Kristina Roberts US Trustee Deny Discharge

IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF MARYLAND

(Greenbelt Division)

In re: KRISTINA L. ROBERTS,

Debtor.

Case No. 14-19469-TJC Chapter 7

JUDY A. ROBBINS, UNITED STATES TRUSTEE,

Plaintiff, v. KRISTINA L. ROBERTS,

Defendant.

Adv. Proceeding No.:__________

UNITED STATES TRUSTEES COMPLAINT TO DENY DISCHARGE OF DEBTOR

Plaintiff Judy A. Robbins, United States Trustee for Region 4 ("U.S. Trustee"), by and

through undersigned counsel, hereby files this Complaint, pursuant to sections 727(a)(2)(A),

(a)(2)(B), (a)(4)(A), (a)(4)(D), and (a)(5) of the Bankruptcy Code, objecting to the discharge of

Debtor Kristina L. Roberts (the "Defendant"). In support of this Complaint, the U.S. Trustee

states as follows:

JURISDICTION AND VENUE

1. This Court has jurisdiction over this Complaint pursuant to 28 U.S.C. 1334 and

11 U.S.C. 727.

Case 14-19469 Doc 40 Filed 02/11/15 Page 1 of 15

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2. This is a core proceeding under 28 U.S.C. 157(b)(2)(J). Pursuant to Local Rule

7012-1, the United States Trustee consents to the entry of a final order or judgment by the

Bankruptcy court in this matter.

3. Venue in this Court is proper pursuant to 28 U.S.C. 1409(a).

4. The U.S. Trustee has standing to file this Complaint under 11 U.S.C. 307 and

Fed. R. Bankr. P. 4004.

5. The deadline to object to discharge is up to and including February 13, 2015, so

this Complaint is therefore timely.

PARTIES

6. The Plaintiff is the U.S. Trustee for Region 4.

7. The Defendant is the Chapter 7 Debtor herein.

8. After the Defendant filed for relief under Chapter 7, Roger Schlossberg was

appointed and continues to serve as the Chapter 7 Trustee in this case.

FACTS

9. On June 11, 2014, the Defendant filed a voluntary petition (Doc. 1) for relief

under Chapter 7 of the Bankruptcy Code in the United States Bankruptcy Court for the District

of Maryland, Greenbelt Division.

10. On June 11, 2014, the Defendant also filed schedules, statements, and related

documents (Docs. 2, 3, 4, and 5) signed under penalty of perjury.

11. On Schedule A (Doc. 1), the Defendant listed real property located at 2500 Old

Largo Rd, Upper Marlboro, MD (primary residence) valued at $950,000 and at 14209 Dunwood

Valley Drive, Bowie, MD (investment property) valued at $530,000.


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12. On Schedule B, question 2 (financial accounts), the Defendant listed a $400

Capital One Checking account, a $51 Capital One Savings account, and an $8 Capital Money

Market account.

13. On Schedule B, question 4 (household goods), the Defendant listed a value of

$3,500.

14. On Schedule B, question 6 (wearing apparel), the Defendant listed a value of

$1,500 with no additional detail.

15. On Schedule B, question 25 (automobiles), the Defendant listed a 2010 Nissan

Rogue with a value of $10,000.

16. Although the Schedule B instructions specifically require the Defendant to list

all personal property of the debtor of whatever kind, the Defendant checked None for all of

the other 31 questions on Schedule B, including: question 5 (books), question 13 (interests in

businesses), question 14 (partnerships or joint ventures), question 22 (copyrights), and question

35 (other personal property of any kind).

17. On Schedule D, the Defendant listed secured claims of $1,488,763 on her real

property

18. On Schedule E, the Defendant listed an IRS claim as unknown amount, and a

$337,151.85 State of Maryland claim.

19. On Schedule F, the Defendant listed unsecured claims of $1,615,779, including a

$1,600,000 Direct Lending Group claim.

20. On Schedule G, the Defendant checked the box indicating that the debtor has no

executory contracts or unexpired leases.


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21. On Schedule H, the Defendant checked the box indicating that the debtor has no

co-debtors.

22. On Schedule I, the Defendant listed Author as her occupation and Simon &

Schuster, Inc. as her employer for 9 years with monthly gross income of $4,729, and $3,159

monthly income after $1,570 payroll deductions for taxes and retirement.

