Court Opinion

ID: 4192869
Source: CourtListenerOpinion
Date Created: 2017-08-03 17:03:04.306208+00
Date Added: 2024-06-11T09:36:41.281859
License: Public Domain

FILED
                                                           JUL 01 2015
                                                     SUSAN M. SPRAUL, CLERK
 1                       NOT FOR PUBLICATION             U.S. BKCY. APP. PANEL
                                                         OF THE NINTH CIRCUIT
 2
 3                UNITED STATES BANKRUPTCY APPELLATE PANEL
 4                          OF THE NINTH CIRCUIT
 5   In re:                             )    BAP No. AZ–14-1511-PaJuKi
                                        )            AZ-14-1514-PaJuKi
 6   DUSTIN ROGER CHANTEL and ELIZABETH )            (related appeals)1
     DARLENE CHANTEL,                   )
 7                                      )    Bankr. No. 13-11909
                    Debtors.            )
 8   ___________________________________)    Adv. Proc. 13-00977
                                        )               14-00041
 9   DUSTIN ROGER CHANTEL; ELIZABETH    )
     DARLENE CHANTEL,                   )
10                                      )
                    Appellants,         )
11                                      )
     v.                                 )    M E M O R A N D U M2
12                                      )
     WILLIAM PIERCE, Chapter 7 Trustee; )
13   UNITED STATES TRUSTEE,             )
                                        )
14                  Appellees.          )
     ___________________________________)
15
                      Submitted Without Oral Argument3
16                            on June 19, 2015
17                          Filed - July 1, 2015
18             Appeal from the United States Bankruptcy Court
                         for the District of Arizona
19
        Hon. Eddward P. Ballinger, Jr., Bankruptcy Judge, Presiding
20
21
          1
22           Although the parties have separately briefed the two
     appeals, the Panel elects to treat them as related appeals in this
23   Memorandum.
24        2
             This disposition is not appropriate for publication.
     Although it may be cited for whatever persuasive value it may have
25   (see Fed. R. App. P. 32.1), it has no precedential value. See 9th
     Cir. BAP Rule 8024-1.
26
          3
             After reviewing the briefs and submissions of the parties,
27   pursuant to Fed. R. Bankr. P. 8019, in separate orders entered on
     April 30, 2015, the Panel determined that oral argument was not
28   required in these appeals.

                                    -1-
 1   Appearances:    Dustin Roger Chantel pro se on brief; Ramona D.
                     Elliott, P. Matthew Sutko, John Postulka, Ilene J.
 2                   Lashinsky, Elizabeth C. Amorosi, and Christopher J.
                     Pattock on brief for appellee United States
 3                   Trustee; Terry A. Dake on brief for appellee
                     William E. Pierce, chapter 7 trustee.
 4
 5   Before: PAPPAS, JURY, and KIRSCHER, Bankruptcy Judges.
 6
 7        Chapter 74 debtors Dustin Roger Chantel (“Dustin”) and
 8   Elizabeth Darlene Chantel (“Elizabeth”5 and, together, “Debtors”)
 9   appeal two judgments of the bankruptcy court entered in related
10   adversary proceedings: (1) determining that all of the real and
11   personal property held by an entity known as the Chan-Lan Trust
12   (the “Trust”) was property of the bankruptcy estate, and directing
13   Debtors to turn over that property to the chapter 7 trustee,
14   William E. Pierce (“Pierce”); and (2) denying their discharge
15   under § 727 (a)(2)(A), (a)(2)(B), (a)(3), (a)(4)(A), and
16   (a)(4)(D).   We AFFIRM the bankruptcy court’s judgment determining
17   that the Trust’s assets are property of the estate and directing
18   Debtors to turn them over to Pierce.   We AFFIRM that portion of
19   the bankruptcy court’s judgment denying discharge under
20   § 727(a)(2)(A), (a)(2)(B), and (a)(4), but we REVERSE that portion
21   of the judgment denying Debtors’ discharge under § 727(a)(3) and
22   (a)(4)(D).
23
24
25        4
             Unless otherwise indicated, all chapter and section
     references are to the Bankruptcy Code, 11 U.S.C. §§ 101–1532, and
26   all Rule references are to the Federal Rules of Bankruptcy
     Procedure, Rules 1001–9037.
27
          5
             We refer to Debtors by first name for clarity; no
28   disrespect is intended.

