Multinational Life Insurance Company v. Pedro M. Van Rhyn Soler

• Court: United States Bankruptcy Court, D. Puerto Rico
• Decided: November 17, 2021
• Docket: 17-00270
• Status: Unknown

Opinion

THE DISTRICT OF PUERTO RICO 2

IN RE: 3 PEDRO M. VAN RHYN SOLER CASE NO. 14-10211 (MCF) 4 Debtor(s) Chapter 7

5 ------------------------------ MULTINATIONAL LIFE INSURANCE 6 COMPANY

7 ADVERSARY CASE: 17-00270 (MCF) Plaintiff 8 V. 9

PEDRO M. VAN RHYN SOLER 10

Defendant 11

13 OPINION AND ORDER

14 For a second time, the Plaintiff, Multinational Life 15 Insurance Company, challenges Defendant, Pedro Van Rhyn’s, 16 discharge order. Its previous attempt, a complaint objecting to the discharge, was unsuccessful, and dismissed as late. Now, in 17 an eleventh-hour attempt to prevail, it seeks to revoke the 18 discharge order. 19 The Plaintiff argues that the Defendant’s discharge should be revoked because he obtained it through fraud by acquiring property 20 of the estate and failing to report it to the trustee. On the other 21 hand, the Defendant counters that the Plaintiff had knowledge of 22 all alleged underlying facts prior to the bankruptcy petition and to entry of the discharge order; and thus, the discharge order may 23 not be revoked. 24 After reviewing the two cross motions for summary judgment and hearing the parties’ arguments, the court grants the summary judgment motion. The court agrees that the Plaintiff had 2 knowledge of the Defendant’s actions prior to the entry of the 3 discharge order. As such, it is estopped from revoking the 4 discharge. The Plaintiff was late again in pursuing its remedies and therefore, cannot prevail now. 5 In the instant case, a review of the undisputed facts, 6 procedural history and case law show that the Plaintiff is not 7 entitled to the extraordinary remedy of revoking the Defendant’s discharge. 8

9 I. UNDISPUTED FACTS AND PROCEDURAL HISTORY 10 We find it necessary to meticulously recount the undisputed 11 facts and the relevant procedural history of the legal and 12 adversary cases: 13 1. Between 2004 and 2012, the Defendant and his brother, 14 Edgardo Van Rhyn, were co-owners of Option Health Care 15 Network, Inc. Exhibit I Docket No. 128-1, at 1-2. 16 2. Option was a third-party administrator of National Life 17 Insurance Company (NALIC). Exhibit III Docket No. 127-1, at 18 7. 19 3. On or about April 2006, Option signed a service agreement 20 contract with NALIC. Exhibit I Docket No. 128-1, at 3. 21

22 4. In 2012, the Plaintiff purchased NALIC.

23 5. After conducting an internal audit of the company, the 24 Plaintiff became aware that Option officials including the Defendant detoured sums of monies from Option accounts to Transactions from corporate accounts to personal accounts 2 resulted in payments to themselves and cash withdrawals. 3 EXHIBIT III of Docket No. 127-1 at 6-9. 4 6. On March 5, 2012, the Plaintiff filed before the local 5 court the case Multinational Life Insurance Company v. Option 6 Health Care Network Inc., Pedro Van Rhyn, et al., Case No. 7 KAC 2012-0212, to collect monies, pierce the corporate veil, damages, and breach of obligations for the Defendant’s 8 actions as president and owner of Option. 9

10 7. On August 1, 2012, the Plaintiff alerted the Federal Bureau of Investigation (FBI) through its attorney, Erik Rosado, 11 Esq., of a scheme perpetrated by the Defendant and his brother 12 through Option. It shared information with federal agents 13 regarding bank account transactions, bank account logs, and company information belonging to the Defendant and his 14 brother, where they suspected the governmental funds were 15 being funneled to personal bank accounts. Exhibit I of Docket 16 No. 127-1 at 1-3.

