Jil Mazer-Marino, Chapter 7 Trustee v. Levi

UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF NEW YORK
IN RE SHLOMO LEVI,
Debtor.
Chapter 7
Case No. 16-10837 (MEW)
JIL MAZER-MARINO, CHAPTER 7
TRUSTEE FOR SHLOMO LEVI,
Plaintiff,
-against-
SHLOMO LEVI,
Defendant.
Adv. Proc. No. 17-01021 (MEW)
MEMORANDUM OPINION REGARDING CHAPTER 7
TRUSTEE’S ACTION OBJECTING TO THE DEBTOR’S DISCHARGE
A P P E A R A N C E S :
Jil Mazer-Marino
MEYER, SUOZZI, ENGLISH & KLEIN, P.C.
990 Stewart Avenue, Suite 300
P.O. Box 9194
Garden City, New York 11530-9194
Chapter 7 Trustee
Shlomo Levi
Pro Se
MICHAEL E. WILES
United States Bankruptcy Judge
Shlomo Levi filed a chapter 7 bankruptcy petition on April 7, 2016. 	Entities known as
AF-1 LLC, AF-22 LLC, Espresso Management Holding, Inc., Espresso Stores, Inc. and F-6
Chelsea, Inc. (collectively, the “Franchisee Debtors”) filed chapter 11 bankruptcy petitions in
August 2016. 	Plaintiff Jil Mazer-Marino is the chapter 7 Trustee appointed in Levi’s and the
Franchisee Debtors’ cases. The Trustee alleges, pursuant to 11 U.S.C. §§ 727(a)(2) and (a)(4)(A),
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that Levi’s debts (which amount to at least $2 million) should not be discharged for two
independent reasons. First, she alleges that Levi concealed property both before and after the filing
of his bankruptcy petition and that he did so with the intent to hinder, delay, or defraud a creditor
or the Trustee. Second, she alleges that Levi knowingly and fraudulently made a false oath in or
in connection with his bankruptcy case. Levi denies both allegations.
This opinion follows a trial that was held on October 30, 2017. The sole witness at the trial
was Levi. The Court has considered the stipulated facts, Levi’s Answer, the exhibits and testimony
admitted at the trial, and Levi’s credibility in making the factual findings set forth in this opinion.
JURISDICTION AND POWER TO ISSUE A FINAL DECISION
The parties have agreed that this Court has subject matter jurisdiction over this adversary
proceeding and the Complaint, and personal jurisdiction over the parties. In addition, the parties
agree that the Court has subject matter jurisdiction under 28 U.S.C. §§ 157(b)(2)(J) and 1334(b).
This matter is a core proceeding and raises issues regarding the availability of a discharge on which
the Court may enter a final decision.
FACTUAL BACKGROUND
Before 2008, Levi borrowed money from a business partner and friend named Shimon
Skurry. 	The promissory note obligated Levi to repay more than $800,000 to Skurry. 	Levi,
however, was unable to repay the debt. 	Skurry sued Levi in 2008, at which point extensive
litigation ensued. Skurry prevailed, obtaining a judgment against Levi in the amount of more than
$2 million. The details are not clear, but Levi acknowledges that Skurry aggressively attempted
to collect the outstanding judgment. 	PTO Annex C ¶ 41 (Levi stipulating that “[s]ince 2014,
[Skurry] has aggressively attempted to collect the amounts he is owed by [Levi]”).
While the dispute with Skurry was ongoing, in or around late 2012, Levi attended a trade
show in Chicago where he came across Gruppo Industriale Filicori-Zecchini S.p.A., a company in
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the business of roasting and selling coffee under the Filicori Zecchini trademark. Based on that
encounter, Levi came up with the idea to operate coffee stores under the Filicori brand in New
York City. Two of the Franchisee Debtors, AF-1 LLC and AF-22 LLC, then entered into franchise
agreements with Filicori. Levi admittedly formed the two limited liability companies, and Levi
negotiated and executed the franchise agreements with Filicori. 	The signature pages of the
franchise agreements identify Levi as a “member” of AF-1 LLC and AF-22 LLC. PX 19; PTO
Annex A ¶¶ 45, 47. In addition, in each franchise agreement the parties agreed that the individual
designated as a “principal” in Exhibit C to the agreement would devote all of his time and energies
to the performance of the franchisees’ duties under the agreements and that he “shall not . . . be
connected with or concerned in any other business, competing or noncompeting with [Filicori].”
PX 19. 	Each Exhibit C, in turn, listed one person—Levi—and each referred to Levi as the
“principal” with a 51% ownership interest in the relevant franchisee. Id.; PTO Annex A ¶¶ 46, 48.
In or around 2015, after Skurry obtained the $2 million judgment referenced above, Levi
decided to open additional coffee stores. 	Levi caused the formation of three other companies:
Espresso Management Holding, Inc. (“Espresso Management Holding”), Espresso Stores, Inc.,
and F-6 Chelsea, Inc. On March 23, 2015, Espresso Management Holding entered into a franchise
agreement with Filicori, which allowed Espresso Management Holding to operate a coffee shop
under the “Filicori” trademark. In September 2015 and December 2015, Espresso Stores, Inc. and
F-6 Chelsea, Inc., respectively, entered into franchise agreements with Filicori, which allowed
them to operate coffee shops under the “Filicori” trademark.
The agreements for Espresso Management Holding, Espresso Stores, Inc., and F-6 Chelsea,
Inc. were negotiated and executed by Levi. Unlike the agreements for AF-1 LLC and AF-22 LLC,
these three agreements do not identify Levi as a “member” nor list his specific ownership interest
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in the companies. However, like the two earlier agreements, the later franchise agreements refer
to Levi as the “principal” who is obligated to spend all his time and energy on the performance of
the franchisees’ duties under the contracts and who is precluded from engaging in any other
business, whether competing or noncompeting with Filicori. PX 19. In addition, the agreement
for Espresso Stores, Inc. identifies Levi as “presedent” [sic]. Id. That notation appears next to
Levi’s signature and was made in handwriting.
It is not clear whether Levi received cash or other property directly from the Franchisee
Debtors once they began to operate stores. 	However, it is admitted that AF-1 LLC (and other
companies acting with and for it) made payments directly to Levi’s landlord as rent for his family’s
Manhattan apartment, and payments to other third parties to pay personal expenses of Levi,
including eventually his legal fees.
Levi filed his bankruptcy petition on April 7, 2016. He also filed certain legally mandated
written disclosures (together with the bankruptcy petition, the “Written Disclosures”), including
a Statement of Financial Affairs, a Summary of Assets and Liabilities, and related schedules.
