Debtor did not deny that the transfers were made, but said he did not intend to defraud the Plaintiff. However, he testified that he took steps to save his home from foreclosure, and his girlfriend, who was also his bookkeeper, said the payroll account was established because a woman at the bank said an account labeled “payroll” is safe. The bankruptcy court considered the three transactions identified by plaintiff, and concluded that the debtor did not intend to hinder, delay or defraud creditors, despite the facts that the debtor deposited money into accounts which were not subject to attachment, and took steps to protect his assets, including his house. Oops, there could be a legal boo-boo here. Plaintiff appealed and the 1st Circuit reversed.

“It is undisputed that the debtor applied the insurance and boat proceeds to reduce his mortgage in order to safeguard his home from foreclosure, an inescapable reference to protection from his creditors,” said the Appeals court. “There is no question that the debtor made all of the transfers while in financial distress; the general chronology of events demonstrates that each transaction was consummated on the heels of the preliminary injunction and in the shadow of the debtor’s bankruptcy filing. Additionally, the debtor failed to disclose any of the subject transfers on his Statement of Financial Affairs.” The Appeals court said every indicia of fraud articulated in Marama v. Citizens Bank, was present in this case, including blaming the Benghazi terror attack on September 11 on the You-Tube video.

Lawrence Bautista Yang is a graduate of Georgetown University Law Center and has been in law practice for thirty years. He specializes in bankruptcy, business and civil litigation and has handled more than five thousand successful bankruptcy cases in California. He speaks Mandarin and Fujien and looks forward to discussing your case with you personally. Please call (626) 284-1142 for an appointment at 1000 S Fremont Ave Bldg A-1 Suite 1125 Unit 58 Alhambra, CA 91803.