                                     -2-
 1                                  I.   FACTS
 2        Dustin is retired; Elizabeth, his spouse, is a housewife.
 3        The disputes in this appeal focus on the Trust, a California
 4   trust created by Dustin and Elizabeth in 1995.     In the initial
 5   trust documents, Donna Aguirre was identified as the settlor of
 6   the Trust,6 and Dustin was the trustee.     Elizabeth became a co-
 7   trustee in 1997.
 8        Debtors became embroiled in litigation with their electricity
 9   supplier, Mohave Electric Cooperative (“Mohave”).     Mohave had
10   erected power lines on Debtors’ property in Kingman, Arizona (the
11   “Property”) on an easement granted decades before Debtors acquired
12   the land.    Later, Debtors constructed what they described as a
13   “divinely inspired structure” directly beneath the power lines.
14   Mohave County issued a stop-work order to Debtors during
15   construction of the structure; Debtors ignored the order.     On
16   September 12, 2008, the county instructed Mohave to de-energize
17   the overhead lines because the structure had created an unsafe
18   condition.   As a result, Debtors lost their source of electric
19   power on the Property.
20        In 2009, Debtors sued Mohave for complying with the county’s
21   instructions in state court.    Mohave asserted a counterclaim
22   against Debtors, and the state court entered a money judgment of
23   $175,000 against Debtors on Mohave’s counterclaim.     Debtors
24   appealed, but the judgment was affirmed by the Arizona Court of
25   Appeals.    Chantel v. Mohave Elec. Co-op, 2013 WL 1628308 (Ariz.
26
27        6
             Ms. Aguirre’s identity or whereabouts is not provided by
     the parties. She resigned as settlor of the Trust on the day it
28   was created. She did not contribute any property to the Trust.

                                         -3-
 1   Ct. App. Apr. 16, 2013).   No further appeal was taken.
 2        Debtors filed a petition for relief under chapter 13 on
 3   July 11, 2013, which the court dismissed due to Debtors’ failure
 4   to timely file a chapter 13 plan.      The court then granted Debtors’
 5   motion to reinstate the case but converted it to a chapter 7 case
 6   on August 12, 2013.   Pierce was appointed to serve as chapter 7
 7   trustee.
 8        Debtors’ schedules indicated that they owned no real property
 9   and had not transferred any property to a self-settled trust in
10   the previous ten years.    The only reference to the Trust was in
11   schedule G in which Debtors claimed they leased farmland from the
12   Trust.    Debtors listed their monthly income as $2,039, comprised
13   solely of pension, social security benefits, and disability
14   benefits.    There is no declaration in their schedules about the
15   income of, nor any compensation Debtors may receive from, the
16   Trust.7
17        On August 27, 2013, Pierce commenced an adversary proceeding
18   against Debtors in their personal capacities and as trustees of
19   the Trust.   Pierce sought a judgment denying Debtors’ discharge
20   under § 727(a)(2)(A), (a)(2)(B), (a)(3), (a)(4)(A), and (a)(4)(D)
21   alleging that Debtors had: failed to properly disclose their
22   interests in the Trust; failed to provide records concerning the
23   Trust; transferred assets of the Trust during the bankruptcy case
24   without court approval; and knowingly, wilfully, and fraudulently
25   hindered, delayed, and defrauded their creditors and the trustee.
26
          7
             Although Debtors did not list any real property in their
27   schedules, they did list a mortgage of approximately $163,000.
     Their schedule F also acknowledges a debt of $175,000 to Mohave
28   based upon the state court judgment.

                                      -4-
 1   Pierce also sought a judgment from the bankruptcy court
 2   determining that all of the real and personal property of the
 3   Trust was property of the bankruptcy estate pursuant to § 541 and
 4   directing that Debtors turn over all of the property to Pierce
 5   pursuant to § 542.
 6        On January 16, 2014, the United States Trustee (the “UST”)
 7   commenced an adversary proceeding against Debtors.   It also
 8   requested that the bankruptcy court deny Debtors’ discharge under
 9   § 727(a)(2), (a)(3), and (a)(4).   The UST alleged that the Trust
10   was a sham, that Debtors were the beneficial owners of the Trust’s
11   assets, and that Debtors had transferred, removed, and concealed
12   property of the Trust with the intent to hinder, delay, and
13   defraud their creditors.   The UST further alleged that Debtors had
14   failed to keep, or had concealed, records, and that they
15   knowingly, and with fraudulent intent, made false statements under
16   oath concerning material information by failing to disclose their
17   interest in the Trust in their schedules.
18        At the request of the UST and Pierce, the bankruptcy court
19   ordered that both adversary proceedings be tried at the same
20   time.8   The trial occurred on July 31 and August 8, 2014.   Pierce
21   and the UST were represented by counsel; Debtors appeared pro se.
22   At the beginning of trial, both Pierce and the UST informed the
23   bankruptcy court that they no longer sought a denial of Debtors’
24   discharge for their failure to produce books and records.
25        Dustin and Elizabeth testified at the trial.    Dustin made
26
          8
             Before trial commenced, Dustin, as trustee of the Trust,
27   filed a motion to dismiss the case. The bankruptcy court denied
     the motion because Dustin was not an attorney, and only attorneys
28   may represent the Trust in federal court.

