Tuesday, December 3, 2019
Page 3
Ninth Circuit:
Old Age Isn’t Excuse for Bankrupt’s Failure To Proffer Reports of Financial Condition
By a MetNews Staff Writer
The Ninth U.S. Circuit Court of Appeals has held that no leniency need be accorded a 92-year-old attorney, on inactive status, who, faced with judgments against him amounting to $18 million, was denied a discharge in bankruptcy because he has not provided records showing his assets.
The lawyer is Gerson Irving Fox, who was admitted to the State Bar of California on June 11, 1958. He claims that he just didn’t keep financial records.
District Court Judge Manuel Real of the Central District of California, since deceased, said in an Aug. 1, 2018 decision affirming the Bankruptcy Court’s denial of a discharge:
“In this case, there is no genuine dispute that Appellant has worn many professional hats— he has been a lawyer, an accountant, and a sophisticated businessman. It is undisputed that he was a Certified Public Accountant and admitted to the California State Bar. It is undisputed that he co-founded and operated a business, Barry’s Jewelers, for almost forty years. It is also undisputed that Appellant has invested in several real properties through numerous single purpose entities. These facts, taken together, show that Appellant is indisputably a sophisticated business person and subject to a higher standard of record keeping.”
Real went on to say:
“The question here is whether a reasonable person with Appellant’s education, experience, and sophistication would have kept adequate books and records. Based on the record, there is no genuine dispute of material fact that a reasonable person with Appellant’s education, experience, and sophistication would have kept adequate books and records.”
Fox did not file tax returns in 2013 or 2014.
Real remarked:
“In this case. Appellant suggests that his failure to maintain adequate records was related to his age and failing health, however he cannot exempt himself from this duty by blandly asserting the status of an elderly person in poor health.”
The Ninth Circuit affirmed in a memorandum decision, filed Friday. It says that Fox “argues his age and a variety of physical ailments justified the lack of records” but notes that his “counsel specifically disclaimed this justification before the bankruptcy court,” adding:
“…Fox does not explain why his age and physical ailments rendered him unable to file tax returns or maintain sufficient records to allow the trustee to assess his financial condition. Other individuals in similar circumstances would have far more records than what Fox maintained.”
The case is In re Fox, 18-56182.
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