United General Title Insurance Company v. Karanasos
MEMORANDUM OF DECISION & ORDER (US Bankruptcy Court- Eastern New York, 8-11-09428-ast) - Accordingly, the decision of the Bankruptcy Court is reversed to the extent that the Debtors fraudulent concealment of his interest in the Rockville Centre Prope rty necessitates a denial of discharge pursuant to 11 U.S.C. § 727(a)(2)(A) and the Debtors false oaths regarding his interest in that property and the lawsuit surrounding that concealed interest necessitate a denial of discharge pursuant to 11 U.S.C. § 727(a)(4)(A). The case is remanded to the Bankruptcy Court for the entry of judgment in favor of UGT, and for any further proceedings required consistent with this Memorandum and Order. The Clerk of the Court is respectfully directed to close this case. SEE ATTACHED DECISION for details. So Ordered by Judge Arthur D. Spatt on 12/27/2016. (Coleman, Laurie)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
UNITED GENERAL TITLE INSURANCE
1:39 pm, Dec 27, 2016
U.S. DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
LONG ISLAND OFFICE
DECISION & ORDER
-againstCHRIS KARANASOS, also known as
Belowich & Walsh LLP
Attorneys for the Appellant
140 Grand Street
White Plains, NY 10601
Daniel Walsh, Esq., Of Counsel
The Law Office of John M. Stravato
Attorney for the Appellee
P.O. Box 298
Bethpage, NY 11714
John M. Stravato, Esq., Of Counsel
SPATT, District Judge:
Before the Court is an appeal from an order by the United States Bankruptcy Court for the
Eastern District of New York (Trust, J.) by appellant creditor United General Title Insurance
Company (“UGT”). UGT contends that that Bankruptcy Court’s denial of its complaint objecting
to the discharge of appellee debtor Chris Karanasos’ (the “Debtor”) was reversible error.
Specifically, UGT states that the Debtor’s debt should not be discharged pursuant to 11 U.S.C.
§ 727 (“Section 727”) because it proved, by a preponderance of the evidence, during a stipulated
trial that was supplemented with testimony, that the Debtor fraudulently concealed a secret interest
in property and made false oaths with fraudulent intent. For the reasons that follow, the Court
finds that the Debtor’s discharge should be denied under both theories put forward by UGT; and
remands the case for further proceedings consistent with this order.
A. The Relevant Facts
Although the facts in this case have been substantially set forth in three different decisions,
the Court will once again briefly review the facts. They are drawn from the parties joint pre-trial
memorandum; the stipulated record; and the brief testimony from the supplemental trial. The
bankruptcy record, comprised of six hundred and sixty–nine pages, includes all of these items as
well as complaints, petitions, schedules, memoranda and orders. Any references to the bankruptcy
record will be denoted as “R.”
1. Real Property Interests of the Debtor
The two pieces of real property at issue throughout this case are the “Rockville Centre
Property” and the “Manhattan Property.” The Rockville Centre Property is located at 390
Woodbridge Road in Rockville Centre, New York, and the Manhattan Property is located at 408
East 120th Street in New York, New York.
The Debtor and his wife, Rosa Karanasos (“Mrs. Karanasos”), have resided in the
Rockville Centre Property since 2002, when Mrs. Karanasos acquired title to the property. She
financed the purchase with a mortgage from Interamerican Bank. Mrs. Karanasos and the Debtor
paid that mortgage with funds from their joint checking account. On June 20, 2003, Mrs.
Karanasos conveyed title to herself and the Debtor. Thereafter, the Debtor and Mrs. Karanasos
obtained a mortgage from Flagstar Bank with a principal amount of $265,000, and Mrs. Karanasos
satisfied her mortgage with Interamerican Bank. The Debtor and Mrs. Karanasos made payments
on the Flagstar Bank mortgage with funds from their joint checking account. The Debtor and Mrs.
Karanasos also obtained a home equity line of credit with JP Morgan Chase Bank (the “Chase
HELOC”) in 2003 for $210,000.
On December 17, 2008, the Debtor and Mrs. Karanasos re-conveyed title for the Rockville
Centre Property back to Mrs. Karanasos by deed (the “2008 Transfer”). The deed was recorded
on April 9, 2009 in the Nassau County Clerk’s Office. Subsequent to the transfer of title, the
Debtor remained liable on the Flagstar Bank mortgage and the Chase HELOC, and the Rockville
Centre Property served as collateral for both loans.
The Debtor continued to use and enjoy the Rockville Centre Property after he conveyed
his interest to his wife. He and his wife took a deduction on their 2010 joint federal tax return for
real estate taxes and mortgage interest payments on the Rockville Centre Property; they shared the
mortgage and utility obligations related to the Rockville Centre Property; and he identified the
Rockville Centre Property as his primary address in his bankruptcy petition.
Throughout the proceedings, the Debtor has claimed that one of the reasons for the 2008
Transfer was his desire to acquire the Manhattan Property as an investment property. In September
2008, the Debtor allegedly invested $200,000 in the Manhattan Property using $100,000 from the
Chase HELOC and $100,000 from a personal line of credit.
He loaned this $200,000 to
Mohammed Khan (“Khan”), who would acquire title to the Manhattan Property with the Debtor
as a joint tenant. Khan agreed to repay the Debtor the full $200,000 with interest, and, as collateral,
Khan gave the Debtor an unrecorded deed conveying Khan’s interest in the Manhattan Property.
If Khan had paid the Debtor in full, the Debtor would have conveyed full title to the Manhattan
Property to Khan. However, Khan defaulted and the Debtor acquired sole title to the Manhattan
Mrs. Karanasos did not approve of the Manhattan Property investment, and the Debtor
claims that she only permitted him to draw $100,000 from the Chase HELOC on the condition that
she obtain full title to the Rockville Centre Property. The Debtor said in his deposition that “for
her[,] the only way to let me borrow the money from my home line of credit as investment to [the
Manhattan] property, I had to take off my name from the [Rockville Centre] deed to protect her
and our children.” (R. at 39). The deed for the 2008 Transfer states that the consideration for the
conveyance was $100,000. While the parties agreed in their joint pre-trial memorandum that the
Debtor did not pay or transfer any consideration to Mrs. Karanasos for the 2008 Transfer, the deed
recording that transfer indicates that the consideration for the conveyance was $100,000.
