In re D. Erik von Kiel

In re D. Erik von Kiel, No. 13-1925 (3d Cir. December 24, 2013)
Dr. von Kiel concealed property belonging to and/or controlled by him within one year before the date of his chapter 7 petition and discharge of his debts was denied.
Procedural context:
Pro se appellant Dr. D. Erik von Kiel (“Dr. von Kiel”) appealed from an order of the District Court, which affirmed the United States Bankruptcy Court‟s order entering judgment in favor of the United States Trustee and against Dr. von Kiel denying discharge of Dr. von Kiel's debts. Dr. von Kiel also appealed from the District Court‟s denial of his motion for reconsideration. The Third Circuit affirmed.
The United States Trustee filed a complaint in Dr. von Kiel's chapter 7 case objecting to the discharge of Dr. von Kiel‟s debts on three independent statutory grounds: (1) under 11 U.S.C. § 727(a)(2)(A) based on his fraudulent concealment of assets; (2) under 11 U.S.C. § 727(a)(3) for his failure to maintain adequate financial records; and (3) under 11 U.S.C. § 727(a)(4) based on false oaths made in his bankruptcy case. The bankruptcy court entered judgment in favor of the Trustee and the District Court affirmed. On appeal to the Third Circuit, Dr. von Kiel argued that the Bankruptcy Court erred in denying a discharge on the basis that he had fraudulently concealed his assets because: (1) he did not transfer or conceal his assets within one year before the date of his chapter 7 petition; (2) the United States knew about his financial arrangements; and (3) the Bankruptcy Court erroneously found “per se fraud.” The key inquiry was whether Dr. von Kiel concealed property belonging to and/or controlled by him. Concealment is defined as acting “to secrete or hide away” or “„to prevent the discovery of or to withhold knowledge of.‟” United States v. Schireson, 116 F.2d 881, 884 (3d Cir. 1940). Because concealment can only occur with the debtor‟s property, the debtor must still “possess some property interest.” Rosen v. Bezner, 996 F.2d 1527, 1531 (3d Cir. 1993) (alteration in original). The Third Circuit found that Dr. von Kiel had concealed his property, inter alia, by using someone else's tax id number. The Third Circuit also found that, contrary to D. von Kiel's assertion, the doctrine of "continuing concealment" did not apply in this case. Under this doctrine, a concealment will be found to exist during the year before bankruptcy even if the initial act of concealment took place before this one period as long as the debtor allowed the property to remain concealed into the critical year. The Court also found that the Bankruptcy Court was correct in determining that Dr. von Kiel concealed his property with a subjective intent to hinder, delay or defraud his creditors. Finally, the Third Ciruit stated that it disagreed with Dr. von Kiel that the Bankruptcy Court erred because the United States allegedly knew about his financial arrangements. Even assuming that this is true, it is irrelevant if a federal agency knew about the transfer. See In re Jennings, 533 F.3d 1333, 1340 (11th Cir. 2008).

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