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THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION

MADHUPRIYA DUGGISETTY,

Appellant,

v.

PATRICK S. LAYNG

Appellee.

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No. 20 C 2026

Judge Virginia M. Kendall

MEMORANDUM OPINION & ORDER

Appellant Madhupriya Duggisetty appeals the denial of her discharge and the denial of her 

motion for new trial by the United States Bankruptcy Court for the Northern District of Illinois. 

[Dkt. 23]. Because the Bankruptcy Court’s decisions as to both issues were supported by the 

record, Duggisetty’s appeal is denied. 

BACKGROUND

I. Duggisetty’s Petition and Discovery of Undisclosed Assets

Duggisetty filed her voluntary petition for Chapter 7 Bankruptcy Relief on January 2, 2018. 

(Dkt. 26-1 at 7). As part of her petition, Duggisetty had to disclose her property in documents 

entitled Schedules A-J, a Statement of Financial Affairs, and a Statement of Intention. (Id. at 16–

49). In response to Item No. 12 on Schedule A/B, which asks if a debtor owns any “Jewelry... 

Examples: everyday jewelry, costume jewelry, engagement rings, wedding rings, heirloom 

jewelry, watches, gems, gold, silver,” Duggisetty checked the box indicating, “No.” (Id. at 18). In 

response to Item No. 16 on Schedule A/B, which asks if a debtor owns any cash, for example in a 

safety deposit box. Duggisetty likewise checked the box indicating, “No.” (Id.) 

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The Statement of Financial Affairs for Individuals Filing for Bankruptcy (the “SOFA”) 

asks various financial questions which debtors must answer under penalty of perjury. Question 21 

of the SOFA asks, “Do you now have, or did you have within 1 year before you filed for 

bankruptcy, any safe deposit box or other depository for securities, cash, or other valuables?” 

Duggisetty responded she had one at “First American Bank,” but did not list any cash and testified 

under oath that she was the only one who had access to the safe deposit box. (Id. at 47, 81). 

Duggisetty also made a number of sworn declarations that her statements were true and correct. 

(Id. at 67–69). 

On January 3, 2018, Duggisetty’s safe deposit box was opened and a large amount of 

jewelry and $25,520 in cash was discovered. (Id. at 96, 117, 123–125). Marc P. Trent, a licensed 

attorney who represented Duggisetty in her divorce and was trying to collect his legal fees, issued 

a citation to discover assets to First American Bank and secured access to her safe deposit box. 

(Id. at 96, 117). According to bank records and Heta Patel, the retail risk and service manager for 

First American Bank, Duggisetty accessed her safe deposit box 59 times in 2017. (Id. at 199). 

On January 30, 2018, David Brown, the trustee in Duggisetty’s case, conducted the meeting 

of creditors pursuant to section 341(a) of the Code. Duggisetty swore an oath to tell the truth and 

said that the information she had filed was accurate. (Id. at 74–75). Duggisetty was asked about 

the safe deposit box and testified that (a) the safe deposit box was in her name, (b) she was the sole 

owner, and (c) she was the only party with a key, but that her biggest mistake was that she had 

$5,000 in cash held in the safe deposit box that she did not declare. (Id. at 81). On February 3, 

2018, four days after the 341 meeting, Duggisetty amended her Schedule A/B, stating that she did 

have jewelry and that she had $25,000 in cash in the safe deposit box. (Id. at 98, 100–01).

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II. Denial of Duggisetty’s Petition for Discharge

After learning of the undisclosed jewelry and cash, the United States Trustee filed a 

complaint objecting to Duggisetty’s discharge. The complaint alleged that Duggisetty’s discharge 

should be denied on two counts: under section 727(a)(2)(A) for concealing the cash and jewelry 

with intent to defraud, and under section 727(a)(4) for knowingly making false oaths. (Id. at 113). 