                                      -5-
 1   several important admissions and other statements during his
 2   testimony.   Among them, he testified that in the years preceding
 3   creation of the Trust a group of people whom he could not identify
 4   had approached him about creating a trust; they then gratuitously
 5   gave him two parcels of real estate to create the Trust.    Dustin
 6   later claimed that he had traded services in exchange for the two
 7   parcels.   Dustin testified that Debtors owned no real property,
 8   and later he testified that Debtors had transferred numerous
 9   parcels of real property and items of personal property to the
10   Trust, including the Property.   Dustin admitted that Debtors had
11   declared income from property ostensibly owned by the Trust on
12   their personal income tax returns.     He also admitted that Debtors
13   had used the Property allegedly owned by the Trust as collateral
14   for loans made to Debtors, including the mortgage loan, and then
15   had deducted the mortgage loan interest on their personal income
16   taxes.   Dustin admitted that the Trust’s funds were used to pay
17   Debtors’ personal cable bill, cell phone bill, dental expenses,
18   gas and propane bills, car loan payments (for cars titled in
19   Debtors’ names), car registration, credit card bills, and other
20   personal expenses.   Dustin was unable to identify any
21   distributions to beneficiaries made by the Trust except for loans.
22   Dustin also testified that, after Debtors filed their bankruptcy
23   petition, Dustin sold silver bullion, which had been purchased
24   with Trust funds, to unnamed parties, and then lost the $110,000
25   in sale proceeds gambling in Nevada.9
26
          9
27           Dustin ignored the bankruptcy court’s advice that he
     consider invoking the Fifth Amendment because of the potential
28                                                        (continued...)

                                      -6-
 1        In her testimony, Elizabeth confirmed several aspects of
 2   Dustin’s testimony, while adding other details.   She insisted that
 3   the information Debtors listed in the bankruptcy schedules was
 4   correct.    She acknowledged that Debtors had transferred their
 5   assets to the Trust, including a $90,000 cash inheritance she
 6   received, which Debtors then used to make improvements to the
 7   Property.   She recounted how Debtors had purchased jewelry with
 8   Trust funds, which was stored in Elizabeth’s jewelry box and worn
 9   by her.
10        At the close of trial, the bankruptcy court took the matter
11   under advisement.   On October 15, 2014, the court announced its
12   oral findings, conclusions, and decision.   Highlights of the
13   court’s decision included that:
14        - Debtors were the settlors, trustees, and beneficiaries of
15   the Trust because Debtors supplied all of the assets contributed
16   to the Trust without consideration, and without relinquishing
17   enjoyment, dominion, and control over those assets.
18        - Debtors used Trust assets regularly to pay personal
19   expenses.
20        - The $110,000 in Trust assets (i.e., the silver bullion sale
21   proceeds) gambled away by Dustin, and the jewelry purchased for
22   Elizabeth, were prominent examples of why, in the court’s words,
23   “[t]he Trust was nothing more than Debtors’ personal asset
24   repository.”   Hr’g Tr. 9:10-11, Oct. 15, 2014.
25        - Debtors had unlimited power over the Trust, including the
26
27
          9
           (...continued)
28   criminal implications of his testimony.

                                       -7-
 1   power to amend the Trust.
 2        - The Trust documents did not require any distributions to be
 3   made to its beneficiaries, and no distributions other than loans
 4   to be repaid were in fact made.
 5        - Debtors “maintained all the beneficial ownership of the
 6   Trust assets.”   Hr’g Tr. 11:6-9, Oct. 15, 2014.
 7        - “The trial evidence, including [among] other things, the
 8   Court’s evaluation of witness credibility clearly established that
 9   the Debtors withheld, concealed their assets, and provided false
10   information to the Trustees with the intent to hinder, delay, and
11   defraud their creditors, the estate Trustee, and the U.S.
12   Trustee.”   Hr’g Tr. 15:5-15, Oct. 15, 2014.
13        - Debtors knowingly and fraudulently signed the bankruptcy
14   schedules in which they failed to disclose Trust assets and
15   personal income earned by the sale of Trust property.
16        - Debtors’ failure to disclose the assets and transfers to
17   the Trust constituted false oaths.
18        The bankruptcy court entered separate judgments in the two
19   adversary proceedings on November 11, 2014.    In the judgment in
20   Pierce’s adversary proceeding, the court denied Debtors’ discharge
21   under § 727(a)(2)(A), (a)(2)(B), (a)(3), (a)(4)(A), and (a)(4)(D).
22   It also determined that all of the assets of the Trust were
23   property of the Debtors’ bankruptcy estate under § 541 which must
24   be turned over to Pierce pursuant to § 542.    In the UST’s
25   adversary proceeding, the court denied “discharge of all of
26   Debtors’ debts and claims which are listed in the Schedules . . .
27
28

