Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caeb-2_17-ap-02205/USCOURTS-caeb-2_17-ap-02205-0/pdf.json

Parties Involved:
Westates Holdings, LLC
Plaintiff
Rajpal Singh Chatha
Defendant
Taranjit Kaur Chatha
Defendant

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Itas 

FILED 

NOT FOR PUBLICATION 

MAR26 2019 

UNITED STATES BANKRUPTCY COURT 

EASTERN DISTRICT OF CAUFORNIA_ 

UNITED STATES BANKRUPTCY COURT 

EASTERN DISTRICT OF CALIFORNIA 

In re: Case No. 17-25335-B-7 

RAJPAL SINGH CHATHA and Adversary No. 17-2205 

TARANJIT KAUR CHATHA, 

Debtor(s) 

WESTATES HOLDINGS, LLC, a 

Delaware limited liability 

company, 

Plaintiff (s) 

V. 

RAJPAL SINGH CHATHA and 

TARANJIT KAUR CHATHA, 

Defendant(s) 

MEMORANDUM DECISION AFTER TRIAL 

Introduction 

A trial in this adversary proceeding was held on February 4, 

2019. Appearances on behalf of plaintiff Westates Holdings, LLC, 

and defendants Rajpal Singh Chatha and Taranjit Kaur Chatha were 

noted on the record.' The court takes judicial notice of the 

'Because both defendants and their son, Simranjit Chatha, 

who also plays a role in this litigation share the same surname, 

when necessary, the court will refer to these individuals by 

their first name for ease of reference. No disrespect is 

intended. 

Filed 03/26/19 Case 17-02205 Doc 43
1 docket in this adversary proceeding and in the defendants' 

2 chapter 7 case, No. 17-25335. See Fed. R. Evid. 201. Findings 

3 of fact and conclusions of law are set forth below. See Fed. R. 

4 Civ. P. 52(a); Fed. R. Bankr. P. 7052. 

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6 Jurisdiction 

7 The court has jurisdiction over this adversary proceeding 

8 pursuant to 28 U.S.C. § 1334. This is a core proceeding under 28 

9 U.S.C. §§ 157(b) (2) (A), (J) and (0). Venue is proper pursuant to 

10 28 U.S.C. § 1409. 

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12 Findings of Fact 

13 Defendants are debtors in the parent chapter 7 case. 

14 Defendants filed a voluntary chapter 7 petition on August 11, 

15 2017 (the "Petition Date") 

16 Plaintiff objects to defendants' discharge under 11 U.S.C. § 

17 727(a). The complaint that commenced this adversary proceeding 

18 was timely-filed on November 13, 2017. It alleges claims for 

19 relief under § 727(a) (2) (A) in the first claim for relief, § 

20 727(a) (2) (B) in the second claim for relief, § 727(a) (3) in the 

21 third claim for relief, § 727(a) (4) (A) in the fourth claim for 

22 relief, and § 727(a) (5) in the fifth claim for relief. 

23 Plaintiff introduced substantial evidence regarding 

24 defendants' finances and financial transactions, defendants' 

25 properties, and entities that the defendants formed, owned, and 

26 operated over a span of nearly a decade. The court focuses on 

27 three matters for purposes of this decision: (1) the omission of 

28 a checking account from the initial and amended Statements of 

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Financial Affairs ("SOFAs") ; (ii) the omission of the full extent 

of the defendants' interest in an entity by the name of 

Brightside Hospitality, LLC ("Brightside") from the initial and 

amended Schedules and SOFAS; 2 and (iii) the defendants failure to 

satisfactorily explain their finances and financial dealings 

generally and, in particular, their failure to explain the 

consideration, if any, received in exchange for the transfer of 

their real property located at 513 B Street, Apt. #1, Marysville, 

California ("513 B Property") to Pacific Coast Ventures, LLC 

("PCV"), and thereafter for the transfer of their membership 

interests in PCV to Simranjit. As further explained below, 

evidence regarding these matters supports (and warrants) a denial 

of the defendants' discharge in their chapter 7 case. 