The Bankruptcy Court set the matter for trial. At trial, Heta Patel testified that Duggisetty visited 

her safety deposit box numerous times in 2017 and that nobody had accessed the box between the 

opening of Duggisetty’s safety deposit box and the filing of her bankruptcy case. (Id. at 197–203). 

The trustee then called David Brown to testify. Brown testified as to Duggisetty’s statements that 

she had about $5,000 in the safe deposit bank, but that when he accessed the box he found a 

substantial amount of jewelry and cash. (Id. at 216 –19) 

The United States Trustee then called Duggisetty to testify. Duggisetty confirmed her 

testimony at the 341 meeting that she had $5,000 in cash and that she had signed her bankruptcy 

petition, schedules and SOFA under penalty of perjury that the information in those documents 

was true and correct. (Id. at 247). Duggisetty admitted that she had left out assets, although she 

would only admit that she “forgot the 5,000,” and not the total $25,000. (Id. at 256). Duggisetty 

did acknowledge that she amended her Schedule A/B to reflect the $25,000, not $5,000. (Id. at 

257). Duggisetty at first denied that she kept the cash and jewelry a secret to hide it during her 

divorce, but then admitted it when confronted with her deposition testimony. (Id. at 258–261).

Duggisetty then presented her case. She stated that the “that last time [she] counted, it was 

$5,000” in the safe deposit box. (Id. at 309). Duggisetty also said that she read her bankruptcy 

petition before it was filed, but indicated that she was not aware of its accuracy. (Id. at 309–10). 

Duggisetty accepted responsibility for not disclosing the cash. (Id.). Duggisetty then testified 

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“[E]ven if I had know if I had $25,000, [] the total I owe to the creditors is much larger. So even 

if I did declare $25,000, even if I had $25,000, I would not be able to pay creditors.” (Id. at 314). 

The Court asked Duggisetty how she could file for bankruptcy but forget about $25,000 in her 

security deposit box and she replied that it was a mistake, but her intention was not to defraud or 

hide anything. (Id. at 319–22). In her conclusion, Duggisetty said she took fault for missing “one 

single point of declaring the cash...even though my attorney asked me. I shouldn’t be denied a 

discharge because . . . I honestly said that mistake happened. And when I found it, I took 

responsibility . . . and my attorney re-amended as per the bankruptcy law.” (Id. at 323). 

On re-direct examination, the United States Trustee asked Duggisetty questions which she 

evaded. The Court then said to Duggisetty, “I am getting a little tired of this. I’m going to get 

straight to the point. On January 3rd, 2018, your safe deposit box was drilled open and there’s 

$25,000 in cash in there. Where did it come from? Simple question . . . $25,000, where did it come 

from?” (Id. at 330). Duggisetty then replied, “I don’t know.” (Id.).

The Bankruptcy Court made several findings. The Court denied Duggisetty’s discharge 

under 11 U.S.C. § 727(a)(2)(A), finding a concealment because the “schedules that were filed on 

day one say zero in cash. That is crystal clear. There’s no disclosure of cash in the safe deposit 

box. There’s no disclosure of cash anywhere. It says zero.” (Id. at 307). The Court found this 

non-disclosure to be “clearly . . . an act of concealment.” (Id. at 381). The Court found an intent 

by Duggisetty to conceal the cash and denied her argument that she amended her schedules once 

the cash was discovered thereby negating her intent to conceal. (Id. at 378–84). The Court found 

Duggisetty to not be credible and rejected her various explanations for the undisclosed cash. (Id. 

at 379–81). 

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The Bankruptcy Court also denied Duggisetty’s discharge under 11 U.S.C. § 727(a)(4). 

The Court found false statements regarding the undisclosed $25,000 in cash and that such 

statements were material. (Id. at 385–87). The Bankruptcy Court also found Duggisetty’s 

credibility lacking and that her various explanations for the undisclosed cash were unconvincing. 

(Id. at 383, 386). 

