Legal Definitions - fraudulent alienee

A fraudulent alienee refers to an individual or entity that receives property through a transfer specifically intended to defraud creditors, avoid legal obligations, or otherwise deceive. The term "alienee" simply means the person or entity to whom property is transferred. When the transfer itself is made with a fraudulent purpose—such as hiding assets from a lawsuit, bankruptcy, or divorce settlement—the recipient of that property becomes a fraudulent alienee.

Here are some examples to illustrate this concept:

• Example 1: Avoiding Creditors Before Bankruptcy

  Imagine a business owner, facing mounting debts and the imminent threat of bankruptcy, decides to "sell" their valuable commercial property to a close friend for a significantly undervalued price, or even as a gift. The intent behind this transfer is to prevent the property from being seized by creditors during bankruptcy proceedings. In this scenario, the friend who received the property would be considered a fraudulent alienee because they received an asset that was transferred with the express purpose of defrauding the business owner's creditors.

• Example 2: Hiding Assets During a Divorce

  Consider a spouse anticipating a contentious divorce who transfers ownership of a valuable antique collection to their sibling. The transfer is made without fair compensation and with the specific aim of preventing the collection from being included in the marital assets subject to division by the court. The sibling, in this instance, would be the fraudulent alienee, as they received property that was transferred to unlawfully shield it from the other spouse's rightful claim during the divorce settlement.

• Example 3: Evading a Legal Judgment

  Suppose an individual has lost a significant lawsuit and a large monetary judgment has been entered against them. To avoid paying this judgment, they quickly transfer ownership of their luxury vehicle and investment accounts to a newly created trust, naming a distant relative as the beneficiary. This transfer is made for no legitimate business reason and with the clear intent to make these assets unavailable to the judgment creditor. The trust, or the relative as its representative, would be the fraudulent alienee because they received assets that were transferred to unlawfully evade a legal obligation.