Wieland v. Assaf (In re Soberanis-Soberanis)
| Decision Date | 12 April 2012 |
| Docket Number | Case No. 11-33991-MER |
| Parties | In re: ROBERTO E. SOBERANIS-SOBERANIS SOLEDAD A. TEJERINA Debtors. RICHARD A. WIELAND United States Trustee Region 19, Movant, v. EMMANUEL M. ASSAF SAN JUANITA OLMOS, and ROCIO REZA-ORTEGA Respondents. |
| Court | U.S. Bankruptcy Court — District of Colorado |
The Honorable Michael E. Romero
THIS MATTER comes before the Court on the following pleadings:
• Emmanuel M. Assaf's Response to U.S. Trustee's Motion for Order to Show Cause Why Fines, Penalties and Other Relief Should Not Be Ordered Against Emmanuel M. Assaf (Docket No. 26) (the "Assaf Response"), and
• San Juanita Olmos's Response to U.S. Trustee's Motion for Order to Show Cause Why Fines, Penalties and Other Relief Should Not be Ordered Against San Juanita Olmos (Docket No. 28) (the "Olmos Response").
JURISDICTION
The Court has jurisdiction over this matter under 28 U.S.C. §§ 1334(a) and (b) and 157(a) and (b). This is a core proceeding under 28 U.S.C. § 157(b)(2)(A) as it concerns the administration of the estate.
PROCEDURAL AND FACTUAL BACKGROUND
Roberto E. Soberanis-Soberanis ("Soberanis") and Soledad A. Tejerina ("Tejerina") (collectively, the "Debtors") filed this Chapter 7 case on October 11, 2011. The "Disclosure of Compensation" and "Declaration and Signature by Non-Attorney Bankruptcy Petition Preparer" were filed by Emmanuel M. Assaf ("Assaf"). Assaf is a bankruptcy petition preparer in Arvada, Colorado, and disclosed he agreed to accept a fee of $200 for his services. On December 8, 2011, the Debtors attended their Meeting of Creditors held pursuant to § 341 (the "Creditors' Meeting") and provided sworn testimony before Chapter 7 Trustee, Janice Steinle ("Steinle").
On December 29, 2011, the United States Trustee ("UST") filed the instant Motion. According to the UST, the Debtors testified at the Creditors' Meeting that they paid $1,400 to San Juanita Olmos ("Olmos") for the bankruptcy assistance provided by Assaf and/or Rocio Reza-Ortega ("Reza-Ortega"), a portion or all of which was apparently funneled to Assaf and/or Reza-Ortega. In his Motion, the UST sets forth the events which took place and the alleged information and advice that was given leading up to the filing of the Debtors' bankruptcy petition. For example, the UST alleges Olmos, Assaf and/or Reza-Ortega gave the Debtors advice regarding the filing fee (and waiver thereof), canceling an existing debt settlement contract, taking the pre-petition and post-petition counseling courses, and that they would be able to keep their car. Further, the UST alleges:
Debtors state that they did not give Assaf, Olmos, or Rocio any draft of any bankruptcy document for preparation or typing, nor did they direct Assaf, Olmos, or Rocio on how to prepare the documents; rather, Debtors state that Assaf, Olmos, and/or Rocio prepared all the paperwork based on the scant documents provided by Debtors to Olmos, by asking Debtors a few questions, and possibly procuring other information independently, such as a credit report.2
The UST asserts Assaf, Olmos and possibly Reza-Ortega were all acting within the definition of bankruptcy petition preparers under § 110(a)(1), but did more than just prepare forms and further, failed to perform certain other obligations. Although Assaf signed certain documents filed in this case and provided his Social Security number, the UST asserts Assaf, Olmos and/or Reza-Ortega failed to sign and include a Social Security number on several other documents as required by § 110(b)(1)(A) and (c)(1). The UST asserts Assaf's disclosure of compensation was inaccurate and Olmos and Reza-Ortega should have, but failed to, file a disclosure of compensation, all in violation of § 110(h)(2).
