Smith v. Oklahoma Attorney General's Office

• Court: Court of Appeals for the Tenth Circuit
• Decided: January 30, 2026
• Docket: 25-6169
• Status: Unpublished

Opinion

Appellate Case: 25-6169 Document: 11-1 Date Filed: 01/30/2026 Page: 1 FILED United States Court of Appeals UNITED STATES COURT OF APPEALS Tenth Circuit

FOR THE TENTH CIRCUIT January 30, 2026 _________________________________ Christopher M. Wolpert Clerk of Court BOBBY LEE SMITH,

Plaintiff - Appellant,

v. No. 25-6169 (D.C. No. 5:25-CV-00588-JD) OKLAHOMA ATTORNEY GENERAL’S (W.D. Okla.) OFFICE; GENTNER DRUMMOND; MICHAEL JAMES HUNTER; NIKKI KIRKPATRICK; HOPE BRYANT; JOHN AND JANE DOES 1-10,

Defendants - Appellees. _________________________________

ORDER AND JUDGMENT * _________________________________

Before MATHESON, PHILLIPS, and McHUGH, Circuit Judges. _________________________________

On June 2, 2025, Plaintiff–Appellant Bobby Lee Smith filed a complaint

against “the Oklahoma Attorney General’s Office . . . and its agents,” alleging

“malicious prosecution, defamation, constitutional violations, and administrative

obstruction.” ROA at 6. His complaint was accompanied by an application to proceed

After examining the briefs and appellate record, this panel has determined *

unanimously that oral argument would not materially assist in the determination of this appeal. See Fed. R. App. P. 34(a)(2); 10th Cir. R. 34.1(G). The case is therefore ordered submitted without oral argument. This order and judgment is not binding precedent, except under the doctrines of law of the case, res judicata, and collateral estoppel. It may be cited, however, for its persuasive value consistent with Federal Rule of Appellate Procedure 32.1 and Tenth Circuit Rule 32.1. Appellate Case: 25-6169 Document: 11-1 Date Filed: 01/30/2026 Page: 2

in forma pauperis (“IFP”) under 28 U.S.C. § 1915. In the IFP application and

accompanying affidavit, Mr. Smith asserted that (1) his average monthly expenses

totaled approximately $2,760, including $1,800 for rent; (2) he had “no consistent

source of income”; (3) he had previously declared bankruptcy, and the bankruptcy

was finalized in 2024; (4) he had $36,000 in a Coinbase account, $4,900 in a

Robinhood account, and $1,100 on a Cash App debit card; (5) the $4,900 in his

Robinhood account was “[l]oaned [m]oney”; (6) the $36,000 in his Coinbase account

was “the remaining portion of a $200,000 private loan” issued in November 2024;

and (7) he had “us[ed] the bulk of th[is] loan to cover housing, living expenses, and

legal filing costs.” Dist. Ct. Dkt. No. 2 at 2, 6–7.

On June 5, 2025, the magistrate judge recommended denying the IFP

application based on the funds in Mr. Smith’s three accounts, which the magistrate

judge determined were “sufficient to meet both the mandatory demands on his

financial resources and to pay the $405.00 filing fee.” ROA at 283.

On June 13, 2025, Mr. Smith filed an objection to the magistrate judge’s report

and recommendation. In his objection, he made several factual assertions that were

not included in his IFP application. Among other things, he claimed for the first time

that he “owe[d] $13,257 in back rent.” Id. at 286. He did not explain, however, why

he would owe any money in back rent given his previous allegation that he received a

$200,000 loan in November 2024, “the bulk of” which he had used to “cover

housing” and other expenses. Dist. Ct. Dkt. No. 2 at 7.

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On September 12, 2025, the district court overruled Mr. Smith’s objections

and denied his IFP application.

On September 22, 2025, Mr. Smith filed a motion in which he renewed his IFP

application and asked the district court to reconsider its order denying IFP. He stated

that this motion was “based on [his] current financial status as of September 22,

2025, reflecting further depletion since the June 2025 Report and Recommendation.”

