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NOTFOR PUBLICATION

UNITED STATES BANKRUPTCY APPELLATE PANEL

OF THE NINTH CIRCUIT

In re: ) BAP No. WW-17-1067-KuFB

)

ZHEN CHEN, ) Bk. No. 16-10632-TWD

)

Debtor. ) Adv. No. 16-01166-TWD

______________________________)

)

ZHEN CHEN, )

)

Appellant, )

)

v. ) M E M O R A N D U M*

)

UNITED STATES TRUSTEE, )

)

Appellee. )

______________________________)

Argued and Submitted on September 28, 2017

at Seattle, Washington

Filed - October 17, 2017

Appeal from the United States Bankruptcy Court

for the Western District of Washington

Honorable Timothy W. Dore, Bankruptcy Judge, Presiding

___________________________________

Appearances: Glyn E. Lewis argued for appellant; Hilary B.

Mohr argued for appellee.

___________________________________

Before: KURTZ, FARIS, and BRAND, Bankruptcy Judges.

FILED

OCT 17 2017

SUSAN M. SPRAUL, CLERK

U.S. BKCY. APP. PANEL

OF THE NINTH CIRCUIT

* This disposition is not appropriate for publication.

Although it may be cited for whatever persuasive value it may

have (see Fed. R. App. P. 32.1), it has no precedential value. 

See 9th Cir. BAP Rule 8013-1.

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Appellant, chapter 71 debtor Zhen Chen, appeals from the

bankruptcy court’s summary judgment in favor of the United

States Trustee (Trustee) denying Chen’s discharge under

§ 727(a)(3). Because the record shows that there are no genuine

disputes of material fact, we AFFIRM. 

I. FACTS

A. Chen’s Background

Chen lived and worked in China for most of her life. Her

native language is Mandarin. She attended college in Beijing

and received her degree in Foreign Trade in 1989. From 1989-

2000, Chen worked as an importing agent in China. In 2000, Chen

moved to the United States. 

The record is spotty regarding her employment after her

move. In 2010, she earned a bookkeeping certificate from

Bellevue Community College in Bellevue, Washington. In 2014,

Chen and a colleague formed an import/export business called BTS

Trading, LLC (BTS) of which Chen owned ten percent. That same

year, Chen worked for a small Chinese company part-time and a

restaurant for two months.

Chen was unemployed in 2015 and had no income. During 2014

and 2015, Chen received large wire transfers into her bank

accounts from Chinese nationals. Since February 2016, Chen has

been employed by Richful, LLC as a bookkeeper. In that

position, she interfaces with an accountant for payroll and tax

1 Unless otherwise indicated, all chapter and section 

references are to the Bankruptcy Code, 11 U.S.C. §§ 101-1532. 

“Rule” references are to the Federal Rules of Bankruptcy

Procedure and “Civil Rule” references are to the Federal Rules of

Civil Procedure.

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return preparation.

According to the record, Chen was a high stakes gambler. 

Chen incurred significant debt related to her gambling. 

B. Bankruptcy Events

Chen filed a chapter 7 petition in early 2016. Her amended

Schedule E/F shows $417,090.77 in non-priority unsecured debt

consisting primarily of gambling debt owed to casinos in Las

Vegas and Washington. Her initial Statement of Financial

Affairs (SOFA) showed that she had lived at 35th Place,

Sammamish, Washington (35th Place Property) from January 1, 2009

to May 1, 2015. Chen also disclosed that two months before her

bankruptcy filing, she transferred her title interest in real

property located on 201st Court, Sammamish, Washington (201st

Court Property) to her sister for zero dollars because her

sister had provided all the funds for the purchase of the

property. The SOFA showed that Chen was a member of BTS, but

she indicated that the company had “never done business.” 

Finally, Chen disclosed $295,000 in gambling losses.

Shortly after Chen filed her petition, Trustee sought and

obtained an order directing Chen to submit to examination and

produce documents under Rules 2004 and 9016. Trustee issued a

subpoena to Chen seeking production of documents pertaining to

her financial condition including, among others: 

(1) copies of financial statements, balance sheets, or

loan or credit applications prepared or submitted by 

Chen or an entity she controlled for the two years

prior to her bankruptcy (Requested Period); 

(2) tax returns for tax years 2012 through 2014; 

(3) statements for any type of bank or financial

account Chen controlled for the Requested Period, and

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related documents (e.g., canceled checks, check

registers, wire transfers, deposit slips); 

(4) copies of cashier’s checks she or an entity she

controlled obtained during the Requested Period; and 

(5) all documents related to real property in which 

Chen had an interest in the past five years,

specifically including her interest in two parcels of

residential real property - the 201st Court Property

and the 35th Place Property. 

