Patrick S. Layng, United States Trustee for Region v. Barclay

FOR THE DISTRICT OF COLORADO

Bankruptcy Judge Thomas B. McNamara

In re:

Bankruptcy Case No. 21-11967 TBM

MATTHEW JASON MENNONA and

NICOLE MARIE MENNONA, Chapter 7

Debtors.

PATRICK S. LAYNG, United States

Trustee, Region 19,

Adv. Pro. No. 22-1139 TBM

Plaintiff,

v.

DEVON MICHAEL BARCLAY and

DEVON BARCLAY, P.C.,

Defendants.

_______________________________________________________________________

MEMORANDUM OPINION AFTER TRIAL

_______________________________________________________________________

I. Introduction.

The Debtors, Matthew Jason Mennona and Nicole Marie Mennona (together, the

“Debtors”) engaged attorney Devon Michael Barclay (“Mr. Barclay”) and his wholly-owned

law firm, Devon Barclay, P.C. (“DBPC,” together with Mr. Barclay, the “Defendants”), as

bankruptcy counsel. In violation of Section 528(a) of the Bankruptcy Code,1 the

Defendants failed to execute a written contract with the Debtors. In any event, Mr.

Barclay commenced the Debtors’ Chapter 7 bankruptcy case by forging the Debtors’

signatures on the Petition, Statement of Financial Affairs, and Schedules. Then, he filed

a knowingly false application for the Debtors to pay the bankruptcy filing fee in

installments and submitted an incorrect Schedule A/B. The Chapter 7 Trustee appointed

in the Debtors’ bankruptcy case started to investigate the Debtors’ assets and financial

condition. At that point, the Defendants engaged in an egregious pattern of further

misbehavior trying to dismiss the Debtors’ bankruptcy case. Mr. Barclay lied repeatedly

1 All references to the “Bankruptcy Code” are to the United States Bankruptcy Code, 11 U.S.C. § 101

et seq. Unless otherwise indicated, all references to “Section” are to sections of the Bankruptcy Code.

to appear. He tried to manipulate the bankruptcy filing fee system to cause the

bankruptcy case to be dismissed. Mr. Barclay filed multiple motions to dismiss based

upon false assertions of fact. He ignored informal and formal discovery efforts initiated by

the Chapter 7 Trustee, thus causing his clients to be sanctioned by the Court. Mr.

Barclay failed to communicate with the Debtors and provided incompetent legal services.

To top it all off, Mr. Barclay advised his clients to try to infect the Chapter 7 Trustee’s legal

counsel with “COVID or some highly infectious disease.” Then he solicited a third-party

creditor to engage in a further fraud on the Court with yet another strange dismissal

scheme.

As the Supreme Court has observed: “lawyers are officers of the court who

perform a fundamental role in the administration of justice.” Spevack v. Klein, 385 U.S.

511, 524 (1967). This is especially true in bankruptcy proceedings where consumer

debtors are financially strapped and often not sophisticated in the technicalities of

bankruptcy cases. See SE Prop. Holdings, LLC v. Stewart (In re Stewart), 970 F.3d

1255, 1258 (10th Cir. 2020) (“Attorneys for debtors perform an essential role in

bankruptcy proceedings.”). Competent counsel is critical. The integrity of the judicial

system depends on the Court’s ability to rely on the honesty and professionalism of

attorneys appearing before it.

What Mr. Barclay and DBPC did was an affront to the administration of justice and

highly detrimental to the Debtors. After Mr. Barclay’s malfeasance was discovered, the

United States Trustee (the “UST”) commenced this Adversary Proceeding against the

Defendants and asserted claims for: (1) violations of Fed. R. Bank. P. 1008 and 9011; (2)

violations of Section 526(a)(2); (3) violations of Sections 526(a)(1) and (a)(3); (4)

violations of Section 528; and (5) violations of professional duties. The Defendants

initially filed a deficient answer to the complaint, then answered the complaint (admitting

most of the factual allegations), then withdrew their answer and defaulted. The

Defendants failed to participate in pre-trial proceedings and skipped the trial. They

offered no evidence or defense. Thus, all of the factual allegations asserted by the UST

have been deemed admitted.

With no contest over the facts or the Defendants’ liability under all the causes of

action stated by the UST, the primary remaining issue for the Court is to determine the

appropriate sanctions to be imposed on the Defendants for their blatant misconduct. The

Defendants’ malfeasance demands severe sanctions. Accordingly, the Court suspends

the Defendants from the practice of law in the United States Bankruptcy Court for the

District of Colorado for a term of three years. The Court also imposes some additional

ancillary sanctions.

II. Jurisdiction and Venue.

The Court has subject matter jurisdiction over this Adversary Proceeding

concerning bankruptcy attorney misconduct pursuant to 28 U.S.C. §§ 157 and 1334.

Furthermore, this is a core proceeding under 28 U.S.C. § 157(b)(2)(A) (matters

concerning administration of the estate). Both the UST and the Defendants consented to

asserted in this Adversary Proceeding.2 Venue is proper in this Court under 28 U.S.C.

§§ 1408 and 1409.

III. Procedural Background.3

A. The Bankruptcy Case.

On April 16, 2021, Mr. Barclay, acting through his law firm (DBPC) and purportedly

on behalf of the Debtors, filed a joint voluntary petition for relief under Chapter 7 of the

Bankruptcy Code (the “Petition”)4 thereby initiating the bankruptcy case captioned: In re

Mennona, 21-11967 (Bankr. D. Colo.) (the “Main Case”). Promptly thereafter, Simon E.

Rodriguez was appointed as the Chapter 7 Trustee for the Debtors’ estate (the “Chapter 7

Trustee”).5 The Chapter 7 Trustee issued a “Notice of Possible Dividends”6 and began

efforts to administer the Main Case and recover assets for the benefit of creditors. In

response, Mr. Barclay (often acting without the knowledge or consent of the Debtors)

engaged in various fraudulent schemes to thwart bankruptcy administration and cause

the Main Case to be dismissed. Mr. Barclay’s misconduct ultimately resulted in the Court

sanctioning the Debtors while keeping the Main Case open.7

After some of Mr. Barclay’s malfeasance was discovered, the Debtors secured

substitute counsel, Stephen Berken (“Substitute Counsel”), in place of the Defendants.8

Then the Debtors sued Barclay and DBPC for their misconduct.9 The Debtors and the

Chapter 7 Trustee later settled certain malpractice-oriented claims against the

Defendants. As a result, the Chapter 7 Trustee recovered sufficient funds to enable him

to pay the allowed administrative expense claims and allowed unsecured claims against

the Debtors’ estate in full.10 And, the Debtors eventually received their bankruptcy

discharge along with a small surplus.11

The result of the Main Case may be viewed as a success because the claims

against the Debtors’ estate were satisfied and the Debtors received their discharge.

However, that success was achieved only through the settlement of the malpractice

claims brought against Mr. Barclay who had engaged in egregious lawyer misconduct

2 Docket Nos. 16 and 19. The Court uses the convention “Docket No. ___” to refer to a document

filed in the CM/ECF system for this Adversary Proceeding. When referring to a document filed in the

CM/ECF system for the Debtors’ main bankruptcy case, In re Mennona, Case No. 21-11967 TBM (Bankr.

D. Colo.), the Court identifies the documents as follows: “Docket No. ___ in Main Case”.

3 The Court takes judicial notice of the docket in this case. See St. Louis Baptist Temple, Inc. v.

F.D.I.C., 605 F.2d 1169, 1172 (10th Cir. 1979) (a court may sua sponte take judicial notice of its docket and

of facts that are part of public records).

4 Docket No. 1 in Main Case.

5 Docket No. 11 in Main Case.

6 Docket No. 20 in Main Case.

7 Docket No. 85 in Main Case.

8 Docket No. 96 in Main Case.

9 Docket No. 123 in Main Case.

10 Docket Nos. 147, 153, 172, and 179 in Main Case.

11 Docket No. 142 in Main Case.

the bankruptcy system are set forth below as part of the Court’s Findings of Fact.

B. The Adversary Proceeding.

1. The Complaint.

On April 21, 2022, the UST initiated this Adversary Proceeding by filing his

“Complaint” (the “Complaint”).12 The Complaint is extremely comprehensive: it spans 240

paragraphs plus more than 100 pages of supporting exhibits. Most of the Complaint

consists of factual allegations detailing Mr. Barclay’s pattern of gross misconduct in the

Main Case. Among the myriad transgressions alleged in the Complaint, the UST asserts

that Mr. Barclay: failed to execute a written contract with the Debtors; forged the Debtors’

electronic signatures on the Petition and other documents; knowingly submitted

inaccurate Schedules; improperly advised the Debtors not to appear at the Section 341

meeting of creditors; lied to the Chapter 7 Trustee at the Section 341 meeting of creditors;

devised and tried to implement multiple improper schemes for dismissal of the Main

Case; failed to properly communicate with the Debtors concerning their obligation to

produce documents thereby causing the Debtors to be sanctioned by the Court;

disparaged the Chapter 7 Trustee and encouraged an effort to infect the Chapter 7

Trustee’s counsel with “COVID or some other highly infectious, nasty disease”; made

numerous misrepresentations to the Court; and tried to defraud the Court through a

fraudulent scheme proposed to a creditor in an effort to cause the Main Bankruptcy Case

to be dismissed. The foregoing is merely a summary of some of the factual assertions

advanced by the UST, many of which are directly supported by the myriad of exhibits

attached to the Complaint. The Complaint contains more factual allegations about Mr.

Barclay’s misconduct. Many, many more. Since Mr. Barclay is the sole owner and

principal of his law firm (DBPC), the claims also were asserted against DBPC based on

Mr. Barclay’s misconduct.

Based upon the factual assertions, the UST stated five causes of action against

the Defendants as follows: (1) violations of Fed. R. Bank. P. 1008 and 9011; (2) violations

of Section 526(a)(2); (3) violations of Sections 526(a)(1) and (a)(3); (4) violations of

Section 528; and (5) violations of professional duties. In the Complaint, the UST

requested a series of remedies including: voiding any contractual arrangement with the

Debtors; imposing sanctions, fines, and penalties; entering injunctive relief to bar future

violations; prohibiting the Defendants from practicing law in the United States Bankruptcy

Court for the District of Colorado; and referring Mr. Barclay’s misconduct to the

Disciplinary Panel or the Committee on Conduct of the United States District Court for the

District of Colorado (the “District Court”). The remedies requested by the UST are among

the most serious that the Court may impose against a bankruptcy lawyer.

12 Docket No. 1.

The Defendants initially responded to the Complaint by filing a document titled

“Response” (the “Response”).13 Use of the title “Response” is curious because the

Response is best characterized as a non-compliant non-response. Fed. R. Civ. P. 12, as

incorporated by Fed. R. Bankr. P. 7012, provides that a defendant must serve an “answer

within 30 days after the issuance of the summons” unless the defendant serves a “motion

permitted under this rule . . . .” The Response was not a “motion permitted under” Fed. R.

Civ. P. 12, as incorporated under Fed. R. Bankr. P. 7012. So, the Response seemed to

be an attempt at an “answer” to the Complaint. Per Fed. R. Civ. P. 7(a)(2), as

incorporated by Fed. R. Bankr. P. 7007, both a “complaint” and an “answer to a

complaint” are “pleadings.” Fed. R. Civ. P. 8(b), as incorporated by Fed. R. Bankr. P.

7008, explains the “general rules of pleading” when responding to a complaint. Chief

among them is that a defendant must “admit or deny the allegations [made in the

complaint] . . . .”

In the Response, the Defendants violated the main pleading requirements. Mr.

Barclay asserted that he had “been advised by counsel to avoid speaking in detail about

the allegations between 122-131 of the [C]omplaint, for fears that anything said could be

used in whatever context for prosecution, whatever the ultimate merits, by the UST.” But

then the Defendants stated that “Defendants enter qualified admissions to every

accusation in the Complaint.” (Emphasis added.) The Defendants did not explain what

they meant by “qualified” admissions. In any event, the Defendants did not stop there.

They purported to address “Allegations 19-33” of the Complaint by admitting that they

“were without signed copies of the petition when the case was filed” and presented some

narrative but otherwise did not specifically admit or deny any allegations in the Complaint.

Then, the Defendants referred to “Allegations 34-45” of the Complaint. However, they did

not expressly admit or deny any of those allegations either. Instead, they presented

some commentary. Later, the Defendants cited “Allegations 65-121” of the Complaint,

but did not admit or deny any such allegations and instead advanced some argument.

