- Citation:
- Case No. 10-31128, --- F.3d --- (5th Cir. 2011).
- Tag(s):
-
- Ruling:
- In this decision, the Fifth Circuit reminds debtors that there are worse punishments than the denial of a bankruptcy discharge. Debra (“Wife”) and Brian (“Husband”) Spurlin were convicted of several counts of bankruptcy crimes, including concealment of bankruptcy assets, false oaths in bankruptcy filings and, for Husband only, bankruptcy fraud. They appealed their convictions on a number of theories, including: (a) the Husband’s use of Wife’s general power of attorney was insufficient to convict Wife; (b) evidence was insufficient; and (c) the fraudulent scheme was complete before the bankruptcy filing and, thus, the scheme did not amount to bankruptcy fraud. The Court affirmed all counts, except the Husband’s false oath conviction. The Court rejected Wife’s argument that a power of attorney was insufficient to hold her criminally liable for Husband’s concealment. To the contrary, the Court noted that there was more than enough evidence for a reasonable jury to find that Wife ratified her Husband’s acts and omissions, because she never objected her Husband’s statements at the 341 meeting and clearly knew about, and even benefited from, the concealed assets. Thus, the concealment convictions were affirmed. On the false oath convictions, the issue was whether Husband and Wife knowingly and fraudulently answered one of the chapter 7 trustee’s questions falsely. The Court reversed the Husband’s conviction because the trustee’s question was sufficiently ambiguous to allow a reasonable jury to find Husband’s answer to be true. However, Wife’s testimony during trial was that she understood the answer to be false at the time and yet did not offer to correct the false statement. Thus, her conviction was affirmed. Finally, on the bankruptcy fraud conviction, Husband argued that his scheme was completed before he filed for bankruptcy protection and, thus, the bankruptcy filing did not help him conceal any allegedly fraudulent scheme. The Court rejected this argument under a plain reading of the statute, and explained that, by filing for bankruptcy protection, the Husband was able to conceal his scheme by discouraging his victim from expending additional funds to investigate a debt that would ultimately be discharged. Said the Court, “Just because he failed [to conceal his scheme] does not mean he did not try.” This sentence was vacated and remanded for resentencing.
- Procedural context:
- Appeal from the Western District of Louisiana, following the multiple count convictions of Husband and Wife of bankruptcy crimes.
- Facts:
- Using a general power of attorney, Husband filed a chapter 7 petition on behalf of himself and Wife. The bankruptcy schedules and statement of financial affairs failed to list all of the debtors’ bank accounts and interests in shell companies which, in turn, held title to the debtors’ real property and vehicles. At the 341 meeting, which was attended by both Husband and Wife, the debtors failed to disclose the fact that Wife’s father had left property to her mother, which Husband sold and kept the proceeds. The debtors also failed to disclose that, prior to the petition date, they had transferred property between their companies and the Wife’s elderly mother and used the sale proceeds for personal items such as groceries and school tuition. The Husband had also defrauded an investor and sought to obtain a discharge from the potential debt owed to such investor. Ordinarily these actions would lead to the denial of a discharge. But in this case, the debtors were charged and convicted of federal bankruptcy crimes.
- Judge(s):
- Smith, Barksdale and Benavides
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