Free Appellee's Brief - District Court of California - California

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Charles A. Bird, State Bar No. 56566 Charles P. Maher, State Bar No. 124748 LUCE, FORWARD, HAMILTON & SCRIPPS LLP Rincon Center II, 121 Spear Street, Suite 200 San Francisco, California 94105-1582 Telephone No.: 415.356.4600 Fax No.: 415.356.4610

Attorneys for Appellee Andrea A. Wirum, Successor-in-Interest to Charles E. Sims Chapter 7 Trustee

UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA

In Re RAMIN YEGANEH, Debtor,

Case No. C 07-03256 JSW

CHARLES E. SIMS, Trustee Appellee, v. ALLIED MANAGEMENT TRUST, and K. YEGANEH aka KEN YEGANEH AKA KAIKHOSROW YEGANEH, Appellants.

Bankruptcy Case No. 05-30047 TEC Adversary Pro. No. 05-3241 TEC APPELLEE'S BRIEF

Appellee Andrea A. Wirum, Chapter 7 Trustee in Bankruptcy (the "Trustee"), hereby submits her appellee's brief.

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TABLE OF CONTENTS

Page

BASIS OF APPELLATE JURISDICTION...................................................... 1 ISSUE PRESENTED ON APPEAL ................................................................. 1 STANDARD OF REVIEW............................................................................... 1 SUMMARY OF THE TRUSTEE'S OPENING BRIEF .................................. 1 STATEMENT OF FACTS................................................................................ 3 A. The Adverse Rulings Against the Debtor in the State Suit Which Triggered the Debtor's Fraudulent Transfers of the Five Allied Properties................................................................................................. 3 The Debtor's Acquisition of the Five Allied Properties Under False Pretenses ........................................................................................ 5 The Debtor's Fraudulent Transfers of the Five Allied Properties .......... 6 The Debtor's Bankruptcy Filings............................................................ 6 The Trustee's Adversary Proceeding to Recover the Allied Properties................................................................................................. 6 The Trustee's Evidence of Badges of Fraud in Support of Her Motion for Summary Judgment .............................................................. 7 The Debtor's and Appellants' Discovery Abuses and Assertions of the Fifth Amendment........................................................................ 11 The Bankruptcy Court's Limited Exclusion Ruling ............................. 14 The Appellants Did Not Offer Evidence Sufficient to Create a Genuine Issue of Material Fact in Opposing the Trustee's Motion ..... 14

ARGUMENT .................................................................................................. 15 A. The Appellants Failed to Satisfy Their Burden in Opposing Summary Judgment, Without Considering the Exclusion Order ......... 15 The Bankruptcy Court's Limited Exclusion Order Was Justified by the Repeated Invocations of the Fifth Amendment and Failures to Produce Discovery .............................................................. 18 The Trustee Has Standing ..................................................................... 19

VII. CONCLUSION ............................................................................................... 21

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TABLE OF AUTHORITIES Page(s) CASES Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (1986) ................................................................................................................ 18 BMG Music v. Martinez, 74 F.3d 87 (5th Cir. 1996)....................................................................................................... 15 Brinson v. Linda Rose, 53 F.3d 1044 (9th Cir. 1995)................................................................................................... 18 Brown v. United States, 356 U.S. 148 (1958) ................................................................................................................ 19 California Architectural Building Products, Inc. v. Franciscan Ceramics, Inc., 818 F.2d 1466 (9th Cir. 1987)................................................................................................. 17 Cambridge Electronics Corp. v. MGA Electronics, Inc., 227 F.R.D. 313 (C.D. Cal. 2004) ............................................................................................ 15 Chambers v. Nasco, Inc., 501 U.S. 32 (1991) .................................................................................................................. 19 Citizens Bank of Massachusetts v. Marrama, 331 B.R. 10 (Bankr. D. Maryland 2005), aff'd 445 F. 3d 518 (1st Cir. 2006) ....................... 16 Decker v. Voisenat, 214 B.R. 219 (Bankr. N.D. Cal. 1997).................................................................................... 16 Federal Deposit Insurance Corp. v. Anchor Properties, 13 F.3d 27 (1st Cir. 1994) ....................................................................................................... 15 Filip v. Bucurenciu, 129 Cal.App.4th 825 (2005).............................................................................................. 16, 17 French v. Peninsula Bank, 338 B.R. 668 (Bankr. D. Maryland 2006)............................................................................... 16 Hambleton Brothers Lumber Co. v. Balkin Enterprises, 397 F.3d 1217 (9th Cir. 2005)................................................................................................. 17 Heffernan v. Bennett and Armour, 110 Cal. App. 2d 564 (1952)................................................................................................... 20

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Holland Livestock Ranch v. U.S., 714 F.2d 90 (9th Cir. 1983)..................................................................................................... 17 Hydranautics v. FilmTec Corp., 204 F.3d 880 (9th Cir. 2000)................................................................................................... 21 In re Cohen, 199 B.R. 709 (9th Cir. BAP 1996) .......................................................................................... 20 In re Edmond, 934 F.2d 1304 (4th Cir. 1991)................................................................................................. 19 In re Liquimatic Systems, Inc., 194 F. Supp. 625 (D.C. Va. 1961)........................................................................................... 20 Kennedy v. Allied Mut. Ins. Co., 952 F.2d 262 (9th Cir. 1991)................................................................................................... 17 Lawrence v. Romano, 316 B.R. 429 (Bankr. W.D.N.Y. 2004)................................................................................... 15 Lawson v. Murray, 837 F.2d 653 (4th Cir. 1988)................................................................................................... 19 Link v. Wabash R.R. Co., 370 U.S. 626 (1962) ................................................................................................................ 19 Liodas v. Sahadi, 19 Cal.3d 278 (1977)............................................................................................................... 17 Matsushita Electric Industrial Co. v. Zenith Radio Corp., 475 U.S. 574 (1986) ................................................................................................................ 17 McDonald v. Schumann, 2004 Bankr. Lexis 819 (Bankr. N.D. Tex. 2004).............................................................. 15, 17 Radobenko v. Automated Equip. Co., 520 F.2d 540 (9th Cir. 1975)................................................................................................... 17 Shubert v. Dawley, 2005 Bankr. Lexis 1593 (Bankr. E.D. Pa. 2005) .............................................................. 16, 17 Sigma Micro Corp. v. Healthcentral.com (In re Healthcentral.com), 504 F.3d 775 (9th Cir. 2007)...................................................................................................... 1 Slatkin v. Neilson, 310 B.R. 740 (Bankr. C.D. Cal. 2004) .............................................................................. 15, 16 Stitt v. Williams, 919 F.2d 516 (9th Cir. 1990)................................................................................................... 17