Next, the Defendants addressed “Allegations 122-131” of the Complaint by mentioning a

completely inapposite statute — Section 561 — and then provided some explanations

before calling allegations of “fraudulent or nefarious intent . . . not only unrealistic but

absurd.” Per their modus operandi, the Defendants failed to admit or deny any specific

allegations in the Complaint. Next, the Defendants engaged in what can best be

described as a diatribe accusing the UST and others of acting “unethically” and failing to

fulfill their obligations. The Defendants ended the Response by attaching a copy of a

letter Mr. Barclay prepared and addressed to “United States Attorney” accusing the UST,

multiple Chapter 7 Trustees, and various bankruptcy lawyers of “serious abuse,” “abuse

of power,” “actual bankruptcy fraud,” “violat[ions] of . . . duties as a fiduciary,” and

otherwise allegedly nefarious conduct.14

13 Docket No. 4.

14 Docket No. 5.

Given the obvious deficiencies in the Response, the UST filed a “Motion for More

Definite Answer to Complaint” (the “Motion for More Definite Answer”).15 In support of his

position, the UST cited Fed. R. R. Civ. P. 8(b) and argued that Fed. R. Civ. P. 8(b) “only

permits three possible responses to a compliant: (1) admission; (2) denial; or (3) a

disclaimer statement in compliance with Rule 8(b)’s provision for lack of knowledge and

information, which is deemed a denial.” McSweeney v. Janes, 2014 WL 3707788, at *2

(D. Colo. July 24, 2014). The UST pointed out that the Defendants’ purported “qualified

admissions” coupled with the other text of the Response were “inconsistent” and that the

Response “does not comport with the pleading requirements of Fed. R. Civ. P. 8(b), and

as a result, the UST is left to guess” about Barclay’s position with respect to the

allegations in the Complaint.16 The UST did not request that the defective Response be

deemed an admission of all the allegations in the Complaint and did not ask that the

Defendants be sanctioned for failing to properly respond to the Complaint. Instead, the

UST asked only that the Defendants be ordered to follow Fed. R. Civ. P. 8(b) and

specifically admit or deny the allegations in the Complaint. In other words, the UST

proposed to give the Defendants another chance to answer the Complaint the right way.

The Defendants did not respond to the Motion for More Definite Answer in writing

within the 14-day period set by L.B.R. 7007-1. However, the Court elected to defer ruling

on the Motion for More Definite Answer in order to provide the Defendants a further

opportunity to respond orally during an already-set Pretrial Scheduling Conference.

4. The Joint Report and Pretrial Scheduling Conference.

The Court set a Pretrial Scheduling Conference for June 28, 2022 (the “Scheduling

Conference”). In advance of the Scheduling Conference, the UST and the Defendants

submitted their “Joint Report,”17 wherein the parties proposed various pretrial deadlines

for this Adversary Proceeding. Among other things, the Defendants agreed that this

Court “has jurisdiction over this Adversary Proceeding pursuant to 28 U.S.C. §§ 157(a),

157(b)(1), and 1334(b)” and that this Court “has authority to enter [a] final order or

judgment with respect to the claims asserted in this Adversary Proceeding.”

Both the UST and the Defendants appeared at the Scheduling Conference.18 Mr.

Barclay entered his appearance on behalf of himself and his law firm.19 The Court

15 Docket No. 10.

16 Id. at 4.

17 Docket No. 16.

18 Docket No. 19.

19 Mr. Barclay represented himself and DBPC throughout this Adversary Proceeding. Despite

admonitions to obtain counsel to represent him, Mr. Barclay elected not to do so. Thus, Mr. Barclay

proceeded pro se. Normally, the Court is charged with liberally construing the papers filed by pro se

parties. Thompson v. Coulter, 680 Fed. Appx. 707, 710 (10th Cir. 2017) (citing Garrett v. Selby Connor

Maddux & Janer, 425 F.3d 836, 840 (10th Cir. 2005)); Hall v. Bellmon, 935 F.2d 1106, 1110 (10th Cir.

1991). However, when the pro se party is a licensed attorney, courts are not required to extend “the same

liberality [afforded] to a pro se pleading.” Davison v. Comm’r, 2022 WL 2196884, at *4 (10th Cir. Jun. 17,

Barclay continued to represent himself and his law firm and never engaged other legal

counsel in this Adversary Proceeding. At the Scheduling Conference, the Court

entertained legal argument on the pending Motion for More Definite Answer. The

Defendants did not oppose the relief requested in the Motion for More Definite Answer.

Accordingly, the Court entered an “Order Granting Motion for More Definite Answer” and

directed:

. . . by July 8, 2022, Devon Michael Barclay and Devon

Barclay, P.C. (collectively, “Defendants”), shall file a more

definite answer . . . responding specifically to each of the

numbered paragraphs in the Complaint consistent with the

pleading requirements of Fed. R. Civ. P. 8(b), and failing

which all allegations in the Complaint shall be deemed

admitted consistent with Fed. R. Civ. P. 8(b)(6).20

The Court also issued a “Scheduling Order” (the “Scheduling Order”) and set the trial in

this Adversary Proceeding for November 3, 2022.21

5. The Answer.

Subsequently, on July 8, 2022, the Defendants filed another “Response” (the

“Answer”) responding to the Complaint.22 In the Answer, the Defendants admitted without

qualification most of the factual allegations asserted in the Complaint: approximately 152

Paragraphs out of 240 Paragraphs. With respect to the remaining allegations, the

Defendants either: (1) denied such allegations in part; (2) denied such allegations in full;

(3) stated that they “lack[] the information to admit or deny”; or (4) noted that the specific

allegations were not allegations “requiring admission or denial.” Additionally, the

Defendants asserted a series of affirmative defenses.

6. The Trial.

Months passed. With the trial rapidly approaching, on October 13, 2022, the

Defendants filed an unsigned document titled: “Mitigation.”23 The purpose of the

document was unclear. It was not a pleading, answer, or motion. However, before the

Court had an opportunity to assess it, the Defendants withdrew the first “Mitigation.”24

Meanwhile, the Defendants filed a different unsigned document titled: “Mitigation.”25 Like

its predecessor, it also was not a pleading, answer, or motion and mostly consisted of an

attack on the Chapter 7 Trustee and various bankruptcy professionals. In the CM/ECF

2022) (citing Mann v. Boatright, 477 F.3d 1140, 1148 n.4 (10th Cir. 2007)). Because Mr. Barclay is a

licensed attorney who regularly practices in this Court, this Court need not construe his deficient papers

liberally.

20 Docket Nos. 19 and 21.

21 Docket Nos. 19 and 20.

22 Docket No. 26.

23 Docket No. 31.

24 Docket No. 36.

25 Docket No. 32.

Exhibits.” However, the second “Mitigation” did not identify any witnesses or exhibits for

the trial. In any event, the Court received a “Motion to Strike” the second “Mitigation.”26

The Defendants did not respond. So, the Court ordered the second “Mitigation” stricken

from the record.27 Meanwhile, the Defendants and the UST also agreed to a “Joint

Statement of Stipulated Facts and Exhibits” (the “Stipulated Facts”).28

Given the Defendants’ unusual litigation behavior, along with their failure to meet

the deadline for submitting a witness and exhibit list and exchanging trial exhibits with the

UST, the Court sua sponte set a Final Pretrial Conference.29 The evening before the

Final Pretrial Conference, the Defendants filed a document titled “Notice of Withdrawal of

Documents, and of Default” (the “Withdrawal”) which stated (in its entirety):

Undersigned counsel [Barclay] hereby withdraws the

Defendants’ Answer (Docket No. 26) and Answer (Docket No.

4). Defendants default. The Court can and should enter final

orders at its discretion. 30

On October 27, 2022 (just a few days before the long-scheduled trial), the Court

conducted the Final Pretrial Conference. The Defendants did not attend. The Court

issued an “Order to Show Cause Why Sanctions Should Not Be Imposed on Defendants

for their Failure to Appear” (the “Order to Show Cause”).31 However, the Court conducted

the Final Pretrial Conference in Mr. Barclay’s absence and received input from the UST.

Thereafter, the Court issued an oral ruling on the effect of the Withdrawal filed by the

Defendants.32 The Court determined that because the Defendants had withdrawn the

Answer, all factual allegations contained in the Complaint (and incorporated exhibits)

were deemed admitted pursuant to Fed. R. Civ. P. 8(b)(6) and governing law.33 The

Court also decided that the Defendants had defaulted and instructed the Clerk of Court to

enter such default pursuant to Fed. R. Civ. P. 55(a), as incorporated by Fed. R. Bankr. P.

7055.34

After the foregoing rulings, the Court inquired whether the UST wished to introduce

any additional evidence beyond the admitted factual allegations contained in the

Complaint (and incorporated exhibits). The UST elected to forego the presentation of any

other testimony or exhibits at trial and instead rested its evidentiary case solely on the

admitted factual allegations contained in the Complaint (and incorporated exhibits).35

Thereafter, the Court declared that “the evidence is closed and the Court will take no

26 Docket No. 41.

27 Docket Nos. 45 and 49.

28 Docket No. 38.

29 Docket No. 35.

30 Docket No. 43.

31 Docket Nos. 45 and 48.

32 Docket No. 45.

33 Id.

34 Id.

35 Id.

would only entertain closing arguments from the UST and the Defendants “including the

precise remedy the UST asks the Court to impose on the Defendants.”37 The Court also

provided a further opportunity for the UST and the Defendants to submit additional legal

briefing “pertaining the remedies the UST seeks to have imposed.”38 The day after the

Final Pretrial Conference, the Clerk of Court issued the “Clerk’s Entry of Default”

determining that “Defendants Devon Michael Barclay and Devon Barclay, P.C., are in

default pursuant to Fed. R. Civ. P. 55(a), made applicable by Fed. R. Bankr. P. 7055.”39

A few days before the trial, Mr. Barclay responded to the Order to Show Cause

and indicated that “preceding the pretrial conference” he had experienced various

adverse medical conditions and was diagnosed with “Adjustment Disorder” which he

characterized as a “physical reaction to psychological trauma” caused by this Adversary

Proceeding.40 The Defendants again confirmed their intention to default and stated:

8. Having already withdrawn his answer, Barclay and his

firm are without standing to appear and defend any allegations

involved in the Complaint.

9. Barclay cannot obey court orders that threaten his life,

as it appears this case now may.

10. Barclay needed medical attention which took priority

over appearing at the hearing. This was unexpected and

Barclay should not be sanctioned for that.

11. The Bankruptcy Court is a court of equity. Knowing

what the Court knows, the Court should enter whatever ruling

it deems fit against Barclay and his company, Devon Barclay,

PC and should issue whatever orders it deems appropriate.

12. Barclay, based on medical advice, cannot appear at

any future hearing on this matter.41

The Defendants did not ask that the trial be delayed. Nor did they request an opportunity

to retain substitute counsel. But, given Mr. Barclay’s explanation of his medical

circumstances, the Court discharged its Order to Show Cause and did not sanction the

Defendants for their failure to appear at the Final Pretrial Conference.

On November 3, 2022, the Court conducted the trial in this Adversary Proceeding.

True to his word, Mr. Barclay did not attend. Given the Court’s rulings at the Final Pretrial

36 Id.

37 Id.

38 Id.

39 Docket No. 47.

40 Docket No. 56.

41 Id.

also filed additional written legal argument and a proposed form of Order.42 The Court

found the UST’s closing argument comprehensive, balanced, professional, and helpful to

the Court especially given the very unusual circumstances of this Adversary Proceeding.

IV. Findings of Fact.

As set forth above, the Defendants withdrew the Answer. Accordingly, all the

factual allegations in the Complaint (and incorporated exhibits) have been deemed

admitted pursuant to Fed. R. Civ. P. 8(b)(6). See also Burlington N.R.R. Co. v.

Huddleston, 94 F.3d 1413, 1415 (10th Cir. 1996); CrossFit, Inc. v. Jenkins, 69 F. Supp.3d

1088, 1093 (D. Colo. 2014); Doe v. Hofstetter, 2012 WL 2319052, at *2 (D. Colo. June

13, 2012). The Defendants also defaulted under Fed. R. Civ. P. 55. Furthermore, the

Defendants admitted most of the allegations in the Complaint in the Stipulated Facts.

Since the UST elected to proceed based solely on the admitted factual allegations

contained in the Complaint (and incorporated exhibits), the Court incorporates by

reference each and every factual allegation contained in the Complaint (and incorporated

exhibits) and determines that such factual allegations along with the Stipulated Facts

constitute the Court’s findings of fact under Fed. R. Civ. P. 52(a)(1), as incorporated by

Fed. R. Bankr. P. 7052.

The Complaint is extremely comprehensive and consists of 240 separate

paragraphs — the majority of which are factual allegations. The Court declines to repeat

verbatim all the factual allegations (and incorporated exhibits). Instead, the Court

identifies only the main evidentiary highlights, which really are better characterized as

“lowlights” in the practice of bankruptcy law.

A. The Defendants Did Not Execute a Written Attorney-Client Contract with the

Debtors.

