GERALD D. FINES, Chief United States Bankruptcy Judge
This matter having come before the Court for trial on a Complaint to Determine Dischargeability of Debt and Objection to Discharge; the Court, having heard sworn testimony and arguments of counsel and being otherwise fully advised in the premises, makes the following findings of fact and conclusions of law pursuant to Rule 7052 of the Federal Rules of Bankruptcy Procedure.
The Debtor/Defendant, an attorney, filed for relief under Chapter 7 of the Bankruptcy Code on March 21, 2002. The Defendant's Chapter 7 filing was precipitated mainly by a $550,000 judgment to which the Defendant consented in a Fayette County, Illinois, civil case on August 15, 2001. It is undisputed that, in Fayette County Case No. 99-CH-30, the Defendant represented both himself and the Plaintiffs herein as co-defendants in the Fayette County case, and that the Defendant herein confessed judgment as to himself and the Plaintiffs herein on the eve of trial on August 15, 2001. Judgment was entered in Fayette County Case No. 99-CH-30, in the amount of $550,000 with the defendants in that case having joint and severally liability. The Defendants in the Fayette County case were found by the State Court Judge to have tortiously interfered with the property rights of the plaintiffs in Case No. 99-CH-30.
On June 10, 2002, Plaintiffs, Thomas A. Falese and Falese Oil Company, Inc., filed the instant Complaint to Determine Dischargeability of Debt and Objection to Discharge.
The Complaint contains four counts alleging that the indebtedness due from the Debtor/Defendant to the Plaintiffs be determine non-dischargeable pursuant to 11 U.S.C. § 523(a)(2)(A), (a)(4), and (a)(6). The Complaint contains two counts requesting that the Debtor's discharge be denied pursuant to 11 U.S.C. § 727(a)(4)(A) and (a)(3).
The Court will first address Count V of the Plaintiffs' Complaint, which seeks denial of the Debtor's discharge pursuant to 11 U.S.C. § 727(a)(3). Pursuant to § 727(a)(3):
(a) The court shall grant the debtor a discharge, unless — . . .
(3) the debtor has concealed, destroyed, mutilated, falsified, or failed to keep or preserve any recorded information, including books, documents, records, and papers, from which the debtor's financial condition or business transactions might be ascertained, unless such act or failure to act was justified under all of the circumstances of the case;
One of the main goals of the Bankruptcy Code is to give honest debtors a "fresh start" by relieving them of debts incurred prior to the filing for bankruptcy relief. In re Scott, 172 F.3d 959, 966 (7th Cir. 1999), citing Grogan v. Garner, 498 U.S. 279 (1991). It is important to recognize, however, that a discharge in bankruptcy is a privilege and not a right, and should only inure to the benefit of the honest debtor. In re Juzwiak, 89 F.3d 424 (7th Cir. 1996).
Accordingly, the privilege of discharge is necessarily dependent upon a true presentation of the debtor's financial affairs. See: In re Scott, supra, at 969.
Title 11 U.S.C. § 727(a)(3) requires, as a pre-condition to discharge, that the debtor produce records which provide creditors "with enough information to ascertain the debtor's financial condition and track his financial dealings with substantial completeness and accuracy for a reasonable period past to present." Juzwiak, supra, at 427. The debtor's duty, under 11 U.S.C. § 727(a)(3), does not merely require that the debtor turn over any records he has. Scott, supra, at 969. Rather, the language of § 727(a)(3) places an affirmative duty on the debtor to create books and records which accurately document the debtor's business affairs. Id, at 969. The Bankruptcy Code does not require the Court or creditors to sift through a mass of paper to determine the debtor's financial affairs. Rather, it is the duty of the debtor to provide the Court with organized records of his financial dealings. See: In re Conners, 283 F.3d 896 (7th Cir. 2002). Where the debtor is a professional or sophisticated business man, creditors have an expectation of greater and better record keeping. See: Conners, supra, at 898. In the case at bar, the Defendant has utterly failed to provide adequate documents and records from which his financial condition or business transactions might be ascertained. The financial documents which the Debtor/Defendant has supplied are wholly incomplete and in great disarray. Further, the Court finds that the Debtor/Defendant's explanation concerning loss of computer data resulting from a power surge at his offices is wholly incredible. The Debtor/Defendant in this case is an attorney who graduated from law school with honors, served a two-year clerkship with the United States District Court Judge from the Southern District of Illinois, and has represented numerous clients in bankruptcy proceedings as both debtors' counsel and creditors' counsel. Based upon his educational qualifications and experience, the Court finds that the Debtor/Defendant knew or should have known of his duty to keep records of his financial dealings, and that his failure to do so is in no way justified under the circumstances of the present case. As such, the Court has no difficulty in finding that the Debtor/Defendant's discharge should be denied pursuant to the provisions of 11 U.S.C. § 727(a)(3).
The Court also concludes that the Debtor/Defendant's discharge should be denied pursuant to the provisions of 11 U.S.C. § 727(a)(4)(A). Under 11 U.S.C. § 727(a)(4):
(a) The court shall grant the debtor a discharge, unless — . . .
