JEFF BOHM, Chief Judge.
The Court writes this Memorandum Opinion to emphasize the unwavering importance of ethical conduct in the practice of law, particularly regarding the filing of documents with the court. As one court recently noted:
In re Daw, No. 09-00690-TLM, 2011 WL 231362, at *1 (Bankr.D.Idaho Jan. 24, 2011) (slip copy).
The case at bar involves an attorney, Calvin Braun (Braun), who failed to personally meet and review the Statement of Financial Affairs (SOFA) and Schedules with his client, Karl Stomberg (the Debtor), before filing them with this Court. Further, Braun filed these Schedules and SOFA without obtaining the signature or verification of the Debtor, and in fact forged the Debtor's signature using an electronic signature represented as a "/s/". There is more. The Court learned about Braun's misconduct after this Court had already taken action against Braun for filing affidavits in this case containing material misrepresentations and for failing to disclose a conflict of interest — which were done in conjunction with his effort to obtain this Court's approval for him to represent the Debtor. In fact, the show cause order issued in the case at bar is the sixth time since 2005 that Braun's poor conduct has caught this Court's attention. Yet, despite having already been taken to task by this Court on numerous occasions, and having been admonished of the need to be truthful and candid, Braun ignored this continuing duty and thereafter attempted to cover up his filing of the Schedules and SOFA without obtaining the Debtor's signature. This Memorandum Opinion discusses how Braun's improper preparation and illegal filing of the Debtor's original Schedules and original SOFA, as well as his cover-up of these misdeeds thereafter, has demonstrated a blatant disregard for the professional, legal, and ethical obligations required by both his status as an attorney and the judicial system.
1. Braun, Monica Orlando (Ms. Orlando), and Michael "Gary" Orlando (Mr. Orlando) are partners in the law firm of Orlando & Braun LLP (the Firm). [Doc. No. 76, p. 8]. Braun is a seasoned bankruptcy practitioner who has been licensed since 1992. [June 7, 2011 Tr. 6:2-7].
3. Sometime in 2006, the Debtor retained the Firm to advise him in the purchase of two businesses. [Doc. No. 38, p. 8; Mar. 10, 2011 Tr. 8:7-12].
4. In 2009, the Debtor hired Braun to represent one of his business ventures, Stomper Automotive, LLC, in a Chapter 11 case in the United States Bankruptcy Court for the Southern District of Texas. [Doc. No. 38, p. 8-9 & 14; Mar. 10, 2011 Tr. 8:24; 9:9; 14:3-8; Dec. 1, 2011 Tr. 99:10-16].
5. In late February or early March of 2010, Ms. Stomberg asked the Debtor if he could recommend a bankruptcy attorney to her. [Mar. 10, 2011 Tr. 10:11-16]. The Debtor recommended Braun. [Mar. 10, 2011 Tr. 10:7-16]. At this point, the Debtor and Ms. Stomberg were divorced. [Mar. 10, 2011 Tr. 7:25-8:2].
6. Soon thereafter, Braun met with Ms. Stomberg to discuss her potential bankruptcy case. [Doc. No. 38, p. 21; Mar. 10, 2011 Tr. 21:11-19]. Braun testified that at this meeting, he discussed with Ms. Stomberg the strengths and weaknesses of filing a petition under Chapter 7 versus Chapter 13. [Doc. No. 38, p. 21-22; Mar. 10, 2011 Tr. 21:20-25; 22:1-8]. According to Braun, he advised Ms. Stomberg that the Firm would not be able to represent her if she opted to file for Chapter 13. [Doc. No. 38, p. 22; Mar. 10, 2011 Tr. 22:9-13]. Braun also testified that he warned Ms. Stomberg that the Firm was representing the Debtor in various business transactions and that there was a possibility that Braun would file a bankruptcy petition on behalf of the Debtor himself; and that therefore, a conflict of interest could potentially arise that would force Braun to withdraw from Ms. Stomberg's representation. [Doc. No. 38, p. 27-28; Mar. 10, 2011 Tr. 27:4-28:2]. In her testimony, however, Ms. Stomberg adamantly denied that Braun discussed his representation of the Debtor at this meeting. [Doc. No. 38, p. 54 & 72; Mar. 10, 2011 Tr. 54:4-5; 72:15-19]. The Court believes Ms. Stomberg and expressly finds that Braun did not discuss his representation of the Debtor with her.
8. Ms. Stomberg also denied ever receiving a copy of the May 18 Letter. [Mar. 10, 2011 Tr. 56:9-13]. In fact, she testified that the first time she was notified of Braun's representation of the Debtor was the day she received a copy of the application to employ that Braun filed after initiating the Debtor's case in this Court.
9. Ms. Stomberg decided to file bankruptcy under Chapter 7, and Braun undertook this representation and proceeded to file the petition on her behalf. [Case No. 10-34625, Doc. No 1; Mar. 10, 2011 Tr. 28:5-6]. Ms. Stomberg's Chapter 7 petition was filed on May 31, 2010. [Case No.
10. In August or September of 2010, Ms. Stomberg filed an enforcement action against the Debtor in the District Court of Harris County, Texas seeking to enforce the terms of their divorce decree. [Doc. No. 38, p. 53; Mar. 10, 2011 Tr. 53:7-18]. The enforcement action specifically involved child custody and support issues. [Doc. No. 38, p. 53; Mar. 10, 2011 Tr. 53:7-18].
11. On August 22, 2010, Ms. Stomberg completed her post-petition financial management course given to her by Money Management International, Inc. [Case No. 10-34625, Doc. No. 24, pg. 8 of 10]. Ms. Stomberg provided Braun with the Certificate of Debtor Education (the Certificate) that Money Management International, Inc. had given to her as evidence that she had, in fact, completed this course on personal financial management. [Id.]. Braun should have immediately filed the Certificate with the Clerk's Office to ensure that Ms. Stomberg would receive her discharge, yet he failed to do so.
12. On November 5, 2010, Ms. Stomberg's Chapter 7 case was administratively closed without entry of a discharge because the Certificate was not filed. [Case No. 10-34625, Doc. No. 22]; [Mar. 10, 2011 Tr. 28:14-24]. According to Braun, Ms. Stomberg was indecisive about whether to reaffirm a particular debt and, therefore, they decided to allow the deadline to file the Certificate to pass in order to preserve Ms. Stomberg's right to reaffirm that debt. [Doc. No. 38, p. 28-30; Mar. 10, 2011 Tr. 28:25-30:13]. Ms. Stomberg, on the other hand, testified that she had provided Braun with the Certificate before the deadline and expected him to file it to enable her to obtain her discharge. [Doc. No. 38, p. 57; Mar. 10, 2011 Tr. 52:7-15; 57:13-22]. The Court expressly finds that Ms. Stomberg's testimony is credible and that Braun's testimony is not credible; therefore, the Court expressly finds that Ms. Stomberg provided Braun with the Certificate and that he failed to file it.
13. Soon after this Court closed Ms. Stomberg's Chapter 7 case without providing her a discharge, she discovered what had happened and attempted to contact Braun. [Mar. 10, 2011 Tr. 54:5-8]. Braun, however, did not respond to either her e-mails or phone calls. [Mar. 10, 2011 Tr. 54:8-11].
14. Eventually, Braun did speak with Ms. Stomberg and told her that he would reopen her case and file the Certificate if she would pay him an additional $259. [Mar. 10, 2011 Tr. 77:16-20]. Ms. Stomberg did, in fact, pay Braun the $259 on
15. On December 7, 2010, Braun informed Ms. Stomberg that he would reopen her Chapter 7 case by the end of the week. [Mar. 10, 2011 Tr. 77:19-20]. As already noted, the purpose of reopening her case was to file the Certificate and obtain a discharge. Despite his assurance to Ms. Stomberg, Braun still failed to file the appropriate motion to reopen her Chapter 7 case so that the Certificate could be filed in order for her to obtain a discharge. [Mar. 10, 2011 Tr. 39:9-16].
16. Meanwhile, Mr. Orlando, who was the Debtor's corporate counsel at the Firm [Mar. 10, 2011 Tr. 16:25-17:3], suggested to the Debtor the possibility of him filing a personal bankruptcy. [Mar. 10, 2011 Tr. 15:3-9]. On December 22 or 23, 2010, the Debtor hired Braun to be his bankruptcy attorney. [Dec. 1, 2011 Tr. 87:17-25].
17. On December 23, 2010, the Debtor went to the Firm's office and met with Braun. [Dec. 1, 2011 Tr. 88:3-7]. One purpose of the meeting was for the Debtor to sign the Chapter 11 petition (the Petition), which he in fact did. [Dec. 1, 2011 Tr. 11-18]. Then, Braun electronically filed the "barebones" Petition
18. Braun began working on the Debtor's bankruptcy case, and, through his legal assistant, Patricia Alcaraz (Alcaraz), collected information from the Debtor such as tax returns, pay stubs, vehicle numbers, and other items necessary to fill out the Debtor's SOFA and Schedules. [Feb. 17, 2012 Tr. 56:16-17; Apr. 30, 2012 Tr. 24:1-2, 25:3-6]. Pursuant to Federal Rule of Bankruptcy Procedure 1007(c), the Debtor had fourteen (14) days from the date of the filing of the Petition to file the Schedules and SOFA. Fed. R. Bankr.P. 1007(c).
19. On December 28, 2010 — five days after Braun filed the Petition on behalf of the Debtor — Ms. Stomberg, at Braun's insistence, paid him an additional $1,000.00. [Mar. 10, 2011 Tr. 78:6-16]; see also [Doc. No. 1]. Ms. Stomberg testified that this payment covered the balance of the legal fees she owed Braun for her Chapter 7 case [Mar. 10, 2011 Tr. 78:6-16], and Braun admitted the same in an email to Ms. Stomberg sent on December 20, 2010, as well as in his testimony before this Court. [Mar. 10, 2011 Tr. 39:9-13]. However, Braun had represented in the Rule 2016 disclosure of compensation that he had collected his entire $2,500 fee prior to filing this disclosure on July 2, 2010, and that this amount covered all aspects of the Chapter 7 case except representation in contested and/or adversary proceedings. [Finding of Fact No. 9]; [Case No. 10-34625, Doc. No. 10, p. 40 of 51]. Since there were never any adversary proceedings and only one contested matter (a motion to lift stay for which Braun filed no response) in Ms. Stomberg's Chapter 7 case, any additional fees which Braun collected from Ms. Stomberg in December of 2010 were undisclosed and unapproved by this Court.