Mrs. Karanasos filed for bankruptcy protection on October 5, 2010, and again on
December 3, 2010. Mrs. Karanasos’ bankruptcy petition in her first filing identified her interest
in the Rockville Centre Property as a “Fee Simple” and a “Tenant by the entirety.” Her first
petition was dismissed without her receiving a discharge of her debt. In her second bankruptcy
petition, she did not identify the nature of her interest in the Rockville Centre Property—she left
the “Nature of Debtor’s Interest” blank in relation to that property on her Schedule A for that
petition. She received a discharge of debt in her second case.
The Debtor identified the Rockville Centre Property as his street address in his bankruptcy
petition, but did not identify, disclose or explain any interest he maintained in that property in his
schedules or his statement of financial affairs. He used the term “sole tenant” to describe his
ownership interest in the Manhattan Property.
2. Lawsuits Against the Debtor
On February 4, 2008, UGT commenced a civil action in New York State Supreme Court
civil term against the Debtor and two other parties, GE Abstract and Esther Serrano, for damages
sustained in connection with breaches of an agency agreement and related personal guarantees (the
“GE lawsuit”). The 2008 Transfer occurred while the Debtor was defending the GE lawsuit. A
judgment of $677,351 was entered against the Debtor and his co-defendants in the GE lawsuit.
On November 5, 2010, UGT commenced a separate action in New York State Supreme
Court against the Debtor and Mrs. Karanasos, seeking a judgment declaring that the 2008 Transfer
was fraudulent and void (the “fraudulent conveyance action”). The Debtor did not answer or
otherwise appear in the action, and he is in default. It is unclear from the record whether any type
of judgment was entered in that action.
The Debtor listed the GE lawsuit in his Statement of Financial Affairs, but did not list the
fraudulent conveyance action in either his Schedules or his Statement of Financial Affairs. The
Debtor declared, under penalty of perjury, that the information provided in his bankruptcy petition,
and the annexed summary and schedules, were true and correct.
B. Procedural History
On July 3, 2011, the Debtor filed a voluntary petition for relief under Chapter 7 of Title 11
of the United States Code (the “Bankruptcy Code”). On October 6, 2011, UGT commenced an
adversary proceeding against the Debtor, asserting that the Debtor’s discharge should be denied
pursuant to Section 727. UGT alleged that the Debtor had 1) concealed a secret interest in the
Rockville Centre Property within one year before filing his petition for bankruptcy, and that he did
so with the intent of hindering, delaying or defrauding his creditors; and 2) knowingly and
fraudulently made three material false oaths: failing to disclose his interest in the Rockville Centre
Property; failing to disclose UGT’s fraudulent conveyance action against the Debtor; and
misrepresenting his ownership interest in the Manhattan Property as that of a sole tenancy.
The parties agreed to trial by stipulated record, and the Bankruptcy Court ordered that
UGT’s complaint objecting to the Debtor’s discharge be denied. The Bankruptcy Court found that
UGT failed to prove, by a preponderance of the evidence, that the Debtor had concealed a secret
interest in the Rockville Centre Property, and, because it found that the Debtor did not conceal an
interest in the property, it did not address whether any concealment was fraudulent.
Bankruptcy Court also found that the Debtor made false oaths by failing to disclose the civil action
against him and misrepresenting his ownership interest in the Manhattan Property. However, the
Bankruptcy Court held that the Debtor did not make the false oaths with fraudulent intent, and
therefore denied UGT’s complaint on that basis as well.
UGT appealed the bankruptcy court’s decision and Judge Joseph F. Bianco found that the
bankruptcy court committed several errors. United Gen. Title Ins. Co. v. Karanasos, No. 13–cv–
7153, 2014 WL 4388277, at *1 (E.D.N.Y. Sept. 5, 2014). Specifically, Judge Bianco found that
the Debtor had concealed an ownership interest in the Rockville Centre property, id. at *10, and
that he committed two false oaths when he failed to disclose his interest in that property and when
he failed to disclose the fraudulent conveyance action. Id. at *12. As to the Debtor’s classification
of his interest in the Manhattan Property as a “sole tenant,” Judge Bianco found that even if it was
false, it was not fraudulent. Id. Although the 2008 Transfer occurred more than one year before
the Debtor filed for bankruptcy, Judge Bianco found that the Debtor had concealed the Rockville
Centre Property under the “continuous concealment doctrine,” which provides that a concealment
can be found to exist in the year before the bankruptcy petition even where the initial concealment
occurred before the one-year period, if the debtor allowed the property to remain concealed during
the year in question. Id. at *10; In re Boyer, 328 F. App’x 711, 714–15 (2d Cir. 2009) (summary
order). Judge Bianco remanded the case back to the Bankruptcy Court to determine 1) whether
the Debtor “harbored improper intent in concealing his” interest in the Rockville Centre Property
“for purposes of § 727(a)(2)(A),” Karanasos, 2014 WL 4388277, at *1; and 2) whether the debtor
made his two false oaths with fraudulent intent for the purposes of § 727(a)(4)(A). Id. Judge
Bianco left to the Bankruptcy Court’s discretion whether to “rely solely on the stipulated record,
request supplemental submissions, and/or conduct a trial on any disputed issues.” Id. at *10.
The Bankruptcy Court supplemented the original stipulated trial record with 18 stipulated
exhibits and live testimony from the Debtor consisting of nine pages. The Debtor testified on
March 10, 2015. The stated purpose of the live trial was to determine the Debtor’s intent. On
October 29, 2015, the Bankruptcy Court found that UGT did not satisfy its burden of proof in that
it did not prove by a preponderance of the evidence that the Debtor either concealed his property
interest or made false oaths with fraudulent intent.
UGT filed a notice of appeal on December 4, 2015 and filed their brief as appellant on
February 19, 2016. The Debtor filed his brief as appellee on April 4, 2016 and UGT filed its reply
brief on April 4, 2016.
A. Applicable Legal Standard
The district court has jurisdiction to hear appeals from rulings of the bankruptcy court.
28 U.S.C. § 158(a). Final orders of the bankruptcy court are appealable to the district court. Id.;
see also Morse v. Rescap Borrower Claims Tr., No. 14–cv–5800, 2015 WL 353931, at *3
(S.D.N.Y. Jan. 26, 2015).
In reviewing judgments by the bankruptcy court, the district court functions as an appellate
court. See In re CBI Holding Co., Inc., 529 F.3d 432, 448–49 (2d Cir. 2008). Therefore, the
district court reviews the bankruptcy court’s findings of fact for clear error and its conclusions of
law de novo. In re Ionosphere Clubs, Inc., 922 F.2d 984, 988 (2d Cir. 1990); see also FED. R.