Mr. Barclay is an attorney admitted to practice law in this Court. He wholly owns

his law firm: DBPC.43 Mr. Barclay provides legal services to his clients through DBPC.44

The Debtors initially contacted Mr. Barclay about legal representation for a possible

bankruptcy case on October 6, 2020.45 Shortly thereafter, Mr. Barclay met with the

Debtors and began representing them. He advised the Debtors to delay filing for

bankruptcy until after they received their anticipated federal tax refund.46 Mr. Barclay

recommended that the Debtors spend their tax refund (including by paying the

Defendants) before seeking bankruptcy protection so that it would not be available to their

creditors.47

42 Docket No. 57.

43 Compl. ¶¶ 3-4.

44 Id.

45 Compl. ¶ 9.

46 Compl. ¶ 11.

47 Id.

prior to providing them with legal advice. Indeed, the Defendants never executed any sort

of written agreement with the Debtors.48 Instead, Mr. Barclay merely sent an unexecuted

form of draft “Representation Agreement” (the “Representation Agreement”) to the

Debtors on March 17, 2021.49 The form included numerous blank spaces, did not list the

Debtors’ names, and did not even disclose Mr. Barclay’s proposed fee.50 Furthermore,

through the form, Mr. Barclay falsely asserted that his “rate for attorney’s fees” (which

was not identified) “is usually free to the client and paid by creditors.”51 In any event, Mr.

Barclay did not ask the Debtors to sign the form Representation Agreement, and never

executed it himself.52 Notwithstanding the absence of any written agreement executed by

the Debtors and the Defendants, the Defendants provided bankruptcy legal services to

the Debtors for a year from October 12, 2020 to October 11, 2021.53

B. Mr. Barclay Falsely Indicated that the Debtors Had Signed the Petition,

Statement of Financial Affairs, and Schedules Before He Filed the Main

Bankruptcy Case.

Before the commencement of the Main Case, the Debtors met with Mr. Barclay

only once: on October 12, 2020. Many months later, on March 17, 2021, Mr. Barclay sent

the Debtors draft bankruptcy documents: a Petition, a Statement of Financial Affairs, and

Schedules.54 He asked the Debtors to review and sign the materials.55 A month later, on

April 16, 2021, Mr. Barclay initiated the Main Case for the Debtors by filing the Petition,

Statement of Financial Affairs, and Schedules electronically.56 Persons seeking

bankruptcy protection must execute the petition, statement of financial affairs, and

schedules forms when they commence a bankruptcy case.

Part 7 of the petition form instructs debtors to “Sign Below” and states:

I have examined this petition, and I declare under penalty of

perjury that the information is true and correct . . . . I request

relief in accordance with the chapter of title 11, United States

Code, specified under this petition. I understand making false

statement, concealing property, or obtaining money or

property by fraud in connection with a bankruptcy case can

result in fines up to $250,000, or imprisonment for up to 20

years, or both.57

48 Compl. ¶ 13.

49 Compl. ¶ 14 and Ex. 2.

50 Id.

51 Id.

52 Compl. ¶¶ 13-17 and Ex. 2.

53 Compl. ¶¶ 10-11 and 13-132.

54 Compl. ¶ 19 and Ex. 3.

55 Compl. ¶¶ 19-20 and Ex. 3.

56 Compl. ¶ 26; Docket No. 1 in Main Case.

57 Docket No. 1 in Main Case at 6.

signatures in the Petition as follows: “/s/ Matthew Jason Mennona” and “/s/ Nicole Marie

Mennona.”58 He also added the date that the Debtors purportedly had signed the

Petition: April 16, 2021.59 Further, Mr. Barclay appended his own electronic signature on

the Petition along with the April 16, 2021 date. However, the foregoing was false, and the

Defendants knew it. The Debtors had not signed the Petition on or before April 16, 2021

as represented by Mr. Barclay and stated in the Petition.60 In fact, the Debtors were not

even aware that Mr. Barclay filed the Main Case until sometime after April 20, 2021.61

Similarly, Part 12 of the statement of financial affairs form requires debtors to sign

under the statement:

I have read the answers on this Statement of Financial Affairs

and any attachments, and I declare under penalty of perjury

that the answers are true and correct. I understand that

making a false statement, concealing property, or obtaining

money or property by fraud in connection with a bankruptcy

case can result in fines up to $250,000, or imprisonment for up

to 20 years, or both.62

Immediately under the foregoing statements, Mr. Barclay inserted the Debtors’ electronic

signatures in the Statement of Financial Affairs as follows: “/s/ Matthew Jason Mennona”

and “/s/ Nicole Marie Mennona.”63 He also added the date that the Debtors purportedly

had signed the Statement of Financial Affairs: April 16, 2021.64 However, the foregoing

was a lie about which the Defendants were aware. The Debtors had not signed the

Statement of Financial Affairs on or before April 16, 2021 as represented by Mr. Barclay

and stated in the Statement of Financial Affairs.65

At the commencement of a bankruptcy proceeding, debtors also must submit form

schedules A-G and a summary of schedules. Such forms are followed by a “Declaration

About an Individual Debtor’s Schedules” (the “Declaration”).66 The Declaration states:

You must file this form whenever you file bankruptcy

schedules or amended schedules. Making a false statement,

concealing property, or obtaining money or property by fraud

in connection with a bankruptcy case can result in fines up to

$250,000, or imprisonment for up to 20 years, or both.

. . . .

58 Id.

59 Id.

60 Compl. ¶¶ 28-29.

61 Compl. ¶ 33.

62 Docket No. 1 in Main Case at 13-14.

63 Id.

64 Id.

65 Compl. ¶¶ 28-29.

66 Docket No. 1 in Main Case at 44.

summary and schedules filed with this declaration and that

they are true and correct.67

Just as with the Petition and the Statement of Financial Affairs, immediately under the

foregoing statements, Mr. Barclay inserted the Debtors’ electronic signatures in the

Declaration as follows: “/s/ Matthew Jason Mennona” and “/s/ Nicole Marie Mennona.”68

He also added the date that the Debtors purportedly had signed the Declaration: April 16,

2021.69 However, Mr. Barclay knew that the foregoing was false. The Debtors had not

signed the Declaration on or before April 16, 2021 as represented by Mr. Barclay and

stated in the Declaration.70

Although the Debtors did not execute the Petition, Statement of Financial Affairs,

or Declaration when the Main Bankruptcy Case was started, they executed blank

signature pages for the Petition, Statement of Financial Affairs, and Declaration several

days later on April 19, 2021, and then sent the original “wet-ink” signature pages to Mr.

Barclay the next day.71

C. Mr. Barclay Knowingly Filed a False Schedule A/B.

As noted above, Mr. Barclay sent the Debtors draft Schedules on March 17,

2021.72 At that time, he noted that he had “some questions” to which the Debtors should

respond so that the file could be “updated.”73 The draft Schedules asserted that the

Debtors had $0 in their bank accounts.74 The next day, March 18, 2021, the Debtors

responded to Mr. Barclay and notified him that they had a single bank account with a

balance of $5,486.75 Thereafter, Mr. Barclay changed the draft Schedule A/B to falsely

state that the Debtors had two bank accounts (not one) and that the aggregate balance

was $3,950 (not $5,486).76 Then, Mr. Barclay filed the false Schedule A/B on the Petition

Date without allowing the Debtors an opportunity to review it.77 By that time, the amount

in the Debtors’ sole bank account was $5,000.05.78

67 Id.

68 Id.

69 Id.

70 Compl. ¶¶ 28-29.

71 Compl. ¶¶ 30-32 and Ex. 4.

72 Compl. ¶ 19 and Ex. 3.

73 Compl. Ex. 3.

74 Compl. ¶ 22.

75 Compl. ¶ 23.

76 Compl. ¶¶ 23-24.

77 Compl. ¶ 25.

78 Compl. ¶ 27.

Indicated that the Debtors Had Signed the Filing Fee Application Even

Though They Had Not.

Mr. Barclay filed the Main Case as a Chapter 7 liquidation. At the time, the filing

fee for Chapter 7 bankruptcy cases was $338.79 The Debtors easily could have paid the

$338 filing fee since they had $5,000.05 in cash in their bank account on the Petition

Date. Nevertheless, Mr. Barclay prepared an “Application for Individuals to Pay Filing

Fee in Installments” (the “Filing Fee Application”)80 in an effort to delay the payment of the

bankruptcy filing fee. Part 2 of the Filing Fee Application states:

By signing here, you state that you are unable to pay the full

filing fee at once [and] that you want to pay the fee in

installments . . . .81

Mr. Barclay proposed to the Court that the Debtors pay the $338 filing fee in three

installments. Then, Mr. Barclay inserted the Debtors’ electronic signatures in the Filing

Fee Application as follows: “/s/ Matthew Jason Mennona” and “/s/ Nicole Marie

Mennona.”82 He also added the date that the Debtors purportedly had signed the Filing

Fee Application: April 16, 2021.83

All of the foregoing was false. As of the Petition Date, the Debtors were able to

pay the full filing fee since they had $5,000.05 in cash in their bank account.84 Also, the

Debtors did not sign the Filing Fee Application on April 16, 2021. In fact, the Debtors

never signed the Filing Fee Application — they did not even know about it.85 Mr. Barclay

never told the Debtors about the Filing Fee Application.86 Instead, Mr. Barclay knowingly

filed a false and fabricated document with the Court. Mr. Barclay misled the Court into

granting the Filing Fee Application.87

E. Mr. Barclay Lied at the Section 341 Meeting in an Attempt to Have the Main

Case Dismissed.

Not long after the Petition Date, Simon E. Rodriguez was appointed as the Chapter

7 Trustee for the Main Case.88 Mr. Barclay dislikes the Chapter 7 Trustee. Accordingly,

in late April or early May 2021, Mr. Barclay advised the Debtors that they needed to have

the Main Case dismissed because the Chapter 7 Trustee was “greedy, corrupt, would

make their life hell, and would make the Debtors sell their house.”89

79 Compl. ¶ 35.

80 Docket No. 10 in Main Case; Compl. Ex. 5.

81 Id.

82 Id.

83 Id.

84 Compl. ¶ 44.

85 Compl. ¶¶ 41-43.

86 Id.

87 Docket No. 12 in Main Case.

88 Compl. ¶ 46; Docket No. 11 in Main Case.

89 Compl. ¶ 47.

The Chapter 7 Trustee convened the initial Section 341 meeting of creditors in the

Main Case on May 17, 2021.90 The debtors did not appear.91 Before the start of the

Section 341 meeting, Mr. Barclay told the Chapter 7 Trustee that the Debtors were not

present and he had been unable to reach them.92 During the Section 341 meeting, the

Chapter 7 Trustee asked Mr. Barclay what steps he had taken to reach the Debtors. Mr.

Barclay told the Chapter 7 Trustee that he had tried to reach the Debtors by telephone

and another method.93 Based on the foregoing, the Chapter 7 Trustee adjourned the

Section 341 meeting to June 14, 2021.94

Mr. Barclay’s statements during the Section 341 meeting (which is an important

part of the bankruptcy process) were false and misleading. Contrary to his statement that

he was unable to reach his clients for the Section 341 meeting, Mr. Barclay had been in

touch with the Debtors about the Section 341 meeting. As part of an improper attempt to

orchestrate dismissal of the Main Case, Mr. Barclay expressly advised the Debtors not to

attend the Section 341 meeting.95 Then he lied to the Chapter 7 Trustee about it. After

the Chapter 7 Trustee rescheduled the Section 341 meeting, Mr. Barclay did the same

thing again and advised the Debtors not to attend the adjourned Section 341 meeting

either.96 As a result, neither Mr. Barclay nor the Debtors appeared at the rescheduled

Section 341 meeting.

F. Mr. Barclay Manipulated the Filing Fee System in an Attempt to Have the

Main Case Dismissed.

As set forth above, Mr. Barclay committed fraud on the Court with respect to the

Filing Fee Application. Based upon his false statements, the Court granted the Filing Fee

Application and ordered the Debtors to pay the bankruptcy filing fee in installments: (1)

$126 by April 30, 2021; (2) $106 by May 28, 2021; and (3) $106 by June 25, 2021 (the

“Filing Fee Order”).97 The Debtors timely paid the first filing fee installment.98 But then,

Mr. Barclay made the decision to try to have the Main Case dismissed because of his

displeasure with the Chapter 7 Trustee. Even though the Debtors were financially able to

pay the second installment of the filing fee, Mr. Barclay improperly advised them to violate

the Filing Fee Order and shirk their obligations to the Court. Mr. Barclay sent an e-mail to

the Debtors stating:

There are 3 court fee invoices, but don’t pay this one — we

need the case to get dismissed, and not paying the court fee is

the fastest way to get there.99

90 Compl. ¶¶ 52-53.

91 Compl. ¶ 52.

92 Compl. ¶ 53.

93 Compl. ¶ 54.

94 Compl. ¶ 55.

95 Compl. ¶ 49 and Ex. 1 at 89-91.

96 Compl. ¶ 57 and Ex. 6.

97 Compl. ¶ 60; Docket No. 12 in Main Case.

98 Compl. ¶ 61.

99 Compl. ¶ 63 and Ex. 8.

Mr. Barclay did not advise the Debtors concerning the potential ramifications of willful

failure to comply with the Filing Fee Order.100 In any event, the Debtors did not timely pay

the second filing fee installment.

