In re Connelly
| Decision Date | 27 March 1986 |
| Docket Number | No. 84 B 2020.,84 B 2020. |
| Citation | 59 BR 421 |
| Parties | In re Thomas J. CONNELLY, Debtor. |
| Court | U.S. Bankruptcy Court — Northern District of Illinois |
COPYRIGHT MATERIAL OMITTED
COPYRIGHT MATERIAL OMITTED
COPYRIGHT MATERIAL OMITTED
Abraham Brustein, Dozoryst, Cosby & Brustein, Chicago, Ill., for debtor.
Lawrence M. Cooper, Cooper & Cooper, Ltd., Chicago, Ill., trustee.
Dean Harvalis, Chicago, Ill., U.S. trustee.
(As Corrected and Reissued)
Debtor, Thomas J. Connelly ("Connelly"), filed his petition herein under Chapter 7 of the Bankruptcy Code. He then invoked the Fifth Amendment to the United States Constitution and refused on that ground to testify or otherwise disclose any information at all pertaining to his case. He responded to each question on the schedules with that assertion. Likewise, each substantive question calling for his sworn testimony was met by the same assertion. He responded likewise to each question posed at the creditors meeting. In fact, he only gave three bits of information: his name, address, and social security number. Connelly requested immunity but the United States Attorney declined, possibly because debtor may be under investigation. Connelly filed a matrix with the Clerk of the Court listing the names of parties entitled to notice, but he has declined on Fifth Amendment grounds to fill out the forms to schedule creditors and debtors or to answer questions about the matrix list. He has turned over no records or property to the trustee for the same asserted reason.
The trustee argues that because of the foregoing he cannot possibly administer this estate. He moved to dismiss the case for debtor's refusal to perform his several duties under the Bankruptcy Code. The issues posed by this situation are: (1) Whether Connelly has properly asserted the Fifth Amendment privilege in these proceedings; (2) the scope of that privilege, if properly asserted, as to testimony, bankruptcy schedules, information recorded in documents, and the turnover of property of the estate; and, (3) the appropriate procedures and remedies available when a trustee in bankruptcy is confronted with a debtor making such a blanket assertion of that privilege.
Debtor moved for an order under Bankruptcy Code § 521 declaring that if he complies with Trustee's requests (for information, documents, and property turnover) he will not thereby waive his Fifth Amendment rights.
For reasons set forth below at length, at the end of this opinion debtor's motion under Code § 521 for a declaration of his Fifth Amendment rights will be denied; the Trustee's Motion to Dismiss will be held in abeyance until it is ripe for decision; and various specified disclosures, actions, and explanations by the debtor will be ordered. The results of the latter order will determine the ultimate ruling on Trustee's Motion to Dismiss.
Connelly filed his voluntary Chapter 7 case here on February 16, 1984. The petition disclosed only his name, social security number and post office address. No creditors or debtors were listed in the sworn petition. However, an unverified matrix consisting of a three-page list of parties entitled to notice was attached. Therefore, the Clerk was able to send out notices to those parties regarding such matters as the first meeting of creditors and the last day for filing objections to discharge.
The first meeting of creditors was originally set for April 26, 1984. By letter dated April 5, 1984, Connelly's attorneys advised the United States Trustee that he would exercise his rights under the Fifth Amendment, and would not testify, submit to examination, or provide information, until granted immunity as provided by Title 11 U.S.C. § 344 and Title 18 U.S.C. § 6001 et seq.
On August 6, 1984, Marguerite Butler, interim trustee, moved to dismiss Connelly's case for his failure to file schedules and a statement of affairs. A rule to show cause why the case should not be dismissed was entered and continued to various dates through and including April 1, 1985.
On August 15, 1984, Connelly's attorneys formally asked the U.S. Attorney for a grant of immunity for Connelly pursuant to 11 U.S.C. § 344 and 18 U.S.C. § 6001 et seq. The letter stated Connelly believed various federal agencies, including the F.B.I., the Justice Department, the S.E.C. and the F.D.I.C. may have investigations pending or which have been completed within the past five years. No reasons were stated therein as a basis for such apprehension, nor have reasons therefore been advanced to this Court.
On August 27, 1984, the Bankruptcy Court granted Connelly a protective order extending his time to file schedules until October 1, 1984.
By letter dated October 17, 1984, Phillip A. Turner, Assistant United States Attorney, advised Abraham Brustein, counsel for Connelly, that the United States Attorney would not seek an immunity order for his client under the Bankruptcy Code. Connelly's counsel have represented their belief that debtor is under investigation by the United States Attorney. While no basis for that assertion has been placed on the record here, some accusations of wrongdoing were made against this debtor by private parties in the bankruptcy proceeding of Churchfield Management & Investment Corporation ("Churchfield") (Case No. 84 B 7409) pending before this Court. Connelly had management involvement with Churchfield that lead to such accusations.
Lawrence Cooper became trustee of the estate of Thomas Connelly on March 4, 1985. Since debtor continued to adhere to his assertion of Fifth Amendment privilege, on March 19, 1985, trustee moved for a Rule to Show Cause why Connelly's case should not be dismissed for his refusal to file schedules or a statement of affairs. The trustee requested that Connelly be ordered to supply any and all information requested or face dismissal of his case for failure to do so. The office of the United States Trustee supported the trustee's motion to dismiss. The trustee's motion was fully briefed and taken under advisement after oral argument thereon. That motion had not been passed on at the time this case was reassigned to the undersigned in mid-1985.
On June 21, 1985, Connelly finally filed a Statement of Financial Affairs for Debtor Not Engaged in Business. However, he answered only one question therein: "What is your full name?" Connelly answered every other question on the statement of affairs, and every item on the attached schedules, by invoking inter alia the Fifth Amendment privilege against self-incrimination.1 On September 26, 1985, Connelly filed his schedules of liabilities and personal property, answering every item with the same invocation of the Fifth Amendment.2
On July 1, 1985, the trustee noticed all parties on the matrix list of a Bankruptcy Code § 341 meeting of creditors3 to be held on July 19, 1985, and invited any creditor to attend and examine Connelly, the debtor. The meeting was continued to August 21, 1985, at which time Connelly did appear with counsel.4 However, the trustee was only able to elicit two responses from Connelly; he stated his name, and affirmed that his signature did appear at the bottom of his bankruptcy petition. Connelly refused to answer every other question posed by the trustee, claiming that to answer would violate inter alia his Fifth Amendment rights.5 Connelly even asserted that objection to such apparently innocuous questions as: "What is your correct home address, please?"6 and "Are you married, Mr. Connelly."7 He refused to answer the trustee's question concerning documents he had voluntarily filed with the bankruptcy court,...
To continue reading
Request your trial