ECF Nos. 1, 4 and 5. Levi declared under penalty of perjury that the Written Disclosures were
true and correct. (ECF Nos. 1 at page 6, 4 at page 21, and 5 at page 7.) Among other things, Levi
represented that, on the date of the filing of the petition:
 	His assets were limited to (i) less than $4,000 in personal property; and (ii) a
50% membership interest in FDB 124, LLC (a hotel business), which he indicated
had no value (ECF No. 4 at pages 1, 4-6);
 	He had worked as a manager of AF-1 LLC for “2 years” and, as of the date of his
bankruptcy filing, received gross monthly wages of about $4,000 (ECF No. 4 at p.
17);
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 	He had no interest in any other incorporated or unincorporated businesses, whether
LLCs, partnerships, or joint ventures (ECF No. 4 at page 5 (listing only FDB 124,
LLC in response to a question calling for disclosure of any such interests)); and
 	His liabilities included over $2 million in non-contingent liabilities (including the
$2,219,530 judgment obtained by Skurry) and $40 million in contingent liabilities
arising mainly from guaranteeing loans to other parties (ECF No. 4 at pages 11-14).
With regard to his historical income and financial affairs, Levi disclosed under oath that:
 	In the first three months of 2016, his total income was $12,000 (ECF No. 5 at
page 1);
 	In the two calendar years before his bankruptcy (2014 and 2015), he had gross
income of $50,000 each year (ECF No. 5 at pages 1 and 2); and
 	In the four years before filing for bankruptcy, he had been a member of the
previously mentioned 124 FDB, LLC and also Espresso Dream, LLC (which he
identified as an espresso bar), but otherwise had had no connections to any business,
whether as a “a member of a limited liability company (LLC) or limited liability
partnership (LLP), a partner in a partnership, an officer, director, or managing
executive of a corporation, [or] an owner of at least 5% of the voting or equity
securities of a corporation.” (ECF No. 5 at pages 6-7)
Nowhere in the Written Disclosures did Levi mention AF-22 LLC, Espresso Management
Holding, Inc., Espresso Stores, Inc. or F-6 Chelsea Inc., even though he admitted at the trial that
he had devoted all of his time and energy to the running of the stores owned by those entities.
Although Levi’s Written Disclosures revealed a connection to AF-1 LLC, they merely stated that
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Levi was employed by AF-1 LLC as a “manager,” and failed to disclose any ownership or other
connection. ECF No. 4 at page 17 and passim; ECF Nos. 1 and 5.
The relevant forms also required Levi to report his non-filing spouse’s “monthly gross
wages, salary, and commissions.” ECF No. 4 at page 17. In response to that question, Levi listed
“N/A” for “not applicable.” ECF No. 4 at pages 17-18. Levi also failed to answer the question of
whether or not his wife was “Employed” or “Not employed.” Id.
On May 7, 2016, approximately a month after filing the petition and the other Written
Disclosures, Levi gave sworn testimony at a meeting of creditors pursuant to section 341 of the
Bankruptcy Code. 341 Meeting Tr. (PX 15.) Levi testified about his employment by AF-1 LLC,
his wife’s employment, the payment of his legal fees (they had been paid by an entity named Lola
8 West Ltd.), as well as his past involvement with various businesses. He stated under oath that
he was not employed by anyone other than AF-1 LLC (PX 15 at 19:22-25); that AF-1 LLC was a
“management company” that “managed the café, for the investors” (PX 15 at 14:13-16); that as an
employee of AF-1 LLC, he performed the role of a “district manager for coffee . . . stores;” that
he had been a full time employee of AF-1 LLC for “like eight, nine months” (PX 15 at 11:25-12:3;
15:3-6); and that prior to that, he had worked for AF-1 LLC on a part-time basis. Although Levi’s
testimony revealed the existence of multiple coffee stores, he gave the impression that they were
run by the single company AF-1 LLC, of which he was a mere employee.
Levi was asked, at the creditor meeting, to list the owners of AF-1 LLC. 	He answered
under oath that he was “not sure [who owns AF-1 LLC]. But it’s my – investors from Israel . . .
which is my family and my wife’s family. My mother, my mother-in-law, and my uncle, people
that put money in order to make it happen. It’s like my list of family investors may be like six of
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them. . . . But I don’t know how many really in the paperwork. But maybe they are all under one
family member, back up with – in Israel. I don’t know.” PX 15 at page 18.
Levi also testified that his wife was employed by AF-1 LLC. PX 15 at 11:10:24; 8:6-15.
Specifically, he testified that she was a “part-time volunteer, part-time employee, in managing a
café.” Id. Asked about his wife’s salary, he stated: “It’s basically $1,000, something like that, for
every two weeks, or something. She’s a part-time, so she helps me.” PX 15 at 9:2-9. In addition,
Levi testified that his wife’s family provided financial support for the couple. PX 15 at 20:1-10.
When asked why Lola 8 West paid his legal fees, Levi testified that there was a connection
between Lola 8 West and AF-1 LLC, though he was not clear as to the nature of the connection.
PX 15 at 41:25-42:12. He said that Lola 8 West gave “money to the company that have the café.
It’s a friend’s, like, kind of finance company that friends – between friends, like, kind of finance
company that friends – between friends, and give us money for the café. The café doesn’t make
money. So, this is – I’m getting money from the company. And this is how we get money. But
it’s not something that – we need to ask Moshe Maman that. 	He’s the guy that’s dealing with
that.” Id. Levi then continued: “But AF1 [AF-1 LLC] took money from them and managed the
money between Moshe Maman, which is managing the company. He’s giving the money from
whatever accounts he find. Lola 8 West, the guy is – they have a lot of money. And he helps.
We’re taking money from him. Not me, I don’t want to say me. But we – I know that we’re taking
money from him, giving back to finance the company to move, like, kind of loan or whatever, So -
-.” PX 15 at 42:19-43:1.
Finally, Levi testified that he did not have to repay Lola 8 West “because I’m getting money
from the company . . . from AF1.” PX 15 at 42:13-19. Levi did not identify any services for which
he would be entitled to receive money except for his operation of the Franchisee Debtors. At the
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trial of this matter, Levi confirmed that the financial obligations of AF-1 LLC and other Franchisee
Debtors were frequently satisfied by Lola 8 West.
It became clear during the 341 meeting, and Levi now admits, that compensation for his
services was not always paid to him directly. PX 15 at 10:12-23. Instead, AF-1 LLC and Lola 8
West (apparently on AF-1’s behalf) were directed by Levi to make monthly rent payments of
approximately $4,900 for the apartment that Levi and his family occupied in midtown Manhattan.