G. Mr. Barclay Made Misrepresentations to the Court in Connection with Pay

Advices in Multiple Attempts to Have the Main Case Dismissed.

On June 3, 2021, the Chapter 7 Trustee filed a “Notice of Possible Dividends,”101

which operated to prevent the Main Case from being dismissed for failure to pay filing

fees.102 Apparently still dissatisfied with the Chapter 7 Trustee’s efforts to recover assets

for the benefit of creditors, Mr. Barclay engaged in another scheme to try to have the

Main Case dismissed by manipulating pay advices.

Section 521(a)(1)(B)(iv) requires that bankruptcy debtors file “copies of all payment

advices or other evidence of payment received within 60 days before the date of the filing

of the petition, by the debtor from any employer of the debtor.” (Emphasis added.) Since

Mr. Barclay filed the Petition on April 16, 2021, the Debtors were supposed to file pay

advices received during the period from February 15, 2021 to April 16, 2021.

Early in the Main Case, Mr. Barclay filed the following six pay advices for Mrs.

Mennona: (1) pay advice dated February 19, 2021 (for pay period February 8, 2021 to

February 14, 2021); (2) pay advice dated March 12, 2021 (for pay period March 1, 2021

to March 7, 2021); (3) pay advice dated March 26, 2021 (for pay period March 15, 2021 to

March 21, 2021); (4) pay Advice dated April 2, 2021 (for pay period March 22, 2021 to

March 28, 2021); (5) pay Advice dated April 9, 2021 (for pay period March 29, 2021 to

April 4, 2021); and (6) pay advice dated April 16, 2021 (for the pay period April 5, 2021 to

April 11, 2021).103

On June 29, 2021, Mr. Barclay filed “Debtor’s Motion to Dismiss Chapter 7 Case”

(the “First Motion to Dismiss”).104 There, he stated:

Debtor spouse included a final paystub dated April 2, 2021.

Debtor spouse is paid weekly, but omitted paystubs for April 9,

and April 16, 2021. Because the Debtors failed to file all pay

advices received within 60 days before the filing of the petition,

their case must be dismissed by operation of law.105

Mr. Barclay’s representation to the Court was plainly false since (as set forth above) he

had in his possession and filed with the Court Mrs. Mennona’s pay advices for April 9,

100 Compl. ¶ 64.

101 Compl. ¶ 65; Docket No. 20 in Main Case.

102 Compl. ¶¶ 65 and 66.

103 Docket No. 9 in Main Case.

104 Compl. ¶ 67; Docket No. 33 in Main Case.

105 Compl. ¶ 69; Docket No. 33 in Main Case.

Trustee pointed out the obvious error.107 However, Mr. Barclay continued to prosecute

the First Motion to Dismiss. The Court was forced to conduct a hearing on the First

Motion to Dismiss during which Mr. Barclay initially continued to advocate the false

premise regarding Mrs. Mennona’s April 9, 2021 and April 16, 2021 pay advices.108

Later, Mr. Barclay admitted that he was “wrong” and it was his “mistake.”109 Mr. Barclay

also “admitted that [he had filed] all of Mrs. Mennona’s pay advices.”110 Thus, the Court

denied the First Motion to Dismiss in relation to Mrs. Mennona.111

Notwithstanding Mr. Barclay’s representation in open court that he had filed all of

Mrs. Mennona’s pay advices with the Court, he promptly advocated the exact opposite

position. Immediately after the Court denied the First Motion to Dismiss, Mr. Barclay

asked Mrs. Mennona to send him her pay advices dated February 26, 2021, March 5,

2021, and March 19, 2021.112 She did not do so and with good reason: Mrs. Mennona

did not receive any pay advices dated February 26, 2021, March 5, 2021, and March 19,

2021, since she did not work during the relevant pay periods.113 Mrs. Mennona had

informed Mr. Barclay that she had not worked during such periods in an e-mail on the

Petition Date.114 But, that did not stop Mr. Barclay.

On August 29, 2021, without Mrs. Mennona’s authorization, Mr. Barclay filed the

“Debtor’s Voluntary Motion to Dismiss Chapter 7 Case” (the “Second Motion to Dismiss”)

asking that Mrs. Mennona’s case be dismissed because:

On further review of the pay stubs submitted to the court, it

appears that [Mrs. Mennona] nonetheless failed to submit pay

advices received February 26, 2021, March 5, 2021, and

March 19, 2021.115

The central factual premise of the Second Motion to Dismiss (i.e., that Mrs. Mennona

failed to file three pay advices she had received dated February 26, 2021, March 5, 2021,

and March 19, 2021) was patently false. And, Mr. Barclay knew it. After all, early in the

Main Case, Mrs. Mennona had told Mr. Barclay that she had not worked during such

periods. And, in response to Mr. Barclay’s inquiry after the denial of the First Motion to

Dismiss, Mrs. Mennona had explained that she was not able to provide such pay advices

because she never received them. So, Mr. Barclay apparently just fabricated the facts he

hoped would allow him to obtain dismissal of the Main Case.

106 Compl. ¶ 71; Docket No. 9 in Main Case.

107 Compl. ¶ 75; Docket No. 40 in Main Case.

108 Compl. ¶ 76 and Ex. 10.

109 Id.

110 Compl. ¶ 77; Docket No. 50 in Main Case.

111 Docket No. 50 in Main Case.

112 Compl. ¶ 78 and Ex. 6.

113 Compl. ¶¶ 79 and 81-82 and Ex. 11.

114 Compl. ¶ 82 and Ex. 11.

115 Compl. ¶ 80; Docket No. 57 in Main Case.

Mrs. Mennona again informed Mr. Barclay that she had not received the supposedly

missing pay advices.117 Even then, Mr. Barclay declined to withdraw the Second Motion

to Dismiss and never informed the Court that his factual representations in the Second

Motion to Dismiss were false.118

H. Mr. Barclay Caused the Debtors to Be Sanctioned for His Own Egregious

Discovery Misconduct and Encouraged Harm to Counsel for the Chapter 7

Trustee.

Throughout the pendency of the Main Case, the Chapter 7 Trustee repeatedly tried

to obtain documents from the Debtors to assess the Debtors’ financial condition and

administer the Main Case for the benefit of creditors and other parties in interest.119 Mr.

Barclay consistently stymied such efforts by failing to timely advise the Debtors about the

Chapter 7 Trustee’s requests.120

Initially, the Chapter 7 Trustee made a series of informal requests for information

from the Debtors on May 13, 2021, May 17, 2021, and June 4, 2021.121 Two of the

requests were made in writing to Mr. Barclay.122 The other was made orally to Mr.

Barclay at the Section 341 meeting of creditors (which Barclay had advised the Debtors

not to attend).123 Mr. Barclay did not apprise the Debtors of any of the informal requests

for information made by the Chapter 7 Trustee.124 And, Mr. Barclay did not respond to

the Chapter 7 Trustee either.125

Given Mr. Barclay’s intransigence, the Chapter 7 Trustee turned to a formal

discovery mechanism and filed a “Motion to Compel Turnover of Property of the Estate”

(the “Motion to Compel”).126 In the Motion to Compel, the Chapter 7 Trustee requested

that the Debtors turn over to the Chapter 7 Trustee keys and access to their real property

as well as six categories of documents.127 Mr. Barclay did not inform the Debtors about

the Motion to Compel and he did not ask the Debtors to provide access to their real

property or to provide information responsive to the Motion to Compel.128 Instead, Mr.

Barclay filed an unauthorized objection to the Motion to Compel which contained no legal

or factual basis for denial of the Motion to Compel.129 Thereafter, the Court set a hearing

116 Compl. ¶ 83; Docket No. 67 in Main Case.

117 Compl. ¶ 84.

118 Compl. ¶ 86. The Second Motion to Dismiss ultimately was withdrawn by Substitute Counsel for

the Debtors. Docket No. 137 in Main Case.

119 Compl. ¶ 87.

120 Compl. ¶ 88.

121 Compl. ¶¶ 89-97 and Ex. 12 and 13.

122 Compl. ¶¶ 89 and 94 and Ex. 12 and 13.

123 Compl. ¶ 92.

124 Compl. ¶¶ 91, 93 and 96.

125 Compl. ¶¶ 90 and 95.

126 Compl. ¶ 98; Docket No. 27 in Main Case.

127 Id.

128 Compl. ¶ 100-101.

129 Compl. ¶ 99; Docket No. 35 in Main Case

the hearing, the Court entered an “Order Granting Motion by Trustee to Compel Turnover

of Property of the Estate” (the “Turnover Order”) and directed that the Debtors to provide

access to their real property and produce all the documents requested by the Chapter 7

Trustee within seven days.131 Just as he failed to disclose the Motion to Compel to the

Debtors, Mr. Barclay also did not inform the Debtors about the Turnover Order and their

obligations thereunder.132 As a consequence of Mr. Barclay’s actions and failure to

communicate with his clients, the Debtors did not comply with the Turnover Order.133

Since the Debtors did not comply with the Turnover Order (after all, they were

unaware of it), the Chapter 7 Trustee was forced to file a motion to enforce the Turnover

Order.134 Thereafter, the Court issued an “Order to Debtors to Show Cause Why

Sanctions for Civil Contempt Should Not Be Imposed” (the “Main Case Order to Show

Cause.”).135 On the verge of contempt, Mr. Barclay finally asked the Debtors to send him

some of the materials required by the Turnover Order. But that was not all — he also

encouraged the Debtors to harm counsel for the Chapter 7 Trustee. Bizarrely, this is

what Mr. Barclay advised his clients to do before mailing documents to the Chapter 7

Trustee’s counsel:

If either of you have COVID or some other highly infectious,

nasty disease — or if you know someone who does — please

make sure they lick the envelope and handle it as much as

possible.136

Next, Mr. Barclay lied to the Court. In his “Response to Order to Show Cause,” Mr.

Barclay told the Court that the “Debtors have provided the trustee with most of the items

requested in their motion for turnover” and that the “Debtors have essentially complied

[with the Turnover Order] . . . .”137 But that was another blatant untruth. When Mr.

Barclay made the foregoing misrepresentation, the Debtors had only provided two

categories of documents requested by the Chapter 7 Trustee.138 At the initial hearing on

the Main Case Order to Show Cause, Mr. Barclay again continued the charade about

having fully complied with the Turnover Order.139 The Chapter 7 Trustee contested such

assertion. So, the Court set a contested evidentiary hearing to get to the bottom of the

dispute.140 Two days before the hearing, Mr. Barclay agreed to “Stipulated Facts”

acknowledging that the Debtors had not turned over anything by the deadline set in the

Turnover Order and had not turned over all the required information by the initial hearing

130 Compl. ¶ 101.

131 Compl. ¶ 103; Docket No. 51 in Main Case.

132 Compl. ¶¶ 104-105.

133 Compl. ¶ 104-106.

134 Compl. ¶ 107; Docket No. 62 in Main Case.

135 Compl. ¶ 111; Docket No. 63 in Main Case.

136 Compl. ¶¶ 112-113 and Ex. 15.

137 Compl. ¶ 114; Docket No. 65 in Main Case.

138 Compl. ¶¶ 115, 167 and 168.

139 Compl. ¶ 116.

140 Id.

facts. At the evidentiary hearing on the Main Case Order to Show Cause, Mr. Barclay

and the Debtors did not present any evidence. The Court held the Debtors in contempt of

Court and imposed a $2,783.50 monetary sanction on the Debtors for failure to timely

comply with the Turnover Order.142 At that stage, the Court had little idea of the extent of

Mr. Barclay’s misconduct and assumed that the Debtors had failed to comply. But after

the award of sanctions, Mr. Barclay took some responsibility stating that a “good part of

the blame” rested with him and indicating that he would pay the sanctions.143

I. Mr. Barclay Attempted to Commit a Fraud on the Court Through Another

Misguided Dismissal Effort.

Meanwhile, on the morning after the initial hearing on the Main Case Order to

Show Cause, Mr. Barclay engaged in a new effort to defraud the Court using a section of

the Bankruptcy Code designed to encourage debtor cooperation with creditors: Section

521(e)(2)(C).144 Mr. Barclay sent an e-mail to an employee of one of the Debtors’

creditors: BC Services. The e-mail proposed a convoluted multi-stage scheme to

dismiss the Main Case and pay BC Services in preference to the Debtors’ other creditors

and to “compensate BC Services for its time and cooperation in this process.” This is

exactly what Mr. Barclay wrote to BC Services (the “BC Services E-Mail”):

Hi Amy,

I’m writing to request a bit of a favor.

I’ve got an active Ch 7 that has gone completely off the rails.

Essentially, the trustee is actively trying to extort my clients. I

believe I can get the case dismissed on statutory grounds, but

it’s a very open question. Should that fail, we’ll be left in a

very protracted appeals process. We are prepared to do that,

but for obvious reasons would prefer not to.

