United States v. Schoenmann

• Court: United States Bankruptcy Court, N.D. California
• Decided: July 3, 2025
• Docket: 23-03043
• Status: Unknown

Opinion

U.S. BANKRUPTCY COURT SS NE NORTHERN DISTRICT OF CALIFORNIA □□□□ ae □□ 1 . . Wig Signed and Filed: July 3, 2025 □□□□□ ORL 2 Mini J 4 Vine 5 DENNIS MONTALI U.S. Bankruptcy Judge 6 7 UNITED STATES BANKRUPTCY COURT 8 NORTHERN DISTRICT OF CALIFORNIA 9 In re ) Bankruptcy Case No. 22-30028 10 ) BE. LYNN SCHOENMANN, ) Chapter 7 11 ) ) 12 Debtor. ) 13 ) ) 14 ||UNITED STATES OF AMERICA, ) Adversary Proceeding 15 ) No. 23-03043 Plaintiff, ) 16 ) Vv. ) 17 ) 18 BE. LYNN SCHOENMANN, ) ) 19 Defendant. 20 21 MEMORANDUM DECISION AFTER TRIAL 22 On June 9 and 10, 2025, the court conducted a trial to 23 Ildetermine the dischargeability of debt owed by Debtor-Defendant 24 Ile, Lynn Schoenmann (“Schoenmann”) to Plaintiff United States 25 Small Business Administration (“SBA”). At the conclusion of the 26 trial, the court took the matter under submission. For the 27 reasons set forth below, the court determines that the SBA has 28 proven by a preponderance of the evidence that a prepetition -_ 1 -_

1 COVID-19 Economic Injury Disaster Loan (“EIDL”) the SBA made to 2 Schoenmann is nondischargeable under Section 523(a)(2)1 and a 3 separate penalty owed to the SBA due to Schoenmann’s misuse of 4 the EIDL is nondischargeable under Section 523(a)(7). 5 This Memorandum Decision After Trial constitutes the 6 court’s findings of fact and conclusions of law pursuant to Rule 7 7052. 8 I. Background 9 Schoenmann was admitted to the California state bar in 10 1981, after which she was periodically inactive until her 11 resignation from the bar in 2014 to focus on her trustee 12 practice. From 1997 to 2024, Schoenmann served as a chapter 7 13 panel trustee. She acted as a sole proprietor of her trustee 14 practice, which encompassed other fiduciary roles at some 15 points, such as state receiverships (Day 2 trial testimony of 16 Schoenmann). 17 In her personal life, Schoenmann was married to Donn R. 18 Schoenmann (“Donn”) from 1993 until Donn’s passing in 2018. At 19 some point in May 2016, Schoenmann learned that Donn had, via 20 counsel, modified his estate planning documents as well as 21 certain grant deeds to marital properties. As a result of those 22 modifications, a marital trust holding assets jointly with a 23 right of survivorship, along with the rights of survivorship in 24

25 1 Unless specified otherwise, all chapter and section references 26 are to the Bankruptcy Code, 11 U.S.C. §§ 101-1532, “Section 636(b)” refers to 15 U.S.C § 636, “Rule” references are to the 27 Federal Rules of Bankruptcy Procedure, and “Civil Rule” 28 references are to the Federal Rules of Civil Procedure. 1 the grant deeds, were revoked. After learning of these 2 modifications, Schoenmann initiated divorce proceedings. 3 In November 2016, Schoenmann and Donn signed a Post-Marital 4 Agreement (“PMA”) agreeing, among other things, that (1) their 5 earnings and retirement account contributions would be treated 6 as separate property (a deviation from California law which 7 would deem earnings or retirement contributions by either spouse 8 to be community property), with the lion’s share held by 9 Schoenmann; and (2) three of the four real properties would once 10 again be held jointly with the right of survivorship. 11 Schoenmann dismissed the divorce proceeding thereafter. 12 Upon Donn’s passing in 2018, a probate for Donn was opened, 13 and in 2019, litigation within the probate was initiated against 14 Schoenmann by Donn’s adult children and grandchild from Donn’s 15 first marriage, who are Schoenmann’s stepchildren and step- 16 grandchild, challenging the validity of the PMA (“probate 17 litigation”). 18 Around two years into the probate litigation, a bifurcated 19 trial that spanned ten court days was conducted in November 20 2021. On December 27, 2021, the probate court entered a 26-page 21 Tentative Decision. That Tentative Decision concluded that the 22 PMA was a product of undue influence by Schoenmann against Donn, 23 and that the PMA was invalid as a result. 24 While the probate litigation trudged on from 2019 through 25 2021, the COVID-19 pandemic overtook the country. In March 26 2020, in response to the global crisis, Congress passed the 27 Coronavirus Preparedness and Response Supplemental 28 1 Appropriations Act, 2020,2 which deemed COVID-19 to be a disaster 2 covered by the EIDL program. Congress then enacted the 3 Coronavirus Aid, Relief, and Economic Security Act (“CARES 4 Act”),3 which established the Paycheck Protection Program and 5 expanded eligibility for the EIDL program, each loan programs 6 that made long-term, low-interest loans to businesses and non- 7 profits that had suffered economic injury due to COVID-19. 