We sometimes hear this concern from clients:
“I was scammed by someone overseas. I lost money. Now the bankruptcy trustee is investigating the transfers. Will they actually recover anything?”
If you’ve already been victimized once, the idea of a trustee digging into it can feel stressful. Let’s walk through what’s happening — and what’s realistic.
🔍 Why Is the Trustee Investigating?
In bankruptcy, trustees are required to review financial activity before filing.
They look at:
- Large transfers of money
- Payments to individuals
- Wire transfers
- Cryptocurrency transfers
- Unusual withdrawals
If you sent money overseas — even because you were defrauded — it shows up in your bank records.
The trustee’s job is to determine whether:
- The transfer was legitimate
- It can be recovered for creditors
- It qualifies as a “fraudulent transfer” under bankruptcy law
This does not automatically mean you did anything wrong.
⚖️ What Is a Fraudulent Transfer in Bankruptcy?
Under bankruptcy law, a “fraudulent transfer” doesn’t necessarily mean criminal fraud.
It can mean:
- You transferred money within a certain time period before filing
- You did not receive reasonably equivalent value in return
If you were scammed, you likely received no value in return — which technically fits the legal definition.
But that does not mean the trustee believes you were part of the fraud.
It usually means they’re evaluating whether recovery is possible.
🌎 Can the Trustee Recover Money Sent Overseas?
This is where reality sets in.
Recovery depends on:
1️⃣ Where the Money Went
If funds were sent to:
- An individual in another country
- A shell company
- A cryptocurrency wallet
- A scam operation
Recovery is often extremely difficult.
2️⃣ Jurisdiction
Trustees operate under U.S. bankruptcy court authority. Enforcing a judgment overseas can require:
- Foreign legal proceedings
- Cooperation from foreign courts
- Significant legal expense
In many scam cases, the cost of recovery outweighs the potential benefit.
3️⃣ Traceability
If the funds were:
- Quickly withdrawn
- Moved through multiple accounts
- Converted to crypto
- Sent through money transfer services
They may be practically untraceable.
💰 Will the Trustee Actually Recover Anything?
In most overseas scam situations, recovery is unlikely — but not impossible.
Trustees may:
- Send demand letters
- Investigate recipient information
- Evaluate whether litigation makes sense
- Ultimately determine recovery is not cost-effective
If the trustee concludes the funds cannot realistically be recovered, the investigation may simply close.
🚩 Should You Be Worried?
Generally, if:
- You were genuinely defrauded
- You were not complicit
- You fully disclosed the transfers
- You are cooperating
You are not the target of the trustee’s investigation.
The trustee’s job is to maximize recovery for creditors — not punish scam victims.
However, full honesty and documentation are critical.
📄 What You Should Do
If a trustee is investigating:
✔ Provide all requested documents.
✔ Be transparent about what happened.
✔ Provide police reports or fraud reports if available.
✔ Explain the timeline clearly.
The more documentation you provide, the easier it is for the trustee to determine that you were a victim, not a participant.
🧠 Important: Timing Matters
Trustees generally review transfers made within:
- 2 years before filing (federal lookback period)
- Sometimes longer under state law
If the transfers occurred within that window, investigation is standard procedure.
It doesn’t mean your discharge is at risk — unless there was concealment or dishonesty.
📌 The Bottom Line
If you were defrauded by someone overseas and sent them money:
- The trustee may investigate.
- Recovery is often difficult or unlikely.
- Being a victim does not mean you did anything wrong.
- Transparency is your protection.
Bankruptcy trustees understand that scams happen. Their role is to evaluate whether funds can be recovered — not to relive your trauma.
If you’re in this situation, speak openly with your bankruptcy attorney. The more proactive you are, the smoother the process usually goes.
