                   REVISED OCTOBER 8, 2010
           IN THE UNITED STATES COURT OF APPEALS
                    FOR THE FIFTH CIRCUIT  United States Court of Appeals
                                                                                 Fifth Circuit

                                                                              FILED
                                                                          September 24, 2010
                                     No. 09-41226
                                   Summary Calendar                          Lyle W. Cayce
                                                                                  Clerk


In the Matter of: VERNA KAY HERMAN,

                                                  Debtor

VERNA KAY HERMAN,

                                                  Appellant
v.

GARY DEAN JACKSON; JACKSON LAW OFFICES, P.C.; GLORIA ANN
JACKSON,

                                                  Appellees



                   Appeal from the United States District Court
                         for the Eastern District of Texas
                              USDC No. 6:09-CV-158


Before DAVIS, SMITH, and SOUTHWICK, Circuit Judges.
PER CURIAM:*
       In an adversary proceeding in bankruptcy court, creditors of Verna Kay
Herman challenged the discharge of Herman’s debts. The bankruptcy court


       *
         Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH CIR.
R. 47.5.4.
                                  No. 09-41226

ruled in favor of the creditors, finding that Herman had made false statements
and fraudulent omissions in her bankruptcy schedules and statement of
financial affairs. These precluded a discharge of her debt. The district court
affirmed, as do we.
      In 1998, Gary Jackson, the Jackson Law Offices, and Gloria Jackson (the
“Jacksons”), won a state court judgment against Herman for unpaid attorney’s
fees arising from their representation of Herman during her 1996 divorce. After
numerous appeals, the judgment became final on October 11, 2002.             On
November 12, 2002, a Texas constable served a writ of execution in the amount
of $81,349.73 on Herman to enforce the judgment. Herman informed the
constable that she had no available, non-exempt property to satisfy the
judgment. Nonetheless, as a result of seizures and sales of nonexempt property,
the amount owed by Herman has been reduced to $47,794.44.
      On December 3, 2002, Herman filed a voluntary petition under Chapter
13 of the Bankruptcy Code. After two time extensions, she filed schedules listing
about $2,500 in a checking account, later amended to about $300. Herman did
not obtain approval of her Chapter 13 plan and converted her action to one
under Chapter 7. In January 2007, the Jacksons commenced an adversary
proceeding. Their complaint objected to Herman’s discharge in bankruptcy.
They alleged Herman failed to list certain necessary transactions on her filed
bankruptcy schedules or statement of financial affairs, thereby violating 11
U.S.C. §§ 727(a)(2) and (a)(4).
      The bankruptcy court grouped the omitted transactions into three
categories. (1) On November 8 and 12, 2002 – four days before and on the day
of the constable’s serving the writ of execution – Herman made withdrawals
totaling $13,000 from her checking account. She allegedly used these funds to
pay for physical improvements to her home. (2) On July 10, 2002, Herman
transferred title of a 1999 Ford F-250 truck to her husband for $1. The Hermans


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                                  No. 09-41226

traded that truck for a 2000 Ford F-250 truck on September 9, 2002. Herman
paid the balance of the purchase price. (3) On August 19, 2002, Herman
purchased a laptop computer; on October 19, 2002, she purchased a television.
She made both purchases at a Best Buy electronics store using her personal line
of credit. These purchases totaled $1,960.
      In determining whether to deny discharge under Section 727(a)(2)(A) of
the Code, the Jacksons had to prove by a preponderance of the evidence that
there was “(1) a transfer of property; (2) belonging to the debtor; (3) within one
year of the filing of the petition; (4) with intent to hinder, delay, or defraud a
creditor or officer of the estate.” Pavy v. Chastant (In re Chastant), 873 F.2d 89,
90 (5th Cir. 1989). The bankruptcy court had “little doubt” as to the first three
factors. As to the fourth, the bankruptcy court inferred the intent to hinder or
defraud from the evidence. We will discuss that evidence below.
      The bankruptcy court also concluded that Herman’s failure to disclose
these assets was a fraudulent false oath under Section 727(a)(4)(A). We do not
review that analysis, as it is unnecessary to our decision.
      As a result of these violations of the Code, the discharge of debts was
denied. Herman appealed to the district court, which affirmed.
      We review the bankruptcy court’s “findings of fact for clear error and
conclusions of law de novo.” Cadle Co. v. Duncan (In re Duncan), 562 F.3d 688,
694 (5th Cir. 2009). “A finding of fact is clearly erroneous only if on the entire
evidence, the court is left with the definite and firm conviction that a mistake
has been committed.” Id. (internal quotations and citations omitted). We give
“due regard” to the bankruptcy judge’s determination of witness credibility.
Robertson v. Dennis (In re Dennis), 330 F.3d 696, 701 (5th Cir. 2003) (internal
quotations and citations omitted).
      Generally, the bankruptcy court must discharge debts unless the debtor
violates a statutory condition. 11 U.S.C. § 727(a). The bankruptcy court found