20. Ms. Stomberg testified that soon after Braun took this money, he ceased responding to her e-mails and telephone calls.
21. On January 3, 2011, Alcaraz sent an email to the Debtor informing him of the date of his initial debtor's conference (the IDC) with the United States Trustee (the UST), and advising him to provide the necessary information to her for the IDC by January 7, 2011. [Braun Ex. No. 16, p. 158; Feb. 17, 2011 Tr. 83:5-17].
22. On January 4, 2011, Braun reviewed some of the information that the Debtor had given to Alcaraz to use in working up drafts of the SOFA and Schedules. [UST Ex. No. 8, p. 3].
23. On January 6, 2011, the Debtor visited the Firm's office and spoke with Alcaraz and Mr. Orlando regarding the SOFA and the Schedules. [Mar. 21, 2012 Tr. 104:11].
24. During this visit, the Debtor and Alcaraz met for approximately five minutes about the Schedules and the SOFA that Alcaraz was preparing [Mar. 1, 2012 Tr. 27:5; 27:17-18], and Alcaraz did not review either the Schedules or the SOFA line by line with the Debtor.
25. After meeting with Alcaraz for approximately five minutes, the Debtor then went to Mr. Orlando's office and spoke with him for approximately five minutes regarding the Schedules and the SOFA, and then left the Firm's office. [Mar. 1, 2012 Tr. 27:5-21; Mar. 21, 2012 Tr. 98:1-8].
26. The Court finds that the Debtor did not sign either the Schedules or the SOFA on January 6, 2011.
27. Braun finally reviewed the Schedules and SOFA, which Alcarez had prepared, on the afternoon of January 7, 2011. [Apr. 30, 2012 Tr. 162:4-12]. As already noted, January 7, 2011 was the deadline for the filing of the Schedules and SOFA. [Finding of Fact No. 18]. Three phone conversations occurred among the Debtor and the partners at the Firm on this date. The first call occurred at 5:35 P.M. between the Debtor, Mr. and Ms. Orlando, and Braun, and lasted for 45 minutes. [Braun Ex. No. 21, p. 86]. The second call was between Braun and the Debtor and occurred at 6:28 P.M., lasting for 8 minutes. [Braun Ex. No. 21, p. 86]. The third occurred between Braun and the Debtor at 6:57 P.M., and lasted for 11
28. These telephone conversations occurred because upon finally reviewing the draft Schedules and the SOFA that Alcaraz had prepared using information given to her by the Debtor, Braun concluded that there were "some issues that doesn't [sic] really make sense in what I have in these Schedules for filing." [Mar. 21, 2012 Tr. 74:22-24]. In particular, Braun expressed concern to his partners that, given the size of the Debtor's home, more items of personal property should have been listed. [Apr. 12, 2012 Tr. 33:11-22]. After reviewing the Schedules and SOFA with Braun, Ms. Orlando initiated the first phone call to the Debtor (at 5:35 P.M.) in order to discuss the issues about which Braun had expressed concern to the Orlandos. [Apr. 12, 2012 Tr. 34:17-20].
29. During the 45-minute phone call, Braun, Mr. Orlando, and Ms. Orlando had Stomberg walk through his house and verbally state how many items that he had in his possession, ranging from couches to oil paintings. [Mar. 21, 2012 Tr. 75:2-6]. Braun then made changes to the draft Schedules — specifically Schedules B and C — after the Debtor provided the information about his household furnishings.
30. After the 45 minute phone call, Ms. Orlando and Mr. Orlando left the Firm's office for a previously scheduled engagement. [UST Ex. No. 8, p. 4]. The remaining two calls — the one at 6:28 P.M. lasting for 8 minutes, and the other at 6:57 P.M. lasting for 11 minutes [Braun Ex. No. 21, p. 86] — were solely between Braun and the Debtor, and also concerned changes which Braun made to the drafts of the Schedules. See [Apr. 30, 2012 Tr. 209:14-16].
31. Approximately one hour after the third phone call, at 8:06 P.M. on January 7, 2011, Braun filed these Schedules and SOFA electronically with the Clerk of Court. [Mar. 21, 2012 Tr. 74:1-2; Doc. No. 5]. Braun never met with the Debtor in person to review the Schedules or the SOFA before filing them. [Apr. 30, 2012 Tr. 208:25-209:5; 251:2-11].
32. When electronically filing the Schedules and SOFA at 8:06 P.M. on January 7, 2011, Braun represented, using an electronic signature "/s/", that he had obtained the Debtor's signatures on both the Schedules and the SOFA. [Doc. No. 5]. Yet, when he electronically filed these documents, he knew that (a) the Debtor had not personally reviewed the actual documents being filed; and (b) the Debtor had not signed these documents.
33. Despite this representation, Braun had not actually obtained the Debtor's signature on the Schedules or the SOFA.
34. Braun also never obtained the Debtor's signature on the Declaration for Electronic Filing, nor did he ever tender the Declaration for Electronic Filing to the Court. [Doc. No. 139, p. 1 of 3].
35. The Debtor's Schedule E lists Ms. Stomberg as a Priority Creditor holding an unsecured priority claim for $20,000.00 arising out of the Final Decree of Divorce between Ms. Stomberg and the Debtor.
36. On January 10, 2011, on behalf of the Debtor, Braun filed the Debtor's Application to Employ Orlando & Braun LLP as Counsel for Debtor (the Application to Employ), in which Braun was designated as the attorney-in-charge for the Debtor's Chapter 11 case. [Doc. No. 7].
37. Paragraphs seven and eight of the Application to Employ made the following representations to this Court and to the Debtor's creditors:
[Doc. No. 7, p. 3-1, ¶¶ 7-8]. The certificate of service accompanying the Application to Employ lists "Tami Stomberg" as a creditor or party of interest who must be notified of the Application pursuant to Bankruptcy Rule 2002. [Doc. No. 7, p. 7].
38. Braun executed the Affidavit of Proposed Attorney and Rule 2016(b) Disclosure (the Original Affidavit) that is attached to the Application. [Doc. No. 7-1]. In the Original Affidavit, Braun swears under oath that:
[Doc. No. 7-1, p. 2-3, ¶¶ 4-6].
39. As previously noted, Ms. Stomberg received a copy of the Application to Employ in the mail. See [Finding of Fact No. 8]. She testified that she became immediately concerned for several reasons. First, who would represent her in her reopened bankruptcy case if Braun was representing the Debtor in his bankruptcy case? [Doc. No. 38, p. 82; Mar. 10, 2011 Tr. 82:11-22]. She was listed as a creditor in the Debtor's Schedule E for the amount of $20,000 in child support payments. Second, how would her rights as a creditor be affected in the Debtor's Chapter 11 case if her own bankruptcy attorney was representing the Debtor? [Doc. No. 38, p. 83-84; Mar. 10, 2011 Tr. 83:7-84:6]. Third, how would Braun's simultaneous representation of both her ex-husband and her affect her pending enforcement action in state court? [Doc. No. 38, p. 63; Mar. 10, 2011 Tr. 63:17-24].
40. On January 10, 2011, the Debtor and Braun attended the IDC at the UST's Office. [Feb. 17, 2012 Tr. 26:9]. Clarissa Waxton (Waxton), a bankruptcy analyst for the UST, conducted the IDC. [Feb. 17, 2012 Tr. 20:20-21].
41. Waxton did not remember the actual IDC with the Debtor, as she has conducted approximately two IDCs a week for the past nine years. [Feb. 17, 2012 Tr. 21:21-22:2; 26:18-25]. However, Waxton utilized an "Initial Debtor Interview Checklist" (the Checklist) as a guide for what questions to ask the Debtor, and recorded the Debtor's responses on either the Checklist, the Schedules, or her own notes. [Feb. 17, 2012 Tr. 27:7-13]; see also [Braun Exhibit No. 3, pg. 38]. The Checklist reveals that at the IDC, Waxton recorded the Debtor's responses to the following questions: "Did the debtor review and understand the schedules and SOFA that he or she signed?" as well as "Did the debtor sign the schedules and SOFA?" [Braun Ex. No. 3, pg. 38, items 15 & 16]. The Checklist further indicates that both of these questions were answered affirmatively. [Id.]. However, the Checklist does not indicate whether the Debtor himself answered the questions or whether Braun answered on the Debtor's behalf. [Id.]; [Feb. 17, 2012 Tr. 29:11-15; 48:12-18].
42. On January 24, 2011, Ms. Stomberg filed a pleading entitled: Opposition to Application to Employ Counsel Filed by Debtor and Debtor in Possession (the Opposition Response).
43. Also on January 24, 2011, Burger, on behalf of Ms. Stomberg, filed a Motion to Reopen Case to File Certificate of Debtor Education and to Obtain a Discharge in her Chapter 7 case (the Motion to Reopen). [Case No. 10-34625, Doc. No. 24]. Additionally, Ms. Stomberg filed the Certificate with the Clerk of Court. [Case No. 10-34625, Doc. No. 25].
44. On January 28, 2011, this Court granted the Motion to Reopen. [Case No. 10-34625, Doc. No. 26]. Thus, Burger accomplished what Braun had promised — but failed — to do for Ms. Stomberg.
45. Also on January 28, 2011 — four days after Ms. Stomberg filed the Opposition Response — Braun filed a First Amended Affidavit of Proposed Attorney and Rule 2016(b) Disclosure (the Amended Affidavit). [Doc. No. 19]. In the Amended Affidavit, Braun disclosed — among other things — that he had, in fact, represented Ms. Stomberg in her Chapter 7 case. [Doc. No. 19, p. 2-3, ¶ 4]. Paragraph four of the Amended Affidavit specifically states that:
Similar to the Original Affidavit, Braun still inaccurately represented that, except as explicitly admitted in the Amended Affidavit, neither he nor the Firm "has represented and otherwise dealt with, or is now representing and otherwise dealing with, any entity that is or may consider itself a creditor, equity security holder or party in interest...." [Doc. No. 19, p. 3, ¶ 5]. Additionally, just as he misrepresented in the Original Affidavit, [Doc. No. 7-1, p. 3, ¶ 5], Braun also inaccurately represented that to the best of his knowledge, neither he nor any other member of his firm "represents or holds any interest adverse to the Debtor or its estate or have any interest materially adverse to the interest of any class of Debtor's creditors or equity security
46. On January 31, 2011, as a result of Burger's filing of the Motion to Reopen and Ms. Stomberg's filing of the Certificate, this Court entered an order discharging Ms. Stomberg. [Case No. 10-34625, Doc. No. 27]. Thus, Burger was able to assist Ms. Stomberg in obtaining her discharge, when Braun should have done so several weeks previously.
