[00:00:01] Speaker 04:
Enray Ringan Kwan, Benjamin Ellison appearing for appellants, Beth Levine appearing for appellee.

[00:00:11] Speaker 04:
All right.

[00:00:12] Speaker 02:
Good morning, Mr. Ellison.

[00:00:13] Speaker 02:
As you get to the podium, let me know about how much time you would like to reserve.

[00:00:20] Speaker 03:
Your Honor, I'd like 13 minutes for argument, and I'd like to reserve two minutes for rebuttal, please.

[00:00:26] Speaker 02:
All right.

[00:00:27] Speaker 02:
You may begin.

[00:00:38] Speaker 04:
I was told there was a countdown.

[00:00:51] Speaker 03:
Good morning, Your Honor.

[00:00:52] Speaker 03:
Ben Ellison for the debtor and appellant Olivier Rigon here.

[00:00:58] Speaker 03:
Mr. Rigon, together with his wife, was prosecuted by the United States trustee's office under 727A2, A3, A4, A5, and A7.

[00:01:10] Speaker 03:
Though originally there was five theories asserted against my client, and to be clear, I'm only representing Mr. Rigon here today, not Mrs. Quan.

[00:01:19] Speaker 03:
Despite the fact that there were five causes of action initially brought against Mr. Ragone, ultimately he prevailed on two, or pardon me, there is liability found only on three, A3, A4, and A5.

[00:01:34] Speaker 03:
I would just have perhaps this one opening remark that I would make before hitting what I think are sort of the five basic disagreements on the facts and the law in this case.

[00:01:44] Speaker 03:
And I guess I just wanted to say that

[00:01:46] Speaker 03:
I think it's a matter of public record that the United States trustees office has a success rate of 99% when it comes to 727 actions.

[00:01:55] Speaker 03:
And that somewhat flies in the face of, you know, the rote black letter law that we have from I think it's Beauchamp and other cases that says

[00:02:03] Speaker 03:
Discharges are to be liberally construed in favor of debtors and strictly against the person objecting to the discharge, right?

[00:02:09] Speaker 02:
So we have this case law that pays lip service to this burden and I think we need to get to the actual actual merits of your case We're not going to get into the statistical analysis of sex race.

[00:02:21] Speaker 02:
I mean you can begin by

[00:02:24] Speaker 02:
by addressing the effect of the community property nature of the case and how that impacts, you know, we're aware that you raised Barton Werfer in your briefing.

[00:02:38] Speaker 02:
Don't really see it as a Barton Werfer situation.

[00:02:40] Speaker 03:
Yeah, I'm afraid that we're sliding towards Barton Werfer in 727.

[00:02:42] Speaker 02:
I don't think so here because I think we read the decision from the bankruptcy judge as focusing on what Mr. Agone

[00:02:50] Speaker 02:
That's what their briefing is directed to, and that's what it should be.

[00:02:53] Speaker 02:
But this is a community property situation.

[00:02:56] Speaker 02:
My understanding is there's no dispute that this is community property.

[00:03:02] Speaker 02:
while much of the items that are in dispute arose initially with Ms.

[00:03:08] Speaker 02:
Kwon as the wife is still the husband's property as well, which expands somewhat the obligations under 727.

[00:03:17] Speaker 02:
So I would urge you to start there.

[00:03:25] Speaker 03:
I suppose, Your Honor, I would say that

[00:03:28] Speaker 03:
community property, I think, cuts in favor of my client, because right off the bat, clients such as mine have imputed liabilities through their spouses in this state.

[00:03:40] Speaker 03:
But what we're talking about here is discharge, which is 727.

[00:03:43] Speaker 02:
What we're talking about is non-disclosure of assets, really, and whether it was concealed, whether it was fraudulent, or whether it was a false oath.

[00:03:49] Speaker 03:
Correct.

[00:03:50] Speaker 03:
And none of those things have to do with anything other than the strictures of 727.

[00:03:55] Speaker 03:
I mean, I guess my question is, if you could apply the community property presumption to a specific class of assets, I could perhaps address it there.

[00:04:02] Speaker 03:
But I feel like over and over again, there's just been this conflation of Mrs. Kwan,

[00:04:07] Speaker 01:
Uh, we adequately made out a case against her and it's just, you know, the language question is, did he have an independent duty to disclose information because he had an ownership interest in it or was it separately her separate property?

[00:04:22] Speaker 01:
So his failure to take action would be excusable because he wouldn't be expected to.

[00:04:27] Speaker 03:
That's the problem, Your Honor.

[00:04:28] Speaker 03:
He didn't have an ownership interest.

[00:04:30] Speaker 01:
Well, that's why the community property question was raised, because the presumption is everything that they acquired during the marriage, which is most of the assets in this case that were at issue, were acquired after 2016.