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Herman breached the two separate statutory conditions that we have discussed.
Both claims arose from Herman’s failure to list the contested transactions on her
bankruptcy schedules or her statement of financial affairs. This court has
recognized that “[t]he burden is on the debtors to complete their schedules
accurately.” Faden v. Ins. Co. of N. Am. (Matter of Faden), 96 F.3d 792, 795 (5th
Cir. 1996) (internal citation and quotations omitted).
      Herman argues that she lacked fraudulent intent. Under Section
727(a)(2)(A), a debtor is entitled to discharge unless “the debtor, with intent to
hinder, delay, or defraud a creditor . . . [has] concealed . . . property of the debtor,
within one year before the date of the filing of the petition.” Id. at § 727(a)(2)(A).
A plaintiff must prove actual fraud – not constructive fraud – though this “may
be inferred from the actions of the debtor and may be proven by circumstantial
evidence.” In re Chastant, 873 F.2d at 91.
      We consider six factors when analyzing an actual intent to defraud:
      (1) the lack or inadequacy of consideration; (2) the family, friendship
      or close associate relationship between the parties; (3) the retention
      of possession, benefit or use of the property in question; (4) the
      financial condition of the party sought to be charged both before and
      after the transaction in question; (5) the existence or cumulative
      effect of the pattern or series of transactions or course of conduct
      after the incurring of debt, onset of financial difficulties, or
      pendency or threat of suits by creditors; and (6) the general
      chronology of the events and transactions under inquiry.

Id. (internal citation omitted). As we will demonstrate below, Herman’s conduct
implicates all factors except possibly the third, strongly indicating actual fraud.
We also apply a “presumption of actual fraudulent intent” if the debtor transfers
property gratuitously or to a relative.         Id.   “The presence or absence of
fraudulent intent is a finding of fact, and is reviewed under the clearly erroneous
standard.” In re Duncan, 562 F.3d at 698.




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                                  No. 09-41226

      Herman argues she had no subjective belief that the omitted assets
belonged to her, and the omission of all transactions was, at most, an “honest
mistake.” Though Herman alleged she did not own the F-250 truck, she paid the
balance of its purchase price on her credit card and produced no evidence that
her husband made any payments for the truck. Herman claimed her husband
used the computer and accessories for his business activities, and thus she
considered him their rightful owner. She also attempted to discharge the debt
on the Best Buy merchandise that she allegedly did not own. On the other hand,
she made the cash withdrawals within days of the enforcement of the state court
judgment, leaving her bank account with amounts far below their historical
averages, and produced no record the home improvements occurred.
      The bankruptcy court found in these facts “too many omissions from
significant transactions occurring only weeks prior to the bankruptcy filing to
support the supposition that these omissions were the result of honest mistake
or inadvertence.”
      The court also expressed doubts about Herman’s credibility. As a result,
her statements that she did not believe she owned the Ford truck or Best Buy
merchandise were given little weight. Given this pattern of behavior, we
conclude that the bankruptcy court did not clearly err by finding Herman acted
with fraudulent intent in violation of Section 727(a)(2)(A).
      We do not review Herman’s arguments about the finding of a Section
727(a)(4)(A) violation. The violation of Section 727(a)(2)(A) is itself a sufficient
basis to preclude a discharge of her debt.
      The judgment of the bankruptcy court and district court is AFFIRMED.




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