47. Also on January 31, 2011, once the discharge order was entered, Ms. Stomberg's Chapter 7 case was closed. [Case No. 10-34625, Doc. No. 27].
48. On February 17, 2011, the Debtor and Braun attended the first meeting of creditors in the Debtor's Chapter 11 case. [Dec. 1, 2011 Tr. 59:16-18]. The UST
49. On March 10, 2011, after a hearing on the Application to Employ and the Opposition Response, this Court denied the Application to Employ, discharging Braun as the Debtor's counsel due to the fact that he had filed an affidavit containing materially false statements in connection with the Application to Employ. [Mar. 10, 2011 Tr. 95:21-23]. Additionally, the Court was concerned with the fact that Braun did not attempt to correct his affidavit until after Ms. Stomberg, who was listed as a creditor on the Debtor's Schedules, brought to light his concurrent representation of both herself and the Debtor. [Mar. 10, 2011 Tr. 94:5-8; 95:2-4; 96: 8-12].
50. On March 22, 2011, the Debtor drove to the Firm's office for the purpose of picking up the file containing all of the documents Braun had maintained on the Debtor's case before this Court removed Braun as the Debtor's attorney by denying the Application to Employ. [Mar. 21, 2012 Tr. 35:13-14]. Benjamin Schlitt (Schlitt), a paralegal at the Firm [Mar. 21, 2012 Tr. 12:18-19], provided the Debtor with the original file when the latter came to the Firm's office. [Mar. 21, 2012 Tr. 20:9-17, 35:13-14]. The Debtor then took this file and drove over to the law office of Barbara Rogers (Rogers) [Apr. 30, 2012 Tr. 75:6-10], who had agreed to represent the Debtor as counsel in his Chapter 11 case. [Apr. 12, 2012 Tr. 132:7-10]. When Rogers subsequently reviewed the file, she found that the file lacked: (1) the original SOFA with the Debtor's "wet signature"; and (2) the original Schedules with the Debtor's "wet signature".
51. On March 30, 2011, the Debtor filed his Application to Employ Rogers & Anderson, PLLC as Debtor's Counsel, with Rogers as attorney-in-charge. [Doc. No. 41].
52. On March 31, 2011, this Court granted the Application to Employ Rogers & Anderson, PLLC as Debtor's Counsel. [Doc. No. 42].
53. On April 25, 2011, this Court issued an Order Requiring Calvin Braun to Appear and Show Cause Why He Should Not Be Sanctioned For His Conduct in This Chapter 11 Case (the First Show Cause Order). [Doc. No. 58]. The First Show Cause Order set forth that in the Application to Employ and in the Original Affidavit accompanying the Application to Employ, Braun had failed to disclose his or the Firm's connection to Ms. Stomberg. [Id.]. The First Show Cause Order required the following:
[Doc. No. 58, p. 20-21].
54. On June 7, 2011, Braun appeared before this Court to respond to the First Show Cause Order. [Doc. No. 72]. After hearing the testimony and listening to closing arguments, this Court — as it had done several times in the past — admonished Braun to be more attentive to detail and more careful with his work. [June 7, 2011 Tr. 61:18-22; 62:17-19; 59:4-10; 59:21-25]. The Court also ordered Braun to return to Ms. Stomberg all of the monies that she had paid him to represent her in her Chapter 7 case. Additionally, the Court ordered Braun to pay $2,400.00 to Mr. Burger, representing the amount of fees he had charged Ms. Stomberg to reopen her Chapter 7 case, to prosecute the Opposition Response, and to attend and participate at the hearing on the First Show Cause Order. [Doc. No. 72]; see also [Feb. 7, 2011 Tr. 65:24-66:14]. Finally, at the suggestion of Leonard Simon (Simon), the attorney who represented Braun at the hearing on the First Show Cause Order, the Court also ordered Braun to enter into a mentoring program with Simon.
55. On or about October 10 or 11, 2011, Rogers happened to see Braun at the courthouse and, recalling that the file that the Debtor had delivered to her did not contain the Debtor's "wet signatures" on either the original Schedules or the original SOFA, asked Braun whether he had
56. On October 12, 2011, Rogers and Braun had a follow-up phone conversation regarding the "wet signatures" on the original Schedules and original SOFA. [Apr. 12, 2012 Tr. 84:16-23]. At this time, Braun indicated that he had the "wet signed" Petition, but was unable to locate the "wet signed" original Schedules and the "wet signed" original SOFA, or even copies of them, at his office. [Apr. 12, 2012 Tr. 82:23-25; 138:11-14]. According to Rogers, Braun sounded very distressed by his inability to find these documents and told her that he would investigate further to see if he could determine what happened to these documents. [Apr. 12, 2012 Tr. 83:2-10].
57. On October 18, 2011, Braun met with the Debtor at the Firm's office and asked him to sign in blue ink the Schedules and the SOFA that Braun had filed over nine months earlier, on January 7, 2011. [Apr. 30, 2012 Tr. 189:3-11]. Braun wanted to obtain the Debtor's "wet signature" on the original Schedules and the original SOFA because he was nervous about the fact that he did not have these original Schedules and SOFA with the Debtor's "wet signatures" in his possession. See [Apr. 30, 2012 Tr. 80:3-4]. When the Debtor informed Braun that he would not sign the original Schedules and SOFA without the advice and approval of his present bankruptcy counsel (i.e., Rogers) [Apr. 30, 2012 Tr. 79:22-25; 80:5-8], Braun became upset with him. [Apr. 30, 2012 Tr. 80:17-18]. The Debtor then left the Firm's office with the original Schedules and the original SOFA which Braun had asked him to sign, drove to Rogers' office, and delivered these documents to Rogers. [Apr. 30, 2012 Tr. 81:20-24]; [Apr. 12, 2012 Tr. 88:3-8]. Rogers advised the Debtor not to sign these documents. [Apr. 12, 2012 Tr. 89:10-12]. Although the Debtor told Rogers, prior to his arrival at the Firm's office, that he was going to meet with Braun [Apr. 30, 2012 Tr. 80:22-24; 81:6-9], Braun himself never notified Rogers of his meeting with the Debtor nor of his intent to have the Debtor sign the original Schedules and original SOFA that he had previously filed; nor did he obtain Rogers' permission to meet with the Debtor. Rather, Rogers testified that she did not speak to Braun until after the Debtor delivered the original, unsigned Schedules and SOFA to her, which were dated January 7, 2011 and contained green tabs where the Braun sought to have the Debtor sign. [Apr. 12, 2012 Tr. 90:2-9]. The Court finds that Braun did not seek Rogers' permission prior to communicating and meeting with the Debtor in an attempt to have the Debtor wet sign the original Schedules and the original SOFA.
58. Later that same day (i.e., on October 18, 2011), Mr. Orlando sent an email to the Debtor stating, "We [the Firm] feel we are being treated like step-children ... I forced Calvin to file for you and now we are concerned we are going to get screwed again, since you refused to sign the schedules." [UST Ex. No. 12].
59. On September 12, 2011, this Court entered on the docket a letter that it received
60. In response to this letter, the Court issued an Order Requiring the Debtor to Appear and Respond to Allegations by Tammy Cromwell Stomberg that He is Knowingly Filing False and Material Declarations with this Court. [Doc. No. 95].
61. On December 1, 2011, this Court held a hearing pursuant to the above-referenced show cause order. [Doc. No. 95]. The Debtor and his family law attorney explained the differences between the income figures disclosed in the Family Law Court and the income figures disclosed in this Court, and also testified that the income figures submitted to the Family Law Court, while not correct, were not submitted under oath, and that the numbers submitted under oath to this Court were, in fact, the correct figures. [Dec. 1, 2011 Tr. 129:13-16; Dec. 1, 2011 Tr. 55:20-23].
62. Additionally, at the hearing on December 1, 2011, the Debtor testified that the original Schedules and SOFA that Braun filed on January 7, 2011 contained numerous inaccuracies.
63. Based on the testimony from the Debtor at the December 1, 2011 hearing that he had never reviewed or signed the original Schedules and SOFA filed by Braun on January 7, 2011, this Court — which had already taken action against Braun for his patently false representations in the Application to Employ [Finding of Fact Nos. 49, 53 & 54] — once more became concerned with Braun's conduct during his time as counsel for the Debtor. [Doc. No. 115].
64. On December 1, 2011, this Court entered an Order Granting Motion to Convert Case to Chapter 7. [Doc. No. 108]. Rogers, with the Debtor's consent, had filed a motion to convert because the Debtor had concluded that he could not obtain a confirmed plan of reorganization given his expected level of income in the future and his overwhelming debt.
65. On December 8, 2011, due to this Court's renewed concern about Braun's conduct, this Court issued another show cause order to Braun entitled: Order Requiring Calvin Braun to Appear and Show Cause Why He Should Not be Sanctioned for Conduct Described herein with Respect to Filing of the Original Chapter 11 Petition and the Initial Schedules and the Statement of Financial Affairs (the Second Show Cause Order). [Doc. No. 115]. The Second Show Cause Order requires Braun to show cause why he should not be sanctioned for the following: (1) filing the Debtor's Chapter 11 Petition with an "/s/" next to the Debtor's name when in fact the Debtor had not signed the Petition; (2) filing the initial Schedules and initial SOFA under the same circumstances; (3) never obtaining the Debtor's signature on the Declaration for Electronic Filing; (4) never tendering an executed Declaration for Electronic Filing to the Court; and (5) never meeting with the Debtor prior to filing the initial Schedules and SOFA to review with him the accuracy of the information contained therein. [Doc. No. 115].