[00:04:44] Speaker 03:
I understand, but in 2015, that's when Rock PI was created.

[00:04:50] Speaker 03:
So Rock PI was created by Mrs. Kwan, and then later they get married.

[00:04:54] Speaker 03:
So what was hers remains hers.

[00:04:57] Speaker 03:
That's her pre-marriage separate property.

[00:04:59] Speaker 03:
It wasn't clear that we were referring- That's Rock.

[00:05:01] Speaker 02:
Rock PI.

[00:05:02] Speaker 02:
And Rock really doesn't play into this.

[00:05:05] Speaker 02:
When you play it through, Rock owned the Denny properties.

[00:05:08] Speaker 02:
The Denny properties were then transferred.

[00:05:10] Speaker 02:
In the few tax returns that are presented, there's a 2017 tax return that shows the rent of the Denny properties.

[00:05:20] Speaker 02:
And they were not disclosed.

[00:05:22] Speaker 03:
I agree they weren't disclosed.

[00:05:24] Speaker 03:
And community property has nothing to do with knowledge or imputing knowledge.

[00:05:28] Speaker 03:
It has to do with ownership and responsibility.

[00:05:29] Speaker 02:
It was on the 2017 tax return.

[00:05:32] Speaker 02:
What was on the 2017?

[00:05:33] Speaker 02:
The rental of the three Denny properties.

[00:05:37] Speaker 01:
Yes, it was.

[00:05:38] Speaker 01:
So he had an interest in it.

[00:05:39] Speaker 01:
He benefited from the income from it.

[00:05:42] Speaker 01:
He didn't make any effort to disclose it.

[00:05:45] Speaker 02:
And he'd have to explain what happened to them.

[00:05:47] Speaker 02:
But you would need to establish that he had knowledge of it.

[00:05:50] Speaker 02:
No, I don't think that...

[00:05:52] Speaker 02:
there's where we're having the problem.

[00:05:54] Speaker 02:
If it's your property and you file bankruptcy, 727 is going to require you to do some preparation to explain what happened and any questions and to disclose any of the transactions that fall within the state of financial affairs time periods.

[00:06:09] Speaker 03:
I suppose the disconnect that we're having here is

[00:06:13] Speaker 03:
In many, many couples, there are people who specialize in certain areas of the family business.

[00:06:19] Speaker 01:
So running the properties might be one issue, but the income that was generated from them went through their bank accounts.

[00:06:26] Speaker 01:
He spent the money.

[00:06:27] Speaker 01:
So how did he not have knowledge of the income that was being generated, whether he owned the properties, managed the properties, or not?

[00:06:35] Speaker 03:
The premise of the question is incorrect.

[00:06:37] Speaker 03:
You said that he spent the money.

[00:06:38] Speaker 03:
He didn't spend the money.

[00:06:40] Speaker 03:
If we look at page 48 of the appellee's brief, it states that Mr. Ragone had the benefit of $25,000 for some sand property and bamboo investment.

[00:06:52] Speaker 03:
And they say that he had access to the bank account.

[00:06:56] Speaker 03:
He had electronic access.

[00:06:57] Speaker 03:
And if we turn to page 15 of the judgment, the court also says that.

[00:07:01] Speaker 03:
The court also says that Mr. Ragone had electronic access.

[00:07:05] Speaker 03:
But if you read the actual testimony, it doesn't say that.

[00:07:08] Speaker 03:
It says only Mrs. Kwan had electronic access.

[00:07:12] Speaker 02:
Perhaps I could just give you... Let's be specific.

[00:07:14] Speaker 02:
This is as to the sand properties.

[00:07:17] Speaker 03:
This is... I think this is to all bank accounts.

[00:07:20] Speaker 02:
No, it's not to Rock.

[00:07:23] Speaker 03:
What I'm saying is, Mr. Ragone didn't have electronic access to the bank accounts.

[00:07:28] Speaker 02:
So every time there's a question as to- So he did not have access to the ROC accounts from which, I thought the testimony was that he paid bills and monitored, and he did not have access to the checking account or the savings account.

[00:07:42] Speaker 03:
My answer to that is yes.

[00:07:43] Speaker 03:
And let me just clarify it with the page citation that I would point the court to.

[00:07:47] Speaker 03:
And this is the problem, right?

[00:07:48] Speaker 03:
If the court's judgment on page 15 is that he had full and unfettered access to these accounts, then I absolutely can see that this is all imputed to him, and he should have the knowledge.

[00:07:58] Speaker 03:
But I think that's where the fundamental disconnect is.

[00:08:00] Speaker 01:
How about the problem that the court determined that they thought his feigned ignorance was not credible?

[00:08:09] Speaker 03:
Your honor, I understand about the feigned ignorance, and I am going to address that comprehensively.

[00:08:15] Speaker 03:
Could I answer, could I give the citation to Judge Spraker and then provide the answer on the feigned ignorance?

