United States v. Hale

• Decision Date: 12 August 2014
• Docket Number: No. 13–4099.,13–4099.
• Citation: 762 F.3d 1214
• Parties: UNITED STATES of America, Plaintiff–Appellee, v. Thomas Francis HALE, Defendant–Appellant.
• Court: U.S. Court of Appeals — Tenth Circuit

762 F.3d 1214

UNITED STATES of America, Plaintiff–Appellee,

v.Thomas Francis HALE, Defendant–Appellant.

No. 13–4099.

United States Court of Appeals,

Tenth Circuit.

Aug. 12, 2014.

Joseph Alexander Little, IV, Bone McAllester Norton, PLLC, Nashville, TN, for the Defendant–Appellant.

Stewart Michael Young, Assistant United States Attorney (David B. Barlow, United States Attorney, with him on the briefs), Office of the United States Attorney, District of Utah, Salt Lake City, UT, for the Plaintiff–Appellee.

Before LUCERO, HARTZ, and HOLMES, Circuit Judges.

LUCERO, Circuit Judge.

Thomas Francis Hale filed for bankruptcy in 2005. During the course of that bankruptcy, he allegedly lied under oath and attempted to conceal from the bankruptcy trustee an agreement to sell property. After his relationship with the trustee became antagonistic, Hale sent her a package with unidentified material and a note that said, “Possible Haz-mat? Termites or Hanta virus [sic] from mice?” In 2013, Hale was convicted of making a materially false statement under oath in a bankruptcy case, concealing a contract from the bankruptcy trustee and creditors, and perpetrating a hoax regarding the transmission of a biological agent. Exercising jurisdiction pursuant to 28 U.S.C. § 1291, we affirm in part and reverse in part.

I

In October 2005, Hale filed a voluntary Chapter 13 bankruptcy petition, which “authorizes an individual with regular income to obtain a discharge after the successful completion of a payment plan approved by the bankruptcy court.” Marrama v. Citizens Bank of Mass., 549 U.S. 365, 367, 127 S.Ct. 1105, 166 L.Ed.2d 956 (2007). In Schedule A to Hale's Statement of Financial Affairs, signed under penalty of perjury and filed with the bankruptcy court, Hale listed three pieces of real property. He stated that a parcel in Salt Lake City, Utah (the “SLC Property”) had a market value of $190,000 and was subject to a secured claim of $198,000. Hale also listed two properties in Pocatello, Idaho, and indicated that both properties were subject to secured claims in excess of their market values. Hale's Schedule A thus reflected that there was no equity in his real property. Although tax valuations on the SLC Property ranged from $189,800 to $198,300 between 2001 and 2004, the 2005 assessment—released several months before Hale filed for bankruptcy—indicated that the property was worth $268,900. Hale challenged the 2005 assessment, and although his challenge ultimately failed, it was pending at the time the Schedule A was filed.

Hale moved to convert his bankruptcy case from Chapter 13 to Chapter 7 on July 13, 2006, and an order was subsequently entered to that effect. “Chapter 7 authorizes a discharge of prepetition debts following the liquidation of the debtor's assets by a bankruptcy trustee, who then distributes the proceeds to creditors.” Marrama, 549 U.S. at 367, 127 S.Ct. 1105. Although “under Chapter 13 the debtor retains possession of his property,” pursuant to “Chapter 7 the debtor's nonexempt assets are controlled by” a trustee. Id. Elizabeth Loveridge, a panel Chapter 7 trustee for the state of Utah, became trustee of Hale's bankruptcy estate.

Loveridge questioned Hale at his first meeting of creditors on August 22, 2006. The meeting was recorded and Hale was placed under oath. The following interaction took place between Loveridge and Hale:

Loveridge: And did you sign the petitions, schedules, statements, related bankruptcy documents you filed with the court?

Hale: Yes, ma'am.

Loveridge: Did you read these documents before you signed them?

Hale: Yes, ma'am.

Loveridge: Do you have personal knowledge of the information contained in your bankruptcy documents?

Hale: Yes, ma'am.

Loveridge: To your best knowledge and belief, is the information contained in your petition schedules, statements and related bankruptcy documents true, complete and accurate?

Hale: Yes, ma'am.

Loveridge: Are you aware of any changes or amendments that need to be made?

Hale: No, ma'am.

Although Loveridge believed, at the time of the meeting, that the value listed for the SLC Property on Hale's Schedule A was less than its actual market value in August 2006, and although she asked specific questions regarding the SLC Property, she did not inquire specifically about the value that Hale listed on Schedule A.