Chen produced some documents in response, but many were 

missing. She later produced more documents, but several were

duplicative and others were still missing. 

In June 2016, Trustee conducted Chen’s 2004 exam and gave

her a further opportunity to produce documents pertaining to:

(1) a line of credit (LOC) on the 35th Place Property and its

sale that occurred within the year preceding the petition,

including the disposition of the sale proceeds; (2) Chen’s joint

purchase of the 201st Court Property with her sister, also in

the year preceding the bankruptcy; (3) Chen’s disposition of

$30,000 in proceeds from the sale of a 2013 Lexus about three

months before she filed bankruptcy; and (4) millions in

unexplained deposits and withdrawals into and out of Chen’s bank

accounts in the two years preceding her petition. 

After her exam, Chen made her largest production of the

requested documents, but still many were missing. She also

amended her SOFA to show the sale of the 35th Place Property for

$672,000, and disclosed that the sale proceeds were used to pay

back her gambling debt to casinos in Las Vegas and to pay the

mortgage. She further disclosed that she had transferred

approximately $30,000 in sale proceeds from the Lexus to her

friend, Ms. Yin, for repayment of a gambling loan. In the

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amended SOFA, Ms. Chen reflected her gambling losses as

$400,000. Finally, Chen made adjustments to her income from

employment for 2015, changing her gross income from $15,000 to

$0.00 and increasing her 2014 gross income from $15,000 to

$20,000. She also showed gross income of $15,000 from gambling

for the year 2014.

Following Trustee’s repeated failed attempts to obtain 

documents relating to the various transactions, Trustee filed an

adversary complaint against Chen seeking to deny her discharge

under § 727(a)(2)(A), (a)(3), (a)(4), and (a)(5). After Chen

answered the complaint, Trustee filed a motion for summary

judgment (MSJ) on the § 727(a)(3) claim, alleging that there

were significant transactions (two property sales, a vehicle

sale, and the flow of millions of dollars into and out of Chen’s

accounts in the two years before the petition date) that were

undocumented or inadequately documented to the extent that

parties in interest could not ascertain her financial condition

as of the petition date.

In support of the MSJ, Trustee submitted the declaration of

bankruptcy analyst Young-Mi Petteys (Petteys). Attached to

Petteys’ declaration were bank statements, a two-page ledger

from Chen regarding her draws and payments on the LOC for the

35th Place Property, and communications regarding requests to

Chen for the further production of documents.

Trustee also submitted the declaration of Hilary Mohr, the

trial attorney for Trustee in this matter. Attached to

Ms. Mohr’s declaration were the transcript of Chen’s 2004 exam

and various communications regarding Ms. Mohr’s efforts to

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obtain the relevant documents. 

Based on Chen’s testimony and documents that were produced,

Petteys’ declaration set forth the four areas where it was

impossible to trace, verify, or otherwise piece together Chen’s

financial condition:

Unexplained deposits and withdrawals: Relying on the bank

statements produced, Petteys declared that there were $2,329,000

in unexplained deposits and $2,244,000 in unexplained

withdrawals from Chen’s accounts for the years 2014 and 2015.

201st Court Property: Relying on Chen’s testimony and the

documents produced, Petteys declared that she was unable to

verify the source of the funds used to purchase the 201st Court

Property. Chen testified that the 201st Court Property belonged

to her sister and that Chen was on title only for her sister’s

convenience because her sister lives in China. Chen also

testified that after her sister learned of Chen’s gambling

habits, her sister requested that Chen quitclaim the property to

her. Chen did so two months before she filed her petition. 

Although Trustee requested that Chen provide all documents

relating to the purchase of the 201st Court Property, she

produced documents in draft form only. The draft deed of trust

identified Chen as a “co-borrower” on the loan to purchase the

201st Court Property. She did not produce a final HUD-1

statement for the purchase of the 201st Court Property or

provide final loan or security documents.2

2 There is no explanation in the record why Chen did not

attempt to obtain final documents pertaining to the sale or, if

(continued...)

