Dolin, In re, 85-3699
| Decision Date | 25 August 1986 |
| Docket Number | No. 85-3699,85-3699 |
| Citation | 799 F.2d 251 |
| Parties | , Bankr. L. Rep. P 71,431 In re William Mitchell DOLIN, Debtor. William Mitchell DOLIN, Plaintiff-Appellant, v. NORTHERN PETROCHEMICAL COMPANY; Lake River Corporation; Airosol Corporation, Defendants-Appellees. |
| Court | U.S. Court of Appeals — Sixth Circuit |
Richard H. Siegel (argued), Richard H. Siegel Co., L.P.A., Cleveland, Ohio, for plaintiff-appellant.
John Roger Brandenburg (argued), Chicago, Ill., Frank C. Whalen, Cleveland, Ohio, for defendants-appellees.
Before KENNEDY, WELLFORD and BOGGS, Circuit Judges.
The debtor, William Mitchell Dolin, appeals a denial of discharge from bankruptcy. This appeal presents the question whether chemical addiction and compulsive gambling satisfactorily explain the deficiency of the debtor's assets in meeting his liabilities under 11 U.S.C. Sec. 727(a)(5) and justify the debtor's failure to keep records under 11 U.S.C. Sec. 727(a)(3). We hold that they do not and affirm the District Court order which affirmed the decision of the Bankruptcy Court denying discharge.
Dolin is a recovering cocaine addict and compulsive gambler who supported his lifestyle by withdrawing at least $500,000 over a three-year period from Chemically Speaking, Inc. ("CSI") and more than $90,000 in less than a year from Carolar Corporation, two corporations of which he was the sole shareholder. From 1979 to 1982, Dolin wrote checks to himself or for cash on company bank accounts, but otherwise kept no records of his withdrawals. During this time he also drew an $80,000 annual salary from CSI. Three days before he and CSI filed separate bankruptcy petitions, Dolin withdrew $16,000 from that company's bank account and repaid a drug dealer to whom he owed $20,000. Although he testified that he had always intended to repay what he had "borrowed," he did not know how much money he owed. No loan agreements exist. Only the CSI checkbook reflects his withdrawals and those records are incomplete.
The Bankruptcy Court refused to discharge Dolin's debts because: (1) Dolin transferred property with intent to defraud his creditors under 11 U.S.C. Sec. 727(a)(2) within one year before he filed his bankruptcy petition, see 11 U.S.C. Sec. 727(a)(7); (2) Dolin failed to keep any records from which his financial condition might be ascertained under 11 U.S.C. Sec. 727(a)(3); and (3) Dolin did not "explain satisfactorily" the deficiency of his assets to meet his liabilities under 11 U.S.C. Sec. 727(a)(5). The District Court issued an order affirming the decision of the Bankruptcy Court, but declined to reach the issue of whether Dolin intended to defraud his creditors under 11 U.S.C. Sec. 727(a)(2) since the other two reasons for denying the discharge applied and were sufficient. For the reasons stated below, we agree that the exceptions preventing the discharge of debts under 11 U.S.C. Secs. 727(a)(5) and (a)(3) apply. Consequently, we also need not and do not reach the question whether Dolin had the necessary intent to defraud creditors under 11 U.S.C. Sec. 727(a)(2).
Title 11 U.S.C. Sec. 727(a)(5) provides that a bankruptcy court may deny the discharge of debts when "the debtor has failed to explain satisfactorily, before determination of denial of discharge under this paragraph, any loss of assets or deficiency of assets to meet the debtor's liabilities." Dolin argues that his proven addiction to and dependence upon narcotics in the year preceding his bankruptcy and his compulsive gambling constitute satisfactory explanations for the deficiency of his assets to meet his liabilities. We cannot agree.
The Bankruptcy Court held that Dolin's general, unsubstantiated statements about his lifestyle did not "explain satisfactorily" the disposition of more than $500,000 in the three years preceding his bankruptcy. See Baum v. Earl Millikin, Inc., 359 F.2d 811, 814 (7th Cir.1966). We agree. Dolin could only allege that he had used the money to support his cocaine habit and to gamble. The actual expenditures, to whom and when made, are unknown. We recognize that Dolin would not want to keep records of his cocaine purchases and gambling because the drug purchases were illegal and the gambling may have been illegal. The mere fact that a debtor has spent money illegally does not...
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...to overcome an otherwise unsatisfactory explanation of a loss of assets. Ross , 2013 WL 414474 (citing Dolin v. N. Petrochemical Co. , 799 F.2d 251, 253 (6th Cir. 1986) ). T Brown's purported explanation is nothing more than an excuse for the loss as it is a " 'vague explanation' unsupporte......
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...that books or records are adequate under the terms of the statute and the facts of each case. Dolin v. Northern Petrochemical Co. (In re Dolin), 799 F.2d 251, 253 (6th Cir.1986) (quoting McBee v. Sliman, 512 F.2d 504, 506 (5th Cir.1975) ); see also In re Trantham, 304 B.R. at 306 ; CM Tempo......
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...that books or records are adequate under the terms of the statute and the facts of each case....’ ” Dolin v. Northern Petrochemical Co. (In re Dolin), 799 F.2d 251, 253 (6th Cir.1986) (quoting McBee v. Sliman, 512 F.2d 504, 506 (5th Cir.1975) ); see also In re Trantham, 304 B.R. at 306 ; CM......