Stamat v. Neary

Stamat v. Neary, No. 09-3448 (7th Cir. Mar. 24, 2011)
The Court ruled that the debtors' failure to include numerous items of required information in their Statement of Financial Affairs warranted denial of their discharge under Bankruptcy Code section 727(a)(4) for making knowing and fraudulent false oaths. The Court found that the official form for the Statement of Financial Affairs requires debtors to disclose all business entities in which they owned an interest during the six years pre-petition, even if certain entities ceased to exist pre-petition and the debtors only held limited partnerships in certain entities. The Court also found that neither settlement payments nor mortgage refinancings comprised transfers made in the ordinary course of business that properly could be omitted from disclosure and that failing to list income accurately showed a reckless disregard for the truth, especially in light of other mistakes and omissions in disclosure.
Procedural context:
Appeal from the District Court for the Northern District of Illinois affirming decision of Bankruptcy Court for the Northern District of Illinois denying debtors' discharge; reviewed for clear error as to alleged factual errors and de novo as to conclusions of law and mixed questions of fact and law.
Debtors' filed Statement of Financial Affairs incorrectly stated their gross income from businesses, failed to disclose ownership interests in business interests, and omitted a pre-petition settlement payment. Moreover, at their meeting of creditors and a Rule 2004 examination conducted by the United States Trustee, the debtors admitted to owning certain assets and engaging in mortgage refinance transactions that previously were undisclosed in their bankruptcy documents. The United States Trustee objected to the debtors' discharge under Bankruptcy Code sections 727(a)(2), (4), and (5). The United States Trustee prevailed on all portions of its adversary complaint in the Bankruptcy Court and the District Court upheld the ruling below under Bankruptcy Code section 727(a)(4) only.
Rovner, Evans, Williams

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