8 After having received two loans under the Paycheck 9 Protection Program, Schoenmann received an email notice from the 10 SBA on October 4, 2021, notifying her that she may be eligible 11 to receive an EIDL for her business. On October 8, 2021, 12 Schoenmann submitted an EIDL application (“Application”) (SBA 13 Exs. 5, 22). The Application contained a specific section for 14 Schoenmann and other applicants to list “Contingent Liabilities” 15 that included “Legal Claims & Judgments,” as well as a separate 16 section for applicants to list “Other Liabilities (describe in 17 detail).” Schoenmann did not mention the probate litigation in 18 those sections or anywhere else in her Application (SBA Ex. 5). 19 Upon approval of her Application, Schoenmann signed a Loan 20 Agreement promising that she would only use the EIDL proceeds 21 “solely as working capital to alleviate economic injury caused 22 by the disaster occurring in the month of January 31, 2020 and 23 continuing thereafter.” (SBA Ex. 6). 24 Schoenmann signed the Loan Agreement on October 29, 2021. 25 On December 13, 2021, she received loan proceeds in the amount

26 27 2 Pub. L. No. 116-123, 134 Stat. 146 (Mar. 6, 2020).

28 3 Pub. L. No. 116-136, 134 Stat. 281 (Mar. 27, 2020). 1 of $924,700 (minus a small fee). Almost immediately after 2 receiving the proceeds, Schoenmann spent nearly one third of 3 them on probate litigation expenses including attorney fees and 4 fees for expert witnesses. She then spent another $155,000 on 5 retainers for bankruptcy professionals. A small amount (around 6 $55,000) was spent on Schoenmann’s trustee business. The 7 remaining approximately $450,000 was then placed in a brokerage 8 account to, in Schoenmann’s own words, earn income for her until 9 she had to pay back the EIDL over 30 years at a generously low 10 $3.75 interest rate. 11 On January 14, 2022, just over two weeks after the 12 Tentative Decision was issued and just one month after she 13 received the EIDL proceeds, Schoenmann filed bankruptcy. The 14 SBA timely filed this adversary proceeding. After granting, 15 then reconsidering Schoenmann’s motion for partial summary 16 judgment, the court determined that the main factual issues for 17 it to decide at trial were the SBA’s reliance on Schoenmann’s 18 Application and Loan Agreement (Dkt. 65) and the amount of its 19 damages. 20 II. The EIDL is Nondischargeable Pursuant to Sections 21 523(a)(2)(A) and alternatively, (a)(2)(B). 22 Section 523(a)(2) “excepts from discharge debts arising 23 from various forms of fraud.” Lamar, Archer & Cofrin, Llp v. 24 Appling, 584 U.S. 709, 715, (2018). Subpart (A) concerns “false 25 pretenses, a false representation, or actual fraud, other than a 26 statement respecting the debtor’s . . .financial condition” 27 while subpart (B) focuses on “statement[s] in writing . . .that 28 1 [are] materially false. . .respecting the debtor’s or an 2 insider’s financial condition.” Section 523(a)(2). 3 The SBA seeks a ruling that the EIDL is excepted from 4 discharge pursuant to both subparts of Section 523(a)(2). 5 A creditor must prove the following elements by a 6 preponderance of the evidence to establish the 7 nondischargeability of a debt under Section 523(a)(2)(A): 8 “(1) misrepresentation, fraudulent omission, 9 or deceptive conduct by the debtor; (2) 10 knowledge of the falsity or deceptiveness of 11 [the debtor’s] statement or conduct; (3) an 12 intent to deceive; (4) justifiable reliance 13 by the creditor on the debtor’s statement or 14 conduct; and (5) damage to the creditor 15 proximately caused by his reliance on the 16 debtor’s statement or conduct.” 17 Turtle Rock Meadows Homeowners Ass’n v. Slyman (In re Slyman), 18 234 F.3d 1081, 1085 (9th Cir. 2000) (citations omitted). 19 A creditor must prove nearly those same elements to 20 establish the nondischargeability of a debt under Section 21 523(a)(2)(B), except that the misrepresentation must be a 22 statement in writing respecting the debtor’s financial 23 condition, that the statement must be material, and the creditor 24 reasonably relied on the statement. In re Siriani, 967 F.2d 302, 25 304 (9th Cir. 1992). 26 The SBA has proven all the above elements respecting both 27 supbarts (A) and (B). 