In the event that we win, which I think we will, BC Services will

receive nothing – but, I’d prefer to see your client get paid, and

I’d much prefer not to wait until mid-October to resolve those

issues at trial. Instead, what I’d like is for BC Services to

request a copy of my clients [sic] tax returns, and we will

willfully not comply with that request. In response, BC

141 Compl. ¶¶ 117-118; Docket No. 78 in Main Case.

142 Compl. ¶ 120; Docket No. 85 in Main Case.

143 Compl. ¶ 121.

144 Section 521(e)(2)(C) provides the opportunity for a creditor to request a copy of the debtor’s

Federal income tax return “for the most recent tax year ending immediately before the commencement of

the case and for which a Federal income tax return was filed.” 11 U.S.C. § 521(e)(2)(C). If the debtor fails

to comply with the request, “the court shall dismiss the case unless the debtor demonstrates circumstances

beyond the control of the debtor.” Id.

on statutory grounds.

We will prepare a draft of the motion for your use, and in

exchange for all of this we will pay anything owed to BC

Services in full and compensate BC Services for its time and

cooperation in this process.

Please let me know if this is of interest. I think it’s a good deal

for both BC Services and my clients.

Cheers,

Devon145

So to restate, Mr. Barclay tried to convince BC Services to make a request for the

Debtors’ tax returns. Then, even though Mr. Barclay had the Debtors’ tax returns, he

planned to engage in a complete farce: “we will willfully not comply with that request.” 146

Next, Mr. Barclay asked BC Services to file a motion to dismiss based upon Mr. Barclay’s

own willful non-compliance. Mr. Barclay proposed to ghost-write the motion to dismiss

himself so the Court would not know about the scheme. Then, Mr. Barclay committed to

pay BC Services for helping to engage in the fraud.

To its credit, BC Services declined to engage in the scheme. Instead, BC Services

sent a copy of the BC Services E-Mail to the Chapter 7 Trustee.147 At that point, Mr.

Barclay began dissembling. He asserted that the BC Services E-Mail was “privileged in

nature and content” and a “confidential settlement offer.”148 Those statements were

obviously false. Then, he claimed that his intent was “to be completely transparent with

the court regarding the circumstances giving rise to the motion [to dismiss] . . . .” Mr.

Barclay’s assertion is preposterous on its face.

The foregoing scheme was concocted solely by Mr. Barclay. The Debtors did not

authorize Mr. Barclay to make the illicit proposal to BC Services.149 They had no

knowledge about the matter until after the Chapter 7 Trustee disclosed the BC Services

E-Mail to the Chapter 7 Trustee and it was read in open court at the second hearing on

the Main Case Order to Show Cause.150 The Debtors were “appalled” by Mr. Barclay’s

misconduct which they recognized immediately for what it was: “fraudulent activity.”151

145 Compl. ¶ 122 and Ex. 16, at 5.

146 Compl. ¶¶ 122 and 131.

147 Compl. ¶ 123.

148 Compl. ¶ 124.

149 Compl. ¶ 128 and Ex. 1 at 100-109.

150 Compl. ¶¶ 126-129.

151 Compl. ¶ 130 and Ex. 1 at 100-109.

Within weeks of the entry of sanctions against the Debtors and the disclosure of

the BC Services E-Mail, the Debtors fired the Defendants and retained Substitute

Counsel.152 Substitute Counsel withdrew the Second Motion to Dismiss.153 Substitute

Counsel also facilitated the Debtors’ testimony at the Section 341 meeting of creditors.154

And, not long thereafter, the Debtors were able to secure their bankruptcy discharge.155

V. Legal Conclusions.

In the Complaint, the UST stated five causes of action against the Defendants as

follows: (1) violations of Fed. R. Bank. P. 1008 and 9011; (2) violations of Section

526(a)(2); (3) violations of Sections 526(a)(1) and (a)(3); (4) violations of Section 528; and

(5) violations of professional duties. The Court analyzes each of the causes of action

separately.

A. The Defendants Violated Fed. R. Bankr. P. 1008 and 9011(b) and (f).

In his First Cause of Action, the UST asserts that the Defendants violated Fed. R.

Bankr. P. 1008 and 9011 by filing the Petition without the Debtors’ signatures. A rather

obvious preliminary step in bankruptcy practice is that “an attorney needs to know for

certain that his client wishes to file for bankruptcy before a petition is filed.” Briggs v.

Labarge (In re Phillips), 433 F.3d 1068, 1071 (8th Cir. 2006). Fed. R. Bankr. P. 1008

embodies that premise and mandates:

All petitions, lists, schedules, statements and amendments

thereto shall be verified or contain a sworn declaration as

provided in 28 U.S.C. § 1746.

The signature requirement found in Fed. R. Bankr. P. 1008 is “a means of not only

authorizing the filing of those documents, but of verifying, under penalty of perjury, that

they [the debtors] have reviewed the information contained therein and that it is true and

correct to the best of their knowledge, information and belief.” In re Bradley, 495 B.R.

747, 760 (Bankr. S.D. Tex. 2013); see also In re Dobbs, 535 B.R. 675, 685 (Bankr. N.D.

Miss. 2015) (“under [Fed. R. Bankr. P.] 1008 — ‘any attorney who files schedules and

statements on a debtor’s behalf makes a certification [of accuracy] regarding the

representations contained therein.’”). There are “no circumstances that would ever justify

an attorney filing a petition, any Schedule, or a SOFA [statement of financial affairs]

without first obtaining the debtor’s signature . . . .” Bradley, 495 B.R. at 780. Fed. R.

Bankr. P. 9011(f) reenforces the Fed. R. Bankr. P. 1008 signature requirement and

provides: “[w]hen these rules require copies of a signed or verified paper, it shall suffice if

the original is signed or verified and the copies are conformed to the original.” See also

Fed. R. Bankr. P. 9011(b)(3) (“By presenting to the court (whether by signing [or] filing. . .)

152 Compl. ¶ 132.

153 Compl. ¶ 133; Docket Nos. 136 and 137 in Main Case.

154 Compl. ¶ 134.

155 Compl. ¶ 135; Docket No. 142 in Main Case.

contentions have evidentiary support . . . .”). And, of course, Official Form 101 (Voluntary

Petition for Individuals Filing for Bankruptcy) requires that debtors must sign their petitions

under penalty of perjury. The need for an attorney to receive and retain a bankruptcy

debtor’s actual “wet signature” on a petition is also mandated by this Court’s local rules,

which require: “Documents required to be retained by attorneys with actual signatures of

the debtor include all petitions, statements, schedules, lists, and amendments thereto.”

L.B.R. 9011-4; see also L.B.R. 5005-4(a)(5) (same).

Nowadays, most bankruptcy petitions and associated documents are filed with the

Court electronically. But the mechanics of filing electronically really make no difference.

“In filing a petition electronically, the practitioner represents to the court that he or she has

secured an originally executed petition physically signed by debtor prior to electronically

filing the case.” In re Wenk, 296 B.R. 719, 724 (Bankr. E.D. Va. 2002) (emphasis in

original); Dobbs, 535 B.R. at 686 (same). Bankruptcy courts uniformly have determined

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

Stomberg, 487 B.R. 775, 808 (Bankr. S.D. Tex. 2013) (quotation omitted); see also

Briggs v. Labarage (In re Phillips), 317 B.R. 518, 524 (8th Cir. BAP 2004), aff’d in part

433 F.3d 1068 (8th Cir. 2006) (finding that without the original signature on the debtor’s

petition “the factual contentions have no evidentiary support and thus the petition violates

Rule 9011(b)(3).”); In re Burnett, 2022 WL 802586, at *8 (Bankr. D.S.C. Mar. 16, 2022)

(“The filing of a document with the debtor's electronic signature is a certification by an

attorney that he has appropriately obtained the signature.”); In re T.H., 529 B.R. 112, 139-

141 (Bankr. E.D. Va. 2015) (finding that attorney violated Fed. R. Bankr. P. 9011 by filing

a petition without the debtor's signature and stating that “[a]ffixing the electronic signature

of an individual who did not in fact sign or authorize the signing indeed amounts to

forgery”); Bradley, 495 B.R. at 780 (“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.”); U.S. Tr. v. Jones (In re

Alvarado), 363 B.R. 484, 491 (Bankr. E.D. Va. 2007) (finding Rule 9011 was violated

where attorney filed a second case without debtor's signature); In re Ludwick, 185 B.R.

238, 244-47 (Bankr. W.D. Mich. 1995) (suspending attorney for forging client signatures

in violation of Fed. R. Bankr. P. 9011).

The requirement that every bankruptcy debtor sign his or her petition before the

petition is filed is not some mere make-work bureaucratic rule. Instead, it is fundamental

to the operation of the bankruptcy system. It is the pivotal first step to everything that

follows. Mr. Barclay’s violation of Fed. R. Civ. P. 1008 and 9011(b) and (f) is patent. He

admitted (and his clients have confirmed) that he did not obtain the Debtors’ signatures

before filing the Petition with the Court. Instead, on the Petition Date, the Debtors were

still in the process of reviewing the accuracy of the Petition, Statement of Financial

Affairs, and Schedules. Mr. Barclay filed the Petition anyway — without final

authorization from the Debtors in the form of their signatures on the Petition. Mr. Barclay

forged the Debtors signatures on the Petition. His misconduct is attributable to his wholly-

owned law firm (DBPC) too.

improper filing of the Petition to commence the Main Case. That is certainly important.

However, the Court notes that Mr. Barclay also forged the Debtors’ signatures on the

Debtors’ Statement of Financial Affairs and the Declaration for the Debtor’s Schedules.

As with the Petition, the purported signatures of the Debtors affixed to the Statement of

Financial Affairs and Declaration for the Debtor’s Schedules were submitted on forms

indicating that the Debtors were subject to potential penalty of perjury for false

submissions. But the Debtors had not approved and authorized the final filing of such

documents. Mr. Barclay’s forgery of the Debtors’ signatures on the Debtors’ Statement of

Financial Affairs and the Declaration for the Debtor’s Schedules likely would support

further claims by the UST against the Defendants for malfeasance pursuant to Fed. R.

Bankr. P. 1008 and 9011(b) and (f).

B. The Defendants Violated Section 526(a)(2).

In his Second Cause of Action, the UST asserts that the Defendants violated

Section 526(a)(2). Congress enacted Section 526 to strengthen professionalism

standards for attorneys and others who assist consumer debtors in their bankruptcy

cases. Milavetz, Gallop & Milavetz, P.A. v. U.S., 559 U.S. 229, 232 (2010). Section

526(a)(2) states:

A debt relief agency shall not — (2) make any statement, or

counsel or advise any assisted person or prospective assisted

person to make a statement in a document filed in a case or

proceeding under this title, that is untrue or misleading, or that

upon the exercise of reasonable care, should have been

known by such agency to be untrue or misleading . . . .

Interpretation of Section 526(a)(2) requires quite a bit of statutory cross-referencing. The

phrase “debt relief agency” in Section 526(a)(2) is defined as:

. . . any person who provides any bankruptcy assistance to an

assisted person in return for the payment of money or other

valuable consideration.

11 U.S.C. § 101(12A). The term “bankruptcy assistance” is quite broad and means:

. . . any goods or services sold or otherwise provided to an

assisted person with the express or implied purpose of

providing information, advice, counsel, document preparation,

or filing, or attendance at a creditor’s meeting or appearing in

a case or proceeding on behalf of another or providing legal

representation with respect to a case or proceeding under this

title.

11 U.S.C. § 101(4A). The phrase “assisted person” in Section 526(a)(2) is:

and the value of whose nonexempt property is less than

$204,425.156

11 U.S.C. § 101(3). “Consumer debts” are those “incurred by an individual primarily for a

personal, family, or household purpose.” 11 U.S.C. § 101(8).

Putting it all together in the context of this Adversary Proceeding, as a threshold,

Section 526(a)(2) only applies if the Defendants qualify as “debt relief agenc[ies]” and the

Debtors are “assisted person[s]” who received “bankruptcy assistance” from the

Defendants. Fortunately, these elements are easily met because the Defendants twice

affirmatively admitted the points. In the Answer, the Defendants conceded that “Barclay

acted as a debt relief agency in relation to the Debtor’s Case” and “[t[he Debtors are

‘assisted persons’ and received ‘bankruptcy assistance’ from Barclay.”157 In the

Stipulated Facts, the Defendants admitted:

The Defendants acted as ‘debt relief agencies,’ as that term is

defined by 11 U.S.C. § 101(12A), in relation to the Debtors’

bankruptcy case. The Debtors are ‘assisted persons’ and

received ‘bankruptcy assistance” from the Defendants, as

those terms are defined by 11 U.S.C. §§ 101(3) and 101(4A)

respectively.158

In addition to twice affirmatively agreeing that the Defendants qualify as “debt relief

agenc[ies]” and the Debtors are “assisted persons” who received “bankruptcy assistance”

from the Defendants, the Defendants later withdrew the Answer and defaulted. Per the

default, the Defendants conceded again that “Barclay acted as a debt relief agency in

relation to the Debtor’s case” and “[t]he Debtors are ‘assisted persons’ and received

‘bankruptcy assistance’ from Barclay.”159

Having concluded that the Defendants acted as “debt relief agenc[ies]” and that the

Debtors were “assisted persons” who received “bankruptcy assistance” from the

Defendants, the only thing that remains to be analyzed with respect to the Second Cause

of Action is whether Mr. Barclay made “any statement . . . that is untrue or misleading.”