66. The hearing on the Second Show Cause Order required several days of testimony due to the availability of witnesses and counsel, as well as this Court's schedule. The first day of the hearing was held on February 17, 2012. The hearings then continued over six days in March and April, with the final day of hearing held on April 30, 2012. On November 5, 2012, the Court heard closing arguments from counsel for the Debtor, counsel for Braun, counsel for the UST, and counsel for Ms. Stromberg.
At the hearings on February 17, March 1, March 21, April 12, April 13, and April 30, 2012, the following witnesses testified: (1) Clarissa Waxton, a bankruptcy analyst for the office of the UST, who conducted the Debtor's initial debtor's conference (the IDC); (2) Patricia Alcaraz, an employee of the Firm at the time of the filing of the initial Schedules and the initial SOFA; (3) Benjamin Schlitt, a paralegal at the Firm who dealt with the Debtor on a few occasions; (4) Michael G. Orlando, a partner at the Firm who has previously represented the Debtor in various non-bankruptcy business matters, and who had knowledge of the Debtor's Chapter 11 case
Waxton testified that she conducted the Debtor's IDC on January 10, 2011. She testified that she did not remember the specific meeting. Her testimony is understandable considering the high volume of IDCs that she conducts in any given week and the lapse in time (over thirteen months) between her February 17, 2012 testimony in court and the Debtor's January 10, 2011 IDC. However, despite her inability to remember the specific conference with the Debtor, she testified competently about her normal practices in the IDCs and her notes regarding the answers given at the Debtor's IDC. Accordingly, the Court finds Waxton to be a credible witness and gives her testimony substantial weight.
The Court finds that Alcaraz is not a credible witness. During her testimony at the hearings, she answered questions defensively, gave answers that were contradictory, and had difficulty recalling facts, making this Court question her credibility. For example:
In all, Alcarez testified for over two hours. The Court carefully observed her and carefully listened to her answers. Her demeanor was stilted; she appeared uncomfortable when asked questions that she interpreted to be a criticism of her own job performance; and she appeared from time to time to give definitive answers with much detail in order to justify her own competence. Her recall of details from the meeting with the Debtor on January 6, 2011 is entirely suspect considering she could not even remember the name of the Firm where she worked prior to becoming Braun's legal assistant. For all of the reasons set forth above, this Court finds Patricia Alcaraz not to be a credible witness. The Court gives very little weight to her testimony.
Benjamin Schlitt, a paralegal at the Firm, testified that on January 26, 2011, he emailed to the Debtor the original Schedules and the original SOFA that Braun had filed at 8:06 P.M. on January 7, 2011. [Mar. 21, 2012 Tr. 17:12-18:9]. Schlitt also testified that he mistakenly gave the Debtor the original file rather than a copy of the file when the Debtor came to the Firm's office on March 22, 2011. [Mar. 21, 2012 Tr. 20:10-15]. Schlitt himself had not gone through the original file and did not know whether any original documents with the Debtor's "wet signatures" were contained in the file that he gave to the Debtor on March 22, 2011. [Mar. 21, 2012 Tr. 24:15-17]. The Court finds Benjamin Schlitt to be a credible witness, and gives his testimony considerable weight.
Mr. Orlando testified about many of his face-to-face and electronic communications with the Debtor, a phone call that took place between the Debtor and the partners of the Firm on the night of Braun's filing of the original Schedules and SOFA (i.e. on
And, on certain specific points, Mr. Orlando's testimony is very questionable. For example, his testimony regarding the Firm's possession of the "wet signed" Petition is contradictory with actual events. Braun testified that he had in his possession the original Petition with the Debtor's "wet signature" which had been filed on December 23, 2010. He, in fact, was able to produce this document at the October 18, 2011 meeting with the Debtor, [Apr. 30, 2012 Tr. 189:15-16]. Yet, both Braun and Mr. Orlando testified that the entire file with "wet signed" originals — including the Petition — was given to the Debtor at the Firm on March 22, 2011. [Mar. 21, 2012 Tr. 20:9; 88:8-15]; [Apr. 30, 2012 Tr. 225:5-7; 221:4-14]. If Mr. Orlando's testimony is true, then the "wet signed" original Petition should not have been in Braun's possession as of October 12, 2011. Because it was, Mr. Orlando's credibility on this point is significantly undermined.
In sum, under the circumstances described above, the Court gives Mr. Orlando's testimony some, but not substantial, weight.
Barbara Rogers is the Debtor's current attorney in his existing Chapter 7 bankruptcy. She has kept excellent files in this case, has counseled the Debtor about submitting proper and complete amended Schedules, has received positive comments from the Debtor about the quality of her representation, and has generally performed all of the tasks that Braun should have performed when he was representing the Debtor and filing the original Schedules and the original SOFA. Rogers gave testimony about the file that she received from the Firm, and the frustration and distress that Braun expressed to her when he could not locate in his office the original
In sum, Ms. Rogers was forthright and extremely knowledgeable in the testimony that she gave at the hearing. This Court finds her to be a very credible witness and gives her testimony substantial weight.
Karl Stomberg, the Debtor in this case, was a somewhat credible witness. However, there were several points on which the Court finds that the Debtor was not very credible, including the following:
Overall, the Court finds that the Debtor generally: (1) has an extremely short attention span; (2) is disorganized; (3) is rushed; and (4) is inclined to hide any details about his businesses from his exwife (i.e., Ms. Stomberg) — with whom he had an extremely acrimonious custody dispute in family law court — out of concern that such disclosure will negatively affect his relationship with his present wife and his present mother in law (both of whom
Syria Sinoski, an intern with Rogers & Anderson at the time that Rogers took on the Debtor's case, gave testimony on the discrete issue of what was in the file that the Debtor delivered to the law office of Rogers & Anderson on March 22, 2011 after picking it up from the Firm. The Court finds Ms. Sinoski's testimony to be very credible, and accordingly, gives it substantial weight.
The Court finds multiple inconsistencies in Braun's testimony, which are outlined below:
1. "It was imperative to me that these things be true and accurate." [Apr. 30, 2012 Tr. 163:12-14, 167:25, 168:1]. Braun gave this testimony to explain why he had three phone conversations with the Debtor on the evening of January 7, 2011. However, if it was really imperative that the Schedules and SOFA be true and accurate, Braun would have
2. Braun was evasive in answering whether Rogers actually asked for the "wet signed" original Schedules and "wet signed" original SOFA, and what his response to her inquiry was. [Apr. 30, 2012 Tr. 187:16-24; 229:7-14]. In fact, Braun testified both that Rogers did ask him for the signed Schedules and Statement of Financial Affairs, and that she did not ask him for these documents. [Apr. 30, 2012 Tr. 226:5-24, 228:9-13, 229:14]. Yet, Rogers was quite clear in her testimony that she explicitly asked Braun for both the "wet signed" original Schedules and the "wet signed" original SOFA during their face-to-face meeting on October 10 or 11 of 2011 [Apr. 13, 2012 Tr. 7:21-25], and during their phone conversation the following day. See [Apr. 13, 2012 Tr. 9:5-12]. The Court believes Rogers, and does not believe Braun because Rogers was responsive and forthright on the witness stand, and Braun was not; and, moreover, on being pressed during cross-examination, Braun conceded that Rogers had, indeed, asked him for these documents. [Apr. 30, 2012 Tr. 229:7-14]. Thus, after initially stating under oath that Rogers did not ask him for these documents, he later back off and conceded that she had. Braun lied under oath.
4. Braun testified that he did not conduct a search for the "wet signed" original Schedules and "wet signed" original SOFA, and did not conclude that these documents were missing at all until "late December of 2011." [Apr. 30, 2012 Tr. 227:10-18]. However, in light of Rogers' request for the "wet signed" original Schedules and "wet signed" original SOFA on October 10 or 11, 2011 [Apr. 13, 2012 Tr. 7:21-25] and Rogers' testimony that Braun was "very, very" distressed by his inability to find the documents at that time [Apr. 12, 2012 Tr. 83:2-10], the Court does not believe Braun's testimony on this point.
5. Braun claims to have asked Rogers, during his telephone conversation with her on October 12, 2011, whether she had "an issue" with him having the Debtor sign the original Schedules and original SOFA as a means of ratifying them. [Apr. 30, 2012 Tr. 188:3-5]. Rogers, however, testified that she did not speak to Braun until after the Debtor delivered the original, unsigned Schedules and SOFA to her, which Braun had sought to have the Debtor sign. [Apr. 12, 2012 Tr. 90:2-9]. The Court believes Rogers, who, aside from being truthful and trustworthy, has no motive to lie here; whereas Braun, on the other hand, has a reason to lie. By testifying that he asked Rogers for her permission for him to meet with the Debtor to obtain the Debtor's signature, Braun wants this Court to believe that Rogers actually approved of what he attempted to do. Moreover, by testifying that he first sought Rogers' permission, Braun wants this Court to believe that he did not violate the Texas Disciplinary Rules of Professional Conduct
6. The fact that Braun had in his possession the original Petition with the Debtor's "wet signature" which had been filed on December 23, 2010, and was able to produce it at the October 18, 2011 meeting with the Debtor, [Apr. 30, 2012 Tr. 189:15-16] strikes the Court as odd because Braun and Orlando both testified that the entire file with "wet signed" originals was given to the Debtor when the Debtor came to the Firm and picked up the file from Schlitt on March 22, 2011. [Mar. 21, 2012 Tr. 20:9; 88:8-15]; [Apr. 30, 2012 Tr. 225:5-7; 221:4-14]. If so, the "wet signed" original Petition should not have been in Braun's possession as of October 12, 2011. Thus, both the credibility of Braun
7. Certain entries on Braun's timesheet are suspect. For example, on January 6, 2011, Braun listed that for twelve minutes, he was "[a]dvised by staff that schedules for Stomberg are complete and client has reviewed and signed." [UST Ex. No. 8]. Not only is this entry suspicious for its specificity, but also for the arbitrarily high amount of time listed for the activity. It certainly does not take twelve minutes for Alcarez to inform Braun that the Debtor has reviewed and signed his Schedules. Braun also evaded answering certain questions regarding why the timesheets took so long to be printed. [Apr. 30, 2012 Tr. 196:1-22].