                                       -8-
 1   or could have been included in the Schedules.”10
 2        Dustin and Elizabeth filed timely appeals of both judgments.
 3                              II.    JURISDICTION
 4        The bankruptcy court had jurisdiction under 28 U.S.C. §§ 1334
 5   and 157(b)(2)(E) and (J).     We have jurisdiction under 28 U.S.C.
 6   § 158.
 7        Although their argument is difficult to decipher, Debtors
 8   appear to challenge the jurisdiction of the bankruptcy court and
 9   this Panel to adjudicate the issues raised in these proceedings
10   because, they allege, there are “non-core” issues implicated here.
11   Debtors seem to argue that the judgments purport to adjudicate
12   their dispute with Mohave, thereby presenting non-core contract
13   law issues, which the bankruptcy court and this Panel may not
14   constitutionally decide.    See N. Pipeline Constr. Co. v. Marathon
15   Pipe Line Co., 458 U.S. 50 (1982); Stern v. Marshall, 564 U.S. 2
16   (2011).   For the following reasons, we reject Debtors’ attempted
17   jurisdictional challenge.
18        First, no non-core claims were asserted in the adversary
19   proceedings.   Pierce and the UST sought a judgment denying
20   Debtors’ discharge under § 727(a), a classic core proceeding per
21   28 U.S.C. § 157(b)(2)(J).11      In addition, Pierce sought an order
22
23        10
             The judgment in the UST action did not reference any
     specific provisions of § 727(a) upon which the Court determined
24   Debtors’ discharge should be denied. However, the judgment does
     reference the oral ruling of October 15, 2014, during which the
25   bankruptcy court determined Debtors’ discharge should be denied
     under § 727(a)(2)(A), (a)(2)(B), and (a)(4)(A).
26
          11
             A claim for denial of the debtor’s bankruptcy discharge is
27   a “public rights” controversy, involving only the Debtors and the
     bankruptcy estate, which the bankruptcy court may constitutionally
28                                                       (continued...)

                                         -9-
 1   requiring Debtors to turn over what the bankruptcy court
 2   determined to be property of the estate, another core proceeding.
 3   See 28 U.S.C. § 157(b)(2)(E).   Marathon and Stern address
 4   constitutional questions regarding the bankruptcy court’s
 5   authority to adjudicate claims between the bankruptcy estate and
 6   third parties other than the debtors.      Here, the only parties
 7   involved were Debtors, Pierce, and the UST.     Because there were no
 8   third parties involved in these proceedings, the principles
 9   discussed in those decisions are of no consequence.
10        Secondly, while they suggest otherwise, Debtors’ claims
11   involving Mohave were not at issue in the adversary proceedings,
12   and Mohave has not asserted any claims against the assets of the
13   Trust.    Indeed, there is a separate adversary proceeding pending
14   in the bankruptcy court where the dispute between Mohave and
15   Debtors will be heard.   Adv. 13-01267.12
16        In sum, Debtors’ ill-defined jurisdictional arguments lack
17   merit.
18                                III.     ISSUES
19        Whether the bankruptcy court erred in determining that all of
20   the real and personal property in the Trust was property of the
21   estate and directing the turnover of that property to Pierce.
22        Whether the bankruptcy court erred in denying Debtors’
23
24        11
           (...continued)
25   adjudicate. Deitz v. Ford (In re Deitz), 760 F.3d 1038, 1039 (9th
     Cir. 2014).
26        12
             In their adversary proceeding, Mohave seeks an exception
27   to discharge under § 523(a)(6) for their Superior Court judgment
     of $175,407.04, plus attorneys’ fees and costs. We express no
28   opinion on the impact this decision has on that adversary
     proceeding.

                                         -10-
 1   discharge.
 2                           IV.    STANDARDS OF REVIEW
 3        Whether property is included in a bankruptcy estate, and the
 4   procedures for recovering estate property, are questions of law
 5   that we review de novo.       White v. Brown (In re White), 389 B.R.
 6   693, 698 (9th Cir. BAP 2008).       The court’s factual findings are
 7   reviewed for clear error.      Retz v. Samson (In re Retz), 606 F.3d
 8   1189, 1196 (9th Cir. 2010).
 9        We review a bankruptcy court’s decision resolving an
10   objection to discharge as follows:
11                “(1) the bankruptcy court’s determinations of
                  the historical facts are reviewed for clear
12                error; (2) the selection of the applicable
                  legal rules under § 727 is reviewed de novo;
13                and (3) the application of the facts to those
                  rules requiring the exercise of judgments
14                about values animating the rules is reviewed
                  de novo.”
15
16   In re Retz, 606 F.3d at 1196 (quoting Searles v. Riley
17   (In re Searles), 317 B.R. 368, 373 (9th Cir. BAP 2004), aff’d,
18   212 F. App’x 589 (9th Cir. 2006)).
19        The bankruptcy court’s determinations concerning the debtor’s
20   intent are factual matters reviewed for clear error.      Beauchamp v.
21   Hoose (In re Beauchamp), 236 B.R. 727, 729 (9th Cir. BAP 1999).        A
22   factual finding is clearly erroneous if it is “illogical,
23   implausible, or without support in the record.”      In re Retz,
24   606 F.3d at 1196 (citing United States v. Hinkson, 585 F.3d 1247,
25   1261-62 & n.21 (9th Cir. 2009) (en banc)).
26                                  V.   DISCUSSION
27        Debtors’ essential argument, both in the bankruptcy court and
28   in these appeals, is that they owned none of the Trust property.

