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An indictment was filed a few days ago against former chapter 7 debtors in Palm Beach County. It provides an occasion to review the bankruptcy crimes provisions of title 18 of the United States Code. 
Recent IndictmentThe indictment for a bankruptcy crime against the former chapter 7 debtors alleged that they "did knowingly and fraudulently conceal and cause to be concealed property belonging to the bankruptcy estate" in violation of 18 U.S.C §152. First on the list of undisclosed property - a Rolex watch.
18 U.S.C. §152Section 152 of 18 U.S.C. provides
A person who—(1) knowingly and fraudulently conceals from a custodian, trustee, marshal, or other officer of the court charged with the control or custody of property, or, in connection with a case under title 11, from creditors or the United States Trustee, any property belonging to the estate of a debtor; (2) knowingly and fraudulently makes a false oath or account in or in relation to any case under title 11; . . .shall be fined under this title, imprisoned not more than 5 years, or both.
ElementsThe U.S. Attorney Manual explains that the elements of the proof for the offense of "concealment" under 18 U.S.C. § 152(1) are
1. the bankruptcy proceeding was in existence
2. the defendant fraudulently concealed the property from the custodian (such as the bankruptcy trustee)
3. the property belong to the estate
The manual makes reference to the cases of United States v. Guiliano, 644 F.2nd 85, 87 (2nd Cir., 1981). Jury Determination The U.S. Attorney's manual sets forth that it is a question for a jury to determine whether the assets are property of the debtor and belong to the bankruptcy estate. It appears that the determination of whether the asset is part of the "estate" under the "technical rules" of the Bankruptcy Code, is not co-determinative of whether it is property of the estate for purposes of this criminal bankruptcy statute. (See footnote 10 in law review article on bankruptcy crimes was written by Nevin M. Gewertz.) One commentator states that Interestingly enough, the manual makes reference to the bankuptcy judge testifying in the criminal case, but that the bankruptcy judges testimony "that property is an asset of the estate is inadmissible to prove that the assets in question belong to the bankruptcy estate."
"Might Be" Property of the EstateThe U.S. Attorney's refers to the case of United States v. Cherek, 734 F.2d 1248, 1254 (7th Cir. 1984), cert. denied, and takes the position that the all-encompassing definition of "estate" in section 541 of the Bankruptcy Code, even requires the debtor to disclose information about all property that "might be" property of the bankruptcy estate and to disclose "the existence of assets whose immediate status is uncertain." The manual takes the position that even if the asset is not ultimately determined to be property of the estate under the Bankruptcy Code, section 152 of title 11 "properly imposes sanctions on those who pre-empt a court's determination by failing to report the asset."
Concealment The U.S. Attorney's manual also sets forth its position on the definition of "concealment." It states that conceal "does not mean merely to secrete or hide away" but concealment also means to "prevent the discovery of the asset or to withhold knowledge of the asset." United States v. Schireson, 116 F.2d 881, 884 (3d Cir. 1941); Burchinal v. United States, 342 F.2d 982, 985 (10th Cir.). It further explains that the concealment may take prior to the filing of the bankruptcy as well as after the filing of the bankruptcy. Concealment prior to the filing of a bankruptcy constitutes a single offense as there is only a single duty to disclose the existence of all assets but that each asset concealed after the filing of the bankruptcy petition constitutes a separate offense because each concealment represents a separate act with intent.
Further ReferencesOutlines on the topic of bankruptcy and related crimes is available here and here. Jordan E. Bublick - Miami Bankruptcy Lawyer - Kendall & Aventura Offices - (305) 891-4055 - www.bublicklaw.com
The 11th Circuit Court of Appeals recent decision in In re Donald J. Donovan, 532 F. 3rd 1134 (11th Cir. 2008) dealt with an appeal of the Bankruptcy Court's denial of an unsecured creditor's motion to dismiss a chapter 7 case as being "abusive". The Circuit Court held that it lacked jurisdiction as the order denying the motion was not a "final" order and no exception applied.
First, the Court reviewed the differences in scope of appellate review of district court and appellate courts in the bankruptcy context as set forth in 28 U.S.C. §158(a) and (d). In general, district courts may review final orders as well as interlocutory orders from bankruptcy proceeding, but circuit courts may only hear appeals of final orders.
Final Order The Court reviewed that the general requirement that an order be "final" in order to be appealed. For an order to be "final" it must "end the litigation on the merits, leaving nothing to be done but execute the judgment." The Court explained that in the bankruptcy context, the finality requirement is applied to "discrete controversies within the administration of the [bankruptcy] estate." The Court further explained that in the bankruptcy context, the finality requirement is given a "more flexible interpretation".
