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Robinson v. Worley

United States Court of Appeals, Fourth Circuit

February 28, 2017

WANN VAN ROBINSON; MARY D. ROBINSON; THE WANN VAN ROBINSON REVOCABLE TRUST, Plaintiffs-Appellees,
v.
JASON CLINT WORLEY, Defendant-Appellant, and BRUCE MAGERS, Trustee.

          Argued: January 26, 2017

         Appeal from the United States District Court for the Middle District of North Carolina, at Greensboro. Thomas D. Schroeder, District Judge. (1:14-cv-01083-TDS; 13-50180; 13-06081)

         ARGUED:

          Clinton Shepperd Morse, Jeffrey Edward Oleynik, BROOKS, PIERCE, MCLENDON, HUMPHREY & LEONARD, L.L.P., Greensboro, North Carolina, for Appellant.

          Rayford Kennedy Adams, III, SPILMAN THOMAS & BATTLE, PLLC, Winston-Salem, North Carolina, for Appellees.

         ON BRIEF:

          R. Scott Adams, SPILMAN THOMAS & BATTLE, PLLC, Winston-Salem, North Carolina, for Appellees.

          Before WILKINSON, NIEMEYER, and KEENAN, Circuit Judges.

          WILKINSON, Circuit Judge.

         Jason Clint Worley, a Chapter 7 bankruptcy debtor, estimated the value of his interest in a real estate investment company at just 4% of his initial capital contribution. The bankruptcy court found after a bench trial that Worley intentionally lowballed his valuation and accordingly denied his discharge under the false oath provision of 11 U.S.C. § 727(a)(4). The district court agreed. We review that finding for clear error, and for the reasons that follow, we affirm.

         I.

         Worley has spent much of his adult life studying and working in the financial industry. In addition to earning a bachelor's degree in finance from the University of Florida and an MBA from Emory University, he worked at Edward Jones as a financial advisor for almost a decade.

         During his time at Edward Jones, Worley got caught up in the heady investment environment of the early 2000s and began personally investing in a series of real estate ventures. One of those ventures was Gemini Land Trust, LLC, which Worley formed in January 2006 with his childhood friend, Joshua Crapps. Worley contributed $65, 000 for a 49% interest in the company; Joshua Crapps served as managing member and had complete discretion over whether to distribute any profits or retain the proceeds for future transactions. Gemini's sole investment was a 10% share in Pelham Land Group, LLC, which was managed by Crapps's father, Daniel Crapps. Pelham owned 587 acres of Georgia timberland that, in 2012, was worth an estimated $2, 250 per acre, or $1.32 million total. The property also generated a few thousand dollars each year from farming, hunting, and timber leases.

         Many of Worley's other investments flopped, and he filed for bankruptcy on February 14, 2013. He initially classified the filing as a "no asset" case, signaling to the bankruptcy trustee that he did not own any non-exempt assets that were worth distributing. See 11 U.S.C. ยง 554 (2012) (authorizing the trustee to "abandon [to the debtor] any property of the estate . . . that is of inconsequential value"). On Schedule B to the petition, Worley estimated that his interest in Gemini had a market value of $2, 500. He explained that he was unsure how to value the minority stake in Gemini, but sought the advice of counsel and applied the capitalization rate method. Consequently, he took the largest annual distribution he received from Gemini ($483, rounded up to $500) and multiplied by a capitalization rate of five. Worley never consulted with Joshua or Daniel Crapps before estimating the value of his interest, though ...


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