17 8. On February 8, 2013, the Plaintiff through its Director- 18 Auditor, Guillermo Somoza, Esq., and its attorney, Erik 19 Rosado, Esq., voluntarily provided the Internal Revenue Services (IRS) with information regarding a possible 20 fraudulent scheme that they encountered while auditing the 21 Plaintiff’s purchase from NALIC. The scheme stemmed from 22 transfer of corporate funds to personal accounts by Option officials resulting in cash withdrawals. EXHIBITS XI & XII, 23 Docket No. 127-1 at 54-58. 24

9. On November 4, 2013, Erik Rosado was interviewed at the and IRS Special Agents. He communicated to the authorities 2 that the Plaintiff had knowledge that the Defendant was using 3 funds from Option to pay a personal credit card. He stated 4 that this credit card was used to conduct numerous personal transactions which included the purchase of jet fuel, 5 clothing, and gifts to employees of Option. Exhibit II of 6 Docket No. 127-1 at 5. 7 10. On December 13, 2014, the Defendant filed for bankruptcy 8 under Chapter 7 of the Bankruptcy Code. Case No. 14-10211 at 9 Docket No. 1. 10 11. On the following day, the deadline to object to the 11 discharge was set to March 16, 2015. Case No. 14-10211, Docket 12 No. 5. 13 13. The Clerk notified these deadlines to the creditors and 14 parties in interest, including the Plaintiff. Case No. 14- 15 10211 at Docket No. 9. 16 14. On March 3, 2015, the United States trustee requested an 17 extension of time to file a motion to dismiss or an objection 18 to discharge. Case No. 14-10211 at Docket No. 31. 19 15. The next day, the bankruptcy court granted until June 15, 20 2015,to file a motion to dismiss or an objection to discharge. 21 Case No. 14-10211 at Docket No. 32. 22 16. On March 23, 2015, the Plaintiff filed a notice of 23 appearance and a motion requesting an extension of time to 24 object to the discharge. Case No. 14-10211 at Docket Nos. 43- 44. 17. On March 24, 2015, the bankruptcy court denied the 2 Plaintiff’s motion seeking an extension of time to file an 3 objection to discharge for failure to comply with PR LBR 4 9013(c), which requires initial motions to include notice language. Case No. 14-10211 at Docket No. 45. 5

6 18. On March 30, 2015, the Plaintiff refiled an extension of 7 time to object to the discharge. Case No. 14-10211 at Docket No. 53. 8

9 19. The next day the bankruptcy court once again denied the 10 Plaintiff’s extension for failure to comply with PR LBR 9013(c). Case No. 14-10211 at Docket No. 54. 11

12 20. Fifteen days later, a new counsel appeared on behalf of 13 the Plaintiff. Case No. 14-10211 at Docket No. 56.

14 21. On that same day, the Plaintiff filed Proof of Claim No. 15 17 in the amount of thirteen million dollars 16 ($13,000,000.00). The claim stems from the Plaintiff’s allegations in the case of Multinational Life Insurance 17 Company v. Option Health Care Network Inc. Pedro Van Rhyn, et 18 al., Case No. KAC 2012-0212. 19 22. A month later, on July 16, 2015, the Plaintiff filed an 20 adversary proceeding against the Defendant to object to his 21 discharge. Adversary Proceeding No. 15-00181. 22 23. On August 11, 2015, the Defendant filed a motion to 23 dismiss, alleging that the complaint was filed after the 24 deadline to file objections to discharge. Adversary Proceeding No. 15-00181 at Docket No. 11. 24. On October 14, 2015, the Plaintiff opposed the dismissal 2 motion. Adversary Proceeding No. 15-00181 at Docket No. 25. 3

4 25. On February 6, 2016, while the motion to dismiss was pending before the court, the Plaintiff filed a motion for 5 leave to file an amended complaint, alleging that it 6 discovered new facts, new corporations, and undisclosed facts 7 that are essential to the causes of action. Adversary Proceeding No. 15-00181 at Docket No. 40. The amended 8 complaint was filed simultaneously with the motion requesting 9 leave. Id. at Docket No. 41. 10 26. On March 10, 2016, the court dismissed the objection to 11 the discharge action for failure to file the adversary 12 complaint within the statutory deadline for objecting to the 13 discharge. Adversary Proceeding No. 15-00181 at Docket No. 47. 14

15 27. On October 12, 2016, the Defendant was granted a discharge 16 order, pursuant to 11 U.S.C. § 727. Case No. 14-10211 at Docket No. 136. 17