Exceptions to the Finality RulePrior 11th Circuit decisions discuss the three exception to the final order requirement.
- collateral order doctrine
- doctrine of practical finality
- intermediate resolution of issues fundamental to the merits of the case
Jordan E. Bublick is a Miami Bankruptcy Lawyer with over 25 years of experience in filing Chapter 13 and Chapter 7 Bankruptcy Cases and Mortgage Modifications (305) 891-4055
A recent decision from the 11th Circuit Court of Appeals gives occasion to review the finality rule and its three exceptions. The 11th Circuit Court of Appeals decision in In re Donald J. Donovan, 532 F. 3rd 1134 (11th Cir. 2008) dealt with an appeal of the Bankruptcy Court's denial of an unsecured creditor's motion to dismiss a chapter 7 case as being "abusive". The Circuit Court held that it lacked jurisdiction to hear the appeal as the order denying the motion to dismiss was not a "final" order and no exception applied.
FinalityThe Court also reviewed the general requirement that an order must be "final" in order to be appealed. In general, to be "final" under 28 U.S.C. §158(d) and §1291, an order must "end the litigation on the merits, leaving nothing to be done but execute the judgment." The Court explained that in the bankruptcy context, the finality requirement is applied to "discrete controversies within the administration of the estate."Three ExceptionsIn prior cases, the 11th Circuit explained that there are three exceptions to the "finality" requirement as follows:
- collateral order doctrine
- doctrine of practical finality
- intermediate resolution of issues fundamental to the merits of the case
The Court in Donovan explained that in a bankruptcy context "finality" is given a more "flexible interpretation" as bankruptcy is an "aggregation of controversies and suits". It gave the example that it is "generally the particular adversary proceeding or controversy that must have have been finally resolved rather than the entire bankruptcy litigation."1. Collateral Order DoctrineThe 11th Circuit explained in the case of In re F.D.R. Hickory House, Inc., 60 F. 3rd 724 (11th Cir. 1995) explained that the collateral order doctrine applies to orders that (1) finally determine a claim separate and independent from the other claims in the action, (2) cannot be reviewed after the final judgment because by then effective review will be precluded and that the rights conferred will be lost and (3) are too important to be denied review because they present a significant and unresolved question of law.2. Practical FinalityThe "practical finality" rule, which is referred to as the Fogay-Conrad rule, permits a circuit court to review an interlocutory order thatdecides the right to the property in contest, and directs it to be delivered up by the defendant to the complainant, or directs it to be sold, or directs the defendant to pay a certain sum of money to the complainant, and the complainant is entitled to have such decree carried immediately into executionin Walker, the 11th Circuit explained that this exception is applied "where practical considerations require it" and that "judicial economy" would be "turned on its head" if the appellate court could not review the case.3. Fundamental Issues"Fundamental Issues" is the third exception to the finality rule. The 11th Circuit explains that this exception is the “most extreme” exception to the final judgment rule, applicable “even [to] an order of marginal finality [is] if the question presented is fundamental to further conduct of the case.”Further ReferencesFurther material is available in this article in the Florida Bar Journal, an article on practice tips, a blog post on Weil Gotshal's "Bankruptcy Blog", and an article "Bankruptcy Appeals - Useful Reminders."
Jordan E. Bublick - Miami Bankruptcy Lawyer - Kendall & Aventura Offices - (305) 891-4055 - www.bublicklaw.com
All debt is generally discharged in a chapter 7 bankruptcy case with certain important exceptions. A recent case decided in January, 2014 by the Bankruptcy Court in Miami involved the dischargeability of a dental malpractice claim.
In this case, a former dental patient obtained a judgment for dental malpractice in the Dade-County Circuit Court in 2011. In 2012, the dentist filed for chapter 7 bankruptcy relief. The former patient sought to except the dental malpractice claim from the chapter 7 discharge on the alleging that the dentist obtained his fee under "false pretenses, a false representation, or actual fraud..." 11 U.S.C. § 523(a)(2)(A). The Court noted that the action for exception from discharge was not brought under 11 U.S.C. § 523(a)(6) on an allegation of "will and malicious injury by the debtor to another entity or to the property of another entity." The former dental patient alleged that there was a "false representation" or "fraud" claiming that the dentist did not disclose his drug dependency and lapse in malpractice insurance.