8. Braun testified that he kept contemporaneous timesheets, but later admitted that he does not enter them into the system until up to a week after the event occurred. [Apr. 30, 2012 Tr. 197:2-8]. A week later is not "contemporaneous." Braun is familiar with the contemporaneous timesheet requirement, as this Court reduced his fee award after a similar incident in 2005 in which he failed to keep contemporaneous timesheets. See In re EBCO Land Dev., Ltd., Case No. 04-30519, Doc. No. 632 at 2 ("The Court has considered the testimony and the comments of the Trustee and his accountant, and finds that Braun has failed to satisfy certain basic requirements of any attorney representing the debtor in a Chapter 11 case. Specifically, Braun has failed to maintain contemporaneous time sheets....").
9. Braun initially stated that he spent "several hours on the phone with him [i.e., the Debtor]" on January 7 [Apr. 30, 2012 Tr. 209:4-5], but then stated "[i]t was about an hour." [Apr. 30, 2012 Tr. 209:14-21]. Thus, Braun attempted to convince this Court that he spent substantially more time reviewing the Schedules and the SOFA on the phone with the Debtor than he actually did.
10. Referring to the changes made on January 7, 2011, Braun testified that "Schedule B was changed only." [Apr. 30, 2012 Tr. 216:2]. At another point, Braun testified "I made some changes to Schedule B, that's all I did." [Apr. 30, 2012 Tr. 262:18]. Yet, when this Court reviewed the Schedules with Braun, Schedule by Schedule, he also admitted to making changes to Schedule C, which was not signed by the Debtor. [Apr. 30, 2012 Tr. 266:1-3, 266:12-23]. Thus, Braun sought to convince this Court that he only made changes to Schedule B; it was only after the Court inquired further that he admitted
11. Additionally, Braun testified that the changes he made to Schedules B and C on January 7, 2011 "were fairly de minimis in nature." [Apr. 30, 2012 Tr. 212:10-13]. However, Mr. Orlando testified that the Schedules contained "a lot of inaccuracies" [Apr. 12, 2012 Tr. 19:10-14] and Ms. Orlando was concerned enough about the Schedules to call the Debtor on the phone on the evening of January 7, 2011, to verify the information listed in the Schedules. [Apr. 12, 2012 Tr. 34:17-20]. The testimony of Ms. Orlando and Mr. Orlando more accurately explains why all three partners in the Firm participated in the initial 45 minute phone call with the Debtor [Apr. 12, 2012 Tr. 28:12-13]. If the Schedules needed only de minimis changes, it is very unlikely that all three of the Firm's partners would have been involved in a 45 minute telephone conference with the Debtor, or that Braun would have two subsequent telephone conferences for 8 minutes and 11 minutes, respectively, with the Debtor. [Finding of Fact Nos. 27, 29 & 30].
12. Braun was uncooperative and non-responsive in many respects to the UST's questions. [Apr. 30, 2012 Tr. 218:11-14]. He was particularly evasive when answering questions regarding how much help he gave to the Debtor in filling out the Schedules and SOFA and in preparing for the IDC. For example, when asked, "Did you do anything to help Stomberg prepare for the initial Debtor's conference at the U.S. Trustee's office?" Braun dodged the question and responded that "Stomberg had already been through one with Stomper Automotive a year before...." [Apr. 30, 2012 Tr. 218:4-9].
13. Braun contradicted himself when testifying about how many copies of the Debtor's bankruptcy file existed at the Firm. At one point, he testified that he did not believe that the Debtor's original bankruptcy file was ever copied [Apr. 30, 2012 Tr. 221:20], yet almost immediately thereafter said that there were two "Redrope" bankruptcy files for the Debtor containing the same information. [Apr. 30, 2012 Tr. 222:5-6].
14. During his testimony, Braun claimed that he saw the "wet signed" original Schedules and "wet signed" original SOFA, and that they were signed in blue ink; according to Braun, this was a common practice at the Firm because blue ink shows up better on copies. [Apr. 30, 2012 Tr. 223:19-21]. However, Alcaraz testified that she provided the Debtor with a black pen, and that she watched the Debtor sign the Schedules and SOFA in black ink. [Mar. 1, 2012 Tr. 38:16-20]. This conflicting testimony calls into question the credibility of both witnesses, and also the notion that the Debtor ever signed these documents in the first place.
15. Braun claims to have had a conversation with Ms. Stomberg wherein he explained to her the potential conflicts that were involved in representing her in her Chapter 7 and the Debtor in his Chapter 11 simultaneously [Mar. 10, 2011 Tr. 27:12-28:2], yet somehow he failed to mention these same conflicts in his Original Affidavit attached to the Application to Employ, which he filed in the Debtor's case. See also Footnote No. 1.
16. Braun told Ms. Stomberg on December 7, 2010 that he would file a motion to reopen her Chapter 7 case by the end of the week and accepted money to re-open her case; yet, he never did so. [Mar. 10, 2011 Tr. 39:9-16]. Thus, Braun, an attorney and an officer of this Court, took money from an existing client and represented to her that he would take action on a matter that he knew was extremely important to her, but never followed through by taking this action. Braun broke a promise he made to his client, and this conduct seriously undermines his credibility.
17. When he filed the Application to Employ, Braun also failed to disclose in the Original Affidavit that he had previously represented the Debtor's business (i.e., Stomper Automotive, LLC) in a Chapter 11, and that Ms. Orlando had represented the Debtor in his divorce from Ms. Stomberg. (See Amended Affidavit, Doc. No. 19 vs. Original Affidavit, Doc. No. 7-1). Only when Ms. Stomberg subsequently discovered that Braun was seeking this Court's approval to represent her ex-husband in his Chapter 11 case and filed her Opposition Response on the grounds of conflict of interest did Braun attempt to cure his misrepresentations by filing the Amended Affidavit in which he admitted that he had, in fact, represented Ms. Stomberg in her Chapter 7 case. [Doc. No. 58]. Even then, in the Amended Affidavit, Braun still represented that he did not represent any creditors of the Debtor, which was untrue because he was counsel of record for Ms. Stomberg, who was a creditor in her ex-husband's Chapter 11 case.
Based on Braun's misrepresentations, inconsistent statements, and unwillingness to respond to simple and direct questions, the Court finds Braun's testimony to have very little credibility; therefore, the Court gives his testimony virtually no weight.
The Court has jurisdiction over this matter pursuant to 28 U.S.C. §§ 1334(b) and 157(a). This particular dispute is a
In the wake of the Supreme Court's ruling in Stern v. Marshall, this Court must also evaluate whether it has the constitutional authority to sign a final order regarding the show cause hearing. Stern v. Marshall, ___ U.S. ___, 131 S.Ct. 2594, 180 L.Ed.2d 475 (2011). In Stern, the Supreme Court held that 28 U.S.C. § 157(b)(2)(C) — which authorizes bankruptcy judges to issue final judgments in counterclaims by a debtor's estate against entities filing claims against the estate — is an unconstitutional delegation of Article III authority to bankruptcy judges, at least when the counterclaim being adjudicated is based solely on state common law and does not affect the claims adjudication process. Id. at 2616.
The matter at bar is not a counterclaim of the Debtor's estate based solely on state law. Rather, this matter arises from this Court's issuance of the Second Show Cause Order in order to maintain the integrity of the bankruptcy process. This matter arises out of violations by Braun, an officer of this Court, of various Federal and Local Bankruptcy Rules — specifically Federal Bankruptcy Rules 9011(b) and 5005(a)(2), and Bankruptcy Local Rules 1001-1 and 5005-1. This Court has authority under Federal Bankruptcy Rule 9011(c) to issue sanctions for violations of Rule 9011(b), as well as under 11 U.S.C. § 105(a) and applicable case law to police the conduct of the attorneys who appear in this Court and to impose sanctions on those attorneys who misbehave. Chambers v. NASCO, 501 U.S. 32, 111 S.Ct. 2123, 115 L.Ed.2d 27 (1991); Knight v. Luedtke (In re Yorkshire, LLC), 540 F.3d 328, 332 (5th Cir.2008). There is no state law involved in the matter before this Court. Rather, the matter before the Court solely involves bankruptcy law. For all of these reasons, the Court concludes that it has the constitutional authority to enter a final order imposing sanctions on Braun.
Federal Rule of Bankruptcy Procedure 9011 has important implications for attorneys who present documents to a court. Specifically, Rule 9011(b) provides, in pertinent part:
Fed. R. Bankr.P. 9011(b).
Related to Rule 9011(b) is Rule 1008, which requires that "[a]ll petitions, lists, schedules, statements and amendments thereto shall be verified...." Fed. R. Bankr.P. 1008. In other words, debtors must sign the petition, Schedules, and SOFA as a means of not only authorizing the filing of these documents, but of verifying, under penalty of perjury, that they have reviewed the information contained therein and that it is true and correct to the best of their knowledge, information, and belief. In re Phillips, 317 B.R. 518, 523 (8th Cir. BAP 2004); In re Wenk, 296 B.R. 719, 727 (Bankr.E.D.Va.2002). Rule 1008 is related to Rule 9011(b) because, by failing to obtain the debtor's verification as to the accuracy of the documents he files, an attorney falsely represents to the court that "the allegations and other factual contentions have evidentiary support." Fed. R. Bankr.P. 9011(b)(3); In re Josephson, Case No. 04-60004-13, 2008 WL 113861, at *6 (Bankr.D.Mont. Jan. 9, 2008); see also In re Phillips, 317 B.R. at 524 ("[T]he petition [the attorney] filed did not have the debtor's original signature and therefore lacked a verification of the facts. With no verification, the factual contentions have no evidentiary support and thus the petition violates Rule 9011(b)(3).").
Here, Braun knowingly filed documents (i.e., the Debtor's original Schedules and original SOFA) for which he does not have — and never has had — the Debtor's "wet signatures."