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Stoll v. Gottlieb, 305 U.S. 165 (1938) ................................................................................................................ 20 Triple S Restaurants, Inc. v. Schilling, 422 F.3d 405 (6th Cir. 2005)................................................................................................... 16 Triton Energy Corp. v. Square D Company, 68 F.3d 1216 (9th Cir. 1995)................................................................................................... 18 United States of America v. 4003-4005 5th Ave., 55 F.3d 78 (2nd Cir. 1995)...................................................................................................... 19 United States v. Real Property at 5208 Los Franciscos Way, 385 F.3d 1187 (9th Cir. 2004) ("U.S. v. Real Property") .............................................. 1, 15, 16 United States v. Schimmels, 127 F.3d 875 (9th Cir. 1997)................................................................................................... 20 Wobogo v. Yeganeh, San Mateo County Superior Court, Case No. 410586 (the "State Suit").................................. 4

STATUTES 11 U.S.C. § 544(b) .............................................................................................................. 1, 15, 20 28 U.S.C. § 158 ............................................................................................................................... 1 Cal. Bus. & Prof. Code § 17200...................................................................................................... 4 Cal. Civ. Code § 2945.4(g) and § 2945.7........................................................................................ 4 Cal. Civ. Code § 3439.04(a)(1) ............................................................................................. 1, 3, 16 Cal. Civ. Code § 3439.04(b) ......................................................................................................... 16 Cal. Civ. Code § 3934.04(a)(1) ....................................................................................................... 7 Section 3439.01(b) of the California Civil Code .......................................................................... 19 Section 3439.01(c) of the California Civil Code........................................................................... 19 Section 3439.04(a) of the California Civil Code........................................................................... 20 Federal Rule of Bankruptcy Procedure 7056 ............................................................................ 1, 15 Federal Rule of Bankruptcy Procedure 8001 .................................................................................. 1

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I.

BASIS OF APPELLATE JURISDICTION This Court has subject matter jurisdiction over this appeal pursuant to 28 U.S.C. § 158 and

Federal Rule of Bankruptcy Procedure 8001. II. ISSUE PRESENTED ON APPEAL The issue on appeal is whether the Bankruptcy Court properly granted the Trustee's motion for summary judgment based on Federal Rule of Bankruptcy Procedure 7056, 11 U.S.C. § 544(b), and Cal. Civ. Code § 3439.04(a)(1). In granting summary judgment, the Bankruptcy Court found that multiple, undisputed badges of fraud established that the Debtor had transferred five parcels of real property to his father and a family trust with the "actual intent to hinder, delay, or defraud" creditors within the meaning of Cal. Civ. Code § 3439.04(a)(1). III. STANDARD OF REVIEW The Bankruptcy Court's findings of fact are reviewed under the clearly erroneous standard, and the Bankruptcy Court's conclusions of law are reviewed de novo. E.g., Sigma Micro Corp. v. Healthcentral.com (In re Healthcentral.com), 504 F.3d 775, 783 (9th Cir. 2007). The Court must apply a de novo standard of review to the summary judgment itself, despite Appellants' statements to the contrary. United States v. Real Property at 5208 Los Franciscos Way, 385 F.3d 1187, 1192 (9th Cir. 2004) ("U.S. v. Real Property") IV. SUMMARY OF THE TRUSTEE'S OPENING BRIEF After summary judgment was granted against Ramin Yeganeh (the "Debtor") in a state court case, the Debtor filed bankruptcy and the Appellee was appointed Chapter 7 bankruptcy Trustee. The Trustee filed an adversary proceeding against the Debtor's father and a family trust (the Appellants) alleging that five pieces of rental property owned by the Debtor had been transferred to the Appellants with the intent to "hinder, delay or defraud" creditors under Cal. Civ. Code § 3439.04(a)(1). The Bankruptcy Court granted the Trustee's motion for summary judgment, finding that the five transfers had been made before the bankruptcy filing with the intent to hinder, delay or defraud creditors. The Appellants filed this appeal of the summary judgment. Section 3439.04(a)(1) enables the Trustee to recover property that has been transferred with the intent to hinder, delay, or defraud creditors. The Trustee moved for summary judgment based on a

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massive amount of evidence of multiple badges of fraud, which taken together established the required intent to hinder, delay, or defraud creditors. The Trustee's evidence of badges of fraud included the fact that all five properties had been transferred to an insider, they had been transferred in violation of a preliminary injunction order, they had been transferred using false names, and the Debtor and Appellant Ken Yeganeh had given false testimony to hide the transfers from creditors. In the Bankruptcy Court, the Appellants made no effort to dispute the Trustee's evidence supporting multiple badges of fraud. On appeal, the Appellants also make no effort to dispute the Trustee's evidence of multiple badges of fraud. For illustration, the Trustee's evidence in the Bankruptcy Court established that the Debtor transferred all five properties to the Appellants in violation of a state court preliminary injunction order. The Appellants have never offered conflicting evidence, and they have never disputed this evidence. The Trustee's evidence established that the Debtor transferred the five properties to an insider, a family trust controlled by the Debtor or his father. The Appellants have never offered conflicting evidence, and they have never disputed this evidence. The Trustee's evidence established that the Debtor gave false testimony to cover up the fact that he was the real buyer of the five properties. The Appellants have never offered conflicting evidence, and they have never disputed this evidence of the Debtor's perjury. The Appellants' arguments on appeal fail to address the obvious, glaring deficiency in the Appellants' opposition to the summary judgment motion in the Bankruptcy Court, namely, the absence of evidence disputing the Trustee's evidence of multiple badges of fraud. Instead, the Appellants' opening brief focuses on irrelevant legal arguments, speculation about the fraudulent transfers, and the Bankruptcy Court's exclusion order arising out of the Debtor's and the Appellants' assertions of the Fifth Amendment right against self incrimination during discovery. Indeed, the exclusion order is immaterial; it did not prevent Appellants from filing evidence in violation of the exclusion order, and the summary judgment is proper even if all of that evidence is considered. The Appellants make an obtuse argument that the Trustee lacks standing, which is not supported by the facts or the law. The Trustee filed this adversary proceeding because she needs these five properties in order to pay more than $4 million in claims. The Appellants also dispute whether the clear and convincing standard or the preponderance of evidence standard applies in determining