28 1 A. Fraudulent Misrepresentation as to Use of the Loan in 2 the Loan Agreement Certification 3 The court is satisfied that Schoenmann knowingly and 4 falsely swore, by signing the Loan Agreement, solely to use the 5 EIDL for working capital for her trustee business to alleviate 6 economic injury caused by COVID-19, which renders the EIDL 7 nondischargeable pursuant to 523(A)(2)(A). Not once, in 8 Schoenmann’s trial brief, her trial testimony, or in any filing 9 in this adversary proceeding or in her bankruptcy, has 10 Schoenmann claimed her trustee practice suffered at all due to 11 the pandemic. At trial and in her briefs, she only states that 12 she sought the EIDL because she could, because she received an 13 email from the SBA letting her know she may be eligible to seek 14 EIDL funds. Schoenmann knew that she would not be using the 15 EIDL to alleviate economic injury caused by the pandemic because 16 she had not suffered any. 17 In her defense, Schoenmann first blames the SBA for failing 18 to provide a definition of “working capital.” Without a 19 definition, Schoenmann argues, she could not possibly know what 20 the EIDL could or could not be spent on, and thus could not have 21 made any false representation as to how she would use the EIDL. 22 While the SBA did not define the term “working capital” in 23 the EIDL Application or in the Loan Agreement, Schoenmann could 24 have asked for clarification of the term at any point in the 25 application process. The record shows that Schoenmann reached 26 out to the SBA directly regarding her Application and pending 27 loan disbursement at least twice. (SBA Exs. 14, 24). Schoenmann 28 could have clarified how loan proceeds were to be used, in 1 addition to her main questions of when she would receive the 2 proceeds, had she so chosen. Schoenmann herself also references 3 the SBA’s own online information webpage regarding uses of 4 proceeds: “Working capital to make regular payments for 5 operating expenses, including payroll, rent/mortgage, utilities, 6 and other ordinary business expenses, and to pay business debt 7 incurred at any time (past, present, or future).” (Schoenmann 8 Trial Brief, Dkt. 75 p. 13). 9 Schoenmann next argues that her defense of the probate 10 litigation was inherently a defense of her trustee practice and 11 was thus an appropriate expenditure of the EIDL as working 12 capital. In her view, because the probate litigants sought to 13 ensure Donn’s estate received its fair share of marital assets 14 under California law, and because those marital assets would 15 include her income from her trustee practice (as well as her 16 rental properties and retirement account, which she claimed for 17 the first time at trial she considered to be part of her 18 business), the probate litigation was a direct threat to her 19 business and any money paid toward defending the probate 20 litigation was an expenditure of working capital. This argument 21 is not credible and appears to purposefully elide the point of 22 the EIDL entirely. No borrower was entitled to use EIDL 23 proceeds to fund a defense of unrelated pre-COVID litigation, 24 even if the outcome of that litigation could conceivably 25 jeopardize the borrower’s business. The COVID-era EIDL program 26 was meant to utilize taxpayer funds to prop up small businesses 27 28 1 and nonprofits directly affected by the pandemic.4 “Any 2 professional should understand the difference between business 3 expenses, also characterized as working capital, and expenses 4 incurred during personal litigation between family members, 5 however characterized.” (Order Granting Motion to Remove E. Lynn 6 Schoenmann as Chapter 7 Trustee, In re Li’s Capital LLC, Case 7 No. 23-3043, Dkt. 144, p.10, aff’d by Schoenmann v. United 8 States Tr. (In re Li’s Cap. LLC), 2025 Bankr. LEXIS 902 (9th 9 Cir. BAP 2025)).5 10 For the first time at trial, Schoenmann presented as a last 11 minute and unlabeled exhibit a portion of the CARES Act that 12 clarifies that for the purpose of making loans, any EIDL 13 applicant is presumed to have been economically injured by the 14 COVID-19 pandemic. This does not help. Whatever presumptions 15 were mandated by the CARES Act, all EIDL applicants, including 16 Schoenmann, were required to affirm that the EIDL would solely 17 be used for that presumed economic injury caused by COVID-19. 18 19 4 Division A, Title I of the CARES Act, which expands EIDL eligibility, is titled “KEEPING WORKERS PAID AND EMPLOYED, HEALTH CARE 20 SYSTEM ENHANCEMENTS, AND ECONOMIC STABILIZATION; KEEPING AMERICAN WORKERS PAID 21 AND EMPLOYED ACT.” Section 7(b) of the Small Business Act, which enables the EIDL program, states that “[i]t is the declared 22 policy of the Congress that the Government should aid, counsel, assist, and protect, insofar as is possible, the interests of 23 small-business concerns in order to ensure free competitive 24 enterprise . . .”