Further, this Court agrees with the court in Phillips that there are no circumstances that would ever justify an attorney filing a petition, any of the Schedules, or the SOFA without first obtaining the debtor's signature, "regardless of how urgent the need may appear to be." See In re Phillips, 317 B.R. at 521 (refusing to accept attorney's excuse that filing petition without first obtaining the debtor's signature was necessary to prevent a foreclosure sale of the debtor's home). Therefore, it is immaterial whether the changes
Moreover, electronically filing a document that purports to have the debtor's signature but which was not, in fact, signed by the debtor, is no different than physically forging the debtor's signature on a paper document. In re Wenk, 296 B.R. at 725. Thus, multiple bankruptcy courts have found that "electronically filing a document bearing an electronic signature that was not actually or validly signed" constitutes a forgery amounting to a Rule 9011 violation. In re Phillips, 317 B.R. at 523-24; see also In re Flowers, Case Nos. 12-40298-CEC, 12-40454-CEC, 12-40457-CEC, 12-40459-CEC, 2012 WL 987298, at *7 (Bankr.E.D.N.Y. Mar. 22, 2012) (finding that an attorney violated Rule 9011(b) by forging the electronic signature of debtors' counsel on bankruptcy petitions and other documents); In re Phillips, 317 B.R. at 523-24 (upholding sanctions award where counsel violated 9011(b) by forging debtor's electronic signature on bankruptcy petition); In re Josephson, Case No. 04-60004-13, 2008 WL 113861, at *7 (Bankr. D.Mont. Jan. 9, 2008) (granting trustee's request for sanctions where counsel violated 9011(b) by forging debtors' electronic signatures on addendum to Chapter 13 plan); In re Alvarado, 363 B.R. 484, 492 (Bankr.E.D.Va.2007) (finding that sanctions were appropriate for attorney who forged debtor's electronic signature on a bankruptcy petition, thereby violating Rule 9011(b)); In re Wenk, 296 B.R. at 728 (finding that counsel who forged debtor's electronic signature on petition violated Rule 9011(b)).
Here, Braun electronically filed the Debtor's original Schedules and original SOFA, representing with a "/s/" that the Debtor had signed these documents when, in fact, he had not. [Finding of Fact No. 32]. By filing the Debtor's original Schedules and original SOFA with forged electronic signatures, Braun violated Rule 9011(b) because he could not have believed that filing these documents with forged signatures was proper or warranted under existing law or a good faith argument to extend the law. See Fed. R. Bankr.P. 9011(b)(1), (2).
An attorney who has violated Rule 9011(b) may be sanctioned pursuant to Bankruptcy Rule 9011(c). In re Nair, 202 Fed.Appx. 765, 766 (5th Cir.2006) (reviewing the bankruptcy court's imposition of sanctions under Rule 9011(c) for a 9011(b) violation and finding that the bankruptcy court did not abuse its discretion); In re Flowers, 2012 WL 987298, at *7. Section (c) provides that "if, after notice and a reasonable opportunity to respond, the court determines that subdivision (b) has been violated, the court may, subject to the conditions stated below, impose an appropriate sanction upon the attorneys, law firms, or parties that have violated
In the case at bar, this Court, sua sponte, issued the Second Show Cause Order notifying Braun of the conduct charged against him. See [Doc. No. 115]. Specifically, the Second Show Cause Order requires Braun to show cause why he should not be sanctioned for the following: (1) filing the Debtor's Chapter 11 Petition with an "/s/" next to the Debtor's name when in fact the Debtor had not signed the Petition; (2) filing the initial Schedules and initial SOFA under the same circumstances; (3) never obtaining the Debtor's signature on the Declaration for Electronic Filing; (4) never tendering an executed Declaration for Electronic Filing to the Court; and (5) never meeting with the Debtor prior to filing the initial Schedules and SOFA to review with him the accuracy of the information contained therein. [Finding of Fact No. 65]; [Doc. No. 115]. Braun was given ample opportunity to respond by adducing testimony and introducing exhibits in the hearings that were held on the Second Show Cause Order, as well as filing responses and briefs. This Court has concluded that much of Braun's conduct, as described with specificity in the Second Show Cause Order, violated Rule 9011(b), and, as he had notice and ample opportunity to respond, sanctions are therefore appropriate under Rule 9011(c). The form and extent of these sanctions will be discussed subsequently in a separate section of this Opinion.
Federal Rule of Bankruptcy Procedure 5005(a)(2) authorizes electronic filing and provides:
Fed. R. Bankr.P. 5005(a)(2).
In the Southern District of Texas, the relevant Local Rules which implement electronic filing are 5005-1 and 1001-1. Local Rule 5005-1 governs the "Filing of Papers" and states, in pertinent part:
S.D. Tex. Local R. 5005-1(b).
Local Rule 1001-1 provides, "[i]n addition to these rules ... the Administrative Procedures for CM/ECF ... govern practice in the bankruptcy court." S.D. Tex. Local R. 1001-1(b). Thus, these Local Rules, taken together, require compliance with "procedures established by the Court" — specifically, "the Administrative Procedures for CM/ECF." S.D. Tex. Local R. 5005-1(b) and 1001-1(b).
Braun never obtained the Debtor's signature on the Declaration for Electronic Filing, nor did he tender this document to the Court. [Finding of Fact No. 34]. Therefore, Braun failed to comply with paragraph 3.
Further, Braun violated Section III, Part B, paragraph 4 of the Administrative Procedures for Electronic Filing. This paragraph, entitled "Retention of Documents with Third-Party Signatures," sets forth that:
Because Braun never obtained the Debtor's wet signature on the original Schedules and the original SOFA that he filed electronically on January 7, 2011 [Finding of Fact Nos. 32 & 33], he not only did not, but could not, comply with paragraph 4 of Part B. And, even if Braun had actually obtained the Debtor's "wet signatures" on these documents, he failed to comply with paragraph 4 of Part B because: (1) he failed to retain them; (2) after Rodgers requested them, he could not provide them to her; and (3) after this Court requested them, he could not produce them.
Practicing attorneys owe fundamental duties of professional responsibility to their clients, the judiciary, opposing counsel, and the administration of justice. See USDC/SDTX Local Rules (2000), Appendix D, Guidelines for Professional Conduct. These duties, which are articulated in the Guidelines for Professional Conduct, encompass three areas that are relevant to the circumstances at hand. First, Provision A of the Guidelines requires that attorneys, in fulfilling their primary duties to their clients, remain conscious of the broader duties owed to the judicial system. Provision B of the Guidelines provides that lawyers owe duties of candor and diligence, and utmost respect to the judiciary. Finally, Provision D states that lawyers owe fundamental duties of personal dignity and professional integrity to the administration of justice. Braun's conduct, including his failure to meet face-to-face with his client (i.e., the Debtor) to review the original Schedules and original SOFA [Finding of Fact No. 31], his filing of these documents on January 7, 2011 with forged electronic signatures [Finding of Fact Nos. 32 & 33], and his failure to disclose to this Court that he had not obtained and maintained possession of the Debtor's original "wet signatures", violated these professional standards.
The Local Rules for the Southern District of Texas, Appendix D, Provision A provide that "[i]n fulfilling his or her primary duty to the client, a lawyer must be ever conscious of the broader duty to the judicial system that serves both the attorney and the client." Braun breached duties owed to his client (i.e., the Debtor) by failing to meet with the Debtor in person to review the original Schedules and the original SOFA with him prior to filing these documents,
The Debtor's Schedules and SOFA were, at least initially, filled out entirely by Braun's legal assistant, Alcarez, with information that she obtained from the Debtor via email. [Finding of Fact Nos. 18 & 27]; [Apr. 30, 2012 Tr. 247:19-25, 248:1-8, 273:4-6]. Alcarez had received no bankruptcy-related training and no training in BankruptcyPRO (i.e., the system used to complete the Debtor's original Schedules and original SOFA). [Mar. 1, 2012 Tr. 24:25-25:5]. In fact, Alcarez testified that she had received no formal training whatsoever at the Firm. [Mar. 1, 2012 Tr. 41:7-13]. She had, at best, done "a little bit of bankruptcy" at her first job as a legal assistant over 20 years prior. [Mar. 1, 2012 Tr. 24:16-24]. Alcarez's limited knowledge of bankruptcy is illustrated by the fact that she called Mr. Orlando over to her desk when the Debtor was in the Firm's office on January 6, 2011 to have Mr. Orlando indicate where the Debtor should sign the Schedules and SOFA.
Not only did Braun allow his untrained legal assistant to prepare the Debtor's Schedules and SOFA, but he also delegated to her the task of reviewing them with the Debtor and obtaining his signatures. Yet, Alcarez only met with the Debtor face-to-face on one occasion — January 6, 2011 — when the Debtor came to the Firm's office [Feb. 17, 2012 Tr. 63:3-6], and Alcarez did not actually review the Schedules or SOFA in detail with the Debtor. [Finding of Fact No. 24]. Rather, the Debtor, while standing at Alcarez's desk, flipped through the Schedules and SOFA on his own for no more than five minutes. [Mar. 1, 2012 Tr. 27:2-13]. Further, Alcarez never mentioned to the Debtor that he was signing under oath subject to penalty of perjury. [Mar. 1, 2012 Tr. 35:15-17].
Certainly, this Court recognizes that legal assistants frequently assist bankruptcy attorneys in collecting financial information from debtors, but there is a fundamental difference between a legal assistant and a bankruptcy attorney. Bankruptcy attorneys aid their clients by using their expertise in bankruptcy law to give legal advice. On the other hand, legal assistants are not attorneys. Legal assistants may not counsel, warn, or ensure the
Here, Braun appears to have frequently allowed Alcarez to perform these sorts of prohibited duties. As Alcarez testified, she often reviewed the Schedules with other debtor-clients of the Firm:
[Mar. 1, 2012 Tr. 34:14-35:6] (emphasis added).
This testimony tends to indicate that Alcarez — at Braun's direction — was improperly engaging in the practice of law by giving legal advice to debtors as they completed their Schedules. It also reveals that the degree of Alcarez's involvement with the Debtor's case was far from unique — based on Alcarez's testimony, it seems that Braun often delegated these types of duties to her. In the instant case, Braun referred to the Debtor as "difficult" and even "painful" to deal with [Apr. 30, 2012 Tr. 163:3-5, 210:21-25], and therefore seems to have passed much of the communication responsibilities off onto Alcarez. As Braun stated, Alcarez "dealt with it on a day-to-day basis, she was in the trenches with these people."
This is not the first time that Braun has abdicated his responsibilities to a client.
Nevertheless, in the case at bar — seven years after the admonishment in EBCO Land Development — Braun again seems to have removed himself from the bankruptcy
Provision B of the Guidelines provides that "[a] lawyer owes, to the judiciary, candor, diligence and utmost respect." By falsely representing that the Debtor had signed the original Schedules and original SOFA by the time of filing on January 7, 2011 at 8:06 P.M., Braun showed that he was not diligent with his work, and was incredibly disrespectful of the judiciary and of the bankruptcy process. Further, Braun violated his duty of candor by not informing the Court when he realized in October of 2011 that he did not have the "wet signatures" on the original Schedules and the original SOFA and that he was not able to obtain them from the Debtor.