[00:08:20] Speaker 03:
Because I think it's a good point.

[00:08:22] Speaker 03:
It's the point I have to overcome to prevail of several.

[00:08:28] Speaker 03:
So.

[00:08:37] Speaker 03:
Right, okay.

[00:08:39] Speaker 03:
On day three of testimony, on pages 106 to 107, Mr. Rogon clarified what had been his prior testimony.

[00:08:48] Speaker 03:
His prior testimony, he was asked, did you make electronic payments with the bank account?

[00:08:54] Speaker 03:
And he said yes previously.

[00:08:55] Speaker 03:
However, on page 106 to 107 of the third day of testimony, he clarified under CROSS that in fact he did not access the bank account.

[00:09:05] Speaker 03:
What he would do is he would go to a utility

[00:09:08] Speaker 03:
bill and he would write in the account number for the bank account so he's making passive withdrawals he's not going to the bank account he's not monitoring but he has a number he knows that it exists and he's utilizing it for his own benefit doesn't disclose it on his schedules

[00:09:24] Speaker 03:
He has the bank account number, and I would submit that that is insufficient to create liability for him, other than knowing that there's a bank account there.

[00:09:32] Speaker 03:
He's not getting active updates.

[00:09:33] Speaker 03:
He's not able to move the money out.

[00:09:36] Speaker 03:
He can provide the bank account information to creditors, and they can, in the regular course of business, pull things out.

[00:09:41] Speaker 03:
Could I address your question about the credibility?

[00:09:45] Speaker 00:
Sure.

[00:09:46] Speaker 00:
Mr. Ellison, let me just ask a question on this.

[00:09:49] Speaker 00:
Isn't that a question of fact, and isn't that something that Judge Alston had the ability to decide?

[00:09:55] Speaker 00:
Are you saying that as a matter of law, or that it was clear error for him to have decided this access issue against your client?

[00:10:05] Speaker 03:
Yes, he has it factually wrong.

[00:10:07] Speaker 03:
On page 15 of the judgment, he says that Mr. Regone had electronic access to the bank account.

[00:10:13] Speaker 03:
I could find the specific quote, but it's effectively that he had control over the electronic access to the account.

[00:10:19] Speaker 03:
But I'm saying that on page 106 to 107 of the third day of testimony, the undisputed testimony is that he did not.

[00:10:26] Speaker 03:
He did not have any active access of the bank account.

[00:10:29] Speaker 03:
to answer your question about credibility.

[00:10:33] Speaker 03:
Judge Alston is very good at making credibility determinations, and he made three.

[00:10:38] Speaker 03:
They're on page 14 and page 16 of the judgment, and he states that Ms.

[00:10:42] Speaker 03:
Kwon lacks credibility three times.

[00:10:45] Speaker 03:
And then there is this one instance where I believe the language is the debtors lacked feigned ignorance.

[00:10:53] Speaker 03:
I guess I would say that

[00:10:56] Speaker 03:
Credibility determinations are entitled to a substantial amount of deference, but much like business judgment, there needs to be an articulated rationale or some kind of specificity.

[00:11:08] Speaker 03:
I would merely point out that in the quotation that you cite, which is the only impugning of Mr. Rigone's credibility, he's not named.

[00:11:17] Speaker 03:
There's just that plural noun, defendants or debtors feigned ignorance, okay?

[00:11:24] Speaker 03:
We don't know who's feigning.

[00:11:25] Speaker 03:
We don't know what they're feigning about.

[00:11:27] Speaker 03:
And I would further point out that it sounds like a general attack on Mr. Rogon's credibility.

[00:11:32] Speaker 03:
on page 48, I believe, of the appellee brief, it makes it sound like there is this wide attack on Mr. Rogon's credibility.

[00:11:39] Speaker 03:
But the end part of the feigned ignorance sentence relates just to the trust, the Quan irrevocable trust.

[00:11:46] Speaker 03:
So there is a vague reference, I would say a generalized reference to lacking credibility by two people.

[00:11:55] Speaker 03:
on one particular asset, but nowhere else across the board is there any of this.

[00:12:00] Speaker 03:
I see that my time will eventually run out.

[00:12:02] Speaker 02:
Can we talk about the trust just a little bit?

[00:12:05] Speaker 02:
Because that's a fairly significant matter.

[00:12:08] Speaker 02:
Is there a dispute that Mr. Rogone was the beneficiary of a trust?

[00:12:17] Speaker 03:
There's no dispute about that.

[00:12:20] Speaker 02:
So that should have been disclosed.

[00:12:23] Speaker 03:
I'm not sure that it should have.

[00:12:26] Speaker 02:
Is it irrevocable trust for which he's a beneficiary?

[00:12:29] Speaker 03:
It's not an asset.