Initially, the court finds that the defendants are 

sophisticated business people. Rajpal has a Bachelor of Arts 

degree in Economics from Arya College in India and a Bachelor of 

Science degree in Business Administration from California State 

University, Sacramento. Rajpal also has well over a decade of 

experience in the hospitality industry. That experience 

includes, but is not limited to, setting financial goals, 

budgeting, policies, franchise relations, renovations, marketing, 

employee relations, information technology, and dealing with 

2This is the entity that purchased and operated a 72-room La 

Quinta Inn ("La Quinta") in Mansfield, Texas. The significance 

of Brightside and the La Quinta are explained in further detail 

below. The name of this entity changed several times from and 

after its formation. For purposes of clarity, however, the court 

will refer to the entity as "Brightside" throughout this 

decision. 

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1 community relations. 

2 For over a decade defendants have formed, owned, and 

3 operated numerous Texas and California limited liability 

4 companies and corporations for personal and business-related 

5 purposes. Defendants served as managers, officers, directors, 

6 and agents for service of process of those entities. 

7 Defendants purchased their first business as early as 1995. 

8 Defendants also purchased and managed commercial properties in 

9 Marysville, California, and a residential property in Lodi, 

10 California. In November of 2008 Brightside purchased the La 

11 Quinta for approximately $5,000,000.00. The transaction also 

12 involved an assumption of existing indebtedness. 

13 Despite their business savvy, on cross-examination, 

14 defendants recalled very little and were unable (or more 

15 accurately unwilling) to testify about basic matters concerning 

16 their finances, financial condition, properties, and business 

17 entities. Defendants generally could not (or more accurately did 

18 not want to) recall where they formally resided, why they claimed 

19 multiple residences, why they listed multiple and differing 

20 residences on their tax returns, how they acquired and 

21 transferred several pieces of real property to Simranjit, how 

22 liens were created and satisfied on their real properties, and 

23 the purpose and function of many of their California and Texas 

24 entities. 

25 In particular, defendants were unable to explain why the 

26 initial and amended SOFAs omitted a Chase checking account which 

27 they held and used within the year preceding the Petition Date. 

28 Defendants also failed to explain why the initial and amended 

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Schedules and SOFAs did not fully disclose the extent of an 

interest they apparently retained in Brightside following its 

purported sale to Simranjit. And defendants were unable to 

explain the extent of consideration received for the transfer of 

the 513 B Property to PCV and thereafter the transfer of their 

interests in PCV to Simranjit. As to each of these matters, and 

those referenced generally above, defendants repeatedly testified 

that they did not know, they did not remember, or they could not 

recall. Given their level of business sophistication, 

defendants' feigned ignorance is not believable and their 

testimony regarding those matters is largely not credible. 3 

A. The Initial and Amended Schedules and SOFAs 

Defendants filed Schedules with their chapter 7 petition. 

Schedule A/B lists no bank or other financial accounts. In 

response to Question No. 17 which requires disclosure of 

"[d]eposits of money" in any "[c]hecking, savings, or other 

financial accounts" defendants answered "No[.]" In response to 

Question No. 27 which requires disclosure of "[llicenses, 

3Consistent with what the court perceives as defendants' 

feigned ignorance and therefore willful failure to testify about 

their finances and financial and business dealings, defendants 

also failed to provide plaintiff with documents covered by a 

pretrial document request. In response to the request, 

defendants produced two documents. Independently, however, the 

chapter 7 trustee managed to obtain hundreds, if not thousands, 

of pages of documents covered by plaintiff's request. Many of 

the documents were admitted for their full probative value 

without objection by the defendants. The documents paint a 

picture of knowledge and personal involvement by the defendants 

much greater than they were willing to testify about and further 

support the court's conclusion that defendants' ignorance was 

feigned and their testimony largely not credible. 

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1 franchises, and other general intangibles" defendants answered 

2 "No[.]" In response to Question No. 35 which requires disclosure 

3 of "[amy financial assets you did not already list" defendants 

4 answered "No[.]" In response to Question No. 37 which requires 

5 disclosure of "any legal interest in any business-related 

6 property" defendants answered "No[.]" And in response to 

7 Question No. 53 which requires disclosure of "other property of 

8 any kind you did not already list" defendants answered "No[.]" 

