfer is considered a badge of fraud because it suggests that John was trying to hide his assets from his former partner to avoid paying damages.
• Sarah owns a small retail store. One day, she sells all of her inventory to her brother for a fraction of its value. This transaction is considered a badge of fraud because it is outside the usual course of business and suggests that Sarah was trying to hide her assets from creditors or other parties.
• Tom is applying for a loan and tells the bank that he makes $100,000 a year when he actually only makes $50,000. This false statement is considered a badge of fraud because it suggests that Tom was trying to deceive the bank to get a loan he may not be able to repay.

These examples illustrate how a badge of fraud can be used to identify when a party is acting in bad faith and trying to deceive or cheat another party. Courts will often use these indicators to determine if fraud has occurred and to hold the responsible party accountable.