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intent to hinder, delay, or defraud. While this issue is interesting, it is immaterial in light of the Appellants' failure to contest the Trustee's undisputed evidence of multiple badges of fraud. The Appellants claim that the Debtor was not insolvent at the time of the five transfers, which is also irrelevant because insolvency is not a required element under § 3439.04(a)(1), although it is required under other fraudulent transfer statutes that were not part of the summary judgment motion. The Appellants sprinkle their appeal with speculation about the five transfers and whether the Debtor knew the identity of each creditor and the exact amounts of each claim at the time the transfers were made. This is mere speculation and it does not address the multiple badges of fraud established in the Trustee's summary judgment motion. Finally, the Appellants contend that the Bankruptcy Court improperly limited the evidence Appellants could offer in opposing the summary judgment motion. The Bankruptcy Court properly limited the Appellants' evidence because of Ken Yeganeh's assertion of the Fifth Amendment in order to avoid testifying and producing discovery to the Trustee. The Bankruptcy Court's exclusion order was narrowly tailored and appropriate because the factual issues surrounding the assertions of the Fifth Amendment directly related to Ken Yeganeh's main defense in this case, namely, the claim that the Debtor originally bought the five properties for Ken Yeganeh using Ken Yeganeh's money and that Ken Yeganeh has always owned the properties. The Appellants' Opening Brief fails to show that the Bankruptcy Court's order granting summary judgment under Bankruptcy Rule 7056 and § 3439.04(a)(1) was error, so the Bankruptcy Court's order should be affirmed. The Record on Appeal has been designated by the Appellant and the Appellee. For the convenience of the Court, the Appellee has prepared and is filing with this Opening Brief an Excerpt of Record in three volumes which contains excerpts of the documents in the designated record. The references designated in this Brief are to the Excerpt of Record and are identified as "ER" with corresponding page numbers. Cross references to the Designated Record on Appeal by bankruptcy docket numbers are contained in a table of contents to each volume of the Excerpt of Record. V. STATEMENT OF FACTS A. The Adverse Rulings Against the Debtor in the State Suit Which Triggered the Debtor's Fraudulent Transfers of the Five Allied Properties

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Before filing this bankruptcy, the Debtor operated an illegal mortgage brokerage and consulting business, which targeted and preyed on vulnerable homeowners whose mortgages were in foreclosure. The Debtor would buy victims' homes using illegal tactics, while the homeowners were under extreme financial duress, and his schemes resulted in his acquisition of about 20 single family residences. In 1999, the Debtor was arrested and charged by the San Mateo County District Attorney with various criminal violations of the California mortgage foreclosure consultants law. (ER 007:1-4, 012:17-28) After being charged with 49 felony counts, eventually the Debtor pled no contest to four separate felony counts under Cal. Civ. Code § 2945.4(g) and § 2945.7 in March, 2001. (ER 028-030) The San Mateo County Superior Court sentenced the Debtor to five years probation, his broker's license was suspended, and he was ordered not to engage in any mortgage broker activity. (ER 028030) Four victims received over $300,000 in cash restitution in the criminal case. (ER 028-030) On October 4, 1999, a group of victims filed a civil suit against the Debtor in San Mateo County Superior Court seeking restitution and other relief under Cal. Bus. & Prof. Code § 17200 based the Debtor's fraudulent and unlawful business practices, Wobogo v. Yeganeh, San Mateo County Superior Court, Case No. 410586 (the "State Suit"). (ER 031-054) On July 30, 2001, the Superior Court granted the plaintiffs' motion for summary adjudication, concluding that the Debtor had violated § 17200 of the California Business and Professions Code. (ER 055-057) The Superior Court reasoned that when the Debtor pled no contest to the four felony counts, he essentially admitted liability on the § 17200 claims in the civil action. (ER 055-057) Thus, the Debtor's admissions in the criminal case were considered to be admissions in the State Suit. After summary adjudication of liability in principle, restitution hearings commenced to determine the appropriate relief for the Debtor's § 17200 violations. The hearings resulted in the entry of a judgment against the Debtor on 27 restitution claims for approximately $270,000. (ER 058-081) The Superior Court later entered a supplemental judgment against the Debtor, adding prejudgment interest of about $130,000, plus $3,452,803.50 in attorney's fees and $32,457.54 in costs. (ER 082096) While the restitution hearings were taking place, the State Suit Plaintiffs became aware that the Debtor had been secretly transferring his properties to avoid creditors. In order to halt the fraudulent

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transfer of properties, on September 26, 2001 the State Suit Plaintiffs moved to modify an existing preliminary injunction to preclude the Debtor from transferring additional properties to third parties. (ER 097-125) The Superior Court granted the motion and entered a modified preliminary injunction order on October 3, 2001. (ER 126-128) The modified injunction enjoined the Debtor from selling, transferring, modifying, hypothecating, or otherwise limiting or disposing of any interest in real property in San Mateo, Santa Clara, San Francisco or Alameda Counties. (ER 126-128) B. The Debtor's Acquisition of the Five Allied Properties Under False Pretenses

Prior to the entry of the modified preliminary injunction order on October 3, 2001, the Debtor had fraudulently transferred eight properties to his parents or sham family trusts. The Debtor had made these transfers in order to hinder, delay, or defraud his creditors because of the inevitable judgment that would be entered against him in the State Suit. While these eight properties are the subject of other adversary proceedings the Trustee has filed against the Debtor's parents and sham family trusts, they are not the subject of this appeal. This appeal involves five residential, rental properties the Debtor transferred to a sham family trust, Allied Management Trust, after the summary adjudication motion was granted in the State Suit and after the Superior Court had modified the preliminary injunction and ordered the Debtor not to transfer any of his properties. The five properties (the "Allied Properties") are 2462 Taylor Avenue, Oakland, California ("Taylor Property"); 2300 Auseon Avenue, Oakland, California ("Auseon Property"); 1012 73rd Avenue, Oakland, California ("73rd Property"); 1278 79th Avenue, Oakland, California, (APN 041-4198-052-00) ("79th Property"); and 1086 69th Avenue, Oakland, California ("69th Property"). The Debtor acquired all five properties under similar, false pretenses. Title to the Taylor Property was conveyed to the Debtor in June, 2002 (ER 137:23-25, 138-139); title to the Auseon Property was conveyed in September, 2002 (ER 142:18-21, 143); title to the 73rd Property was conveyed in November, 2002 (ER 145:4-10, 146); title to the 79th Property was conveyed in December, 2002 (ER 148:7-15, 149); and title to the 69th Property was conveyed in January, 2003 (ER 151:5-13, 152). In each case, the grant deed stated that the buyer was "R. Rad", when, in fact, in each case the property was purchased by the Debtor. The Debtor used the alias "R. Rad" on the grant deeds

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in order to prevent creditors from learning that he owned the properties. (ER 154:24-25, 155:1-4) C. The Debtor's Fraudulent Transfers of the Five Allied Properties

After the modified injunction prohibited him from transferring properties, the Debtor transferred all five Allied Properties to a sham family trust, Appellant Allied Management Trust ("Allied"). (ER 157:12-25, 158-160) On March 31, 2003, using the alias "R. Rad" as the grantor, the Debtor conveyed four of the Allied Properties to Allied. (ER 157:12-25, 159-160) Then on May 6, 2003, again using the alias "R. Rad", the Debtor conveyed the fifth property, the Auseon Property, to Allied. (ER 157:12-25, 158) These are the five fraudulent transfers at issue. D. The Debtor's Bankruptcy Filings