9 Defendants filed an amended Schedule A/B on December 14, 

10 2017. Defendants' answers to Question Nos. 17, 27, 35, 37, and 

11 53 on the amended Schedule A/B all remained "No[.]" 

12 Defendants also filed a SOFA with the petition. Question 

13 No. 20 of the SOFA asks: "Within 1 year before you filed for 

14 bankruptcy, were any financial accounts or instruments held in 

15 your name, or for your benefit, closed, sold, moved, or 

16 transferred?" In response to that question, defendants answered 

17 "No[.]" In response to Question No. 27 which asks "[w]ithin 4 

18 years before you filed for bankruptcy, did you own a business or 

19 have any of the following connections to any business?[,]" 

20 defendants identified "March on Hospitality" (fka Brightside) 

21 from "2007-2014." 

22 Defendants filed an amended SOFA on December 14, 2017. The 

23 answer to Question No. 20 on the amended SOFA remained "No[.]" 

24 As a result of an apparent change in the entity's name, the 

25 response to Question No. 27 changed from "March on Hospitality" 

26 to "Brightside Hospitality." 

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1 1. Defendants' Chase Checking Account 

2 Despite the defendants' sworn statements in the SOFA that 

3 they did not have any financial accounts within the year 

4 preceding the Petition Date, defendants did in fact have a 

5 personal checking account with Chase ending in 3311. Defendants' 

6 Chase checking account was active through at least late September 

7 of 2016. Deposits into and withdrawals from the account for the 

8 first nine months of 2016 totaled $24,390.00. 

9 2. Brightside & La Quinta 

10 Rajpal, as the sole member, formed Chatha Hospitality, LLC, 

11 as a Texas limited liability company on April 11, 2007. On April 

12 13, 2007, Rajpal changed Chatha Hospitality's name to Brightside 

13 Hospitality, LLC. Brightside thereafter purchased the La Quinta 

14 in November 2008. Tax records confirm that Rajpal remained 

15 Brightside's sole member through at least 2015. 

16 Meanwhile, in September of 2014 Brightside filed a voluntary 

17 chapter 11 petition in the United States Bankruptcy Court for the 

18 Northern District of Texas and through that proceeding changed 

19 its name on or about May 13, 2015, to March on Hospitality, LLC, 

20 a Texas limited liability company. As the entity's managing 

21 member, Rajpal signed the Certificate of Amendment changing the 

22 name which thereafter was filed with the Texas Secretary of 

23 I State. 

24 The Texas bankruptcy court confirmed Brightside's (as 

25 renamed) fourth amended plan on or about June 1, 2015. Among 

26 other things, Brightside's confirmed chapter 11 plan provided for 

27 the cancellation of the defendants' interest in Brightside and 

28 the transfer of 100 of that interest to Simranjit in exchange 

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f or a $60,000.00 contribution from Simranjit. Taranjit testified 

that she provided Simranjit with the $60,000.00 payment and that 

she obtained funds for that payment from another family member. 

The court is convinced that Simranjit was a straw-purchaser 

of the defendants' equity interest in Brightside. 4 Stated more 

bluntly, the court is convinced that defendants ignored the Texas 

bankruptcy court's confirmation order cancelling their interest 

in Brightside and thereafter retained and enjoyed a management 

and beneficial interest at least through January 4, 2018, when 

Rajpal's membership interest in Brightside was formally 

terminated and 100 of the entity effectively transferred to 

Simranj it. 5 In addition to the membership interest termination 

4The court takes judicial notice that Texas and California 

are community property states. See Fed. R. Evid. 201. 

5The January 4, 2018, document formally terminating Rajpal's 

membership interest recorded with the Texas Secretary of State 

references an entity no. 800800278 with a formation date of April 

11, 2007. That entity number and date correlate with the 

document that Rajpal filed with the Texas Secretary of State in 

April of 2007 to form Chatha Hospitality, LLC, as thereafter 

renamed Brightside and March on Hospitality. Official records 

thus reflect that Rajpal remained a member of Brightside 

continuously from its formation in April of 2007, on the Petition 

Date, and until his membership interest was formally (and 

officially) terminated for Simranj it's benefit on January 4, 

2018. 