For purposes of brevity, the Court considers only documents Mr. Barclay filed in the Main

156 The dollar amount cap on the value of a debtor’s nonexempt property in Section 101(3) increased

from $204,425 to $226,850, effective April 1, 2022. However, since the Main Case was filed on April 16,

2021, the lower amount applies.

157 Compl. ¶¶ 158 and 159; Answer ¶¶ 158 and 159. In a seminal decision construing Section 526(a),

the Supreme Court determined that “the statutory text clearly indicates that attorneys [and their law firms]

are debt relief agencies when they provide qualifying services to assisted persons.” Milavetz, Gallop &

Milavetz, P.A., 559 U.S. at 239 (holding that Section 526 applied to both individual attorney and law firm).

158 Stip. Facts ¶ 5.

159 Compl. ¶¶ 158 and 159. Given these admissions by the Defendants, the Court need not

independently analyze whether the value of the Debtors’ nonexempt property fell under the Section 101(3)

monetary threshold for purposes of determining whether the Debtors were “assisted persons” protected by

Section 526(a).

misleading in documents filed in the Main Case:

• Mr. Barclay falsely stated that the Debtors had signed the Petition (by forging

their signatures on the Petition) even through the Debtors had not signed the

Petition;

• Mr. Barclay falsely stated that the Debtors had signed the Statement of

Financial Affairs (by forging their signatures on the Statement of Financial

Affairs) even through the Debtors had not signed the Statement of Financial

Affairs;

• Mr. Barclay falsely stated that the Debtors had signed the Declaration (by

forging their signatures on the Declaration) even through the Debtors had not

signed the Declaration;

• Mr. Barclay falsely stated the amount of cash in the Debtors’ bank accounts on

the Debtors’ Schedule A/B even though he had been advised concerning the

correct amounts;

• Mr. Barclay falsely stated that the Debtors had signed the Filing Fee Application

(by forging their signatures on the Filing Fee Application) even through the

Debtors had not signed the Filing Fee Application;

• Mr. Barclay falsely stated that the Debtors were “unable to pay the full filing fee

at once” even though he knew that the Debtors had more than sufficient funds

to pay the full filing fee on the Petition Date;

• Mr. Barclay falsely stated in the First Motion to Dismiss that Mrs. Mennona had

“omitted paystubs for April 9 and April 16, 2021” even though Mrs. Mennona

had filed such paystubs;

• Mr. Barclay falsely stated in the Second Motion to Dismiss that Mrs. Mennona

had failed to file three pay advices she had received (dated February 26, 2021,

March 5, 2021, and March 19, 2021) even though Mrs. Mennona did not work

during such periods and therefore had not received the allegedly missing pay

advices; and

160 The statutory text of Section 526(a)(2) does not appear to be limited to documents filed in a

bankruptcy case and could also cover Barclay’s oral statements to the Court as well as in the Section 341

meeting. See, e.g., Bisges v. Gargula (In re Clink), 770 F.3d 719, 723 (8th Cir. 2014) (holding that Section

526(a)(2) applies to counseling activities even if no document is filed in court). However, given the volume

of “untrue or misleading” statements made by Barclay in documents filed in the Main Case, there is no need

to pile on.

Debtors “have provided the trustee with most of the items” listed in the

Turnover Order even though the Debtors had not.161

So, Mr. Barclay violated Section 526(a)(2) and his misconduct is imputed to his law firm.

C. The Defendants Violated Sections 526(a)(1) and (a)(3).

In his Third Cause of Action, the UST asserts that the Defendants violated

Sections 526(a)(1) and (a)(3) which state:

A debt relief agency shall not —

(1) fail to perform any service that such agency informed

an assisted person or prospective assisted person it

would provide in connection with a case or proceeding

under this title; [and]

. . . .

(3) misrepresent to any assisted person or prospective

assisted person, directly or indirectly, affirmatively or by

material omission, with respect to —

(A) the services that such agency will provide to

such person; or

(B) the benefits and risks that may result if such

person becomes a debtor in a case under this

title . . . .

Sections 526(a)(1) and (a)(3) use much of the same terminology applicable in Section

526(a)(2). So, the Court’s prior discussion about the meaning of the phrases “debt relief

agency,” “assisted person,” “consumer debts,” and “bankruptcy assistance” applies

equally to the UST’s Third Cause of Action. See 11 U.S.C. §§ 101(3), (4A), (8), and

(12A). The Court already has determined that the Defendants are “debt relief agenc[ies]”

that provided “bankruptcy assistance” to the Debtors who themselves are “assisted

persons.”

So, all that remains for the Court to do is decide whether the Defendants violated

the substantive provisions of Sections 526(a)(1) and (a)(3). With respect to Section

526(a)(1), the Defendants never executed any sort of written agreement with the Debtors.

However, Mr. Barclay did circulate an unexecuted form of draft Representation

Agreement to the Debtors. The draft Representation Agreement listed the services that

the Defendants proposed to provide:

161 Barclay has admitted all of the foregoing. Compl. ¶¶ 160-168.

meeting of creditors, dealing with creditor phone calls and

collection attempts, and responding to up to fifty inbound client

phone calls regarding this bankruptcy case. It also includes

assisting the client with any requests from the bankruptcy

trustee as part of the administration of the case and working

on the resolution of any issues.162

Even though Mr. Barclay did not sign the Representation Agreement, the Court finds that

the Defendants purported to represent the Debtors pursuant to the terms (albeit

incomplete) of the Representation Agreement. That is, they committed to do at least the

foregoing.

However, the Defendants violated Section 526(a)(1) because they did not do what

they promised in the Representation Agreement. Among other things, Mr. Barclay:

(1) failed to attend the rescheduled Section 341 meeting of creditors; and (2) failed to

assist the Debtors with requests for information from the Chapter 7 Trustee. Mr. Barclay

also did not inform the Debtors about the informal requests for information received from

the Chapter 7 Trustee. He did not tell the Debtors about the Motion to Compel and failed

to timely advise them regarding the Turnover Order too. Rather than assist the Debtors,

Mr. Barclay’s actions resulted in the Court holding the Debtors in contempt and

sanctioning them. The same conduct violative of Section 526(a)(1) also establishes a

violation of Section 526(a)(3) because the Defendants misrepresented the bankruptcy

legal services which they promised to provide.

D. The Defendants Violated Section 528(a).

In his Fourth Cause of Action, the UST asserts that the Defendants violated

Section 528(a). Section 528(a) states:

A debt relief agency shall —

(1) not later than 5 business days after the first date on

which such agency provides any bankruptcy assistance

services to an assisted person, but prior to such

assisted person’s petition under this title being filed,

execute a written contract with such assisted person

that explains clearly and conspicuously —

(A) the services such agency will provide to such

assisted person; and

(B) the fees or charges for such services, and the

terms of payment;

162 Compl. ¶172 and Ex. 2.

executed and completed contract . . . .

Section 528 uses much of the same terminology applicable in Section 526(a). So, the

Court’s prior discussion about the meaning of the phrases “debt relief agency,” “assisted

person,” “consumer debts,” and “bankruptcy assistance” applies equally to the UST’s

Fourth Cause of Action. See 11 U.S.C. §§ 101(3), (4A), (8), and (12A). The Court

already has determined that the Defendants are “debt relief agenc[ies]” that provided

“bankruptcy assistance” to the Debtors who themselves are “assisted persons.”

The facts prove that the Defendants violated Section 528(a). The Defendants did

not provide the Debtors with an executed written contract within five days after Mr.

Barclay first started advising the Debtors about bankruptcy issues in October 2020.

Indeed, the Defendants never executed a written contract at all. And, so, it follows that

the Defendants did not provide the Debtors with a copy of the non-existent executed

written contract. The closest the Defendants came to complying with Section 528(a) was

circulating a draft Representation Agreement to the Debtors. But neither Mr. Barclay nor

the Debtors signed the draft Representation Agreement. Moreover, the draft

Representation Agreement itself was missing critical information such as “the fees or

charges for such services.” Accordingly, the Defendants obviously violated Section

528(a).

E. Mr. Barclay Violated Professional Duties and Committed Bad Faith Litigation

Misconduct.

In his Fifth Cause of Action, the UST asserts that Mr. Barclay violated a multitude

of professional duties owing to the Debtors, the Court, and others, including under the

Colorado Rules of Professional Conduct. Although the First, Second, Third, and Fourth

Causes of Action capture some discrete components of Barclay’s misconduct in the Main

Case, the Fifth Cause of Action paints a much broader picture of intentional gross

malfeasance and abuse of the bankruptcy system.

Every federal court has the inherent power “to control admission to its bar and to

discipline attorneys who appear before it.” Chambers v. NASCO, Inc., 501 U.S. 32, 43

(1991). See also In re Snyder, 472 U.S. 634, 643 (1985) (“Courts have long recognized

an inherent authority to suspend or disbar lawyers . . . . This inherent power derives from

the lawyer’s role as an officer of the court which granted admission.”); Ex Parte Wall, 107

U.S. 265, 273 (1883) (“a court has power to exercise a summary jurisdiction over its

attorneys to compel them to act honestly towards their clients, and to punish them . . . for

misconduct and contempts, and, in gross cases of misconduct, to strike their names from

the roll [of attorneys].”).

The inherent power of a federal court to “control admission to its bar and discipline

attorneys” is not displaced by statutes (such as Sections 526(a) and 528(a)) or procedural

rules (such as Fed. R. Bankr. P. 9011) governing abusive lawyer conduct. Instead, such

inherent power “extends to a full range of litigation abuses” and “must continue to exist to

fill in the interstices” between statutes and rules. Chambers, 501 U.S. at 46 (“the inherent

which sanction the same conduct.”). Put another way:

. . . when there is bad-faith conduct in the course of litigation

that could be adequately sanctioned under the Rules, the

court ordinarily should rely on the Rules rather than the

inherent power. But if in the informed discretion of the court,

neither the statute nor the Rules are up to the task, the court

may safely rely on its inherent power.

Id. at 50.

The inherent power to sanction attorneys for misconduct extends fully to

bankruptcy courts. Chambers, 501 U.S. at 43 (inherent power to discipline attorneys is

“incidental to all Courts”). Indeed, “overseeing lawyers who represent bankruptcy

debtors” is one of the “core and traditional role[s]” of bankruptcy judges. Stewart, 970

F.3d at 1258 (citing 3 R. Levin & H. Sommer, COLLIER ON BANKRUPTCY ¶ 329, at 329–34

(16th ed. 2020)).

In its seminal decision on the topic, Jones v. Bank of Santa Fe (In re Courtesy Inns

Ltd., Inc.), 40 F.3d 1084 (10th Cir. 1994), the Tenth Circuit Court of Appeals identified

Section 105(a) as a cornerstone authorizing bankruptcy courts to exercise inherent

powers to control attorney misconduct. Section 105(a) provides:

The court may issue any order . . . necessary or appropriate to

carry out the provisions of this title. No provision of this title

. . . shall be construed to preclude the court from, sua sponte,

taking any action or making any determination necessary or

appropriate . . . to prevent an abuse of process.

The Tenth Circuit Court of Appeals explained that Section 105(a) is “intended to imbue

the bankruptcy courts with the inherent power recognized by the Supreme Court in

Chambers.” Courtesy Inns, 40 F.3d at 1089 (“The power to maintain order and confine

improper behavior in its own [bankruptcy] proceedings seems a necessary adjunct to any

tribunal charged by law with the adjudication of disputes.”). Other appellate courts are in

accord. Ginsberg v. Evergreen Sec., Ltd. (In re Evergreen Sec., Ltd.), 570 F.3d 1257,

1263 (11th Cir. 2009) (recognizing that bankruptcy courts have inherent power to impose

attorney sanctions); Price v. Lehtinen (In re Lehtinen), 564 F.3d 1052, 1058 (9th Cir.

2009) (same); Knight v. Luedtke (In re Yorkshire, LLC), 540 F.3d 328, 332 (5th Cir. 2008)

(same); Mapother & Mapother, P.S.C. v. Cooper (In re Downs), 103 F.3d 472, 477 (6th

Cir. 1996) (same).

