United States District Court, D. Maryland
RAYMON K. NELSON Appellant,
CLINTON A. JACKSON Appellee.
LIPTON HOLLANDER UNITED STATES DISTRICT JUDGE
bankruptcy matter is before the Court for the third
time. In this instance, Raymon Nelson, M.D., the
debtor and appellant, challenges an Order of the United
States Bankruptcy Court issued on August 3, 2018 (ECF 1-1),
denying Nelson's discharge, pursuant to 11 U.S.C.
§§ 727(a)(4) and (a)(7). See ECF 1 (the
“Notice of Appeal”); see also ECF 1-2
(Bankruptcy Court docket); ECF 17 (Nelson's Brief). The
Order followed a two-day trial held in July 2018 (Lipp, J.
presiding). See ECF 25-1 (Transcript of July 23,
2018); ECF 25-2 (Transcript of July 24, 2018).
case is rooted in an adversary proceeding filed by Clinton
Jackson against Nelson, the debtor in a related Chapter 7
bankruptcy proceeding. Jackson opposes the appeal. ECF 23
(Jackson's Brief). Although Jackson is pro se, he is an
attorney. See ECF 25-2 at 93-94. Nelson has not
replied to Jackson's brief, and the time to do so has
expired. See Fed. R. Bankr. P. 8018(a)(3); Local
reasons that follow, I shall affirm the Bankruptcy
Court's Order (ECF 1-1) denying Nelson's discharge.
Procedural and Factual Background 
a cardiologist, has an ownership interest in three
businesses: Raymon K. Nelson, Classic Cardiology, MD, P.A.,
Inc. (“Classic Cardiology”); All About the Heart,
LLC (“AAH”); and All About the Property, LLC
(“AAP”). See ELH-15-3978 (“Appeal
I”), ECF 25 at 2 (citing Appeal I, ECF 11 at 10, 12).
Between June 2005 and April 2010, Nelson employed Jackson as
a consultant to perform various services, including the
securing of corporate financing. Appeal I, ECF 25 at 2
(citing Appeal I, ECF 22 at 9-10, ¶ 3).
a creditor of Nelson, ceased working for Nelson in April
2010. Appeal I, ECF 25 at 2 (citing Appeal I, ECF 22 at 9,
¶ 3). He subsequently filed suit against Nelson and
Classic Cardiology in the Circuit Court for Anne Arundel
County for breach of contract. Clinton A. Jackson v.
Raymon K. Nelson M.D., P.A. Classic Cardiology, et al.,
No. 02-C-11-159529. On September 24, 2013, that court entered
judgment in favor of Jackson in the amount of $135, 363.72.
Appeal I, ECF 25 at 2 (citing Appeal I, ECF 2-4 at 36). The
circuit court also awarded Jackson attorney's fees in the
amount of $64, 147. Id. Nelson appealed to the
Maryland Court of Special Appeals. Appeal I, ECF 25 at 2
(citing Appeal I, ECF 11 at 10). On May 7, 2019, the appeal
was stayed, see Jackson, No. 02-C-11-159529 (Order
of May 7, 2019), pending the resolution of Chapter 11
bankruptcy proceedings of Coastal Cardiology, LLC, a
garnishee. In re: Coastal Cardiology, LLC,
TJC-19-15398, ECF 1 (Bankr. D. Md.).
November 7, 2013, Classic Cardiology filed a voluntary
petition for bankruptcy relief pursuant to Chapter 11 of the
United States Bankruptcy Code (the “Corporate
Case”). In re: Raymon K. Nelson, M.D., P.A. Classic
Cardiology, Inc., WIL-13-28961, ECF 1 (Bankr. D. Md.). A
week later, on November 14, 2013, Nelson filed a voluntary
petition for bankruptcy relief pursuant to Chapter 11 of the
United States Bankruptcy Code (the “Individual
Case”). In re: Raymon Kevin Nelson,
WIL-13-29248, ECF 1 (Bankr. D. Md.). Both petitions were
subsequently converted to petitions under Chapter 7.
