United States Bankruptcy Appellate Panel
                            FOR THE EIGHTH CIRCUIT


                                       No. 10-6045


In re:                                       *
                                             *
David P. Lindsey,                            *
                                             *
         Debtor.                             *
                                             *
Northland National Bank,                     *   Appeal from the United States
                                             *   Bankruptcy Court for the
         Plaintiff-Appellant,                *   Western District of Missouri
                                             *
               v.                            *
                                             *
David P. Lindsey,                            *
                                             *
         Defendant-Appellee.                 *


                                Submitted: January 11, 2011
                                   Filed: February 8, 2011


Before KRESSEL, Chief Judge, SALADINO, and NAIL, Bankruptcy Judges.


NAIL, Bankruptcy Judge.
      Northland National Bank ("Bank") appeals the June 11, 2010 judgment of the
bankruptcy court1 in favor of Debtor David P. Lindsey. We affirm.

                                   BACKGROUND

      In 1985, Debtor and his wife formed Lanadar Corp., a Missouri corporation.
Lanadar operated a home improvement, consulting, and sale business. In August
2005, Debtor and his wife transferred certain gold coins to Lanadar to capitalize the
corporation.

       In June 2005, Debtor and Thomas Clark formed American Distributors, Inc.,
also a Missouri corporation. American Distributors was a wholesale supply company,
selling exterior siding, underlayment products, accessories, and windows.

      In early 2006, American Distributors sought and obtained a $750,000.00 loan
from Bank.2 Debtor personally guaranteed the loan, and he and his wife Stacy D.
Lindsey (who did not guarantee the loan) submitted a personal financial statement, on
which they listed, inter alia, gold, silver, and platinum coins valued at $125,000.00
and mutual funds valued at $150,000.00.3 The financial statement indicated the


      1
       The Honorable Jerry W. Venters, United States Bankruptcy Judge for the
Western District of Missouri.
      2
        We are unable to better describe when the loan was made because, with the
exception of the personal financial statement described in the next sentence, Bank did
not introduce any of the 2006 loan documents at trial.
      3
        At trial, Bank introduced four personal financial statements, dated January 1,
2006 (Plaintiff's Ex. 10), December 22, 2006 (Plaintiff's Ex. 9), July 1, 2008
(Plaintiff's Ex. 8), and April 23, 2009 (Plaintiff's Ex. 7), respectively. In its opening
brief, Bank references the January 1, 2006 statement in connection with the 2006 loan.
However, in his brief, Debtor references the December 22, 2006 statement in
connection with the 2006 loan. Because the loan was made in early 2006, we have

                                          -2-
mutual funds were owned by "DPL & SDL" (which we take to mean David P. Lindsey
and Stacy D. Lindsey), but it did not indicate whether the gold, silver, and platinum
coins were owned by Debtor individually, his wife individually, or Debtor and his
wife as tenants by the entirety or otherwise.

      In August 2008, American Distributors sought and obtained a renewal of the
2006 loan. Debtor again personally guaranteed the loan, and he and his wife (who
again did not guarantee the loan) submitted a second personal financial statement, on
which they listed, inter alia, gold, silver, and platinum coins valued at $160,000.00
and mutual funds valued at $140,000.00. The financial statement again indicated the
mutual funds were owned by "DPL & SDL," but it again did not indicate whether the
gold, silver, and platinum coins were owned by Debtor individually, his wife
individually, or Debtor and his wife as tenants by the entirety or otherwise.

      In November 2008, Debtor sought and obtained a release of Bank's second
mortgage against Debtor's home – which secured in part American Distributors'
indebtedness to Bank – in return for Debtor's pledging a certificate of deposit. Debtor
did not submit another personal financial statement at the time.

       In June 2009, Debtor and Thomas Clark decided to close American
Distributors. After it was liquidated, American Distributors still owed Bank
$170,484.20, for which Debtor was liable on his personal guaranty.

      On August 7, 2009, Debtor filed a petition for relief under chapter 7 of the
bankruptcy code. On December 14, 2009, Bank filed a complaint objecting to
Debtor's discharge under 11 U.S.C. § 727(a)(2), (3), (4), and (5) and to determine the
dischargeability of Bank's claim under 11 U.S.C. § 523(a)(2)(A) and (B), (4), and (6).
Bank's complaint included additional counts for breach of contract, unjust enrichment,


used the figures from the January 1, 2006 statement.

