Gloria Allred v. Michael D. Schimek

• Court: United States Bankruptcy Court, S.D. New York
• Decided: October 17, 2025
• Docket: 24-01337
• Status: Unknown

Opinion

UNITEDSTATESBANKRUPTCYCOURT SOUTHERNDISTRICTOFNEWYORK Inre: Chapter 7 MICHAEL D.SCHIMEK, Case No.24-10213 (MG)

Debtor. GLORIA ALLRED, Plaintiff, Adv.Pro.No.24-01337(MG) vs. MICHAEL D.SCHIMEK, Defendant. ORDER AFTER TRIALOVERRULING PLAINTIFF’SOBJECTIONTO DISCHARGE Before the Court istheremainingclaim from Plaintiff GloriaAllred’s (the“Plaintiff”) complaint(the “Complaint,” Adv.Pro.ECFDoc. No.1) todenydischargetodebtor Michael D. Schimek(the “Debtor”)under Section727(a)(4)(A) of the BankruptcyCode. This Court had previouslydismissedallfive causesof action inthe complaint (Adv.Pro.ECFDoc.No.12), after whichPlaintiff appealedtotheDistrict Court. The District Court affirmed inpart and

vacatedinpartthis Court’s order,determiningthat this Court improperlydismissedthethird cause ofactionunder Section727(a)(4)(A). Allredv.Schimek,753F.Supp.3d334,346 (S.D.N.Y.2024). The DistrictCourt explainedthattodenydischarge under Section727(a)(4)(A),a party must sufficientlyshowthat: “(1)thedebtormadea statementunder oath; (2) the statement was false; (3) thedebtor knewthat thestatement wasfalse; (4) the debtormade the statement withthe intent todeceive;and(5)the statement materiallyrelated tothe bankruptcycase.” Id.at 343;In re Fraleigh, 474 B.R. 96, 104-05 (Bankr. S.D.N.Y. 2012). According to the District Court, Plaintiff had sufficiently alleged all five elements in the complaint, specifically noting that Debtor’s CMI statement was false for not including expenses paid by the Debtor’s partner, Lisa Weksler, and that the Complaint sufficiently alleged that the Debtor had the intent to deceive by

falsifying his CMI to overcome the means test and proceed with a Chapter 7 discharge. Allred, 735 F. Supp at 344-45. The District Court remanded the case to this Court to determine whether the Debtor “made his disclosures with fraudulent intent” and should therefore be denied discharge. Id. at 346. As cited by the District Court, “whether the debtor had the necessary wrongful intent is a question of fact.” Id. at 345 (citing 6 COLLIER ON BANKR. ¶ 727.02[3][a] (16th ed. 2024)). Plaintiff must prove by a preponderance of the evidence that the Debtor had the requisite fraudulent intent – whether a debtor intended to deceive the reader of the schedules – for discharged to be denied. In re Fraleigh, 474 B.R. at 105; Baron v. Klutchko (In re Klutchko), 338 B.R. 554, 567 (Bankr. S.D.N.Y 2005).

Mistakes in the filing alone will not be sufficient to prove fraudulent intent. The court in Fraleigh cites to In re Radloff, 418 B.R. 316, 326 (Bankr. D. Minn 2009) for the proposition that “mistakes in the schedules will not doom a debtor’s discharge.” The Radloff court stated “[t]he application of § 727(a)(4) does not require the draconian, zero-tolerance execution of a technical- compliance fiat.” In re Radloff, 418 B.R. at 326. The Debtor in Radloff failed to include the income of his non-filing spouse on the Schedule I on the advice of counsel, which the court held was not enough for the creditor to carry her burden of proof for a denial of discharge: “minute analysis of the inconsistencies and holes in the Debtor's court filings was not enough to make out a case for the drastic expedient of § 727(a)(4).” Id. at 332. This Court held a trial to determine the merits of Plaintiff’s claim. The Debtor was the sole witness. The Debtor testified at trial to the following: that he relied on bankruptcy counsel in preparing and making the disclosures; that he believed the schedules were correct; that he submitted amended schedules to correct some errors regarding his expenses and number of

individuals in his household before the 341(a) meeting; and that he disclosed to the Chapter 7 Trustee and Plaintiff’s counsel at the 341(a) meeting that his expenses are paid by Ms. Weksler, a fact that Plaintiff’s counsel acknowledged during the trial. Plaintiff has not met her burden of proof for a denial of discharge under Section 727(a)(4)(A). While the debtor in Radloff did include his non-filing partner’s income in the means test calculation unlike Mr. Schimek (id. at 327), Mr. Schimek was forthright in disclosing that all his expenses are paid by Ms. Weksler during the 341(a) meeting. Plaintiff has failed to show that despite this disclosure the Debtor had intended to deceive Plaintiff and other creditors with the failure to include Ms. Weksler’s contributions in his initial and amended schedules. IT IS SO ORDERED THAT

1. Plaintiff has not demonstrated by a preponderance of the evidence that Debtor made disclosures with fraudulent intent; and 2. Discharge will not be denied under Section 727(a)(4)(A). Dated: October 17, 2025 New York, New York /s/ Martin Glenn MARTIN GLENN Chief United States Bankruptcy Judge