Stamat v. Neary, 635 F.3d 974

Stamats filed a joint Chapter 7 bankruptcy on July 26, 2007, seeking discharge of over $1.5 million in debts.
Trustee alleged omissions and misstatements in the petition, SOFA, and schedules, including assets, business interests, a $10,000 settlement, a $90,000 home refinance, and 2006 income.
Bankruptcy court denied discharge under §§ 727(a)(2), (4), and (5) for concealment, false oaths, and failure to explain asset loss.
District Court affirmed denial under § 727(a)(4) for fraudulently making a false oath; undisclosed items were deemed material and showed reckless disregard for the truth.
On appeal, Seventh Circuit affirmed, concluding the omissions were numerous, material, and showed reckless indifference to the truth.
Key omissions included: interests in Meyer Medical Physicians Group, Hoffman/Elk Grove Physician Group, 4425 E. 63rd Medical Center; Trailhead Land Investment and Eagle Crest Golf Club; part-time police income; two guns; a $10,000 settlement; and the $90,000 refinancing proceeds.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether omissions support § 727(a)(4) fraudulently making a false oath	Stamats argue omissions lacked fraudulent intent and were not material.	Trustee argues omissions were numerous, intentional, and material, showing reckless disregard for the truth.	Affirmed denial of discharge for § 727(a)(4) true oath violations.
Whether certain disclosures were required under Question 18 of the SOFA	Limited partnerships were exempt from 19–25; none of the questioned items were required to be disclosed.	Question 18 requires disclosure of all partnerships, including limited ones with six-year lookback.	Omissions related to business interests were not exempt; disclosure required and properly omitted.
Whether the $10,000 settlement and $90,000 refinancing were outside the 'ordinary course' of business	Transfers did not need disclosure as ordinary-course transactions.	Transfers were not shown to be ordinary-course; substantial, atypical withdrawals and uses undermined ordinary-course status.	Not within the ordinary course; omissions were material.
Whether over-reporting income defeats intent to defraud under § 727(a)(4)	Overstatement alone does not prove fraudulent intent.	Reckless disregard established by the totality of omissions and misstatements demonstrates intent.	Totality shows reckless disregard; supports § 727(a)(4) finding.

In re Scott, 172 F.3d 959 (7th Cir. 1999) (preponderance standard for § 727(a) grounds)
Grogan v. Garner, 498 U.S. 279 (Supreme Court, 1991) (fresh-start policy and honest debtor constraint)
In re Chavin, 150 F.3d 726 (7th Cir. 1998) (reckless disregard supports fraudulent intent under § 727(a)(4))
In re Duncan, 562 F.3d 688 (5th Cir. 2009) (cumulative false statements show fraudulent intent)
In re Kontrick, 295 F.3d 724 (7th Cir. 2002) (strict construction of discharge exceptions)