On July 31, 2001, the day after the Superior Court granted the State Suit Plaintiffs' motion for summary adjudication, the Debtor filed a Chapter 13 bankruptcy petition. (ER 161-162) In an effort to hinder, delay and defraud creditors, the Debtor used an incomplete and inaccurate spelling of his name and the wrong home address in the petition. The fraudulent nature of the Debtor's bankruptcy filing is evidenced by the fact that two weeks prior to the filing, the Debtor sent the State Court Plaintiffs' counsel a draft bankruptcy petition that contained a complete and accurate spelling of the Debtor's name and his correct home address. (ER 163-166) After the Debtor had been successful in staying the State Suit for a few days (ER 167), the Debtor voluntarily dismissed the bankruptcy on August 2, 2001. (ER 168) Once the supplemental judgment was entered in the State Suit on September 9, 2004 (adding over $3 million in attorney's fees and costs to the original judgment), the Debtor filed bankruptcy again, a skeleton chapter 13 petition. (ER 169-174) The State Suit Plaintiffs' moved to convert the case to a Chapter 7 proceeding, and the Bankruptcy Court converted the bankruptcy to a Chapter 7 case on January 21, 2005. Charles E. Sims was appointed Chapter 7 Trustee. Mr. Sims passed away during the bankruptcy proceedings, and Andrea A. Wirum was appointed to replace Mr. Sims as Chapter 7 Trustee. E. The Trustee's Adversary Proceeding to Recover the Allied Properties

When the Debtor filed his schedules of assets and liabilities in the Chapter 7 bankruptcy, he did not list the five Allied Properties as assets. (ER 175:26-176:9, 178-183) The Trustee's

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investigation revealed that the Debtor had transferred the five Allied Properties to a trust that was controlled by the Debtor and/or the Debtor's father, Appellant Ken Yeganeh. The Trustee concluded that the Debtor's transfers of the five Allied Properties were fraudulent transfers under Cal. Civ. Code § 3934.04(a)(1), and he filed this adversary proceeding to recover the five properties in the Bankruptcy Court on February 18, 2005. (ER 176:14-177:4, 184-187) On February 22, 2005, Ken Yeganeh, as the purported trustee of Allied, executed a grant deed transferring the Allied Properties from Allied to himself. (ER 188-189) After learning of the subsequent transfers of the five Allied Properties to Ken Yeganeh, the Trustee amended his complaint to add Ken Yeganeh as a defendant in the adversary proceeding. In February, 2005, the Trustee also filed three related adversary

proceedings to recover the eight other properties that had been fraudulently transferred by the Debtor to his parents or sham family trusts. F. The Trustee's Evidence of Badges of Fraud in Support of Her Motion for Summary Judgment

The Trustee moved for summary judgment in the adversary proceeding arguing that multiple badges of fraud established that the transfers of the Allied Properties were made with the intent to hinder, delay or defraud creditors under Cal. Civ. Code § 3934.04(a)(1). The Trustee offered extensive evidence, including more than 100 exhibits, in support of the motion, which included testimony of the Debtor and his parents, pleadings from the State Suit, and declarations proving the Debtor's and Appellants' destruction of evidence and failure to produce evidence to the Trustee during discovery. The Trustee's evidence of multiple badges of fraud included the following: First, the Debtor sought to hinder, delay or defraud his creditors by acquiring title to the Allied Properties under a false name: "R. Rad". (ER 191:11-13, 137:23-25, 138-139, 142:18-21, 143, 145:4-10, 146, 148:7-15, 149,151:5-13, 152). In April, 2002, the Debtor gave false testimony about that alias by testifying that some person by the name "R. Rad" was involved in some loan transactions with the properties, that he had no relationship with "R. Rad", and that he had not seen "R. Rad" since 2001. (ER 193:20-25, 194:1-25, 195:1-25, 196:1-25) In a deposition a year later, on April 25, 2003, the Debtor finally admitted that he was in fact "R. Rad" and that "R. Rad" was an alias. (ER 154:2425, 155:1-4) The Debtor's use of this alias is significant because it is the alias he had used to acquire

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the five Allied Properties in an effort to "avoid" the reach of the preliminary injunction in the State Suit. The Appellants did not offer evidence to contest the Trustee's evidence supporting this badge of fraud. Second, the Debtor transferred the Allied Properties to an insider, a family trust controlled by the Debtor and/or Ken Yeganeh. (ER 158-160, 198-199) The Appellants did not offer any evidence to rebut the Trustee's evidence proving that the transfers of the Allied Properties were made to an insider. Third, the Debtor transferred the Allied Properties to an insider after the State Court's entry of summary adjudication against him. (ER 055-057, 158-160) The Appellants did not offer any evidence to contest the Trustee's evidence that the State Suit summary adjudication was entered before the Debtor transferred the five Allied Properties to an insider. Fourth, the Debtor transferred the Allied Properties in violation of the preliminary injunction order in the State Suit. On October 3, 2001, the State Court entered a modified preliminary injunction order, stating as follows: "IT IS HEREBY ORDERED that the preliminary injunction issued by this Court on March 21, 2000 be modified as follows: (1) Ramin Yeganeh [the Debtor] and/or American Mortgage Realty ... are restrained and prohibited from, and shall not, without leave of court, directly or indirectly, sell, transfer...or dispose of any interest which Defendants, and any of them, hold in any real property which is situated in the counties of San Mateo, Santa Clara, San Francisco or Alameda." (ER 126-128) The Debtor transferred the five Allied Properties in March and May, 2003, in violation of the State Court's modified preliminary injunction order. On June 20, 2003, the Debtor was found guilty of contempt of court for violating the October 3, 2001 order and sentenced to 36 days in jail. (ER 013:26-014:5) The Appellants offered no evidence to dispute the Trustee's evidence that the transfers were a violation of the preliminary injunction. Fifth, no consideration was paid by Allied Management Trust for the five Allied Properties. The Debtor and Ken Yeganeh concede that no consideration was paid by Allied for the five Allied Properties. Instead, they contend that the Allied Properties had always been owned by Ken Yeganeh and the transfers of the five properties from "R. Rad" to Allied was simply to "put them in trust." (ER 201:14-25, 202:1-25, 203:1-13, 204:13-25, 205:1-4) However, at his December 27, 2004

