Gargula v. Delagrange (In re Delagrange)

IN RE: JONAS JOHN DELAGRANGE Debtor(s).

NANCY J. GARGULA, United States Trustee Plaintiff(s), v. JONAS JOHN DELAGRANGE Defendant(s).

Case No. 16-40964

Adversary No. 17-4017

UNITED STATES BANKRUPTCY COURT FOR THE SOUTHERN DISTRICT OF ILLINOIS

September 14, 2018

In Proceedings Under Chapter 7

OPINION

This matter is before the Court on the Complaint Objecting to Debtor's Discharge filed by Nancy J. Gargula, United States Trustee ("Plaintiff"). In her multi-count complaint, the Plaintiff seeks to deny debtor Jonas John Delagrange ("Defendant") a discharge pursuant to 11 U.S.C § 727(a)(4)(D) for his alleged withholding of documentation and other information from the Chapter 7 Trustee (Count I). Additionally, she requests that Defendant's discharge be denied pursuant to 11 U.S.C. § 727(a)(6)(A) for his repeated failure to comply with Court orders (Count II) and for his alleged making of false oaths pursuant to 11 U.S.C. § 727(a)(4)(A) (Counts V, VI, and VII).¹

A trial on the complaint was conducted on June 27, 2018. The Plaintiff appeared through her counsel, Mark D. Skaggs. The Defendant appeared pro se. At trial, the Court heard testimony from both the Defendant and from Dana S. Trustee, the Chapter 7 Trustee ("Trustee"). Based on the sworn/affirmed testimony, a review of the documentary evidence presented, and the Plaintiff's written Proposed Findings of Fact, Conclusions of Law and Brief (Adv. Doc. 27),² the Court makes the following findings of fact and conclusions of law pursuant to Federal Rule of Bankruptcy Procedure 7052.

FINDINGS OF FACT

(1) Defendant Jonas John Delagrange filed an involuntary Chapter 7 petition against himself on October 17, 2016. ECF Doc. 1.³

(2) After a hearing on November 9, 2016, the Court ruled that the involuntary petition was improper and directed the Defendant to file an amended voluntary petition within seven (7) days. The amended voluntary petition was subsequently filed on November 16, 2016.

(3) Dana S. Frazier was appointed as the Chapter 7 Trustee in this case. She testified that in performing her duties as Trustee, she reviews not only the debtor's bankruptcy petition, schedules and other documents, but also conducts her own public records search as to each debtor in order to ascertain their complete financial situation.

(4) On November 28, 2016, the Trustee sent the Defendant a letter requesting that he provide her with copies of his last filed state and federal income tax returns; his bank statements for the 90-day period immediately prior to and including the date of the bankruptcy filing; and a verification of his income for the previous six month period. These documents were to be provided to the Trustee on or before December 30, 2016. See Plaintiff's Ex. 9.

(5) The November 28, 2016 letter, as well as all subsequent correspondence from the Trustee, was mailed to the Defendant at the address that he provided on his bankruptcy petition. The Trustee testified that none of her correspondence to the Defendant has ever been returned by the U.S. Postal Service.

(6) When the Trustee received no response from the Defendant, she sent a second request asking that the above-referenced documents be provided to her on or before January 20, 2017. See Plaintiff's Ex. 10. Again, the Trustee received no response from the Defendant. In fact, the Trustee testified that the Defendant has never provided her with any of the requested information.

(7) The Trustee conducted a Meeting of Creditors pursuant to 11 U.S.C. § 341 on March 3, 2017 ("§ 341 Meeting").⁴ Based on the Defendant's testimony, the Trustee concluded that she needed additional information regarding his income, assets and other financial dealings.

(8) In a letter dated March 8, 2017, the Trustee requested documentation regarding certain assets that were either owned by the Defendant or in which he had an interest. Specifically, the Trustee requested copies of all of the Defendant's real estate deeds; vehicle and trailer titles; bank statements and checks for the two-year period immediately prior to filing; and insurance policies for all of the Defendant's real and personal property. The Trustee also requested documentationregarding the Delagrange Inheritance Trust, including a list of trust assets and copies of any trust amendments. See Plaintiff's Ex. 13.

(9) The Defendant failed to provide any of the documents requested in the March 8, 2017 letter. Accordingly, the Trustee mailed a second request to the Defendant on March 28, 2017. See Plaintiff's Ex. 14. In conjunction with this second request, the Trustee also filed a Motion for Turnover with this Court requesting that the Debtor be ordered to turnover numerous items of undisclosed personal property. See ECF Doc. 101; Plaintiff's Group Ex. 15.

