In Re: Phillips and

United States Court of Appeals
Fifth Circuit
F I L E D
October 31, 2006
Charles R. Fulbruge III
Clerk
In the
United States Court of Appeals
for the Fifth Circuit
_______________
m 05-31107
_______________
IN RE:
PHILLIPS AND HORNSBY LITIGATION.
KAREN HORNSBY KIRKWOOD, ETC.; ET AL.,
Plaintiffs,
VERSUS
PAUL D. GLASS; ET AL.,
Defendants.
* * * * * * * * * * * * * * *
IN RE:
FRAUDULENT TRANSFER.
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
VERSUS
RYAN PHILLIPS; ET AL.,
Defendants,
RYAN PHILLIPS AND GREGORY PHILLIPS,
Defendants-Appellants.

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_________________________
Appeal from the United States District Court
for the Middle District of Louisiana
m 3:03-CV-3231
______________________________
Before JONES, Chief Judge, SMITH and
STEWART, Circuit Judges.
JERRY E. SMITH, Circuit Judge:*
Defendants appeal a summary judgment
voiding a transfer of property from Chaney
Phillips to his sons Gregory and Ryan. We
affirm.
I.
On April 21, 1998, Chaney Phillips was
convicted of, inter alia, mail fraud and money
laundering in violation of 18 U.S.C. §§ 1341
and 1957, respectively. Before sentencing, a
probation officer met with him to determine
the value of his financial assets for inclusion in
a presentence investigation report (“PSR”). In
answer to a specific question about inherited
property, Phillips disclosed that he had a five
percent interest in a succession from his friend
Stanley Hornsby but claimed the interest was
of small value and was entangled in litigation.
Based on these representations, the officer as-
sumed the interest was de minimis and did not
include it in the PSR. Actually, however,
months before Phillips’s conversation with the
probation officer, the litigation had been com-
pleted, and Phillips had been awarded $32,600,
which was an amount roughly equal to the
remainder of his net worth.
On June 26, 1998, the probation officer
presented Phillips with the PSR, including in-
formation about what restitution he might be
obligated to pay. Phillips objected to several
aspects of the report, including the amount and
recipients of the possible restitution. The PSR
was duly amended on July 24 to include Phil-
lips’s objections.
On the morning of July 30, the day of Phil-
lips’s scheduled sentencing, he executed an in-
ter vivos donation of his interest in the Horns-
by succession to his sons. Later that day, he
was sentenced to 97 months’ incarceration and
$225,587.56 in restitution. At no time during
his sentencing hearing did he disclose the do-
nation he had made that morning.
Phillips appealed his convictions and initial
sentence. Certain of his convictions were va-
cated, and on November 20, 2000, he was re-
sentenced to pay $217,587.56 in restitution.
When it discovered Phillips’s gift, the gov-
ernment brought this action, alleging that the
conveyance constituted a fraudulent transfer
under the Federal Debt Collection Practices
Act (“FDCPA”), 28 U.S.C. § 3302 et seq.,
which permits the government to avoid “trans-
fer[s] or obligation[s] to the extent necessary
to satisfy [a] debt to the United States.” 28
* Pursuant to 5TH CIR. R. 47.5, the court has de-
termined that this opinion should not be published
and is not precedent except under the limited cir-
cumstances set forth in 5TH CIR. R. 47.5.4.

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U.S.C. § 3306(a)(1).2 On October 31, 2003,
the government moved for summaryjudgment,
which was denied because the district court
found that there was a genuine dispute of ma-
terial fact as to whether Phillips had trans-
ferred the property with fraudulent intent.
The government moved for reconsideration
and submitted a redacted version of the PSR in
support. Finding that the PSR demonstrated
conclusively that Phillips had been informed of
the likelihood of restitution before the transfer,
the court granted summary judgment as to the
claim of a fraudulent transfer in violation of 28
U.S.C. § 3304. Only Phillips’s sons appeal,
contending that the PSR was improperly ad-
mitted into evidence and that, even considering
the PSR, a genuine dispute of material fact ex-
ists with regard to Phillips’s intent in making
the transfer.
II.
The sons object to the relevance of and re-
dactions to the PSR and to the authenticity of
the document under Federal Rule of Evidence
901. We agree with the district court that de-
fendants waived their objections to the rele-
vance of the document and the redactions
thereto; we review the district court’s applica-
tion of rule 901 for abuse of discretion. See
R.R. Mgmt. Co., L.L.C. v. CFS La. Midstream
Co., 428 F.3d 214, 220 (5th Cir. 2005). We
will reverse only where we determine that an
error was prejudicial. See United States v.
Scott, 678 F.2d 606, 612 (5th Cir. 1982)
(stating that rule 901 error is subject to harm-
less error analysis).
We agree with the district court that defen-
dants had ample opportunity to object to the
relevance and content of the PSR and failed to
do so. The government informed defendants
and the court that it intended to introduce the
redacted PSR, and it disclosed specifically
which portions it intended to include.
Pursuant to Local Rule 7.5M, the court re-
quired that any objections be filed within twen-
ty days of March 27, 2004. Defendants filed
no objection until January 24, 2005; they sup-
ply no plausible reason why they could not
have objected to the relevance of or redactions
to the PSR within the time allotted by the dis-
trict court. Accordingly, we affirm the finding
of waiver as to these issues.
We need not decide whether defendants
waived their objection to the authenticity of
the copy of the PSR that the government in-
troduced or whether the admission of the PSR
was error under rule 901. That is because any
error was harmless. Phillips has actually seen
the PSR and on appeal his sons raise no genu-
ine issue of fact as to the authenticity of the
document.
Thus, any error committed in admitting the
copy of the PSR without certification was
harmless. Likewise, defendants have supplied
no reason to believe that admitting copies in
lieu of the original was unfair; accordingly, we
also reject their challenge based on Federal
Rule of Evidence 1003.
III.
The Phillips sons contend that, even con-
sidering the PSR as properly admitted into
2 Private restitution orders may be recovered in
the same manner as the statute provides for
“debt[s] to the United States.” See 18 U.S.C.
§ 3664(m)(1)(A)(i)-(ii) (stating that the United
States is authorized to enforce victim restitution
orders by the same means as it recovers fines);
United States v. Phillips, 303 F.3d 548, 550-51
(5th Cir. 2002).