25 5 The court does not apply any principles of estoppel by quoting its Order Granting Motion to Remove E. Lynn Schoenmann as 26 Chapter 7 Trustee, entered in the Li’s Capital matter. The court’s position that working capital does not include capital 27 spent on personal litigation, even if that litigation may 28 indirectly affect a litigant’s business, remains unchanged. 1 The presumption did not eliminate Schoenmann’s duty to be 2 truthful in the Loan Agreement or to use the funds in the manner 3 prescribed by the Loan Agreement. 4 The SBA has shown justifiable reliance on Schoenmann’s 5 representation that she would use the funds solely as working 6 capital for her injured business. As Schoenmann herself noted, 7 by law, the SBA had to presume economic injury when making EIDL 8 funding decisions. The SBA’s witnesses testified that had 9 Schoenmann clarified her true plans for the EIDL, or if she had 10 failed to sign the Loan Agreement or somehow altered it to 11 remove that promise regarding spending of the EIDL, the SBA 12 would have refused to fund the loan even after approval of the 13 Application.6 14 Finally, the court is satisfied that the making of the loan 15 under these false pretenses caused injury to the SBA and finds 16 the SBA established the amount of those damages (principal of 17 $924,700, plus pre-petition interest of $3,040.11). 18 B. Failure to List Contingent Liabilities or Legal Claims 19 in the Application 20 The court is satisfied and finds that Schoenmann’s 21 Application is a materially false written financial statement 22 which renders the EIDL nondischargeable under Section 23 523(a)(2)(B). 24 25 26 6 The record reflects that Schoenmann initially attempted to alter a different part of the Loan Agreement, and was contacted 27 by the SBA to inform her that alterations were not acceptable 28 (SBA Exs. 24, 25). 1 The Application is a document for the SBA to evaluate an 2 applicant’s ability to pay back a loan, considering income, 3 assets (both personal and real property) and liabilities of all 4 types. The Application as a whole is a written financial 5 statement respecting the Debtor’s financial condition. See In 6 re Tallant, 218 B.R. 58, 70 (BAP 9th Cir. 1998) (noting the 7 Ninth Circuit has adopted neither a broad nor expansive view as 8 to what constitutes a statement respecting financial condition 9 and finding a profit and loss statement was a statement 10 regarding financial condition). A written financial statement 11 that contains material omissions may still be nondischargeable 12 under Section 523(a)(2)(B). In re Gertsch, 237 B.R. 160, 168 13 (9th Cir. BAP 1999) (debt nondischargeable where debtor omitted 14 significant liabilities from personal financial statement). 15 The Application specifically directed prospective borrowers 16 to list any “Contingent Liabilities” including contingent 17 liabilities arising from “Legal Claims and Judgments.” The 18 testimony of the SBA’s employees at trial made clear that 19 liabilities listed in any EIDL application would trigger further 20 scrutiny, and potentially denial of the loan. The SBA’s 21 internal Rapid Finance notes show notations to and from multiple 22 loan officers with requests for information and clarification 23 both before and after approval of the Application and prior to 24 funding the EIDL. (SBA Ex. 14). The SBA reviewed and relied on 25 the information Schoenmann provided in the Application, and that 26 reliance was reasonable. As previously noted, a lender may 27 demonstrate reasonable reliance “by showing that it followed 28 normal business practices.” In re Gertsch, 237 B.R. at 170. 1 “Lenders do not have to hire detectives before relying on 2 borrowers' financial statements.... Although a creditor is not 3 entitled to rely upon an obviously false representation of the 4 debtor, this does not require him or her to view each 5 representation with incredulity requiring verification.” Id. 6 (internal quotations omitted). The SBA has shown that it 7 followed its normal practices in reviewing Schoenmann’s 8 Application, and Schoenmann’s withholding of such significant 9 information from her written statement was material to SBA’s 10 reasonable reliance. 