BANKR. P. 8013 (advisory committee note); FED. R. CIV. P. 52(a)(6). Mixed questions of fact and
law are also reviewed de novo. See In re Kassover, 448 B.R. 625, 631 (S.D.N.Y. 2011); In re
Adelphia Commc’ns Corp., 298 B.R. 49, 52 (S.D.N.Y. 2003) (citing In re United States Lines,
Inc., 197 F.3d 631, 640–41 (2d Cir. 1999)). Clear error exists when “the reviewing court on the
entire evidence is left with the definite and firm conviction that a mistake has been committed.”
In re CBI Holding Co., 529 F.3d at 449 (quoting United States v. U.S. Gypsum Co., 333 U.S. 364,
This Court will also review the stipulated record and any conclusions drawn from it de
novo, because “where a case is tried . . . on a stipulated record, it is clear that the . . . review is de
novo because the . . . rulings are necessarily conclusions of law or mixed fact and law.”
Karanasos, 2014 WL 4388277, at *5 (finding that although the Second Circuit has not explicitly
articulated the standard of review for a bankruptcy case tried on a stipulated record, the court would
review the findings de novo because the Second Circuit uses that standard when reviewing district
court decisions on a stipulated trial record). As stated above, the entire record, with the exception
of the Debtor’s live testimony consisting of nine pages, was a stipulated record. Therefore, the
Court will review the Bankruptcy Court’s findings de novo, with the exception of any conclusions
drawn solely from the Bankruptcy Court’s reliance on its interpretation of the Debtor’s credibility
during the brief live testimony.
1. As to the Denial of a Discharge Under Section 727(a)(2)(A)
Section 727(a)(2)(A) states that:
(a) [t]he court shall grant the debtor a discharge, unless—
(2) the debtor, with intent to hinder, delay, or defraud a creditor or an officer of the
estate charged with custody of property under this title, has transferred, removed,
destroyed, mutilated, or concealed, or has permitted to be transferred, removed,
destroyed, mutilated, or concealed—
(A) property of the debtor, within one year before the date of the filing of the
11 U.S.C. § 727(a)(2)(A). To prove that a debtor violated Section 727(a)(2)(A), a creditor must
establish, “by a preponderance of the evidence, (1) an act (i.e., a transfer or concealment of
property); and (2) an improper intent (i.e., a subjective intent to hinder, delay, or defraud a
creditor). Moreover, the creditor must show that both of these components were present during
the one–year period before bankruptcy.” Karanasos, 2014 WL 4388277, at *6 (quoting Boyer,
328 F. App’x at 714 (internal quotation marks omitted)). To determine whether there was
improper intent, courts look to certain ‘badges of fraud’ for indirect proof, because intent is rarely
displayed through clear and direct proof. See Salomon v. Kaiser, 722 F.2d 1574, 1582 (2d
Cir. 1983); Boyer, 328 F. App’x at 715; In re Vidro, 497 B.R. 678, 687 (Bankr. E.D.N.Y. 2013).
Badges of fraud include:
(1) the lack or inadequacy of consideration; (2) the family, friendship or close
associate relationship between the parties; (3) the retention of possession, benefit
or use of the property in question; (4) the financial condition of the party sought to
be charged both before and after the transaction in question; (5) the existence or
cumulative effect of a pattern or series of transactions or course of conduct after the
incurring of debt, onset of financial difficulties, or pendency or threat of suits by
creditors; and (6) the general chronology of the events and transactions under
Kaiser, 722 F.2d at 1582–83.
As stated above, Judge Bianco found that UGT had established by a preponderance of the
evidence that the Debtor had concealed the Rockville Centre Property under the continuous
concealment doctrine; and remanded the case back to the bankruptcy court solely to determine, as
to UGT’s 727(a)(2)(A) claim, what the Debtor’s intent was when he concealed that interest. As
far as the badges of fraud, Judge Bianco also found that the second, third and fifth badges listed
above were clearly present because the Debtor transferred the Rockville Centre Property to his
wife; he remained there after the transfer; and he transferred the property after UGT had
commenced the GE lawsuit against him. Karanasos, 2014 WL 4388277, at *8. This Court agrees
with Judge Bianco’s findings regarding the badges of fraud, examines the remaining factors, and
finds that the Debtor possessed the requisite fraudulent intent.
a. The Adequacy of the Consideration
The Bankruptcy Court found that there was consideration for the 2008 Transfer because
the Debtor took money from an exempt asset and placed it in an asset that could be reached by
creditors. UGT argues that there was no consideration because 1) the only evidence that the Debtor
invested the money from the HELOC in the Manhattan Property is the Debtor’s own testimony,
which should not be believed; 2) there could not have been consideration even if there was such
an exchange because the Debtor still had an actual interest in the Rockville Centre Property and
therefore he did not receive anything; 3) the transfer did not benefit the Debtor’s bankruptcy estate
and therefore does not qualify as consideration; 4) the Debtor never requested to use the homestead
exemption at any point during his bankruptcy proceeding and therefore the exemption could not
serve as a basis for his discharge; and 5) even if the Debtor had claimed the homestead exemption,
the exemption would only have precluded creditors from attaching liens to a portion of the total
value of the Rockville Centre Property.
The Debtor states in opposition that the conveyance could not have been fraudulent because
“[t]he Rockville Centre [P]roperty was mortgaged and had no non–exempt equity for a creditor to
take an interest in by virtue of the homestead exemption;” that as a result of the 2008 Transfer,
“creditors were clearly better off as a result . . . of the taking of exempt funds and using it to
purchase a non-exempt asset;” and the value of the bankruptcy estate was not diminished in any
way. The Court agrees with UGT that there was inadequate consideration because there was no
“Transactions between husband and wife must be closely scrutinized to assure that they are
fair and honest and not merely contrivances resorted to for the purpose of placing a spouse’s
property beyond the reach of creditors.” In re Carl, 517 B.R. 53, 64 (Bankr. N.D.N.Y. 2014)
(citing Laines v. Gold, 352 B.R. 397, 404 (Bankr. E.D.Va. 2005)); see also In re Sicari, 187 B.R.
861, 872 (Bankr. S.D.N.Y. 1994) (“A transfer of property to relatives will be subject to close
scrutiny, and the relationship of the parties in conjunction with other circumstances will often
make the plaintiff’s case compelling notwithstanding the absence of direct evidence of fraud.”
(quoting Loeber v. Loeber (In re Loeber), 12 B.R. 669, 675 (Bankr. D.N.J. 1981) (internal
quotation marks and alterations omitted))).