                                          -11-
 1   Because all of the property at issue was the Trust’s property,
 2   Debtors insist that they committed no concealment or false oath in
 3   failing to disclose relevant facts about the property in their
 4   schedules, nor did they engage in any wrongdoing in transferring
 5   property of the Trust both pre- and post-petition.
 6        We agree with the bankruptcy court that the property held by
 7   the Trust was property of the estate which must be turned over to
 8   Pierce and, with the two exceptions regarding Debtors’ obligations
 9   to keep records discussed below, we agree with the bankruptcy
10   court that Debtors’ discharge was properly denied under § 727(a).
11                                    I.
12        The bankruptcy court did not err in determining that all
          assets of the Trust were property of the estate and directing
13        turnover of those assets to the chapter 7 trustee.
14        Under § 541(a)(1), property of the estate includes "all legal
15   or equitable interests of the debtor in property as of the
16   commencement of the case."   This expansive language is not
17   ambiguous – all means all.   But even assuming the statute is
18   ambiguous, this provision has been consistently interpreted by the
19   courts to have the broadest possible scope.   United States v.
20   Whiting Pools, 462 U.S. 198, 204 (1983) (noting that "Congress
21   intended a broad range of property to be included in the estate
22   . . . .   The statutory language reflects this scope of the estate
23   . . . .   The house and senate reports on the Bankruptcy Code
24   indicate that § 541(a)(1)'s scope is broad."); accord Cusano v.
25   Klein, 264 F.3d 936, 945 (9th Cir. 2001).
26        Although the term “property of the estate” is to be construed
27   broadly, the Bankruptcy Code does limit its reach.   For example,
28   § 541(b)(1) provides that: “Property of the estate does not

                                     -12-
 1   include — 1) any power that the debtor may exercise solely for the
 2   benefit of an entity other than the debtor.”   Under this
 3   provision, a debtor who is a trustee of a private or business
 4   trust ordinarily exercises its “power” on behalf of the trust and
 5   thus “solely for the benefit of an entity other than the debtor.”
 6   However, there is an important exception to this rule: when a
 7   debtor is both the trustee and beneficiary of a trust.   Torts
 8   Claimants Comm. v. Roman Catholic Archbishop in Or. (In re Roman
 9   Catholic Archbishop of Or.), 345 B.R. 686, 707 (Bankr. D. Or.
10   2006).
11        A.   The Trust was the alter ego of Debtors and its assets
               were property of the estate.
12
13        In bankruptcy, an alter ego is a nominal third party that has
14   no substantive existence separate from the debtor, and property
15   purportedly held by that third party is, therefore, the debtor's
16   own property.   Int’l Fin. Servs. Corp. v. Chromas Techs. Can.,
17   Inc., 356 F.3d 731, 734, 736-737, 740 (7th Cir. 2004);
18   In re Pisculli, 426 B.R. 52, 61 (Bankr. E.D.N.Y. 2010) (assets of
19   an alter ego of debtor at the time of filing the bankruptcy
20   petition are property of the estate).
21        Alter ego theory is usually used to reach assets nominally
22   held by a corporation.   Dietel v. Day, 492 P.2d 455, 457 (Ariz.
23   Ct. App. 1972).   However, Arizona law allows the same theory to
24   reach assets of a trust because “the underlying principle is the
25   sham nature of the arrangement.”   Id.; United States v. Hart,
26   2006 WL 3377626, at *3 (D. Ariz. Oct. 19, 2006); see also Neely v.
27   United States, 775 F.2d 1092, 1094 (9th Cir. 1985) (alter ego
28   theory may be applied to sham trusts under federal law).

                                     -13-
 1        A trust is an individual’s alter ego when there is a unity of
 2   interest and ownership between the trust and the individual, such
 3   that observing the trust form would work an injustice.   Dietel,
 4   492 P.2d at 457; Ize Nantan Bagowa, Ltd. v. Scalia, 577 P.2d 725,
 5   728 (Ariz. Ct. App. 1978).    Under Arizona law, a court may find
 6   that a trust is an alter ego where (1) the individual treats the
 7   trust property as his own; (2) the trust paid minimal or no
 8   consideration for the property; (3) the individual has expressed
 9   the intent to shelter assets via the trust mechanism; (4) the
10   individual maintains active or substantial control over the
11   operations and decisions of the trust; and (5) a family or close
12   relationship exists between the individual and the holding entity.
13   Hart, 2006 WL 3377626, at *3 (citing Deutsche Credit Corp. v. Case
14   Power & Equip. Co., 876 P.2d 1190, 1195-96 (Ariz. Ct. App. 1994)).
15        Here, the bankruptcy court made clear findings concerning
16   each of these requirements.   Because its decision was based on
17   competent evidence, it could properly conclude that there was a
18   near perfect unity of interest between the Trust and Debtors, and
19   thus, that the Trust was the alter ego of Debtors and its assets
20   were property of the bankruptcy estate.
21        1.   Debtors treated trust property as their own.   The
22   bankruptcy court heard the testimony of both Debtors and was given
23   voluminous documentary exhibits detailing each asset of the Trust.
24   Among its findings from this evidence, it determined that Debtors
25   had used the Trust “to pay Debtors’ home loan as well as expenses
26   personally related to utilities, gas for vehicles, tires, car
27   payments, personal eyeglasses, dental work, credit card bills,
28   propane gas purchases, cable television and cell phones.”   Hr’g