Hale did not divulge that he had placed an ad regarding the SLC Property in the Salt Lake Tribune and the Deseret Morning News. The ad, which was published on the day of the meeting, listed the SLC Property for “$396,075 or appraisal.” A real-estate agent cold-called Hale after seeing the advertisement, and eventually located an interested purchaser, Kenny Riches. Hale never informed the agent that there was an impediment to a sale or that he was involved in a bankruptcy case. On September 1, 2006, Hale and Riches entered a “Real Estate Purchase Contract,” agreeing on a sale of the SLC Property for $395,000. In an addendum to the contract, Hale committed to contribute half of the buyer's closing costs, up to $6,000. Additionally, both Hale and Riches signed a handwritten document on September 1, 2006, granting Hale the right to rent a portion of the rear home on the SLC Property for $300 per month for up to ten years. Hale did not inform Riches about the bankruptcy proceeding.

On September 21, 2006, an employee of Landmark Title called Loveridge and informed her that a closing had been scheduled on the SLC Property. Loveridge requested copies of the documents and directed the title company to cancel the sale. Later that day, Hale made two unannounced visits to Loveridge's office, appearing “agitated and angry.” During the first visit, Hale told Loveridge that the title company was supposed to inform her of the sale earlier but had erred. A representative of the title company, however, later testified that Hale never indicated to her that he was involved in a bankruptcy case.

During his second visit that day, Hale gave Loveridge several documents. These included two motions to the bankruptcy court: an ex parte motion to approve the sale of the SLC Property and a motion to re-convert the case to Chapter 13. In the ex parte motion, Hale said that, in his experience as an attorney who had practiced bankruptcy law for more than twenty years, “it is rare that a debtor's property will ever bring full market value on a forced sale by a Trustee” and that, although he “requested in writing that the Trustee expedite the sale process,” she had not done so. A letter from Hale attached to the ex parte motion and dated September 11, 2006, requested that Loveridge contact the title company and bemoaned her alleged lack of a fax machine and “reluctance to answer [Hale's] calls.” Loveridge testified that she had a functioning fax machine at the time and that Hale had not called her. Moreover, an affidavit, dated September 11, 2006, from the individual who managed Hale's office stated that the letter attached to the ex parte motion was mailed on September 11. But the affidavit refers to the ex parte motion, which was not filed until September 21, 2006, and would not have been created had Loveridge received and agreed with the letter.

A real estate agent, on behalf of Loveridge, contacted Riches to renegotiate the sale of the SLC Property. Within one week, Loveridge and Riches executed a new contract, again for $395,000. Unlike the first contract, the subsequent agreement did not make the seller responsible for any portion of the closing costs, and the home was sold “as is,” with “no warranties expressed or implied.” Additionally, under the second contract, Hale did not retain the right to rent a portion of one of the homes on the SLC Property; to the contrary, the contract required the eviction of the current tenants. After the trustee moved for approval of the sale, Hale faxed a hand-written message to Landmark Title promising a “ full round of litigation at the very least.” On October 17, 2006, the bankruptcy judge signed an order granting approval of the trustee's sale of the property to Riches.

Six days after the order was signed granting approval for the sale, Hale filed an emergency motion to dismiss his bankruptcy case. He subsequently received a notice to quit the SLC Property from Loveridge's attorney, dated October 31, 2006. The bankruptcy court denied Hale's emergency motion to dismiss on November 13, 2006. The next day, Loveridge's attorney sent Hale a letter stating that eviction proceedings pertaining to the SLC Property had been initiated. The letter reflected a perceived lack of cooperation from Hale, noting that Hale had cancelled insurance and water service for both Pocatello properties.

During this timeframe, Loveridge received several faxes from Hale regarding insurance, electricity, and snow removal on the Idaho properties, among other matters. The record reflects that Loveridge received six different handwritten faxes from Hale on November 16, 2006, alone. Those notes concerned potential code violations at one of the Pocatello properties, tax arrearages and payments of mortgages, the functioning of fire extinguishers, and the winterizing of outdoor spigots. One fax simply said “Please check out the possible haz-mat problem sent in an orange envelope today.”

Loveridge received an orange envelope, listing the SLC Property as a return address, on November 20, 2006. Hand-written on the envelope was: “Caution! Handcancel please!” Loveridge immediately called the police. The Salt Lake City police and fire departments, U.S. Postal inspectors, members of the joint terrorism task force, and FBI agents responded. After x-raying the envelope to ensure that there were no explosives inside and testing it for radiation and volatile organic compounds, the envelope was opened by a member of the bomb squad. Inside was a sandwich baggy with an unidentified material, and a note that said, “Possible Haz-mat? Termites or Hanta virus [sic] from mice?”...