[00:12:34] Speaker 03:
He is the beneficiary of a trust.

[00:12:37] Speaker 03:
He's not aware that he is the beneficiary.

[00:12:39] Speaker 03:
He is at an initial meeting when his wife is traveling to Texas.

[00:12:43] Speaker 02:
He's at a meeting where... And again, to Judge Brand's point, isn't that a factional determination?

[00:12:47] Speaker 02:
Didn't Judge Alston find that he was?

[00:12:50] Speaker 03:
Yeah, he found that he was present.

[00:12:52] Speaker 03:
He found that he was present there, and he also found that he was a beneficiary of the trust.

[00:12:58] Speaker 03:
But again, it is the Quan irrevocable trust.

[00:13:01] Speaker 03:
It is not the Rigone irrevocable trust.

[00:13:05] Speaker 03:
I'm the beneficiary of documents all over the place.

[00:13:09] Speaker 02:
If you file bankruptcy, you should probably disclose that.

[00:13:12] Speaker 03:
I absolutely will in front of Judge Alston and in the Ninth Circuit.

[00:13:17] Speaker 03:
I guess I'm saying,

[00:13:19] Speaker 03:
I see that I'm running low.

[00:13:20] Speaker 03:
I'm going to just take one more minute, and I guess I just want to... You can address it in reply form.

[00:13:25] Speaker 03:
There's three manners in which my client losses discharge, A3, A4, and A5.

[00:13:29] Speaker 03:
It may not seem extremely relevant, but my client has also had a professionalism complaint lodged against him with the police department, and the more specific and narrow

[00:13:41] Speaker 03:
what happened can be, the better it could be for him professionally.

[00:13:45] Speaker 03:
So I can understand that if we only prevail on A4 but not A5, there could be a certain mootness to this and there'd be no need to wade into the weeds as to whether all the dots have been connected.

[00:13:55] Speaker 03:
But on my client's behalf, I would ask that if there's any causes of action upon which we do prevail, we would appreciate it to have some sort of affirmative argument for that so that we could use it in whatever administrative proceedings.

[00:14:07] Speaker 03:
Thank you.

[00:14:07] Speaker 03:
Thank you.

[00:14:13] Speaker 04:
May I please the court Beth Levine with the Department of Justice for the United States for a state

[00:14:42] Speaker 04:
We're here today, as you know, because the bankruptcy court denied a discharge to Mr. Rigone.

[00:14:46] Speaker 04:
It also denied it to his wife, but she is no longer appealing.

[00:14:51] Speaker 04:
To receive a discharge, debtors must be transparent.

[00:14:53] Speaker 04:
They have an obligation to keep records regarding their assets and explain where the assets went.

[00:14:59] Speaker 04:
The Chapter 7 trustee and the creditor shouldn't be forced to engage in an expensive investigation.

[00:15:05] Speaker 04:
It shouldn't be like pulling teeth to get information, but in this case, it was.

[00:15:09] Speaker 04:
And what was a first for the chapter 7 trustee, he had to continue the 341 meeting 10 times for a total of 11 meetings, and he struggled to obtain information.

[00:15:18] Speaker 04:
Many assets weren't disclosed until subpoenaed, and much information was only disclosed by third parties.

[00:15:26] Speaker 04:
The bankruptcy court here had three independent bases for denying Mr. Rigwon a discharge.

[00:15:34] Speaker 02:
So it is an interesting development.

[00:15:39] Speaker 02:
from Ms.

[00:15:39] Speaker 02:
Kwan to no longer contest the appeal.

[00:15:44] Speaker 02:
In reading the evidence and the bankruptcy court's decision, there is a blurring of the individual states, the individual debtors into, understandably, a couple.

[00:15:59] Speaker 02:
And Mr. Ellison indicated, made that reference that some of it is just debtors.

[00:16:06] Speaker 02:
as to the credibility, as to assets, as to payments.

[00:16:12] Speaker 02:
Now that we have to separate that and really examine Mr. Regone separately, it seems more difficult.

[00:16:21] Speaker 02:
So a lot of the acts done by Ms.

[00:16:24] Speaker 02:
Kwon, but now we have to assess Mr. Rigone's disclosure obligations and his compliance to 727.

[00:16:31] Speaker 02:
That seems a little more difficult.

[00:16:32] Speaker 02:
Can you address the exact, you know, conduct by which gives rise to each of these obligations under 3, 4, and 5?

[00:16:45] Speaker 02:
And how they were violated.

[00:16:47] Speaker 04:
I'd be happy to, Your Honor.

[00:16:48] Speaker 04:
And first of all, I'd like to make the point that, as has been noted, this is a clearly erroneous standard.

[00:16:52] Speaker 04:
In the Banksy Court here,

[00:16:55] Speaker 04:
When it intended to refer just to Ms.