Levi testified that the same practice was employed with regard to his other personal expenses.
Levi has also stipulated that since approximately 2011 he has not had a bank account in his name
or held any other assets in his name. Annex A to the PTO, ¶ 42. At the trial, he testified that he
stopped having personal bank accounts in order to prevent his creditors from accessing his assets.
The Franchisee Debtors filed their chapter 11 bankruptcy petitions about four months after
Levi filed his chapter 7 petition. Levi executed the Franchisee Debtors’ bankruptcy petitions, the
certificates of resolutions authorizing the filings, and the sworn declaration in support of the
bankruptcy petitions. Case No. 16-12413 (Espresso Management Holding, Inc. and AF-22 LLC)
ECF Nos. 1, 2; Case No. 16-12414 (Espresso Stores, Inc.) ECF Nos. 1, 2; Case No. 16-12415(AF-1
LLC), ECF Nos. 1, 2; Case No. 16-12417(F-6 Chelsea, Inc.) ECF Nos. 1, 2. In the declaration,
Levi stated that the Franchisee Debtors filed for bankruptcy in order to stay a Warrant for Closing
to Enforce Injunction issued by the New York State Court in August 2016 in a lawsuit brought by
Filicori, in which Filicori alleged breach of contract and other claims against the Franchisee
Debtors. 	E.g., Case No. 16-12413 (Espresso Management Holding, Inc. and AF-22 LLC) ECF
No. 2 ¶¶ 8-9.
In the written disclosures that Levi executed under oath in the Franchisee Debtors’ cases
within the next two months, Levi stated that, on the date of the petitions, he was the only person
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in possession of each of the Franchisee Debtors’ books and records, and identified only himself in
the space that required him to list “the debtor’s officers, directors, managing members, general
partners, members in control, controlling shareholders, or other people in control of the debtor at
the time of the filing of [the] case.” 	Case No. 16-12413 ECF No. 24 at page 6 (Espresso
Management Holding, Inc.), ECF No. 26 at page 6 (Espresso Stores, Inc.), ECF No. 28 at page 6
(F-6 Chelsea, Inc.), ECF No. 30 (AF-1 LLC) at page 6, ECF No. 32 (AF-22 LLC) at page 6. The
Franchisee Debtors’ cases were not filed as cases related to Levi’s personal bankruptcy case, but
the matters later were consolidated when the Court was later advised of the connections to Levi’s
pending case. After the Franchisee Debtors’ cases were converted to Chapter 7 cases, the Plaintiff
was then appointed to serve as the chapter 7 trustee in the Franchisee Debtors’ bankruptcy cases
as well.
THE PARTIES’ POSITIONS
Levi consented to extensions on the deadline to object to the discharge of Levi’s debts.
ECF No. 17, 21, 29, 33, 40. The Trustee then filed this adversary proceeding in which she asserts
that, pursuant to Sections 727(a)(2) and 727(a)(4)(A) of the Bankruptcy Code, Levi is ineligible
for the discharge of his debts because: (i) he concealed his interests in the Franchisee Debtors and
the income he derived from their operations both before and after the filing of his bankruptcy
petition; and (ii) he made false sworn statements concerning his equitable interest in the Franchisee
Debtors and his household income (specifically by failing to disclose his wife’s income of
approximately $2,000 a month in his Written Disclosures).
It should be noted that the Trustee did not assert a false oath allegation in the complaint but
the issue was tried without any objection by Levi. Therefore, the Court will consider both claims
as if they were both included in the complaint. See Fed. R. Civ. P. 15(b)(2) (made applicable in
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this adversary proceeding per Rule 7015 of the Federal Rules of Bankruptcy Procedure) (“When
an issue not raised by the pleadings is tried by the parties’ express or implied consent, it must be
treated in all respects as if raised in the pleadings.”).
Levi takes the position that he has no interests in the Franchisee Debtors and that, if the
Court were to find that he did own such an interest, he did not conceal it. E.g., PTO Annex C. In
addition, Levi testified that he did not act with the intent to hinder, delay, or defraud any creditors
or the Trustee. With regard to his failure to list his wife’s income in his Written Disclosures, Levi
states he was advised by the attorney who represented him at that time that the requirement to
disclose his wife’s income was “potentially unconstitutional” and that, in any case, Levi made
disclosures shortly after the omission. PTO Annex C ¶ 10.
THE APPLICABLE LEGAL STANDARDS
Chapter 7 of the Bankruptcy Code is designed to provide individual debtors the opportunity
for a “fresh start” through the discharge of personal liability for pre-petition debts. To that end,
Section 727(a) states that the Court “shall grant the debtor a discharge” unless one of the exceptions
enumerated in the statute apply. 	11 U.S.C. § 727(a). 	Because a denial of discharge is a harsh
sanction, Section 727(a) “must be construed strictly against [the Trustee] and liberally in favor of
[Levi].” 	See In re Chalasani, 92 F.3d 1300, 1310 (2d Cir. 1996) (internal quotation marks
omitted); Gordon v. Tese Milner (In re Gordon), 535 B.R. 531, 535-36 (S.D.N.Y. 2015). At the
same time, “the discharge of a bankrupt from his debts is a privilege . . . that has been granted by
Congress upon such terms as it has seen fit to impose,” and “[a]mong these terms is the requirement
that debtors act in good faith and provide full and honest disclosure.” In re Gordon, 535 B.R. at
535-36 (internal citations omitted); Husky Int’l Elecs., Inc. v. Ritz, 136 S. Ct. 1581, 1589 (2016)
(“§ 727(a)(2) is a . . . remedy for actions that hinder the entire bankruptcy process”).
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The Trustee bears the burden of proving by the preponderance of the evidence that a
discharge should be denied based on one or more of the exceptions set forth in the statute. Grogan
v. Garner, 498 U.S. 279, 287 (1991) (“The party objecting to discharge must establish those
elements by a preponderance of the evidence.”); In re Gordon, 535 B.R. at 536 (the burden of
proof is preponderance of the evidence). 	Here, the Trustee invokes sections 727(a)(2) and
727(a)(4)(A) as grounds on which she contends a discharge should be disallowed. PTO at 1.
