United States District Court, E.D. New York
James J. Bordonaro, Debtor, Appellant,
Fido's Fences, Inc., Creditor, Appellee.
MEMORANDUM AND ORDER
F. BIANCO United States District Judge
J. Bordonaro (“Bordonaro” or
“debtor”) appeals from an order entered by the
United States Bankruptcy Court for the Eastern District of
New York in the underlying bankruptcy proceeding. After a
trial held on May 12, 2015 and September 17, 2015, the
Honorable Robert E. Grossman issued a written opinion dated
January 12, 2016 in which he denied the debtor's
discharge pursuant to 11 U.S.C. §§ 727(a)(3) and
(a)(4)(A). In re Bordonaro, 543 B.R. 692, 703
(Bankr. E.D.N.Y. 2016). Judge Grossman found that creditor
Fido's Fences (“creditor”) proved by a
preponderance of the evidence that debtor “concealed,
destroyed, mutilated, falsified, or failed to keep or
preserve records, without justification when [debtor] (i)
produced redacted bank statements without justification and
(ii) failed to produce his log of cash transactions, despite
order by the Court.” Id. at 695. He further
found that the debtor “knowingly and fraudulently made
a false oath in the . . . bankruptcy case when [debtor],
under penalty of perjury, misstated his income and assets and
misrepresented that [creditor] held an unsecured claim rather
than a secured claim on his Schedules and Statement of
Financial Affairs.” Id. Judge Grossman
concluded that these were sufficient grounds to deny the
Court holds that the Bankruptcy Court did not clearly err in
concluding that debtor (1) failed to produce the required
documents without adequate justification under Section
727(a)(3), and (2) fraudulently made materially false
statements on the original petition in violation of Section
727(a)(4)(A). Moreover, in light of these findings, the
Bankruptcy Court correctly denied debtor's discharge.
Accordingly, the Order of the Bankruptcy Court dated January
12, 2016 denying debtor's discharge is affirmed.
following facts are taken from the record of the Bankruptcy
Court in the underlying proceeding.
owned and operated Advance Graphics Design and Engineering
and Advance Graphics Design and Development Corp.
(collectively “Advance Graphics”). (R2 at 86-87.)
In his capacity as owner and operator of this business,
debtor became experienced in business management, including
the balancing of accounts and business accounts.
(Id. at 87.) Debtor also worked as an adjunct
professor at the New York Institute of Technology and owned
real property in Bay Shore, New York located at 1707 North
Gardiner Drive (“1707 North Gardiner”) and 1705
North Gardiner Drive (“1705 North Gardiner”).
(Id. at 87.)
March 2013, creditor obtained a money judgment against
Advance Graphics and debtor individually in the Supreme Court
of New York, County of Nassau, due to debtor's
non-payment pursuant to the terms of a Stipulation of
Settlement dated October 12, 2012. (Id.) Creditor
then filed an Execution Against Property with the Suffolk
County Sherriff's Office to collect the amount owed.
(Id.) As a result, 1705 North Gardiner was scheduled
for auction on January 21, 2014.
January 20, 2014 (the “Petition date”), the day
before the auction, debtor filed a voluntary petition for
relief under Chapter 7 of the Bankruptcy Code (the
“Petition”) (R1 at 5-57), which stayed the
auction (R2 at 88). With the Petition, he filed various
schedules, a statement of financial affairs
(“SOFA”), and a Form 22A Chapter 7 Statement of
Current Monthly Income and Means-Test Calculation
(“Means Test”). He read all of these documents
before signing them (R2 at 88) and signed them attesting to
their accuracy under penalty of perjury (R1 at 7, 34, 42, 55;
R2 at 88).
Schedule A of the Petition, debtor listed both of his
properties as real property in which he held a legal interest
but indicated that there was $0.00 in secured claims on 1705
North Gardiner. (R1 at 12; R2 at 88.) On Schedule B, he
indicated that he maintained a business checking account at
New York Commercial Bank with a balance of $100. (R1 at 13.)
He listed only Nationstar Mortgage as a creditor holding a
secured claim on Schedule D. (R1 at 17.) Creditor was not
listed on this schedule as a secured creditor. (Id.;
R2 at 88.) Instead, it was listed on Schedule F as a creditor
holding an unsecured priority claim in the form of a Money
Judgment in the amount of $150, 175.14. (R1 at 24.) With
respect to his income, debtor indicated on Schedule I that he
was self-employed, earned $1, 995.58 in net income from
operating a business, and received $925.00 a month in food
stamps, for a total monthly income of $2, 920.58. (R1 at 30.)
He noted on Schedule J that his monthly expenses were $2,
927.80, for a net monthly income of -$7.22. (Id. at
SOFA, debtor indicated that his sole source of income was the
operation of his business and that his income from that
business was $22, 255 in 2012, $23, 000 in 2013, and $3, 100
in 2014 prior to the Petition Date. (Id. at 35.) He
noted that creditor's lawsuit had been “[s]ettled
per [s]tipulation” (id. at 36), that none of
his property had been attached, garnished, or seized within
one year of the Petition Date (id.), and that he had
no ownership interest in any business (id. at 40).
Debtor listed small business checking and savings accounts
with Capital One as closed financial accounts, with $200 in
checking and $50 in savings as of March 2013. (Id.
on debtor's Means Test, he indicated that the monthly
gross receipts from the operation of his business were $3,
353.17, monthly expenses were $1, 390.50, for a total income
of $1, 962.67, or $23, 552.05 per year. (Id. at
Creditor's Complaint and Debtor's Amendments to the
filed a complaint in the Bankruptcy Court on October 2, 2014,
asserting that debtor's discharge should be denied due to
debtor's failure to keep adequate records and false
statements he made in the Petition that violated 11 U.S.C.
§ 727(a). (R2 at 4.) Creditor alleged that debtor made
the following false statements, among others:
• Creditor was listed as an unsecured creditor when
debtor knew creditor's debt was secured.
• Debtor's year-to-date income for 2014 was listed
as $2, 920.58 and $3, 100 despite a bank deposit of $8,
621.00 during that period.
• The SOFA reported that debtor had no income other than
from employment or operation of a business even though debtor
also collected rental income.
• The SOFA stated that debtor had no interest in any
business, despite his ownership of Advance Graphics.
• The SOFA stated that none of debtor's real
property had been attached, garnished, or seized in the past
year, even though creditor obtained a lien during that
(R2 at 7-18.)
October 28, 2014, following the filing of the complaint,
debtor amended Schedules A, D, F, I, and J, the SOFA, and the
Means Test (the “First Amended Schedules”),
signing the amendments under penalty of perjury and attesting
to their accuracy. (R1 at 350.) He amended Schedule A to
reflect that there was a secured claim on 1705 North Gardiner
in the amount of $150, 175.14 (id. at 352) and
Schedules D and F to reflect that creditor held a secured
claim for that amount (id. at 353, 354-59). On
Schedule I, debtor amended the following entries:
(1) employment information, to show debtor was not employed
(id. at 360);
(2), (4), and (7), to show a monthly income of $1, 760.24
rather than ...