Opinion ID: 74259
Heading Depth: 2
Heading Rank: 2

Heading: concealment of assets and false oaths

Text: A person can violate 18 U.S.C. § 152 if he knowingly and fraudulently conceals from a custodian, trustee, marshal, or other officer of the court charged with the control or custody of property, or, in connection with a case under title 11, from creditors or the United States Trustee, any property belonging to the estate of a debtor or if he knowingly and fraudulently makes a false oath or account in or in relation to any case under title 11.3 See 18 U.S.C. § 152(1), (2). The false oath must pertain to a material matter. See United States v. Key, 859 F.2d 1257, 1261 (7th Cir. 1988) (citations omitted). The government proved beyond a reasonable doubt that Ward concealed assets and made false oaths regarding material matters as charged in Counts I, II and III of the Indictment, and the jury so found. Count I of the Indictment alleged that Ward knowingly and fraudulently failed to disclose to the bankruptcy court trustee the existence of certain bank accounts that were part of the bankruptcy estate. The record reflects that as of January 29, 1993, the date he filed his petition for bankruptcy, Ward had open and active accounts in his name at Lafayette County State Bank and Citizens Bank that contained some money. He concealed these accounts from the trustee by failing to disclose them. 3 Title 11 of the United States Code governs bankruptcy proceedings. See 11 U.S.C. § 103. 6 Count II alleged that Ward knowingly and fraudulently made a false statement under oath at a meeting with creditors on March 2, 1993 that he had no connection with Action Industry except that his wife purchased it. Ward operated Action Industry, the sole proprietorship, as well as Action Industry Trust, Inc., the new corporation that acquired the sole proprietorship’s assets. He was substantially involved in running their day to day affairs with his wife, including paying debts, signing invoices and checks, and deriving income from both entities. He had a significant connection with Action Industry and Action Industry Trust, Inc., which was a perpetuation of the sole proprietorship. Thus, his statement that he had no connection with Action Industry was false. Count III alleged that Ward made a false statement under oath on bankruptcy Schedule B that he had no checking, savings or other financial accounts nor any accounts receivable or any inventory. Yet, there is evidence that Ward had open and active accounts at Lafayette County State Bank and Citizens Bank containing almost $200 as well as over $14,000 in accounts receivable. Ward collected a relatively small portion of the accounts receivable but used the accounts as collateral to run the new corporation. The funds in these accounts were not enormous and were collateralized. However, according to expert testimony, Ward was still obligated to disclose them to 7 the bankruptcy court. This count is the “specified unlawful activity” upon which the money laundering count is premised. The district court was correct in concluding that sufficient evidence supported the jury’s guilty verdict on Counts I, II and III and therefore denying Ward’s motion for judgment of acquittal on those counts. Count IV alleges that Ward made a false oath on Schedule I of his bankruptcy form by stating that he sold Action Industry in 1992. The district court granted Ward’s motion for acquittal on this charge. We determine that it was correct in so doing. The record contains insufficient evidence upon which a reasonable jury could rely to find Ward guilty beyond a reasonable doubt. The government’s theory of Count IV is that the sale of Action Industry was a sham; it did not occur. In support of this theory, the government contends that Ward made inconsistent statements on several occasions about the alleged sale. He stated that he sold it to his wife for $8,000 and he also stated that he sold it to his brother for $8,000. The government further contends that Ward’s bank accounts and tax returns contained no evidence of the $8,000 sale. The government failed to prove that the sale did not occur. On December 23, 1992, before he filed his bankruptcy petition, Ward executed a bill of sale wherein he conveyed the assets of Action Industry for $8,000 to Action Industry 8 Trust, a valid Florida corporation.4 The $8,000 was paid to Citizen’s Bank, the lienholder on the assets and inventory. The district court correctly granted Ward’s motion for judgment of acquittal on Count IV. Count V alleges that Ward knowingly and fraudulently made a false oath in his Statement of Financial Affairs by stating that his yearly gross income for 1991 was $15,000 and his yearly gross income for 1992 was $15,000. The question on the form asked for gross income. The question also asked for the source. For each year, next to the term source, appears the term “earnings.” Additionally, for each year, the figure $15,000 appears next to the term amount. The district court determined that this was not a false statement but it was clearly nonresponsive. Ward testified that he knew the difference between gross and net income and the record demonstrates that his gross income was substantially higher than $15,000. However, there is no evidence concerning whether his earnings were actually $15,000. Additionally, Ward only completed the worksheets from which his attorney generated the form at issue. These worksheets were not in evidence because they were destroyed in the normal course of business. The record demonstrates that the jury did not have sufficient evidence from which it could conclude that this statement was false. The government 4 In the corporations’s Articles of Incorporation, Ward’s wife is listed as the president and secretary/treasurer and his brother is listed as a shareholder. In light of the totality of the evidence and the government’s burden of proof, the fact that the corporation was formed after the sale of Action Industry does not render the sale a sham. 9 failed to sustain its burden of proving beyond a reasonable doubt that Ward acted knowingly and fraudulently.