IN THE UNITED STATES BANKRUPTCY COURT
FOR THE NORTHERN DISTRICT OF CALIFORNIA
|DO NOT PUBLISH
This case disposition has no value as precedent and is not intended for publication. Any publication, either in print or electronically, is contrary to the intent and wishes of the court.
JAMES and BRENDA FINITZ, No. 94-10526
v. A.P. No. 94-1251
JAMES and BRENDA FINITZ,
Memorandum of Decision
In June of 1992, the state court issued a statement of decision awarding plaintiff Julle
Lewicki damages of more than $1 million against debtors and defendants James and Brenda
Finitz. Within a few days of the decision, the Finitzes created several fake trusts and other
entities for the purpose of hiding their assets from Lewicki. They filed a Chapter 7 petition
March 7, 1994. By this adversary proceeding, Lewicki seeks to deny the Finitzes their
discharge pursuant to section 727(a)(2) of the Bankruptcy Code.
On June 10, 1992, the Finitzes created the Finitz Business Trust. Their daughter was the
trustee; they were the only beneficiaries. The Finitzes used the bank account of this "trust" as
their personal account, and transferred money to it regularly to keep Lewicki from attaching
the funds. Transfers to this account included $12,500.00 on March 27, 1993, $6,500.00 on May
6, 1993, $2,500.00 on June 9, 1993, and $4,500.00 on July 8, 1993.
On June 11, 1992, the Finitzes created the Finitz Grandchildren's Trust. They supposedly
transferred their Mercedez Benz automobile to this trust, although they retained possession and
control of the vehicle.
Other trusts created by the Finitzes at the same time included the Finitz Children's Trust, the
Brenda Lynne Finitz Irrevocable Living Trust, the James Richard Finitz Irrevocable Living
Trust and the Finitz Charitable Remainder Unitrust. Numerous assets were transferred to these
trusts. All of the trusts were set up and used with the intent to hinder Lewicki in her attempts
to collect her judgment.
Aside from unconvincing excuses for the transfers to the trusts, the Finitzes' only defense
is that the transfers took place more than one year before the bankruptcy. The court rejects this
defense for two reasons. First, the Finitzes used the trusts pursuant to a plan of continuing
concealment of their assets while retaining the benefits of ownership. See In re Oliver
F.2d 550 (5th Cir. 1987). Second, the Finitzes transferred more than $25,000.00 in cash to the
Finitz Business Trust during the year before bankruptcy. These transfers alone, even without
all of the rest, would be enough to deny a discharge to the Finitzes.
The Finitzes also seem to argue that the transfers were not concealed because the Finitzes
disclosed them when they were examined as to their financial affairs. The court sees no merit
to this argument as a defense. The court has found that the Finitzes set up phony trusts and
transferred their assets to them with the intent to conceal the assets from Lewicki and hinder
her attempts to enforce her judgment, and that these actions continued to take place during the
year prior to bankruptcy. These findings are all that section 727(a)(2) requires for denial of
discharge. It is not a defense that after doing the wrongful acts the Finitzes later confessed to
For the foregoing reasons, the Finitzes shall not receive a discharge. Lewicki shall recover
her costs of suit.
This memorandum constitutes the court's findings and conclusions pursuant to FRCP 52(a)
and FRBP 7052. Counsel for plaintiff shall submit an appropriate form of judgment forthwith.
Dated: August 28, 1995 _______________________