                                         -3-
fraud and intentional misrepresentation, conversion, corporate piercing/alter ego, and
transfers in fraud. The matter was tried, and on June 11, 2010, the bankruptcy court
entered judgment in favor of Debtor. Bank timely filed a notice of appeal.4

      On appeal, Bank challenges only the bankruptcy court's determination that
Bank's claim against Debtor is dischargeable under 11 U.S.C. § 523(a)(2)(B).

                             STANDARD OF REVIEW

      Each of the elements of a claim of nondischargeability under § 523(a) must be
shown by a preponderance of the evidence. Grogan v. Garner, 

, 286-91
(1991). This means the trier of fact must believe the existence of a fact is more
probable than its nonexistence. Buchholz v. Dewey (In re Dewey), 

, 263
(Bankr. N.D. Iowa 2001) (citing Metropolitan Stevedore Co. v. Rambo, 

,
137 [n.9] (1997)).

        Whether a requisite element of a claim of nondischargeability under
§ 523(a)(2)(B) has been satisfied is a factual determination that is reviewed for clear
error. R & R Ready Mix v. Freier (In re Freier), 

, 587 (8th Cir. 2010);
First National Bank of Olathe, Kansas v. Pontow, 

, 609 (8th Cir. 1997).
A finding is clearly erroneous if, after reviewing the entire evidence, the Court is left
with the definite and firm conviction that a mistake has been made. 

(quoting therein Anderson v. Bessemer City, 

, 573 (1985)). "Oral
findings and conclusions under Rule 52(a) must be liberally construed and found to
be in consonance with the judgment if the judgment has support in the record



      4
       Bank's adversary proceeding was consolidated for trial with another adversary
proceeding in which the United States Trustee also objected to Debtor's discharge.
The bankruptcy court entered judgment in favor of Debtor in that adversary
proceeding as well. The United States Trustee did not appeal.

                                          -4-
evidence." Fonder v. U.S., 

, 999-1000 (8th Cir. 1992) (quoting Jiles v.
Ingram, 

, 414 (8th Cir. 1991)) (internal quotation marks omitted).5

                                    DISCUSSION

      For a debt to be declared nondischargeable under § 523(a)(2)(B), the creditor
must prove:

              1. the debtor made a written statement;

              2. the statement was materially false;

              3. the statement was in regard to the debtor's or an
                 insider's financial condition;

              4. the creditor reasonably relied on the statement; and

              5. the debtor made the statement with an intent to deceive.

11 U.S.C. § 523(a)(2)(B). It is undisputed Debtor and his wife's personal financial
statements were written statements and were in regard to Debtor and his wife's
financial condition.

       A written statement is materially false if it paints a substantially untruthful
picture of the debtor's financial condition by misrepresenting information that would
normally affect the lender's decision to extend credit. Premier Bank v. Koester (In re
Koester), 

, 368 (Bankr. E.D. Mo. 2010) (citations therein). Bank argues
Debtor and his wife's personal financial statements were materially false in several
regards. First, the financial statements did not accurately reflect the ownership of the
gold coins. Second, the financial statements did not reflect a lien against the gold



      5
          Fed.R.Civ.P. 52 applies in adversary proceedings. Fed.R.Bankr.P. 7052.

                                          -5-
coins held by Premier Bank, another of Debtor's lenders. Third, the financial
statements did not accurately reflect the ownership of the mutual funds.

       The bankruptcy court did not consider these inaccuracies and omissions to be
material. It found while Lanadar actually owned the gold coins, Debtor and his wife
controlled Lanadar and thus had de facto control of the gold coins and could have
used them to pay their personal debts.6 The bankruptcy court also found while the lien
against the gold coins was not disclosed, the debt owed to Premier Bank was disclosed
and it would have been "foolish" or "silly" to assume Premier Bank's claim was
unsecured.7 Finally, the bankruptcy court found while the mutual funds were actually
a part of Debtor and his wife's self-employed pension plan, those mutual funds were
nevertheless available to Debtor and his wife and could also have been used to pay
their personal debt.8

