Memorandum of Decision Re: Fraud

In re GARY and MARILYN RADZAT,                                                 No. 92-11610      Debtors. ___________________________/ MARTIN and JANIS McNAIR,      Plaintiffs,     v.                                                                                                   A.P. No. 93-1003 GARY and MARILYN RADZAT,      Defendants. ______________________________/
Memorandum of Decision
     In December, 1991, debtor Gary Radzat induced his senile, 78-year-old mother to deed to him a portion of her valuable real property in Lancaster, California, in the guise of deeding the property in trust for her grandchildren. His mother would not have knowingly deeded the property to Radzat, as he had previously borrowed a large sum from her and not paid her back.      In January, 1992, Radzat, who was having severe financial problems, listed the Lancaster property for sale. He and his wife filed their Chapter 7 bankruptcy petition on June 18, 1992, and did not mention any interest in the property as either their own or as being held in trust for their children. Even though Radzat extended the listing just a few days before the 341 hearing, the interest in the property remained undisclosed. A creditor, suspecting the Radzats were hiding something, hired an investigator who discovered the interest in the property. By this adversary proceeding, they seek to deny the debtors their discharge pursuant to section 727(a)(4) of the Bankruptcy Code for knowingly making a false oath.      The Radzats' defense is that they did not understand the bankruptcy schedules and had no intent to deceive because the property was supposed to be held for their children. They argue that if they had thought about the property, they would have corrected the deed so that it showed that they held the property in trust. They argue that the ease of correcting the matter, had they thought about the property, shows that it was an innocent mistake.      The flaw in the Radzats' argument is that it presumes that the court believe that it was an innocent mistake for Radzat to have obtained legal title to the property in the first place. In order for the court to believe the defense, it must therefore believe two innocent mistakes: that the property was erroneously deeded to Radzat, and then that it was erroneously omitted from the schedules.      However, the court does not believe that there was any innocent mistake, at least on the part of Gary Radzat. It is far more likely that Radzat, desperate for money and faced with a mother not disposed to help him any further, tricked her into deeding a portion of the property to him outright and then tried to sell the property. The court believes he intended all along to keep the proceeds himself and intentionally hid the existence of his interest in the property from his creditors. Thus, the court believes that Radzat intended to cheat his mother, his children, and his creditors. It was only the investigation by a creditor which foiled his scheme.      For the foregoing reasons, judgment will be entered as prayed denying the Radzats a discharge. Plaintiffs shall also recover their 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: February 4, 1994                                                                                                  _______________________                                                                                                                                                    Alan Jaroslovsky                                                                                                                                                    U.S. Bankruptcy