False RepresentationThe bankruptcy court judge explained that to establish a "false representation" under 11 U.S.C. § 523(a)(2)(A) requires proof of a false or misleading statement with the intent to deceive, inducing a person to turn over money or property. The court stated that the establishment of a "false representation" requires an "expressed misrepresentation - oral or written" and that "[s]ilence, or lack of communication, cannot deliver proof by a preponderance of the evidence." Hanft v. Church, (In re Hanft, N.D., P.A.), 315 B.R. 617 (S.D. Fla. 2002). In this case, the court did not find that the dentist had made any misrepresentations that were intended to deceive the former patient and cause her to turn over money or property. The court noted that the dentist performed the services while licensed and insured.
Actual FraudThe court also found that there was a lack of "actual fraud." The court reviewed that the establishment of "actual fraud" under this section "refers to common law fraud, and requires" the proof by a preponderance of the evidence that 1. there was a false representation made with the purpose and intent of deception, 2. that the representation was relied upon, 3. that the reliance was justifiably founded, and 4. that the person was damaged as a result of the false statement. Field v. Mans, 516 U.S. 59, (1995). The court noted that "actual fraud" may be proven by a misrepresentation that is express or implied, but proof of actual fraud is required and not fraud merely implied in law. The court found that the former patient did not prove express or implied "actual fraud" was committed.
The Court also rejected the former patient's argument that the dentists silence or omissions regarding his drug use or lapse in insurance coverage constituted "fraud" giving rise to an exception to discharge. The Court held that there was no proof that the dentist was under "any duty to disclose facts regarding either his drug use or his business' fiscal operations..." The court stated that no "statute or legal case was presented to prove that illnesses, weaknesses or impairments must be disclosed by medical professionals to their patients."
The Court also held that the dentist's failure to disclose the lapse of the malpractice insurance did not of itself constitute "fraud." The Court distinguished case law presented with regard to the lapse of malpractice insurance involving physicians as opposed to dentists as the Florida regulations as to each profession differ. The Court noted that dentists are cover by the provisions of Chapter 466 of Florida Statutes while physicians are governed by the provisions of Chapter 458. The Court pointed out that while physicians are required to disclose the failure to carry insurance, dentists are not.
Finally, the Court rejected that former patient's argument that malpractice judgments should be excepted from bankruptcy discharge when there was reckless action or their was a lack of malpractice insurance as the U.S. Supreme Court has already rejected that argument in the case of Kawaauhau v. Geiger, 523 U.S. 57 (1998).
The Court though did express sympathy for the unfortunate victim of the dentist's malpractice and suggest that it may be appropriate for the Florida legislature to require dentists to disclose the lack of malpractice insurance as is required of physicians or for the Board of Dentistry to establish a fund "like that established by the Florida Bar for victims of a lawyer's misappropriation or embezzlement."
Jordan E. Bublick is a Miami Bankruptcy Lawyer - www.bublicklaw.com
All debt is generally discharged in a chapter 7 bankruptcy case with certain important exceptions. A recent case decided in January, 2014 by the Bankruptcy Court in Miami involved the dischargeability of a dental malpractice claim.
In this case, a former dental patient obtained a judgment for dental malpractice in the Dade-County Circuit Court in 2011. In 2012, the dentist filed for chapter 7 bankruptcy relief. The former patient sought to except the dental malpractice claim from the chapter 7 discharge on the alleging that the dentist obtained his fee under "false pretenses, a false representation, or actual fraud..." 11 U.S.C. § 523(a)(2)(A). The Court noted that the action for exception from discharge was not brought under 11 U.S.C. § 523(a)(6) on an allegation of "will and malicious injury by the debtor to another entity or to the property of another entity." The former dental patient alleged that there was a "false representation" or "fraud" claiming that the dentist did not disclose his drug dependency and lapse in malpractice insurance.
False RepresentationThe bankruptcy court judge explained that to establish a "false representation" under 11 U.S.C. § 523(a)(2)(A) requires proof of a false or misleading statement with the intent to deceive, inducing a person to turn over money or property. The court stated that the establishment of a "false representation" requires an "expressed misrepresentation - oral or written" and that "[s]ilence, or lack of communication, cannot deliver proof by a preponderance of the evidence." Hanft v. Church, (In re Hanft, N.D., P.A.), 315 B.R. 617 (S.D. Fla. 2002). In this case, the court did not find that the dentist had made any misrepresentations that were intended to deceive the former patient and cause her to turn over money or property. The court noted that the dentist performed the services while licensed and insured.