23. On Schedule I, question 8 (other income), the Defendant listed $0 other income,

including income from business, profession, or other monthly income.

24. On Schedule I, question 11(state all other contributions to expenses), the

Defendant listed $0.

25. On Schedule J, question 2, the Defendant listed two dependents: a son age 19 and

a daughter age 20.

26. On Schedule J, question 22, the Defendant listed total monthly expenses of

$5,155, including a $3,365 mortgage payment, and calculated a monthly net income (question

23c) of negative $1,996.

27. On the Statement of Financial Affairs (SOFA), question 1 (gross income for

two years preceding bankruptcy), the Defendant listed income from Simon and Schuster, Inc:

$28,374 for 2014 year to date; $91,000 for 2013; and $362,000 for 2012.

28. On the SOFA, question 2 (other income for two years preceding bankruptcy), the

Defendant checked the box None.

29. On SOFA, question 4 (suits within one year preceding bankruptcy), the Defendant

listed three Prince Georges County Circuit Court proceedings: a $1,575,234.60 Direct Lending

Group debt collection judgment; a WBGLMC foreclosure; and a State of Maryland Tax Lien

judgment.


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30. On the SOFA, question 7 (gifts within one year preceding bankruptcy), the


31. On the SOFA, question 8 (losses within one year preceding bankruptcy), the


32. On the SOFA, question 10 (other transfers within two years preceding

bankruptcy), the Defendant checked the box None.

33. On the SOFA, question 11 (all financial accounts in debtors name or for the

debtors benefit which were closed, sold or other transferred within one year preceding

bankruptcy), the Defendant checked the box None.

34. On the SOFA, question 14 (all property owned by another person that the debtor

holds or controls), the Defendant checked the box None.

35. On the SOFA, question 18 (all businesses within six years preceding the

bankruptcy), the Defendant listed Strebor Books International, LLC, 2500 Old Largo Road,

Upper Marlboro, MD 20772, book sales beginning June 1999 and ending June 2013.

36. On the SOFA, question 19 (firms or individuals with debtors books, records, and

financial statements within six years preceding the bankruptcy), the Defendant checked None.

37. On the Defendants Chapter 7 Statement of Current Monthly Income and Means

Test Calculation - Form B22A (Doc. 5), filed on June 11, 2014, signed under penalty of perjury,

the Defendant checked the box indicating that the presumption does not arise and listed her

annualized current monthly income (question 13) as $56,400 ($31,524 below the median income

of $87,924 for a family of 3 in Maryland).

38. On July 15, 2014, the Chapter 7 Trustee held the Defendants first meeting of

creditors. The Chapter 7 Trustee, the United States Trustee, and a representative of the $1.6


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million judgment creditor Direct Lending Group questioned the Defendant under oath

concerning her bankruptcy documents filed under penalty of perjury listing over $3.6 million in

liabilities with monthly income of only $3,159 after payroll deductions.

39. The parties were particularly concerned when the Defendant testified that she had

written and published numerous books under the pen name Zane and was employed by Simon

and Schuster, Inc., but had minimal assets and income.

40. The Chapter 7 Trustee continued the meeting of creditors to October 16, 2014,

and the Defendant appeared but did not produce the information requested. On December 3,

2014, the Chapter 7 Trustee filed a motion to compel (Doc. 25) the Defendant to attend a

meeting of creditors on December 12, 2014.

41. On December 8, 2014, an Order (Doc. 30) was entered compelling the Debtor to

attend the December 12, 2014 meeting of creditors.

42. During the December 12, 2014 meeting of creditors, the Defendant testified

concerning several undisclosed assets, including Enrizon Worldwide, Inc.

43. On December 22, 2014, the Chapter 7 Trustee filed an emergency motion for a

Rule 2004 examination (Doc. 33) of Enrizon Worldwide, Inc. and the Defendants son, Andre

Roberts.

44. Finally, on January 13, 2015, the Defendant filed Amended Schedules (Doc. 36),

an Amended Statement of Financial Affairs (Doc. 37), and an Amended Chapter 7 Statement of

Current Monthly Income and Means-Test Calculation B22A (Doc. 38) in her chapter 7 case

disclosing income and assets, including Enrizon Worldwide, Inc., that she failed to disclose

during the previous seven (7) months that her case was pending.


