Corzin v. Digiammarino (In re Maglione), 559 B.R. 489

Background

Debtor Anthony Maglione (Chapter 7) transferred $30,000 in cash to his mother, Ruth DiGiammarino, on September 1, 2012, less than two years before he filed Chapter 7 (March 19, 2014).
Earlier (July 2011) Debtor received a $120,000 tax‑free VA award and began receiving ongoing disability/social security/pension income; on November 16, 2011 he withdrew $77,000 in cash from his PNC account (much of which became untraceable).
The Debtor and his ex‑wife previously incurred ~$22,724 in pre‑2000 credit card charges that Debtor’s parents paid; parties agreed orally Debtor would repay; some payments were made years earlier and the original debt was not documented or scheduled in Debtor’s 2000 Chapter 13 (discharged April 16, 2003).
Around the $30,000 transfer, Debtor was separating/divorcing his wife, facing spousal support obligations and mortgage problems; Debtor moved into a house his mother bought and later placed in a trust naming him a beneficiary.
Trustee sued to avoid the $30,000 transfer as an actual fraudulent transfer under 11 U.S.C. § 548(a)(1)(A), as a constructive fraudulent transfer under § 548(a)(1)(B), and as a voidable preferential/fraudulent transfer under Ohio R.C. 1313.56 via § 544(b).

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
1. Was the $30,000 transfer an actual fraudulent transfer under 11 U.S.C. § 548(a)(1)(A)?	Trustee: transfer was made with actual intent to hinder, delay, or defraud creditors — badges of fraud (insider, secrecy, concealment, dissipation before divorce, lack of consideration).	DiGiammarino: payment was for antecedent debt (repayment to parents); legitimate purpose; good faith.	Held for Trustee. Court found multiple badges of fraud shifting burden to defendant; defendant failed to rebut, so transfer avoided as actual fraud.
2. Was the transfer constructively fraudulent under 11 U.S.C. § 548(a)(1)(B)?	Trustee: Debtor received less than reasonably equivalent value; likely insolvent; transfer within two‑year lookback.	Defendant: debtor may not have been insolvent; trustee failed to prove insolvency and full liabilities.	Held for Defendant on this claim. Court found lack of proof of insolvency so constructive‑fraud claim failed.
3. Can the transfer be avoided under Ohio statute R.C. 1313.56 (via § 544(b))?	Trustee: Ohio law permits avoidance for transfers made with intent to hinder, delay, or defraud creditors; longer reachback period.	Defendant: argues limits/defenses under Ohio law (e.g., historic authority about cash payments and knowledge requirement).	Court declined to decide fully; found first prong inapplicable (defendant not shown to be a creditor) and did not resolve the cash‑payment/Gettnger issue because § 548 holding made resolution unnecessary.
4. Was there reasonably equivalent value for the $30,000 (i.e., was transfer payment of antecedent debt)?	Trustee: no enforceable antecedent debt — any pre‑2000 obligation was discharged in 2003 Chapter 13 and largely paid down; no documentation supports $30,000 value.	Defendant: transfer was repayment of parents for earlier credit‑card debt.	Held for Trustee. Court determined there was no reasonable equivalent value for $30,000 and the antecedent‑debt explanation was inadequate.

Key Cases Cited

Silagy v. Gagnon (In re Gabor), 280 B.R. 149 (Bankr. N.D. Ohio) (badges of fraud—circumstantial proof of intent)
Schilling v. Heavrin (In re Triple S Rests., Inc.), 422 F.3d 405 (6th Cir.) (definition and use of badges of fraud)
Holcomb Health Care Servs., LLC v. Quart Ltd. (In re Holcomb Health Care Servs.), 329 B.R. 622 (Bankr. M.D. Tenn.) (badges of fraud discussion)
Southeast Waffles, LLC v. U.S. Dept. of Treasury/Internal Revenue Service (In re Southeast Waffles, LLC), 702 F.3d 850 (6th Cir.) (reasonably equivalent value analysis)
Conroy v. Shott, 363 F.2d 90 (6th Cir.) (Ohio preference statute discussion/cash payments)
National Bank of Commerce v. Gettinger, 68 Ohio St. 389 (Ohio) (historic rule regarding cash payments under Ohio statute)
Maas v. Miller, 58 Ohio St. 483 (Ohio) (long reachback under predecessor Ohio statute)