15 B 27967, 16 A 00489
Plaintiff PNC Bank, N.A. (“PNC”) filed an adversary complaint against Paul L. Leongas (the “Debtor”), seeking a denial of the Debtor’s discharge pursuant to 11 U.S.C. §§ 727(a)(2), (a)(3), (a)(4)(A), (a)(4)(D), and (a)(6). PNC argued that the Debtor was not entitled to a discharge because he engaged in a continuing course of actions in which he intentionally concealed his income and assets in order to defraud his creditors, failed to produce required financial information, and knowingly and fraudulently made false oaths and accounts in connection with his financial situation. After conducting an evidentiary hearing, the Court found, given the documentary evidence and testimony at trial, that the contributions made by businesses owned and operated by the Debtor’s family members to pay his living expenses were not loans and should have been disclosed on the Debtor’s schedule I as income; that his continued use of his residence—despite its transfer first to a childhood friend and later to others—constituted a concealment under the doctrine of continuing concealment; and that virtually all badges of fraud required for a determination that the Debtor intended to hinder, delay, and defraud his creditors had been established. As such, the Court concluded that the Debtor was not entitled to a discharge under § 727(a)(2). The Court also found that the Debtor failed to produce adequate records from which his financial situation and business transactions could be ascertained with any kind of accuracy; that he made “false oath[s] or account[s]” by filing bankruptcy documents with numerous misstatements and omissions, most of which were made with an intent to deceive; and that he knowingly and fraudulently failed to provide the chapter 7 trustee with all relevant documents and papers to which the trustee was entitled. Accordingly, the Court concluded that the Debtor was also not entitled to a discharge under §§ 727(a)(3), (a)(4)(A), and (a)(4)(D). The Court rejected the Debtor’s argument that he relied on the advice of his attorney—thereby negating any fraudulent intent—because the Debtor was not able to establish either that he provided all of the necessary financial disclosures to his lawyer or that his reliance on the lawyer’s advice was reasonable. The Court dismissed Count IV, under which PNC objected to discharge under § 727(a)(6)(A), for lack of prosecution.