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35th Place Property: Based on Chen’s testimony and the

documents produced, Petteys was unable to confirm the amount

Chen received from the sale of this property or the ultimate

disposition of the sale proceeds. Chen testified that she

purchased this property in 2009 with funds from her father. In

August 2014, Chen obtained the LOC from East West Bank secured

by the property and began drawing on the credit. In total, she

drew $669,000 on the LOC. Chen testified that she drew on the

note to gamble and made payments on the note from gambling

winnings. She also testified that she used the money to make

loans to friends for gambling, and paid on the note from what

they repaid her.

Chen produced no documents showing what she did with the

funds drawn on the LOC, and admitted that the loans to her

friends were not documented in any way. Chen testified that 

all of the credit draws went into her East West Bank checking

account. However, based on a two-page ledger produced by Chen,

Petteys could trace approximately $447,000 of the $669,000,

leaving $220,000 which could not be accounted for because the

draws did not correspond to any deposits in her bank accounts.

Finally, Chen sold the property in 2015 for $672,000. 

However, Chen did not provide any documentation showing the

disposition of the sale proceeds. From what Petteys could piece

together, at the time of the sale Chen owed over $300,000 on the

LOC. On July 13, 2015, $313,000 was wired into Chen’s U.S. Bank

2(...continued)

she did, why she could not obtain them.

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account. Chen testified that she believed the wire was the net

proceeds from the sale after full payment of the East West Bank

mortgage. The following day, Chen made two wire transfers for

$118,000 and $163,000. She testified that these transfers were

to repay gambling debts. However, she produced no records to

show who received the wire transfers. Chen also did not produce

a final HUD-1 settlement statement or other document from which

the final sale proceeds or mortgage payoff from the sale of the

35th Place Property could be verified.3

Petteys declared that the U.S. Bank statement was the only

document to support Chen’s claim that she received $313,000 from

the sale of the 35th Place Property, and that $118,000 and

$163,000 went to pay back casinos. However, using this bank

statement alone, Petteys concluded that she was unable to

confirm the source of the $313,000, or to confirm the recipients

of the two outgoing wire transfers.

Sale of the 2013 Lexus and disposition of sale proceeds: 

In October 2015, Chen sold a 2013 Lexus for $33,500. Chen

testified that she sold the 2013 Lexus to repay a gambling debt

to a friend, Ms. Yin, in the amount of $30,000. The only

document she produced about the sale of the 2013 Lexus is a copy

of her deposit slip which includes a copy of a check. The check

is from Lexus of Bellevue for $33,500 and dated October 25,

2015. According to Chen’s U.S. Bank statement, she deposited

3 Again, there is no indication in the record that Chen

attempted to obtain the final HUD-1 settlement statement or other

closing documents or that she contacted the casinos to obtain

documents showing that they received the wire transfers she

testified to.

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$30,000 four days later. Petteys declared that she could not

find a corresponding withdrawal for $30,000 and therefore it was

unclear if Chen’s friend was ever owed the money or repaid.

Chen responded to the MSJ by accusing Trustee of engaging

in “creative accounting,” misleading arguments, and outright

falsehoods. Chen contended that Trustee used “creative

accounting” to come up with $3.2 million that Chen allegedly

received over two years. Chen argued that she would withdraw

money to gamble and then deposit the same money the next day. 

Chen also asserted that it is undisputed that she lost

money gambling and was a gambling addict. According to Chen, a

“reasonable person” standard should not be applied to her

because gambling against the odds is an inherently unreasonable

activity. Finally, Chen contended that Trustee was using

disputed facts to support her MSJ and therefore summary judgment

should not be granted. 

In her declaration, Chen explained that the only money she

received from China were gifts from her mother and sister who,

together, transferred approximately $900,000 to her from 2013 to

2015. Chen stated that she could not receive the money directly

from her sister because of Chinese currency controls and

therefore her sister’s friends would send Chen the money. Chen

further declared that she sold the 35th Place Property to pay

off her gambling debt to casinos in Las Vegas and that only her

sister had provided funds for the purchase of the 201st Court

Property. She also explained that she used $30,000 in proceeds

from the sale of her Lexus to pay back a personal loan from one

of her gambling friends, Ms. Yin. 

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Finally, Chen stated that she did not keep all the

documents she received from the casinos showing her gambling

losses because it was “too depressing” for her to think about. 

