                                                                    [DO NOT PUBLISH]

                      IN THE UNITED STATES COURT OF APPEALS

                                   FOR THE ELEVENTH CIRCUIT           FILED
                                    ________________________ U.S. COURT OF APPEALS
                                                                     ELEVENTH CIRCUIT
                                            No. 11-11916                APRIL 2, 2012
                                        Non-Argument Calendar            JOHN LEY
                                      ________________________            CLERK


                                D.C. Docket No. 2:10-cv-00212-JES,
                                  BKCY No. 9:06-bk-05685-ALP


In Re: Bonita B. Phillips, a.k.a. Bonnie B. Phillips,

llllllllllllllllllllllllllllllllllllllllll                       Debtor.
_________________________________________

JEFFREY S. PHILLIPS,

lllllllllllllllllllllllllllllllllllllllll                        Plaintiff - Appellant,

                                             versus

EPIC AVIATION,

llllllllllllllllllllllllllllllllllllllll                       Defendant - Appellee.
                                      ________________________

                           Appeal from the United States District Court
                               for the Middle District of Florida
                                 ________________________

                                            (April 2, 2012)

Before TJOFLAT, EDMONDSON and MARCUS, Circuit Judges.
PER CURIAM:

      Appellant-Debtor Jeffery S. Phillips appeals from the district court’s order,

affirming the bankruptcy court’s final judgment in an adversary action brought by

Appellee-Creditor, Epic Aviation, Inc. (“Epic”), which denied Phillips a Chapter 7

bankruptcy discharge under 11 U.S.C. § 727(a)(4)(A) for making false oaths in

connection with the official schedules and statement of financial affairs (“SOFA”) in

his bankruptcy case. On appeal, Phillips argues that: (1) the lower courts erred by

applying a reckless standard instead of a “knowingly and fraudulently” standard to

Phillips’s alleged false statements/ omissions in his SOFA; (2) he had no obligation

to disclose a $50,000 “undocumented” transaction in the SOFA and no reason to

believe he should have; (3) he had no obligation to disclose $23,500 in attorney

payments in the SOFA and no reason to believe he should have; and (4) his failure

to disclose an “immaterial” interest in a $3,090 security deposit was not fraudulent.

After thorough review, we affirm.

      We review a bankruptcy court’s legal conclusions, as well as mixed questions

of law and fact, de novo. In re Piper Aircraft Corp., 244 F.3d 1289, 1295 & n.2 (11th

Cir. 2001). We “accept the factual findings of the bankruptcy court unless they are

clearly erroneous, particularly when the findings are affirmed by the district court,”

as in this case. In re Chalik, 748 F.2d 616, 619 (11th Cir. 1984); see Fed. R. Bankr.

                                          2
P. 8013. A fact finding is clearly erroneous if “the reviewing court on the entire

evidence is left with a definite and firm conviction that a mistake has been

committed.” Jones v. Childers, 18 F.3d 899, 904 (11th Cir. 1994) (quotation

omitted). A bankruptcy court’s findings of fact include findings about whether a

transfer was made in the ordinary course of a debtor’s business, whether a debtor

knowingly and fraudulently made a false oath within the meaning of §727(a)(4)(A),

and whether a false oath is material. In re Issac Leaseco, Inc., 389 F.3d 1205, 1209

(11th Cir. 2004) (“A determination of ordinary business terms under section

547(c)(2)(C) [preferential transfers] is a question of fact subject to the clearly

erroneous standard of review.”); In re Wines, 997 F.2d 852, 856-57 (11th Cir. 1993)

(“Whether the debtor had the requisite wrongful intent is a question of fact which we

review for clear error.”); Swicegood v. Ginn, 924 F.2d 230, 232 (11th Cir. 1991)

(concluding that “[t]he district court was not clearly erroneous in holding that the

value of the omitted assets was material” for purposes of § 727(a)(4)(A)). “Because

a determination concerning fraudulent intent depends largely upon an assessment of

the credibility and demeanor of the debtor, deference to the bankruptcy court’s factual

findings is particularly appropriate.” In re Miller, 39 F.3d 301, 305 (11th Cir. 1994)

(quotation omitted).