The UST points out a bankruptcy petition preparer is prohibited by § 110(e) from providing legal advice, including providing debtors with questionnaires for the purpose of filling out any bankruptcy document or by determining which bankruptcy forms should be completed, providing such forms, inputting information into such forms independent of any direction or draft provided by debtors, and characterizing the nature of debtors' interests or debts. However, as is discussed in more detail below, the UST also advised the Court that Assaf has been previously sanctioned and warned regarding the practices alleged to have occurred in this case. Specifically, the UST asserts on September 9, 2009, Assaf was publicly enjoined from engaging in any further acts of unauthorized practice of law by Order of the Colorado Supreme Court.3 According to the UST, this Order was entered, in part, because of the finding that Assaf was providing legal advice to potential bankruptcy debtors in Colorado. At the evidentiary hearing before this Court on February 29, 2012, Assaf stated the Colorado Supreme Court did not enjoin him from practicing law; rather he made an voluntary agreement with them not to do so.
The UST believes the Debtors may not have personally taken the pre-petition and post-petition counseling courses. Instead, one or both Debtors provided answers to a person at Assaf's office. The UST alleges the documents and statements prepared by Assaf, Olmos and/or Reza-Ortega related to counseling classes appear, "fraudulent, unfair, or deceptive" or "untrue and misleading, or that upon the exercise of reasonable care, should have been known by such agency to be untrue or misleading."4
Based on all of these allegations, the UST asserts Assaf, Olmos and/or Reza-Ortega have violated § 110 and injunctive remedies are appropriate, including enjoining Assaf, Olmos and/or Reza-Ortega from acting as bankruptcy petition preparers. TheUST also seeks remedies under § 526 to the extent Assaf, Olmos and/or Reza-Ortega also acted as "debt relief agencies."
In support of the requested remedies, the UST cites to:
• § 526 which provides for a penalty as appropriate to the evidence if the Court finds the Respondents "intentionally violated this section [§ 526], or engaged in a clear and consistent pattern or practice of violating [§ 526]."5
On December 30, 2011, the Court issued its OSC, ordering Assaf, Olmos, and Reza-Ortega each to file a response to the matters set forth in the UST's Motion. The OSC further ordered Assaf, Olmos, and Reza-Ortega to appear at a hearing on February 29, 2012, to show cause why fines, penalties, injunctive and other relief should not be ordered against them as allowed by §§ 105, 110 and 526.
In his two-page response, Assaf denied each of the numbered paragraphs in the UST's Motion. In his wherefore clause, Assaf requested, . 6 Similarly, in her two-page response, Olmos denied each of the numbered paragraphs in the UST's Motion. In her wherefore clause, Olmos requested, 7 Reza-Ortega failed to file a response.
The Court conducted an evidentiary hearing on February 29, 2012 and March 2, 2012. At the hearing, the Court admitted all of the exhibits tendered by the UST, and heard the testimony of Soberanis, Tejerina, and Reza-Ortega. At the request of the UST, the Court postponed the issues in the UST's Motion as they relate to Reza-Ortega. Olmos failed to appear. Having considered the pleadings, evidence and case law, the Court is prepared to rule on the claims against Assaf and Olmos.
THE EVIDENCE PRESENTED
Soberanis testified he first met with Olmos on September 18, 2011, for about 15 or 20 minutes at her office in Aurora, Colorado.8 Olmos had requested Soberanis bring his pay stubs and 2009 and 2010 tax returns, and indicated she would pull his credit record. Soberanis testified they discussed the possibility of bankruptcy, that Olmos discussed what chapter of bankruptcy would be better for Soberanis and Tejerina, suggesting a Chapter 7 would be best, and that Olmos told Soberanis a bankruptcy would cancel all his debt. At that time, Soberanis had not yet heard of, or met with, Assaf or Reza-Ortega. Soberanis paid Olmos $1,400 on September 18, 2011.9
Soberanis had a second meeting regarding filing for bankruptcy on October 11, 2011. It was at this meeting that Soberanis first met Assaf and his team. This was the same date the bankruptcy petition for Soberanis and Tejerina was filed. As for his Petition, Statement of Financial Affairs and Schedules, Soberanis indicated he did not prepare, type, fill in, or check any boxes on these forms.10 He only signed on the various signature pages.
Soberanis took his post-petition personal financial management course on November 11, 2011.11 Soberanis testified he went to Assaf's office to drop off some documents and was told he needed to take the...
To continue reading
Request your trial