11 Schoenmann chose not to disclose the probate litigation, 12 because, she says, she did not believe she could lose, and 13 therefore did not believe it was truly a contingent liability. 14 Whether Schoenmann thought the probate litigation had any merit 15 does not negate the fact that the litigation did indeed exist as 16 a substantial legal claim and contingent liability of hers. It 17 is beyond credulity that any professional, let alone one with 18 Schoenmann’s extensive background, could believe that litigation 19 with such dire potential financial consequences was somehow not 20 a contingent liability. 21 A final legal argument Schoenmann makes in her trial brief 22 is her omissions in her Application cannot be considered written 23 statements respecting financial condition (as they are 24 unwritten) and thus fall out of the purview of Section 25 523(a)(2)(B), and since the omissions concern her financial 26 condition, they fall out of the purview of 523(a)(2)(A) as well. 27 While there have been recent developments regarding 28 fraudulent omissions in the Ninth Circuit, those developments do 1 not remove Schoenmann’s actions from the reach of Section 2 523(a)(2). In Oregon v. Mcharo (In re Mcharo), 611 B.R. 657 3 (9th Cir. BAP 2020), a debtor’s failure to report a change in 4 income was considered a fraudulent omission for the purposes of 5 Section 523(a)(2)(A). More recently, in Manion v. Strategic 6 Funding Source, Inc., d/b/a/ Kapitus Inc. (In re Manion), 667 7 B.R. 473 (9th Cir. BAP 2025), a debtor who signed an agreement 8 stating his financial circumstances had not changed 9 significantly when in fact they had, was found to have made a 10 fraudulent omission under Section 523(a)(2)(A). In short, 11 because an “omission” is definitionally not a “statement,” then 12 it cannot be a statement regarding financial condition and is 13 still actionable under Section 523(a)(2)(A). Id. at 480-81. 14 The facts of this case are distinguishable from Mcharo and 15 Manion, both of which involve debtors failing to report changes 16 to their finances while under an obligation to do so. This case 17 is more closely aligned with the facts of Gertsch, in which a 18 debtor submitted a financial statement that contained fraudulent 19 omissions to create an overall skewed picture of that debtor’s 20 financial state and was analyzed under 523(a)(2)(B). Here, as 21 in Gertsch, the entirety of the Application is a financial 22 statement, and the omissions within that financial statement 23 mean that the Application as a whole is a false representation 24 of Schoenmann’s financial condition. 25 However, the Manion court recognized that the analysis 26 between Section 523(a)(2)(A) and (B) can become “murky”. In re 27 Manion, 667 B.R. at 480. To the extent the omissions should be 28 taken out of the context of the overall financial statement, 1 those omissions would also be nondischargeable under Section 2 523(a)(2)(A), and with a far lower threshold of proof than that 3 of Section 523(a)(2)(B). For fraudulent omissions, a court need 4 only find that the omitted information was material, and that 5 the debtor had a duty to disclose the information. Apte v. 6 Romesh Japra, M.D., F.A.C.C., Inc. (In re Apte), 96 F.3d 1319, 7 1323 (9th Cir. 1996) (“The nondisclosure of a material fact in 8 the face of a duty to disclose has been held to establish the 9 requisite reliance and causation for actual fraud under the 10 Bankruptcy Code.”). 11 The SBA was proximately harmed in making the loan to a 12 debtor in the face of limited Congressionally appropriated funds 13 that could and should have gone to other borrowers. 14 The EIDL is nondischargeable under Section 523(a)(2)(B). 15 III. The Penalty Owed to the Small Business Administration under 16 15 U.S.C. § 636(b) is Nondischargeable Pursuant to 11 17 U.S.C. § 523(a)(7) 18 Section 523(a)(7) exempts from discharge any debt “for a 19 fine, penalty, or forfeiture payable to and for the benefit of a 20 governmental unit, and is not compensation for pecuniary 21 loss[.]” 