                                          3
      Under the Bankruptcy Code, a discharge should not be granted if the debtor

“knowingly and fraudulently, in or in connection with the case … made a false oath

or account.” 11 U.S.C. § 727(a)(4)(A); Chalik, 748 F.2d at 618. A party objecting to

discharge under § 727(a)(4)(A) must prove by a preponderance of the evidence that

“the false oath [was] fraudulent and material.” Swicegood, 924 F.2d at 232. An

omission from the debtor’s SOFA or schedules may constitute false oaths under this

provision. Chalik, 748 F.2d at 618 & n.3. If the objecting party brings forward

credible evidence establishing these elements, the burden shifts to the debtor to

convince the court not to deny discharge based on the objecting party’s evidence. In

re Prevatt, 261 B.R. 54, 58 (Bankr. M.D. Fla. 2000).

      To begin, there is no merit to Phillips’s arguments that the bankruptcy court

applied the wrong standard to his false statements/omissions. As the record shows,

the bankruptcy court expressly said that § 727(a)(4)(A) requires “a finding of actual

intent to defraud on the part of the Debtor…. Only deliberate omissions qualify as

false oaths justifying denial of discharge.” Immediately following that statement, the

bankruptcy court stated that, based on the court’s observations of Phillips’s demeanor

and all the circumstances of the case, he “chose to play ‘fast and loose’ with his

disclosure obligations,” and that his omissions were “willful.” In the very next

paragraph, the bankruptcy court stated: “In this case, the facts and circumstances

                                          4
clearly warrant the finding that the Debtor had actual fraudulent intent when he

omitted these interests and transfers.” Thus, Phillips’s argument that the bankruptcy

court applied a “willfulness” or “recklessness” standard, or that it failed to make

express findings of actual fraudulent intent, ignores the bankruptcy court’s clear

statement of the law and fact findings under that standard. Moreover, the bankruptcy

court’s finding that Phillips acted with fraudulent intent in making the omissions was

based on its specific fact findings previously made, its observations over the course

of a two-day trial, and all of the circumstances of the case. There is no basis to

conclude that Phillips’ discharge was denied based solely on the bankruptcy court’s

findings that Phillips played “fast and loose.”1

       1
          The bankruptcy court also did not abuse its discretion in admitting evidence of Phillips’s
conduct in relation to the bankruptcy cases and all the surrounding circumstances in determining
that the omissions were made with fraudulent intent, even if such conduct itself did not did not
form an independent basis for denial of discharge. Phillips contends that, because the district
court concluded that Epic’s claims based on corporate transfers and entertainment expenses
could not, procedurally, result in the denial of Phillips’ discharge, “only three alleged false oaths
remain” and thus “there were not ‘several’ transfers.” The bankruptcy court admitted evidence of
various incidents which independently were not grounds supporting the denial of Phillips’s
discharge, but instead, were admitted for the purpose of proving the other counts pleaded in
Epic’s complaint. However, given the bankruptcy judge’s discretion in admitting evidence, In re
Walker, 515 F.3d 1204, 1208 (11th Cir. 2008), evidence of these “other” incidents was properly
admitted and the bankruptcy court was entitled to consider the facts established by that evidence
as they related to Phillips’s overall conduct in connection with the bankruptcies and credibility.
A bankruptcy court is entitled to “look to the totality of the circumstances, including the
recklessness of a debtor’s behavior, to infer whether a debtor submitted a statement with intent to
deceive.” Miller, 39 F.3d at 305. Indeed, because debtors generally will not testify as to their
own misconduct, that a false oath was made knowingly and fraudulently is generally proven by
circumstantial evidence or inferences drawn from circumstances surrounding the debtor. In re
Bosse, 200 B.R. 419, 421 (Bankr. S.D. Fla. 1996) (citing In re Sausser, 159 B.R. 352, 356
(Bankr. M.D. Fla.1993)).

