for the mr going to the appellant this is a very important case for mr gandy his deals with his discharge and his bankruptcy case i'm a sleaze not bernie madoff he's he's a car salesman he's straight commission car salesman and f chapter thirteen i think the important elements of the seven twenty seven a four false oath issue we set out in our brief but i think the most important i'll spend most of the time on is materiality often debtors do make mistakes  reality in this context i mean in the criminal and criminal violations of false statements it doesn't necessarily matter if anyone was in that misled or if the result was any difference how do we know what source do we look to so that the test here for materiality is whether it actually makes a difference well the case i cited but i think it's clear that has to affect the outcome of the case in the most common cases or failure to disclose deciding to take him back sleeper that was passed in two thousand and five there seems to be a difference of opinion as whether the means test controlled how much to pile you know thirteen a landing says no you don't use the six month previous average to set the payment you use a forward looking approach so when when the thirteen is filed the the form and i have a copy here at the top corner the only thing the form of the means testing with chapter thirteen does dictates the length of the case filed this is a two three however filing date it only has a box up there dictates whether he can follow those thirty six month or sixty that's that's the only purpose of this form mr n d filed his plan was a sixty mon on the first day of falling into three eleven it was three days after the end of the month of january as he testified the numbers increased by about three hundred fifty six dollars so he filed monday of that week on the thirty first of january is means will be perfectly accurate three days later earth and maybe i'm not understanding exactly where you are in the argument but just to tell you where i am i thought his basic theory was hey listen these were at worst mistakes because you know commissions you have some estimates if you're paid by commission so he got the estimates wrong and so that does sound like mere negligence mistake but then you have this ongoing duty every ninety days to update your income so that to the extent you were not sure what you were doing you surely would have been on notice that you got to correct it once you find out exactly what the commissions are so that when it seems problematic from the perspective of fraud as opposed to a mistake  again on the first day filing he has to file his pay stubs they were filed for december thirty first and for january so the implication is that because it was wrong he was attempting to hide the information from the source stock is only on the w c pages those are actually following the first day of filing so again mr gagne is following all the information required the documents to the tarmon his input ok so i'm just not following you maybe i just don't understand bankruptcy law he has a duty every ninety days to update the actual income am i right he didn't do that and that he didn't do that i don't care what he filed well i think when the plan was confirming the thirteen case there was objections to the amount of his budgeted income as lanning s forecast it for so many schedule i which is also following this in the means test which is this form the bottom he says he receives straight commission income fluctuation above is based on two thousand and ten monthly average so this document is one of the cour fault is not required to be a current exact mirror of his income that month because he's fallen thirteen is going to go sixty months down the road so he's going to forecast it when he files so the court held a trial in august of two thousand and eleven and confirmed his plans based on this this scheduled budget the schedule on so he didn't for this it just makes him fall are you saying he had no duty to update well there's certainly a chapter thirteen required to pay in additional gross income he decided that he had enough to do in chapter thirteen convert the case but my point is the court based it as captain marsham mr shikar is that they file is a chapter seven convert a case reverts back to the petition date on february third you know that week there well and we had already had a situation where not only did we have all these questions about his representations to the court but there had been  a motion to dismiss filed by the trustee because he failed a six thousand one hundred ten dollars that he'd earned as required by the bankruptcy court order and  responds to that motion to dismiss that filing a seven but the condo we're looking at is the whole period in order to deter both the thirteen in the seven in order to determine to assess fraudulent entity and correct well is the petition date is the documents the court like to understand your question but when that petition is determined to be the seven the converter case that the judge looked at it  speaks of the filing date whether his schedule i and j were faults i don't understand anything you're telling me as far as it relates to frogland in t n we look at the course when you decide about fraudulent entity and you look at the course of conduct of the individual to determine what inferences can be drawn from that and here we're not going to look at petition date serene anything else what we're am asking is simply whether the entire course seven i don't disagree with the core i think the court did look at that looked at the whole history even though it was perfectly permissible to do that i agree but i think what the court looked at and found were the errors that were made is my point story offer you make a mistake in your schedules is it a false so this is a case where the judge