22 Section 636(b) states that “Whoever wrongfully misapplies 23 the proceeds of a loan obtained under this subsection7 shall be 24 civilly liable to the [SBA] Administrator in an amount equal to 25 one-and-one half times the original principal of the loan.” 26 This liability applies to anyone who wrongfully misapplies the 27 28 7 Section 636 enables the EIDL program. 1 EIDL proceeds, no matter how the EIDL was obtained. In other 2 words, even if Schoenmann had the best of intentions when 3 applying for the EIDL, her wrongful misuse of the EIDL would 4 subject her to the penalty of Section 636(b) and 5 nondischargeability of that penalty under Section 523(a)(7). 6 While Schoenmann argues that a civil liability is somehow 7 not a synonym for “fine” or “penalty,” the court concludes that 8 in the context of the surrounding language of Section 636(b), 9 the civil liability described by the statute is indeed a 10 penalty, nondischargeable in her bankruptcy. 11 A. Section 636(b) is a Penalty Payable to a Government 12 Unit 13 Section 636(b) does not define “civilly liable”, and the 14 Code does not define “penalty.” “A fundamental canon of 15 statutory construction is that, unless otherwise defined, words 16 will be interpreted as taking their ordinary, contemporary, 17 common meaning.” Perrin v. U.S., 444 U.S. 37, 42 (1979) 18 (citations omitted). “When determining the plain meaning of 19 language, we may consult dictionary definitions.” Af–Cap, Inc. 20 v. Chevron Overseas (Congo) Ltd., 475 F.3d 1080, 1088 (9th Cir. 21 2007). Webster’s Dictionary lists a few applicable definitions, 22 including: “the suffering or sum to be forfeited to which a 23 person agrees to be subjected in the case of nonfulfillment of 24 stipulations” and a “disadvantage, loss, or hardship due to some 25 action.”8 The civil liability described by Section 636(b) for 26 wrongful misapplication of EIDL proceeds is, indeed, the 27

28 8 www.merriam-webster.com/dictionary/penalty. 1 dictionary definition of a penalty. It is not compensation for 2 a pecuniary loss and is an additional amount owed for wrongful 3 conduct. 4 The court’s analysis may stop at a plain reading of the 5 statute. However, looking to the legislative history of Section 6 636(b) shows that Congress explicitly intended the “civil 7 liability” in the statute to be a penalty. In a 1972 statement 8 to Congress in support of the language of Section 636(b) at 9 issue in this case, then Small Business Administrator Thomas S. 10 Kleppe stated the following: 11 “Further, we support the concept of a civil 12 penalty for any borrower who wrongfully 13 misapplies the proceeds of his loan. 14 Enactment of such a penalty provision should 15 enhance the ability of this Agency to 16 prosecute successfully those cases of 17 willful or wrongful use of loan proceeds 18 which come to our attention.” 19 Small Business Disaster Loans: Hearings on S. 1649, S.3337, 20 S.3446, S. 3725, S.3795, S.3797, S.3801, and H.R. 15692 Before 21 the Subcomm. on Small Business of the S. Comm. On Banking, 22 Housing, and Urban Affairs, 92nd Cong. 341 (1972) at 44. 23 The court is satisfied that the 150% penalty established 24 under Section 636(b) is nondischargeable pursuant to Section 25 523(a)(7). Schoenmann’s misuse of those proceeds to pay her 26 probate litigation counsel, her bankruptcy counsel and save the 27 rest in a brokerage account results in her additional statutory 28 liability. 1 Schoenmann is liable for a penalty of one-and-one half 2 times the principal amount of the EIDL pursuant to Section 3 636(b), and that penalty is nondischargeable under Section 4 527(a). 5 IV. Conclusion 6 For the reasons set forth above, the outstanding EIDL 7 proceeds owed by Schoenmann to the SBA are nondischargeable 8 under Section 523(a)(2) and a separate penalty owed to the SBA 9 due to Schoenmann’s misuse of the EIDL is nondischargeable under 10 Section 523(a)(7). 11 A Judgment After Trial against Schoenmann in the amount of 12 $2,314,790.11 (EIDL principal of $924,700.00; pre-petition 13 interest of $3,040.11; $1,387,050.00) is being entered 14 concurrently with this Memorandum Decision. 15 **END OF MEMORANDUM DECISION**

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