Atkinson v. Nucci, 16-01303

Background

Debtor Angelo F. Nucci filed Chapter 7 on June 25, 2015; Trustee Bunce Atkinson filed an adversary complaint seeking denial of discharge under 11 U.S.C. § 727(a)(2)(A), (a)(3), (a)(4)(A) and (a)(5).
Nucci's filed schedules/Statement of Financial Affairs omitted any real property on Schedule A, failed to list four traditional IRAs (collective value ≈ $1,162,075), misidentified an IRA as an "educational IRA," and listed only one corporate interest (Chanree Construction) while omitting an 8% interest in Catania 201 LLC.
Nucci’s listed residence was 50 Bellevue Ave., Rumson (owned solely by his wife), and he previously co-owned a Toms River property sold in 2009; proceeds helped purchase the Rumson home.
Nucci testified at the § 341 meeting that the petition was accurate, that he never owned real property, that he received help from in-laws for living expenses, and that there were no out-of-ordinary transfers—statements later shown to be incomplete or false (e.g., $345,900 IRA distribution in 2014 routed to his wife, payments to his defunct company’s creditors).
After the adversary was filed an amended petition was submitted correcting some omissions; Nucci claimed he did not review the amendments and relied on counsel in preparing the original petition.
The court held a trial and found by a preponderance of evidence that Nucci made false oaths and false testimony sufficient to deny his discharge under § 727(a)(4)(A).

Issues

Issue	Plaintiff's Argument (Atkinson)	Defendant's Argument (Nucci)	Held
Whether omission of Rumson residence on Schedule A was a false oath with fraudulent intent	Rumson was marital residence and funds from prior sale and other assets were used to acquire/maintain it; omission is a material false statement	Nucci relied on bankruptcy counsel who advised omission because deed was solely in wife’s name (advice-of-counsel defense)	Court: advice-of-counsel defense applies to Rumson omission (no fraudulent intent shown as to that asset)
Whether failure to list four traditional IRAs (and mislabeling one) was a false oath	IRAs were assets that should have been disclosed; omission and mislabeling are material and misleading	Nucci claims reliance on counsel and belief IRAs were not estate property	Court: omission of IRAs was material; reliance defense fails—debtor’s failure to verify and careless signing shows fraudulent intent
Whether failure to list corporate interest (Catania 201 LLC) was a false oath	Six-year corporate-interest question answered "none" despite 8% interest; material to estate	Nucci likely relied on counsel or considered interest insignificant	Court: omission material; 8% interest required disclosure; supports finding of fraudulent intent
Whether false testimony at § 341 meeting (denying prior property ownership, failing to disclose IRA distributions and transfers) supports denial of discharge	False oath at meeting and evasive/incomplete answers show intent to conceal assets/transfers	Nucci pleaded nervousness or misunderstanding of questions; relied on counsel	Court: found testimony false and implausible explanations; cumulative false testimony and omissions establish fraudulent intent; discharge denied under § 727(a)(4)(A)

Key Cases Cited

Rosen v. Bezner, 996 F.2d 1527 (3d Cir. 1993) (denial of discharge is drastic and must be construed strictly in favor of debtor)
Grogan v. Garner, 498 U.S. 279 (Sup. Ct. 1991) (plaintiff in discharge objection must prove claim by preponderance of the evidence)
Georges v. Nunn, 138 F.3d 1 (3d Cir.) (Note: court cited Georges as In re Georges, 138 F. App'x 471) (advice-of-counsel may negate intent where full disclosure to counsel occurred and counsel’s legal advice was reasonable)
United States v. Traitz, 871 F.2d 368 (3d Cir. 1989) (advice-of-counsel defense requires full, honest disclosure of material facts to counsel)
Retz v. Samson, 606 F.3d 1189 (9th Cir. 2010) (materiality of false statement is broadly construed in § 727 context)