A. 	Section 727(a)(2)
Section 727(a)(2) of the Bankruptcy Code precludes discharge when “the debtor, with
intent to hinder, delay, or defraud a creditor or an officer of the estate charged with custody of
property under this title [such as the Trustee], has transferred, removed, destroyed, mutilated, or
concealed, or has permitted to be transferred, removed, destroyed, mutilated, or concealed—
(A) property of the debtor, within one year before the date of the filing of the petition; or
(B) property of the estate, after the date of the filing of the petition.” 11 U.S.C. § 727(a)(2). The
Trustee alleges that Levi concealed his property before the date of the filing of the petition and
property of the estate after that date.
To prevail on her concealment claim under Section 727(a)(2)(A), the Trustee must show
that (i) the property at issue belonged to Levi; (ii) he concealed it; (iii) he did so with the intent to
hinder his creditors, delay them, or defraud them; and (iv) he either did so within one year before
the date of the filing of the petition or his initial act of concealment took place before this one-year
period but he then allowed the property to remain concealed into the critical year. See In re Boyer,
328 Fed. App’x 711, 714-15 (2d Cir. 2009) (internal citations omitted); In re Shah, No. 07-13833,
2010 WL 2010824, at *7 (Bankr. S.D.N.Y. May 13, 2010). The elements of a concealment claim
under Section 727(a)(2)(B) are the same, except the Trustee must show that the property that was
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concealed constituted property of Levi’s estate and that the act of concealment took place after the
date of the filing of the petition. See 11 U.S.C. 727(a)(2)(B).
The Bankruptcy Code does not specify what constitutes “property of the debtor” for
purposes of section 727(a)(2)(A), and so courts have looked to state law to determine what
constitutes an interest in property. Kaufman v. Chalk & Vermilion Fine Arts, LLC, 31 Fed. Appx.
206, 208 (2d Cir.2002). “Among other things, an asset is any form of personal property with value
. . . not exempt from liability by statute or common law.” Ng v. Adler (In re Adler), 494 B.R. 43,
62 (Bankr. E.D.N.Y. 2013) (internal citations omitted). 	In this regard, “property of the debtor”
includes all forms of tangible and intangible assets under state law. In re Adler, 494 B.R. at 62-63.
On the other hand, “property of the estate,” as that term is used in section 727(a)(2)(B), is
defined in the Bankruptcy Code. 	With certain exceptions that are not applicable here, the
bankruptcy estate broadly includes “all legal or equitable interests of the debtor in property as of
the commencement of the case.” 11 U.S.C. § 541(a)(1). While broad, the definition of property
of 	the 	estate 	is 	not 	without 	bounds. 	The 	language 	of 	Section 	541(a) 	is 	“sufficiently
circumscriptive” to exclude “property in which the debtor has [merely] a derivative interest.”
Mcorp Mgmt. Sols., Inc. v. Thurman (In re Thurman), 901 F.2d 839, 841 (10th Cir. 1990). More
particularly, “Congress intended to limit the reach of § 727(a)(2)(A) only to those transfers of
property in which the debtor has a direct proprietary interest.” In re Thurman, 901 F.2d at 841.
“Concealment” has most frequently been found where a debtor transfers legal title to
property to a third party while retaining a secret interest in that property. 	In re Silverstein, 151
B.R. 657, 661 (Bankr. E.D.N.Y. 1993) (internal citations omitted). “Concealment” also happens
when a debtor “plac[es] assets beyond the reach of creditors or withhold[s] pertinent information”
when he has a legal duty to disclose it. See, e.g., In re Shah, No. 07-13833, 2010 WL 2010824, at
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*7 (Bankr. S.D.N.Y. May 13, 2010) (internal citation omitted). Record title is not determinative
of a debtor’s equitable ownership. Id. (citing In re Berman, 100 B.R. 640 (Bankr. E.D.N.Y.1989)
(where equitable ownership in the debtor was determined to exist after the debtor transferred his
interest in his home to his wife but continued to use the residence)). For example, when a debtor
makes all mortgage, insurance, and maintenance payments on and lives in property owned by
another, he may be found to have fraudulently concealed his interest in the property by maintaining
it in another person’s name. Id. (citing In re Martin, 698 F.2d 883 (7th Cir.1983)).
The section 727(a)(2) exceptions to discharge apply only if property was concealed with
the actual intent to hinder, delay, or defraud creditors or the Trustee. In re Gordon, 535 B.R. 531,
536 (S.D.N.Y. 2015). Actual fraud involves “moral turpitude” and connotes “deceit, artifice, or
trick which involves a direct and active operation of intellect which is designed to mislead.” E.g.,
In re Pommerer, 10 B.R. 935, 939 (Bankr. D. Minn. 1981). But given the disjunctive phrasing of
the statute, proof of intent to hinder or delay is sufficient. 	Matter of Bowyer, 916 F.2d 1056,
1059-60 (5th Cir. 1990) (“[T]the term “defraud” does not subsume “hinder or delay.”), rev’d on
other grounds on reh’g, 932 F.2d 1100 (5th Cir. 1991). The statute does not define an intent to
“hinder” or an intent to “delay,” but courts have held that a debtor acts with an intent to “hinder”
if he or she acts with “an intent to impede or obstruct” creditors and an intent to “delay” if he or
she acts with “an intent to slow or postpone creditors.” In Re Wiggains, No. 13-33757, 2015 WL
1954438, at *17 (Bankr. N.D. Tex. Apr. 28, 2015), aff'd sub nom. Matter of Wiggains, 848 F.3d
655 (5th Cir. 2017). Other courts have stated more generally that to act with “intent to hinder or
delay” is to “act improperly to make it more difficult for a creditor to collect a debt.” In re Womble,
289 B.R. 836, 854 (Bankr. N.D. Tex.) (“Case law treats ‘intent to hinder or delay’ as an intent to
improperly make it more difficult for creditors to reasonably collect on their debts.”), aff'd sub
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nom. Womble v. Pher Partners, 299 B.R. 810 (N.D. Tex. 2003), aff'd sub nom. In re Womble, 108
Fed. App’x 993 (5th Cir. 2004). These interpretations of the statute are consistent with ordinary
dictionary definitions of the terms “hinder” and delay.”1
Whether a debtor acts with “actual intent to hinder, delay, or defraud” is a fact-specific
inquiry. 	However, some courts have held that incorrect statements on schedules can amount to
proof of fraudulent intent. 	Congress Talcott Corp. v. Sicari (In re Sicari), 187 B.R. 861, 871
(Bankr. S.D.N.Y.1994); Friedman v. Sofro (In re Sofro), 110 B.R. 989, 991 (Bankr. S.D. Fla.