Overseeing the conduct of bankruptcy lawyers is critical to protect the interests of

bankruptcy debtors and the entire bankruptcy system. See Young v. Young (In re

Young), 789 F.3d 872, 879 (8th Cir. 2015) (quoting In re Armstrong, 487 B.R. 764, 774

(E.D. Tex. 2012)) (“The potential for mischief to be caused by an attorney who is willing to

skirt ethical obligations and procedural rules [in bankruptcy cases] is enormous.”); Dobbs,

protect the public from any attorney misconduct.”). In Dignity Health v. Seare (In re

Seare), 493 B.R. 158 (Bankr. D. Nev. 2013) aff’d 515 B.R. 599 (9th Cir. BAP 2014), the

court succinctly explained why bankruptcy courts must protect against abuse of process

by bankruptcy attorneys:

[L]awyers should behave with honesty and integrity. Being

able to trust lawyers to protect one’s property is especially

important for consumer bankruptcy debtors, who typically seek

representation in dire circumstances and face a complex legal

process. The system is harmed where lawyers create or use

false evidence or intend to deceive the court, and where the

lawyer’s behavior puts an unreasonable burden on the court.

The profession is harmed where an attorney’s practices reflect

poorly on the profession or contribute to a decline in the

overall quality of services provided by attorneys in a practice

area or region.

Id. at 220 (citing AM. BAR ASS’N, JT. COMM. ON PROF’L SANCTIONS, STANDARDS FOR

IMPOSING LAWYER SANCTIONS 13 (2005)).

In exercising inherent powers to control attorney misconduct, a bankruptcy judge

should consider the rules governing the professional conduct of lawyers practicing in

bankruptcy court. Parker v. Jacobs, 466 B.R. 542, 548-50 (M.D. Ala. 2012), aff'd sub

nom. In re Parker, 485 F. App'x 989 (11th Cir. 2012); Dobbs, 535 B.R. at 689 (“[W]hen

considering attorney misconduct and Rule 9011 violations, a bankruptcy court may also

take into consideration the Rules of Professional Conduct of the state in which the court

sits.”); In re Santos, 616 B.R. 332, 353 (Bankr. N.D. Tex. 2020) (same); Seare, 493 B.R.

at 215-16 (retainer agreement executed without compliance with the communication and

consultation rules found in Nevada’s rules of professional conduct violated Section

528(a)).

In this jurisdiction, Local Bankruptcy Rule 9010-1(a) states that the “Local Rules of

Practice of the United States District Court for the District of Colorado, Section V –

Attorney Rules will apply” to the practice of law before the Bankruptcy Court. The Local

Rules of Practice of the District of Colorado, Section V, provide, with exceptions not

applicable here, that “the Colorado Rules of Professional Conduct (Colo. RPC) are

adopted as standards of professional responsibility for the United States District Court

and the United States Bankruptcy Court for the District of Colorado.” D.C. Colo.L.Atty.R.

2(a).

As set forth below, Mr. Barclay violated multiple provisions of the Colorado Rules

of Professional Conduct (“Colo. RPC”), including Colo. RPC 8.4, Colo. RPC 4.1, Colo.

RPC 1.1, Colo. RPC 3.3, and Colo. RPC 1.4., in his representation of the Debtors in the

Main Case. Mr. Barclay’s misconduct was intentional and done in bad faith. He harmed

the Debtors, interfered with the efficient administration of the Main Case, misled the

Court, and egregiously abused the bankruptcy system.

1. Mr. Barclay Violated Colo. RPC 8.4.

Colo. RPC 8.4 is directed to “professional misconduct” and states:

It is professional misconduct for a lawyer to:

(a) violate or attempt to violate the Rules of Professional

Conduct, knowingly assist or induce another to do so, or do so

through the acts of another;

. . . .

(c) engage in conduct involving dishonesty, fraud, deceit or

misrepresentation . . . ;

(d) engage in conduct that is prejudicial to the

administration of justice; [or]

. . . .

(h) engage in any conduct that directly, intentionally, and

wrongfully harms others and that adversely reflects on a

lawyer’s fitness to practice law[.]

The same misconduct proved with respect to the First, Second, Third, and Fourth

Causes of Action establishes that Mr. Barclay violated Colo. RCP 8.4. He forged the

Debtors’ signatures on the Petition, the Statement of Financial Affairs, Declaration for the

Debtors’ Schedules, and the Filing Fee Application. He submitted a knowingly incorrect

Schedule A/B. He falsely asserted that the Debtors could not pay the bankruptcy filing

fee when he knew otherwise. He made false statements in documents filed with the

Court including the First Motion to Dismiss, the Second Motion to Dismiss, and the

“Response to Order to Show Cause.” All of such conduct constitutes dishonesty, fraud,

deceit, and misrepresentation. Mr. Barclay’s malfeasance harmed the Debtors and was

prejudicial to the administration of justice. See In re Husain, 533 B.R. 658, 696-98

(Bankr. N.D. Ill. 2015) aff’d 866 F.3d 832 (7th Cir. 2017) (counsel who falsely represented

that clients had signed bankruptcy documents violated ABA Model Rule 8.4(c) and (d)).

But Mr. Barclay did much more in violation of Colo. RPC 8.4. He lied repeatedly to

the Chapter 7 Trustee at the Section 341 meeting regarding the whereabouts of the

Debtors and efforts to ensure the Debtors’ participation in the mandatory Section 341

meeting. Such deceit was especially egregious since the Chapter 7 Trustee is an officer

of the Court and functions in an important fiduciary capacity for the benefit of all creditors

and parties in interest. Mr. Barclay knowingly advised the Debtors to not fulfill their

statutory duty of attendance at the Section 341 meeting. And, he counseled the Debtors

to violate the Filing Fee Order (an order which itself had been obtained by fraud) by not

paying the filing fee installments which the Debtors were financially obligated and able to

Debtors’ pay advices which caused the Court to schedule an evidentiary hearing on such

matters. He intentionally interfered with the Chapter 7 Trustee’s administration of the

Main Case by refusing to comply with both informal and formal discovery requests. He

caused the Debtors to be sanctioned for misconduct which was entirely due to his own

behavior.

If the foregoing was not bad enough, Mr. Barclay engaged in other appalling

misconduct which adversely reflects on his fitness to practice law. He solicited harm to

an opposing lawyer — counsel for the Chapter 7 Trustee. This is what Mr. Barclay told

his clients (the Debtors) to do before mailing documents to the Chapter 7 Trustee’s

counsel:

If either of you have COVID or some other highly infectious,

nasty disease — or if you know someone who does — please

make sure they lick the envelope and handle it as much as

possible.

To characterize such advice as outrageous is a gross understatement.

Demonstrating that none of the foregoing was some sort of one-off mistake, even

after some of Mr. Barclay’s malfeasance was uncovered, he doubled down and made a

final improper effort to manipulate the Main Case and the bankruptcy system. The

morning after the initial hearing on the Main Case Order to Show Cause, Mr. Barclay

prepared and sent the BC Services E-Mail to BC Services as part of a scheme to deceive

the Court into dismissing the Main Case pursuant to Section 521(e)(2)(C). He tried to

convince BC Services to make a request for the Debtors’ tax returns. Then, even though

Mr. Barclay had the Debtors’ tax returns, he proposed to engage in a complete farce: “we

will willfully not comply with that request.” Next, Mr. Barclay asked BC Services to file a

motion to dismiss premised upon Mr. Barclay’s own willful non-compliance. Mr. Barclay

offered to draft the motion to dismiss himself so the Court would not know about the

scheme. Then, Mr. Barclay committed to pay BC Services (in preference to other

creditors and “to compensate BC Services for its time and cooperation”) for helping to

engage in the fraud. After his misconduct was discovered, Mr. Barclay sent a further

email to BC Services and tried to hide under a bogus assertion that the BC Services E-

Mail was “privileged in nature and content” and a “confidential settlement offer.”

Moreover, he never told his clients (the Debtors) about his scheme. Someone who does

something like that plainly commits professional misconduct, violates Colo. RCP 8.4, and

should not be practicing law.

2. Mr. Barclay Violated Colo. RPC 4.1.

Colo. RPC 4.1 deals with misrepresentations made to third persons and provides:

In the course of representing a client a lawyer shall not

knowingly: (a) make a false statement of material fact or law to

a third person; or (b) fail to disclose a material fact to a third

criminal or fraudulent act by a client, unless disclosure is

prohibited by Rule 1.6.

“Omissions or partially true but misleading statements can be the equivalent of affirmative

false statements.” Colo. RPC 4.1, Comment [1].

Most of Mr. Barclay’s violations of Colo. RPC 8.4 also constitute violations of Colo.

RPC 4.1. For example, since part of the purpose of the documents Mr. Barclay filed in

the Main Case (such as the Petition, Statement of Financial Affairs, Declaration for the

Debtors’ Schedules, First Motion to Dismiss, and Second Motion to Dismiss) was to

inform creditors and other parties in interest, the material misrepresentations made

therein also were directed to third parties. Furthermore, by telling the Chapter 7 Trustee

at the Section 341 meeting that he had tried to contact the Debtors by phone and had not

been able to reach them, and by omitting from that discussion that the Debtors were

willfully failing to appear at the Section 341 meeting in reliance on Mr. Barclay’s advice,

Mr. Barclay made a false statement of material fact to the Chapter 7 Trustee in violation

of Colo. RPC 4.1. Mr. Barclay also violated Colo. RPC 4.1 by failing to disclose to BC

Services that he was engaged in a charade to obtain dismissal of the Main Case on the

pretense of failing to disclose the Debtors’ tax returns even though Mr. Barclay had

possession of the tax returns. His subsequent attempt to cover up the fraudulent nature

of his proposal to BC Services by asserting that the BC Services E-Mail was “privileged in

nature and content” and a “confidential settlement offer” constituted more material

misrepresentations of facts and law to a third person.

3. Mr. Barclay Violated Colo. RPC 1.1.

The first ethical rule is Colo. RPC 1.1 which speaks to attorney competency:

A lawyer shall provide competent representation to a client.

Competent representation requires the legal knowledge, skill,

thoroughness and preparation reasonably necessary for the

representation.

From start to finish, Mr. Barclay’s representation of the Debtors was incompetent.

Even worse, he engaged in intentional bad-faith misconduct. He commenced the Main

Case without obtaining final approval from the Debtors and without securing the Debtors’

signatures in advance. He filed multiple documents (such as the First Motion to Dismiss

and Second Motion to Dismiss) with no reasonable advance investigation and no basis in

fact or law. He submitted the Filing Fee Application (which itself was false) without

authorization. He failed to inform the Debtors of the Chapter 7 Trustee’s repeated

informal and formal requests for documents and information. He caused his clients to be

sanctioned for violation of the Turnover Order.

Rather than provide competent legal advice, Mr. Barclay engaged in a bizarre

gamesmanship in the bankruptcy process. After finding that a Chapter 7 Trustee not to

his liking had been appointed in the Main Case, Mr. Barclay attempted to use a series of

participate in the Section 341 meeting which all debtors are required to attend. He

counseled his clients to violate the Filing Fee Order and not pay the mandatory filing fee

installments. He misrepresented the status of pay advices to the Court. And, then,

through the BC Services E-Mail, Mr. Barclay planned to con the Court into dismissing the

Main Case on a false pretense (i.e., his failure to produce the Debtors’ tax returns even

though he had the tax returns). All of the foregoing conduct establishes that Mr. Barclay

violated Colo. RPC 1.1 by providing incompetent legal services to the Debtors.

4. Mr. Barclay Violated Colo. RPC 3.3.

Colo. RPC 3.3 is titled “Candor Toward the Tribunal” and prohibits an attorney from

knowingly “mak[ing] a false statement of material fact or law to a tribunal or fail[ing] to

correct a false statement of material fact or law previously made to the tribunal by the

lawyer . . . .” Again and again, Mr. Barclay violated this fundamental canon of legal

practice. He forged the Debtors’ signatures on the Petition, Statement of Financial

Affairs, Declaration for the Debtor’s Schedule, and the Filing Fee Application all filed with

the Court. He knowingly submitted a false Schedule A/B. He asserted in the Filing Fee

Application that the Debtors were “unable to pay the full filing fee at once” even though he

knew full well that the Debtors could do so. Mr. Barclay’s misrepresentation caused the

Court to issue the Filing Fee Order. Mr. Barclay made false statements about pay

advices in the First Motion to Dismiss, the Second Motion to Dismiss, and at hearings.

Then, he declined to correct the errors after it became obvious that his prior

representations were untrue. He lied to the Court in the “Response to Order to Show

Cause” wherein he advised that the Debtors had complied with the Turnover Order. His

pattern of deceit was one reason the Court sanctioned the Debtors. Rather than candor

toward the tribunal, Mr. Barclay’s conduct demonstrated only disdain for the Court, the

Chapter 7 Trustee, creditors, and the bankruptcy process. Plainly, Mr. Barclay violated

Colo. RPC 3.3. See Husain, 533 B.R. at 695-96 (attorney who signed documents for

clients, had clients sign incomplete documents and reused client signatures violated ABA

Model Rule 3.3).

5. Mr. Barclay Violated Colo. RPC 1.4.

Colo. RPC 1.4 is directed toward the attorney-client relationship and mandates:

(a) A lawyer shall:

(1) promptly inform the client of any decision or

circumstance with respect to which the client's

informed consent, as defined in Rule 1.0(e), is

required by these Rules;

(2) reasonably consult with the client about the

means by which the client's objectives are to be

accomplished;

status of the matter;

(4) promptly comply with reasonable requests for

information; and

(5) consult with the client about any relevant

limitation on the lawyer's conduct when the

lawyer knows that the client expects assistance

not permitted by the Rules of Professional

Conduct or other law.