                                      -14-
 1   Tr. 7:11-17, Oct. 15, 2014.    The court concluded that “the
 2   evidence clearly established the Trust served as the Debtors’ de
 3   facto checking account, or personal account, I should say.”     Id.
 4   at 7:22-23.    The court further found that, although Debtors
 5   claimed to have repaid the Trust for some of these expenses, their
 6   testimony “lacked credibility” and any payments made were “de
 7   minimis in relation to the benefits provided.”     Id. at 7:19-21.
 8        Here, there was ample evidence offered to support the
 9   bankruptcy court’s conclusion that Debtors treated the Trust’s
10   assets as their own.    In addition, we must give substantial
11   deference to the bankruptcy court's findings because they were
12   based in part on credibility determinations concerning witness
13   testimony.    Anderson v. City of Bessemer City, N.C., 470 U.S. 564,
14   573 (1985); Rosenbaum v. City & Cnty. of San Francisco, 484 F.3d
15   1142, 1163 (9th Cir. 2007) (the “trial court's credibility
16   findings are subject to clear error and deserve special
17   deference”).
18        2.      The Trust paid no consideration for the properties,
19   which were all provided by Debtors.      As noted, the court was given
20   documentary evidence about the assets contributed to and owned by
21   the Trust.    It found that all assets of the Trust had been
22   contributed by Debtors, and that “Debtors’ transfers of property
23   and money to the trust were made without receiving adequate
24   consideration[.]”    Hr’g Tr. 7:6-8, Oct. 15, 2014.   Debtors have
25   not effectively challenged the court’s findings in this respect.
26        3.      Debtors intended to shelter assets via the trust
27   mechanism.    Based on the documentary evidence, and because the
28   Debtors lacked credibility, the bankruptcy court found that

                                       -15-
 1   Debtors intended to shelter assets: “By transferring nominal
 2   ownership of their valuable assets to the trust, the Debtors
 3   sought to and intended to hinder, delay, or defraud their
 4   creditors.”    Hr’g Tr. 11:10-15, Oct. 15, 2014.   The record
 5   adequately supports this finding, and it was not clearly
 6   erroneous.
 7        4.      Debtors maintained active or substantial control over
 8   the operations and decisions of the Trust.    The bankruptcy court
 9   made explicit fact findings on this point:    “Throughout its
10   histories, Debtors have exercised exclusive dominion and control
11   over trust assets[.]”    Hr’g Tr. 7:11-12, Oct. 15, 2014.   “For all
12   relevant times since the inception of the Trust, one or both of
13   the Debtors executed documents and instruments and acted as sole
14   trustees of the Trust.”    Id. at 6:17-20.   The bankruptcy court’s
15   findings are supported in the record and were not clearly
16   erroneous.
17        5.      A family or close relationship exists between the
18   Debtors and the Trust.    It is undisputed that Debtors, at all
19   relevant times, served as the trustees of the Trust.    The one
20   exception to this condition occurred in 1997, when Debtors’
21   stepson/son Brian Lankford was a trustee.    However, there is no
22   indication in the record that anyone outside the Debtors’ family
23   ever participated in the management of the Trust, nor have Debtors
24   suggested otherwise.
25        As can be seen, the bankruptcy court made appropriate and
26   adequate fact findings as to each of the five elements under the
27   Arizona case law to show that the Trust was the alter ego of the
28   Debtors at the time of filing the bankruptcy petition (and

                                       -16-
 1   thereafter).   The bankruptcy court could therefore properly
 2   conclude that the Trust’s assets were actually the Debtors’
 3   property.   Chromas Techs. Can., Inc., 356 F.3d at 740.    As a
 4   result, those assets became property of the estate when Debtors
 5   filed their bankruptcy petition.    § 541(a); In re Pisculli,
 6   426 B.R. at 61.
 7        B.     The bankruptcy court did not err in directing the
                 turnover of the assets of the Trust.
 8
 9        A bankruptcy court may order the turnover of property to the
10   debtor’s estate if it is property of the estate.     See § 542(a)
11   (requiring turnover of property of the estate to the trustee
12   unless such property is of inconsequential value or benefit to the
13   estate.)    To prevail in a turnover action under § 542(a), a
14   trustee must establish: (1) that property of the estate is or was
15   in the possession, custody, or control of an entity during the
16   pendency of the case; (2) that the property may be used by the
17   trustee under § 363; and (3) that the property has more than
18   inconsequential value or benefit to the estate.     See § 542(a);
19   Bailey v. Suhar (In re Bailey), 380 B.R. 486, 492 (6th Cir. BAP
20   2008); Zazali v. Minert (In re DBSI, Inc.), 468 B.R. 664, 669
21   (Bankr. D. Del. 2011); 5 COLLIER ON BANKRUPTCY ¶ 542.02[2] (Alan N.
22   Resnick & Henry J. Sommer, eds., 16th ed.).
23        As discussed in the previous section, the bankruptcy court
24   properly concluded that all assets of the Trust were property of
25   the estate and that “at all relevant times, Debtors have exercised
26   exclusive dominion and control over trust assets[.]"     Hr'g Tr.
27   7:11-12, Oct. 15, 2014.   While the bankruptcy court did not
28   attempt to value all of the assets of the Trust, the record before

