Pergament v. Gonzalez (In re Gonzalez), 553 B.R. 467

Debtors Jose Manuel Gonzalez and Maria Elena Diaz filed a joint Chapter 7 petition on July 27, 2014 with schedules and a Statement of Financial Affairs (SOFA).
The trustee (Plaintiff Marc A. Pergament) sued under 11 U.S.C. § 727(a)(4)(A) (false oaths) and alternatively sought dismissal for bad faith; trial was held and Defendants appeared pro se (Diaz did not testify).
The original SOFA omitted significant non-employment receipts (IRA withdrawals, stock-sale proceeds, unemployment benefits, and gifts from family) and misstated employment income; Schedule J materially understated monthly expenses vs. bank-statement averages.
Debtors later filed an amended SOFA correcting some income omissions but never corrected Schedule J; Gonzalez testified he used “ballpark” figures, did not consult records, and relied in part on counsel’s advice regarding stock-sale reporting.
Court found multiple material false statements and omissions, Gonzalez’s education and finance experience supported inference of reckless indifference/knowledge, and Diaz’s signature permitted an inference of her awareness or reckless indifference.
Court denied the Debtors’ discharge under § 727(a)(4)(A); alternative motion to dismiss was not reached.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether Debtors made false oaths under § 727(a)(4)(A)	Debtors omitted and misstated material income and expenses on SOFA/Schedules	Errors were inadvertent ballpark estimates; later amended SOFA and cooperation show no fraudulent intent; counsel advised on stock sale	Held: Multiple material false oaths existed (income omissions, misstated income, understated expenses); element satisfied
Whether Debtors knew falsity and acted with fraudulent intent	Knowledge/reckless indifference shown by omissions and Gonzalez’s failure to consult records despite financial sophistication	Defendant claimed lack of intent, reliance on counsel, and post-filing amendments	Held: Court inferred fraudulent intent/reckless indifference; amendments after discovery were insufficient to rebut inference
Whether reliance on counsel excuses false statements	Plaintiff: reliance on counsel does not excuse patently false statements or reckless indifference	Gonzalez asserted advice of counsel re: stock-sale reporting	Held: Advice-of-counsel defense rejected for patently false/omitted disclosures and where debtor was sophisticated and failed to verify
Materiality of false statements	Plaintiff: omissions concerned assets and estate administration and were therefore material	Defendants: framed some items as non-reportable or minor errors	Held: False statements were material because they related to finances, assets, and disclosures required for administration

State Bank of India v. Chalasani, 92 F.3d 1300 (2d Cir. 1996) (§ 727 construed strictly against objector and liberally for debtor; standards for discharge objections)
Carlucci & Legum v. Murray (In re Murray), 249 B.R. 223 (E.D.N.Y. 2000) (elements plaintiff must prove under § 727(a)(4)(A))
Nof v. Gannon (In re Gannon), 173 B.R. 313 (Bankr. S.D.N.Y. 1994) (petition and schedules are statements under oath)
In re Maletta, 159 B.R. 108 (Bankr. D. Conn. 1993) (amendments after trustee discovery diminish inference of innocent omission)
Bub v. Rockstone Capital, LLC, 516 B.R. 685 (E.D.N.Y. 2014) (debtor’s education and experience relevant; reliance on counsel not exculpatory for patently improper advice)
Gobindram v. Bank of India, 538 B.R. 629 (E.D.N.Y. 2015) (factors for reckless indifference: seriousness of information sought, debtor’s sophistication, pattern of errors)
In re Virovlyanskiy, 485 B.R. 268 (Bankr. E.D.N.Y. 2013) (burden shifts to debtor to offer credible explanation after false statement shown)
Agai v. Antoniou (In re Antoniou), 515 B.R. 9 (Bankr. E.D.N.Y. 2014) (materiality defined by relation to assets, business dealings, or estate)
In re Robinson, 506 F.2d 1184 (2d Cir. 1974) (materiality does not require showing creditor prejudice)