(4) the debtor knowingly and fraudulently, in or in connection with the case —
(A) made a false oath or account;
(B) presented or used a false claim;
(C) gave, offered, received, or attempted to obtain money, property, or advantage, or a promise of money, property, or advantage, for acting or forbearing to act; or
(D) withheld from an officer of the estate entitled to possession under this title, any recorded information, including books, documents, records, and papers, relating to the debtor's property or financial affairs;
As under 11 U.S.C. § 727(a)(3), the plaintiff bears the burden of proof by a preponderance of the evidence to show the elements of 11 U.S.C. § 727(a)(4)(A). See: Grogan v. Garner, 498 U.S. 279 (1991). In order to prevail, the plaintiff must establish that: (1) the debtor made a statement under oath; (2) the statement was false; (3) the debtor knew the statement was false; (4) the debtor made the statement with the intent to deceive; and (5) the statement related materially to the bankruptcy case. See: In re Sholdra, 249 F.3d 380 (5th Cir. 2001); In re Bailey, 147 B.R. 157 (Bankr.N.D.Ill. 1992). A false oath may include a knowing and fraudulent omission. In re Handel, 266 B.R. 585 (Bankr.S.D.N.Y. 2001). The debtor has an affirmative duty to disclose all assets regardless of the fact that the property might be worthless. See: Bailey, supra, at 157.
In the present case, the Court finds numerous instances in the Debtor's bankruptcy schedules and petition that meet the elements under 11 U.S.C. § 727(a)(4)(A). First, in his bankruptcy petition, the Debtor/Defendant indicated that he did not have any income for the two years prior to filing for Chapter 7 relief. This declaration is clearly false, and the excuse which the Debtor/Defendant offered for said declaration is not credible. The Debtor/Defendant is an attorney who has represented both debtors and creditors in bankruptcy proceedings. The Court finds that the Debtor/Defendant knows the difference between gross income and net income, and the Debtor/Defendant's belief that he did not have any income based upon the $550,000 judgment entered against him in the Fayette County lawsuit points clearly to an intent to deceive on the part of the Debtor/Defendant. Further, the Court finds that the Debtor/Defendant failed to list all of his creditors in his original petition. The Debtor/Defendant did not list the Plaintiffs in this adversary proceeding at all.
His explanation that he did not list the Plaintiffs because he did not want to discharge their debt is not credible and flies in the face of clear language in the Bankruptcy Code indicating that all pre-petition debt, not excepted from discharge under the provisions of 11 U.S.C. § 523, whether scheduled or not, is discharged upon the completion of a Chapter 7 case. See: 11 U.S.C. § 524. The Court also finds that the Debtor/Defendant failed to accurately schedule plaintiffs in the Fayette County lawsuit as creditors, and the Debtor/Defendant offered no explanation for this failure. Finally, the Court notes that there is credible evidence that the Debtor/Defendant did not schedule all of his assets, including personal property and accounts receivable. As such, in addition to the Court's finding that Debtor/Defendant's discharge should be denied pursuant to the provisions of 11 U.S.C. § 727(a)(3), the Court finds that there is further basis for denial of the Debtor/Defendant's discharge under the provisions of 11 U.S.C. § 727(a)(4)(A).
Having determined that the Debtor/Defendant's discharge in bankruptcy should be denied pursuant to 11 U.S.C. § 727(a)(3) and (a)(4)(A), the Court finds that it is not necessary to determine dischargeability of the Plaintiffs' debt herein under the provisions of 11 U.S.C. § 523, as alleged in Counts I through IV of the Plaintiffs' Complaint. However, the Court would note that, were it necessary to make such a determination, it would have to find that the Plaintiffs failed to meet their burden of proof under each of the sections of 11 U.S.C. § 523 that were alleged in Plaintiffs' Complaint. Although this Court questions the wisdom of Debtor/Defendant's representation of both himself and the Plaintiffs herein as defendants in the Fayette County lawsuit, this Court is unable to conclude that the Plaintiff, Thomas A. Falese, and his corporation unknowingly and unwittingly confessed the judgment which was entered in Case No. 99-CH-30, on August 15, 2001. This Court finds that the State Court Judge in Case No. 99-CH-30 addressed the potential conflict of interest between the Debtor/Defendant herein and his clients, Thomas A. Falese and Falese Oil Company, Inc., and found no reason to disturb the representation. Further, this Court finds that the testimony of Thomas A. Falese as to his lack of understanding of the judgment entered in Fayette County Case No. 99-CH-30, on August 15, 2001, was unconvincing. Credible evidence adduced at trial in this matter leaves this Court to conclude that Thomas A. Falese, on his own behalf and on behalf of his oil company, was aware of the judgment to be entered in the Fayette County lawsuit and understood its ramifications. As such, the Court must conclude that the Plaintiffs failed to meet their burden of proof in Counts I through IV of their Complaint.
ORDER
For the reasons set forth in an Opinion entered on the ___ day of January 2003: IT IS HEREBY ORDERED that:
A. Counts V and VI of Plaintiffs' Complaint to Determine Dischargeability of Debt and Objection to Discharge are ALLOWED;
B. Debtor/Defendant's discharge in bankruptcy is DENIED pursuant to the provisions of
11 U.S.C. § 727(a)(3) and (a)(4)(A); and,
C. Counts I through IV of Plaintiffs' Complaint to Determine Dischargeability of Debt and Objection to Discharge are DENIED.