                                      -17-
 1   the court included in its list of assets numerous parcels of real
 2   estate, and other real estate contracts valued at over $175,000.
 3   The only indication in the record of liens was a mortgage on the
 4   principal residence.   Among the personal property assets, the
 5   silver bullion testified to by Dustin had significant value, and
 6   Elizabeth testified that the jewelry was “valuable.”   Thus, we are
 7   confident that the Trust assets had a value of consequence, and
 8   that their liquidation would confer a significant benefit to the
 9   creditors of the estate.
10        Because the Trust assets had significant value and were
11   property of the estate in the possession, custody, and control of
12   Debtors, the bankruptcy court did not err in ordering the turnover
13   of the Trust assets.
14                                   II.
15        The bankruptcy court did not err in denying Debtors’
          discharge.
16
17        A.   The court did not err in denying Debtors’ discharge
               under § 727(a)(2)(A) and (a)(2)(B).
18
19        Section 727(a)(2) provides that:
20             The court shall grant the debtor a discharge,
               unless . . . the debtor, with intent to
21             hinder, delay, or defraud a creditor or an
               officer of the estate charged with custody of
22             property under this title, has transferred,
               removed, destroyed, mutilated, or concealed,
23             or has permitted to be transferred, removed,
               destroyed, mutilated, or concealed[,] (A)
24             property of the debtor, within one year before
               the date of the filing of the petition; or (B)
25             property of the estate, after the date of
               filing the petition[.]
26
27   Under § 727(a)(2), a party objecting to a debtor’s discharge must
28   prove the following elements by a preponderance of the evidence:

                                     -18-
 1   “‘(1) disposition of property, such as a transfer or concealment,
 2   and (2) a subjective intent on the debtor’s part to hinder, delay,
 3   or defraud a creditor through the act of disposing of the
 4   property.’”   In re Retz, 606 F.3d at 1200 (quoting Hughes v.
 5   Lawson (In re Lawson), 122 F.3d 1237, 1240 (9th Cir. 1997)).    The
 6   intent of a debtor in making a transfer or concealment of property
 7   is a question of fact that “may be established by circumstantial
 8   evidence, or by inferences drawn from a course of conduct.”
 9   Devers v. Bank of Sheridan (In re Devers), 759 F.2d 751, 753-54
10   (9th Cir. 1985); see also Adeeb v. Adeeb (In re Adeeb), 787 F.2d
11   1339, 1342 (9th Cir. 1986).
12        In this case, after a two-day trial where the bankruptcy
13   court heard testimony from Debtors and received substantial
14   documentary evidence concerning the assets of the Trust, the court
15   found the Trust was “a mere conduit for Debtors’ personal
16   activities and all of the assets contributed [to it] constituted
17   property of the Debtors before the bankruptcy filing.”   Hr’g Tr.
18   11:7-9, Oct. 15, 2014.   Further, the court determined that Debtors
19   had concealed, and failed to properly disclose, “more than
20   $110,000 of liquid assets [of the Trust] consisting of quantities
21   of silver bullion purchased just prior to and subsequent to
22   Debtors’ petition date.”   Id. at 8:25-9:3.   The court also found
23   that Debtors concealed the Property in the Trust, even though in
24   2013, and for some time prior, Debtors claimed to own the Property
25   as their personal residence and had pledged it as collateral for
26   loans.   The court found “[a]t the time of their [petition] filing,
27   Debtors had nominally divested themselves of title to . . . most
28   if not all of their valuable assets by transferring these to [the

                                     -19-
 1   Trust] in exchange for no or de minimis consideration.”    Id. at
 2   9:17-20.    Further, the court determined, “[b]y transferring
 3   nominal ownership of their valuable assets to the [T]rust, the
 4   Debtors sought to and intended to hinder, delay, or defraud their
 5   creditors.    Notwithstanding the nominal transfer of the assets
 6   during the one year period of filing for bankruptcy, the Debtors
 7   maintained all the beneficial ownership of [T]rust assets.”     Id.
 8   at 11:10-15.
 9        The bankruptcy court did not err in finding that Debtors
10   concealed and transferred their property both pre- and post-
11   petition.    First, we agree with the bankruptcy court that the
12   evidence in the record established Debtors’ prepetition
13   concealment and transfers of property within one year prior to the
14   bankruptcy petition.    The evidence also shows that Debtors
15   concealed and transferred property of the estate after they filed
16   their bankruptcy petition.    Given the evidence presented at trial
17   regarding the concealment and transfer of property by the Debtors
18   both pre- and post-petition, the bankruptcy court’s finding that
19   Debtors intended to hinder, delay, or defraud their creditors by
20   completing these actions was also not illogical, implausible, or
21   without support in the record.
22        The bankruptcy court did not err in denying Debtors’
23   discharge under § 727(a)(2)(A) and (a)(2)(B).
24        B.      The bankruptcy court did not err in denying discharge
                  under § 727(a)(4)(A).
25
26        Section 727(a)(4)(A) provides: “[t]he court shall grant the
27   debtor a discharge, unless — . . . (4) the debtor knowingly and
28   fraudulently, in or in connection with the case — (A) made a false