18 28. Six weeks later, the Defendant was indicted by the U.S. 19 Department of Justice at the United States District Court for the District of Puerto Rico. Criminal Case No. 16-742-ADC. 20

21 29. On September 27, 2017, the United States Bankruptcy Court 22 for the District of Puerto Rico issued General Order #17-05 extending all periods set by statutes of limitations 23 applicable to causes of action, cases, and proceedings, filed 24 or to be filed in the Court, until November 6, 2017, after the passing of Hurricane Maria through Puerto Rico. 30. On November 6, 2017, the Plaintiff filed the instant 2 complaint for revocation of discharge order, alleging that 3 the Defendant obtained the discharge through fraud and on 4 grounds, pursuant to 11 U.S.C. § 727(d)(1)-(d)(2) and Fed. R, Bankr. P. 7001(4). Adversary Proceeding No. 17-00270 at 5 Docket No. 1. 6

7 31. On February 14, 2019, the Defendant and the U.S. Attorney filed a Plea Agreement in the criminal case no. 19-111, in 8 which the Defendant pled guilty of conspiracy to defraud 9 against the United States under 18 U.S.C. § 371. Adversary 10 Proceeding No. 17-00270 at Docket No. 128-1, Exhibit III at 14-27. 11

12 32. In the Plea Agreement, the Defendant stipulated as fact 13 that the purpose of the scheme was for him and his brother to enrich themselves by not revealing to the Commonwealth of 14 Puerto Rico income in the amount of $181,337.39, and the non- 15 payment of taxes on personal expenses charged to Option’s 16 AMEX credit card in the years 2010, 2011, and 2012. The Defendant and his brother knowingly concealed, and disguised 17 personal expenses paid with the company’s AMEX. Adversary 18 Proceeding No. 17-00270 at Docket No. 128-1, Exhibit III at 19 25.

20 33. A month after the plea agreement, on March 13, 2019, the 21 Defendant filed an Amended Statement of Financial Affairs. 22 Bankruptcy Case No. 14-10211 at Docket No. 180.

23 34. On July 29, 2019, the Defendant filed a motion submitting 24 the amended tax returns for tax years 2010, 2011, and 2012, containing an aggregate unpaid tax debt of $28,804.00 in 2 35. On November 17, 2020, the legal and adversary cases were 3 reassigned to the undersigned judge. Adversary Proceeding No. 4 17-00270 at Docket No. 125.

5 II. LEGAL STANDARD 6

7 Summary judgment is available if the pleadings, depositions, answers to interrogatories, and admissions on file, together with 8 the affidavits, if any, show that there is no genuine issue as to 9 any material fact and that the moving party is entitled to a 10 judgment as a matter of law. Fed. R. Civ. P. 56(c); Fed. R. Bankr. P. 7056; Borges ex rel. S.M.B.W. v. Serrano-Isern, 605 F.3d 1, 4 11 (1st Cir. 2010). 12 When both parties move for summary judgment, each party must 13 carry its own burden of proof as the moving party in its cross motions and as the nonmoving party in response to the other party’s 14 motion. Wells Real Estate Inv. Trust II, Inc., 615 F.3d 45, 51 15 (1st Cir. 2010). If there are no disputed material facts, only one 16 party is entitled to judgment as a matter of law. Encanto Rests., Inc. v. Aquino Vidal (In re Cousins Int’l Food Corp.), 553 B.R. 17 197, 205 (Bankr. D.P.R. 2016). 18 This matter is appropriate for summary judgment disposition 19 as there are no material facts in dispute and it is a matter of law. In re Colarusso, 382 F.3d 51 (1st Cir. 2004) (citing Celotex, 20 477 U.S. at 322-323); Vega-Rodriguez v. Puerto Rico Tel. Co., 110 21 F.3d 174, 178 (1st Cir. 1997). 22 III. PARTIES’ CONTENTIONS 23