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deposition taken in a state court case concerning one of the Allied Properties, Ken Yeganeh testified that he could not remember if he gave the Debtor money to put the five properties into Allied Management Trust. (ER 207-208, 211:21-25, 212:1-7) In his deposition, Ken Yeganeh testified that he could not remember: (1) how much money he gave the Debtor (ER 215, 218:16-17), (2) whether he gave the Debtor cash or a check (ER 219:7-9), and (3) whether the Debtor used the money Ken Yeganeh gave him to purchase the Allied Properties (ER 219:17-25). The Appellants offered no evidence to dispute the Trustee's evidence that no consideration was paid for the transfers made in March and May of 2003 when the Allied Properties were transferred by the Debtor to Allied. Sixth, the Debtor gave false testimony in order to hinder, delay or defraud creditors. The Debtor repeatedly denied the he was "R. Rad" under oath. (ER 221:5-17, 222:20-225:10) Then, in April, 2003, the Debtor admitted that he was "R. Rad." (ER 154:24-25, 155:1-4) When the Debtor was deposed in this adversary proceeding he admitted that he had previously given false testimony when he had denied being "R. Rad." (ER 227:5-11) The Appellants did not offer evidence to contest the Trustee's evidence that the Debtor had given false testimony. Seventh, the Debtor gave false testimony about Allied Management Trust. For example, on May 28, 2003, the Debtor signed a declaration stating that Allied Management Trust is an "independent investor." (ER 228-232) Later, on June 20, 2003, the Debtor testified at his contempt hearing that he was the trustee and beneficiary of Allied Management Trust. (ER 234:22-235:7) The Appellants did not offer evidence to contest the Trustee's evidence that the Debtor had given false testimony about Allied Management Trust. Eighth, after the Debtor transferred the Allied Properties to Allied, he continued to treat the properties as his own. The document supposedly creating Allied Management Trust even allowed the Debtor to maintain control over the properties as the "trustee" of Allied. The Debtor's exercise of control over the properties did not change after he purported to resign as the trustee of Allied in July, 2003. (ER 237) Ken Yeganeh testified that the Debtor has always collected rent for the properties and paid all of the expenses for the Allied Properties. (ER 239:12-15, 239:23-25, 240:1-25) Ken Yeganeh never treated the Allied Properties as though they were his properties, until after the Trustee had made this fraudulent transfer claim. Ken Yeganeh could not say how much he paid for the Allied

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Properties. (ER 242:13-17, 243:6-8) Ken Yeganeh could not say what the value of any of the Allied Properties is. (ER 245:2-25) He could not say how much the rental income was or how much the expenses were for the properties. (ER 247:16-20, 248:19-22, 249:1-14) Ken Yeganeh did not know if the Allied Properties have mortgage loans, or if they have ever had mortgage loans. (ER 251:18-21, 252:4-6, 253:1-25) Ken Yeganeh did not even know if he paid the Debtor to manage the properties. (ER 255:1-7) The Appellants did not offer evidence to contest the Trustee's evidence that the Debtor had treated the Allied Properties as his own until the Trustee's fraudulent transfer claim was made. Ninth, the Debtor and Ken Yeganeh repeatedly asserted the Fifth Amendment in order to prevent the Trustee from obtaining evidence contradicting the Appellants' claims in this case. The Appellants did not offer evidence to contest the fact that there had been repeated assertions of the Fifth Amendment by the Appellants and the Debtor. Tenth, the Debtor testified that he began discarding and destroying records relating to the Allied Properties and other transferred properties in 1999 in order to avoid having those documents used against him by his creditors. (ER 257:9-25, 258:1-15, 259:6-16) This testimony constitutes an admission by the Debtor that he has destroyed documents with the intent to hinder, delay, or defraud creditors. The Debtor destroyed mortgage loan documents, mortgage loan statements, property tax statements, lease agreements, evidence of lease payments received, records of improvements to the properties, repair invoices, property insurance statements, and utilities statements. (ER 261:10-262:11, 263:22-25, 264:1-24, 265:7-12, 267:5-25, 268:1-3, 269:13-25, 270:1-9, 271:2-25, 272:1-20, 274:2125, 275:1-18, 276:9-25, 277:15-19, 278:20-25, 279:1-2, 280:23-25, 281:1-25, 282:1-2, 284:25-255:6) The Debtor has admitted under oath that he has "lost" or destroyed records "[b]ecause I'm [the Debtor] involved in this lawsuit where they are trying to hang me with every piece of information whether I tell the truth or not tell the truth. They use anything against me, it's just crazy, including you." (ER 287:22-25, 288:1-21) The Appellants did not offer evidence contesting the Trustee's evidence that the Debtor admitted destroying documents to hinder, delay, or defraud creditors. In addition to these undisputed badges of fraud, the Debtor and the Appellants engaged in various discovery abuses and assertions of the Fifth Amendment in order to prevent the Trustee from obtaining information about the fraudulent transfers of the Allied Properties. Those discovery abuses

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and assertions of the Fifth Amendment are discussed below. G. The Debtor's and Appellants' Discovery Abuses and Assertions of the Fifth Amendment

The Appellants and the Debtor took extreme steps to fabricate a story to keep the Allied Properties from the reach of the Debtor's creditors, including perjury, abuse of the discovery process, destruction of evidence, and assertion of the Fifth Amendment right against self-incrimination. Ken Yeganeh first invoked the Fifth Amendment on June 24, 2005 during a Bankruptcy Rule 2004 Examination. (ER 290:4-13, 291:10-24, 292:16-19) At that time, Ken Yeganeh claimed that when the Debtor first acquired the Allied Properties in the name of "R. Rad", the Debtor was actually buying the properties for Ken Yeganeh. (ER 290:4-10) Yet, Ken Yeganeh repeatedly asserted the Fifth Amendment when asked about how much money he gave to the Debtor to purchase the Allied Properties. (ER 290:4-13, 291:10-15, 292:16-19, 292:19-293:16) When Ken Yeganeh received the written transcript, he changed his Fifth Amendment objections to: "I don't remember." (ER 296-300) When Ken Yeganeh was asked the same questions in discovery in the adversary proceeding, he invoked the Fifth Amendment again and refused to answer questions and produce documents relating to his alleged purchase of the Allied Properties. Specifically, Ken Yeganeh invoked the Fifth Amendment and refused to answer the Trustee's written discovery requests on the following subjects: (1) Whether Ken Yeganeh has ever filed federal and state tax returns (ER 308:23-25, 318:25-319:10); (2) Whether Ken Yeganeh declared rental income from the Allied Properties on his tax returns (ER 308:26-301:1, 319:11-28); (3) The identification of the tenants of the Allied Properties (ER 329:811, 333:26-28, 343:15-27; 344:1-3); (4) The amount of rent that had been paid by tenants of the Allied Properties (ER 329:12-16, 344:4-18); and (5) The identification of the real and personal property that Ken Yeganeh owns and has ever owned. (ER 329:17-24, 344:19-345:14) Ken Yeganeh also refused to produce documents relating to income from the Allied Properties, any lease or rental agreements for the Allied Properties and any documents relating to any other property he owns. (ER 351:7-14, 354:8-355:16) At his deposition in the adversary proceeding, Ken Yeganeh invoked the Fifth Amendment