(10) The Court conducted a hearing on the Motion for Turnover on May 10, 2018. Both the Trustee and the Defendant were present at this hearing. Although the Defendant did testify, the "testimony" that he provided was non-responsive. Instead of addressing the Trustee's requested turnover of assets, the Defendant repeatedly challenged the jurisdiction of this Court and the legitimacy of the Bankruptcy Code. See Plaintiff's Ex. 20.

(11) After hearing the testimony and considering the arguments of the parties, the Court granted the Motion for Turnover. In an Order entered May 16, 2017, the Defendant was directed to turnover a number of unencumbered assets to the Trustee including: livestock; coal; cash and other currency; gold coins; gold bars; silver; multiple vehicles, trailers, and buggies; and the rent proceeds from certain rental real estate in Cisne, Illinois ("Turnover Order"). The Turnover Order specifically required the Defendant to either deliver the property to a designated auction site or to make the property available for pickup by the Trustee's agent within twenty-one (21) days. See ECF Doc. 120; Plaintiff's Group Ex. 15.

(12) The Trustee discovered all of the assets referenced in the Turnover Order through her own efforts. None of the subject assets were voluntarily disclosed by the Defendant.

(13) The Defendant failed to comply with the Turnover Order in any way. Accordingly, onJune 28, 2017, the Trustee filed her first Petition for Rule to Show Cause.

(14) A hearing on this Petition was conducted on August 2, 2017. Again, the Defendant was present at this hearing and provided testimony. The Court granted the Trustee's Petition for Rule to Show Cause and ordered the Defendant to comply with the Turnover Order within seven (7) days. In its order, the Court specifically found that the Defendant had "failed, refused, and neglected to turnover certain personal property as required in this Court's Order entered May 16, 2017." See ECF Doc. 14; Plaintiff's Group Ex. 16.

(15) When the Defendant again failed to turn over the property, the Trustee filed a Petition for Rule to Show Cause and for Seizure. This Petition was granted after a hearing on October 11, 2017 and memorialized in a written order entered October 13, 2017. The Court specifically found the Defendant to be in civil contempt for "willfully failing and refusing to comply with the Turnover Order" and authorized the Trustee, with the assistance of the U.S. Marshal's Service, to seize all of the assets referenced in the Turnover Order. See ECF Doc. 152; Plaintiff's Group Ex. 17.

(16) To date, none of the property referenced in the Turnover Order has ever been turned over to either the Trustee or to her agent.

(17) In conjunction with the filing of his bankruptcy petition, the Defendant filed schedules, a Statement of Financial Affairs and a Statement of Current Monthly Income.

(18) These documents were all signed under penalty of perjury that the information contained therein was true and correct. See ECF Docs. 13, 40 and 39.

(19) Schedule A/B requires a debtor to list all of their interests in certain real and personal property. Despite this, the Defendant did not list any of the assets referenced in the Turnover Order on his Schedule A/B.⁵

(20) Although the Defendant filed a "Revised" Schedule A/B on April 19, 2017, this amended document did not list any additional assets. Instead, the revised schedule was basically a copy of the Defendant's original Schedule A/B to which he attached a copy of his birth certificate. See ECF Doc. 108; Plaintiff's Ex. 7.⁶

(21) At his § 341 Meeting, the Defendant testified to "having" certain undisclosed items of property, including a skid steer, multiple vehicles and trailers, appliances, tools, and livestock. See Plaintiff's Ex. 18. However, he repeatedly maintained that he did not have an actual ownership interest in any of these items. Instead, the Defendant asserted that all of the property in question was owned by an "inheritance" or "family" trust ("Trust").⁷

(22) The Defendant's interest in the Trust was not disclosed either on his Schedule A/B or on his Statement of Financial Affairs and no Trust documents have ever been provided to the Trustee.

(23) The Defendant was also questioned at the § 341 Meeting about his interest in other personalty such as electronics, jewelry, firearms, books, and collectibles. In response, the Defendant refused to indicate whether he owned any such items. Instead, he answered all of the Trustee's inquiries with the response, "That's private." Plaintiff's Ex. 18 at 95-6.

(24) A debtor is required to disclose all of their income on the Statement of Financial Affairs and Schedule I. The Defendant affirmatively stated on his Statement of Financial Affairs that he had not received any income during 2014, 2015 or 2016 from employment, the operation of a business, or from any other sources. ECF Doc. 39, ¶¶ 4-5.

(25) Similarly, the Defendant stated on Schedule I that he was unemployed and had $0 monthly income at the time of filing. He further indicated that his sole source of income consisted of "donations." ECF Doc. 37.

(26) Despite these representations, the Defendant testified at trial that he does...