559 B.R. 319
Bankr. E.D.N.Y.2016Background
- Debtor Xiang Yong Gao filed Chapter 7 and did not list any real property or a 5% membership interest in 37th Avenue Realty LLC on his schedules or SOFA.
- At a Rule 2004 exam Gao twice denied ever holding an interest in 37th Avenue Realty LLC.
- The Trustee later produced an LLC membership certificate and tax returns showing Gao was the recorded owner of a 5% interest until he transferred it on May 31, 2012, for $870,000 to AE & LY Holdings LLC.
- Gao refused to continue the Rule 2004 exam after being confronted with the documents but now claims (via a self-serving affidavit) he held only legal title and that the equitable owner was a friend, Zhengzhou Chen. No corroborating documentation for Chen or an equitable interest was produced.
- The Trustee moved for summary judgment seeking denial of discharge under 11 U.S.C. § 727(a)(4)(A) (false oaths). The court considered the documentary evidence, Gao’s admissions on tax returns, and his unsupported affidavit.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Debtor made knowingly false oaths under § 727(a)(4)(A) by omitting and denying ownership of the 5% interest | Trustee: Documentary evidence and tax returns show Gao owned the 5% interest and knowingly omitted/denied it | Gao: He was only legal title-holder; equitable interest belonged to Chen who asked Gao to hold title | Court: Granted — Gao made false oaths; intent to deceive inferred because explanation was unsupported |
| Whether the Debtor rebutted the presumption of ownership created by possession/stock certificate | Trustee: Presumption of ownership applies; no admissible evidence rebuts it | Gao: Asserts equitable ownership by Chen (self-serving affidavit) and counsel affidavit on information and belief | Court: Rebuttal insufficient; self-serving and counsel affidavits carry no weight at summary judgment |
| Whether Trustee met burden for materiality and knowledge elements of § 727(a)(4)(A) | Trustee: Ownership was material ($870,000) and Gao knew (tax returns list income/losses) | Gao: No contrary factual evidence showing lack of materiality or knowledge | Court: Held materiality and knowledge satisfied; documentary record supports Trustee |
| Whether summary judgment was appropriate or genuine issue for trial existed | Trustee: Record is one-sided; no admissible contrary evidence | Gao: Relies on unsupported affidavit and attorney statements | Court: Summary judgment appropriate; no genuine dispute of material fact |
Key Cases Cited
- Celotex Corp. v. Catrett, 477 U.S. 317 (summary judgment standard)
- Anderson v. Liberty Lobby, 477 U.S. 242 (evidentiary standard for genuine issue)
- Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574 (drawing inferences for nonmovant)
- Grogan v. Garner, 498 U.S. 279 (purpose of bankruptcy discharge)
- In re Cacioli, 463 F.3d 229 (§ 727 principles in 2d Circuit)
- Karaha Bodas Co. v. Perusahaan Pertambangan Minyak Dan Gas Bumi Negara, 313 F.3d 70 (presumption that possessor is owner)
- Perkins v. Guaranty Tr. Co. of N.Y., 274 N.Y. 250 (rebuttable presumption from certificates issued in party's name)