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repeatedly. He refused to answer questions concerning the following topics: information regarding his bank account and income and expenses relating to the Allied Properties (ER 369:14-16, 370:10-17), identification of the tenants of the Allied Properties (ER 372:12-15), information about the collection of rent from the Allied Properties (ER 373:8-13), whether rent payments from the Allied Properties were deposited into his bank account (ER 375:1-6), whether he reported income from Allied Properties on his state and federal tax returns (ER 375:10-16), whether he has ever filed tax returns (ER 375:19-376:3), whether the Debtor reported income from the Allied Properties on his tax returns (ER 376:14-17), any evidence that the Allied Properties were owned by him and not the Debtor (ER 377:1-23), lease agreements for the Allied Properties (ER 378:4-9), payment of expenses for the Allied Properties (ER 380:3-9), properties other than the Allied Properties owned by him (ER 382:310), and how much money he gave the Debtor to purchase the properties (ER 384:5-8). The Debtor also asserted the Fifth Amendment right against self-incrimination when he was deposed in the adversary proceeding. The Debtor refused to answer questions regarding the identity tenants of Allied Properties (ER 386:10-21, 387:25-388:6, 389:9-14, 390:1-3), possible rents from the Allied Properties (ER 388:7-11, 389:5-8, 390:4-9, 394:4-11), the lease agreements for the Allied Properties (ER 394:21-25), and whether he located tenants for the Allied Properties (ER 397:25398:3). The Debtor also invoked the Fifth Amendment when questioned about his false testimony about the identity of "R. Rad" in prior testimony. (ER 400:25-401:13) Ken Yeganeh said he could not recall when or how much money he gave to the Debtor to purchase the Allied Properties. (ER 133:15-18, 403:16-17) Neither Ken Yeganeh nor the Debtor produced documents demonstrating that Ken Yeganeh had provided the money to buy the Allied Properties or that Ken Yeganeh was the true owner of the Allied Properties. (ER 131:18-132:5, 132:24-133:10, 135:1-7) The Appellants never produced documents showing that Ken Yeganeh paid the expenses for the Allied Properties in 2002 and 2003. (ER 131:18-132:5, 132:24-133:10, 133:19:26) When the Appellants finally produced documents, they produced documents in the 2004 and 2005 time period, which was after the issue of a fraudulent transfer had arisen. (ER 131:18-132:5, 132:24-133:10) The defendants did not produce: documents evidencing the purchase of the properties; documents showing that Ken Yeganeh gave the Debtor money to purchase the properties at issue;

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documents evidencing payment of expenses and income from the properties; documents regarding the lease agreements for the properties; documents identifying the tenants and rental income for the properties; and tax returns and financial records for Allied. (ER 131:18-132:5, 132:24-133:10) The Debtor testified that he has destroyed or discarded documents because of the State Suit. In 1999, boxes of the Debtor's financial records were seized from his home. The Debtor admitted that, after the documents were returned to him, he destroyed them. (ER 405:7-20, 406:16-407:19, 409:11411:1, 412:10-414:6) Before the seizure of his records in 1999, the Debtor kept records regarding his real property transactions. (ER 406:16-407:15) He testified that he no longer keeps or maintains real property records because the plaintiffs had used the records against him in the State Suit. (ER 287:22288:24) In response to the Trustee's demands for supplemental discovery responses, the Appellants eventually produced some documents, (ER 415-419), although the Appellants failed to produce documents relating to the acquisition of the Allied Properties and the true ownership of the properties. (ER 420-421) In particular, the Appellants failed to produce: (1) the state and federal income tax returns for Ken Yeganeh for the tax years 1999, 2000, 2001, 2002, 2003, 2004, and 2005; (2) the state and federal income tax returns for Allied Management Trust; (3) the property tax statements for the five properties for the years 1999, 2000, 2001, 2002, and 2003; (4) the bank statements for Allied for the years 2000, 2001, 2002, 2003, 2004, and 2005; (5) the bank statements for Ken Yeganeh for the years 2000, 2001, 2002, 2003, 2004, and 2005; (6) the bank statements and investment accounts, showing the hundreds of thousands of dollars that Ken Yeganeh claims were used to buy the five properties at issue; (7) the property insurance bills, invoices and statements for the five properties for the period 1999, 2000, 2001, 2002, 2003, 2004, and 2005; (8) the documents and correspondence between the defendants and any tenants of the properties, including all rent payments made by the tenants and all lease and agreements; (9) the name, address and telephone number of each tenant for each of the five properties for the period 1999 through the present.

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The Appellants never produced information and documents relating to these categories of the information in the adversary proceeding. H. The Bankruptcy Court's Limited Exclusion Ruling

In light of the Debtor's and the Appellants' discovery abuses and repeated assertions of the Fifth Amendment in order to avoid producing discovery to the Trustee, the Trustee moved to prevent the Appellants from offering evidence in the adversary proceeding on any of the topics relating to the Appellants' invocation of the Fifth Amendment during discovery. Appellants and the Debtor had refused to answer deposition questions and written discovery on core factual issues relating to the Appellants' main defense to the Trustee's fraudulent transfer claim. The Appellants' main defense was that the Allied Properties were originally purchased by the Debtor for the Appellants, and that the Appellants had always been the true owners of the Allied Properties. The Trustee's discovery sought information and documents directly relevant to the Appellants' main defense. In particular, the Trustee's discovery sought the Appellants' tax returns showing whether they had reported rental income and expenses for properties; the identity of the tenants so that the Trustee could examine tenants about whether Appellants or the Debtor acted as the owner of the property; rental income records showing whether the rent was paid to Appellants or the Debtor; and mortgage records showing whether the Appellants or the Debtor were the borrowers. The Bankruptcy Court granted the Trustee's motion, in part, and precluded the Appellants' from offering evidence that they were the true owners of the Allied Properties when the Debtor had originally acquired them. I. The Appellants Did Not Offer Evidence Sufficient to Create a Genuine Issue of Material Fact in Opposing the Trustee's Motion

In the motion for summary judgment, the Trustee offered extensive evidence of 14 badges of fraud proving that the transfers of the Allied Properties were made with the intent to hinder, delay, or defraud creditors. The most important aspect of the Appellants' opposition to the summary judgment was the Appellants' failure to offer evidence to contest the Trustee's badges of fraud evidence. The Appellants never offered evidence to contest the Trustee's evidence of the Debtor's perjury. The Appellants never offered evidence to contest the Trustee's evidence of the Appellants' perjury. The

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Appellants never offered evidence to contest the Trustee's evidence of violations of the State Suit preliminary injunction. The Appellants never offered evidence to contest the Trustee's evidence of the Debtor's use of aliases to buy and transfer the Allied Properties. Now, on appeal, the Appellants fail to argue that their opposition to the summary judgment motion had raised genuine issues of material fact sufficient for the Bankruptcy Court to deny summary judgment. When the Appellants failed to raise genuine issues of material fact as to the badges of fraud in the Trustee's motion, the Bankruptcy Court was bound under Rule 7056 to grant the motion for summary judgment.