The parties agreed that Mrs. Karanasos did not receive any consideration for the 2008
Transfer. The Bankruptcy Court found that there was adequate consideration because the Debtor
“received a substantial benefit from the transaction” in that he received $100,000 from the HELOC
despite the fact that he no longer had any interest in the Rockville Centre Property and invested it
in the Manhattan Property, which he believed would be profitable. (R. at 226). The Bankruptcy
Court held that the Debtor took a risk by taking the money from the HELOC, which was protected
by the homestead exemption, and investing it in the Manhattan Property, where investors could
place liens on the money.
In the Court’s view, assuming that the Debtor and his wife made this arrangement, the
Debtor did not in fact receive anything. As Judge Bianco said in the original appeal, if the 2008
Transfer actually occurred in the manner that the Debtor claims it did, it was a mortgage, and the
Debtor still had an ownership interest in the property. If “Mrs. Karanasos demanded the deed to
the property as security for debtor’s having borrowed an additional $100,000.00 against the marital
home . . . then the conveyance would be a mortgage, and debtor would have retained an ownership
interest in the property.” Karanasos, 2014WL4388277, at *9 (quoting N.Y. REAL PROP. LAW §
320 (“A deed conveying real property, which, by any other written instrument, appears to be
intended only as a security in the nature of a mortgage, although an absolute conveyance in terms,
must be considered a mortgage . . . .”); Leonia Bank v. Kouri, 3 A.D.3d 213, 772 N.Y.S.2d 251,
254 (N.Y. App. Div. 2004) (“[T]he courts are steadfast in holding that a conveyance, whatever its
form, if in fact given to secure a debt, is neither an absolute nor a conditional sale, but a mortgage,
and that the grantor and grantee have merely the rights and are subject only to the obligations of
mortgagor and mortgagee.”)).
Even if the 2008 Transfer occurred in the manner the Debtor claims that it did, neither side
really received anything. Mrs. Karanasos did not receive any consideration, as stipulated, because
the Debtor continued to use and enjoy the premises and maintained a de facto ownership interest.
The Debtor lived there, made mortgage payments, and took tax deductions relating to the Rockville
Centre Property after the 2008 Transfer. Mrs. Karanasos even listed her ownership interest as a
tenant by the entirety in her bankruptcy schedule. It stands to reason therefore, that since the
Debtor maintained a de facto ownership interest in the Rockville Centre, he did not receive any
consideration because he only took something which he already possessed. Indeed, “whether
debtor’s transfer of the Rockville Centre Property to his wife was really a mortgage or a total sham
transaction is immaterial,” Karanasos, 2014WL4388277, at *9. Whether the 2008 Transfer was a
sham or a mortgage, the Debtor had an ownership interest in the Rockville Centre Property and
therefore he did not receive consideration.
The Bankruptcy Court’s decision is apparently contrary to Judge Bianco’s decision because
Judge Bianco said that “Mrs. Karanasos did not give debtor $100,000.00 in exchange for debtor’s
interest in the Rockville Centre Property. Instead, as a condition for allowing debtor to draw
$100,000 on the Chase HELOC that encumbered their home, Mrs. Karanasos demanded that
debtor remove his name from the deed to protect her and their children.” Id. at *3. This Court
agrees with Judge Bianco’s assessment. The Debtor did not receive anything from his wife
because he took $100,000 from a home in which he retained an actual ownership interest. Nor did
he give up anything because he retained an actual ownership interest. “In determining the
adequacy of consideration, the focus is on the effect that the transfer had on the assets of the
bankruptcy estate, not on what changed hands between the debtor and the transferees. No
consideration ever actually came into appellant’s hands.” In re Pisculli, 426 B.R. 52, 67 (E.D.N.Y.
2010), aff’d, 408 F. App’x 477 (2d Cir. 2011). The same is true here—no consideration came into
either the Debtor’s hands or his wife’s hands.
The Court also finds that the Bankruptcy Court’s reliance on the homestead exception was
misplaced. The Bankruptcy Court’s decision appears to place importance on the homestead
exception because, assuming that it would have applied to the $100,000 from the Chase HELOC,
the Debtor “placed the money in harm’s way” by moving it from an exempt asset to an asset that
was not exempt.
First, there is nothing in the record to suggest that the Debtor ever claimed or sought to
utilize the homestead exemption. The Debtor lists the Chase HELOC in his Schedule D, but does
not list the property that the HELOC encumbers, nor does it list the description or market value of
the property. The Debtor also did not list either the Rockville Centre Property or the Chase
HELOC as exempt in his Schedule C. Mrs. Karanasos did claim the Rockville Centre Property as
exempt in her Schedule C, and she only claimed that $50,000 was exempt, which was the
maximum when she filed. Mrs. Karanasos lists the Rockville Centre Property in the description
of the property as subject to the Chase HELOC lien in Schedule D. The Bankruptcy Court assumes
that the Debtor would have claimed the homestead exemption when he did not. See In re Murray,
249 B.R. 223, 230–31 (E.D.N.Y. 2000) (“Before an exemption can be claimed, it must be estate
property. Section 522(1) of the Bankruptcy Code specifically directs a debtor to file a list of
property that the debtor claims as exempt. Property is not exempt by fiat of the debtor, but only
through a process of compliance with the statutory disclosures and then by order of the bankruptcy
court . . . .”) (internal citations and quotation marks omitted); In re Antoniou, 515 B.R. 9, 20
(Bankr. E.D.N.Y. 2014) (“The focus in this analysis is on the fraudulent conduct itself, not the
value of the assets in question.”).
Second, the homestead exemption would not have been available to the Debtor because he
sought to conceal his interest in the Rockville Centre Property. A debtor cannot claim an
exemption on something that he concealed. “[A] debtor may not claim as exempt, property that
he concealed and failed to disclose on his bankruptcy schedules.” In re Estarellas, 338 B.R. 538,
541 (Bankr. D. Conn. 2006) (quoting In re Markmueller, 165 B.R. 897, 899–900 (Bankr. E.D.Mo.
1994), aff’d, 51 F.3d 775 (8th Cir. 1995)). In fact, 11 U.S.C. § 522, which the Bankruptcy Court
cited in its decision, states
the value of an interest in real or personal property that the debtor or a dependent
of the debtor uses as a homestead shall be reduced to the extent that such value is
attributable to any portion of any property that the debtor disposed of in the 10-year
period ending on the date of the filing of the petition with the intent to hinder, delay,
or defraud a creditor and that the debtor could not exempt, or that portion that the
debtor could not exempt, under subsection (b), if on such date the debtor had held
the property so disposed of.
