Third Circuit disposition — 043575np-pdf

NOT PRECEDENTIAL
IN THE UNITED STATES COURT
OF APPEALS
FOR THE THIRD CIRCUIT
NO. 04-3575
IN RE: MELVIN SHAW, Debtor
Melvin Shaw,
Appellant
On Appeal From the United States
District Court
For the District of New Jersey
(D.C. Civil Action No. 04-cv-02473)
District Judge: Hon. Robert B. Kugler
Submitted Pursuant to Third Circuit LAR 34.1(a)
April 22, 2005
BEFORE: ROTH, FUENTES and STAPLETON, Circuit Judges
(Opinion Filed: April 29, 2005)
OPINION OF THE COURT

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STAPLETON, Circuit Judge:
Appellant/Debtor Melvin Shaw appeals from a District Court order affirming the
dismissal of his Chapter 7 petition in bankruptcy for lack of “good faith” pursuant to 11
U.S.C. § 707(a). We will affirm.
Shaw filed his voluntary Chapter 7 petition on June 5, 2003. It listed five
unsecured creditors, including one Janine Hamilton, whose claim was described as
involving “guarantor liability for loan to Philly Motor Sport, Inc.,” in the amount of
$180,000.
Shaw pled guilty to Count Fourteen of a federal indictment which charged him
with using a wire communication in interstate commerce to execute a scheme to defraud.
Specifically, his plea constituted an admission that he devised and executed a scheme
from October 2001 to August 2002 to defraud business associates of Shaw Auto Sport
and Philly Motor Sport. “It was part of the scheme that [inter alia]:”
3. Defendant MELVIN D. SHAW borrowed money from third
parties and pledged as collateral certain cars, fraudulently misrepresenting
that he owned such cars and that no other person had any interest in or
claim against such cars.
4. Defendant MELVIN D. SHAW borrowed money from a third
party and agreed to share with that party profits earned from the purchase
and re-sale of a particular car, fraudulently misrepresenting the condition
and history of that car.
App. at Pa-3.
Hamilton successfully moved to dismiss Shaw’s petition for cause under 11 U.S.C.

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The Court also noted that Shaw had obstructed the bankruptcy proceedings by failing1
to cooperate with his attorney.
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§ 707(a). In support of her motion, Hamilton filed a sworn certification which advised
the Court as follows:
Beginning on October 11, 2001, I made loans to debtor and his
corporations (Shaw Auto Sport, Inc., a New Jersey corporation [SAS] and
Philly Motor Sport, Inc. a Pennsylvania corporation [PMS] totaling
$150,000.00 to be used only for the purchase of automobile inventory.
Debtor and his corporations gave plaintiff promissory notes and securing
agreements evidencing and securing the loans. Debtor was personally
obligated as well as the corporations.
App. at Pa-23. The certification went on to aver that Shaw’s representations with respect
to the condition of the pledged vehicles was material and knowingly false and that Shaw
falsely represented that he owned the vehicles and that no other person had any interest in
them. Based on these fraudulent misrepresentations, Hamilton secured a judgment
against Shaw and Philly Motor Sport in the amount of $180,000.
Hamilton also supplied the Bankruptcy Court with a Victim Notification Letter she
had received from the United States Attorney’s Office referencing Shaw and his
indictment.
Following a hearing, the Bankruptcy Court concluded, not surprisingly, that
Hamilton was a victim of the fraudulent scheme to which Shaw had confessed. It also
concluded on the basis of a defaulted adversarial complaint of the Trustee that Shaw had
failed to list many of his creditors. The Court ultimately concluded that “[t]his1
individual is not an honest debtor seeking to discharge creditors.”

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We reject Shaw’s arguments for essentially the reasons given in the District
Court’s opinion. Shaw pled guilty to having conducted the fraudulent scheme described
in Count Fourteen, not just to sending the wire communication noted in paragraph 6 of
that Count. Given that fact, the record provides ample support for the Bankruptcy Court’s
conclusion that Shaw’s petition sought discharge of a $180,000 debt which he knew to be
non-dischargeable.
Judd v. Wolfe, 78 F.3d 110 (3d Cir. 1996), does not stand for the proposition that
there can be no finding of a lack of good faith in a no-asset case.
The judgment of the District Court will be affirmed.

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