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45. On Amended Schedule B (Doc. 36, page 2), question 12 (interests in IRA or

pensions), the Defendant added a 401K CBS Inc., valued at $105,000.

46. On Amended Schedule B (Doc. 36, page 3), question 23 (licenses or other

intangibles), the Defendant added Debtors interest in Zane name, value Unknown.

47. On Amended Schedule B (Doc. 36, page 3), the Defendant increased the total

value of Personal Property from $15,459 to $120,459.

48. On Amended Schedule I (Doc. 36, page 5), question 8h (other monthly income),

the Defendant added Enrizon Worldwide Payment of Personal Expense of $13,669.

49. On Amended Schedule I (Doc. 36, page 5), question 12, the Defendant increased

the combined monthly income from $3,159 to $16,828.

50. On Amended Schedule J (Doc. 36, page 7), question 23c, the Defendant increased

the monthly net income from negative $1,996 to $11,673.

51. On the Amended SOFA (Doc. 37, page 1), question 1 - Income, the Defendant

increased the 2014 year to date Simon & Schuster income from $28,374 to $100,968.

52. On the Amended SOFA (Doc. 37, page 4), question 10 Transfers, the Defendant

added a transfer that began on May 7, 2013 to Enrizon Worldwide, Inc. of Wage earnings and

sales earnings from Debtors pen name Zane, approximate value of $500,000. Upon

information and belief, Enrizon Worldwide, Inc. continues to receive the Defendants earnings.

53. On the Amended Chapter 7 Statement of Current Monthly Income and Means-

Test Calculation B22A (Doc. 38, page 1), the Defendant changed the Statement from the

presumption of abuse does not arise to The presumption arises.

54. On the Amended B22A (Doc. 38, page 3), question 12, the Defendant increased

current monthly income from $4,700 to $16,828.


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annualized current monthly income from $56,400 to $201,936. Thus increasing the Defendants

income from $31,524 below the $87,924 median income for a family of 3 in Maryland to

$114,012 above it.


monthly disposable income from $0 to $12,814.

57. On the Amended B22A (Doc. 38, page 6) question 51, the Defendant increased

60-month disposable income from $0 to $768,840.

58. Therefore, on January 21, 2015, the Chapter 7 Trustee filed a Chapter 11 petition

for Enrizon Worldwide, Inc. (Case No. 15-10863-PM) on behalf of the Defendants Chapter 7

bankruptcy estate as president, sole director and owner of 100% of the common stock of Enrizon

Worldwide, Inc.

COUNT I Objection to Discharge 11 U.S.C. 727(a)(2)(A)

(Transferred or concealed property of the debtor with intent to hinder, delay or defraud a creditor, within one year Before the date of filing the petition)

59. The allegations contained in paragraphs 1 58 are incorporated herein by

reference.

60. Section 727(a)(2)(A) provides that the Court shall grant the Debtor a discharge

unless the Debtor, with the intent to hinder, delay, or defraud a creditor or an officer of the

estate, has permitted to be transferred or transferred, removed, destroyed, mutilated, or concealed

property within one year before the date of the filing of the petition.

61. The Defendant, with intent to hinder, delay, or defraud a creditor or an officer of

the estate, has transferred or concealed property within one year before the date of the filing of

the petition.


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62. The Defendant has transferred or concealed personal property that she owned

within one year of the date of filing the petition, which she did not disclose on her original

bankruptcy documents filed under penalty of perjury on June 11, 2014, and not amended until

January 13, 2015.

63. The Defendant concealed the pre-petition transfer of at least $500,000 in wages

and sales earnings from the Defendants pen name Zane to Enrizon Worldwide, Inc., as indicated

in the Defendants Amended Schedules (Doc. 36), Amended Statement of Financial Affairs

(Doc. 37), and Amended Chapter 7 Statement of Current Monthly Income and Means-Test

Calculation B22A (Doc. 38).

64. The Defendant transferred or concealed personal property with intent to hinder,

delay, or defraud creditors and the estate within one year before the date of the filing of the

petition.

65. Thus the Defendant is not entitled to a discharge pursuant to 11 U.S.C.

727(a)(2)(A).

