Opinion ID: 197937
Heading Depth: 2
Heading Rank: 1

Heading: Rowe's False Statements

Text: 4 For years, Rowe and his brother, Ronald Rowe, ran a home construction business called Rowe & Rowe, Inc. (RRI). In 1989, Rowe and his brother suffered a number of serious financial setbacks. As a result, the brothers discontinued doing business as RRI, and Rowe caused another company he controlled, Senator Construction, Inc., to file for bankruptcy. That same year, the brothers created EDI. EDI, which was nominally owned by Howard Sonny Fisher, a friend of Rowe's, engaged in the same business as had RRI. 5 In September 1992, Rowe filed a personal bankruptcy petition under chapter 7 of the Bankruptcy Code. Doing so obligated him to file with the bankruptcy court a number of bankruptcy schedules that are designed to profile a chapter 7 petitioner's financial situation. In Schedule A, which directs the petitioner to list all interests in REAL PROPERTY, Rowe typed NONE in the column where he was asked to provide a Description and Location of Property. In Schedule J, which is labeled CURRENT EXPENDITURES OF INDIVIDUAL DEBTOR(S), Rowe typed $395.00 in the space he was to list his Rent or home mortgage payment. These two responses were the subjects of the bankruptcy frauds charged in Counts II and III of the indictment. 6 The government's theory as to Count II was straightforward: the answer NONE in Schedule A was fraudulent because, at the time Rowe filed his petition, he and his ex-wife each had a 50 percent ownership interest in a residence located at 20 Highland Avenue in Nahant, Massachusetts. The government's theory as to Count III is a bit more complicated, see infra at 15-22, but can be summarized as follows: the answer $395.00 in Schedule J was fraudulent because, at the time Rowe filed his petition, EDI was paying upwards of $1800 per month in rent for Rowe to live in a house he personally had leased. This house was located at 47 Castle Road in Nahant, Massachusetts. In the government's view, Rowe had a clear obligation to disclose this rent payment on his Schedule J, but failed to disclose it in order to further the fraud charged in Count I (the charge of which the jury acquitted him): concealing his interest in EDI from the bankruptcy court. 7 Rowe defended the statement charged in Count II on the basis that, although he technically did own half of the Highland Avenue residence, he had no beneficial interest in it because it was encumbered with a $50,000 mortgage and attachments in the amount of $1.8 million, and because he had an agreement with his ex-wife that she would get the equity (if any) that remained in the residence following sale of the property. Rowe defended the statement charged in Count III on two bases: (1) because EDI was paying the $1800 monthly rental payment on the Castle Road property pursuant to a loan agreement Rowe had with the company, Rowe was not obligated to list the payment as a current personal expenditure; and (2) because Schedule J asked Rowe to list only his rent or home mortgage payment (emphasis supplied), and because Rowe's response of $395.00 truthfully set forth his home mortgage payment, Rowe's answer to this (arguably) disjunctive inquiry was truthful. Rowe supported this latter argument by testifying that his monthly mortgage payment on the Highland Avenue property was $395.00 (not including late payment charges).