[00:16:57] Speaker 04:
Kwan, it did.

[00:16:58] Speaker 04:
When it intended to refer just to Mr. Rigon, it did.

[00:17:01] Speaker 04:
And when it intended to refer to them both, it referred to defendants.

[00:17:05] Speaker 04:
But I don't think it can be assumed that when it referred to defendants, it was not doing that intentionally and intentionally including Mr. Rigon.

[00:17:11] Speaker 02:
Well, there is some of that in the discussions of the income from the trust.

[00:17:16] Speaker 02:
It's Kwan, Kwan, Kwan, Kwan and Rigon.

[00:17:19] Speaker 02:
So as for that, you're asking to deny the discharge for a joint payment of $2,500, roughly.

[00:17:27] Speaker 02:
And I think that's what we're alluding to.

[00:17:29] Speaker 02:
Can you help us understand that and the basis?

[00:17:32] Speaker 02:
Because when you parse it that thin, it feels like a much different case.

[00:17:37] Speaker 04:
Well, why don't I start with section 727A4, that he made fraudulent

[00:17:43] Speaker 04:
false oaths.

[00:17:44] Speaker 04:
And as the court has acknowledged, this was not a Barton Wharford imputation.

[00:17:48] Speaker 04:
The bankruptcy court made findings that Mr. Regan himself

[00:17:52] Speaker 04:
made fraudulent false o's.

[00:17:54] Speaker 04:
And of course, fraud is often, is usually based on circumstantial evidence.

[00:18:00] Speaker 04:
Things like the number of omissions, the failure to correct them, the size of the omissions, all of those badges of fraud are true here with respect to Mr. Regone.

[00:18:12] Speaker 04:
So there are at least six material omissions, starting with the sale of the three Denny properties.

[00:18:18] Speaker 04:
Mr. Regone admitted he knew about those sales.

[00:18:21] Speaker 04:
That's at 30SER 488A.

[00:18:24] Speaker 04:
He claimed he didn't know who owned the properties, but he knew of the sales.

[00:18:29] Speaker 04:
And of course, when you sign the schedules, they specifically say when you're filing jointly with a spouse, you are equally responsible for ensuring their accuracy.

[00:18:38] Speaker 04:
And the notion that he didn't know that he owned it

[00:18:44] Speaker 04:
Directly contrary to the fact that they personally use those funds and that gets to the next significant omission They personally use the funds Where is the evidence that he personally used the funds from the Denny's sales sure so there's forty eight thousand dollars that went to their joint checking account and Miss Kwan testified

[00:19:08] Speaker 04:
that they had long discussions about what to do with that money.

[00:19:12] Speaker 04:
Should they use that money to stay a foreclosure of their home?

[00:19:16] Speaker 04:
Or should they use that money to put it into their business?

[00:19:19] Speaker 04:
That discussion lasted for days with Mr. Rigone.

[00:19:22] Speaker 04:
So he very much knew that this money from the Denny property was going to be used for personal expenses.

[00:19:29] Speaker 04:
That is in the record that Mr. Kwan's testimony about those extensive discussions at 29 SCR 460 to 61.

[00:19:36] Speaker 02:
We need to bring it back to the false oath then.

[00:19:37] Speaker 02:
Sure.

[00:19:38] Speaker 02:
What is the exact false oath in not disclosing the use of the Denny properties?

[00:19:45] Speaker 02:
Because there's the dispute as to what he knew who owned.

[00:19:50] Speaker 02:
So how it gets there seems to be in some flux.

[00:19:53] Speaker 02:
And maybe Judge Alston decided that as a factual matter.

[00:19:56] Speaker 02:
OK.

[00:19:57] Speaker 02:
But then there's the use of that and ultimately the false oath that arises.

[00:20:02] Speaker 02:
So where is that false oath?

[00:20:03] Speaker 04:
Sure.

[00:20:04] Speaker 04:
So there are two false oaths related to the Denny properties.

[00:20:07] Speaker 04:
The first is SOFA question 18 that asked about sales of property.

[00:20:12] Speaker 04:
The second is income, the proceeds from the Denny sales.

[00:20:16] Speaker 04:
That's question five of the SOFA.

[00:20:19] Speaker 04:
And he knew about that income, having personally used it and discussed how to use it.

[00:20:25] Speaker 04:
There's also a false statement regarding income, the same question, SOFA five, regarding the $25,000 from the Sands property.

[00:20:34] Speaker 04:
Mr. Rigon never denies knowledge about the Sands properties.

[00:20:38] Speaker 04:
There's no testimony denying knowledge of it.

[00:20:41] Speaker 04:
There was a 5% interest in the Sands properties disclosed in the schedules.

[00:20:47] Speaker 04:
The $25,000 from the Sands property went into the joint checking account.

[00:20:52] Speaker 04:
In five $5,000 installments in the four months before they filed petition.