24 The Plaintiff seeks to revoke the discharge order under states that the discharge was obtained through fraud and that it 2 did not know of the fraud until after the entry of the discharge 3 order; therefore, the discharge order must be revoked under § 4 727(d)(1). The Plaintiff also argues that the discharge may be revoked because the Defendant failed to report the acquisition of 5 or entitlement of property to the chapter 7 trustee under § 6 727(d)(2). 7 The Defendant, on the other hand, claims that the Plaintiff is not entitled to revoke the discharge under § 727(d)(1) because 8 it knew of the Defendant’s activities prior to the entry of 9 discharge. The Defendant contends that revocation of the discharge 10 under § 727(d)(2) is not warranted because the Plaintiff has failed to specify the property of the estate, which the Defendant 11 allegedly failed to report fraudulently in the bankruptcy 12 schedules. 13 IV. LEGAL ANALYSIS 14

15 The Plaintiff’s summary judgment cannot be granted under 16 either § 727(d)(1) or § 727(d)(2). Under § 727(d)(1), the Plaintiff cannot convince the court to revoke the discharge order when it 17 had pre-discharge knowledge of the facts that led to the 18 Defendant’s indictment. Furthermore, the eventual guilty plea deal 19 that occurred two years after the entry of discharge cannot be raised to revoke the discharge. It is undisputed that the Plaintiff 20 had knowledge of the Defendant’s fraudulent actions at least two 21 years prior to the filing of the bankruptcy petition. The 22 Plaintiff bases his complaint on a federal indictment of the Defendant that was filed one month after the entry of the 23 24

1 Unless expressly stated otherwise, all references to “Bankruptcy Code” or to specific statutory sections are to the Bankruptcy Reform Act of 1978, as amended, 11 U.S.C. §§ 101-1532. cooperation with federal authorities. The court notes that this 2 revocation of discharge action appears to be a collateral attack 3 on the ruling dismissing its previous complaint objecting to the 4 discharge. Under § 727(d)(2), the Plaintiff is unable to revoke the 5 discharge order because there was no property to be hidden or 6 delivered to the trustee and even if there was such hidden 7 property, pre-discharge knowledge of the Defendant's wrongdoing bars the Plaintiff from prevailing in the instant action. We 8 address these points. 9

10 A. Section 727(d)(1)

11 Section 727(d)(1) states that the court shall revoke a 12 discharge if “such discharge was obtained through the fraud of the 13 debtor, and the requesting party did not know of such fraud until after the granting of such discharge.” 11 U.S.C. § 727(d)(1). The 14 time to bring a revocation for fraud is limited to one-year. 15 Section 727(e)(1) states that “a creditor … may request a 16 revocation of discharge - (1) under subsection (d)(1) of this section within one year after such discharge is granted.” 17 “Revocation of a discharge is an extraordinary remedy, which should 18 be construed liberally in favor of the debtor.” In re Green, 2014 19 WL 3953470 at *6 (B.A.P. 1st Cir. August 6, 2014). To prevail under Section 727(d)(1), the Plaintiff must 20 establish by a preponderance of the evidence that: (1) the debtor obtained the discharge through fraud; (2) 21 the creditor possessed no knowledge of the debtor's fraud prior to the granting of the discharge; and (3) 22 the fraud, if known, would have resulted in the denial of the discharge under section 727(a) of the Bankruptcy 23 Code. As for the first element, the plaintiff must demonstrate that the debtor committed actual fraud 24 involving an intentional wrong, such as the intentional omission of assets from the debtor's schedules. The third element also incorporates a standard of actual discharge under section 727(a) of the Bankruptcy Code 2 had the fraud been known. In this way, the third element subsumes the first to the extent that an analysis of 3 the third element inherently requires the same analysis of whether the debtor committed fraud in fact. 4 Multinational v. Van Rhyn, Adv. Proc. 17-00270, Docket No. 86 at 5 4 (Bankr. D.P.R., Oct. 31, 2019)(citing Yules v. Gillis (In re Gillis), 403 B.R. 137, 144 (B.A.P. 1st Cir. 2009)). 6

7 The present revocation action fails for two reasons. First, the Plaintiff became aware of the Defendant’s fraudulent 8 activities two years before the filing of the bankruptcy petition. 9 The Defendant shared this knowledge with the federal authorities 10 in 2012, prior to the bankruptcy filing, and the result was that the Defendant’s 2016 indictment and eventual conviction in 2019 11 after he entered into a guilty plea agreement. Second, the 12 knowledge of the guilty plea agreement did not occur within the 1- 13 year period after entry of discharge. Because we find that the Plaintiff does not comply with the second prong of section 14 727(d)(1) regarding lack of knowledge, the court centers its 15 attention on this factor and will not discuss the merits of the 16 remaining prongs.