In addition, she did not document personal loans made to her

gambling friends because they trusted each other: “To ask for

documentation among such close friends may have been considered

insulting.” Chen further declared that her native language was

Mandarin and she did not understand all the English language

documents that she has, such as the purchase and sale documents

for the 201st Court Property and 35th Place Property. 

The bankruptcy court heard the matter and stated its ruling

granting Trustee’s MSJ on the record. On December 23, 2016, the

court entered the order granting Trustee’s MSJ and denying

Debtor’s discharge on the basis of § 727(a)(3). 

Chen did not file a notice of appeal by the January 6, 2017

deadline. On January 20, 2017, Chen filed a timely motion to

extend the time to file an appeal from the order based on

excusable neglect — Chen’s counsel thought there were 30 days to

file an appeal instead of 14 days. See Rule 8002(d)(1)(B). 

Trustee opposed. The bankruptcy court granted Chen’s motion and

extended the time to appeal to March 3, 2017. Chen filed her

notice of appeal on March 2, 2017. 

II. JURISDICTION

The bankruptcy court had jurisdiction over this proceeding

under 28 U.S.C. §§ 1334 and 157(b)(2)(J). We have jurisdiction

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under 28 U.S.C. § 158.4

III. ISSUE

Did the bankruptcy court err when it granted summary

judgment and denied Chen’s discharge under § 727(a)(3)? 

IV. STANDARD OF REVIEW

We review a summary judgment de novo. Caneva v. Sun

Communities Operating Ltd. P’ship (In re Caneva), 550 F.3d 755,

760 (9th Cir. 2008). We thus independently conduct our review

giving no deference to the bankruptcy court’s conclusion. Roth

v. Educ. Credit Mgmt. Agency (In re Roth), 490 B.R. 908, 915

(9th Cir. BAP 2013). Viewing the evidence in the light most

favorable to the non-moving party, we must determine whether

there are any genuine disputes of material fact that remain for

trial and whether the prevailing party is entitled to judgment

as a matter of law. New Falls Corp. v. Boyajian (In re

Boyajian), 367 B.R. 138, 141 (9th Cir. BAP 2007).

V. DISCUSSION

The court shall grant summary judgment when the pleadings,

depositions, and admissions on file, together with the

affidavits, show that there are no genuine disputes as to any

material fact and the movant is entitled to judgment as a matter

of law. Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986). 

Credibility determinations, the weighing of the evidence, and

4 The bankruptcy court’s order contained a Civil Rule 54(b)

certification thereby making the order final for purposes of this

appeal. There is no separate judgment. See Rule 7058, making

Civil Rule 58 applicable in adversary proceedings. However, the

separate judgment requirement is not jurisdictional and can be

easily waived as occurred here. See Bankers Tr. Co. v. Mallis,

435 U.S. 381, 384–85 (1978).

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the drawing of legitimate inferences from the facts are jury

functions, not those of a judge when he is ruling on a motion

for summary judgment. Anderson v. Liberty Lobby, Inc., 477 U.S.

242, 255 (1986).

After the moving party has met her initial burden of proof,

the nonmoving party must produce evidence to support her claim

or defense. Nissan Fire & Marine Ins. Co., Ltd., v. Fritz Cos.,

Inc., 210 F.3d 1099, 1103 (9th Cir. 2000). “The evidence of the

non-movant is to be believed, and all justifiable inferences are

to be drawn in his favor.” Anderson, 477 U.S. at 255. However,

“[a] conclusory, self-serving affidavit, lacking detailed facts

and any supporting evidence, is insufficient to create a genuine

issue of material fact.” FTC v. Publ’g Clearing House, Inc.,

104 F.3d 1168, 1171 (9th Cir. 1997). “If the nonmoving party

fails to produce enough evidence to create a genuine issue of

material fact, the moving party wins the motion for summary

judgment.” Nissan Fire & Marine, 210 F.3d at 1103. 

For purposes of summary judgment, “the substantive law will

identify which facts are material.” Anderson, 477 U.S. at 248. 

The substantive law at issue in Trustee’s MSJ is § 727(a)(3). 

The statute directs the bankruptcy court to deny a debtor’s

discharge when:

the debtor has . . . failed to keep or preserve any

recorded information, including books, documents,

records, and papers, from which the debtor’s financial

condition or business transactions might be

ascertained, unless such act or failure to act was

justified under all the circumstances of the case.