VI.

ARGUMENT A. The Appellants Failed to Satisfy Their Burden in Opposing Summary Judgment, Without Considering the Exclusion Order

Summary judgment is available in intent-to-defraud fraudulent transfer cases just as it is available in any other case. U.S. v. Real Property, 385 F.3d at 1192. When the Trustee used the badges of fraud to meet her initial burden of presenting evidence from which a trier of fact could conclude that the Debtor transferred the Allied Properties to Appellants with the purpose to defraud the Debtor's creditors, the burden shifted to Appellants to demonstrate a triable issue of material fact. Id. When Appellants failed to meet his burden, granting summary judgment on an issue of actual fraudulent intent was correct and unremarkable. Id.; BMG Music v. Martinez, 74 F.3d 87, 90 (5th Cir. 1996); Federal Deposit Insurance Corp. v. Anchor Properties, 13 F.3d 27 (1st Cir. 1994); Cambridge Electronics Corp. v. MGA Electronics, Inc., 227 F.R.D. 313 (C.D. Cal. 2004); Lawrence v. Romano, 316 B.R. 429 (Bankr. W.D.N.Y. 2004); Slatkin v. Neilson, 310 B.R. 740 (Bankr. C.D. Cal. 2004); McDonald v. Schumann, 2004 Bankr. Lexis 819 (Bankr. N.D. Tex. 2004). Bankruptcy Code § 544(b) provides that "the trustee may avoid any transfer of an interest of the debtor in property ... that is voidable under applicable law by a creditor holding an unsecured claim that is allowable under section 502 of this title...." 11 U.S.C. § 544(b). According to California's version of the Uniform Fraudulent Conveyance Act, a transfer should be set aside if it was made by a debtor "whether the creditor's claim arose before or after the transfer was made or the

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obligation was incurred, if the debtor made the transfer ... With actual intent to hinder, delay, or defraud any creditor of the debtor." Cal. Civ. Code § 3439.04(a)(1). Because direct evidence of intent to defraud can rarely be established, a party like the Trustee needed only to set forth evidence of certain badges of fraud in order to satisfy her burden. Triple S Restaurants, Inc. v. Schilling, 422 F.3d 405, 416 (6th Cir. 2005). Cal. Civ. Code § 3439.04(b) provides a list of badges of fraud to be considered in determining whether actual intent to hinder, delay or defraud creditors, including: (1) Whether the transfer or obligation was to an insider; (2) Whether the debtor retained possession or control of the property transferred after the transfer; (3) Whether the transfer or obligation was disclosed or concealed; (4) Whether before the transfer was made or obligation was incurred, the debtor had been sued or threatened with suit; (5) Whether the transfer was of substantially all the debtor's assets; (6) Whether the debtor absconded; (7) Whether the debtor removed or concealed assets; (8) Whether the value of the consideration received by the debtor was reasonably equivalent to the value of the asset transferred or the amount of the obligation incurred; (9) Whether the debtor was insolvent or became insolvent shortly after the transfer was made or the obligation was incurred; (10) Whether the transfer occurred shortly before or shortly after a substantial debt was incurred; and (11) Whether the debtor transferred the essential assets of the business to a lienholder who transferred the assets to an insider of the debtor. See U.S. v. Real Property, 385 F.3d at 1187; Filip v. Bucurenciu, 129 Cal.App.4th 825, 834 (2005). These eleven badges of fraud are not exclusive. Courts have identified other facts that are also considered badges of fraud, including: (12) Whether the debtor has failed to keep records and documents so that the true intent of the transfer can be ascertained, see French v. Peninsula Bank, 338 B.R. 668, 674-75 (Bankr. D. Maryland 2006), remanded on other grounds 499 F. 3d 345 (4th Cir. 2007); (13) Whether the debtor invokes the Fifth Amendment right against self-incrimination, Citizens Bank of Massachusetts v. Marrama, 331 B.R. 10, 15-16 (Bankr. D. Maryland 2005), aff'd 445 F. 3d 518 (1st Cir. 2006); (14) Whether the debtor had admitted an actual intent to defraud creditors Rosen v. R. Todd Neilson, 310 B.R. 740, 748 (Bankr. C.D. Cal. 2004); (15) Whether the instrument effecting the transfer is suspicious, Shubert v. Dawley, 2005 Bankr. Lexis 1593 (Bankr. E.D. Pa. 2005); (16) Whether the Debtor's testimony was unreliable, dishonest, or evasive, Decker v. Voisenat, 214 B.R.

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219, 231 (Bankr. N.D. Cal. 1997); (17) Whether there is a voluntary gift to a family member, McDonald v. Schumann, 2004 Bankr. Lexis 819 (Bankr. N. D. Texas 2004); and (18) Whether the general chronology of events and transactions indicates that the transfer is fraudulent. Shubert v. Dawley, supra. If unrebutted, evidence establishing only one or two of the badges of fraud creates a strong presumption that a transfer was fraudulent. McDonald v. Schumann, 2004 Bankr. Lexis 819 at *23; Filip v. Bucurenciu, 129 Cal.App.4th at 834. Under California law the standard of proof of actual fraud is a preponderance of the evidence. Liodas v. Sahadi, 19 Cal.3d 278, 293 (1977). Here, the Trustee submitted undisputed evidence establishing multiple badges of fraud. Ante, pp. 7-15 Attempts by Appellants and the Debtor to create a triable issue of material fact failed. First, the Debtor and Ken Yeganeh were barred from attempting to contradict their deposition testimony with declarations targeted at the Trustee's summary judgment showing. A party opposing summary judgment may not submit evidence which contradicts that party's prior version of the facts. Radobenko v. Automated Equip. Co., 520 F.2d 540, 544 (9th Cir. 1975); Holland Livestock Ranch v. U.S., 714 F.2d 90, 93 (9th Cir. 1983). The sham affidavit rule bars a broad range of tactics that could be used to manufacture a genuine issue of material fact contrary to the party's prior testimony. Hambleton Brothers Lumber Co. v. Balkin Enterprises, 397 F.3d 1217 (9th Cir. 2005); Kennedy v. Allied Mut. Ins. Co., 952 F.2d 262, 266 (9th Cir. 1991). Even if Ken Yeganeh's evidence did not contradict his and the Debtor's prior testimony, it would not create a triable issue of fact. An opposing party's implausible testimony will not create a genuine issue of material fact unless the non-moving party can "come forward with more persuasive evidence to support their claim...." Matsushita Electric Industrial Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986). Implausible, uncorroborated, and self-serving declarations will not preclude summary judgment. California Architectural Building Products, Inc. v. Franciscan Ceramics, Inc., 818 F.2d 1466, 1470 (9th Cir. 1987); Stitt v. Williams, 919 F.2d 516, 523 (9th Cir. 1990). Ken Yeganeh's testimony opposing summary judgment is implausible. In his deposition, Ken Yeganeh testified that he could not remember: (1) how much money he gave the Debtor (ER 218:16-17), (2)