17 i. Pre-discharge Knowledge 18 The Defendant filed for bankruptcy in 2014. Two years before, 19 in 2012, the Plaintiff purchased NALIC, and after conducting an internal audit of the company it became aware that the Defendant 20 detoured sums of monies from Option to personal bank accounts for 21 the years 2006 to 2011. These transactions constituted payments 22 and cash withdrawals from corporate accounts to personal accounts. The Plaintiff alerted the FBI of the scheme perpetrated by the 23 Defendant and shared information with federal agents. 24 In 2013, the Plaintiff also contacted the IRS and provided it information about the Defendant funneling monies from corporate Plaintiff's attorney was interviewed by the FBI and IRS Special 2 Agents. He again communicated to these authorities that the 3 Defendant was using funds from Option to pay a personal credit 4 card. He further stated that this credit card was used to conduct numerous personal transactions which included the purchase of jet 5 fuel, clothing, and gifts to employees of Option. A year after the 6 interview, the Defendant filed for chapter 7. 7 Exhibits I, II, III, V, VI, X, XI & XII of the Defendant’s motion for summary judgment demonstrate that the Plaintiff was 8 aware of the Defendant’s use of the corporate credit card for 9 personal expenses and transfer of corporate funds to personal bank 10 accounts, two years prior to the filing of the bankruptcy case. As stated above, the Plaintiff reported it to the federal authorities 11 in 2012. Two years later, the Plaintiff learned during the 12 discovery process in the local court case that Option’s corporate 13 Amex credit card was being used for personal expenses by the Defendant. These fraudulent activities resulted in guilty plea 14 agreement in 2019. Thus, the Plaintiff was aware of the Defendant’s 15 fraudulent activities before the bankruptcy petition was filed. 16 ii. Untimely Objection to Discharge Complaint 17 The Plaintiff filed an untimely objection to the discharge 18 based on the fraudulent activities discovered in the audit. The 19 deadline to file an objection to discharge was March 16, 2015. The Clerk’s Office notified this deadline to the Plaintiff along with 20 the other creditors in the case. The court extended the deadline 21 to June 15, 2015, per the request of the U.S. trustee. The 22 Plaintiff filed the complaint eight days after the extended deadline afforded to the U.S. trustee expired. 23 The Plaintiff then requested leave to file an amended 24 complaint after it discovered new facts, new corporations, and undisclosed facts that it described as essential to the causes of scheme perpetrated by the Defendant to conceal his assets. The 2 bankruptcy court dismissed the action because it was filed after 3 the deadline to object to discharge expired. In the dismissal 4 order, the bankruptcy court reasoned that the Plaintiff failed to make an assertion that its knowledge of the facts giving rise to 5 the alleged fraud were formed between the day that the deadline to 6 file an objection to discharge expired and the day when it filed 7 its complaint.

8 iii. Post-Discharge Knowledge 9 Because the Plaintiff did not timely raise its objection to 10 the discharge, it now seeks to revoke the discharge order as a collateral attack with the present adversary proceeding. The 11 Defendant's discharge was entered on October 12, 2016, pursuant to 12 11 U.S.C. § 727. For purposes of 11 U.S.C. § 727(d)(1), the 13 Plaintiff can only use knowledge of fraud that came to its attention from October 12, 2016 until October 12, 2017. We note 14 that the court extended deadlines for filing causes of action until 15 November 6, 2017, upon the passing of Hurricane Maria, pursuant to 16 General Order #17-05. Due to the one year after the discharge statutory requirement, the Plaintiff is barred from using evidence 17 or knowledge obtained after November 6, 2017. 18 Within the 1-year period after the entry of the discharge 19 order, the Plaintiff learned that the Defendant was indicted by the U.S. Department of Justice. The federal indictment contained 20 one count of health care fraud and two counts of money laundering. 21 The Defendant was the President of Option, the corporation that 22 acted as the third-party administrator of Plaintiff’s predecessor, NALIC. According to the prosecuting authorities, “the scheme and 23 artifice to defraud” employed by the Defendant was to incur in 24 large amounts of personal and non-business related expenditures on Option’s corporate credit card and misused funds received from the in the Plaintiff (Multinational Life Insurance Company) having to 2 pay more than $4,000,000 to healthcare providers with outstanding 3 debts owed by Option as a result of the fraudulent scheme. The 4 court is of the view that the underlying facts contained in the indictment were not new to the Plaintiff because it alerted the 5 federal authorities of the criminal activities and cooperated with 6 the investigation two years before the filing of bankruptcy 7 petition.

