By: Derek Hawkins//February 6, 2017//
7th Circuit Court of Appeals
Case Name: In Re: Margaret Kempff, Appeal of: Brian K. Farley
Case No.: 15-3200
Officials: WOOD, Chief Judge, and SYKES and HAMILTON, Circuit Judges.
Focus: Bankruptcy – Adversary Complaint
Margaret Kempff’s ex-husband Bart embezzled more than $1 million from his employer while the two were still married. To evade detection, he attempted to replenish the stolen funds, borrowing $400,000 from his friend Brian Farley on the ruse that the money would be used for a real-estate development. As security for the loan, Bart gave Farley a third-priority lien on the couple’s home, forging Margaret’s signature on the note and mortgage. Bart’s effort to cover his tracks did not succeed. His employer discovered the embezzlement and reported it to police; he was eventually convicted of felony theft. In the meantime, Margaret divorced him and the couple’s home went into foreclosure. Farley filed a cross-claim in the foreclosure action seeking to enforce his lien, but the sale of the home did not yield nearly enough to cover even the first mortgage. Margaret filed for bankruptcy while the foreclosure was pending, which stayed Farley’s claim. Farley then filed an adversary complaint challenging Margaret’s eligibility for a Chapter 7 discharge. He claimed that she made a fraudulent transfer after filing her bankruptcy petition and made multiple false statements in her bankruptcy schedules. Margaret testified at trial that these were innocent mistakes. The bankruptcy judge credited her testimony and rejected each of Farley’s contentions, and the district court affirmed that decision. We do the same. Farley’s arguments for overturning the bankruptcy judge’s ruling are most charitably described as ill-considered. The decision rests on the judge’s acceptance of Margaret’s testimony as credible. Credibility determinations are almost never disturbed on appeal. Farley gives us no good reason to do so here.
Affirmed