[00:20:57] Speaker 04:
The last one just a week before they filed the petition.

[00:21:01] Speaker 04:
And to address the claim that Mr. Rigone did not have access to the online bank accounts, Mr. Rigone testified that he did.

[00:21:11] Speaker 04:
That's at SCR 482 to 483.

[00:21:13] Speaker 04:
And I can read that.

[00:21:22] Speaker 04:
This is starting at page 482.

[00:21:25] Speaker 04:
It's transcript page 69, line 24.

[00:21:27] Speaker 04:
What I'd like to ask you, but meant to ask you, is did you also have online access to your personal accounts?

[00:21:32] Speaker 04:
Answer, yes.

[00:21:34] Speaker 04:
The testimony that Mr. Ellison referred to had to do with his practice for paying the bills.

[00:21:42] Speaker 04:
It was not that he didn't have access to the accounts.

[00:21:49] Speaker 04:
So those are, depending on your account, three or six false statements already.

[00:21:54] Speaker 04:
Then you have the failure to disclose the Bank of America account.

[00:21:57] Speaker 04:
That was account.

[00:21:58] Speaker 02:
The Bank of America savings account.

[00:21:59] Speaker 04:
The savings account, yes.

[00:22:00] Speaker 04:
Correct.

[00:22:01] Speaker 02:
Because the Bank of America checking account was disclosed.

[00:22:03] Speaker 04:
That joint account was disclosed.

[00:22:04] Speaker 04:
The savings account was not disclosed.

[00:22:06] Speaker 04:
And of course, banking accounts are always very important in a bankruptcy.

[00:22:10] Speaker 02:
And what was the size of the saving account?

[00:22:12] Speaker 04:
I believe it was something less than $1,000, but the law is well established that disclosure of accounts is important.

[00:22:17] Speaker 04:
You can understand why.

[00:22:19] Speaker 04:
Look at past transactions to make sure that others are not secreting assets.

[00:22:22] Speaker 02:
Doesn't that really ultimately get to the fraudulent intent?

[00:22:26] Speaker 02:
I'm sorry, I couldn't quite hear you.

[00:22:27] Speaker 02:
Doesn't it ultimately get to the fraudulent intent?

[00:22:30] Speaker 04:
Yes, and the fraudulent.

[00:22:31] Speaker 02:
If you disclose Bank of America checking and you omit $1,000 Bank of America savings,

[00:22:39] Speaker 02:
Why is that fraudulent?

[00:22:43] Speaker 02:
Why is that a false oath instead of a mistake?

[00:22:45] Speaker 02:
Because they did not amend it, I believe is really the case.

[00:22:48] Speaker 04:
But that is part of it.

[00:22:49] Speaker 04:
Yes, they did not amend it.

[00:22:50] Speaker 04:
And it's also, as mentioned, when courts evaluate whether there's fraudulent intent, they look at, for example, the number of material emissions.

[00:22:59] Speaker 04:
And there are many here.

[00:23:00] Speaker 04:
We haven't even gotten to the trust and to the AIG policy, which involved hundreds of thousands of dollars of transactions.

[00:23:07] Speaker 04:
Over $100,000 rent from Mr. Rogon and his wife to the trust.

[00:23:11] Speaker 02:
Wait, went from Mr. Rogon and his wife to the trust.

[00:23:14] Speaker 02:
It went from the checking account?

[00:23:17] Speaker 04:
It went from the checking account or their business account.

[00:23:20] Speaker 02:
Or their business, the business being Crissall?

[00:23:23] Speaker 04:
The business being Rock P.I.

[00:23:25] Speaker 04:
and it was funneled through that entity, Crissall.

[00:23:28] Speaker 02:
And who transferred the money?

[00:23:31] Speaker 04:
Your honor, Ms.

[00:23:33] Speaker 04:
Quantas, she transferred the money from Crystal, but it originated in accounts to which Mr. Rigon had online access.

[00:23:39] Speaker 04:
And again, this is the credibility finding with respect to the trust that Mr. Rigon was feigning ignorance about it.

[00:23:46] Speaker 04:
He testified he was present when the trust was created.

[00:23:50] Speaker 02:
In 2017.

[00:23:51] Speaker 02:
Or 2016?

[00:23:51] Speaker 04:
In 2016, in 2019, I believe it was 2019, there was a check made out to both of them.

[00:23:59] Speaker 02:
What happened to that check?

[00:24:02] Speaker 02:
Where is the information regarding where was it deposited?

[00:24:06] Speaker 02:
Where was it cashed?

[00:24:08] Speaker 04:
Your Honor, the fact that we don't know, that is all part of the A3 and the A5 basis for denial of discharge.