To the extent that Rajpal retained an interest in Brightside 

on the Petition Date, he held a membership interest in the entity 

that, on the Petition Date, owned the La Quinta. Tarrant County 

(Texas) Recorder records reflect that four days after the 

Petition Date, on August 15, 2017, a General Warranty Deed, 

document no. D217187705, signed by Simranjit, conveying "Lot 5R1, in MANSFIELD DEBBIE LANE ADDITION" from Brightside to a newly 

formed entity, Summerfest Hospitality, LLC, a Texas limited 

liability company, was recorded. According to the Tarrant County 

(Texas) Assessor "MANSFIELD DEBBIE LANE ADD Lot 5R1" corresponds 

with an address at 1503 Breckenridge Road, Mansfield, Texas, 

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1 date, the court reaches this conclusion based on the use of 

2 family funds for Simranjit's $60,000.00 contribution and the 

3 substantial control that Rajpal continued to exercise over 

4 Brightside's finances and financial matters between June 2015 and 

5 at least September 2017. 

6 From at least June of 2015 through November of 2015 Rajpal 

7 remained an authorized signatory on a La Quinta Frost Bank 

8 ' account ending in 4444. Rajpal signed checks drawn on that 

9 account to purchase assets for the entity, pay the entity's 

10 expenses and insurance, transfer funds to a Brightside account 

11 ending in 8508 maintained at Stanford Federal Credit Union, and 

12 pay U.S. trustee fees. 

13 Between August 2015 and February 2016, Rajpal remained an 

14 authorized signatory, and signed checks drawn, on a La Quinta 

15 Chase Bank account ending in 1408. Rajpal also made a number of 

16 large prepetition withdrawals from this account totaling 

17 $174,000.00, including: $25,000.00 on May 29, 2015; $99,000.00 on 

18 'June 8, 2015; and $50,000.00 on July 18, 2015. He made another 

19 substantial withdrawal of $145,718.95 from the account 

20 postpetition on September 29, 2017. In total, Rajpal withdrew 

21 $319,718.95 from this La Quinta account acting in the name of 

22 Brightside. The nature and purpose of the withdrawals were not 

23 explained. 

24 B. 513 B Property and PCV 

25 PCV is a California limited liability company. Defendants 

26 formed the entity in June of 2012 and, at about the same time, 

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1 transferred fee title to the 513 B Property to the entity with no 

2 record of any consideration. The 513 B Property is an apartment 

3 building also used for commercial purposes. It is zoned as "spot 

retail" and classed as commercial according to county records. 

5 Defendants each transferred 50% of their interest in PCV to 

6 Simranjit in October of 2012. Defendants each transferred their 

7 remaining 50% interest in PCV to Simranjit in July of 2013. The 

8 only consideration identified for the defendants' transfer of 

9 their interests in PCV to Simranjit is the latter's purported 

10 agreement to take over, renovate, and manage the property. 

11 However, when questioned on cross-examination, defendants were 

12 unable to identify or explain how or to what extent Simranjit 

13 "managed" or "renovated" the 513 B Property in exchange for the 

14 defendants' PCV interests. Defendants were also unable to 

15 produce records to establish the extent of Simranj it's purported 

16 consideration, if any. 

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18 I Conclusions of Law 

19 A. Section 727(a) (4) (A) 

20 Section 727(a) (4) (A) states that "[tihe court shall grant 

21 the debtor a discharge, unless . . . the debtor knowingly and 

22 fraudulently, in or in connection with the case[,] made a false 

23 oath or account." The elements of a § 727(a) (4) (A) claim are: 

24 (i) a false oath by the debtor in or in connection with the case; 

25 (ii) the oath related to a material fact; (iii) the oath was made 

26 knowingly; and (4) the oath was made fraudulently. Retz v. 

27 Samson (In re Retz), 606 F.3d 1189, 1197 (9th Cir. 2010) 

28 (internal quotations and citations omitted). 

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1. First and Third Elements: Defendants knowingly made 

false oaths in and in connection with their chapter 7 

case. 

The court focuses on the defendants' initial and amended 

Schedules and SOFAs. Schedules and statements of financial 

affairs are signed and filed under penalty of perjury. See Fed. 