See Appeal I, ECF 25 at 3 (citing Corporate Case,
ECF 180, and Individual Case, ECF 149).
cases, Nelson and creditors participated in several meetings
mandated under 11 U.S.C. § 341. In the Individual Case,
the § 341 meeting was held on December 18, 2013, and
continued on March 21, 2014, and April 21, 2014. Individual
Case, ECF 7; ECF 49; ECF 57. In the meeting of April 21,
2014, the Trustee directed Nelson to amend his schedules to
disclose that he was formerly the trustee of his
brother's trust, the Ralph K. Nelson Trust. ECF 23 at
¶ 0025-A0026 (Transcript of April 21, 2014 Meeting).
After the Individual Case was converted to a Chapter 7
proceeding on January 26, 2015, a § 341 meeting was held
on March 6, 2015. Individual Case, ECF 150.
Section 341 meeting in the Corporate Case was conducted on
December 16, 2013, and continued on March 6, 2014. Corporate
Case, ECF 21; ECF 63. Following conversion to Chapter 7 on
January 27, 2015, a § 341 meeting was held on March 24,
2015, and continued on April 21, 2015. Corporate Case, ECF
206. In the final meeting of April 21, 2015, Nelson
represented to the Trustee that as of January 28, 2015, there
were no outstanding accounts receivable in connection with
Medicare services. ECF 23 at ¶ 0046 (Transcript of April
21, 2015 Meeting).
5, 2015, Jackson initiated an adversary proceeding against
Nelson in the Individual Case. See Appeal I, ECF 25
at 3. Jackson alleged that “[t]he Debtor
knowingly and fraudulently made a false oath or
account.” Case ELH-18-256 (“Appeal II”),
ECF 4-3 at 5, ¶ 12. And, he claimed that “[t]he
Debtor concealed property that belonged to the estate with
the intent to hinder, delay or defraud the Creditors and/or
The Chapter 7 Trustee . . . .” Id. ¶ 13.
In particular, the complaint alleged, inter alia,
that notwithstanding Nelson's amendments to his
submissions to the Bankruptcy Court, Nelson failed to
disclose income obtained from Classic Cardiology and AAH.
See generally Id. at 5-11, ¶¶ 14-26.
Further, Jackson alleged that Nelson failed to disclose a
judgment debt incurred by AAP. See Id. at 14-15,
¶ 31. Accordingly, Jackson sought the denial of
Nelson's discharge, pursuant to “11 U.S.C. Sections
727(a)(2) and/or (a)(3) and/or (a)(4) and/or (a)(5) and/or
(a)(7) . . . .” Id. at 17; see also
Appeal II, ECF 4-2 at 1; ECF 1-2; ECF 4-5 (Nelson's
Answer, dated June 8, 2015).
Jackson moved for summary judgment in the adversary
proceeding. Appeal I, ECF 2-7 at 1-2. In an Order of December
17, 2015, the Bankruptcy Court granted Jackson's summary
judgment motion, and denied the debtor's discharge under
11 U.S.C. § 727(a)(4) and § 727(a)(7).
Id., ECF 2-28. Nelson challenged that ruling in an
appeal to this Court. Id., ECF 1.
Memorandum and Order of July 20, 2016, I reversed and
remanded for further proceedings. Appeal I, ECF 25; ECF 26.
In particular, I concluded that there was a dispute of
material fact as to whether Nelson intended to omit or
mischaracterize information contained in his financial
disclosure forms. Id., ECF 25 at 28-29.
Additionally, I concluded that the Bankruptcy Court had
impermissibly assessed the credibility of evidence submitted
in the context of Jackson's summary judgment motion.
remand, Jackson moved for partial summary judgment, asking
the Bankruptcy Court, inter alia, to deny
Nelson's discharge based upon defendant's conduct in
violation of 11 U.S.C. §§ 727(a)(3), 727(a)(5)
and/or 727(a)(7). Appeal II, ECF 4-31. In the motion, Jackson
averred, inter alia, that Nelson had
“concealed” and failed to “explain”
assets in financial disclosure forms related to the Corporate
Case. Id. at 6-8, 11. Further, Jackson contended
that the alleged “concealment” of assets
“made it impossible to ascertain the Corporate
Debtor's true financial condition.” Id. at
20. And, Jackson argued that 11 U.S.C. §§
727(a)(3), 727(a)(5), and 727(c)(7) “do not require the
Court's finding of [Nelson's] fraudulent
intent” as to any funds he may have concealed.
Id. at 3.
Bankruptcy Court held a motion hearing on January 23, 2018.
