United States Court of Appeals

Fifth Circuit

FILED

October 31, 2006

Charles R. Fulbruge III

Clerk

In the

United States Court of Appeals

for the Fifth Circuit

_______________

m 05-31107

_______________

IN RE:

PHILLIPS AND HORNSBY LITIGATION.

KAREN HORNSBY KIRKWOOD, ETC.; ET AL.,

Plaintiffs,

VERSUS

PAUL D. GLASS; ET AL.,

Defendants.

* * * * * * * * * * * * * * *

IN RE:

FRAUDULENT TRANSFER.

UNITED STATES OF AMERICA,

Plaintiff-Appellee,

VERSUS

RYAN PHILLIPS; ET AL.,

Defendants,

RYAN PHILLIPS AND GREGORY PHILLIPS,

Defendants-Appellants.
2

_________________________

Appeal from the United States District Court

for the Middle District of Louisiana

m 3:03-CV-3231

______________________________

Before JONES, Chief Judge, SMITH and

STEWART, Circuit Judges.

JERRY E. SMITH, Circuit Judge:*

Defendants appeal a summary judgment

voiding a transfer of property from Chaney

Phillips to his sons Gregory and Ryan. We

affirm.

I.

On April 21, 1998, Chaney Phillips was

convicted of, inter alia, mail fraud and money

laundering in violation of 18 U.S.C. §§ 1341

and 1957, respectively. Before sentencing, a

probation officer met with him to determine

the value of his financial assets for inclusion in

a presentence investigation report (“PSR”). In

answer to a specific question about inherited

property, Phillips disclosed that he had a five

percent interest in a succession from hisfriend

Stanley Hornsby but claimed the interest was

of small value and was entangled in litigation.

Based on these representations, the officer assumed the interest was de minimis and did not

include it in the PSR. Actually, however,

months before Phillips’s conversation with the

probation officer, the litigation had been completed, and Phillips had beenawarded $32,600,

which was an amount roughly equal to the

remainder of his net worth.

On June 26, 1998, the probation officer

presented Phillips with the PSR, including information about what restitution he might be

obligated to pay. Phillips objected to several

aspects ofthe report, including the amount and

recipients of the possible restitution. The PSR

was duly amended on July 24 to include Phillips’s objections.

On the morning ofJuly 30, the day of Phillips’sscheduled sentencing, he executed an inter vivos donation of his interest in the Hornsby succession to his sons. Later that day, he

wassentenced to 97 months’incarceration and

$225,587.56 in restitution. At no time during

his sentencing hearing did he disclose the donation he had made that morning. 

Phillips appealed his convictions and initial

sentence. Certain of his convictions were vacated, and on November 20, 2000, he was resentenced to pay $217,587.56 in restitution.

When it discovered Phillips’s gift, the government brought this action, alleging that the

conveyance constituted a fraudulent transfer

under the Federal Debt Collection Practices

Act (“FDCPA”), 28 U.S.C. § 3302 et seq.,

which permitsthe government to avoid “transfer[s] or obligation[s] to the extent necessary

to satisfy [a] debt to the United States.” 28

* Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not be published

and is not precedent except under the limited circumstances set forth in 5TH CIR. R. 47.5.4.
3

U.S.C. § 3306(a)(1).2 On October 31, 2003,

the government moved forsummaryjudgment,

which was denied because the district court

found that there was a genuine dispute of material fact as to whether Phillips had transferred the property with fraudulent intent.

The government moved for reconsideration

and submitted a redacted version ofthe PSR in

support. Finding that the PSR demonstrated

conclusively that Phillips had been informed of

the likelihood ofrestitution before the transfer,

the court granted summary judgment as to the

claim of a fraudulent transfer in violation of 28

U.S.C. § 3304. Only Phillips’s sons appeal,

contending that the PSR was improperly admitted into evidence and that, even considering

the PSR, a genuine dispute of materialfact exists with regard to Phillips’s intent in making

the transfer.

II.

The sons object to the relevance of and redactions to the PSR and to the authenticity of

the document under Federal Rule of Evidence

901. We agree with the district court that defendants waived their objections to the relevance of the document and the redactions

thereto; we review the district court’s application of rule 901 for abuse of discretion. See

R.R. Mgmt. Co., L.L.C. v. CFS La. Midstream

Co., 428 F.3d 214, 220 (5th Cir. 2005). We

will reverse only where we determine that an

error was prejudicial. See United States v.

Scott, 678 F.2d 606, 612 (5th Cir. 1982)

(stating that rule 901 error is subject to harmless error analysis).

We agree with the district court that defendants had ample opportunity to object to the

relevance and content of the PSR and failed to

do so. The government informed defendants

and the court that it intended to introduce the

redacted PSR, and it disclosed specifically

which portions it intended to include. 

Pursuant to Local Rule 7.5M, the court required that anyobjections be filed within twenty days of March 27, 2004. Defendants filed

no objection until January 24, 2005; they supply no plausible reason why they could not

have objected to the relevance of or redactions

to the PSR within the time allotted by the district court. Accordingly, we affirm the finding

of waiver as to these issues.