R. Bankr. P. 1008. "A false statement or an omission in the 

debtor's bankruptcy schedules or statement of financial affairs 

can constitute a false oath." Retz, 606 F.3d at 1196 (quoting 

Khalil v. Developers Sur. & Indem. Co. (In re Khalil), 379 E.R. 

163, 172 (9th Cir. BAP 2007), aff'd and adopted, 578 F.3d 1167 

(9th Cir. 2009) 

Inasmuch as defendants' Chase checking account existed and 

was active through the latter part of 2016, defendants 

undoubtedly were aware of the account when they filed the initial 

and amended SOFAs. Yet, the account is not disclosed in either. 

Additionally, given the level of financial control that Rajpal 

enjoyed and exercised over Erightside from and after June of 

2015, which included acting in the name of the entity within the 

year preceding the Petition Date and over a month thereafter, 

defendants knew they retained an interest in Brightside much 

greater than the interest disclosed for the first time in the 

amended SOFA. 6 

Defendants deliberately and consciously signed the initial 

and amended Schedules and SOFAS knowing they omitted the Chase 

checking account and the true extent of their Brightside 

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lBrightside terminated in 2014 which itself is not accurate. 

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1 interest. The omissions are therefore false oaths by the 

2 defendants which were knowingly made. Accordingly, the first and 

3 third elements of § 727(a) (4) (A) are satisfied. 

4 2. Fourth Element: Defendants' false oaths were 

fraudulently made. 

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Once it is shown that a false oath was knowingly made it 

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must also be shown that it was fraudulently made. Retz, 606 F.3d 

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at 1198; see also Fogal Leciware of Switzerland, Inc. v. Wills (In 

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re Wills), 243 B.R. 58, 64 (9th Cir. BAP 1999). A debtor's 

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fraudulent intent may be established by circumstantial evidence 

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or by inference drawn from a course of conduct. Retz, 606 F.3d 

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at 1199 (citing Devers v. Bank of Sheriden, Mont. (In re Devers), 

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759 F.2d 751, 753-54 (9th Cir. 1985)). A court is likely to find 

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the requisite fraudulent intent where there is a pattern of 

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falsity, reckless indifference to and disregard for the truth, a 

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failure to take advantage of an opportunity to clear up omissions 

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and inconsistencies, and the size or nature of an undisclosed 

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asset suggests it is something that the debtor might not want to 

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disclose. Id. at 1198-99 (citing Khalil, 379 B.R. at 174); see 

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also Trainor v. Evans (In re Evans), 2017 WL 3429023, *45 (9th 

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Cir. BAP 2017) (reaffirming Khalil) . Evidence presented at trial 

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supports a finding of fraudulent intent. 

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Defendants knowingly omitted the Chase checking account and 

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the full extent of their Brightside interest from the initial 

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Schedules and SOFA. That exhibits a reckless indifference to and 

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disregard for the truth. See Stamat v. Neary, 635 F.3d 974, 982 

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(7th Cir. 2011) (reckless disregard shown where debtors who 

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failed to disclose business interests were highly educated and 

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had significant business experience). 

Several months later defendants retained new bankruptcy 

counsel and amended the Schedules and SOFA. Like the initial 

version of those documents, the Chase checking account and the 

full extent of the defendants' Brightside interest were again 

knowingly omitted from the amended documents. That is a pattern 

of falsity and a failure by the defendants to take advantage of 

an opportunity to clear up their prior inconsistencies. 7 

The defendants' Brightside interest became property of the 

estate which vested in the trustee on the Petition Date. Fursman 

v. tJlrich (In re First Fire Protection, LLC), 440 B.R. 820, 830 

(9th Cir. BAP 2010) (under Arizona law, full extent of debtors' 

membership interest in limited liability company is property of 

the estate); Fresno Rock Taco, LLC v. National Sur. Ins. Corp., 

2015 WL 135720, *13 & n.32 (E.D. Cal. 2015) (finding First 

Protection analysis applicable to California limited liability 

company due to identity of statutes). And because Brightside 

still owned the La Quinta on the Petition Date, that makes the 

defendants' Brightside interest a potentially valuable asset in 

that it would give the trustee an ownership interest in the 

entity that owned the La Quinta. Moreover, the La Quinta appears 

be a family-run enterprise which the defendants apparently want 

I to keep in the family. So in those respects, the potential value 

7This is particularly true given that in the period between 

the filing of the initial Schedules and SOFA, i.e., August 11, 

2017, and the filing of the amended Schedules and SOFA, i.e, 

December 14, 2017, on September 29, 2017, Rajpal withdrew an 

additional $145,718.95 from Brightside's account signing the 

withdrawal slip under Brightside authority. 