Section 727(a)(3) places an affirmative duty on the debtor

to keep and preserve records accurately documenting his or her

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business and personal affairs. See In re Caneva, 550 F.3d at

762. Requiring accurate documentation “removes the risk to

creditors of ‘the withholding or concealment of assets by the

bankrupt under cover of a chaotic or incomplete set of books or

records.’” Id. (quoting Burchett v. Myers, 202 F.2d 920, 926

(9th Cir. 1953). We strictly construe this exception to

discharge in favor of the debtor’s fresh start. Id.

To succeed on its objection to discharge under § 727(a)(3),

Trustee must show “‘(1) that [Chen] failed to maintain and

preserve adequate records, and (2) that such failure rendered it

impossible to ascertain [Chen’s] financial condition and

material5 business transactions.’” Lansdowne v. Cox

(In re Cox), 41 F.3d 1294, 1296 (9th Cir. 1994) (quoting

Meridian Bank v. Alten, 958 F.2d 1226, 1232 (3d Cir. 1992)). 

Generally, records are sufficient if they allow the court and

creditors to trace the debtor’s financial dealings. 

In re Ridley, 115 B.R. 731, 733 (Bankr. D. Mass. 1990).

Once Trustee met her initial burden showing these elements,

the burden of proof then shifted to Chen to justify the

inadequacy or nonexistence of the records. In re Caneva,

550 F.3d at 761. The issue of justification is decided under an

objective standard and depends on what a normal, reasonable

person would do under similar circumstances. Id. at 763

“‘Justification for [a] bankrupt’s failure to keep or preserve

5 The bankruptcy court correctly observed that although the

language in § 727(a)(3) does not require the unexplained

transactions be material, the Ninth Circuit added a materiality

requirement in both In re Cox and In re Caneva.

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books or records will depend on . . . whether others in like

circumstances would ordinarily keep them.’”). 

In applying this objective standard, the court may

consider: (1) the debtor’s education, experience, and

sophistication; (2) the volume of the debtor’s business; (3) the

complexity of the debtor’s business; (4) the amount of credit

extended to the debtor in his business; and (5) any other

circumstances that should be considered in the interest of

justice. Meridian Bank, 958 F.2d at 1231. Generally, “when a

debtor is sophisticated and carries on a business involving

substantial assets, ‘creditors have an expectation of greater

and better record keeping.’” In re Caneva 550 F.3d at 762

(quoting In re Juzwiak, 89 F.3d 424, 428 (7th Cir. 1996)).

Finally, “[o]ral testimony is not a valid substitute or

supplement for concrete written records.” In re Juzwiak,

89 F.3d at 429.

It is not enough that Debtor merely recite from

records ostensibly ‘kept in his head’ and detail from

memory what transactions he engaged in and how the

funds were dissipated. Records of substantial

completeness and accuracy are necessary in order that

they may be checked against Debtor’s oral statements.

Creditors, in other words, are not required to rely on

a debtor’s oral representations concerning these

matters without also having some independent means of

substantiating such representations.

Id.; see also Meridian Bank, 958 F.2d at 1233 (“Vague and

indefinite explanations of losses that are based upon estimates

uncorroborated by documentation are unsatisfactory.”); McBee v.

Sliman, 512 F.2d 504, 506 (5th Cir. 1975) (“Where a debtor’s

explanation for inadequate records is gambling, the debtor must

provide direct or circumstantial evidence to show that money was

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in fact lost and that the gambling explanation was not merely a

ruse to evade creditors.”).

The bankruptcy court used the above-referenced standards

and so do we in assessing the record before us. It shows that

Chen dealt with substantial sums of cash keeping little or no

verifiable records. Although Chen produced some documents,

there are no genuine disputes of material fact that the records

produced were inadequate. Trustee could not verify the details

of the transactions discussed or trace Chen’s financial

dealings. Petteys’ uncontroverted declaration showed:

! Chen received and transferred substantial sums of money

to third parties for which she provided no documentation. The

transfer of substantial amounts of money to a third party, with

no documentation, establishes a prima facie violation of

§ 727(a)(3). In re Caneva, 550 F.3d at 762. Although Chen

disputed Trustee’s contention that millions of dollars flowed

into and out of her bank accounts, Chen admitted that

approximately $900,000 had been received from family members -

either directly or indirectly - in the roughly two years prior

to her bankruptcy. The bankruptcy court properly concluded that

“no reasonable trier of fact could find that the transfer or

other expenditure of $900,000 in those two years by an

individual debtor with very modest income and few other assets

was not material.” Accordingly, even if Chen received the

$900,000 versus the millions alleged by Trustee, the bank

statements show large withdrawals of cash. Chen provided no

documentation regarding how she used the money.

