Posted in: Criminal Receiverships

Criminal Receiverships

Another way to utilize the receivership remedy is to preserve property that is involved in criminal activity and pay restitution to the victims of the criminal activity. Often if a person is arrested and incarcerated the question becomes what happens to their assets? A recent example of when a receiver was sought is in a criminal case is when Bernie Madoff was incarcerated for his multi-billion dollar ponzi scheme. Although, the ponzi scheme fell apart Mr. Madoff still had substantial assets to be seized and distributed to his victims, which is why the SEC sought the appointment of a receiver.

California has its own statute to appoint a receiver in these situations, which is known as the “freeze and seize law.” In California if a receiver is appointed pursuant to the penal code they have the ability to sell the receivership assets in the same manner as they do in typical civil law receivership cases. Therefore, district attorneys throughout the state can use the freeze and seize laws to appoint a receiver over the assets of criminal defendant, and the receiver can then sell the assets to assist the victims of fraud. The receiver can also be appointed to preserve the assets of the criminal defendant from falling into disrepair. For example, if a criminal defendant owns ten properties and is incarcerated, these properties must still be maintained, in this case a receiver can be appointed to preserve and eventually sell the holdings.