1990) (“The intent to hinder, delay, or defraud a creditor [under § 727(a)(2)(A)] may be imputed
to a debtor where the debtor fails to make a full disclosure of his liabilities in the petition for relief
and omits assets of substantial value from the Schedules.”).2 An otherwise innocent motive can
coexist with the intent to hinder or delay creditors. Rupp v. Pearson, 658 Fed. App’x 446, 450-51
(10th Cir. 2016) (citing First Beverly Bank v. Adeeb (In re Adeeb), 787 F.2d 1339, 1343 (9th Cir.
1986) (debtor who transferred property “intend[ing] to protect the property from one creditor for
the benefit of the other creditors” nevertheless intended to hinder or delay a creditor under
§ 727(a)(2)(A))).
1 	According to the Oxford English Dictionary, the term “hinder” means to “keep back, delay;
impede; obstruct; prevent.” 	It defines “delay” as “put off to a later time; postpone, defer.”
Webster’s online dictionary defines “hinder” as “to make slow or difficult the progress of,”
“to hold back,” or “to delay, impede, or prevent action.” See also United States ex rel. Anti-
Discrimination Ctr. of Metro New York, Inc. v. Westchester Cty., No. 06 CIV. 2860 (DLC),
2016 WL 3004662, at *18 (S.D.N.Y. May 24, 2016), aff'd 689 F. App’x 71 (2d Cir. 2017).
2 	But see Jensen v. Slater (In re Slater), 318 B.R. 881, 886-87 (Bankr. M.D. Fla. 2004) ( “ While
errors on the Chapter 7 debtors schedules may be sufficient to warrant to a denial of the
debtors’ discharge on the grounds of ‘false oaths’ it is not based on concealment.” (internal
citation omitted)).
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B. 	Section 727(a)(4)(A)
Section 727(a)(4)(A) of the Bankruptcy Code states that the court shall deny a discharge 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). To meet her burden under Section 727(a)(4)(A), the Trustee
must prove that “(1) the debtor made a statement under oath; (2) the statement was false; (3) the
debtor knew the statement was false; (4) the debtor made the statement with fraudulent intent; and
(5) the statement related materially to the bankruptcy case.” In re Boyer, 328 F. App’x 711, 715
(2d Cir. 2009) (citing Keeney v. Smith (In re Keeney), 227 F.3d 679, 685 (6th Cir. 2000));
Vidomlanski v. Gabor (In re Gabor), No. 06-1916, 2009 WL 3233907, at *7 (Bankr. S.D.N.Y.
Oct. 8, 2009).
The bankruptcy petition and schedules of a debtor are statements under oath. Gabor, 2009
WL 3233907, at *7; Nof v. Gannon (In re Gannon), 173 B.R. 313, 320 (Bankr. S.D.N.Y. 1994).
Testimony at a section 341 meeting also qualifies as a statement under oath for purposes of
§ 727(a)(4)(A). Moreo v. Rossi (In re Moreo), 437 B.R. 40, 61 (E.D.N.Y. 2010).
Fraudulent intent must be shown by demonstrating actual fraud, not constructive fraud.
In re Moreo, 437 B.R. 40, 62 (E.D.N.Y. 2010). The party objecting to a discharge based on the
omission of information in a sworn statement must show that the information was omitted for the
specific purpose of perpetrating a fraud and not simply because the debtor was careless or failed
to fully understand an attorney’s instructions. 	In re Moreo, 437 B.R. 40, 62 (E.D.N.Y. 2010).
However, “[a] reckless disregard of both the serious nature of the information sought and the
necessary attention to detail and accuracy in answering may rise to the level of fraudulent intent
necessary to bar a discharge.” In re Irving, 27 B.R. 943, 946 (Bankr. E.D.N.Y. 1983); see also In
re Tully, 818 F.2d 106, 111 (1st Cir. 1987) (“[I]t is well settled that reliance upon advice of counsel
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is, in this context, no defense where it should have been evident to the debtor that the assets ought
to be listed in the schedules.”); Diorio v. Kreisler-Borg Constr. Co., 407 F.2d 1330, 1331 (2d Cir.
1969) (“Successful administration of the Bankruptcy Act hangs heavily on the veracity of
statements made by the bankrupt . . . . [R]eckless indifference to the truth . . . is the equivalent of
fraud.”).
A false oath must have related to a material matter in order to justify the denial of a
discharge. In re Boyer, 328 F. App’x 711, 715 (2d Cir. 2009). A false statement or omission is
material if it “bears a relationship to the debtor’s business transactions or estate, or concerns the
discovery of assets, business dealings, or the existence and disposition of the debtor’s property.”
In re Gordon, 535 B.R. 531, 538 (S.D.N.Y. 2015) (internal citations omitted) (also noting that “[i]t
is well settled in the Second Circuit that ‘[m]ateriality does not require a showing that the creditors
were prejudiced by the false statement’”); Tully, 818 F.2d at 110-11; see also In re Robinson, 506
F.2d 1184, 1188 (2d Cir. 1974) (“Materiality does not require a showing that the creditors were
prejudiced by the false statement.”). 	A collection of false statements may be material in the
aggregate, even if individually they would be less significant. 	In re Irving, 27 B.R. 943, 946
(Bankr. E.D.N.Y. 1983) (“otherwise immaterial falsehoods or omissions can aggregate into a
critical mass substantial enough to bar a debtor’s discharge”) (citations omitted).
ANALYSIS OF THE CONCEALMENT CLAIMS
The preponderance of the evidence at trial shows that Levi concealed (a) his interest in
the Franchise Debtors, and his income from those businesses, within one year of filing his
chapter 7 petition, and (b) his interests in the Franchisee Debtors after filing his chapter 7
petition. Furthermore, he did so with the actual intent to hinder or delay creditors and/or the
trustee.
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A. 	Pre-Bankruptcy Concealment
The Court finds, based on the following facts, that Levi had ownership interests in the
Franchisee Debtors, and that his current efforts to deny those interests are not credible:
 	Levi admittedly caused each of the Franchisee Debtors to be formed. 	PTO
Annex C ¶ 43.
 	Levi admittedly negotiated and executed each of the relevant franchise agreements.
PTO Annex C ¶¶ 45, 47, 50, 53, 56.
 	Levi was the only representative of the Franchisee Debtors that met with Filicori
before the parties entered into the franchise agreements.
 	Levi also signed—on behalf of another entity, Espresso Dream LLC (no longer at
issue in the Trustee’s case)—the leases for the five premises where the Franchisee
Debtors operated their coffee shops. PTO Annex C, at ¶ 62.
 	In 2012, on the signature pages of two of the five franchise agreements, Levi
represented himself to be a “member” of AF-1 LLC and AF-22 LLC and a principal
and owner of a 51% interest in AF-1 LLC and AF-22 LLC. PTO Annex C ¶¶ 45-
48; PX 19.