! Chen admitted to frequently borrowing and loaning money

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to friends for gambling. She conceded that she had no

documentation for any of the transactions. 

! Chen admitted that she failed to keep all documents that

would show her gambling expenses.6

! Chen testified during her 2004 exam that she used $30,000

in proceeds from the sale of her 2013 Lexus to repay a gambling

debt to Ms. Yin. Yet, she provided no documentation of any debt

owed to Ms. Yin or that she repaid it with the sale proceeds. 

! The documents produced regarding Chen’s potential

interest in the 201st Court Property were inadequate. Although

Chen attached some documents showing the down payment was made

by her sister, she did not produce a final HUD-1 or documents to

show where approximately $86,0007 in deposits, in addition to

the down payment, came from. Although Chen tried to explain the

purchase transaction, Chen’s oral testimony was not a valid

substitute or supplement for the requested records. 

In re Juzwiak, 89 F.3d at 429.

! Chen’s documents pertaining to the sale of her home on

35th Place and the disposition of the sale proceeds were also

inadequate. She did not provide the final HUD-1 closing

6 Federal regulations require casinos to maintain extensive

records about transactions with their customers. See, e.g.,

31 C.F.R. § 1021.410. Chen never explained why she failed to

obtain - or even request - records from the casinos at which she

gambled.

7 Attached to Chen’s reply brief is a declaration from her

attorney with a copy of a $86,309.00 check written on Chen’s

account to Toll WA and allegedly returned to Chen. We do not

consider this evidence which is presented for the first time on

appeal. See Cold Mountain v. Garber, 375 F.3d 884, 891 (9th Cir.

2004).

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statement or other closing documents for the sale of her home

nor did she provide documents to show how she used the net sale

proceeds. Although she said she used the money she received to

pay gambling debts to Las Vegas casinos, she never produced

documents showing the transfer of the sale proceeds to those

entities nor does the record show that she tried to obtain them. 

Chen suggested in her brief opposing the MSJ that Trustee

could have obtained the records regarding her payments to the

casinos, but she chose not to. Trustee was not required to

investigate and acquire Chen’s records. Id.; Peters v. Michael

(In re Michael), 433 B.R. 214, 225 (Bankr. N.D. Ohio 2010)

(Under § 727(a)(3), “[a] creditor, even if they have the power

to obtain the records, such as through a subpoena, is not under

an obligation to do so.”). It was Chen’s duty to keep and

preserve records and provide sufficient information.

In the end, the records produced were incomplete and raised

more questions than they answered. It was impossible for

Trustee or any other party in interest to ascertain any

meaningful picture of Chen’s financial condition. Since Trustee

showed that no genuine disputes of material fact existed as to

its prima facie case, the burden shifted to Chen to present

evidence sufficient to show that a question of material fact did

exist as to whether her failure to keep or preserve the records

was justified under the circumstances of her case. 

Chen submitted no evidence in opposition to the MSJ other

than her declaration which repeated much of her 2004 exam

testimony and contained her justifications for her failure to

keep or preserve records in connection with the transactions

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discussed. Chen’s cursory affidavit does not create any genuine

disputes of material fact. 

Chen declares that “she did her best” to produce all the

documents in her possession, custody and control in response to

Trustee’s document requests. However, her best efforts in

producing the documents is not sufficient to satisfy the

requirements of § 727(a)(3). In re Caneva, 550 F.3d at 763; see

also Desiderio v. Devani (In re Devani), 556 B.R. 37, 43-44

(Bankr. E.D.N.Y. 2016) (debtor’s assertion that he produced what

was available to him in his possession is not a sufficient

justification for his failure to produce financial records as he

could have requested them from the relevant banks). 

