good morning may it please the court i represent brian farley in this objection to discharge under section seven twenty seven against debtor margaret can't want to turn directly to the errors of law made by the bankruptcy court in ruling on fraudulent intent with respect to the false oath made the misrepresentations or the omissions in the well that's a fact question as we've set forth in the standard of review there's the historical facts there's the legal pass to be applied and why is it to know what standard i know it's actually not unless it's a constitutional question if it's fourth amendment you know probable cause to search or if it's many other things we had many discussions about back but in any event right i mean the bankruptcy court which was the original finder of fact and then backed up by the district court find that these arguments you're making were either beside the point such as the three thousand dollar error on the three thousand to seventy five thirty five or to seventy five thirty five because it was i al because it wasn't required to be reported or not made with any kind of intent to defraud so it's hard for me to see where we attacked that off first of all the the three thousand dollar matter let's let's start there that was never corrected if in fact it was but so what if it didn't have to be reported to begin with because it was set forth in the schedules and in this case the statement is financial affairs that was sworn to be true under penalty of perjury there was no exception for the penalty of perjury for something that arguably might not have had to have been included but you don't think it was a typo although the bankruptcy court did if it was a typo and somebody swore to it do we have that level of strict liability and bankruptcy forms once whilst as answer my question please if it was a typo would you say that it was nonetheless fraud if it wasn't corrected if it wasn't corrected why do you need to correct it if it's a typo then speaking of accurate statements counsel let me ask you about page four of your brief where do you basically put forward your evidence the true had  appealed was it that was a finding your honor that's right that's really not before this court exactly the bankruptcy judge found that this was forgery  had signed her name to the to the to the document right i'm trying to understand since it's not before us and you didn't appeal that to the district judge or to  with this extra charge that you didn't appeal it is indeed was part of the five twenty three train and that's not before this court it was not you so why are you trying to put that in your brief to try to give us the these discrepancies and they're there and they're serious but the result of them is to put the sins of margaret's lawyers on your clients trying to understand how that happened i don't understand your clients any worse off because the under section seven twenty seven we do not have to prove are the debtor passed to accurately set forth in her well let me put it it's ok if you don't want to prove or argue harm how was she better off by any of these mistakes that also in the or word deceptions if you want if you will that that's an important that's an important point in that we do not have to show any motive we don't have to show and that's in the caspian case you do have to show materiality you have to show that they did well certainly for seven twenty seven eight for claims you had to prove that there was a statement or oath that was false she knew it was false she made it with fraudulent intent and it related materially to the case the bankruptcy court in the district court find that she did not make it with is that she did not make with fraudulent intent and it was not material anyway so i don't know why that just throws that theory too because it just charge out the window because the bankruptcy court aerate as a question is worthless or its for whatever reason unavailable for distribution to the creditors it still needs to be reported and the three hundred thousand dollar judg divorce judgment that was not reported at all for ten months and then it gets put down in the wrong line of the form i understand she still thinks it's worthless and she doesn't say three hundred thousand but worthless because i the bankruptcy court makes the determination that that it's not done with fraudulent intent it may be clumsy it may be other things but it's not fraudulent that not everything it's a mistake is fraud is or may be entitled to those items and it also says give particulars not every item in schedule besides give particulars at no point in this bankruptcy case point zero zero eight without any further explanation but look in the two thousand and four examinations and certainly your client was well aware of of all of these things you're the one who's who's introducing it to the bankruptcy court it's all there and so the bankruptcy court makes a determination that they her her way of assessing this wasn't done well actual intent even if it wasn't in full compliance with the rules and that it wasn't material because in fact the value was zero because mr kemp you know unless he wins the lottery is they all said isn't going to pay or anything like the bankruptcy court applied the wrong legal standard is not a common law fraud standard you do not need to show conscious intent to deceive cha said simply not caring being indifferent to getting it right or wrong why do you think that's proven by this record why do you think a bankruptcy judge in the district court were ignorant of the proper standard well let me let