11 U.S.C. § 522(o)(4). By saying that the Debtor could have claimed the homestead exemption,
the Bankruptcy Court assumes that he would have claimed the Rockville Centre Property or his
equity in it as an exemption, when he did not do and could not have done.
Finally, even if the homestead exemption had applied to the Chase HELOC, it would not
necessarily have exempted the total amount of money in the Chase HELOC. See, e.g., N.Y. CPLR
5206 (exemption not to exceed one hundred fifty thousand dollars in Nassau County et al., and
judgement may attach to the debtor’s surplus equity, but exemption applies in proceedings to
satisfy judgment). “[I]f a debtor possesses equity in a principal residence, that equity, not
exceeding [$150,000], is exempt from the satisfaction of money judgments and, in the event of
bankruptcy, is exempt from property of the debtor's bankruptcy estate. New York’s Homestead
Exemption is simply the right to receive the first [$150,000] in proceeds. The balance of proceeds,
if any, is paid to the judicial lien creditor.” Levinson v. R & E Prop. Corp., 395 B.R. 554, 557
(Bankr. E.D.N.Y. 1995). For instance, Mrs. Karanasos filed for bankruptcy before N.Y. CPLR
5206 was amended, so she listed a $50,000 exemption on the Rockville Centre Property, which
was the exemption allowed at the time, and listed the market value of the property as $575,000.
Therefore, in the Court’s view, the Bankruptcy Court’s reliance on the homestead
exemption was misplaced.
The Court finds that the fact that there was no consideration exchanged, coupled with the
badges of fraud found by Judge Bianco, would be sufficient to support a finding of a prima facie
case of fraudulent intent. See, e.g., Sicari, 187 B.R. at 872 (“A presumption of actual fraudulent
intent necessary to bar a discharge arises when property is either transferred gratuitously or is
transferred to relatives.”) (quoting In re Chastant, 873 F.2d 89, 91 (5th Cir. 1989) (quoting In re
Butler, 38 B.R. 884, 888 (Bankr. D.Kan. 1984))); In re Silverstein, 151 B.R. 657, 661 (Bankr.
E.D.N.Y. 1993) (“The fact that property has been gratuitously transferred raises a presumption
that such transfer was accompanied by the actual fraudulent intent necessary to bar a discharge
under 727(a)(2).”). Nevertheless, the Court considers the other badges of fraud.
b. As to the Debtor’s Financial Condition Before and After the 2008 Transfer
The Bankruptcy Court found that the Debtor’s financial condition before and after the 2008
Transfer did not give rise to a suspicion of fraud because the Debtor continued to make mortgage
payments; he borrowed on a line of credit; and the trial record is silent as to a precise date of the
Debtor’s insolvency. However, UGT states that the parties stipulated that the Debtor was in poor
financial condition after the 2008 Transfer and/or insolvent. The Debtor argues that since the
transaction did not occur under circumstances evidencing an intent to defraud creditors, the timing
was not suspicious. The Court again agrees with UGT.
“A classic example of fraud is ‘[t]he transfer of property by the debtor to his spouse while
insolvent, while retaining the use and enjoyment of the property.’” Ng v. Adler, 518 B.R. 228, 240
(E.D.N.Y. 2014), appeal withdrawn (Feb. 17, 2015) (In re Pisculli, 426 B.R. 52, 67
(Bankr. E.D.N.Y. 2010) (In re Kaiser, 722 F.2d at 1583)). Here, the parties stipulated that prior
to the 2008 Transfer, the Rockville Centre Property was a primary asset of the Debtor, and that
after the 2008 Transfer, he “was in poor financial condition and/or insolvent, his liabilities then
exceeding his assets.” (R. at 31).
The fact that the 2008 Transfer occurred after the commencement of the GE lawsuit is
perhaps the most demonstrative fact. The 2008 Transfer occurred several months after UGT
commenced the GE lawsuit against the Debtor in state court. The reasonable conclusion is that
the Debtor did not want the judgment to attach to the Rockville Centre Property. Mrs. Karanasos
was not a party to the GE lawsuit. The Defendant was, and so he removed himself from the title
to Rockville Centre Property to protect that property and his family.
In the Court’s view, the Bankruptcy Court’s reliance on the Debtor’s ability to obtain a line
of credit was misplaced. The Debtor took out the business line of credit prior to the 2008 Transfer.
Although it is not clear from the record exactly when the business line of credit was obtained, the
Debtor testified that he drew from that line of credit and the Chase HELOC in August of 2008.
(R. at 95). The 2008 Transfer occurred in December of 2008, after the Debtor had drawn from the
business line of credit. The Court also notes that this was not a personal line of credit, but a
business line of credit that was personally guaranteed.
Furthermore, merely because the Debtor was able to pay his mortgage does not mean that
he was solvent. As the parties stipulated, after the 2008 Transfer, the Debtor’s liabilities exceeded
his assets. The facts in this case are generally similar to those in In re Vidro, 497 B.R. 678 (Bankr.
E.D.N.Y. 2013), where the Court found that the defendant had concealed his interest in a residence
prior to petitioning for bankruptcy by transferring it to a relative. Id. at 688. The Court stated that,
“[n]otwithstanding the transfer, the Defendant continued to reside at the Residence and continued
to pay the mortgage, real estate taxes, and insurance on the property while taking deductions for
the mortgage interest and property taxes on his tax returns. Defendant also continued to pay for
the upkeep of the Residence.” Id.
Therefore, the Court finds that the Debtor’s financial condition before and after the 2008
Transfer further contributes to a prima facie case of fraud.
c. As to the Pattern and General Chronology of Events
The Bankruptcy Court further found that the Debtor acted no differently after the 2008
Transfer than he had before. UGT argues that the facts and chronology reveal a pattern of fraud:
the Debtor divested title to the Rockville Centre Property while retaining a secret interest in the
Rockville Centre Property to avoid allowing the GE lawsuit judgment from attaching to that
property; and he continued to conceal his interest in the Rockville Centre Property when he filed
his bankruptcy petition. The Debtor relies on his general arguments concerning the validity of the
transfer to rebut UGT’s arguments about the timing and pattern of the events. The Court again
agrees with UGT.