As counsel for the Debtor, Braun is an officer of this Court and is bound by fiduciary standards. See ICM Notes, Ltd. v. Andrews & Kurth, LLP, 278 B.R. 117, 123 (S.D.Tex.2002) (citing Brown v. Gerdes, 321 U.S. 178, 182, 64 S.Ct. 487, 88 L.Ed. 659 (1944)); see also In re Alvarado, 363 B.R. at 489-90 ("As officers of the court, attorneys have a special responsibility for upholding the quality of justice within the judicial process."). Braun has repeatedly been warned by this Court of the need to communicate with forthrightness; for instance, in hearings related to EBCO Land Development, this Court specifically told Braun that he has a duty to inform the Court when things go wrong, see [Tape Recording, 11/30/2005 Hearing at 1:23:00-1:23:50 P.M.] and that it is "better to step up and alert [this Court] to all problems that have occurred." [Tape Recording, 07/13/2006 Hearing at 9:03:00-9:03:32 A.M.]. Yet, here, rather than admit his mistake to the Court when he realized that he did not have possession of the wet signed original Schedules and "wet signed" original SOFA, Braun remained silent. And, rather than come forward to the Court when he learned that he would not be able to obtain a substitute signature from the Debtor in October of 2011, Braun stayed quiet.
To remain silent under the particular circumstances in this case, Braun showed an utter lack of candor and respect. In fact, it was not until the Debtor testified in December, 2011 at the hearing on the Order Requiring the Debtor to Appear and Respond to Allegations by Tammy Cromwell Stomberg that He is Knowingly Filing False and Material Declarations with this Court that the Court first learned that the Debtor had not signed the original Schedules and original SOFA. See [Finding of Fact No. 62]. And, Braun himself did not admit to not having the original signatures in his possession until this Court issued the Second Show Cause Order and called upon him to respond. Thus, Braun's testimony on April 30, 2012 that he "was not trying to hide anything with the Court in anyway" was patently false. [Apr. 30, 2012 Tr. 189:24-25]. Accordingly, Braun
Finally, Provision D of the Guidelines provides that "[a] lawyer unquestionably owes, to the administration of justice, the fundamental duties of personal dignity and professional integrity." Dignity
Attorneys have "an affirmative duty to conduct a reasonable inquiry into the facts set forth in the Debtor's schedules [and] statement of financial affairs ... before filing them." In re Withrow, 405 B.R. 505, 512 (1st Cir. BAP 2009). As a part of this reasonable inquiry, the attorney should sit down in person with his client and carefully review the Schedules, the SOFA, and any other documents to be filed with the court to ensure that all of the representations set forth therein are true and accurate. In re Nguyen, 447 B.R. 268, 282-83 (9th Cir. BAP 2011); In re Tran, 427 B.R. 805, 809-10 (Bankr. N.D.Cal.2010);
In the case at bar, Braun did not personally meet with the Debtor to review with him the accuracy of the information in the original Schedules and the original SOFA at any point prior to Braun's filing of these documents on January 7, 2011. [Finding of Fact No. 31]. At most, he reviewed the Schedules and the SOFA with the Debtor on the phone mere hours before filing them, and without ensuring that the Debtor himself had a copy of the Schedules and the SOFA in front of him to catch any inaccuracies while on the phone. [Finding of Fact No. 27]. Further, Braun made additional changes during and after
The Second Show Cause Order identified five areas of concern:
Braun has met his burden of proof with respect to the first area of concern. The Court has found that the Debtor did, in fact, sign the Petition which Braun filed on December 23, 2010. [Finding of Fact No. 17]. Braun's use of the "/s/" on this document was, therefore, a truthful representation by Braun that the Debtor had actually signed the Petition.
Nevertheless, Braun has failed to meet his burden on each of the remaining concerns detailed in the Second Show Cause Order. Specifically, Braun has failed to prove that: (1) the Debtor actually signed the initial Schedules and the initial SOFA that Braun filed on January 7, 2011; (2) the Debtor signed the Declaration for Electronic Filing; (3) Braun tendered the Declaration for Electronic Filing to this Court; and (4) Braun personally met with the Debtor before filing the initial Schedules and the initial SOFA. Because Braun has failed to meet his burden with respect to these four areas of concern, this Court concludes that sanctions are appropriate.
Federal Rule of Bankruptcy Procedure 9011(c) provides specific authority for this Court to sanction attorneys for
Additionally, this Court has the inherent power to sanction pursuant to § 105 of the Bankruptcy Code. Under this section, the Court may issue any order that is "necessary or appropriate to carry out the provisions" of the Bankruptcy Code. 11 U.S.C. § 105(a). Section 105 does not exist to merely punish behavior already sanctioned by other mechanisms. Rather, § 105 is meant to "fill in the interstices" that rules such as 9011(c) do not fill. See Chambers, 501 U.S. at 33, 46-47, 111 S.Ct. 2123 ("[O]ther [sanction] mechanisms, taken alone or together, are not substitutes for the inherent power, for that power is both broader and narrower than other means of imposing sanctions ... [W]hereas each of the other [sanction] mechanisms reaches only certain individuals or conduct, the inherent power extends to a full range of litigation abuses. At the very least, the inherent power must continue to exist to fill in the interstices. Even Justice Kennedy's dissent so concedes.") (emphasis added).
The Fifth Circuit has also held that the imposition of sanctions using these inherent powers must be accompanied by a specific finding of bad faith. Matter of Yorkshire, LLC, 540 F.3d 328 (5th Cir.2008); Goldin v. Bartholow, 166 F.3d 710, 722 (5th Cir.1999); In re Paige, 365 B.R. 632, 638 (Bankr.N.D.Tex.2007). In effect, to impose sanctions using its inherent powers, this Court must find that the "very temple of justice has been defiled" by the party's conduct. Goldin, 166 F.3d at 722; Cadle Co. v. Brunswick Homes, LLC (In re Moore), 470 B.R. 414, 417, 436 (Bankr.N.D.Tex.2012).
In the case at bar, Braun's transgressions eclipsed 9011(b) and (c)'s narrow confines, resulting in violations of Federal Rule of Bankruptcy Procedure 5005(a)(2) (for improper electronic filing of the Debtor's original Schedules and original SOFA with the Court) and Local Rules 5005-1 and 1001-1 (for improper electronic filing of the Debtor's documents with the Court). The Court may therefore employ § 105 to sanction such misconduct. Further, it is clear that for the reasons stated above, Braun's actions have defiled the very temple of justice, and were in bad faith. Indeed, if forgery by a seasoned attorney on his own client's Schedules and SOFA does not constitute bad faith, then nothing does.
In considering the sanctions to now impose on Braun, this Court must focus on how egregious his conduct has been in the specific areas set forth in the Second Show Cause Order. But, also relevant to this Court's determination of appropriate sanctions is the consideration of whether the conduct at issue was an isolated incident or part of a pattern of activity. In re Allen, Case No. 06-60121, 2007 WL 1747018, at *2, 2007 Bankr.LEXIS 2063, at *7 (Bankr.S.D.Tex. June 18, 2007). This Court has already discussed its conclusions that Braun's conduct referenced in the Second Show Cause Order was in bad faith and defiled the very temple of justice. Therefore, the Court now focuses on Braun's past misconduct in this Court.
Although Braun has not been sanctioned in the past for the exact conduct set forth in the Second Show Cause Order — namely, failure to personally meet with his client before filing the Schedules and SOFA, failure to obtain his client's signature and authorization to file these documents on the client's behalf, and forging his client's name on the original Schedules and the original SOFA — Braun has previously been the subject of several show cause orders, and has also filed sloppy paperwork with the Court. [Tape Recording, 6/7/2011 Hearing at 10:51:47-10:53:37 A.M.].
Braun's conduct relating to the Second Show Cause Order and his conduct in the past, taken together, indicate that first, Braun has routinely engaged in improper behavior; that second, prior admonitions to Braun have failed to achieve the Court's objective, namely to deter Braun's poor conduct; and that finally, now, in the case at bar, severe sanctions are warranted.
In 2005, the undersigned judge held a series of hearings after Braun submitted an application for compensation for services and reimbursement for expenses incurred on behalf his debtor client. In re EBCO Land Dev., Ltd., Case No. 04-30519. At the hearing held on November 30, 2005, Braun testified that he failed to keep contemporaneous time sheets. [Tape Recording, 11/30/05 Hearing at 9:15:00-9:17:00 p.m.]. The Court found that the time sheets Braun did keep also failed to comply with U.S. Trustee guidelines, which specifically require simultaneous billing in one-tenth hour increments.
The Court rebuked Braun for his actions, making several findings at the November 30, 2005 hearing. The Court called Braun's work "very, very sloppy." [Id. at 1:18:00-1:19:00 P.M.]. Braun conceded that his work was careless, but said that his sloppiness was because he "hated this case" and that "it was a nightmare." [Tape Recording, 10/17/05 Hearing at 12:37:00-12:38:00 P.M.]. The Court rejected this excuse, telling Braun that: (1) taking on a case requires that an attorney give his full 100% effort to the case [Tape Recording, 11/30/05 Hearing at 1:20:30-1:22:15 P.M.]; (2) an attorney cannot give a "half-baked" effort [Id. at 1:22:15-1:25:00 P.M.]; and (3) Braun could not choose to "push these issues off onto somebody else." [Id. at 1:22:15-1:25:00 P.M.]. The Court "[chose] to conclude" that Braun's mistakes were due to sloppiness and not dishonesty, but insisted that Braun take his cases seriously. [Id. at 1:24:30-1:25:14 P.M.].