III. Duggisetty’s Motion for New Trial

Ten days after the entry of the Bankruptcy Court’s order, Duggisetty timely filed a motion 

for a new trial. (Id. at 390). Duggisetty alleged for the first time that her counsel for her bankruptcy 

proceedings filed different schedules than what she approved. (Id.). Duggisetty also claimed she 

had new evidence about the cash in the safety deposit box, although she did not state what the new 

evidence was. (Id.). After the United States Trustee responded and Duggisetty filed her reply, the 

Bankruptcy Court held a hearing on Duggisetty’s motion on March 13, 2020. Duggisetty first 

alleged the new evidence was that the trustee received a cashier’s check and not cash from the box. 

(Id. at 411). The Court explained the trustee merely converted the $25,000 in cash to a cashier’s 

check, “and then that check was deposited in the bank. No one testified that a check was found in 

your safe deposit box. It was cash.” (Id. at 412). Duggisetty’s new evidence was her desire to reexamine the bank’s security procedures. However, the Court explained to her that “[t]he banker 

who was responsible for the safety of the security box was on the witness stand. She testified as to 

the procedure. She testified who was there. She testified what had happened. She testified what 

they did. All of that evidence came out.” (Id. at 415). Duggisetty continued to relitigate the issues 

the Court previously heard and stated that she was “rehashing things [the court had] heard about 

and read about many, many times” and thus asked Ms. Duggisetty to address only any newly 

discovered evidence. (Id. at 426). Duggisetty responded only that she felt she was “entitled to 

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know is where the money placed in a pile where it was when they opened the safety deposit box” 

and that she wanted “to take additional testimony from the bank.” Id. The Bankruptcy Court then 

denied the motion because Duggisetty’s arguments did not reflect any “new discovered evidence 

or manifest error of law.” (Id. at 428).

LEGAL STANDARD

A bankruptcy court’s conclusions of law are reviewed de novo and its factual findings for 

clear error. In re Resource Tech. Corp., 624 F.3d 376, 382 (7th Cir. 2010). If the bankruptcy 

court's account of the evidence is plausible in light of the record viewed in its entirety, the 

reviewing court will not reverse its factual findings even if the Court would have weighed the 

evidence differently. Freeland v. Enodis Corp., 540 F.3d 721, 729 (7th Cir. 2008). In reviewing 

a bankruptcy court’s decision to deny a discharge, an appellate court will not overturn the decision 

unless it is clearly erroneous. In re D’Agnese, 86 F.3d 732, 734 (7th Cir. 1996) (citation omitted). 

A factual finding is clearly erroneous if “although there is evidence to support it, the reviewing 

court on the entire evidence is left with the definite and firm conviction that a mistake has been 

committed.” In re Kempff, 47 F.3d 444, 448 (7th Cir. 2017).

A court reviews a denial of a motion for new trial under Rule 59(a) for abuse of discretion. 

See Kapelanski v. Johnson, 390 F.3d 525, 530 (7th Cir. 2004). A party seeking to reverse a court's 

denial of a motion for a new trial bears a particularly heavy burden. Smith v. Northeastern Ill. 

Univ., 388 F.3d 559, 569 (7th Cir. 2004). In general, a court abuses its discretion when no 

reasonable person would agree with its rulings. Dunn v. Menard, Inc., 880 F.3d 899, 905 (7th Cir. 

2018).

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DISCUSSION

I. Denial of Duggisetty’s Petition under 11 U.S.C. § 727(a)

The Bankruptcy Court clearly did not abuse its discretion in justifying the denial of 

Duggisetty’s petition under 11 U.S.C. § 727(a)(2)(A) or Section 727(a)(4)(A). Proof of conduct 

satisfying any one of § 727(a)’s sub-sections is enough to deny discharge. In re Krehl, 86 F.3d 

737, 744 (7th Cir. 1996) (internal citation omitted). Here, there was ample proof to support the 

Bankruptcy Court’s findings under both of § 727(a)’s subsections. 