 	The three franchise agreements signed in 2015, after Skurry had obtained and begun
to pursue a judgment against Levi, do not refer to Levi as a member and do not
identity the extent of his ownership of those companies, but they do refer to him as
“principal.” Id. at ¶¶ 51, 54, 57. In addition, Espresso Stores, Inc.’s agreement also
was signed by Levi as President. PX 19 (ECF No. 13-6 at page 135 of 162).
 	In 	the 	Franchisee 	Debtors’ 	Schedules (filed 	several 	months 	after 	his 	own
schedules), Levi listed himself—and only himself—as the person with possession
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of the Franchisee Debtors’ books and records. Case No. 16 12413 ECF No. 24 at
page 6 (Espresso Management Holding, Inc.), ECF No. 26 at page 6 (Espresso
Stores, Inc.), ECF No. 28 at page 6 (F-6 Chelsea, Inc.), ECF No. 30 (AF-1 LLC) at
page 6, ECF No. 32 (AF-22 LLC) at page 6. In the sections that required him to
list any directors, officers, or members of the Franchisee Debtors, he again listed
only himself. Id.
 	With the exception of AF-22 LLC, Levi admits that he is a director—along with
Yoav Tal and Avi Castro—of each of the Franchisee Debtors. PTO Annex A ¶ 44
(AF-1 LLC), ¶ 49 (Espresso Management Holding), ¶ 52 (Espresso Stores, Inc.),
and ¶ 55 (F-6 Chelsea, Inc.).
Levi’s disclosures at the time of the Franchisee Debtors’ bankruptcy filings (which were
made in a desperate effort to stave off a closure of the stores that the state court had ordered) are
particularly telling. There, as noted above, Levi listed only himself as a person with interests in
the Franchisee Debtors. Yet in his own bankruptcy disclosures, several months earlier, with the
exception of AF-1 LLC (which he stated was his employer), Levi made no mention of those
companies or of his interests in them.
Levi now contends that he did not actually have ownership interests in the companies.
However, Levi has not even been consistent over time in identifying who the alleged owners were.
He now claims that AF-1 LLC is owned by Tal and Castro, a third cousin and a friend (PTO Annex
C ¶ 1; Annex A ¶ 27, 28), but in his sworn testimony at the creditor meeting Levi stated that the
business was owned by unidentified members of his and his wife’s family, suggesting at times that
he was not even sure who the owners were. 	PX 15 at page 18. 	Notably, Levi offered no
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documentary evidence, or testimony, or acknowledgment of any kind that any person other than
himself actually has an ownership interest in the Franchisee Debtors.
Levi contends that his prior statements that he was a “principal” and a “member” of each
Franchisee Debtor should not be held against him because English is not his primary language and
he simply did not know the significance of the terms “principal” and “member.” E.g., Annex C to
the PTO ¶ 4. However, Levi certainly understood the significance of his prior statement that he
owned 51% of the ownership interests in two of the Franchisee Debtors. 	Levi admittedly had
extensive business dealings in the United States since 2003. Annex C to the PTO ¶¶ 29-38. His
involvement with various businesses included the importation of shoes from China, a major real
estate development project, and a business venture to open falafel stores. Id. Levi was no stranger
to substantial monetary transactions, having borrowed hundreds of thousands of dollars and
guaranteed others’ debt in excess of $40 million. 	E.g., Annex C to the PTO ¶ 38. 	Given his
significant business experience in the United States, the Court does not find Levi’s contentions
that he did not understand the meaning of the terms “principal” and “member” to be credible.
Levi also contended that Filicori inserted the descriptions of Levi as 51% owner and
“member” without Levi’s knowledge and that, in his brief review of the franchise agreements, he
did not notice these descriptions. In that vein, Levi notes, for example, that the pages that refer to
him as owning a 51% interest do not bear his initials, while other pages in the agreements do. The
Court finds, to the contrary, that the agreements prominently refer to Levi as the Franchisee
Debtors’ principal and contain default provisions that describe, in some detail, the significance of
the “principal” and the importance of the principal’s role in conducting the franchised business.
Levi’s contention that he was not aware of the descriptions of his role are not credible.
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Levi also contended at trial that Filicori knew that Levi was not the actual owner of the
Franchisee Debtors, and that the relevant language in the franchise agreements was included at
Filicori’s insistence, in order to appease a Filicori principal in Italy who would not enter into the
franchise agreements unless Levi (whom Filicori had actually met) represented himself to be an
owner of the companies. 	It must be emphasized that this testimony directly contradicts Levi’s
separate testimony (a) that he did not understand the significance of the “principal” and “member”
references, and (b) that he allegedly was unaware, when he signed the agreements, that they
referred to him as a principal and (in some cases) member and/or principal owner of the Franchisee
Debtors. This particular testimony constitutes an admission that Levi knew the meaning and the
significance of the representations. 	Levi contends (in effect) that the statements were false and
that he made them only for the purpose of defrauding another Filicori representative. The Court
does not find this explanation to be credible. Levi correctly stated his interests in the Franchisee
Debtors in the franchise agreements that he signed prior to the entry of a large state court judgment
against him.
Levi also argues that there is no operating or other similar agreements listing him as the
Franchisee Debtors’ owner. 	That argument might have carried some weight if operating
agreements had been drawn up and listed other people as the Franchisee Debtors’ owners. 	But
Levi admits that operating or similar agreements never existed. This was consistent with Levi’s
general desire to avoid creating evidence of his ownership of assets that might be seized by
judgment creditors.
Levi next points to the fact that he was not a signatory on any of the Franchisee Debtors’
bank accounts and did not authorize a single payment on their behalf. However, the Court does
not accept the notion that this somehow is evidence that Levi did not own the Franchisee Debtors.
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Levi acknowledged in his testimony that he did not want to create assets that could be seized to
satisfy the large outstanding judgment against him. The use of bank accounts that were not in his
name is just evidence of his intent to avoid creditors, rather than evidence that Levi actually lacked
an ownership interest.
Finally, Levi points out that as of the time of the trial, he was three months behind on his
rent, which, according to him, negates any possibility that he secretly derived some financial
benefit from his alleged undisclosed interest in the Franchisee Debtors. But at the time he filed
the relevant Written Disclosures Levi was still operating the Franchisee Debtors and still
attempting to derive profits from their operations. Creditors were entitled to know of the existence
of those businesses and to make their own decisions as to whether they represented assets that
might have been salvaged and that might have permitted a larger recovery on the creditors’ claims.