ROA at 293. He asserted that he had “avoided eviction only by transferring all

cryptocurrency in his Robinhood and Coinbase accounts to the landlord in exchange

for rent coverage through October 31, 2025.” Id. at 294. Again, however, he failed to

explain why he owed so much money for rent when he had received a $200,000 loan

within the past year and had used “the bulk of” this loan to pay for his housing and

living expenses, along with legal filing costs. Dist. Ct. Dkt. No. 2 at 7. He also did

not explain why he needed to use the entirety of his Robinhood and Coinbase

accounts, which had together totaled more than $40,000 in June 2025, to cover five

months of rent and pay for the “$13,257 in back rent” that he had claimed in June

2025. ROA at 286.

The magistrate judge recommended denying the renewed IFP motion. The

magistrate judge reasoned that Mr. Smith “had sufficient funds to pay for both the

necessities of life and his filing fee at the time he filed his complaint,” and he had

therefore not shown that he was entitled to proceed IFP. Id. at 312. For support, the

magistrate judge cited to an unpublished decision of this court in which we held that

“the district court did not abuse its discretion in refusing to grant [the plaintiff] leave

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to proceed IFP on the ground” that she “had sufficient funds to pay the filing fee at

the commencement of litigation” despite later becoming indigent. Lewis v. Burger

King, 398 F. App’x 323, 326 (10th Cir. 2010) (unpublished).

Mr. Smith filed an objection, but the district court ultimately adopted the

magistrate judge’s report and recommendation. In addressing Mr. Smith’s argument

that his funds were now depleted, the district court reasoned that “nothing changes

the fact that [Mr. Smith] knew on June 5, 2025, that [the magistrate judge’s]

recommendation was for him to pay the $405.00 filing fee in full and for the

[district c]ourt to deny [his] motion to proceed IFP.” ROA at 324. Mr. Smith’s

subsequent decision to transfer all of his money to his landlord did not change the

fact that he had adequate funds at the time of filing to pay the filing fee in full. The

district court therefore denied Mr. Smith’s renewed IFP request and advised him that

the action would be dismissed without prejudice unless he paid the $405 filing fee in

full within twenty-one days of the court’s order.

Mr. Smith appeals the district court’s denial of his initial and renewed

applications to proceed IFP. We have appellate jurisdiction over this appeal under the

Cohen doctrine. See Lister v. Dep’t of Treasury, 408 F.3d 1309, 1310 (10th Cir.

2005); see also Cohen v. Beneficial Indus. Loan Corp., 337 U.S. 541 (1949).

Under § 1915(a), a court “may authorize the commencement, prosecution or

defense of any suit, action or proceeding, . . . without prepayment of fees or security

therefor, by a person who submits an affidavit that includes a statement of all assets

such prisoner possesses that the person is unable to pay such fees or give security

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therefor.” 28 U.S.C. § 1915(a). “Section 1915(a) applies to all persons applying for

IFP status, and not just to prisoners.” Lister, 408 F.3d at 1312.

“[I]n order to succeed on a motion to proceed IFP, the movant must show a

financial inability to pay the required filing fees, as well as the existence of a

reasoned, nonfrivolous argument on the law and facts in support of the issues raised

in the action.” Id. And “the court must ‘dismiss the case at any time if the court

determines that . . . the allegation of poverty is untrue’ or that ‘the action . . . is

frivolous or malicious [or] fails to state a claim on which relief may be granted;’ or

makes a claim for monetary relief from an immune party.” Id. (quoting

§ 1915(e)(2)(B)) (alterations in original).

We review the district court’s denial of IFP for an abuse of discretion. See

Lister, 408 F.3d at 1312.

Mr. Smith argues that the district court abused its discretion by finding that he

had sufficient funds to pay the $405 filing fee. He contends that the district court

should have granted IFP because (1) the IFP application and accompanying affidavit

“showed no income, no banking access, more than $18,000 in overdue rent, and

negative cash flow”; and (2) the assets relied on by the court to deny IFP were

“temporary borrowed funds that existed briefly in a cryptocurrency app,” which

“were borrowed for necessities of life and were immediately used for rent, utilities,

and survival expenses.” Appellant’s Br. at 2 (emphasis omitted).

As an initial matter, we note that Mr. Smith has not explained why it should

matter that his assets were held in cryptocurrency accounts rather than in a traditional

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bank account. Section 1915 requires an assessment of “all assets,” with no limitations

on the types of assets to be considered. And Mr. Smith provides no persuasive reason

why cryptocurrency assets should be treated any differently under this statute than

assets held in traditional bank accounts.