      6
        In its opening brief, Bank contends the bankruptcy court in effect created a
"small business exception" to Missouri corporate and property law. We disagree. The
bankruptcy court did not suggest Debtor, his wife, or Lanadar could be compelled to
use the gold coins to pay Debtor and his wife's personal debts.
      7
         The financial statements do not indicate the gold coins were owned free and
clear of liens. Consequently, we question whether the failure to reflect Premier Bank's
lien against the gold coins amounts to a misrepresentation, and even if it does, whether
that misrepresentation is fairly attributable to Debtor. Nothing in the record suggests
Bank told Debtor how to prepare the financial statements, what information should
be included on them, or how that information should be presented.
      8
         We also question whether Debtor and his wife's treatment of the mutual funds
amounts to a misrepresentation. On the first page of each of the financial statements,
there is a line item for "Cash Value Life Insurance, Pension Fund, IRA, Gold & CDs,"
with a reference to "schedule I." While there are slight differences in the respective
schedules I, each includes, inter alia, a line item for "IRAs" or "IRA'S & Annuities"
and a line item for "Mutual Funds." In his brief, Debtor argues because they were
clearly not life insurance, gold, or CDs, the mutual funds could only have comprised
either the pension funds or the IRAs listed on the first page of the financial statements.
Taking Debtor's argument one step further, because the IRAs are separately

                                           -6-
       Each of these findings is supported by the record. In essence, the bankruptcy
court found Debtor and his wife's financial statements did not paint a substantially
untruthful picture of their financial condition and thus those financial statements were
not materially false. We cannot say that finding is clearly erroneous.

       Whether a creditor reasonably relied on a written statement must be determined
in light of the totality of the circumstances. 

(citations
therein).

             "Among other things, a court may consider 'whether there
             were any 'red flags' that would have alerted an ordinarily
             prudent lender to the possibility that the representations
             relied upon were not accurate; and whether even minimal
             investigation would have revealed the inaccuracy of the
             debtor’s representations.' [Coston v. Bank of Malvern (In
             re Coston), 

, 261 (5th Cir. 1993.]" [Sinclair
             Oil Corp. v. Jones (In re Jones), 

, 662 (8th Cir.
             1994)].

in its opening brief and at oral argument the bankruptcy court applied
a higher standard of reliance than required by § 523(a)(2)(B). We disagree. The
bankruptcy court's statement upon which Bank relies, i.e., "I don't believe that the
bank seriously and primarily relied on [Debtor and his wife's financial statements]"
(emphasis added), is only a small part of a lengthy soliloquy and cannot be taken out
of context. The bankruptcy court earlier and unambiguously stated, "I don't believe
the bank relied on these financial statements in making extensions of credit." Liberally
construing the bankruptcy court's oral findings, 

, we do
not believe the bankruptcy court applied an incorrect standard of reliance.




denominated on both the first page of the financial statements and on the respective
schedules I, the mutual funds must necessarily have comprised the pension funds.

                                          -7-
       In any event, we do not reach the question of whether Bank reasonably relied
on Debtor and his wife's financial statements, because the bankruptcy court found
Bank did not rely on them at all.9 Ken Roberson, a former officer of Bank, testified
Bank did in fact rely on Debtor and his wife's financial statements. However, the
bankruptcy court was not required to accept Roberson’s testimony as true. See
Blodgett v. Comm'r, 

, 1036 (8th Cir. 2005) (citations therein).
Moreover, Roberson undercut his own testimony when he admitted on direct
examination, "[I]t's basically character capacity and the credit history of a borrower
when you're doing an analysis of a loan. In this case, we had credit history, so –
which was good." The bankruptcy court noted a number of other factors upon which
it found Bank did rely, e.g., Debtor's years of dealing with Bank, his good credit
history, his track record of paying his debts, his good credit report, and his good
relationship with Bank. The bankruptcy court could have found Bank also relied on


      9
         We note, however, the record would support a finding that Bank did not
reasonably rely on Debtor and his wife's financial statements. As noted above, Debtor
and his wife's financial statements do not indicate who owned the gold coins. At
most, because they are joint financial statements, they can be read to say Debtor or his
wife or Debtor and his wife, possibly as tenants by the entirety, owned the gold coins.
Cutcliff v. Reuter (In re Reuter), 