found three false cells that's why the discharges do not and so the false oath are based on the filing and swearing to certain documents and not updating later right well w accordant but that the doctor was looking at is the final document and they were updated the means test was updated the chapter seven means test was it a ninety days well the means test is not doesn't have to be updated what the judge order in the confirmation order was that the debtor would supply his check records to the trustee and a and the court was entitle to look at the value in the context of the it's clear or if you it's a fact finding yes it has to include the materiality that there is right so materiality is a like a i guess you would say did the judge misunderstand legally how materiality works or what what's your way of dealing with the standard review you just didn't reach any findings that if you actually look at the opinion finds fault selves but never addresses whether has a material effect on the case he cited as a factor looks to me like the judge is this well they're in on the appeals court the district court yes court that the district court review the bankers the judge's opinion of course and they they looked at his findings of fact and so forth and so on but my point was that the documents they found were false uh oh see never finds that there was a case for a eight year period so he would he would be prevented from falling so it's a drastic measure like i said i think it boils down to the yes there is mistakes but they're not material in the court never found their work so that's our position error or even one error or even a technical violation this is a case where there are it's an entire gamut of documents that have there are false that were proven to be false and done evidence that the debtor has still failed to provide today so the bankruptcy judge found three false this is the the first part of it the the  appeal the first part false oath was in connection with the document was a statement of current monthly income statement current monthly income is something that every debtor has to file and it it's it has a specific answer that's the  about it but what you do is you take the debtors the last six months of income you take a pay stubs you add them up and you divide by six new get an exact number of whatever that is for his income per month for the last six months and mr newton here was trying to say well this this has to do with whether or not he can file for chapter seven or chapter thirteen but it actually has a much more important least for this case much more important reason seventy six what that is is it's a threshold and it says that if the debtor is the income as determined by the statement of her monthly income is below the threshold then a creditor such as myself does not have itself and the us trustee so in this case mr ganti converted his chapter thirteen case to a chapter seven case and me as a creditor in the case i filed a motion to dismiss mr noon here defended that and he says oh well mr schuh court does not have standing there is not sufficient materiality the debtor statement of current monthly income says income is too low and then the income declared income and it says essentially that you take the debtors income for the last six months and then divide it by six and then that's the current monthly income so so  what's interesting is to mr gandy declares current monthly income of three thousand nine hundred dollars per month which is below the threshold of section seven of seven b six which says the debtor has to earn more than the median income for his state in order for a creditor to have standing now here's the interesting thing i went back to the debtors paystubs i added him up and i found that his statement i found that his current monthly income was above the two thousand and thirteen weeks go by and mr newton on behalf of the debtor does not amend his document and i was astonished because i indicated before the current monthly what good it's going to come out of this from your perspective you're going to be able to collect a little more than you would have well i also represent a couple of the creditors who also claim that they were defrauded so so the intent is to simply to t discharge right would deny the discharge and then my my clients as well as myself would be unable to be allowed to collect but you know it's going to take a long time you know this means that we're thinking about settling it  i mean we've i have offered to settle many times but mr gandy has not been willing to do that so so ok so so then so he refuses to amend the court then issues a rule to show call you and your clients you'll to me want to collect i mean ultimately i want to collect but you know my my amount how much the one of the bankruptcy proceeding show you and your clients are owed i know you probably don't think you're going to collect all of that at least i hope you don't think that purse my personal claim is for about eight thousand dollars and then the other clients with which it all add up to you represent i also represent a woman in florida her name is karen temple she is a fraud judgment against mr gandy fo fifty nine thousand dollars and i also represent his former windward in knoxville and she has a also a judgment which had elements of fraud in in it for approximately salesman so so anyway with with with risp with respect to this one issue all quickly wrap it up so i can move on to some of the other other issues in connection the cross appeal that the court issued a rule to show cause and says to i want you to show while you have said why you have standing in order filed this motion to dismiss you then again filed all the pay stubs and followed a complete explanation i said that the current monthly income is false and i do have standing  the court then denied the