8 iv. Post-Revocation Complaint 9 After filing the adversary action to revoke the discharge 10 order, the Plaintiff contends that the Defendant plead guilty for defrauding the Puerto Rico Treasury Department and that he filed 11 an Amended Statement of Financial Affairs. The Plaintiff argues 12 that the original Statement of Financial Affairs knowingly 13 contains inaccurate information. Based on these fraudulent actions, the Plaintiff claims that the discharge order should be 14 revoked under § 727(d)(1). The court observes that the Defendant's 15 guilty plea and the amendment to the Statement of Financial Affairs 16 occurred in 2019. Both events occurred two years after the entry of the discharge order. The Plaintiff cannot use the plea agreement 17 or the Amended Statement of Financial Affairs for revocation 18 purposes because they do not fall within the one-year after entry 19 of discharge period. The Code expressly mandates the revocation action must be brought within the year of the entry of discharge. 20 Plaintiff is barred from revoking the discharge by using events 21 that occurred two years after the entry of discharge. Although the 22 complaint was technically filed timely, the Plaintiff acquired knowledge of the plea agreement and the Amended Statement of 23 Financial Affairs outside the statutory period required for a 24 revocation. For a revocation of discharge for fraud to prosper under acquired within one year after the entry of the discharge order. 2 Clearly, the Plaintiff knew of the fraud, prior to the granting of 3 discharge in 2016 and as a matter of fact, knew about the fraud 4 two years prior to the filing of the petition in 2012. The Plaintiff fails to raise any new facts of fraud that 5 occurred between the entry of discharge order in 2016 and one year 6 thereafter in 2017. All the factual allegations for fraud stem 7 from the 2012 audit and the local court litigation, that occurred two years before the filing of the bankruptcy case. These 8 underlying allegations of fraud resulted in a criminal conviction 9 and an Amended Statement of Financial Affairs in 2019, two years 10 after the entry of discharge. Therefore, the Plaintiff is prevented from pursuing its revocation of discharge under § 727(d)(1). 11