Appeal II, ECF 4-1 (hearing transcript); id., ECF
4-65 (same). By Order of the same date, the Bankruptcy Court
denied Jackson's summary judgment motion. Id.,
challenged that ruling in an appeal to the District Court on
January 25, 2018. See Appeal II, ECF 1; ECF 4-53. By
Memorandum and Order of June 25, 2018, I dismissed
Jackson's appeal as premature. Appeal II, ECF 12; ECF 13.
And, I remanded the case to the Bankruptcy Court for further
proceedings. Id. at 20.
Lipp subsequently held a two-day trial on July 23, 2018 and
July 24, 2018. See In re: Raymon Kevin Nelson,
WIL-15-228, ECF 247, ECF 248. Nelson, the debtor, was
represented by counsel. ECF 25-1 at 5. Jackson, the creditor,
proceeded pro se. Id.
trial, the parties called several witnesses. Jackson called
Nelson (ECF 25-1 at 9); Judith Clay, a Certified Public
Accountant (“CPA”) (ECF 25-1 at 149); and Edward
McDuffie, Nelson's part-time bookkeeper (ECF 25-2 at 7).
Nelson called himself (ECF 25-2 at 152), as well as Jackson
(ECF 25-2 at 96); Cheryl Youngblood, his wife (ECF 25-2 at
120); and Troy Emory, Nelson's tax preparer (ECF 25-2 at
addition, Judge Lipp considered numerous exhibits that were
admitted into evidence in connection with the Individual
Case. ECF 25-1 at 6-33. These included Nelson's
“Voluntary Petition, ” dated November 14, 2013
(Individual Case, ECF 1), and Nelson's “Statement
of Financial Affairs, ” amended on June 16, 2014
(id., ECF 80). She also considered Nelson's
schedules, as amended: “Schedule B - Personal Property,
” dated January 29, 2014 (Individual Case, ECF 33 at
1-3), again amended on June 16, 2014 (id., ECF 82;
see ECF 25-1 at 15); “Schedule C - Property
Claimed as Exempt, ” dated January 29, 2014 (Individual
Case, ECF 33 at 4); “Schedule D - Creditors Holding
Secured Claims, ” dated June 16, 2014 (id.,
ECF 82 at 1); “Schedule F - Creditors Holding Unsecured
Nonpriority Claims, ” dated June 16, 2014
(id., ECF 82 at 2-6); “Schedule G - Executory
Contracts and Unexpired Leases, ” dated June 16, 2014
(id., ECF 82 at 7); “Schedule H - Codebtors,
” dated June 16, 2014 (id., ECF 82 at 8);
“Schedule I - Current Income of Individual Debtor(s),
” dated June 16, 2014 (id., ECF 82 at 9);
“Schedule J - Current Expenditures of Individual
Debtor(s), ” dated June 16, 2014 (id., ECF 82
at 10); and “Summary of Schedules, ” dated June
16, 2014. Id., ECF 82 at 11-13.
addition, Judge Lipp considered numerous exhibits related to
the Corporate Case. These included Classic Cardiology's
“Voluntary Petition, ” amended on January 11,
2014 (Corporate Case, ECF 42); “Statement of Financial
Affairs, ” amended on January 10, 2014 (id.,
ECF 40); “Schedule B - Personal Property, ”
amended on January 10, 2014 (id., ECF 38 at 4);
“Schedule D - Creditors Holding Secured Claims, ”
amended on January 10, 2014 (id., ECF 38 at 8);
“Schedule E - Creditors Holding Unsecured Priority
Claims, ” filed November 7, 2013 (id., ECF 1
at 15); “Schedule F - Creditors Holding Unsecured
Nonpriority Claims, ” amended on January 10, 2014
(id., ECF 38 at 11); “Schedule G - Executory
Contracts and Unexpired Leases, ” filed on November 7,
2013 (id., ECF 1 at 23); and “Schedule H -
Codebtors, ” amended on January 10, 2014. Id.,
ECF 38 at 18.
noted, in his Individual Case, Nelson amended his schedules
on January 29, 2014 (Individual Case, ECF 33), and again on
June 16, 2014 (id., ECF 82). See ECF 25-1
at 15. He also amended his “Statement of Financial
Affairs, ” dated June 16, 2014 (Individual Case, ECF
80). ECF 25-1 at 15-16. Nelson acknowledged that at the time
he amended his Statement of Financial Affairs, he was a
trustee of the Adeshoie Family Trust. ECF 25-1 at 16.
