In re Chlad, 922 F.3d 856

Monik Chlad and her husband filed a joint Chapter 7 petition seeking discharge of ~ $5 million in 2013 and submitted schedules and a Statement of Financial Affairs under penalty of perjury.
Two creditors (Chapman and Semy Investments) brought an adversary proceeding under 11 U.S.C. § 727(a)(4)(A) alleging numerous omissions and false statements in the debtors’ filings.
Omitted items included: a jointly owned Van Buren Street property and related mortgages; a personal guaranty to Edgebrook Bank on an $800K+ loan to Chlad’s company; a >$1M shareholder loan from Lockwood (and related transfers); two jointly held bank accounts and transfers; rental and child-support income; and use of the alternate first name “Monika.”
At bench trial Chlad testified the omissions were inadvertent and her bankruptcy counsel was at fault; counsel also conceded some responsibility.
The bankruptcy court found the omissions were material, that Chlad knew the omitted facts, and that her pattern of omissions evidenced reckless disregard for the truth—sufficient fraudulent intent under § 727(a)(4)(A)—and denied discharge. The district court affirmed; Chlad appealed.

Issue	Chlad's Argument	Creditors/BK Court's Argument	Held
Standard of review for intent determination	Bankruptcy intent is a mixed question requiring de novo review	Intent is a factual finding reviewed for clear error	Clear error review applies to the bankruptcy court’s factual findings on intent; affirmed
Knowledge element of § 727(a)(4)(A)	She lacked the requisite knowledge for the omissions; some changes were accounting actions by tax preparers	Chlad actively managed finances, reviewed tax returns and schedules, and knew of the omitted items	Chlad had actual knowledge of the omitted assets/liabilities; knowledge element satisfied
Fraudulent intent vs. innocent mistake	Omissions were inadvertent or due to attorney error; items were trivial	Pattern of omissions, preparatory meetings, and review with counsel show reckless disregard for truth	Reckless disregard inferred from totality of omissions; fraudulent intent proven
Materiality of omitted information	Omissions were immaterial or individually insignificant to the estate	Each omission related to assets/transactions and could affect estate administration; duty to disclose is absolute	Omissions were material as they related to estate, business dealings, or disposition of property; materiality satisfied

In re Kempff, 847 F.3d 444 (7th Cir. 2017) (Chapter 7 discharge reserved for the honest debtor; burden and standards for § 727 review)
Stamat v. Neary, 635 F.3d 974 (7th Cir. 2011) (elements for false oath under § 727(a)(4)(A) and reckless-disregard standard)
In re Marcus-Rehtmeyer, 784 F.3d 430 (7th Cir. 2015) (intent to defraud is a factual question reviewed for clear error)
In re Krehl, 86 F.3d 737 (7th Cir. 1996) (deference to bankruptcy court credibility assessments on intent questions)
In re Katsman, 771 F.3d 1048 (7th Cir. 2014) (fraudulent intent inquiry focuses on intent to deceive creditors or the court)
Matter of Yonikus, 974 F.2d 901 (7th Cir. 1992) (debtor’s pattern of omissions may support inference of fraudulent intent; duty to disclose assets)
Lardas v. Grcic, 847 F.3d 561 (7th Cir. 2017) (materiality defined by relationship to estate, assets, business dealings)