Wann Robinson v. Jason Worley, 849 F.3d 577

Debtor Jason Worley filed Chapter 7 and listed a 49% interest in Gemini Land Trust (Gemini) on Schedule B at a $2,500 market value, despite a $65,000 capital contribution and a 2012 Schedule K-1 showing a capital account of $67,555.
Gemini owned a 10% interest in Pelham Land Group, which held 587 acres of Georgia timberland worth roughly $2,250/acre; Pelham generated only incidental income but sought to flip the land for a profit.
Worley used a capitalization-rate (income-based) method, multiplying the largest annual distribution ($483, rounded to $500) by a capitalization factor of five to reach $2,500, without consulting his managing member partners.
The trustee discovered that Pelham sold a large tract and distributed approximately $100,000 to Gemini shortly before trial; Gemini’s manager testified minority interests typically fetch 20–30% of face value.
Creditors sued under 11 U.S.C. § 727(a)(4)(A) alleging Worley knowingly and fraudulently misstated Gemini’s value; the bankruptcy court denied discharge after a bench trial, and the district court affirmed.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether Worley made a false oath by valuing his Gemini interest at $2,500	Worley knowingly understated the value by over 95% and thus made a false oath	The valuation method (cap rate) was reasonable given limited control and low distributions	Court held the $2,500 estimate was a false oath — clearly erroneous standard does not overturn bankruptcy court
Whether Worley acted with fraudulent intent	Intent inferred from choice of valuation method, financial sophistication, failure to consult partners, and timing suggesting concealment	The undervaluation was an honest disagreement or reasonable reliance on counsel	Court held sufficient circumstantial evidence of intent; reckless indifference and inconsistency with Worley’s knowledge supported fraud finding
Whether reliance on advice of counsel negates fraudulent intent	N/A (creditors)	Worley claims he followed counsel’s advice in valuation	Court held reliance defense rejected: no evidence he fully disclosed facts to counsel and bad-faith or obvious attorney error cannot excuse debtor
Whether the misstatement was material	Misstatement affected estate administration and could deter investigation by trustee/creditors	The undervaluation did not prejudice administration because trustee would have investigated regardless	Court held materiality met: low bar — any false oath relevant to estate/business transactions suffices

Farouki v. Emirates Bank Int’l, 14 F.3d 244 (4th Cir. 1994) (bankruptcy discharge reserved for honest debtors; unclean hands doctrine)
Grogan v. Garner, 498 U.S. 279 (U.S. 1991) (discussing fresh-start policy and standard for discharge)
Williamson v. Fireman’s Fund Ins. Co., 828 F.2d 249 (4th Cir. 1987) (statements in bankruptcy schedules constitute oaths under § 727(a)(4))
Anderson v. City of Bessemer City, 470 U.S. 564 (U.S. 1985) (standard for clear-error review of factual findings)
Smith v. Jordan (In re Jordan), 521 F.3d 430 (4th Cir. 2008) (liberal construction of § 727 in debtor’s favor but denial requires real and substantial reasons)
Boroff v. Tully (In re Tully), 818 F.2d 106 (1st Cir. 1987) (denial of discharge must be grounded in substantial, not technical, reasons)