Actual FraudThe court also found that there was a lack of "actual fraud." The court reviewed that the establishment of "actual fraud" under this section "refers to common law fraud, and requires" the proof by a preponderance of the evidence that 1. there was a false representation made with the purpose and intent of deception, 2. that the representation was relied upon, 3. that the reliance was justifiably founded, and 4. that the person was damaged as a result of the false statement. Field v. Mans, 516 U.S. 59, (1995). The court noted that "actual fraud" may be proven by a misrepresentation that is express or implied, but proof of actual fraud is required and not fraud merely implied in law. The court found that the former patient did not prove express or implied "actual fraud" was committed.
The Court also rejected the former patient's argument that the dentists silence or omissions regarding his drug use or lapse in insurance coverage constituted "fraud" giving rise to an exception to discharge. The Court held that there was no proof that the dentist was under "any duty to disclose facts regarding either his drug use or his business' fiscal operations..." The court stated that no "statute or legal case was presented to prove that illnesses, weaknesses or impairments must be disclosed by medical professionals to their patients."
The Court also held that the dentist's failure to disclose the lapse of the malpractice insurance did not of itself constitute "fraud." The Court distinguished case law presented with regard to the lapse of malpractice insurance involving physicians as opposed to dentists as the Florida regulations as to each profession differ. The Court noted that dentists are cover by the provisions of Chapter 466 of Florida Statutes while physicians are governed by the provisions of Chapter 458. The Court pointed out that while physicians are required to disclose the failure to carry insurance, dentists are not.
Finally, the Court rejected that former patient's argument that malpractice judgments should be excepted from bankruptcy discharge when there was reckless action or their was a lack of malpractice insurance as the U.S. Supreme Court has already rejected that argument in the case of Kawaauhau v. Geiger, 523 U.S. 57 (1998).
The Court though did express sympathy for the unfortunate victim of the dentist's malpractice and suggest that it may be appropriate for the Florida legislature to require dentists to disclose the lack of malpractice insurance as is required of physicians or for the Board of Dentistry to establish a fund "like that established by the Florida Bar for victims of a lawyer's misappropriation or embezzlement."
Jordan E. Bublick - Miami Bankruptcy Lawyer - Kendall & Aventura Offices - (305) 891-4055 - www.bublicklaw.com
I am pleased to report that attorney Mark Ditton who has long managed many of our bankruptcy cases in Portland and Salem, Oregon will be moving to Seattle this week to expand our Seattle Bankruptcy Law Office. Mark will now supervise all of our Washington cases including Chapter 13 matters in Vancouver and Tacoma. Our
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The original post is titled Expanded Bankruptcy Law Office Hours , and it came from Portland Bankruptcy Attorney | Northwest Debt Relief .
The Circuit Court of Appeals of the 3rd Circuit recently issued its opinion in In re SCH Corp., et al, 2014 WL 2724606 in which it had the occasion to review the application of the doctrine of "equitable mootness" in the bankruptcy context. The Court explained the distinctions between the concepts of "mootness" (an Article III Constitutional issue), "equitable mootness", and "prudential considerations." In its application of the doctrine of "equitable mootness", the Court looked to the five-factor test set forth in In re Continental Airlines, 91 F.3d 553 (3rd Cir. 1996). I reviewed this decision here.
Statutory MootnessThe Court in SCH Corp. did not reach the concept of "statutory mootness". This ABI article explains that the concept of statutory mootness as provided for in Sections 363(m) and 364(e) of the Bankruptcy Code to protect capital providers, including purchasers and lenders. 
Supreme Court Other articles, here and here, review the Supreme Court denial of cert. in a case involving the issue of equitable mootness in the case involving a "multi-billion dollar" Chapter 11 plan in Law Debenture Trust Co. v. Charter Communications, Inc., No. 12-847. In the petition for a writ of certiorari, a brief amici curiae was filed by a group of law professors. The doctrine of equitable mootness as applied in the 2nd Circuit is also reviewed in this article by Hunton & Williams, LLP. Jordan E. Bublick is a Miami Bankruptcy Lawyer with over 25 years of experience in filing Chapter 13 and Chapter 7 Bankruptcy Cases and Mortgage Modifications (305) 891-4055
On September 4, 2014, the United States Court of Appeals for the 11th Circuit Court of Appeals issued its decision focusing on the "party aggrieved" doctrine in the case of Benjamin Atkinson v. Ernie Haire Ford, Inc. (In Re: Ernie Ford, Inc.), Case No. 13-11810.
Party Aggrieved Requirement
The Court explained that as bankruptcy cases often involved numerous creditor who are dissatisfied with any compromise that jeopardizes the full payment of their outstanding claims against the bankrupt, that "special rules have been developed to govern which parties my appeal a bankruptcy court order. The Court reviewed that court continue to apply the rule that was codified in the 1898 Bankruptcy Act, that only "person aggrieved" can appeal a bankruptcy court order.