motion to dismiss on the basis of the false document and the judge stare said i want to resolve this by adversary proceeding i don't want to do this by motion so litigated an entire contested matter on the basis of the stockmann the following day after the motion to dismiss was denied i served a motion for sanctions under rule ninety eleven of the bankruptcy code which which is the bankruptcy analog for ruhleben saying the you've filed a false document you're relying upon it i want you to withdraw it or i'm going to hold you responsible for for sanctions at that point after about three weeks mr newton finally with through the false document but before that we had to do we did an appeal of the contested matter we did the the motion for sanctions and then led directly into this adversary proceeding so that was just one of the prongs of what what the lower court relied upon but in addition there were fearful all throughout this case  appeal provides no additional benefit i viewed it as kind of a a precautionary measure the because the i wanted to make sure that those issues were before the court  the cross appeal involved issues relating to discovery and search and in fact he filed a schedule b which is a schedule of assets and on schedule b he says no bank accounts i went accounts but he's got direct deposit somewhere so mr dandy refused to give me his bank records i did a motion to compel the motion to compel was granted and on the basis of that we found out that he had a bank account at an internet bank called made a bank mr gandy refused to comply with a motion to compel which under the political statute seven twenty seven a that would be grounds for denying the discharge but but in addition i suppose the records directly from made a bank and we found that there was not just one bank account but two bank accounts at maida bank and then once we got into indicated would that be right well yes your honor if it is simply a precautionary measure as as we were talking earlier we're looking at the pattern of conduct here and if i had not done the cross appeal are ok yes yes it is so we just additional material to argue to provide additional reference material but it but i would certainly hope that it would not be necessary so the it may be just a touch on a few other issues the so so i so i dug into the made a bank records and i was trying to figure out how mr gandy was paying his rent and his car payment and his utilities and his cell phone so that i served another discovery requests and i said please tell us who your landlord is and tell us what this other credit card is ending in three three nine seven and and then in addition to tell us where the incomes coming in from this because it's not being reflected by the core dealership money going into the known bank account mr gandy refused to comply with that that information he he said he had a nother bank account through bank of america four which was for a closely held company that was paying some of his bills but the closely held company was not disclosed in his schedules so so there was an issue there and at this point he has not yet disclosed those bank records for bank of america in addition we don't have the name of his landlord so at this point we don't know where these these additional expenses are coming from so for all those reasons i would submit that  honour's mister i want to ask you about something you said i understood you just sat that there had been no finding of materiality in this case and i have just looked through two opinions that did tree and one that judge terror and i'm able to fat explicit determinations in each of the that the statement your client made were in fact material and i mean i'm not don't need to go over those with the but i mean it's not correct to tell us that i did not discuss the issue because both of them discussed and considered it judge reeves specifically said that the test you  considered blow as in it well i don't know that i mean when you go through and look at what he's comments are the judges read through his memorandum i read through again before today's hearing he talks about the false hopes he goes into the three disagree with you what you're finding but i don't think he had a finding that affected the outcome of the case i think he said there was obvious errors in the air is it now that your client's conduct didn't affect the outcome of the  mistakes it is a pity thousand dollar balance their checking account may say it's one hundred as material because it affects the outcome how creditors would receive an asset and that's the cases that talk about materiality has to have some ultimate effect on the case shikaris points are related to a chapter seven means test this case was two years in a month in thirteen and the means test is not related to seven or seven but it doesn't have anything to do with it is just there says in the bottom of i think page thirteen he said with respect to the amended means test the presumption of abused children did not arise based on the debtors deductions trial exhibit thirty nine so he reviewed the chapter seven means test and  find there is an abuse involved in the correct means test so that it is that material in other ways well the original filing of it is not underlining doesn't dictate the payments to creditors and he had a confirmation hearing i think the they're an independent voice that watch is their teens and i cited their following that's followed response to his requests to them in the schedules and they fall they reviewed it all and their expertise said that this case would still be eligible for chapter seven so again the issues raised about the motion to dismiss several somebody didn't come about told well into the case so i think again the false oath that judge starr finds if he finds that i don't think it affected the outcome the case still has