Chen’s justifications for her failure to keep relevant and

material records because “it was too depressing,” “may have been

considered insulting” to her friends, or “she did not understand

all the documents” due to a language barrier, fail as a matter

of law for several reasons. First, Chen’s justifications are

simply bald assertions without any specifics. “[F]actually

unsupported claims [and] defenses” are insufficient to withstand

summary judgment.” Harrington v. Simmons (In re Simmons),

810 F.3d 852, 859 (1st Cir. 2016) (citing Celotex, 477 U.S. at

323); see also Publ’g Clearing House, Inc., 104 F.3d at 1171. 

Second, her justifications do not address all the records that

she failed to keep. They do not address her failure to document

how she spent the money obtained from the LOC on the 35th Place

Property and the numerous deposits and withdrawals from her bank

accounts.

Third, the test for determining whether Chen has adequately

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justified the inadequacy or lack of financial records is an

objective one. In re Caneva, 550 F.3d at 763; see also

In re Simmons, 810 F.3d at 859. It is undisputed that Chen was

educated and had a grasp of business and financial matters. She

worked as an import agent, earned a bookkeeping certificate, and

started her business - BTS. As the bankruptcy court found,

“[n]o reasonable trier of fact could conclude that a person with

[Chen’s] background would be justified by failing to keep

records of the voluminous and large transactions, many

apparently in cash, that [Chen] engaged in during the, roughly,

two years prior to filing her bankruptcy case.”

Last, Chen’s alleged gambling addiction does not absolve

her from keeping records. Indeed, since gambling earnings are

“income” for tax purposes, the Internal Revenue Service requires

gambling documentation, such as “[a]n accurate diary or similar

record regularly maintained by the taxpayer, supplemented by

verifiable documentation.”8 Person v. Dep’t. of Revenue,

No. TC-MD 091421D, 2011 WL 2222261 (Or. Tax Magistrate Div.

June 6, 2011). Many courts have denied a debtor’s discharge

under § 727(a)(3) for failure to maintain gambling records. 

8 The court explained:

In general, the diary should contain at least the

following information: 

1) Date and type of specific wager or wagering activity; 

2) Name of gambling establishment; 

3) Address or location of gambling establishment; 

4) Names[s] of other person(s) (if any) present with

 taxpayer at gambling establishment; and 

5) Amount(s) won or lost. 

Id. at *3.

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United States Tr. v. Macway (In re Macway), No. 14-16680, 2016

WL 4039745 (9th Cir. July 28, 2016) (affirming denial of

discharge where debtor failed to maintain records for his

gambling activities); Dolin v. N. Petrochemical Co.

(In re Dolin), 799 F.2d 251 (6th Cir. 1986) (chemical dependence

and compulsive gambling did not excuse the debtor’s failure to

keep adequate records); United States Tr. v. Hong Minh Tran

(In re Hong Minh Tran), 464 B.R. 885 (Bankr. S.D. Cal. 2012)

(denying discharge where debtor provided no contemporaneous

personal or casino records of his gambling wins and losses). 

This is the price Chen pays for seeking bankruptcy protection

and the privilege of a discharge. See In re Macway, 2014 WL

3817103, at *3.

On appeal, Chen’s primary argument is that the bankruptcy

court erred in granting summary judgment because her credibility

was at issue. Chen is mistaken. Intent is not a necessary

element for the denial of discharge under § 727(a)(3). 

In re Cox, 41 F.3d at 1297; In re Juzwiak, 89 F.3d at 430. 

Trustee met her burden of showing that Chen failed to maintain

and preserve adequate records such that it was impossible to

ascertain her financial condition. The burden then shifted to

Chen to show that her failure to keep records was justified

under the circumstances of her case. Such justification is

measured by an objective standard - that of a normal, reasonable

person in like circumstances. As required under summary

judgment standards, we accept as true (as did the bankruptcy

court) Chen’s justifications for her failure to keep or preserve

records. Measured under objective standards, Chen’s

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justifications failed as a matter of law. 

In sum, on this record there are no genuine disputes of

material fact on the essential elements for denial of discharge

under § 727(a)(3).9

VI. CONCLUSION

For the reasons stated, we AFFIRM.

9 Debtor’s counsel contends many of the cases cited by

Trustee are distinguishable from this case. This may well be

true because Chen’s justification for failing to keep or preserve

the records is determined under the circumstances of her case and

each debtor has unique circumstances. Therefore, it is

unnecessary to discuss in detail each of the cases cited by the

parties in their briefs.

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