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whether he gave him cash or a check (ER 219:7-9), (3) whether the Debtor used the money he gave him to purchase the Allied Properties (ER 219:17-25), (4) whether Allied Management Trust owned any other properties other than the five properties at issue in the Allied AP (ER 382:3-20), and (5) whether there are mortgages on the Allied Properties (ER 251:18-21, 252:4-6, 253:1-25) Also, conclusory and speculative testimony will not create an issue of fact. Brinson v. Linda Rose, 53 F.3d 1044, 1050 (9th Cir. 1995). Here, the testimony of the Debtor and Ken Yeganeh was entirely conclusory, speculative, and uncorroborated by any tangible evidence of any theory other than a family agreement to defraud the Debtor's creditors. Immaterial disputes of fact will not defeat summary judgment. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250-52 (1986); Triton Energy Corp. v. Square D Company, 68 F.3d 1216 (9th Cir. 1995). Here, the Debtor's declaration is comprised of mostly immaterial testimony that does not relate to the badges of fraud or the intent to hinder, delay or defraud. In particular, the Debtor's complaints about his criminal conviction and the Wobogo case in paragraphs 3, 23, 24, 33, 34, 35, 36, 41, 43, 44, 45, 46, 47, and 48 of his declaration are immaterial and could not be considered in the Bankruptcy Court because they cannot raise a genuine issue of material fact. At bottom, if all the evidence opposing summary judgment is considered notwithstanding that some of it was barred by the exclusion order, the Trustee established so many badges of fraud beyond dispute that the Bankruptcy Court had no choice but to grant summary judgment. The District Court need not rule on any other issue. B. The Bankruptcy Court's Limited Exclusion Order Was Justified by the Repeated Invocations of the Fifth Amendment and Failures to Produce Discovery

The Trustee fully briefed the exclusion order below. (Appellant's Designation of Record on Appeal, Docket No. 54 (Memorandum in Support of the Trustee's Motion To Preclude Testimony and Exclude Evidence or in the Alternative, Motion To Compel Discovery; Amended Appellant's Designation of Record on Appeal, Docket No. 68, Reply in Support of the Trustee's Motion To Preclude Testimony and Exclude Evidence or in the Alternative To Compel Discovery) No point would be served by repeating that briefing now because (1) the Appellants filed all their evidence

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regardless of whether the Bankruptcy Court considered it and (2) upon considering all the Appellants' evidence, there was no triable issue of fact or other obstacle to summary judgment. Ante, pp. 15-19. Should the Court entertain any independent interest in reviewing the Bankruptcy Court's exclusion order, it is correct for the reasons briefed in the record at the references given just above.. In simple summary, a preclusion order is a remedy to sanction a party for using the Fifth Amendment privilege to "abuse, manipulate or gain an unfair strategic advantage." United States of America v. 4003-4005 5th Ave., 55 F.3d 78, 84 (2nd Cir. 1995). The Fifth Amendment should not be a "positive invitation to mutilate the truth a party offers to tell." Lawson v. Murray, 837 F.2d 653, 656 (4th Cir. 1988), citing Brown v. United States, 356 U.S. 148, 156 (1958); In re Edmond, 934 F.2d 1304 (4th Cir. 1991). The Bankruptcy Court properly exercised its inherent power and discretion to control abuses the judicial process in order to effectuate proper disposition of cases. See, e.g., Chambers v. Nasco, Inc., 501 U.S. 32, 43-45 (1991); Link v. Wabash R.R. Co., 370 U.S. 626, 630-631 (1962). C. The Trustee Has Standing

Appellants contest the Trustee's standing on a theory that resort to the fraudulently transferred properties is unnecessary to satisfy creditors. This they base on an argument that certain creditor claims are not valid. The Trustee briefed this argument on the merits below. (Amended Appellee's Counter Designation of Record on Appeal, Docket No. 79, Trustee's Memorandum in Opposition to Defendants' Motion for Summary Judgment; Appellant's Designation of Record on Appeal, Docket No. 81, Reply Memorandum in Support of the Trustee's Motion of the Trustee's Motion for Summary Judgment Based on Actual Fraud, pp. 13-15) Creditors of the Debtor filed proofs of claim against his estate totaling more than $5 million. "Creditor" is defined in Section 3439.01(c) of the California Civil Code as any person who has a claim. Section 3439.01(b) of the California Civil Code defines a "claim" as a "right to payment, whether or not the right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured or unsecured." By court-approved compromises liquidating claims in allowed amounts, the aggregate amount has been reduced by almost $1 million. Of the amount remaining, approximately $1.1 million has

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been paid to creditors on an interim basis ­ all of it paid after the hearing on the summary judgment motion at issue in this appeal. The assets disclosed by the Debtor are insufficient to pay a substantial amount to creditors. Therefore, all creditors were prejudiced by the transfers made to Allied Management Trust because all creditors had claims against the Debtor on the date of the transfers. All of those creditors had standing to bring a fraudulent transfer action to recover those transfers. The Trustee's standing to bring the fraudulent transfer action is authorized by Section 544(b) of the Bankruptcy Code. Section 3439.04(a) of the California Civil Code provides that "a transfer made ... by a debtor is fraudulent as to a creditor, whether the creditor's claim arose before or after the transfer was made ..., if the debtor made the transfer ... [w]ith actual intent to hinder, delay, or defraud any creditor of the debtor." Neither malice nor insolvency is required. In re Cohen, 199 B.R. 709, 714 (9th Cir. BAP 1996). It is not relevant whether the Debtor had other property to satisfy the claims of specific creditors. In re Liquimatic Systems, Inc., 194 F. Supp. 625 (D.C. Va. 1961); Heffernan v. Bennett and Armour, 110 Cal. App. 2d 564 (1952). While Appellants' argument errs for a multitude of independent reasons, this Court need not expend resources on the argument. That is because Appellants are precluded from collaterally attacking an order of the Bankruptcy Court that adjudicated the contested claims as valid. The Bankruptcy Court's order of April 8, 2006, approving the Trustee's compromise of claims, adjudicated and finally quantified the bankruptcy claims arising out of the State Court litigation. This Court affirmed. (In re Yeganeh, C-06-2788 CW, Order of October 23, 2006.) Although the Debtor has appealed from this Court to the Ninth Circuit, the April 8, 2006 order collaterally estops relitigation of the validity of the creditor claims. "[W]