, 775 (Bankr. W.D. Mo. 2010) (citations
therein) ("[A]ny conveyance of property to a husband and wife is presumed to create
a tenancy by the entirety."). The financial statements also indicate Debtor and his
wife, again possibly as tenants by the entirety, owned the mutual funds. Under the
circumstances, to the extent Bank presumed – without confirming who actually owned
the gold coins or the mutual funds – those assets would be available to satisfy its claim
against Debtor, its reliance on the financial statements was both misplaced and
unreasonable. Under Missouri law, property held in a tenancy by the entirety cannot
be seized to satisfy the individual debts of one of the spouses. 

(citation therein). At oral argument, Bank's counsel attempted to draw a
distinction between "credit analysis" and "collectability." Counsel did not, however,
satisfactorily explain why the fact the gold coins and the mutual funds could have
been owned by Debtor and his wife as tenants by the entirety allegedly did not affect
Bank's credit analysis but the fact the gold coins were owned by Debtor and his wife's
closely-held corporation would have affected its credit analysis.

                                          -8-
Debtor and his wife's financial statements, but it did not. Giving due regard to the
bankruptcy court’s opportunity to assess Roberson's credibility as a witness,
Fed.R.Bankr.P. 8013, we cannot say the bankruptcy court’s finding that Bank did not
rely on Debtor and his wife's financial statements is clearly erroneous.

      Finally, with respect to the necessary intent to deceive,

             Because direct proof of intent (i.e., the debtor's state of
             mind) is nearly impossible to obtain, the creditor may
             present evidence of the surrounding circumstances from
             which intent may be inferred. See [Webster City
             Production Credit Association v. Simpson (In re Simpson)],
             

, 211 (Bankr. N.D. Ia. 1983). Accord [Jordan
             v. Frye (In re Frye)], 

, 427 (Bankr. M.D. Ala.
             1985); [Municipal Credit Union v. Brown (In re Brown)],
             

, 1004 (Bankr. E.D.N.Y. 1986). When the
             creditor introduces circumstantial evidence proving the
             debtor's intent to deceive, the debtor "cannot overcome
             [that] inference with an unsupported assertion of honest
             intent." 

. The focus is, then,
             on whether the debtor’s actions "appear so inconsistent
             with [his] self-serving statement of intent that the proof
             leads the court to disbelieve the debtor." [Heinold
             Commodities & Securities, Inc. v. Hunt (In re Hunt)], 

, 441 (M.D. Tenn.1983).

Caspers v. Van Horne (In re Van Horne), 

, at 1287-88 (8th Cir. 1987)
(emphasis added). Bank essentially argues because Debtor knew he did not own the
gold coins, because he knew Lanadar had pledged the gold coins to Premier Bank, and
because he knew the difference between owning the mutual funds directly and having
an interest in a self-employed pension plan in which the mutual funds were held, the
bankruptcy court was required to find Debtor intended to deceive Bank. We disagree.
The bankruptcy court considered the entire record and – despite its initial assessment
of Debtor's chances of prevailing, i.e., "no prayer" – was not led to disbelieve Debtor.


                                          -9-
Foremost, the bankruptcy court specifically found Debtor was "credible" and testified
"truthfully." It also found Debtor disclosed all assets, including the gold coins, and
all liabilities, including the debt owed to Premier Bank, on the financial statements.
The bankruptcy court also found Debtor was cooperative and attempted to work with
Bank.10 While there was evidence in the record that may have permitted the
bankruptcy court to find otherwise, that does not mean the bankruptcy court's finding
that Debtor lacked the requisite intent to deceive Bank is clearly erroneous, 

, and we not believe it to be so.

                                  CONCLUSION

      Having found no clear error in the bankruptcy court's findings that not every
element of § 523(a)(2)(B) had been shown by a preponderance of the evidence, we
affirm the bankruptcy court's judgment determining Bank's pre-petition claim against
Debtor is not excepted from discharge under that provision.




      10
         In its opening brief, Bank contends the bankruptcy court was referring to
Debtor's efforts to cooperate with Bank after the loan went bad. Reading the
bankruptcy court's comments in context, we think the bankruptcy court was instead
referring to all of Debtor's dealings with Bank.

                                        -10-