                                                 5
      Next, we reject Phillips’s claim that he was not required to disclose an

“undocumented” transfer in his SOFA. Question 10 of the SOFA required Phillips

to: “List all other property, other than property transferred in the ordinary course of

the business or financial affairs of the debtor, transferred either absolutely or as

security within two years immediately preceding the commencement of this case.”

It is undisputed that Phillips had paid $100,000 somehow related to something known

as the “Englewood Project,” that within two years before Phillips filed his petition,

Christopher Cioffi bought him out of his interest for $50,000, and that the transaction

was not in the ordinary course of Phillips’s business. That this transaction was

“undocumented” does not exempt Phillips from listing it, nor does he provide any

authority on that point.

      As for Phillips’s claim that he had no reason to believe that he should have

disclosed the Cioffi transaction in the SOFA, we are unpersuaded. For starters,

Phillips does not dispute the bankruptcy court’s finding that he is a “sophisticated,

educated businessperson,” who was the principal of numerous corporate entities, and

has “owned and invested in several multimillion-dollar jet planes.” In addition, the

record shows that the Cioffi transaction occurred approximately four months before

Phillips filed his petition and only one month before his former attorney began

preparing his bankruptcy schedules. Thus, the transaction had recently occurred at

                                          6
the time Phillips signed his SOFA, it gave Phillips $50,000 at a time he was

financially troubled, and he suffered a significant loss on his original investment of

$100,000. On this record, the bankruptcy court did not clearly err in finding that a

“sophisticated, educated businessperson” like Phillips knew that he had some sort of

interest in the real estate due to his payment of $100,000, and that he transferred that

interest to Cioffi in exchange for $50,000.2

       Phillips argues that the transaction was disclosed to the trustee before the

Section 341 meeting of creditors. The bankruptcy court determined that Phillips

failed to establish when he disclosed the Cioffi transaction to the trustee. As the

record shows, it is undisputed that this transaction was not listed in his SOFA, and

that this transaction, as Phillips admits, was “undocumented.” Moreover, while the

trustee testified that she did not know when she discovered the transaction, she also

testified that she discovered the Cioffi transaction in her investigation. Phillips’s self-

serving testimony that he gave the trustee information about the transaction before

the creditor’s meeting is unpersuasive -- not only does it not specify what

information he gave the trustee, but the trier of fact is permitted to disbelieve a


       2
         As a result, because Phillips did in fact receive payment arising out of this
“undocumented” transaction, it is different from the “handshake” deal in In re Berris, 458 B.R.
601, 610 (Bkrtcy.S.D.Fla.,2011), where the debtor was not found to have a property interest after
“firmly establish[ing] that there was no equity in the properties in which he may have had a
‘handshake deal’ to share in any potential profits upon sale thereof.”

                                                7
witness and find that his demeanor and credibility suggested the opposite of what he

testified.   United States v. Deverso, 518 F.3d 1250, 1258 (11th Cir. 2008)).

Therefore, the bankruptcy court was not clearly erroneous in determining that Phillips

knowingly and fraudulently disregarded his interest and disclosure obligation.

       We also find no merit to Phillips’s claim that he was not required to disclose

$23,500 in payments to attorneys because, he says, they were made in the ordinary

course of his financial affairs. The bankruptcy court described the payments as

follows:

       Phillips paid $5,000 to the law firm of Grimes Goebel to represent him
       in an appeal, $10,000 to the attorney Mark Hildreth to represent him in
       litigation related to the Center case, $5,000 to the law firm of Allen,
       Kuehnle & Stovall to represent him in a case regarding a deficiency on
       an airplane, $3,500 to the attorney Brian Zinn to represent him in an
       adversary proceeding related to the Center case, and an unestablished
       amount to Len Thornton to represent him in another adversary
       proceeding related to the Center case.3

On these facts, the bankruptcy court concluded that the payments were made “outside

the ordinary course of business,” because Phillips’s “business was the charter air

business, not litigation.”4 Phillips does not explain how his personal payments to

       3
        The “Center case” involves the bankruptcy proceedings of Jet 1 Center, Inc., a company
in which Phillips was the principal.
       4
         Although the bankruptcy court’s express language was that the transfer was outside of
the ordinary course of his “business,” its failure to include the words, “financial affairs,” is
inconsequential. See Matter of Texas Mortg. Servs. Corp., 761 F.2d 1068, 1075 n.12 (5th Cir.
1985) (“If a trial judge fails to make a specific finding on a particular fact, the reviewing court

                                                  8
attorneys for the bankruptcy proceedings of another entity, which was a private jet

services company, are payments in the “ordinary course of his financial affairs.”5

Therefore, there is no clear error in the court’s finding that his payments to attorneys

were not in the ordinary course.