Likewise, because § 1915 requires an assessment of “assets,” not just income,

Mr. Smith’s assertions that he has either no income or only inconsistent income are

not determinative of whether the district court should have allowed him to proceed

IFP. See Lister, 408 F.3d 1309, 1313 (holding that a petitioner had not demonstrated

an entitlement to IFP by simply asserting that she was unemployed and “never

received money”); see also Grimes v. TCF Bank, 769 F. App’x 659, 660 (10th Cir.

2019) (unpublished) 1 (holding that the district court did not abuse its discretion by

denying IFP to a litigant who had $4,500 in a savings account, even though the

majority of his income came from student loans and his cash flow absent these loans

was negative); Lay v. Okla. Dep’t of Corr., 746 F. App’x 777, 779 (10th Cir. 2018)

(unpublished) (holding that the district court did not abuse its discretion by denying

IFP to a prisoner when the balance in the prisoner’s inmate savings account at the

time of filing was enough to cover the district court filing fee, with no mention of any

income the prisoner might have had in prison).

1 We cite unpublished cases for their persuasive value only and do not treat them as binding authority. See United States v. Ellis, 23 F.4th 1228, 1238 n.6 (10th Cir. 2022). 6 Appellate Case: 25-6169 Document: 11-1 Date Filed: 01/30/2026 Page: 7

As for Mr. Smith’s assertion that the district court “failed to consider” that he

owed “more than $18,000 in overdue rent,” Appellant’s Br. at 2–3 (emphasis

omitted), we note that the IFP application and affidavit did not in fact say anything

about overdue rent. And when Mr. Smith did raise the matter of overdue rent in his

objection to the magistrate judge’s first report and recommendation, he claimed that

the amount of overdue rent was $13,257, not $18,000 as he now claims. Moreover,

even if Mr. Smith had alerted the district court to his current allegation that he owed

$18,000 in overdue rent when he filed his IFP application, this would not change the

fact that he had $42,000 in claimed assets at that time. Taking as true his current

assertion that he owed $18,000 in overdue rent, he could have paid both the $18,000

for rent and the $405 filing fee and still been left with more than $23,000 to cover his

ongoing expenses.

At the heart of Mr. Smith’s argument is his contention that borrowed money

should not be counted as an asset for purposes of determining indigency under

§ 1915. But Mr. Smith cites no authority, and we have found none, for the

proposition that a district court must disregard substantial assets in a petitioner’s

accounts if the petitioner alleges that these assets are the proceeds of a loan. To the

contrary, the decisions we have found on this point have generally concluded that

borrowed funds constitute assets that must be considered as part of the IFP

assessment. See, e.g., Mitchell v. Brook, No. 21-cv-05014-DMR, 2023 WL 4566288,

at *4 (N.D. Cal. July 17, 2023) (holding that a litigant’s “allegation of poverty was

untrue” based on his recent receipt of “PPP loan proceeds,” which were “material to

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the court’s determination of his qualification for IFP status”); McGee v. United

States, No. 1:08–cv–154, 2010 WL 520708, at *3 (W.D. Mich. Feb. 8, 2010) (finding

“no statute or other authority which empowers a federal judge to refuse to apply an

unambiguous federal statute because the judge personally believes it is unfair or

illogical to count borrowed funds that are deposited into a party’s prison trust

account” as part of the IFP assessment). Cf. In re Marshall, 550 F.3d 1251, 1258

(10th Cir. 2008) (holding in the bankruptcy context that loan proceeds are considered

an asset of the bankruptcy estate).

Of course, there may be circumstances in which a litigant in possession of

borrowed funds may be considered indigent. See, e.g., Moreno v. Salvation Army,

No. 23-cv-01254, 2024 WL 6934557, at *1 (N.D. Ill. Mar. 19, 2024) (holding that a

litigant could proceed IFP where his only assets “came from a loan by a friend to be

used for the specific purpose of paying for his minor children’s educational

expenses”). Under the circumstances of this case, however, we are not persuaded that

the district court abused its discretion by finding that Mr. Smith could use his assets

to pay the $405 filing fee.