me say why in the record the standard was satisfied the debtor knew what was true and then made misstatements omissions under oath the debtor knew of the existence of a three hundred thousand dollar divorce judgment which was merely a year and a half before she filed for bankruptcy the debtor knew  on the witness stand that she was getting more than two thousand dollars a month in support from her parents well and that was a misstatement i mean i agree with you that that was a problem although i gather that it had she said the correct four thousand five hundred that's still quite substantially below the means test and does the bankruptcy court thanks again it's not material and thought that there was a reason why she phrase said in the caspian case even if it does not impact the creditors there is still a need to have these statements and and schedules and the statement financial affairs in the schedules accurate and that's what that's why the bankruptcy court could have found fraudulent intent in this case but materiality from a more practical standard it is how did any of these wind up putting more money or assets in mrs camp's pockets and less money in your client's pockets also seems highly relevant to me in just evaluating fraudulent intent which is the standard but that you're respectfully using the common law standard john you said a standard of fraudulent intent ok not materiality fraudulent intent and i'll concede that that would agree with that would reach reckless indifference to the tr fairly serious matters but also didn't see any steps unless you can correct me that would put extra money in her pocket in less money in your client's part  money then arguably margaret camp is going to get it from her ex husband before mr farley can collect on his state court judgment against the ex husband and so that has a direct in that has to do with the discharge ability right apps yes that's what we're talking about you know and understand that's why perhaps why you're actually skinning to litigate this dry hole but i'm trying to understand how any of these specific issues other than the transfer of the stock dividends would have had any impact tracking with me on this ok forget the question of your attempts to block her discharge if she's entitled to relief under the bankruptcy code do any of these factual matters other than the stock dividends that the bankruptcy judge found she had nothing to do with put money in her pocket that's taken away from your client i haven't heard any in china that not immediately just only if you can beat the discharge we do have to be paid this year i do want to know if i could which means that she would not have had an incentive to lie about any of these things for purposes of the bankruptcy but really what motive is not ok even going to ask you i'm going to give you a minute for about all that i'm going to ask you to sit down now ok we'll he in that case was due to it was decided really on the basis that in in that situation the better in that situation or the court the lower courts did not recognize that a citation to discover assets under illinois law has a continuing effect and therefore there was an obligation to continue to disclose that that's not the situation here we didn't have state court proceedings in state court citation proceedings or gar i think the the question in this case is why at least taken as a whole all of these misstatements don't amount to the same kind of and susi onse about the bankruptcy forms not filling them out accurately taking it upon herself to decide how collectible or not the judgment was in the divorce proceeding it's the forms are not that hard to read to me i think they're pretty clear as to what they're asking for no they're not your honor and the reckless disregard for the truth really goes to a pattern of misstatements or an accumulation of of  items that add up to show to essentially reach the conclusion that there was an fact fraudulent intent because you're not going to have those circumstances very often where someone like in katzman the borrower to the debtor comes out and says i intentionally left somebody off the schedule so it's just the school to try to reach the determination the factual determination as to what the intent was so let's look at some of those came lots of items you have a typographical error ok you have a situation where there was an argument about the value of clothing with no evidence introduced if you're trying to connect the dots those aren't even dots ok there are a couple of things that might be considered dots let's look at the divorce decree she didn't put it out ok corrected it so the bankruptcy court looked at her intention it didn't ask for her three hundred down even when she corrected it did she i thought she still listed it is worth zero and that was what was found to be worth your other wor nominal amount of the judgment was three hundred thousand right it depends on how much of it would have been available to a bankruptcy it shuts the even if it had ben of valuable asset because part of it was child support and that's why the bankruptcy code says you won't get the discharge if you're dishonest if you're trying to game the system if you're somebody who's trying to get this benefit in this remedy but you're not willing to go through all  steps and accurately disclose all the information that doesn't describe market cap would would you agree i understand you don't think that describes the bankruptcy court found otherwise read with you really but but would you agree that this is enough circumstantial evidence that the