In the Court’s view, the pattern and general chronology of events here is consistent with
fraudulent intent. The 2008 Transfer occurred after the GE lawsuit was commenced, but before
judgment was entered so that any judgment could not attach to the Rockville Centre Property. The
Debtor filed his voluntary petition less than a year after the commencement of the fraudulent
conveyance action, and, as Judge Bianco found, continued to conceal his interest in the Rockville
UGT’s argument here is instructive:
By reason of the 2008 Transfer, nearly 6 years after judgment was entered against
[the Debtor], [UGT] has been unable to recover anything from [him] while the true
nature of [his] continuing interest in the Rockville Centre Property was forced to
be discovered and litigated.  [The Debtor’s] ‘arrangement’ with his wife to
remove his name from title to the Rockville Centre Property . . . has proved quite
effective in hindering, delaying, or defrauding [UGT].
(UGT’s Brief at 20). The Court agrees with UGT’s assessment of the Debtor’s arrangement with
his wife. The general factual chronology and pattern leads to the conclusion that the Debtor was
attempting to insulate the Rockville Centre Property from any judgments. See, e.g., In re Nazzaro,
No. 810-74869-reg., 2013 WL 145627, at *10 (Bankr. E.D.N.Y. Jan. 14, 2013) (“The transfer
appears to be part of a scheme to insulate the Debtor from having to repay the Plaintiff in the event
the Plaintiff obtained a judgment.”); In re Abramov, 329 B.R. 125, 131 (Bankr. E.D.N.Y. 2005)
(“The evidence demonstrates that the transfer of [the debtor]’s one-half interest in the Forest Hills
residence to his sister, five months before the commencement of this bankruptcy case, was made
with intent to defraud the debtors’ creditors by reducing the assets available to satisfy their
claims.”); In re Silverstein, 151 B.R. 657, 662 (Bankr. E.D.N.Y. 1993) (“The reason for the transfer
was to remove his major asset from the reach of his creditors while retaining all the benefits of
ownership during a period where he believed the financial condition of his business might
The Bankruptcy Court relied on the fact that “UGT did not introduce any evidence of
Debtor going on wild spending sprees or converting nonexempt assets into exemptible assets.” (R.
at 229). However, as the Second Circuit has said, “[the debtor’s] argument that the facts of this
case do not fit the ‘prototype’ of an intent to defraud case is factually incorrect and irrelevant.
Fraudulent acts are as varied as the fish in the sea. Thus, the fact that the transfers in question did
not occur on the ‘eve of bankruptcy’ . . . [is] insignificant. The intent to defraud is obvious.”
Kaiser, 722 F.2d at 1583.
Therefore, the Court finds that those badges of fraud also contribute to a finding of a prima
facie case of fraudulent intent.
d. As to the Collective Weight of the Badges of Fraud
Accordingly, the Court finds that UGT met its burden of proving, by a preponderance of
the evidence, that the Debtor harbored an improper intent to hinder, delay, or defraud a creditor by
concealing his interest in the Rockville Centre Property, and that the improper intent began more
than a year before the filing of the petition and continued through that filing period. See, e.g., In
re Gardner, 384 B.R. 654, 665 (Bankr. S.D.N.Y. 2008) (“[T]he court also finds that Debtor’s
concealment of assets began more than a year before the filing of the petition and continued until
the trial of this adversary proceeding. A discharge is therefore denied based on the Debtor’s
intentional concealment of assets in an attempt to defraud creditors under § 727(a)(2).”).
The Court bases its finding upon the fact that every badge of fraud weighed against the
Debtor. However, the Court also notes that not every “badge of fraud” need be present in order to
make a finding of fraud. See, e.g., In re Abramov, 329 B.R. 125, 131 (Bankr. E.D.N.Y. 2005)
(finding fraud where the court examined three of the badges of fraud); In re Antoniou, 515 B.R. at
19 (citing to Kaiser, which found fraud based upon the presence of two badges of fraud and stating
that “[t]he presence of several badges of fraud is sufficient grounds for a bankruptcy court to
conclude that the Debtor acted with intent to hinder, delay, or defraud creditors.”).
Thus, UGT presented a prima facie case of fraudulent intent, and, for the reasons set forth
above, the Court also finds that the Debtor did not offer credible evidence to rebut the prima facie
case of fraud. See In re Dubrowsky, 244 B.R. 560, 572 (E.D.N.Y. 2000) (Spatt, J.) (“Once
sufficient evidence is presented by the plaintiff to satisfy the burden of going forward with the
evidence, the burden shifts to the debtor to provide evidence to rebut the plaintiff’s prima facie
case.”); In re Gollomp, 198 B.R. 433, 440 (S.D.N.Y. 1996) (same); see also Sicari, 187 B.R. at
878 (“[Debtor] failed to rebut Plaintiff’s case with credible testimony or with any documentary
evidence, such as bank statements, which should have been readily available to him.”). Namely,
the Court does not accept the Debtor’s argument that the 2008 Transfer was a legitimate exchange
between him and his wife where each side received adequate consideration, nor the implication
from that argument that any suspicious timing was a coincidence.
Therefore, UGT has satisfied its burden for establishing the requisite elements under
§ 727(a)(2)(A), and the Debtor’s petition for a discharge of his debt is to be denied.
2. As to the Denial of a Discharge Under Section 727(a)(4)(A)
Section 727(a)(4)(A) provides that:
(a) The court shall grant the debtor a discharge, unless—
(4) the debtor knowingly and fraudulently, in or in connection with the case—
(A) made a false oath or account.
11 U.S.C. § 727(a)(4)(A). “To prove an objection to discharge under § 727(a)(4)(A), the creditor
must prove: (1) the debtor made a statement under oath; (2) the statement was false; (3) the debtor
knew the statement was false; (4) the debtor made the statement with fraudulent intent; and (5) the
statement related materially to the bankruptcy case.” Dubrowsky, 244 B.R. at 572 (Spatt, J.)
(quoting In re Beaubouef, 966 F.2d at 178; Sicari, 187 B.R. at 880) (citing Williamson v. Fireman’s
Fund Ins. Co., 828 F.2d 249, 251 (4th Cir. 1987))). As stated above, Judge Bianco found that the
Debtor made two false oaths, and remanded to the Bankruptcy Court solely to determine whether
the Debtor made those false oaths with fraudulent intent. Fraudulent intent can be proven by
evidence of either an actual intent to deceive or a reckless disregard for the truth. Adler v. Ng, 395
B.R. 827, 843 (E.D.N.Y. 2008). The badges of fraud discussed above are also relevant for this
determination. Kaiser, 722 F.2d at 1582.
Judge Bianco found that the Debtor had committed false oaths. On remand the burden was
on the Debtor to provide credible explanations for those false oaths. See In re Murray, 249 B.R.