[00:24:16] Speaker 04:
Your Honor, so all of these omissions, the number of them support the finding of fraudulent intent, as does the court's credibility finding that Mr. Higone feigned ignorance, as does the timing, for example, the money that was deposited just before they filed for bankruptcy.

[00:24:33] Speaker 04:
as is the fact that he did not correct these omissions even when he knew about them.

[00:24:38] Speaker 04:
They filed amended schedules.

[00:24:40] Speaker 04:
There was no correction there.

[00:24:41] Speaker 04:
He continued to swear under oath that they were true and correct.

[00:24:45] Speaker 04:
There is no correction in the two years between the petition and the trial.

[00:24:51] Speaker 04:
Despite the many, many requests for information about these transactions, despite the complaint, despite the amended complaint, there is still no correction.

[00:25:02] Speaker 04:
It was very much like the Ninth Circuit's Rhett's case.

[00:25:06] Speaker 04:
Just like as there, the court did not clearly err in finding fraudulent intent based on what was Mr. Groen's at best reckless indifference to the truth, the significant number of falsehoods and omissions, and the failure to amend in those two years.

[00:25:21] Speaker 02:
Would an amendment have corrected anything?

[00:25:23] Speaker 02:
Would it have changed the fraudulent intent?

[00:25:29] Speaker 02:
Your intent is measured at the time of the act, right?

[00:25:32] Speaker 04:
The fraudulent intent is measured at the time of the act.

[00:25:34] Speaker 04:
The evidence of it can include, as the Rets Court held, the failure to amend.

[00:25:41] Speaker 04:
And he continued to make false oaths in the amended schedules at the 341 meeting.

[00:25:48] Speaker 01:
Well, I was going to ask, does the failure to amend also affect the 727-85 requirement that you have up until the time the discharge is denied to correct any or explain any loss of assets?

[00:26:04] Speaker 01:
And no amendment means once he was aware that there was a problem, right?

[00:26:09] Speaker 04:
He still failed to provide that satisfactory explanation.

[00:26:13] Speaker 04:
That's absolutely right.

[00:26:14] Speaker 04:
And we haven't gotten really to A3 or A5.

[00:26:17] Speaker 04:
There was no satisfactory explanation, as you pointed out, for all the money that was funneled into the trust or what the trust did with it or the money that went to the AIG policy.

[00:26:28] Speaker 04:
There was no satisfactory explanation.

[00:26:29] Speaker 02:
But to be clear, he was required to give that satisfactory explanation because it went through the joint checking.

[00:26:37] Speaker 04:
The trust was an asset that he was required to disclose, and there was money that was spent by the trust.

[00:26:45] Speaker 04:
There was money that was spent by him that went to the trust, and there's no adequate explanation for what happened to those funds.

[00:26:53] Speaker 04:
There's no adequate explanation for what happened to the reduction of interest in the SANS entities.

[00:26:59] Speaker 04:
One of them started out with a 50% interest.

[00:27:01] Speaker 04:
One of them started out with a 25% interest.

[00:27:03] Speaker 04:
They each were reduced to 5%.

[00:27:05] Speaker 04:
There is no dispute that there was not an adequate explanation that was that there's not a Excuse me.

[00:27:11] Speaker 04:
There's no dispute that there was a loss of assets here and The burden shifted to mr. Ago and it was his burden to come forward with a satisfactory explanation and he didn't all he did was come difference in the a5 requirement for intent then there is under the a4 or a3 absolutely, and I was just about to get that there is no intent requirement for a5 there is no intent requirement for a3 and

[00:27:34] Speaker 04:
A5 requires only that the debtor come forward with a satisfactory explanation, and here the debtor denied.

[00:27:41] Speaker 04:
It was his burden to do so, and this is like the first circuit case in Simmons.

[00:27:46] Speaker 04:
In that case, the debtor claimed he was a dupe.

[00:27:49] Speaker 04:
And the court said that that assertion of ignorance provides no explanation at all.

[00:27:53] Speaker 04:
That is the same here.

[00:27:55] Speaker 04:
And again, with respect to the trust, great deference is owed to the bankruptcy court's credibility finding that Mr. Rigon was feigning ignorance about that.

[00:28:05] Speaker 04:
With respect to A3,

[00:28:08] Speaker 04:
That is another third independent basis for denial of discharge.

[00:28:13] Speaker 04:
It is undisputed that there were inaccurate records regarding that $25,000 received from the Sands Holdings Company.

[00:28:19] Speaker 04:
We don't know if it was loan, we don't know if it was distribution, we don't know what it was.

[00:28:23] Speaker 04:
There's admittedly no records regarding the AIG policy for which Mr. Regal was the beneficiary.

[00:28:30] Speaker 04:
There are inadequate records regarding all these transactions with the trust.

[00:28:35] Speaker 04:
And Mr. Ogun failed to file his tax returns in 2018 and 2019 and 2020.