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1 and nature of the defendants' Brightside interest make it 

2, something that the defendants would not want to fully disclose in 

3 order to protect and preserve it for Simranj it's benefit. 

4 In short, plaintiff has established fraudulent intent with 

5 regard to their false oaths knowingly made. The Fourth element 

6 of § 727(a) (4) (A) is therefore satisfied. 

7 3. Second Element: Defendants' False Oath is 

Material. 

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Fraudulent omissions must also be material. Materiality is 

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broadly defined and a false statement is material if it bears any 

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relationship to the debtor's business transactions or estate, or 

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concerns the discovery of assets, business dealings, or the 

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existence and disposition of the debtor's property. Retz, 606 

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F.3d at 1198; see also Wills, 243 B.R. at 62. Thus, "[e]ven if 

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the debtor can show that the assets were of little value or that 

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I a full and truthful answer would not have directly increased the 

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estate assets, a discharge may be denied if the omission 

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adversely affects the trustee's or creditors' ability to discover 

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other assets or to fully investigate the debtor's pre-bankruptcy 

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dealing and financial condition." Wills, 243 B.R. at 63 (quoting 

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6 King, Collier on Bankruptcy ¶ 727.04 [1] [bIH. That is so 

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because "[tihe fundamental purpose of § 727(a) (4) (A) is to insure 

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that the trustee and creditors have accurate information without 

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having to conduct costly investigations." 

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The defendants' omission of the Chase checking account and 

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the Brightside interest from the initial and amended Schedules 

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and SOFAS clearly relates to their assets, property, and business 

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dealings. By omitting the Chase checking account from the 

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1 initial and amended SOFAs the defendants provided the trustee and 

2 creditors with an inaccurate picture of their financial condition 

3 and prevented them from learning that, in the months before the 

4 bankruptcy filing, the defendants had access to thousands of 

5 dollars which were used to pay expenses. See e.g., Taylor v. 

6 Good (In re Taylor), 720 Fed. Appx. 413, 414-15 (9th Cir. 2018) 

7 (so stating). The flow of money in and out of an account is also 

8 relevant to the discovery of concealed assets. Id. (so stating) 

9 For these reasons, the court concludes that the omission of the 

10 Chase checking account from the initial and amended SOFAs is 

11 material. 

12 The potential value and nature of the defendants' Brightside 

13 interest, discussed above, speaks for itself as to its 

14 materiality in relation to its omission from the initial and 

15 amended Schedules and SOFAs. 

16 In short, defendants' knowing and fraudulent false oaths are 

17 material. The second element of § 727(a) (4) (A) is therefore 

18 I satisfied. 

19 4. Section 727(a) (4) (A) Conclusion 

20 The court is persuaded that defendants knowingly and 

21 I fraudulently, in and in connection with their bankruptcy case, 

22 Imade false oaths in the initial and amended Schedules and SOFAs. 

23 Therefore, the defendants will be denied a discharge in their 

24 chapter 7 case pursuant to 11 U.S.C. § 727(a) (4) (A). 

25 B. Section 727(a) (5) 

26 Section 727(a) (5) states: "The court shall grant the debtor 

27 a discharge, unless . . . the debtor has failed to explain 

28 satisfactorily, before determination of denial of discharge under 

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l this paragraph, any loss of assets or deficiency of assets to 

2 meet the debtor's liabilities." 11 U.S.C. § 727(a) (5). Section 

3 727(a) (5) is broadly drawn and gives the bankruptcy court power 

4 to decline to grant a discharge when the debtor does not 

5 adequately explain a shortage, loss, or disappearance of assets. 