The discharge provided by the Bankruptcy Code is meant to effectuate the “fresh start” 

goal of bankruptcy relief. Vill. of San Jose v. McWilliams, 284 F.3d 785, 790 (7th Cir.2002). The 

Bankruptcy Code requires debtors to accurately and truthfully present themselves before the court

in exchange for this fresh start. Stathopoulos v. Bostrom (In re Bostrom), 286 B.R. 352, 359 

(Bankr. N.D.Ill.2002), aff'd, No. 02 C 9451, 2003 WL 403138 (N.D. Ill. Feb.20, 2003). Therefore, 

a discharge is only for the honest debtor. In re Chlad, 922 F.3d 856, 850 (7th Cir. 2019).

A. Section 727(a)(2)(A)

Section 727(a)(2) of the Bankruptcy Code provides that a debtor shall be granted a 

discharge unless: 

(2) the debtor, with intent to hinder, delay, or defraud a creditor or an officer of the 

estate . . . has transferred, removed, destroyed, mutilated, or concealed . . . 

(A) property of the debtor, within one year before the date of filing of the petition.

A party objecting to a discharge under § 727(a)(2)(A) must show, by a preponderance of 

the evidence that: (1) the debtor (2) transferred, removed, concealed, destroyed, or mutilated (3) 

the debtor’s property, (3) within one year prior to the bankruptcy filing, (4) with the intent to 

hinder, delay, or defraud a creditor. See In re Kontrick, 295 F.3d 724, 736 (7th Cir. 2002). The 

exception to discharge in § 727(a)(2)(A) essentially “consists of two components: an act (i.e., a 

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transfer or a concealment of property) and an improper intent (i.e., a subjective intent to hinder, 

delay, or defraud a creditor). Id. Because direct evidence of a debtor's intent usually will be 

unavailable, it may be inferred from the circumstances surrounding his objectionable conduct. In 

re Krehl, 86 F.3d at 743. The intent determination often will depend upon a bankruptcy court's 

assessment of the debtor's credibility, making deference to the court's finding particularly 

appropriate. Id.

Duggisetty does not dispute that any of these prongs have been met. Indeed, she could not. 

As discussed above, the Bankruptcy Court found concealment because the “schedules that were 

filed on day one say zero in cash. That is crystal clear. There’s no disclosure of cash in the safe 

deposit box. There’s no disclosure of cash anywhere. It says zero.” (Dkt. 26-1. at 307). The Court 

found an intent by Duggisetty to conceal the cash and denied her argument that she amended her 

schedules once the cash was discovered thereby negating her intent to conceal. (Id. at 378–84). 

The Bankruptcy Court found Duggisetty not credible and rejected her various explanations for the 

undisclosed cash. (Id. at 379–81). Duggisetty admitted that she hid the money and the Court 

found her various explanations not credible The Bankruptcy Court did not commit any mistake. In 

re Kempff, 47 F.3d at 448. The Bankruptcy Court’s findings were appropriate and its decision to 

deny discharge under Section 727(a)(2) is affirmed.

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

The Bankruptcy Court properly justified its denial of Duggisetty’s petition under 

Section727(a)(4), which withdraws discharge eligibility if the debtor “knowingly and 

fraudulently” makes “a false oath or account” in connection with the bankruptcy proceeding. A 

party who opposes discharge under this provision must prove the following: “(1) the debtor made 

a statement under oath; (2) the statement was false; (3) the debtor knew the statement was false; 

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(4) the debtor made the statement with fraudulent intent; and (5) the statement related materially 

to the bankruptcy case.” In re Kempff, 847 F.3d at 449 (citation omitted). Fraudulent intent 

“includes intending to deceive, which need not connote intending to obtain a pecuniary benefit.” 

In re Katsman, 771 F.3d 1048, 1050 (7th Cir. 2014) (internal quotation marks and alteration 

omitted). Evidence of “reckless disregard for the truth is sufficient to prove fraudulent intent.” 

Stamat v. Neary, 635 F.3d 974, 982 (7th Cir. 2011). 