As an initial matter, we note that the IFP application and affidavit indicate that

Mr. Smith’s Robinhood account contained borrowed funds from an unidentified

source while his Coinbase account contained proceeds from a recent $200,000

personal loan. However, nothing in the IFP application or affidavit indicates that the

$1,100 in Mr. Smith’s Cash App account was borrowed. And this $1,100 amount

would have been sufficient in itself to cover the $405 filing fee, without needing to

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tap into any borrowed funds. Thus, even if we were to accept Mr. Smith’s argument

that he should not have been expected to pay his filing fee with borrowed funds,

which we do not, he has not shown that he would have been required to use borrowed

funds to pay the filing fee here.

Moreover, although Mr. Smith asserts on appeal that the funds in his accounts

“were borrowed for necessities of life and were immediately used for rent, utilities,

and survival expenses,” Appellant’s Br. at 2 (emphasis omitted), the affidavit

accompanying his IFP application indicated that he was using the November 2024

loan not just for housing and living expenses, but also “legal filing costs.” Dist. Ct.

Dkt. No. 2 at 7. In light of Mr. Smith’s admission that he was using the borrowed

funds in part for litigation purposes, we are not persuaded that the district court

abused its discretion by concluding that these borrowed funds were also available to

cover the $405 filing fee here.

Additionally, while Mr. Smith asserts on appeal that he needed to dedicate all

of his funds to pay for his overdue rent and ongoing living expenses, the IFP

application and affidavit suggest some cause for skepticism. As discussed above,

Mr. Smith has asserted various amounts of overdue rent in various court filings in

this case, but he has never explained why he owed any back rent in June 2025 after

finalizing a bankruptcy in 2024 and then using “the bulk of” a $200,000 loan issued

in November 2024 to cover his housing costs, living expenses and court fees. Id. at 7.

Considering that Mr. Smith’s claimed monthly rent is $1,800, he could have paid the

alleged $18,000 in overdue rent and then covered more than eight additional years of

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rent payments with the November 2024 loan. Indeed, even taking into account all of

his other claimed monthly expenses, the $200,000 loan should have lasted for at least

six years according to his own financial information. But instead, he claims that the

$200,000 loan was fully depleted within less than one year without explaining why.

Mr. Smith has never explained the significant discrepancy between his alleged

expenses and his claimed actual expenditure of funds. And assuming this discrepancy

can be explained by Mr. Smith’s claimed use of the $200,000 loan in part to pay

court fees, he has not explained why this loan was available to pay what would, by

his own information, seem to amount to more than $100,000 in litigation fees in other

cases, while it remained unavailable for him to pay the $405 filing fee in this case.

Perhaps Mr. Smith has some explanation for the apparent inconsistencies and

discrepancies in the information he provided to the district court. But he did not

present any such explanation to the district court, and we cannot say that the district

court abused its discretion by concluding, under all of the circumstances of this case,

that Mr. Smith could use a small portion of his $42,000 in assets to pay the $405

filing fee.

Mr. Smith’s assertion that he subsequently used all of these assets to cover

$18,000 in overdue rent does not change this conclusion. Because Mr. Smith had

more than enough funds to cover both the $405 filing fee and the necessities of life

when he applied for IFP status, the district court acted within its discretion by

holding that he was not entitled to proceed IFP despite his alleged depletion of those

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funds after filing. See Lewis, 398 F. App’x at 326. We therefore affirm the district

court’s decisions denying IFP.

Mr. Smith has also filed a motion to proceed IFP on appeal. To succeed on this

motion, he must show “a financial inability to pay the required filing fees and the

existence of a reasoned, nonfrivolous argument on the law and facts in support of the

issues raised on appeal.” Watkins v. Leyba, 543 F.3d 624, 627 (10th Cir. 2008)

(quotation marks and brackets omitted). We are not persuaded that Mr. Smith has

shown “the existence of a reasoned, nonfrivolous argument on the law and facts”

here. Id. (quotation marks omitted). We therefore deny his motion to proceed IFP on

appeal as well.

We accordingly AFFIRM the district court’s denials of Mr. Smith’s initial and

renewed IFP applications. Mr. Smith’s motion to proceed IFP on appeal is DENIED.

Entered for the Court

Carolyn B. McHugh Circuit Judge