6 Seror v. Lopez (In re Lopez), 532 B.R. 140, 150 (Bankr. C.D. cal. 

7 2015) (citation omitted) 

8 Under § 727(a) (5) an objecting party bears the initial 

9 burden of proof and must demonstrate: (1) debtor at one time, not 

10 too remote from the bankruptcy petition date, owned identifiable 

11 assets; (ii) on the date the bankruptcy petition was filed or 

12 order of relief granted, the debtor no longer owned the assets; 

13 and (iii) the bankruptcy pleadings or statement of financial 

14 affairs do not reflect an adequate explanation for the 

15 disposition of the assets. Retz, 606 F.3d at 1205. Once the 

16 creditor has made a prima facie case, the debtor must offer 

17 credible evidence regarding the disposition of the missing 

18 assets. Id. (citing Devers, 759 F.2d at 754) 

19 Plaintiff has established a prima fade case under § 

20 1727(a) (5). Defendants' testimony regarding their finances and 

21 properties was vague and evasive. Defendants owned real 

22 property, i.e., the 513 B Property, and had possession of large 

23 amounts of cash, i.e., Rajpal's cash withdrawals from 

24 Brightside's account, within a period of time not too remote from 

25 the Petition Date. Defendants failed to satisfactorily explain 

26 the extent of the consideration purportedly received for the 

27 transfer of the 513 B Property to PCV and the subsequent transfer 

28 of their interest in PCV to Simranjit. There also was no 

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1 satisfactory explanation as to what Rajpal did with the hundreds 

2 of thousands of dollars he withdrew from Brightside's La Quinta 

3 account, both pre- and postpetition. Defendants' testimony that 

4 they do not know, they do not recall, and could not explain these 

5 (and the other matters referenced generally hereinabove) are 

6 tantamount to no explanation at all. And even if testimony of 

7 that nature could be considered to be an explanation, it 

8 certainly is not one satisfactory to this court. See Lopez, 532 

9 B.R. at 140 (vague, indefinite, and uncorroborated explanations 

10 are not satisfactory) 

11 In short, defendants have not met their burden of 

12 explaining, before the entry of a discharge, the loss or 

13 insufficiency of assets to satisfy their obligations. Therefore, 

14 defendants' discharge in their chapter 7 case will alternatively 

15 be denied pursuant to 11 U.S.C. § 727(a) (5). 

16 C. Remaining Claims 

17 There is insufficient evidence to permit the court to 

18 conclude that defendants transferred, removed, mutilated, 

19 destroyed or concealed property of the debtor or the estate with 

20 the intent to hinder, delay, or defraud a creditor or the 

21 trustee. Although assets and related transactions may not have 

22 been fully or accurately disclosed, they were nevertheless 

23 disclosed. Incomplete or inaccurate disclosure lends itself more 

24 to a § 727(a) (4) (A) claim rather than claims under § 

25 727 (a) (2) (A) - (B) 

26 Additionally, based on the voluminous documents and records 

27 that the chapter 7 trustee was apparently able to obtain and 

28 which he provided to the plaintiff, there is no basis for a claim 

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1 under § 727(a) (3). 

2 

3 Conclusion 

4 For all the foregoing reasons, 

5 (1) judgment on the Fourth and Fifth Claims for Relief in 

6 the Complaint will be entered for the plaintiff and against the 

7 defendants, and defendants shall be denied a discharge in their 

8 chapter 7 case. 

9 (2) judgment on the First, Second, and Third Claims for 

10 Relief will be entered for the defendants and against the 

11 plaintiff. 

12 The continued trial set for March 26, 2019, at 9:30 a.m. 

13 shall be vacated. 

14 A separate judgment will issue. 

15 Dated: March 26, 2019. 

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UNITED STATES BANKR PTCY JUDGE 

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Filed 03/26/19 Case 17-02205 Doc 43
INSTRUCTIONS TO CLERK OF COURT 

SERVICE LIST 

The Clerk of Court is instructed to send the attached 

document, via the BNC, to the following parties: 

Walter R. Dahi 

2304 N St 

Sacramento CA 958 16-5716 

W. Steven Shumway 

3400 Douglas Blvd., Suite 250 

Roseville CA 95661 

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