Definition of a Party Aggrieved
The Court cited its holding in the case of In re Westwood Cmty. Two Ass'n v. Barbee (In re Westwood Cmty. Two Ass'n) 293 F.3d 1332 (11th Cir. 2002) which defined a party aggrieved as those individuals that are "directly, adversely, and pecuniarily, affect[ed]" by a bankruptcy court's order." This case further explained that "[a]n order will directly, adversely, and pecuniarily affect a person if that order diminishes their property, increases their burdens, or impairs their rights."
Bankruptcy Code Interests.
The Court further held that it agreed with other circuit courts which have held that a person is not "aggrieved" when the interests harmed by the court order are "not the interests that the Bankruptcy Code seeks to protect or regulate." The Court cited another case which states that this doctrine was developed to limit appeals of bankruptcy court to avoid "endless appeals brought by the myriad of parties who are indirectly affected by every bankruptcy court order." It further explained that the purpose of this doctrine was to ensure that the goals of bankruptcy are not derailed by a flood of appeals" by those parties "who do not suffer a direct harm to interests the Bankruptcy Code seeks to protect or regulate." It further stated that the allowance of appeals from parties who have suffered "only an indirect harm or who hold interests outside of the scope of the Bankruptcy Code would defeat the very purpose underlying our person aggrieved standard."
Further References
In re Randy L. Jones, Case 09-11551-MGW (Bankr. M.D. Florida 2013) (Williamson, J), applied the party aggrieved doctrine in a chapter 13 case. In this case, the Court applied the party aggrieved doctrine to avoid the Chapter 13 trustee's objections to an attorney fee settlement as the unsecured creditors were being paid 100%.
A lengthy law review article published in 2010 on the party aggrieved doctrine is available entitled "Non-Pecuniary Interests and the Injudicious Limits of Appellate Standing in Bankruptcy" by S. Todd Brown.
Jordan E. Bublick is a Miami Bankruptcy Lawyer with over 25 years of experience in filing Chapter 13 and Chapter 7 Bankruptcy Cases and Mortgage Modifications (305) 891-4055
Bankruptcy Case This is the bankruptcy case study for JW from Chicago Illinois who is seeking bankruptcy protection. There is no real estate involved in this case. There is no rental situation in this case. The client owns a 2014 Nissan Versa which is financed through Nissan Acceptance Corporation. The vehicle is worth $17,000 and+ Read More
The post Bankruptcy Case Study For J.W. From Chicago, Illinois appeared first on David M. Siegel.
Five of Atlantic City’s 12 casinos could close this year, following Trump Entertainment Resorts’ bankruptcy filing this past Tuesday.
The company owns Trump Plaza, a casino slated to close next week. Trump’s Taj Mahal could follow suit in November if the company cannot receive concessions from union workers.
According to paperwork filed with the U.S. Bankruptcy Court, Trump Entertainment estimates its liabilities range between $100 million and $500 million and assets no greater than $50,000. The company missed last quarter’s tax payment and currently does not have enough revenue to pay lenders this month, as reported by the Washington Post.
In a statement to the New York Times, Fitch Ratings analyst Alex Bumazhny indicates the Taj Mahal closure comes as a surprise: “The property is almost breaking even and will benefit from the closure of Trump Plaza.”
Three casinos have closed since January in lieu of increased competition from neighboring states. On CNBC’s “Closing Bell,” financial researcher Frank Fatini claims new casinos in Pennsylvania and New York state have “taken away…the convenience gambler, the ‘daytripper’”from Atlantic City.
Bloomberg states that higher labor costs and real estate taxes have also hurt Atlantic City’s profits.
The closing of the Taj Mahal could leave 2,800 workers unemployed, raising the year’s total loss in Atlantic City casino jobs to above 8,000.
On Monday, New Jersey governor Chris Christie assembled a meeting of elected officials, casino executive and union leaders to discuss Atlantic City uncertain future.
“A whole bunch [of] people are getting put out of work with nothing else on the horizon,” said state senator and former city mayor James Whelan. “You now have the possibility of five empty buildings on the boardwalk.”
Trump Entertainment has struggled since its 2010 bankruptcy. Billionaire investor Carl Icahn currently holds a $289 million loan, rendering him the company’s largest credited investor.
Donald J. Trump owns a 9 percent stake in the company but has no connection with operations. Trump has a current lawsuit to remove his name from the properties.
The post Trump Casinos Company Files for Bankruptcy appeared first on The Bankruptcy Blog.
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