We need not decide whether defendants

waived their objection to the authenticity of

the copy of the PSR that the government introduced or whether the admission of the PSR

was error under rule 901. That is because any

error was harmless. Phillips has actually seen

the PSR and on appeal his sons raise no genuine issue of fact as to the authenticity of the

document.

Thus, any error committed in admitting the

copy of the PSR without certification was

harmless. Likewise, defendants have supplied

no reason to believe that admitting copies in

lieu of the original was unfair; accordingly, we

also reject their challenge based on Federal

Rule of Evidence 1003.

III.

The Phillips sons contend that, even considering the PSR as properly admitted into

2 Private restitution orders may be recovered in

the same manner as the statute provides for

“debt[s] to the United States.” See 18 U.S.C.

§ 3664(m)(1)(A)(i)-(ii) (stating that the United

States is authorized to enforce victim restitution

orders by the same means as it recovers fines);

United States v. Phillips, 303 F.3d 548, 550-51

(5th Cir. 2002).
4

evidence, summary judgment is inappropriate

because there is a genuine dispute as to Phillips’s intent in making the transfer. We disagree. Analyzing a Texas statute that was, in

all relevant respects, identical to the FDCPA,

this court stated that “[i]ntent to defraud . . .

can be decided as a matter of law” where

numerous “badges of fraud”3are present and

the only evidence in support ofthe defendant’s

theory is a series of conclusional, self-serving

statements. BMG Music v. Martinez, 74 F.3d

87, 90-91 (5th Cir. 1996). 

As in BMG Music, six of the eleven listed

badges of fraud are present: (1) The transfer

occurred shortly before or after the debt was

incurred; (2) Phillips received no reasonably

equivalent value for the transfer; (3) the transfer was made to “insiders”; (4) Phillips wasinsolvent at the time of the transfer; (5) he concealed the transfer by failing to disclose it at

hissentencing;4and (6) he concealed hisretirement account with the Louisiana Tax Assessors’ Office. See 28 U.S.C. § 3304(b)(2). In

addition to these nonexclusive statutory factors, Phillips mischaracterized his succession

interest when he met with the officer developing the PSR, describing it asspeculative and of

small value. He also failed to disclose at the

sentencing that he had executed a $100,000

second mortgage on his house only two days

earlier. 

Although there are some differences between this case and BMG MusicSSfor example, the defendant inBMG Music admitted that

he retained an interest in the transferred property, see BMG Music, 74 F.3d at 91 n.21,

these distinctions are insignificant to the outcome of this case. The same number of badges of fraud are present, and the inference of

fraud is similarly inescapable.

None of defendants’ self-serving statements

that Phillipslacked intent to defraud is enough

3 The FDCPA states, in determining actual intent, that special consideration may be given to

certain “badges of fraud” such as whether

(A) the transfer or obligation was to an insider;

(B) the debtor retained possession or control of

the property transferred after the transfer;

(C) the transfer or obligation was disclosed or

concealed; (D) before the transfer was made or

obligation was incurred, the debtor had been

sued or threatened with suit; (E) the transfer

was of substantially all the debtor’s assets;

(F) the debtor absconded; (G) the debtor removed or concealed assets; (H) the value of the

consideration received by the debtor was reasonably equivalent to the value of the asset

transferred or the amount of the obligation incurred; (I) the debtor was insolvent or became

insolvent shortly after the transfer was made or

the obligation was incurred; (J) the transfer

occurred shortly before or shortly after a substantial debt was incurred; and (K) the debtor

transferred the essential assets of the business

to a lienor who transferred the assets to an insider of the debtor.

28 U.S.C. § 3304(b)(2).

4 Defendants’ contention that Phillips disclosed

the transfer because hemade the transaction public

under Louisiana law is without merit. The fact that

Phillips recorded the transaction and thus publicized it to theminimumextent necessary to achieve

a valid transfer under Louisiana law is insufficient

to constitute “disclosure” under the statute where

he failed to inform the sentencing court, the United

States, or even any of the persons to whom he

owed restitution. See, e.g., LSA-C.C. art. 2442

(stating that concealed transfers of property are

ineffective with respect to third parties such as

creditors).
5

to overcome the objective evidence.5It is implausible that Phillips did not know the difference between a fine, which he had been informed that he was unlikely to have to pay,

and restitution. It is scarcely credible that he

did not realize that he would likely be forced

to make some restitution. He had been shown

the PSR, he knew was likely to be ordered to

pay restitution, and he transferred his interest

in the Hornsby succession to his sons to avoid

forfeiting it to hislikely creditors. The numerousindicia of fraudulent intent make summary

judgment appropriate.

AFFIRMED.

5

See In re Hinsley, 201 F.3d 638, 643 (5th Cir.

2000) (“A party’s self-serving and unsupported

claim that [he] lacked the requisite intent is not

sufficient to defeat summary judgment where the

evidence otherwise supports a finding of fraud.”).