FOR THE NORTHERN DISTRICT OF CALIFORNIA In re ROBERT DUGAN,                                                   No. 1-89-01708      Debtor. ___________________________/ RAYMOND A. CAREY, Trustee,      Plaintiff,    v.                                                                              A.P. No. 1-90-0066 JIM BOB DUGAN,      Defendant. ______________________________/ Memorandum of Decision      The debtor filed his Chapter 13 petition on October 13, 1989. One of the non-exempt assets of his estate was a $15,000.00 promissory note secured by a deed of trust. The note was paid off after the bankruptcy, and all the proceeds were taken by the debtor without the trustee's knowledge. For this conversion of estate property, the debtor has been denied a discharge.      This action seeks recovery of $12,000.00 from the debtor's father, Jim Bob Dugan. The only issue raised by the parties is whether the debtor gave his father $12,000.00 of the note proceeds.      After the trustee discovered that the debtor had converted the note proceeds, his counsel arranged a meeting with the debtor. The debtor's father accompanied his son. At the meeting, the debtor told the trustee's counsel, in his father's presence, that he had given $12,000.00 of the proceeds to his father. During the entire meeting, the father in no way indicated that this statement was untrue.      On the witness stand at the trial in this matter, the debtor testified that he lied to the trustee's counsel at the meeting, and testified that he gave his father only $1,200.00 or $1,500.00 of the proceeds. He stated that he gave most of the rest to friends he declined to name. When instructed to give their names, he testified that he paid $800.00 of the proceeds to one friend, paid $600.00 to a car dealer, and spent $4,000.00 on a trip to Jamaica. He was unable to account for the rest of the funds, and denied the existence of any other friends who received any funds. The debtor's demeanor and responses left the court with the strong impression that his answers were not truthful.      Since all of the alleged transfers were in cash, the court will never know for sure where the truth lies. However, the fact that the debtor is unable to account for the bulk of the funds, when coupled with his pre-litigation admission that he paid the bulk to his father and the father's failure to deny it, leads the court to the conclusion that the original version is the truth and the debtor did indeed give $12,000.00 to his father. The court so finds, and accordingly concludes that the transfer of the note proceeds to the debtor is avoidable under section 549(a) of the Bankruptcy Code and the recovery of $12,000.00 of such proceeds may be had from the debtor's father pursuant to section 550(a)(2).      Counsel for the trustee shall submit a form of judgment against defendant Jim Bob Dugan in the amount of $12,000.00, plus costs of suit. This memorandum constitutes the court's findings and conclusions.
Dated: September 6, 1990                                                                          _______________________                                                                                                                      Alan Jaroslovsky                                                                                                                      U.S. Bankruptcy