Legal Definitions - sham

A "sham" refers to something that is presented as genuine or legitimate but is, in reality, a false front, a pretense, or a deception. It lacks the true purpose or substance it purports to have, often created to mislead, evade a legal requirement, or conceal the true nature of an arrangement.

• Example 1: Sham Corporation

  Imagine a situation where a business owner, facing significant debts, creates a new company with no employees, no physical office, and no actual business operations. The owner then attempts to transfer valuable assets from the indebted company to this new entity, claiming the assets were sold. The purpose of this new company is solely to hide assets from creditors and avoid paying debts.

  This new company would be considered a sham corporation because it appears to be a legitimate business entity but lacks any true operational substance or independent existence. Its sole purpose is to deceive creditors and shield assets, making it a false front rather than a genuine enterprise.

• Example 2: Sham Lease Agreement

  Consider a landlord who wants to evict a long-term tenant but cannot do so under local rent control laws without a valid reason. To circumvent these rules, the landlord creates a fake lease agreement with a friend, claiming the friend will move in and occupy the apartment. The friend has no intention of living there, and the agreement is never actually enforced; it's just a document to create the appearance of a new tenancy.

  This lease agreement is a sham because it presents itself as a binding rental contract but is, in fact, a pretense. It lacks the genuine intent of a landlord-tenant relationship and is designed solely to create a false legal basis for evicting the existing tenant.

• Example 3: Sham Marriage for Immigration

  Two individuals agree to marry, not because they intend to build a life together as spouses, but solely for one person to obtain immigration benefits, such as a green card. They might live separately, maintain separate finances, and have no romantic or familial relationship, despite presenting themselves as a married couple to immigration authorities.

  This arrangement would be classified as a sham marriage. While a marriage certificate exists, the union is a deception because it lacks the fundamental intent of a genuine marital relationship. It is entered into for an ulterior motive (immigration status) rather than for the purposes traditionally associated with marriage.