223, 228 (E.D.N.Y. 2000) (“Where it reasonably appears that the oath is false, the burden falls
upon the debtor to come forward with evidence to prove that it was not an intentional
misrepresentation. If the debtor fails to provide such evidence or a credible explanation for his
failure to do so, a court may infer fraudulent intent.”) (quoting In re Gollomp, 198 B.R. 433, 437
(S.D.N.Y. 1996) (quoting In re Arcuri, 116 B.R. 873, 884 (Bankr. S.D.N.Y. 1990))).
a. As to the Debtor’s False Oath About His Interest in the Rockville Centre
The Bankruptcy Court found that the Debtor did not fraudulently intend to omit his interest
in the Rockville Centre Property. UGT argues that the same badges of fraud discussed above apply
here; that the Debtor’s pattern of lies and omissions give rise to fraudulent intent, and that each
omission at least exhibits a reckless disregard for the truth. In his brief, the Debtor does not address
UGT’s arguments in any meaningful way.
First, the Court notes that, on remand, the burden was on the Debtor, and, as the Bankruptcy
Court said, “there is no direct evidence in the  record as to why Debtor failed to list any interest
in the [Rockville Centre Property].” (R. at 232). Second, the Court relies on the badges of fraud
discussed above regarding the Debtor’s interest in the Rockville Centre Property. The Court finds
that the Debtor’s failure to list his interest in the Rockville Centre Property was part of his ongoing
scheme to conceal his interest in that property. The Debtor retained a secret interest in the
Rockville Centre Property: he paid the mortgage; he used the Chase HELOC that encumbered it
to invest in another property; and he used the property as a basis for a tax exemption.
Finally, the Court finds that the Debtor’s pattern of omissions requires a finding of
fraudulent intent. “The Second Circuit has recognized that fraudulent intent may be inferred from
a series of incorrect statements and omissions contained in the schedules.” In re Moreo, 437 B.R.
40, 62 (E.D.N.Y. 2010). “Where there has been a ‘pattern’ of falsity, or a ‘cumulative effect’ of
falsehoods, a court may find that [fraudulent] intent has been established.” Abraham v. Stuart,
No. 15-cv-04864, 2016 WL 4045432, at *7 (E.D.N.Y. July 28, 2016) (quoting Monety Corp. v.
Maletta (In re Maletta), 159 B.R. 108, 112 (Bankr. D. Conn. 1993)). Stated otherwise,
an occasional omission of facts is seldom sufficient to establish a claim of false
oath. Numerous omissions in statement of financial affairs and schedules taken
together warrant the conclusion of a reckless disregard for the truth by the debtor.
Such reckless disregard for the truth is recognized to be equivalent to fraudulent
intent to commit a false oath. Numerous omissions that display a pattern of
misleading conduct are sufficient to establish a fraudulent false oath.
In re Bressler, 387 B.R. 446, 462 (Bankr. S.D.N.Y. 2008) (quoting Reynolds v. Trafford (In re
Trafford), 377 B.R. 387, 394 (Bankr. M.D. Fla. 2007) (internal alterations omitted)). Here, the
Debtor omitted his interest in the Rockville Centre Property; omitted his status as a defendant in
the Fraudulent Conveyance Action; and used the term “sole tenant” to misstate his ownership in
the Manhattan Property. Although Judge Bianco previously ruled that the Debtor’s use of the term
sole tenant, “even if false,   was not fraudulent,” Karanasos, 2014 WL 4388277, at *12, the
Court finds it instructive in the current analysis.
The Bankruptcy Court found otherwise because it said that “UGT was not able to articulate
a theory under which Debtor could reasonably believe he would benefit by listing [the Rockville
Centre Property] as his address, listing UGT as a creditor and listing the lawsuit in which UGT
obtained a judgment against Debtor, but concealing a secret interest in the Residence, particularly
given that UGT had filed the Fraudulent Conveyance Action.” (R. at 233).
However, the Bankruptcy Court acknowledged that “because the District Court has found
that Debtor made two false statements, the burden has shifted to Debtor to provide a credible
explanation for making those statements.” (R. at 231). Yet, in its decision the Bankruptcy Court
apparently placed the onus on UGT to either “articulate a theory under which Debtor could
reasonably believe he would benefit” by not listing the Rockville Centre Property (R. at 232), or
“point to any evidence in the trial record that shows that Debtor’s failure to disclose the
[Rockville Centre Property] . . . exhibited a reckless indifference for the truth.” (Id. at 233). The
Bankruptcy Court then went on to list the ways in which UGT did not meet these burdens. This
is contrary to the Bankruptcy Court’s own standard that it set for the case on remand: that the
Debtor had to provide credible explanations for the false statements. The Debtor did not provide
a credible explanation, and because the badges of fraud weigh against the Debtor, the Court finds
that UGT has met its burden under Section 727(a)(4)(A).
Judge Bianco suggested in his decision that the Bankruptcy Court should re-examine its
initial finding that there was no fraudulent intent. He said, “[a]lthough debtor failed to provide an
explanation for this omission, the Bankruptcy Court found no fraudulent intent on the part of
debtor. However, the Bankruptcy Court’s determination on this issue was contingent upon its
finding that debtor had not concealed an interest in the Rockville Centre Property. The Bankruptcy
Court should re-evaluate this conclusion in light of the fact that debtor not only failed to list the
fraudulent conveyance action, but also failed to list his interest in the Rockville Centre Property.”
Karanasos, 2014 WL 4388277, at *13.
In finding that “[t]here is no evidence in the record from which this Court can conclude
that Debtor subjectively believed that he could obtain an advantage by failing to disclose an interest
in the [Rockville Centre Property],” (R. at 234), the Bankruptcy Court apparently discounted the
fact that the Debtor has effectively hindered and delayed these bankruptcy proceedings and any
recovery by UGT in either civil action, for years by concealing his interest in the Rockville Centre
Property. Furthermore, as Judge Bianco pointed out, “[a] debtor may not pick and choose among
his assets and holdings so as to schedule only those which he may deem to be valuable, important
or relevant. Rather, a debtor is obliged to completely and accurately list all property of every kind
and nature, tangible and intangible, legal and equitable, which may comprise his bankruptcy estate,
and to respond truthfully to all questions in the Schedules and Statement of Financial Affairs.”
Karanasos, 2014 WL 4388277, at *12 (quoting Sicari, 187 B.R. at 881); see also In re Haddad,
No. 15-74327-REG, 2016 WL 4523829, at *2 (Bankr. E.D.N.Y. Aug. 26, 2016) (“A debtor is
obligated to disclose even worthless assets, as it is not for the debtor to determine whether the asset
has value or is important to disclose.”).