COUNT II Objection to Discharge 11 U.S.C. 727(a)(2)(B)

(Transferred or concealed property of the debtor with intent to hinder, delay or defraud a creditor, After the date of filing the petition)

66. The allegations contained in paragraphs 1 65 are incorporated herein by

reference.

67. Section 727(a)(2)(B) provides that the Court shall grant the Debtor a discharge

unless the Debtor, with the intent to hinder, delay, or defraud a creditor or an officer of the

estate, has permitted to be transferred or transferred, removed, destroyed, mutilated, or concealed

property after the date of the filing of the petition.


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68. As explained in detail above, the Defendant, with intent to hinder, delay, or

defraud a creditor or an officer of the estate, has transferred or concealed property after the date

of the filing of the petition.

69. In the original petition and schedules filed in her Chapter 7 case, the Defendant

only listed a small portion of her income, assets, and property.

70. The Defendant did not file amendments disclosing over $1 million of additional

income, assets, and property until her case had been pending for seven (7) months, after several

meetings of creditors, a motion and Court order compelling the Debtors attendance, and only

after the Court entered an Order granting an emergency motion for a Rule 2004 examination

concerning the unscheduled corporation Enrizon Worldwide, Inc. and the Defendants son,

Andre Roberts.

71. The Defendant continued to conceal income, assets, and property post-petition.

72. The Defendant continued to conceal post-petition a 401K account at CBS Inc.

valued at $105,000.

73. The Defendant continued to conceal post-petition her books, movies, publishing,

and other valuable interests in her pen name Zane.

74. The Defendant continued to conceal post-petition monthly income from Enrizon

Worldwide, Inc. of at least $13,669.

75. The Defendant continued to conceal post-petition that her monthly net income

was not negative $1,996, but a positive $11,673.

76. The Defendant continued to conceal post-petition her transfer of at least $500,000

in wages and sales earnings from the Defendants pen name Zane to Enrizon Worldwide, Inc.


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77. The Defendant continued to conceal post-petition that the Presumption of Abuse

arises in this case. Several months after the deadline for filing a Motion to Dismiss for Abuse,

the Defendant increased her annualized income on Form B 22A (Doc 38) from $56,400 to

$201,936; increased her 60-month disposable income from $0 to $768,840; and checked the box

on Form B22A indicating that the presumption [of abuse] arises.

78. The Defendants continued post-petition concealment and transfers were made

wilfully with the intent to deceive and to conceal these assets and financial accounts from parties

in interest, the Chapter 7 Trustee, and from the United States Trustee.

79. Thus, the Defendant is not entitled to a discharge pursuant to 11 U.S.C.

727(a)(2)(B).

COUNT III Objection to Discharge 11 U.S.C. 727(a)(4)(A)

(False Oaths)

80. Plaintiff hereby incorporates by reference the allegations in paragraphs 1-79

above.

81. Section 727(a)(4)(A) provides that the Court shall grant the debtor a discharge

unless the debtor knowingly and fraudulently, in or in connection with the case, made a false

oath or account.

82. The Defendant made numerous false oaths and omissions on her original

Schedules (Doc. 1)

83. The Defendant made numerous false oaths and omissions on her original SOFA

(Doc 1).

84. The Defendant made numerous false oaths and omissions on her original B22A

(Doc 5).


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85. The Defendant signed her Schedules under penalty of perjury.

86. The Defendant signed her SOFA under penalty of perjury.

87. The Defendant signed her B22A under penalty of perjury.

88. The Defendant committed a false oath by not listing her 401k CBS, Inc. valued

at $105,000 on her original Schedule B.

89. The Defendant committed a false oath by not listing her valuable interests in her

pen name Zane on her original Schedule B.

90. The Defendant committed a false oath by not listing $13,669 monthly income on

her original Schedule I received from Enrizon Worldwide, Inc.

91. The Defendant committed a false oath on her original SOFA question 1 by listing

her 2014 year to date Simon & Schuster, Inc. income as $28,374 when it was actually $100,969.

92. The Defendant committed a false oath on her original SOFA question 10 by not

listing the $500,000 transfer to Enrizon Worldwide, Inc. that began on May 7, 2013.

93. The Defendant committed a false oath on her original B22A by indicating that the

presumption of abuse did not arise, and then admitting several months after the motion to

dismiss deadline that the presumption arises.