                                       -20-
 1   oath or account.”   The party objecting to a debtor’s discharge
 2   under this provision must prove, by a preponderance of the
 3   evidence, “‘(1) that the debtor made a false oath in connection
 4   with the case; (2) the oath related to a material fact; (3) the
 5   oath was made knowingly; and (4) the oath was made fraudulently.’”
 6   In re Retz, 606 F.3d at 1197 (quoting Roberts v. Erhard
 7   (In re Roberts), 331 B.R. 876, 882 (9th Cir. BAP 2005)).   Intent
 8   is a finding of fact that is usually proven by circumstantial
 9   evidence or by inferences drawn from the debtor’s conduct.
10   In re Retz, 606 F.3d at 1199 (citing In re Devers, 759 F.2d at
11   753-54).
12        Here, the bankruptcy court found Debtors failed to disclose
13   numerous parcels of real property they owned, including the
14   Property, which they used as their residence.   The court also
15   found Debtors failed to disclose in their schedules several bank
16   accounts they owned.   Moreover, the court found Debtors omitted
17   the silver bullion from their schedules, as well as the jewelry.
18   These findings of fact are supported by the record, and based upon
19   them, the bankruptcy court did not err in concluding that Debtors
20   made false oaths and omissions as to material facts in their
21   bankruptcy case by failing to list these assets in their
22   schedules.
23        The bankruptcy court also did not clearly err when it found
24   that Debtors acted knowingly because they deliberately omitted
25   assets from their schedules with knowledge of the fact that they
26   were incomplete.    See Khalil v. Developers Sur. & Indem. Co.
27   (In re Khalil), 379 B.R. 163, 173 (9th Cir. BAP 2007) (“A debtor
28   ‘acts knowingly if he . . . acts deliberately and consciously.’”)

                                      -21-
 1   (quoting In re Roberts), 331 B.R. at 883); see also In re Retz,
 2   606 F.3d at 1198 (holding that a debtor acts knowingly if he or
 3   she deliberately and consciously signed the schedules and
 4   Statement of Financial Affairs knowing they were incomplete).
 5        Finally, the bankruptcy court properly found, as it did under
 6   § 727(a)(2)(A) and (a)(2)(B), that Debtor acted fraudulently in
 7   concealing and omitting assets in their schedules because they did
 8   so with the intent to deceive their creditors and the bankruptcy
 9   trustee.
10        Because the bankruptcy court’s findings were not clearly
11   erroneous, and because all the requirements of the statute are
12   met, we conclude that the bankruptcy court did not err in denying
13   the Debtors’ discharge under § 727(a)(4)(A).
14        C.      The bankruptcy court erred in denying discharge under
                  § 727(a)(3) and (a)(4)(D).
15
16        Under § 727(a)(3), a discharge must be denied if "the debtor
17   has concealed, destroyed, mutilated, falsified, or failed to keep
18   or preserve any recorded information, including books, documents,
19   records, and papers, from which the debtor's financial condition
20   or business transactions might be ascertained, unless such act or
21   failure to act was justified under all of the circumstances of the
22   case."    This statute ensures that discharge is dependent on a
23   debtor's true presentation of his financial affairs.    Caneva v.
24   Sun Cmtys. Operating Ltd. P'ship (In re Caneva), 550 F.3d 755, 761
25   (9th Cir. 2008).
26        Similarly, § 727(a)(4)(D) provides for denial of discharge if
27   “the debtor knowingly and fraudulently, in or in connection with
28   the case —    . . . (D) withheld from an officer of the estate

                                       -22-
 1   entitled to possession under this title, any recorded information,
 2   including books, documents, records, and papers, relating to the
 3   debtor's property or financial affairs[.]”
 4        We conclude the bankruptcy court, perhaps inadvertently,
 5   erred when it denied Debtors’ discharge under § 727(a)(3) and
 6   (a)(4)(D).   Recall, both the UST and Pierce withdrew their claims
 7   under § 727(a)(3) at the beginning of trial.   And neither party
 8   presented any evidence regarding Debtors’ records under either
 9   provision of § 727(a).    The bankruptcy court also made no findings
10   regarding the appropriateness of Debtors’ books and records or
11   whether they were withheld from an officer of the estate.
12        We, therefore, REVERSE that portion the bankruptcy court’s
13   judgment denying Debtors’ discharge under § 727(a)(3) and
14   (a)(4)(D).
15                               VI.   CONCLUSION
16        We AFFIRM the court’s judgment determining that the assets of
17   the Trust are property of the estate and directing the turnover of
18   those assets to Pierce.   We AFFIRM the bankruptcy court’s
19   judgments denying Debtors’ discharge under § 727(a)(2)(A),
20   (a)(2)(B), and (a)(4)(A).    Finally, we REVERSE the bankruptcy
21   court’s judgment denying Debtors’ discharge under § 727(a)(3) and
22   (a)(4)(D).
23
24
25
26
27
28

                                       -23-