                           NOT FOR PUBLICATION                           FILED
                    UNITED STATES COURT OF APPEALS                        JUN 25 2020
                                                                     MOLLY C. DWYER, CLERK
                                                                       U.S. COURT OF APPEALS
                           FOR THE NINTH CIRCUIT

KEYWORD ROCKSTAR, INC., JON                     Nos. 19-60031, 19-60032
SHUGART & LUKE SAMPLE,
                                                BAP Nos.
                Plaintiffs-Appellants,          18-1269-KuFB, 18-1278-KuFB

v.
                                                MEMORANDUM*
JORDON WALLACE SCHULTZ.

                Defendants-Appellees.

                          Appeal from the Ninth Circuit
                            Bankruptcy Appellate Panel
              Kurtz, Faris, and Brand, Bankruptcy Judges, Presiding

                       Argued and Submitted June 1, 2020*
                              Pasadena, California

Before: RAWLINSON and N.R. SMITH, Circuit Judges, and KORMAN,**
District Judge.

      Keyword Rockstar, Inc., Jon Shugart, and Luke Sample (collectively,

“Appellants”) appeal from the decision of the Bankruptcy Appellate Panel (“BAP”)

reversing the bankruptcy court and holding that Appellee Jordon Schultz was


      *
             This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
      **
             The Honorable Edward R. Korman, United States District Judge for the
Eastern District of New York, sitting by designation.
                                                                             Page 2 of 5

entitled to have his debts discharged in his personal Chapter 7 bankruptcy case.

“[W]e review the bankruptcy court’s decision without according any deference to

the BAP.” Salazar v. McDonald (In re Salazar), 430 F.3d 992, 994 (9th Cir. 2005).

The bankruptcy court’s factual findings are reviewed only for clear error. Id. We

have jurisdiction pursuant to 28 U.S.C. § 158(d)(1), and we reverse the BAP and

remand.

      The bankruptcy court did not clearly err in finding that Schultz fraudulently

undervalued his customer and lead lists in connection with the bankruptcy case of

his solely-owned business, JWS Publishing, Inc., in violation of 11 U.S.C.

§ 727(a)(4)(A), see Retz v. Samson (In re Retz), 606 F.3d 1189, 1197 (9th Cir. 2010),

which requires that Schultz be denied a discharge in his personal bankruptcy case

pursuant to § 727(a)(7). To establish a violation of § 727(a)(4), Appellants were

required to show that: “(1) [Schultz] made a false oath in connection with the case;

(2) the oath related to a material fact; (3) the oath was made knowingly; and (4) the

oath was made fraudulently.” Id. (quoting Roberts v. Erhard (In re Roberts), 331

B.R. 876, 882 (B.A.P. 9th Cir. 2005)).

      First, the bankruptcy court’s determination, that Schultz’s $778.60 valuation

of the customer and lead lists was false, finds support in the record and is not illogical

or implausible. Indeed, Schultz previously represented to his customers that the lists

were “valued at $1,000,000,” and Schultz used the lists to generate close to
                                                                             Page 3 of 5

$6,000,000 in gross sales in 2015 and 2016. Additionally, Shugart testified that,

between two valuations of the lists at $1,000,000 or $742, the $1,000,000 valuation

was the more accurate valuation. Moreover, although Schultz testified that the lists

were only worth $1,000,000 to him, because the individuals on the lists had a

relationship with him and were more likely to purchase from him, the bankruptcy

court found Schultz’s explanation of the “low value [was] not credible.” The

bankruptcy court’s factual finding that Schultz falsely undervalued the lists, which

was based in part on the bankruptcy court’s determination that Schultz’s explanation

was not credible, is therefore entitled to “great deference.” See id. at 1196.

       Second, the bankruptcy court did not clearly err in finding the false oath

“related to a material fact.” See id. at 1197 (quoting Roberts, 331 B.R. at 882). In

light of Schultz’s representation that the lists were worth $1,000,000, the bankruptcy

court did not clearly err in finding Schultz “grossly undervalued” the lists at $778.60

and the undervaluation was, therefore, “clearly material” to the administration of

Schultz’s estate. See id. at 1198 (“A fact is material ‘if it bears a relationship to the

debtor’s . . . estate . . . .’” (citation omitted)).

       Third, the bankruptcy court did not clearly err in finding Schultz acted

“knowingly in making the false oath.” See id. The bankruptcy court found that

Schultz “had to have known the list had far more value than he scheduled,” and

pointed: (1) to the disparity between the scheduled value of the lists and their
                                                                             Page 4 of 5

potential value (if they had been fairly valued in the schedules); and (2) Schultz’s

trial testimony that he was successfully using the lists to market products to

individuals in relation to his new business, Verticode. In fact, Schultz so successfully

utilized the lists post-abandonment in his new business that he received a capital

distribution from Verticode in the approximate amount of $53,000. This is sufficient

to support the bankruptcy court’s finding that Schultz acted knowingly. See id.

      Finally, the bankruptcy court did not clearly err finding that Schultz made the

oath with fraudulent intent. See id. at 1197, 1198–99. The bankruptcy court

specifically found that, “where (as here) there is a great disparity between the

scheduled value of an asset and its potential value if fairly valued, the court may

draw an inference that the debtor has knowingly and fraudulently made a false oath

. . . .” Indeed, “the size or nature of a single [misstatement or omission], might suffice

to support a finding that a debtor knowingly and fraudulently made a false oath or

account.” Khalil v. Developers Sur. & Indem. Co. (In re Khalil), 379 B.R. 163, 176

(B.A.P. 9th Cir. 2007), aff’d, 578 F.3d 1167, 1168 (9th Cir. 2009) (stating “[t]he

BAP’s published opinion is a correct statement of the applicable law, and we

expressly approve of that opinion by our decision today”). Ultimately, we are unable

to say the bankruptcy court’s finding that Schultz had the requisite fraudulent intent

was illogical, implausible, or without support in the record.

      Moreover, the finding that Schultz acted knowingly and fraudulently by
                                                                            Page 5 of 5

deliberately undervaluing the lists is not inconsistent with the bankruptcy court’s

related findings that Schultz’s initial failures to include the value of his Rolex watch

and bitcoin assets in his personal bankruptcy filings were attributable to his mental

disability, rather than an intent to defraud. The bankruptcy judge permissibly

reasoned that, while those were merely omissions that could be attributed to his

forgetfulness and lack of focus, his undervaluing of the lists—a commission rather

than an omission—could not be so innocently explained. Thus, the bankruptcy

court’s findings are not inconsistent.

      Because the bankruptcy court did not clearly err in denying Schultz’s

discharge pursuant to 11 U.S.C. § 727(a)(7), based on the violation of § 727(a)(4)(A)

in JWS Publishing, Inc.’s bankruptcy case, we need not reach Appellants’ alternative

argument under § 727(a)(5). See Robertson v. Swanson (In re Swanson), 36 B.R. 99,

100 (B.A.P. 9th Cir. 1984) (“Each ground, if proven, is alone sufficient to deny

discharge under § 727(a).”).

      REVERSED and REMANDED to the BAP with instructions to affirm the

judgment of the bankruptcy court.