The Bankruptcy Court found that the Debtor did not exhibit a reckless disregard for the
truth. In doing so, it examined the factors that some courts in the Second Circuit have used to
determine whether a debtor exhibited such a state of mind: “(a) the serious nature of the
information sought and the necessary attention to detail and accuracy in answering; (b) a debtor’s
lack of financial sophistication as evidenced by his or her professional background; and (c)
whether a debtor repeatedly blamed recurrent errors on carelessness or failed to take advantage of
an opportunity to clarify or correct inconsistencies.” Gobindram v. Bank of India, 538 B.R. 629,
638 (E.D.N.Y. 2015) (quoting In re Antoniou, 515 B.R. at 24).
The Bankruptcy Court said that although the Debtor failed to disclose an ownership interest
in the Rockville Centre Property, which the parties stipulated had been his primary asset, he
attempted in good faith to comply because he listed the HELOC which encumbered the Rockville
Centre Property and listed the property as his mailing address. However, although the Debtor did
list the Chase HELOC, he did not detail which property the HELOC encumbered, as the Schedule
requires. Also, as stated above, although the Debtor did list the Rockville Centre Property as his
address, he did not list his ownership interest. The Debtor said “[l]iving at a premises does not
equal ownership of the premises.” (Appellee Karanasos’ Brief at 2). So that the Debtor failed to
list his interest in his primary asset. The information sought could not be more important, and the
Debtor disregarded the detail sought by the bankruptcy schedule when he listed the Chase HELOC
but did not detail which property it encumbered.
As to the Debtor’s sophistication and background, the Bankrupt Court said, “there is no
dispute that Debtor possessed the financial sophistication to invest in the Manhattan Property, run
his own businesses, and had previously been employed in the title insurance industry.” (R. at 233).
This Court agrees and finds that because the Debtor was a sophisticated investor who had worked
in the title insurance industry, he, at the very least, exhibited a reckless indifference for the truth.
Finally, the Bankruptcy Court stated that the Debtor relied on his counsel’s advice in
preparing his schedules. However, the record does not reveal that the Debtor specifically relied
on counsel’s advice when he omitted his interest in the Rockville Centre Property. In fact, when
asked about listing his interest in the Rockville Centre Property, the Debtor mentioned protecting
his family. (R. at 176). Nor is it clear from the record that debtor’s counsel was “fully aware of
all the relevant facts.” Dubrowsky, 244 B.R. at 573 (Spatt, J.) (“An explanation by the debtor that
he acted on advice of counsel, who was in turn fully aware of all the relevant facts, generally rebuts
an inference of fraud.”) The Court finds that the third factor that courts consider when deciding
whether there was a reckless disregard for the truth also weighs against the Debtor, in that there is
insufficient evidence that he blamed recurrent errors on carelessness and there is evidence that he
failed to take advantage of opportunities to clarify or correct inconsistencies.
Accordingly, the Court finds that the Debtor acted with fraudulent intent when he omitted
his interest in the Rockville Centre Property from his bankruptcy petition, and that UGT has met
their burden under Section 727(a)(4)(A) with regard to that false oath. Therefore, the Debtor’s
petition for a discharge of debt should also be denied pursuant to Section 727(a)(4)(A).
b. As to the Debtor’s Failure to list the Fraudulent Conveyance Action
The Bankruptcy Court found that the Debtor did not possess a fraudulent intent when he
omitted the fraudulent conveyance action from his Petition. It found that the badges of fraud were
not present, and that the Debtor provided a credible explanation for his omission. UGT argues that
the omission was in furtherance of the Debtor’s attempt to conceal his interest in the Rockville
Centre Property. In his brief, the Debtor did not respond to UGT’s arguments in any meaningful
manner. The Court finds that the facts supported a finding of the Debtor’s pattern of omissions
and resulting fraudulent intent.
The fraudulent conveyance action sought a judgment declaring that the 2008 Transfer was
fraudulent and void. This was a suit regarding the Debtor’s concealed interest in the Rockville
Centre Property. It follows logically that if the Debtor fraudulently intended to conceal his interest
in that property, that he would want to conceal any suit regarding that concealed interest. The
Court’s analysis regarding the Debtor’s omission of his interest in the Rockville Centre Property
is therefore also instructive.
When asked during the live portion of the bankruptcy trial about the fraudulent conveyance
action, the Debtor repeatedly said that he didn’t remember the details of the second suit. (R. at
173, 175 (“I can’t recall that there was a second lawsuit. I can’t remember.”)). As to advice of
counsel in this regard, it is not clear that counsel had the evidence of the second suit, or that he
actually relied on his attorney’s advice when he omitted it from his schedules. (See R. at 172 (the
Debtor first stating that he did not turn a copy of the lawsuit over to his attorney, then changing
his answer without a reason)). Nevertheless, the Debtor testified that he had reviewed the petition
and that it was all correct. In the Court’s opinion, this was part of a pattern of omissions meant to
conceal the Debtor’s interest in the Rockville Centre Property, and, contributes to the Court’s
finding of fraudulent intent upon that pattern and the badges of fraud discussed above. See
Abraham, 2016 WL 4045432, at *7 (“Where there has been a ‘pattern’ of falsity, or a ‘cumulative
effect’ of falsehoods, a court may find that [fraudulent] intent has been established.”) (quoting In
re Maletta, 159 B.R. at 112). The Court finds that the Debtor did not provide a reasonable
explanation for his omission of the Fraudulent Conveyance Action.
Accordingly, the Court finds that UGT met its burden pursuant to § 727(a)(4)(A) regarding
the Debtor’s omission of the fraudulent conveyance action, and the Debtor’s petition for discharge
also must be denied under that theory.
Accordingly, the decision of the Bankruptcy Court is reversed to the extent that the
Debtor’s fraudulent concealment of his interest in the Rockville Centre Property necessitates a
denial of discharge pursuant to 11 U.S.C. § 727(a)(2)(A) and the Debtor’s false oaths regarding
his interest in that property and the lawsuit surrounding that concealed interest necessitate a denial
of discharge pursuant to 11 U.S.C. § 727(a)(4)(A). The case is remanded to the Bankruptcy Court
for the entry of judgment in favor of UGT, and for any further proceedings required consistent
with this Memorandum and Order. The Clerk of the Court is respectfully directed to close this
It is SO ORDERED:
Dated: Central Islip, New York
December 27, 2016
________/s/ Arthur D. Spatt__________
ARTHUR D. SPATT
United States District Judge
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