However, he failed to list the trust on Line 14,
“Property held for another person.” Individual
Case, ECF 79 at 6. When Nelson was asked why he failed to do
so, he testified that he “didn't understand”
that he “was supposed to.” ECF 25-1 at 17. But,
Nelson claimed that the Adeshoie Trust was the “only
one” he failed to list. Id.
addition, Nelson testified that he did not list the Ralph
Nelson Trust in his Statement of Financial Affairs. ECF 25-1
at 55. Nelson claimed that when he filed for bankruptcy on
November 14, 2013, he “wasn't legally responsible
for” and “had no access to” the Ralph
Nelson Trust. Id. However, he acknowledged that he
should have listed the trust on Schedule F, “Creditors
Holding Unsecured Nonpriority Claims, ” as amended on
June 16, 2014 (Individual Case, ECF 82 at 3). ECF 25-1 at 56.
explained that following the death of his brother, Ralph
Nelson, in 2005, he was appointed the trustee of his
brother's trust, the Ralph Nelson Trust. ECF 25-2 at 160.
However, a “legal battle" with Ralph's wife
ensued, because she claimed that Nelson's appointment as
trustee was fraudulent. Id. Nelson claimed that he
subsequently entered “into a settlement agreement for
$100, 000” with the wife, and he “turned over all
the [trust's] records to another trustee who was
appointed by the Court.” Id. As a result, he
claimed that he “had nothing to do with Ralph Nelson
Trust” at the time he filed for bankruptcy.
Id. at 161. And, he notified the new trustee of his
bankruptcy filing. Id.
September 15, 2015, in response to a subpoena and document
request issued to the Centers for Medicare and Medicaid
Services (“CMS”) on August 11, 2015, CMS
produced, inter alia, the billing records of Classic
Cardiology from January 2011 through April 21, 2015. ECF 23,
A0395 (CMS Letter to Jackson, dated September 15, 2015). For
the period of January 28, 2015, to April 21, 2015, the
records indicated that Classic Cardiology billed CMS for
Medicare services, in the amount of $99, 678.00. ECF 23,
A0397. In the same period, CMS also paid Classic Cardiology a
total of $32, 463.96. Id.
was asked about the CMS records. He acknowledged that
following the conversion of the Corporate Case to Chapter 7
on January 27, 2015, Classic Cardiology continued to bill
CMS. ECF 25-1 at 80-81. Nelson was asked several times
whether he told the Chapter 7 Trustee at the § 341
meeting of April 21, 2015, that Classic Cardiology was no
longer billing CMS after conversion. Id. at 81-82.
Nelson responded that he did not “remember” or
“recall”, but he insisted that “it's
true” that Classic Cardiology was no longer billing CMS
once Classic Cardiology “went into Chapter 7.”
Nelson claimed that he did not list any payments under Line
23, “Withdrawals from a partnership or distributions by
a corporation, ” in his Statement of Financial Affairs.
ECF 25-1 at 62. Of relevance here, the caption of Line 23
provides: “If the debtor is a partnership or
corporation, list all withdrawals or distributions credited
or given to an insider, including compensation in any form,
bonuses, loans, stock redemptions, options exercised and any
other perquisite during one year immediately preceding the
commencement of this case.” Corporate Case, ECF 40 at
claimed that he did not list any payments because he
“didn't understand” that the question asked
for all withdrawals made within one year preceding the filing
of the bankruptcy petition. ECF 25-1 at 61. When confronted
with Classic Cardiology's Bank Account Statements, Nelson
acknowledged that he and his wife, Cheryl Youngblood, made
numerous withdrawals for personal payments to Auto Zone,
Petco, and mortgage services companies, among others.
Id.; see also ECF 23 at ¶ 0261-A0362
(Classic Cardiology Bank Account Statements, dated November
1, 2012, to November 30, 2013).
Jackson rested, Nelson moved for a “Directive
Verdict.” ECF 25-2 at 49. With Jackson's consent,
Judge Lipp dismissed Jackson's claims filed pursuant to
11 U.S.C. §§ 727(a)(2)(b), (a)(3), and (a)(4)(d).
Id. at 83-84. As a result, the only remaining claims
were those brought under §§ 727(a)(4)(b), (a)(5),
and (a)(7). Id.
respect to § 727(a)(5), Judge Lipp granted the motion
and entered judgment in favor of Nelson. Id. at 85.