       Moreover, that Phillips knew he was obligated to disclose payments to

attorneys in Question 10 is shown by the fact that he actually did disclose a payment

to another attorney in Question 10. In light of the disclosure of that one payment in

Question 10 and the bankruptcy court’s assessment of his credibility, sophistication,

demeanor, candor, and the circumstances of the case, the bankruptcy court’s finding

that he knowingly and intentionally failed to disclose the attorney payments was not

clearly erroneous.

       Finally, we are unpersuaded by Phillips’s claim that his failure to disclose an

“immaterial” interest in a $3,090 security deposit was not fraudulent. Phillips does

not dispute that he was required to disclose the commercial lease and security deposit

may assume that the court impliedly made a finding consistent with his general holding so long
as the implied finding is supported by the evidence.”) (citing Clinkenbeard v. Central S.W. Oil
Corp., 526 F.2d 649, 651-52 (5th Cir. 1976)); see also Bonner v. City of Prichard, 661 F.2d 1206,
1209 (11th Cir.1981) (en banc) (adopting as binding precedent all decisions of the former Fifth
Circuit handed down prior to close of business on September 30, 1981).
       5
         Indeed, in the Bankruptcy Code’s preferential treatment provisions, “[t]he purpose of
the ordinary course of business defense is to leave undisturbed normal financial relations, which
enables the struggling debtor to continue operating its business.” Issac Leaseco, 389 F.3d at
1210 (citation and quotation omitted; emphasis added).


                                                9
and offers no excuse as to why he failed to meet that obligation; instead, he argues

that his failure to disclose it was not fraudulent. The record is clear that the lease was

between the landlord and Phillips individually, and that Phillips paid the first month’s

rent and security deposit from his personal funds. In addition, the record shows that

Phillips’s testimony about the security deposit changed over time -- he initially

testified that the security deposit was paid by one of his companies, then changed his

story to say that it was paid by a different company, then reviewed the records of his

personal bank account showing that he paid and said he was reimbursed. However,

Phillips could not recall who, how, or when the alleged reimbursement took place.

Nor could he produce documentation of the reimbursement. Given his shifting

testimony specifically relating to this omission, together with the totality of his

conduct with respect to his other basic disclosure obligations, the bankruptcy court’s

finding that he acted knowingly and fraudulently is not clearly erroneous.

      Furthermore, despite Phillips’s suggestion to the contrary, this omission was

material. An omission is material for purposes of § 727(a)(4)(A) “if it bears a

relationship to the bankrupt’s business transactions or estate, or concerns the

discovery of assets, business dealings, or the existence and disposition of his

property.” Chalik, 748 F.2d at 618. If an omission meets this standard, it is irrelevant

that the omission concerned worthless assets or did not injure any creditor. Id. A

                                           10
materiality standard based on an omitted item’s relative value to the amount of assets

and liabilities at issue in the case would encourage debtors to pick and choose which

information to disclose based on the debtor’s own assessment of value or significance

to the bankruptcy administration. Because that would frustrate the policy of full

disclosure, “[c]reditors are entitled to judge for themselves what will benefit, and

what will prejudice, them.” Id.

      Phillips has not shown that the bankruptcy court’s finding of materiality was

clearly erroneous. The record supports that this was not an excusable, isolated, de

minimus omission. As shown from the trustee’s testimony, Phillip’s non-disclosure

of the security deposit and commercial lease impaired her investigation and valuation

of assets, and was part of a general lack of candor that interfered with her evaluation

of the substantial number of transfers at issue in this case. Accordingly, we affirm.

      AFFIRMED.




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