The Court also emphasized that Braun has a duty to inform the Court when things go wrong in a case [Id. at 1:23:00-1:45:00 P.M.], and that Braun cannot remain silent. See [Id. at 1:20:00-1:21:30 P.M.]. Indeed, this Court concluded in its order on Braun's application for allowance of expenses that it "hopes Braun will learn from this experience that he needs to ... always be completely candid with the Court." [Case No. 04-30519, Doc. No. 635, p. 3]. Braun's attorney promised the Court that "Braun will never — I can assure you ... — will never, if anything like this occurs again, will [never] not file a certificate or notice with the Court advising that there had been an untruth or a misstatement of fact ... [but] will immediately do that in the future. Certainly, we have all learned from this case." [Tape Recording, 11/30/05 Hearing at 12:36:00-12:38:00 P.M.].
On March 19, 2010, the undersigned judge ordered Braun to show cause why he had not filed an application to employ a real estate broker within the designated period. In re DKLC Group, Case No. 09-34833, Doc. No. 142; see also S.D. Tex. Bankr.Local R.2014-1(b) (stating that an application to employ a professional is deemed contemporaneous if filed within 30 days of the commencement of the professional's provision of services). At the hearing, Braun claimed that he did not understand that this particular professional
Only a few weeks later, the undersigned judge ordered Braun to show cause for a second time. In re Mo's BBQ, Case No. 09-35848, Doc. No. 76. Braun had again failed to file an application to employ a professional — this time, his own firm — within the requisite time frame.
The undersigned judge told Braun at this hearing that he appreciated that Braun was taking responsibility for his inaction. [Id.] Despite initial concerns, see [Tape Recording 04/30/10 at 2:15:00-2:16:00 P.M.] (stating that the Court was "very concerned" about Braun's conduct), the undersigned judge decided to grant the application nunc pro tunc. [Tape Recording, 06/29/10 Hearing at 11:03:00-11:19:00 A.M.].
In August of 2010, the Court had another reason to order Braun to show cause. In re Milton Motors, Inc., Case No. 08-37549, Doc. No. 133. In this case, Braun failed to file the following documents within the deadline set forth in this Court's Order: (1) "[a]ll applications for administrative expenses and professional fees or a report indicating no such applications will be filed"; (2) "[a] report covering the action taken by the Debtor and the progress made in consummation of the plan"; (3) "[a]ny other adversary proceeding, contested matter, motion or application or a report indicating no such matters will be filed"; and (4) "[a] post confirmation certificate." Id. at 1; see also In re Milton Motors, Inc., Case No. 08-37549, Doc. No. 119. Braun acknowledged that he had not timely filed these documents because he was overwhelmed by his case load. [Tape Recording, 09/03/10 Hearing at 11:24:19-11:29:39 A.M.]. He told the Court that he was working with his firm to correct these mistakes, and admitted that he needed help. [Id.].
Yet, the Court "[had] heard many times that [Braun] is taking steps to fix these things." [Id. at 11:26:55-11:27:48 A.M.]. And, as this was the third show cause hearing in 2010, the Court finally asked Braun directly: "Why are there so many problems?" [Id.]. Braun assured the Court that his firm was hiring an administrative assistant to help him, and that the firm was instituting a monthly monitoring of his fees. [Id. at 11:27:49-11:29:39 A.M.]. Braun agreed to the Trustee's proposed remedy of a $5,000 reduction in his fees, and the Court accepted this reduction for the delays within the case caused by Braun. [Id. at 11:25:35-11:26:01 A.M.]; see also Doc. No. 171.
Finally, the most recent examples of Braun's past misconduct have come in the pending case. On April 25, 2011, this Court issued the First Show Cause Order because in the Application to Employ and in his Original Affidavit accompanying the Application, Braun had failed to disclose his or the Firm's connection to Ms. Stomberg. [Finding of Fact Nos. 37, 38 & 53]. In fact, Braun had affirmatively stated that neither he nor any of his partners "has represented and otherwise dealt with, or is now representing and otherwise dealing with, any entity that is or may consider itself a creditor...." [Finding of Fact No. 38]; [Doc. No. 7-1, p. 3, ¶ 5]. Only when Ms. Stomberg subsequently discovered that Braun was seeking this Court's approval to represent her ex-husband — and, thus, objected to the Application to Employ on the grounds of conflict of interest [Finding of Fact No. 42] — did Braun attempt to cure his misrepresentations by filing the Amended Affidavit with the Court in which he admitted that he had, in fact, represented Ms. Stomberg. [Finding of Fact No. 45]. Even then, Braun still did not file an accurate affidavit because he was still counsel of record for Ms. Stomberg in her Chapter 7 case, and therefore he was representing a creditor of the Debtor. Specifically, Braun still represented in the Amended Affidavit that: (1) neither he nor the Firm "has represented and otherwise dealt with, or is now representing and otherwise dealing with, any entity that is or may consider itself a creditor...."; (2) to the best of his knowledge, neither he nor any other member of his firm "represents or holds any interest adverse to the Debtor or its estate or have any interest materially adverse to the interest of any class of Debtor's creditors or equity security holders." [Finding of Fact No. 45]. Additionally, Braun failed to disclose in the Amended Affidavit that he had taken an additional $300 from Ms. Stomberg a mere 23 days before filing the Debtor's Petition, that he had promised Ms. Stomberg that he would seek to have her Chapter 7 case re-opened, and that he had failed to do so. [Finding of Fact No. 45].
At the June 7, 2011 hearing on the First Show Cause Order, Braun apologized to this Court for his lack of disclosure concerning Ms. Stomberg and this Court admonished Braun to slow down and think about his actions. [Finding of Fact No. 54]; [Tape Recording 06/07/11 Hearing at 2:38:25-2:41:06 P.M.]. Yet, a few months later, in October of 2011, when Braun — after being questioned by Rogers as to whether he had possession of the wet signed original Schedules and original SOFA, realized that he did not have possession of these documents [Finding of Fact No. 57] — clammed up. Rather than affirmatively inform this Court that he did not have possession of these documents as required by the Administrative Procedures for Electronic Filing, Braun improperly tried to convince the Debtor to wet sign back-dated Schedules and SOFA. [Finding of Fact No. 57]. And, when the Debtor refused to sign, Braun once again clammed up. Rather than affirmatively inform the Court that he did not have possession of these wet signed documents, he remained silent, just as he did in EBCO Land Development on the tax return issue. Thus, contrary to what Braun's attorney represented to this Court back in 2005 — namely that Braun would never again fail to notify the Court of any untruths or misrepresentations of fact in a case — here Braun did just that.
The above-described review of Braun's past misconduct in this Court from 2005 to the present reflects that he continues to practice law in a slipshod and unethical manner, and has clearly not learned from his past misconduct. Indeed, given his conduct related to the First Show Cause Order and the Second Show Cause Order, he has become increasingly unethical. His conduct has, in effect, gone from bad to very bad. This Court has admonished Braun time and again to be more attentive to detail and to always be honest and forthcoming with the Court, and such blatant disregard for this Court's directions reflects Braun's inability to take instruction and related inability to follow the ethical and legal rules of the judicial system. Under all of these circumstances, this Court concludes that serious sanctions are in order.
In determining the appropriate sanctions to impose against Braun, the Court is mindful that the sanctions should be limited to what is sufficient to deter Braun from repeating such conduct and deter others from engaging in similar conduct in the future. Fed. R. Bankr.P. 9011(c)(2); In re Essien, 358 B.R. 286, 289 (Bankr.S.D.Tex.2006). Some argument was made that this Court should impose only non-monetary sanctions against Braun. The Court declines to take this route. Braun is not a novice attorney; rather, as an attorney who has practiced for many years [Finding of Fact No. 1], Braun knows the necessary methods and procedures for the proper prosecution of a bankruptcy case. This Court has, in fact, warned and provided the opportunity for Braun to improve his legal practice several times. See, e.g., In re EBCO Land Dev., Ltd., Case No. 04-30519; In re Mo's BBQ, Case No. 09-35848; In re Milton Motors, Case No. 08-37549. Indeed, Braun has conceded that this Court has been extremely flexible with him. See, e.g., [Tape Recording, 06/29/10 Hearing at 11:03:00-11:19:00 A.M.] (acknowledging that the undersigned judge had given him "great latitude in other issues" and assuring this Court that he was "trying to get back on the straight and narrow."). Yet, this Court finds that little has improved; Braun is staunchly defiant in continuing to commit misdeeds. Indeed, he has resorted to forgery and perjury. The Court believes that the most effective sanction is one that hits Braun in the wallet. As a result, the Court chooses to impose monetary sanctions.
However, requiring the respondent (here, Braun) to pay the fees and costs incurred by others is not always the only proper measure of the amount that is appropriate to deter future wrongful conduct by a party and deter others from repeating such conduct. In re TAGT, L.P., 393 B.R. 143, 154 (Bankr.S.D.Tex.2006) (citing Fox v. Acadia State Bank, 937 F.2d 1566, 1571 (11th Cir.1991)); In re Essien, 358 B.R. at 289 (same). The Court can also require Braun to pay appropriate sums to the Clerk of Court. Given the egregiousness of his conduct in the case at bar, this Court concludes that Braun should pay the following sums to the Clerk of Court:
For several months, Braun has been in and out of this Court in connection with the Debtor's and Ms. Stomberg's bankruptcy cases. In an attempt to complete large amounts of case work in little time, Braun has exhibited reckless disregard for his duties as an attorney at law — breaking promises to his client (i.e., Ms. Stomberg), filing materially inaccurate affidavits, failing to disclose conflicts of interest, failing to meet with the Debtor in person to review his Schedules and SOFA prior to filing them, filing Schedules and a SOFA that were filled with some material inaccuracies, filing documents with forged electronic signatures of the Debtor in violation of the Federal Rules of Bankruptcy Procedure, the Local Rules for the Southern District of Texas, and the Bankruptcy Local Rules for the Southern District of Texas, and attempting to cover his tracks in every respect. Each of these actions alone is an egregious affront to the dignity of this Court in particular and to the judicial system in general. Collectively, they are a full-scale attack.
Abraham Lincoln once said, "[y]ou cannot escape the responsibility of tomorrow by evading it today."
By imposing sanctions, this Court hopes that Braun will finally learn the lessons of the need to be truthful, candid, diligent, attentive to detail, and respectful of both this Court and the entire judicial system — lessons that he claimed to have learned at the close of the hearing on the First Show Cause Order in this case, but which his silence about never procuring and maintaining possession of the Debtor's wet signatures proves otherwise.
Guidelines for Reviewing Applications for Compensation, 28 C.F.R. Part 58, Appendix (1996).