With regards to the fraudulent intent inquiry, “[w]hether a debtor possessed the requisite 

intent to defraud is a question of fact, which is subject to the ‘clearly erroneous’ standard of 

review” and often depends upon a bankruptcy court’s assessment of the debtor’s credibility. In re 

Kempff, 847 F.3d at 449. 

Again, Duggisetty does not take issue with whether the test was met here. The Bankruptcy 

Court made a number of factual findings and thoroughly developed the record as to why it denied 

Duggisetty’s petition under § 727(a)(4)(A). Duggisetty made false statements in her schedules 

and SOFA, and the omission of assets from the same can constitute a false oath for purposes of § 

727(a)(2)(A). See, e.g., Stamat, 635 F.3d at 981–82. The Bankruptcy Court found that Duggisetty 

knew the statement that she had no cash was false and that she made that statement with fraudulent 

intent. The record supports such a finding. The Bankruptcy Court found Duggisetty’s credibility 

lacking and that her changing explanations for her non-disclosure were unavailing because she is 

“a debtor who is very educated, very intelligent...” (Dkt. 26-1 at 383, 386). The Bankruptcy 

Court told Duggisetty that “it’s much more incredible that the cash wouldn’t have been disclosed, 

that you wouldn’t recall where it came from, and that you keep changing your story.” Id. at 383.

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Based on the record before the Court, the Bankruptcy Court’s decision was not clearly 

erroneous. There was ample support for the Bankruptcy Court’s position. The denial of 

Duggisetty’s petition under § 727(a)(4)(A) is affirmed.

II. Denial of New Trial

After holding a hearing on Duggisetty’s Motion for New Trial, the Bankruptcy Court 

denied the motion, finding that Duggisetty sought to relitigate issues that had already been heard 

during trial.1 (Dkt. 26-1 at 415, 426, 428). The Court reviews the denial of a motion for new trial 

under the abuse of discretion standard. Kapelanski, 390 F.3d at 530. The Bankruptcy Court did 

not abuse its discretion. Duggisetty did not present any new evidence that would preclude 

judgment and could not establish that the Bankruptcy Court committed a manifest error of law or 

fact. See Cincinnati Life Ins. Co. v. Beyrer, 722 F.3d 939, 954 (7th Cir. 2013).

Even in the instant appeal, Duggisetty seeks to relitigate claims that were already heard 

and decided in the Bankruptcy Court. Had Duggisetty desired to interview bankers at First 

American Bank about the bank’s security procedures, she had ample opportunity to do so during 

the original trial. (Dkt. 26-1 at 415). Duggisetty also sought to put forth a new argument that the 

schedules on file were not the schedules she had approved, which she reiterates here. (Dkt. 23 at 

1; Dkt. 26-1 at 390). However, Duggisetty also had ample opportunity to raise this issue before 

the Bankruptcy Court. (Dkt. 26-1 at 400). As to her argument that the new evidence was that the 

trustee received a cashier’s check and not cash from the box. (Id. at 411), the Bankruptcy Court 

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Fed. R. Bankr. P. 9023 incorporates Federal Rule of Civil Procedure 59. Rule 59(a)(1)(B) states a new trial may be 

granted “on all or some of the issues . . . after a nonjury trial for any reason for which a rehearing has heretofore 

been granted in a suit in equity in federal court.” Rule 59(a)(2) states that “[a]fter a nonjury trial, the court may, on 

motion for a new trial, open the judgment if one has been entered, take additional testimony, amend findings of fact 

and conclusions of law or make new ones, and direct the entry of a new judgment.”

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clearly explained why that was not the case. (Id. at 412). The Bankruptcy Court’s denial of the 

Motion for New Trial was clearly justified and was therefore not an abuse of discretion.

CONCLUSION

Because the Bankruptcy Court’s denial of Duggisetty’s petition was not clearly erroneous,

its decision is affirmed. Its denial of Duggisetty’s motion for new trial was not an abuse of

discretion and is also affirmed.

____________________________________

Virginia M. Kendall

United States District Judge

Date: October 19, 2020

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