Given the facts in evidence, and the many prior statements by Levi himself, the Court
concludes that Levi was the majority owner (if not the sole owner) of each of the Franchisee
Debtors.
Levi also took steps to conceal his ownership interests in the Franchisee Debtors and to
conceal the income he derived from operating them, and he did so in order to frustrate creditors in
the collection of legitimate debts. Levi stated, in his bankruptcy schedules, that he had income of
approximately $62,000 between January 1, 2015 and April 7, 2016. However, he admitted that he
made arrangements to avoid having payments of compensation made directly to him. Instead, at
Levi’s direction, money was paid directly by third parties to Levi’s landlord and to other creditors.
Levi kept the full benefit of the money he earned and the right to direct its use, but avoided any
potential garnishment by creditors. Levi admitted at trial that he did not maintain a bank account
or other assets in his own name, and that he caused payments to be made in this way, in order to
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keep creditors (particularly his judgment creditor) from knowing of the income and enforcing their
rights against it. Through this arrangement, Levi actively and intentionally concealed his income,
and the fact that such income was connected to his interests in the Franchisee Debtors, for the
purpose of hindering or delaying the collection of legitimate debts.
The evidence is undisputed that these practices began more than one year prior to the
bankruptcy filing but that they persisted well into the one-year period. Specifically, Levi stipulated
that the following are fourteen checks totaling $68,450 from AF-1, LLC, AF-2, LLC, A Stores NY,
LTD., Lola 339 East Fordham Road, Inc., Lola 8 West, Ltd., and Pakod, Inc. to Juvenal
L. Marchisio for rent for Levi’s apartment, each issued within the relevant timeframe:
Payor 	Date 	Check No. 	Bank 	Amount
Lola 8 West,
Ltd.
4/24/2015 	0790 	TD Bank 	$4,750.00
Lola 8 West,
Ltd.
5/22/2015 	0811 	TD Bank 	$4,900.00
AF-1, LLC 	7/27/2015 	11325 	Metropolitan 	$4,900.00
AF-1, LLC 	8/10/2015 	11426 	Metropolitan 	$4,900.00
Lola 8 West,
Ltd
11/10/2015 	1011 	TD Bank 	$4,900.00
Lola 8 West,
Ltd.
12/10/2015 	1049 	TD Bank 	$4,900.00
AF-2, LLC 	1/10/2016 	1013 	Metropolitan 	$4,900.00
Lola 8 West,
Ltd.
3/1/2016 	1152 	TD Bank 	$4,900.00
Lola 8 West,
Ltd.
4/1/2016 	1215 	TD Bank 	$4,900.00
Lola 8 West,
Ltd.
4/28/2016 	1257 	TD Bank 	$4,900.00
A Stores NY
Ltd.
5/27/2016 	1049 	Metropolitan 	$4,900.00
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Payor 	Date 	Check No. 	Bank 	Amount
Lola 8 West,
Ltd.
6/29/2016 	1015 	TD Bank 	$4,900.00
Pakod Inc. 	7/29/2016 	1031 	Metropolitan 	$4,900.00
Lola 8 West,
Ltd.
8/29/2016 	1117 	TD Bank 	$4,900.00
Total 	$68,450
The Trustee therefore has sustained her burden of showing that Levi concealed property
(his income and his interests in the Franchisee Debtors) during the one year prior to the bankruptcy
petition, and that Levi did so with the intent to hinder or delay creditors.
B. 	Post-Bankruptcy Concealment
Nowhere in his Written Disclosures did Levi so much as mention four of the five
Franchisee Debtors. There were numerous questions in the SOFAs and the Schedules that were
meant to elicit disclosure of Levi’s connections to the Franchisee Debtors, yet Levi did not make
the required disclosures. For example, Levi was obliged to list the assets he owned; in response,
he only listed (i) less than $4,000 worth of personal property; and (ii) a 50% membership interest
in FDB 124, LLC (a hotel business), which he indicated had no value (ECF No. 4 at pages 1, 4-6).
He also represented in his Written Disclosures that he had no interest in any other incorporated or
unincorporated businesses, whether LLCs, partnerships, or joint ventures. (ECF No. 4 pages 4-6.)
Levi did state that in the four years before filing for bankruptcy, he had been a member of Espresso
Dream, LLC (which he identified as an espresso bar and which the parties concede held the leases
for the five coffee shop locations), but he did not identify this membership interest as a present
asset (ECF No. 4 at pages 1, 4-6) and also did not otherwise indicate any other connections to any
business, whether as a “member of a limited liability company (LLC) or limited liability
partnership (LLP), a partner in a partnership, an officer, director, or managing executive of a
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corporation, 	[or] 	an 	owner 	of 	at 	least 	5% 	of 	the 	voting 	or 	equity 	securities 	of 	a
corporation.” (ECF No. 5 at pages 6-7.)
Levi’s failure to disclose his ownership interests in the Franchisee Debtors, when he had a
duty to do so, was willful and intentional and done for the purpose of concealing assets from
creditors and from the Trustee, in the hope (at the time of Levi’s bankruptcy filing) that he could
avoid having to apply those assets to the payment of his creditors’ claims. The state court had not
yet issued a closure order and Levi was continuing to run the espresso franchises at the time of his
bankruptcy filing. Levi was a judgment debtor in the action filed by Skurry, and at his deposition
and at the trial Levi acknowledged that Skurry was aggressively pursuing collection efforts and
that Levi conducted his affairs deliberately in a way that would minimize Skurry’s ability to find
and execute on Levi’s income and property. It was for that reason (by Levi’s own admission) that
he did not keep bank accounts in his own name and did not keep property in his name. 	Levi’s
vague and evasive testimony at the 341 meeting as to the owners of AF-1 LLC– made at a time
when Levi was still operating the shops and still hoped to salvage them as valuable businesses –
is further evidence of his intent to conceal assets, and to hinder or delay creditors.
Levi argues that the disclosures that he made when the Franchisee Debtors filed their own
bankruptcy cases are evidence that he was not trying to conceal information about his interests in
the companies – a strange statement, given that Levi’s primary contention at trial was that the
statements about his interests that he made when the Franchisee Debtors filed their own cases were
incorrect, and that other people were the real owners. In any event, the fact that Levi disclosed
information once the closure of the businesses was imminent, in a last-ditch effort to block a state
court ruling through a bankruptcy filing, hardly undercuts the evidence that he intentionally
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concealed the same information at an earlier time and that he did so with the intent of hindering
and delaying creditors and the Trustee.