divorce decree yes that's an item that she should have put out there but then you should correct first you create the characterization of the money from her parents as a loan when everybody's saying oh it isn't really a loan it's just a moral obligation and you've got the payment to illinois department of revenue ok maybe you can talk about those i'll talk about those write a first asked to the one point four million dollars and that everybody seems to have agreed that it didn't need to be there look closely at the district court's opinion the district line of the district court's decision the one point four million was accurately disclosed debt the district court actually felt it was the debt the district court said there was no evidence it was a gift  money to her parents toward that obligation and they had accepted those payments so not everybody thought that that that that item didn't need to go down there and i cited you understand from a policy point of view i guess we have two competing policies here from a policy so i think that that's how i would address the one point four million and she also did that at the advice of her of her lawyer who thought that that could be a creditor her lawyer her parents had also testified in their proceedings that they had never consulted an attorney about this so this was what they were feeling but nobody had ever gone to a lawyer and said is this an unforeseeable dad why have a a a claim here for quite to merit with or unjust enrichment despite the fact that they never got to know these were family members who helped each other out and the parents were saying i'm not going to the parents we're going to go to court and say i intend to sue my daughter i have a claim my daughter but the district court look at that the district court said court actually thought it was it that it was appropriate to disclose now let's go to the seventy two hundred your honor the evidence in that case situation is crystal clear first margaret had given security interest in her stock to her uncle she didn't even think of herself as only in the stopper and title to the stock anymore she had no way to pay back the loan that stock was a gone or she still did have the evidence and her lawyer wrote they've they've she recognized them she put them in  schedule her lawyer wrote to the only department of revenue and said you cannot collect on this the monies were held by the account she was never to see she was never contacted by the account of this to what to do it was in fact subject to a l so when the account decided to pay it it was in fact paid to a creditor who had a secured climate so where has she done anything deceptive in terms of transferring money in violation of the bank of the questions where she said she lacked diligence didn't i guess as the nominal owner still of the stock even though it was fully encumbered but make sure that the issuing company knew that the bankruptcy court was going to control all distribution should have controlled all distribution that's right you're right and she did there was no evidence that she contacted the accountant or that even how is it i said to her but i will say that she already had told the accountant previously that any monies that came out of the dividends or to be paid to her parents to try to pay back the one point four million dollars so she had actually given previous instructions to the accountant and she really had no no no thought process to go back and change those  discussion suggests to me that there are different inferences that could arise from this record and that suggests that it's a quintessentially factual appeal yes yes your honor there are inferences and the bankruptcy court had a three day trial and heard all the witnesses and heard miss kemp's explanations she specifically found her to be credible her parents should be credible the account to be credible and made factual determination i respectfully suggest that unless this court can find clear air and certainly the  demonstrated where where that might be those those factual findings should be honored and there's no question that that bankruptcy judge applied the right legal standard decided in her opinion from the bench that intent to defraud or to see includes reckless disregard so yes she specifically referenced that and then noted that cases from this court require her to still examine the witnesses she she can't just look at what's on the pieces of paper she needs to look at the witnesses and determine the credibility because the bankruptcy court blamed the bankruptcy lawyer not the debtor the bankruptcy court said the debtor didn't have fraudulent intent but came down very hard on the bankruptcy lawyer the bankruptcy lawyer and the bankruptcy court and the banks the client is responsible for what the bankruptcy lawyer does the court made it pretty clear that there was no defense based on the lawyer but the as a it's a fact helping one to understand intent what the lawyer was telling her was a fact that was get the issue is her intent different things go into that whether it's her statements whether it's circumstances whether it's what the lawyer was telling her it's a factual determination the lawyers we didn't know he would be we didn't know this issue was going to come up because he was he was not listed by the other side as a person having knowledge in this case and then in the middle of trial they raise this issue of  conversations with a lawyer as a basis for for not being liable so that was a complete surprise to us and we have objected for all for all that testimony ok well if you'd like