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evidence, summary judgment is inappropriate
because there is a genuine dispute as to Phil-
lips’s intent in making the transfer. We dis-
agree. Analyzing a Texas statute that was, in
all relevant respects, identical to the FDCPA,
this court stated that “[i]ntent to defraud . . .
can be decided as a matter of law” where
numerous “badges of fraud”3 are present and
the only evidence in support of the defendant’s
theory is a series of conclusional, self-serving
statements. BMG Music v. Martinez, 74 F.3d
87, 90-91 (5th Cir. 1996).
As in BMG Music, six of the eleven listed
badges of fraud are present: (1) The transfer
occurred shortly before or after the debt was
incurred; (2) Phillips received no reasonably
equivalent value for the transfer; (3) the trans-
fer was made to “insiders”; (4) Phillips was in-
solvent at the time of the transfer; (5) he con-
cealed the transfer by failing to disclose it at
his sentencing;4 and (6) he concealed his retire-
ment account with the Louisiana Tax Asses-
sors’ Office. See 28 U.S.C. § 3304(b)(2). In
addition to these nonexclusive statutory fac-
tors, Phillips mischaracterized his succession
interest when he met with the officer develop-
ing the PSR, describing it as speculative and of
small value. He also failed to disclose at the
sentencing that he had executed a $100,000
second mortgage on his house only two days
earlier.
Although there are some differences be-
tween this case and BMG MusicSSfor exam-
ple, the defendant in BMG Music admitted that
he retained an interest in the transferred prop-
erty, see BMG Music, 74 F.3d at 91 n.21,
these distinctions are insignificant to the out-
come of this case. The same number of badg-
es of fraud are present, and the inference of
fraud is similarly inescapable.
None of defendants’ self-serving statements
that Phillips lacked intent to defraud is enough
3 The FDCPA states, in determining actual in-
tent, that special consideration may be given to
certain “badges of fraud” such as whether
(A) the transfer or obligation was to an insider;
(B) the debtor retained possession or control of
the property transferred after the transfer;
(C) the transfer or obligation was disclosed or
concealed; (D) before the transfer was made or
obligation was incurred, the debtor had been
sued or threatened with suit; (E) the transfer
was of substantially all the debtor’s assets;
(F) the debtor absconded; (G) the debtor re-
moved or concealed assets; (H) the value of the
consideration received by the debtor was rea-
sonably equivalent to the value of the asset
transferred or the amount of the obligation in-
curred; (I) the debtor was insolvent or became
insolvent shortly after the transfer was made or
the obligation was incurred; (J) the transfer
occurred shortly before or shortly after a sub-
stantial debt was incurred; and (K) the debtor
transferred the essential assets of the business
to a lienor who transferred the assets to an in-
sider of the debtor.
28 U.S.C. § 3304(b)(2).
4 Defendants’ contention that Phillips disclosed
the transfer because he made the transaction public
under Louisiana law is without merit. The fact that
Phillips recorded the transaction and thus publi-
cized it to the minimum extent necessary to achieve
a valid transfer under Louisiana law is insufficient
to constitute “disclosure” under the statute where
he failed to inform the sentencing court, the United
States, or even any of the persons to whom he
owed restitution. See, e.g., LSA-C.C. art. 2442
(stating that concealed transfers of property are
ineffective with respect to third parties such as
creditors).

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to overcome the objective evidence.5 It is im-
plausible that Phillips did not know the differ-
ence between a fine, which he had been in-
formed that he was unlikely to have to pay,
and restitution. It is scarcely credible that he
did not realize that he would likely be forced
to make some restitution. He had been shown
the PSR, he knew was likely to be ordered to
pay restitution, and he transferred his interest
in the Hornsby succession to his sons to avoid
forfeiting it to his likely creditors. The numer-
ous indicia of fraudulent intent make summary
judgment appropriate.
AFFIRMED.
5 See In re Hinsley, 201 F.3d 638, 643 (5th Cir.
2000) (“A party’s self-serving and unsupported
claim that [he] lacked the requisite intent is not
sufficient to defeat summary judgment where the
evidence otherwise supports a finding of fraud.”).

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