Finally, Levi contended that his counsel advised him, before he filed the Written
Disclosures, that because Levi was not listed as an owner in any operating agreement and was not
a signatory on any of the bank accounts, he did not have any disclosable affiliation with the
Franchisee Debtors. Levi offered no corroboration that any such advice was ever given, and the
Court did not find Levi’s testimony on the issue to be credible.
ANALYSIS OF THE “FALSE OATH” CLAIM
The Trustee also asserts that a discharge should be denied under Section 727(a)(4)(A) on
the separate and independent ground that Levi made false oaths in his Written Disclosures and at
his 341 meeting about (i) his household income; and (ii) his equitable interest in the Franchisee
Debtors.
As noted above, a false statement must be “material” in order to support the denial of a
discharge. E.g., In re Gordon, 535 B.R. 531, 538 (S.D.N.Y. 2015). The Court does not find that
Levi’s failure to list his wife’s income in his Written Disclosures is a separate basis for denying
him the discharge, because that omission (even if it was made knowingly and with intent to
defraud) in and of itself was not material. The Trustee has not shown that that information bears
on the discovery of estate property or the debtor’s business dealings. 	See In re Irving, 27 B.R.
943, 946 (Bankr. E.D.N.Y. 1983) (citing Gannon, 173 B.R. at 319 20).
The Court does, however, find that Levi knowingly and fraudulently made several false
statements under oath in trying to conceal his interest in the Franchisee Debtors. Below are the
questions that Levi answered falsely:
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Question 	Levi’s Answer 	What Would Have Been an
Accurate Answer
Total Value of personal property
you own (ECF No. 4 at 1)
$3,750 	This included Levi’s clothing and
household items as well as a
limited amount of cash. Levi
should have disclosed that this
amount does not include the value
of his interests in the Franchisee
Debtors.
Do you have any legal or equitable
interest in non-publicly traded stock
and interests in incorporated and
unincorporated businesses,
including an interest in an LLC,
partnership, and joint venture.
(ECF No. 4)
Yes. 50%
membership
interest in FDB
124, LLC
Levi should have listed his
equitable interests in the
Franchisee Debtors: AF-1 LLC,
AF-22 LLC, Espresso
Management Holding, Espresso
Stores, Inc., and F-6 Chelsea, Inc.
Do you have other property of any
kind you did not already list?
(ECF No. 4)
No 	The interests in the Franchisee
Debtors were not listed and
should have been disclosed.
Did you have any income from
employment or from operating a
business during this year or the two
previous calendar years? Fill in the
total amount of income you
received from all jobs and all
businesses, including part-time
activities. (ECF No. 5 at page 1)
Yes.
$12,000 from
operating a
business since
January 1, 2016
$50,000 from
operating a
business in 2015
and $50,000 from
operating a
business in 2016
Levi testified at his deposition in
this adversary proceeding that
this amount did not include what
was paid to his landlord directly,
Dep. Tr. at 65:23-66:11 (August
9, 2017), and the record otherwise
discloses that Levi’s rent was
$4,900 a month. Levi should
have disclosed amounts paid to
his landlord directly as income.
Did you receive any other income
during this year or the two previous
calendar years?
(ECF No. 5 at page 3)
No. 	This was another opportunity for
Levi to reveal that some of his
income was paid directly to his
landlord and was not included in
the amounts listed above.
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Question 	Levi’s Answer 	What Would Have Been an
Accurate Answer
Give details about your business or
connections to any business:
Within 4 years before you filed for
bankruptcy [i.e., since April 7,
2012], did you own a business or
have any of the following
connections to any business? A
member of a limited liability
company or a limited liability
partnership? A partner in a
partnership? An officer, director, or
managing executive of a
corporation? (ECF No. 5 at pages
6-7)
Levi stated that he
had been a member
of 124 FDB, LLC
and Espresso
Dream LLC
He did not identify any of the
Franchisee Debtors, did not
disclose his interests in them, and
did not disclose that he was (as he
now admits) their director and
manager. Annex A to Joint PTO
¶¶ 44 (director of AF-1 LLC), 49
(director of Espresso
Management Holding), 52
(director of Espresso Stores, Inc.),
55 (director of F-6 Chelsea, Inc.).
As noted above, to prevail on the “false oaths” claim, the Trustee must show that when the
Debtor made false statements under oath, he acted with actual fraudulent intent and that the
falsehoods were material. In addition, as in the case of all discharge objections, evidence must be
construed strictly in Levi’s favor. 	Here, even when the evidence is construed in the light most
favorable to Levi, it shows that Levi acted fraudulently and with a deliberate, knowing intent to
conceal the true facts. In addition, his misstatements and omissions were material. Not only were
the Franchisee Debtors a valuable asset (as evidenced by the fact that Levi himself valued their
litigation claims against Filicori at $1 million each), but the information Levi omitted would have
materially assisted the Trustee in identifying all property of the Debtor’s estate. 	Perhaps the
businesses might have failed anyway – but the point is that we will never know if that would have
been the case, or if creditors could have recovered more value if the proper disclosures had been
made. 	Cf. Borges v. Placeres (In re Placeres), No. 15-01356, slip op. at 28 (Bankr. S.D.N.Y.
December 5, 2017) (in denying pursuant to Section 727(a)(4)(A) discharge, noting that the
debtor’s failure to disclose a malpractice claim against a third party inappropriately assumed the
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trustee’s role of deciding what information was important and undercut the trustee’s ability to do
his job); O’Connell v. DeMartino (In re DeMartino), 448 B.R. 122, 130 (Bankr. E.D.N.Y. 2011)
(“It is not for a debtor to determine whether called for information is immaterial, unimportant or
of no benefit to creditors.”). “Materiality” merely requires a showing that the relevant information
was something that creditors and the trustee reasonably would have regarded as significant in
identifying the assets of the estate that could be liquidated and used to satisfy claims, and Levi’s
interests in the Franchisee Debtors met that test. See In re Gordon, 535 B.R. 531, 538 (S.D.N.Y.
2015) (materiality depends on whether the information is pertinent “to the debtor’s business
transactions, or if it concerns the discovery of assets, business dealings, or the existence or
disposition of the debtor’s property”) (internal citation omitted).
CONCLUSION
For the reasons set forth above, the Court finds in favor of the Trustee. 	Pursuant to
11 U.S.C. §§ 727(a)(2) and 727(a)(4)(A), Levi is not entitled to a discharge of his debts.
Dated: New York, New York
December 11, 2017
/s/ Michael E. Wiles
THE HONORABLE MICHAEL E. WILES
UNITED STATES BANKRUPTCY JUDGE
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