Massachusetts Debtor Denied Bankruptcy Due to False Oaths on Bankruptcy Schedules
Don’t lie. We all learned this by kindergarten. You can’t lie under oath either. If this derivation of “don’t lie” wasn’t learned during the Clinton administration, what was? In a case decided by the Bankruptcy Court on September 15, 2010, the Court found that the debtor lied, under oath, on his Statement of Financial Affairs, which is a critical part of the personal bankruptcy petition and schedules. Apparently the debtor “failed to disclose the identity of several corporations in which he had an interest” on his Petition and Schedules. The Court found that as a trained accountant, and as someone who did disclose those corporations on recent tax returns, the debtor was, simply, lying. The Petition and Schedules are signed under oath, and under oath, the Trustee at the Creditor’s Hearing asks each debtor if the Petition is true and accurate.
In the case, In Re: Gorman, the U.S. Bankruptcy Court pointed out that the false oath was “material.” Apparently the debtor also held corporate offices, which he failed to disclose. The debtor’s defense was, first, that there was no value to the corporations he had an interest in, and second, that he “was distracted” and the Court pointed out that these two defenses “are inconsistent with each other” and that the debtor acted “knowingly and fraudulently.” The case was sent back to the U.S. Trustee for a denial of discharge.