Opinion ID: 2714911
Heading Depth: 3
Heading Rank: 2

Heading: Fraud on the Bankruptcy Court

Text: In January 2006, the bankruptcy trustee instituted an adversary proceeding against Simonson based on activity associated with Simonson obtaining a tax refund. 2 The bankruptcy court issued multiple restraining orders restricting the movement of Simonson's assets and eventually froze his assets altogether. Jackson failed to comply with these orders. In numerous transactions, Jackson violated the court's orders by accepting funds on Simonson's behalf and disbursing funds pursuant to Simonson's specific directions-e.g., agreeing to deposit $170,488.86 into his IOLTA Trust Account on behalf of Simonson; issuing an IOLTA 1 Mark Laing bought Network Builders, which owned the property. 2 After the bankruptcy petition was filed, Simonson amended his prepetition tax returns and obtained a tax refund of approximately two hundred thousand dollars. Simonson still had some of the money in his personal accounts. The trustee filed the first adversary proceeding seeking to recover the remainder of the tax refunds Simonson had acquired. 5 No. 201,017-2 account check to Key Bank payable to Merendon Mining, a tax shelter that was the apparent source of Simonson's retroactive tax refund; and purchasing a certified check also payable to Merendon Mining. Jackson then used multiple accounts to conceal the trail of money. Accordingly, the bankruptcy court granted the trustee's motion for sanctions against Jackson and his firm. Jackson argued that he complied with court orders as soon as he became aware of them. But based on the totality of Jackson's demeanor during his testimony, the contradictions between his testimony and the exhibits, and the testimony of other, credible witnesses, the hearing officer concluded that Jackson lied to the bankruptcy court about his knowledge of the restraining orders to conceal his role in perpetrating fraud on the court. Based on the overwhelming evidence, the hearing office found that, in actively and intentionally participating in fraud on the bankruptcy court, Jackson violated 18 U.S.C. § 152. Although the hearing officer acknowledged the bankruptcy court's order granting a motion for sanctions against Jackson's firm, she independently relied on abundant documents and testimony to find that Jackson had violated discovery orders.