[00:28:40] Speaker 04:
The 2018 returns were eventually filed, we understand, but not the 2019 and 2020.

[00:28:47] Speaker 04:
And it was stipulated that he never produced any signed returns.

[00:28:52] Speaker 04:
Again, intent is not an element.

[00:28:53] Speaker 04:
The burden shifted to Mr. Ogun provide a sufficient justification for the lack of records.

[00:29:00] Speaker 04:
The standard of rather reasonably prudent person in similar circumstances would do so.

[00:29:05] Speaker 04:
And he presented no evidence to carry his burden.

[00:29:11] Speaker 04:
He did not present any evidence that a debtor in like circumstances would not have filed tax returns.

[00:29:17] Speaker 04:
And the evidence in the record is to the contrary.

[00:29:19] Speaker 04:
The chapter 7 trustee testified that he's seen debtors in like circumstances who had filed the tax returns.

[00:29:27] Speaker 04:
That's in the record at 31 SCR 518 to 519.

[00:29:32] Speaker 04:
I only have a few seconds left.

[00:29:34] Speaker 04:
But with respect to the other properties, again, he comes forward with an ignorance defense.

[00:29:41] Speaker 04:
The court didn't believe he was ignorant.

[00:29:43] Speaker 04:
But this case is a striking contrast to the Cox case in the Ninth Circuit.

[00:29:47] Speaker 04:
And we talked about that at pages 40 and 42 of our brief.

[00:29:51] Speaker 04:
I have about 10 seconds left.

[00:29:52] Speaker 04:
So with that, I'll just ask if you have any additional questions.

[00:29:55] Speaker 02:
And good.

[00:29:56] Speaker 02:
Judge Brand, any questions?

[00:29:59] Speaker 04:
Thank you.

[00:29:59] Speaker 04:
For all of those reasons, Your Honors, we ask that you affirm.

[00:30:02] Speaker 02:
Thank you very much.

[00:30:04] Speaker 03:
Mr. Elson, you have about a minute 45.

[00:30:09] Speaker 03:
Thank you, Your Honor.

[00:30:11] Speaker 03:
There is the generalized, I would say, generic statement about Mr. Rogon's lack of credibility, but it was limited to the context of the trust.

[00:30:21] Speaker 03:
I will say that during his day of testimony, day three, he stated 13 times that he wasn't aware because these questions related to financial duties and obligations that his wife was primarily

[00:30:34] Speaker 03:
aware of and he did not know the answer.

[00:30:37] Speaker 03:
It cannot be that we discredit page 51, 52, 3, 59, 68, 73, 77, 84 because there's not been particularized rejection of his credibility on these points on all matters.

[00:30:50] Speaker 03:
Second thing I would say is I dispute the UST's distinction on whether there's control over the bank account.

[00:30:59] Speaker 03:
On page 107

[00:31:02] Speaker 03:
The statements provided by the UST are accurate.

[00:31:05] Speaker 03:
Her citation is correct.

[00:31:07] Speaker 03:
But the citation we provided came afterward and clarified what had happened there.

[00:31:11] Speaker 03:
And I would just give the court this one sentence from page 106 from day three of the testimony.

[00:31:22] Speaker 03:
This is my question.

[00:31:23] Speaker 03:
All right.

[00:31:24] Speaker 03:
I think there was some question about your level of involvement, Mr. Ragon, in making payments.

[00:31:27] Speaker 03:
I think we heard that you would be on job sites and handover checks.

[00:31:29] Speaker 03:
Were you actively going into the online bank accounts for Rock PI?

[00:31:32] Speaker 03:
Answer, no.

[00:31:34] Speaker 03:
What goes on over the next two pages further clarifies that he only has passive access and passive representative capacity with regards to the account.

[00:31:42] Speaker 03:
He's not going in.

[00:31:43] Speaker 03:
He's not spending the money.

[00:31:45] Speaker 03:
The last thing I'll say is just the UST said,

[00:31:50] Speaker 03:
With regards to sand properties, no testimony was provided by Mr. Rigone that he denied.

[00:31:58] Speaker 03:
At no point did Mr. Rigone deny having knowledge about what was going on there.

[00:32:02] Speaker 03:
I think what's relevant is that no one asked Mr. Rigone any questions about sand properties, neither ourselves nor the UST.

[00:32:09] Speaker 03:
So we just have all these dots, and it's up to the UST to connect them.

[00:32:13] Speaker 03:
And I don't think sufficient dots have been connected.

[00:32:15] Speaker 02:
Thank you very much.

[00:32:18] Speaker 02:
All right, this matter will be submitted.

[00:32:19] Speaker 02:
Thank you for your very interesting and good arguments.

[00:32:22] Speaker 02:
It will be submitted.

[00:32:23] Speaker 02:
We'll get it out in order as soon as possible, decisions as soon as possible.