12 B. Section 727(d)(2) 13 The Plaintiff asserts that the discharge should also be 14 revoked under section 727(d)(2) of the Bankruptcy Code. This 15 section lists as a ground for revocation of a discharge that “the 16 debtor acquired property that is property of the estate or became entitled to acquire property that would be property of the estate, 17 and knowingly and fraudulently failed to report the acquisition of 18 or entitlement to the property, or to deliver or surrender the 19 property to the trustee.” 11 U.S.C. § 727(d)(2). The Plaintiff claims that the Defendant acknowledged through his Plea Agreement 20 that, during years 2010, 2011 and 2012, the Defendant participated 21 in a conspiracy to enrich himself by not revealing income of 22 $181,337.39 and the non-payment of taxes on personal expenses charged to Option. It prompts the court to consider that the Debtor 23 amended his tax returns to reflect this fact. The Plaintiff also 24 alleges that the fact that the Defendant amended his Statement of Financial Affairs to indicate an increase in income for the years an acquisition of property of the estate. Quite to the contrary. 2 The court examined the Amended Statement of Financial 3 Affairs and the amended tax returns; but it does not find anything 4 in them to suggest that there is property acquired by the bankruptcy estate. Rather, the court is of the view that the 5 amended tax returns are a result of overstated expenditures on the 6 part of the Defendant and do not result in the acquisition of 7 property available to the trustee for the benefit of the bankruptcy estate. The monies that the Defendant spent with the corporate 8 American express were never available as “property of the estate” 9 because they were expended by the Defendant long before the 10 bankruptcy petition was filed in 2014. Given that there was no property to be hidden or delivered to the trustee, § 727(d)(2) 11 does not apply to our set of facts and may not be a basis to revoke 12 the discharge. 13 Even if the Plaintiff had identified a property that the Defendant failed to report, it already knew of the situation prior 14 to the entry of the discharge order from the 2012 audit. As stated 15 above, the Plaintiff had filed a belated objection to discharge, 16 claiming the following in the allegations of the previous complaint: 17 1) “[u]pon information and belief, the defendant also 18 failed to list all of his assets and or property of the 19 estate in the schedules and amendments to the schedules filed in the Chapter 7 case which constitutes a ground 20 for the denial of a discharge under section 727(a)(2) of 21 the Bankruptcy Code.” Adversary Proceeding No. 15-00181 22 at Docket No. 1, at 4, ¶6. 2) “[u]pon information and belief, even though the 23 defendant has filed multiple amendments to his schedules 24 and participated in 341 meetings, these are incomplete disclosures that do not conform with [section] 727(a)(3) 3) “[o]mitting an asset from the debtor's schedules may be 2 a “concealment” within the meaning of the discharge 3 exception if it is both fraudulent and material.” Id. at 4 9, ¶28. The prior complaint establishes that the Plaintiff knew about an 5 alleged failure by the Defendant to set forth his assets or 6 liabilities, years before the bankruptcy. 7 Several bankruptcy courts have held that under § 727(d)(2) a party's pre-discharge knowledge of a debtor's wrongdoing under 8 this section will effectively estop that party from seeking 9 revocation of the discharge. 6 Collier on Bankruptcy ¶ 727.17 (16th 10 2021)(citing Canfield v. Lyons, Jr. (In re Lyons, Jr.), 23 B.R. 123, 126 (Bankr. E.D. Va. 1982)(“The fact that subparagraphs 11 727(d)(2) and (d)(3) contain no language requiring the knowledge 12 of any fraudulent conduct to be received after the discharge is 13 granted, does not give the party in interest, who has the knowledge of the probable wrongdoing the privilege to wait until after a 14 discharge is granted to ask the court to revoke the discharge.”)). 15 The Debtor's duty under § 727(d)(2) is to report to the trustee 16 any acquisitions of property after the filing of the petition. Id. We have already ruled that the Plaintiff had pre-discharge 17 knowledge of the Debtor's wrongdoing and as such it is barred from 18 seeking the revocation of the discharge. Moreover, the Plaintiff’s 19 proffers defeat his plea for revocation, given that the property of the estate that it alleges that the Defendant acquired occurred 20 prior to the filing of the bankruptcy petition. According to 21 Collier on Bankruptcy, § 727(d)(2) appears to apply only to 22 property acquired during the bankruptcy case. 6 Collier on Bankruptcy ¶ 727.17 (16th 2021). Other bankruptcy courts have 23 similarly held that the revocation under § 727(d)(2) should be for 24 post-petition conduct. Hurston v. Anzo (In re Anzo), 2017 Bankr. LEXIS 259 *10 (Bankr. N.D. Ga. Jan. 30, 2017)("only post-petition 1 |Jconduct in connection with the Debtor's bankruptcy case is relevant > and this Court finds that this applies to Section 727(d) (2), as well"). See All Points Capital Corp. v. Stancil (In re Stancil), 3 2012 Bankr. LEXIS 4323 *6 (Bankr. E.D.N.C. Sept. 18, 2012) ("under 48 727(d) (2), a debtor's discharge may be revoked when a debtor 5 engages in certain types of fraud in connection with his own bankruptcy case"). Hence, the revocation of discharge under 6 $727(d) (2) does not prevail. While we do not condone the 7 ||/Defendant’s pre-bankruptcy criminal conduct, the court is unable 9 to revoke the discharge under § 727(d) (1) or (d) (2).

9 CONCLUSION 10 11 For the foregoing reasons, the Plaintiff’s summary judgment is denied, and summary judgment is granted in favor of the Defendant. 13 14 IT IS SO ORDERED. 15 San Juan, Puerto Rico, this 17*® day of November, 2021. NAehctre cb Caan 17 Mildred Caban Flores U.S. Bankruptcy Judge 18 19 20 21 22 23 24