94. The Defendant committed a false oath on her original B22A by indicating that her

current monthly income is $4,700 when it is $16,828.


annualized current monthly income is $56,400 when it is $201,936.


monthly disposable income is $0 when it is $12,814.


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60-month disposable income is $0 when it is $768,840.

98. The Defendant committed knowing and fraudulent false oaths and accounts when

she failed to list at least $1 million in financial interests in her Schedules, SOFA, and B22A.


727(a)(4)(A).

COUNT IV Objection to Discharge 11 U.S.C. 727(a)(4)(D)

(Withholding Recorded Information from Officer of Estate)

100. Plaintiff hereby incorporates by reference the allegations in paragraphs 1-99

above.

101. Section 727(a)(4)(D) provides that the Court shall grant the debtor a discharge

unless the debtor knowingly and fraudulently, in or in connection with the case, withheld from

an officer of the estate entitled to possession under the Bankruptcy Code, any recorded

information.

102. The Chapter 7 Trustee serves as officer of the bankruptcy estate while the

Defendants bankruptcy case is pending.

103. The Chapter 7 Trustee has standing to request production and is entitled to obtain

possession of any recorded information, including books, documents, records, and papers,

relating to the Defendants property or financial affairs.

104. As indicated in more detail in the facts above, because of the Defendants lack of

cooperation the Chapter 7 Trustee obtained an Order (Doc. 30) compelling the Defendants

attendance at a continued meeting of creditors on December 12, 2014.


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105. During the December 12, 2014 meeting of creditors the Defendant finally

disclosed her creation and transfer of assets to Enrizon Worldwide, Inc. However, the Defendant

failed to produce accounting or recorded information related to the company, so the Chapter 7

Trustee resorted to the extraordinary measure of obtaining an Order (Doc. 34) on December 22,

2014 for an Emergency Rule 2004 Examination of Enrizon Worldwide, Inc. and the Defendants

son, Andre Roberts.

106. The Defendant knowingly and fraudulently in and in connection with the case,

withheld recorded information from the Chapter 7 Trustee, an officer of the estate entitled to

possession under the Bankruptcy Code.


727(a)(4)(D).

COUNT V Objection to Discharge 11 U.S.C. 727(a)(5) (Failure to Explain Loss/Deficiency of Assets)

108. The U.S. Trustee hereby incorporates by reference the allegations in paragraphs

1 - 107 above.

109. Section 727(a)(5) provides that the Court shall grant the debtor a discharge

unless the debtor knowingly and fraudulently, in or in connection with the case, failed to explain

satisfactorily any loss of assets or deficiency of assets to meet the debtors liabilities.

110. In the original petition, schedules, and SOFA, which the Defendant filed in her

case on June 11, 2014, under penalty of perjury, the Defendant did not list all of her businesses

or all of her income or all of her personal property, and the Defendant failed to satisfactorily

explain the loss or deficiency of her assets.


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111. As indicated in detail in the facts above, the Defendant listed $3.6 million in

liabilities in her Schedules with monthly income of only $3,159 after payroll deductions, and the

Defendant failed to satisfactorily explain the loss or deficiency of her assets.

112. Only after several months of continued creditors meetings, an Order Compelling

Attendance, and an Order for an Emergency 2004 Examination, has a partial explanation been

provided by the Defendant, but it remains unsatisfactory.

113. Thus, the Defendants discharge should be denied pursuant to 11 U.S.C.

727(a)(5) because the Defendant failed to satisfactorily explain the loss or deficiency of assets.

WHEREFORE, based on the foregoing, the United States Trustee respectfully prays that

the Court:

a. Deny the Defendants bankruptcy discharge pursuant to Counts I, II, III, IV or

V; and

b. Grant such further relief as the circumstances may require.

Dated: February 11, 2015 JUDY A. ROBBINS United States Trustee for Region 4 By Counsel: /s/ Leander D. Barnhill Leander D. Barnhill, Bar No. 16971 Trial Attorney

U.S. Department of Justice Office of the U.S. Trustee

6305 Ivy Lane, Suite 600 Greenbelt, MD 20770 Tel: (301) 344-6216 Fax: (301) 344-8431

Email: [email protected]


Kristina Roberts US Trustee Deny Discharge

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