However, as to §§ 727(a)(4)(b) and (a)(7), she
denied the motion. Id. She explained, id.
All right. So, the only thing that is left that you are
dealing with is 727(a)(4) and (a)(7) and I find that there is
sufficient evidence presented to deny the Motion for
Directive [sic] Verdict or the Motion to Dismiss at this
There are a multitude of non-disclosures in the Bankruptcy
Schedules. There - and there is both in the individual case
and in the corporate case.
As I described in the Motion for Summary Judgment, the ones
that really, really troubled me - and again there is just a
multitude of them - is the failure to disclose in the
corporate case transfers that were made within a year to the
benefit of Ms. Youngblood and to the benefit of the Debtor.
That is all of those payments that the Debtor was, I guess,
capturing as income, if that was what he was doing or
whatever, needed to be either listed by the Debtor as his
income and still would have listed disclosures to Ms.
Youngblood. She is an insider.
You have to go through the entire year. Payments were made
for her car by the corporate entity. Those payments needed to
be listed. It is on behalf of an insider. The payments that
remain on the mortgage needed to be listed, itemized. All
payments with a year to the Debtor.
If you wanted to put a little note there that it was also -
he used it as income or whatever, [he] could have done that.
But he did not disclose an[y] of it.
Those are potential fraudulent conveyances that a Trustee has
the right to investigate and potentially sue those people to
collect because they benefitted them. If those disclosures
were not made I am very concerned that the- This Ralph Nelson
Trust was not listed as a creditor. Listing it as a loss does
not give a creditor notice of the bankruptcy. This appeared
to be a situation where it would potentially, I do not know
for a fact, have been a non-dischargeable debt. And it was
not disclosed. They had the right to participate in the
bankruptcy case and to file a complaint. Now, maybe they
backed off because Mr. Jackson has aggressively pursued
discharge and with a discharge then maybe - nobody's debt
would be discharged.
So, it maybe [sic] they backed off if in fact they know about
it, I would assume by now somebody has told them, but they
needed to have direct information that was never provided.
* * *
And I find that those lack of disclosures are reckless
disregard for the truth. They are sufficient to raise enough
of a question and then to pass the responsibility of the
Debtor to come back and show that it was not. To explain it.
To explain his conduct.
Judge Lipp's ruling on the motion, Nelson called several
witnesses. As noted, they included Jackson (ECF 25-2 at 96);
Cheryl Youngblood, Nelson's wife (ECF 25-2 at 120); and
Troy Emory, Nelson's tax preparer (ECF 25-2 at 140). In
addition, Nelson testified again. ECF 25-2 at 152.
stated that in 2013, she worked as the office manager of her
husband's business, Classic Cardiology. ECF 25-2 at 121.
As office manager, she recorded Classic Cardiology's
financial transactions, which included inputting checks and
paying bills through a computer program called
“Quickbooks.” Id. at 122. When asked
about the office's bills, Youngblood acknowledged that
she paid the couple's personal “debt” and
home mortgage out of Classic Cardiology's bank account.
Id. at 123-24. But, Youngblood maintained that
Nelson “did not” instruct her to make those
payments. Id. at 124. She further claimed that she
did not pay for any additional personal expenses out of the
company's bank account. Id.
testified that Nelson hired him to prepare Nelson's 2013
personal and business tax returns as well as the
“monthly operating reports” of Classic
Cardiology. Id. at 141-42. In preparing Nelson's
business tax returns, Emory primarily relied on the expenses
listed in Quickbooks. Id. at 143.
testified that when he filed for bankruptcy on November 14,
2013, he was “under duress because Mr. Jackson had
garnished all of [his] accounts.” Id. at 154.
Nelson added that he filed for bankruptcy because he
“was being sued” and was “under
pressure.” Id. at 157. He explained,
id.: “Clint Jackson had had a yellow piece of
tape wrapped around my house. All of my cars were wrapped in
yellow. Marshals were knocking on my door on his behalf. I
was under pressure. I couldn't even get into my
house.” Nelson maintained that, in filling out his
schedules, he “wanted to be as truthful as
conclusion of the evidence, Judge Lipp said, ECF 25-2 at
I have already indicated that there were a series of
non-disclosures, clearly the debtor knows how to amend