(b) A lawyer shall explain a matter to the extent reasonably necessary to

permit the client to make informed decisions regarding the

representation.

Stripped to its essence, Colo. RPC 1.4 demands that lawyers keep their clients

informed so that their clients can make informed decisions. Mr. Barclay’s misconduct can

best be characterized as the antithesis of Colo. RPC 1.4. From the get-go, he kept the

Debtors constantly in the dark. He did not receive final authorization to commence the

Main Case but did so anyway. He did not let the Debtors know that he had filed the

Petition until days later. He did not tell the Debtors that he had filed an incorrect

Schedule A/B. Mr. Barclay hid from the Debtors that he forged their signatures on the

Filing Fee Application and filed a false Filing Fee Application. He failed to disclose to his

clients that he lied at the Section 341 meeting of creditors about the Debtors’

whereabouts. Mr. Barclay directed the Debtors not to pay a filing fee installment without

disclosing all the consequences of a willful failure to comply with the Filing Fee Order.

Mr. Barclay’s malfeasance in the discovery process took on a life of its own. He

never told the Debtors about the Chapter 7 Trustee’s numerous informal requests for

information. He failed to inform the Debtors about the Motion to Compel. Instead, Mr.

Barclay filed an unauthorized objection to the Motion to Compel with no factual or legal

basis. Thereafter, he declined to inform the Debtors about the Turnover Order. So, the

Debtors (not knowing about it) failed to comply with the Turnover Order. Because of Mr.

Barclay’s misconduct and failure to communicate with the Debtors, the Debtors were

sanctioned.

Toward the end of his work in the Main Case, Mr. Barclay developed a haphazard

scheme to defraud the Court through the BC Services E-Mail. The Debtors knew nothing

about the BC Services E-Mail because Mr. Barclay did not send them a copy and never

mentioned it. The Debtors did not authorize Mr. Barclay to communicate with BC

Services at all. After the BC Services E-Mail surfaced (because BC Services sent it to the

Chapter 7 Trustee), Mr. Barclay did not bother to tell the Debtors. The first they heard

about it was when the BC Services E-Mail was read in open court and they realized that

their lawyer was engaged in “fraudulent activity.” Later, after being advised about the

extent of Mr. Barclay’s malfeasance, the Debtors were “appalled.” Suffice to say that Mr.

Barclay’s violations of Colo. RPC 1.4 are patent.

F. Both Mr. Barclay and DBPC Are Liable for the Misconduct of Mr. Barclay.

Mr. Barclay is the sole owner of DBPC. He elected to create DBPC as a vehicle

for providing legal services to his clients. In the Main Case, Mr. Barclay acted through

DBPC at all times in his representation of the Debtors. With respect to all documents Mr.

Barclay filed in the Main Case, he listed his affiliation with DBPC. In communications with

the Debtors and third parties (such as BC Services), Mr. Barclay utilized a DBPC e-mail

address. The draft Representation Agreement was between the Debtors and DBPC and

provides for the Debtors’ retention of DBPC. Accordingly, DBPC is liable for Mr.

Barclay’s misconduct to the same extent that Mr. Barclay is.

G. The Defendants Must Be Sanctioned.

The UST has proven beyond peradventure each of the five Causes of Action

asserted in the Complaint against the Defendants. All that remains is for the Court to

select the right sanction.

With respect to the First Cause of Action (violations of Fed. R. Bank. P. 1008 and

9011(b) and (f)), Fed. R. Bankr. R. 9011(c) authorizes the Court to “impose an

appropriate sanction upon the attorneys, law firms, or parties that have violated

subdivision (b) or are responsible for the violation.” Fed. R. Bankr. P. 9011(c); see also,

Stomberg, 487 B.R. at 807 (“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(c)(2) gives more specificity about possible

sanctions:

A sanction imposed for violation of this rule shall be limited to

what is sufficient to deter repetition of such conduct or

comparable conduct by others similarly situated . . . . [T]he

sanction may consist of, or include, directives of a

nonmonetary nature, an order to pay a penalty into court, or

. . . an order directing payment to the movant of some or all of

the reasonable attorneys’ fees and other expenses incurred as

a direct result of the violation.

The foregoing list is non-exclusive. The Court can also suspend an attorney from

practicing law before the Court. In re Brooks-Hamilton, 400 B.R. 238, 249 (9th Cir. BAP

2009).

With respect to the Second and Third Causes of Action (violations of Sections

526(a)(1), (a)(2), and (a)(3)), Section 526(c)(5) identifies several potential remedies:

. . . in addition to any other remedy provided under Federal or

State law, if the court, on its own motion or on the motion of

the United States trustee or the debtor, finds that a person

consistent pattern or practice of violating this section, the court

may —

(A) enjoin the violation of such section; or

(B) impose an appropriate civil penalty against such

person.

Section 526(c)(5) “creates two distinct categories of violations . . . (1) an individual

violation that is ‘intentional,’ and (2) a ‘clear and consistent pattern or practice’ of

violations.” Hobbs v. Chesson, 2018 WL 4172667, at *12 (Bankr. W.D. La. Aug. 29,

2018). For purposes of Section 526(c)(5), an intentional violation may be established

through circumstantial evidence. Law Sols. of Chicago LLC v. Corbett, 2019 WL

1125568, at *7 (N.D. Ala. Mar. 12, 2019), aff'd, 971 F.3d 1299 (11th Cir. 2020) (“’Because

direct evidence of intent is rarely available, a court may infer intent from the totality of the

circumstances,’ and reckless indifference may be sufficient to establish intent in some

cases.” (citation omitted)). For instance, an attorney’s failure to take legal obligations

seriously or to make an effort to comply with the law constitutes intentional conduct. Id.

Reckless disregard for the truth of the matter asserted is sufficient to establish that a false

or misleading statement was made intentionally. Id. “The requirement of intent does not

apply to the second – ‘clear and consistent pattern or practice’ – category based on the

text of the statute.” Hobbs, 2018 WL 4172667, at *12. Instead, a court may find a clear

and consistent pattern or practice exists through evidence that the violation was part of “a

standard or routine way of operating.” Corbett 2019 WL 1125568 at *8 (quoting In re

Maxwell, 281 B.R. 101, 123 (Bankr. D. Mass. 2002)); In re Cook, 610 B.R. 852, 867

(Bankr. N.D. Ill. 2019) (“A civil penalty for repeated violations of its statutory obligations

and the choice to bury its head in the sand and ignore an obvious issue is therefore

appropriate.”). The Defendants have admitted that all the actionable “untrue or

misleading” statements violating Section 526(a)(2) and the “fail[ures] to perform” and

misrepresentations violating Sections 526(a)(1) and (a)(3) were intentional.163 And, their

actions show a “clear and consistent pattern or practice of violations” even though in the

context of a single bankruptcy case. Thus, both injunctive relief and civil penalties are

available as remedies per Section 526(c)(5). And the injunctive relief may include barring

an attorney from practicing law in a bankruptcy court. Burnett, 2022 WL 802586, at *13;

In re Fahey, 2009 WL 2855728, at *8 (Bankr. S.D. Tex. Sept. 1, 2009).

With respect to the Fourth Cause of Action (violations of Section 528(a)), Section

526(c)(1) provides that a contract for bankruptcy services which fails to comply with any

of the material requirements of Sections 526, 527, or 528, “shall be void and may not be

enforced by any Federal or State court or by any other person, other than such assisted

person.” 11 U.S.C. § 526(c)(1). Section 526(c)(2) states an additional remedy:

Any debt relief agency shall be liable to an assisted person in

the amount of such fees or charges in connection with

163 Compl. ¶¶ 169 and 179.

relief agency has received, for actual damages, and for

reasonable attorneys’ fees and costs if such agency is found,

after notice and a hearing to have . . . intentionally or

negligently failed to comply with any provision of . . . section

528 with respect to a case or proceeding under this title for

such assisted person . . . .

Finally, with respect to the Fifth Cause of Action (violations of professional duties),

the Colo. RPC do not specify any remedies for violations of any of its Rules. “The Rules

are designed to provide guidance to lawyers and to provide a structure of regulating

conduct through disciplinary agencies.” Colo. RPC Preamble [20]. Instead, the Court’s

authority to impose sanctions derives from its inherent power to sanction conduct abusive

of the judicial process and Sections 105 and 526. Chambers, 501 U.S. at 50; Courtesy

Inns, 40 F.3d at 1089. The range of potential sanctions include nonmonetary sanctions,

monetary sanctions, disallowance of fees, disgorgement of fees, referral to state or

federal disciplinary investigations, suspension from practicing law in the Court for a fixed

period, and disbarment.

During his closing argument, the UST requested that the Court enter three types of

relief: First, the UST asks that the Court enjoin Mr. Barclay “from providing any

bankruptcy services in relation to cases filed, or to be filed, in [the Court]” for “a period of

seven years beginning on the date of the [Court’s Order].”164 Following the expiration of

the injunctive term, the UST proposes that Mr. Barclay be permitted to file an application

with the Court “demonstrating good cause for why he should be allowed to resume filing

cases in this jurisdiction, which shall be granted or denied in the discretion of the

Court.”165 The UST suggests that DBPC may be allowed to provide legal services

utilizing attorneys other than Mr. Barclay who Mr. Barclay would supervise. Second, the

UST requests that any contract between the Defendants and the Debtors be declared

void and unenforceable. Finally, the UST wants the Court to refer Mr. Barclay’s

misconduct to the Disciplinary Panel or the Committee on Conduct of the District Court for

possible further action (such as a bar on Mr. Barclay appearing in the District Court).

Provided that the Court enters the requested remedies, the UST maintains that additional

monetary sanctions against the Defendants are unnecessary.166 Notably, the Defendants

have not opposed the relief requested in the Complaint as further refined by the UST

during his closing argument. Indeed, the Defendants did not bother with appearance at

the trial, presented no mitigating evidence, and did not suggest any alternative remedies.

164 Docket No. 57-1, Attachment A.

165 Id.

166 During closing argument at the trial, the UST refined his requests for relief. For example, in the

Complaint, the UST suggested that Mr. Barclay be prohibiting from practicing law “for such period of time as

the Court deems appropriate.” However, in closing argument and the proposed order, the UST requested

that Mr. Barclay be enjoined from practice for a set period: seven years. In the Complaint, the UST

advocated for unspecified monetary sanctions. In closing argument, however, the UST retracted that

request arguing that the Debtors and the estate had been made whole.

sanctions to impose. See In re Nguyen, 447 B.R. 268, 276 (9th Cir. BAP 2011) (appellate

court should assess whether: “(1) the disciplinary proceeding is fair, (2) the evidence

supports the findings, and (3) the penalty imposed was reasonable.”). The Court afforded

the Defendants with fair and full due process in this Adversary Proceeding. The basic

components of due process are notice that the Court is considering sanctions and an

opportunity for the attorney accused of misconduct to respond. Braley v. Campbell, 832

F.2d 1504, 1514 (10th Cir. 1987). Even though the Defendants had an opportunity to

contest the factual allegations and remedies requested by the UST in the Complaint (over

a period of more than eight months), the Defendants ultimately chose not to oppose

anything. So be it; but the Defendants definitely had their day in Court. And, the

evidence (including the Defendants’ admissions) supports all of the Court’s factual

findings. What remains is to fashion reasonable sanctions under the circumstances.

Reasonableness requires “that the sanction imposed be within the scope of the

bankruptcy court’s authority and that the sanction be tailored to address the conduct.”

Nguyen, 477 B.R. at 280.

Given the gravamen of Mr. Barclay’s misconduct, there can be no doubt — no

doubt whatsoever — that very serious sanctions must be imposed on the Defendants.

After all, the malfeasance was intentional and committed in bad faith resulting in serious

abuse of the bankruptcy process. And the misconduct (albeit occurring only in the Main

Case)167 was systematic and continuous, not some sort of one-time mistake.

Ultimately, the Court concurs with the UST that the Defendants should be

suspended from practicing law in the Court for some fixed period of time. Although such

an injunction appears to be authorized under Section 526(c) and Fed. R. Bankr. P. 9011,

the Court also invokes its inherent authority (as confirmed in Section 105(a)) to control

egregious lawyer misconduct. The use of inherent power is necessary in this Adversary

Proceeding because “neither the statute nor the Rules” alone are “up to the task.”

Chambers, 501 U.S. at 50 (“the inherent power of a court can be invoked even if

procedural rules [e.g. Fed. R. Civ. P. 11] exist which sanction the same conduct”).

The inherent power to prevent abuse of process by lawyers allows bankruptcy

courts to discipline the attorneys who appear before them, including by suspending

lawyers from appearing and practicing law in bankruptcy courts. See Williams v. Lynch (In

re Lewis), 611 Fed. Appx. 134, 136 (4th Cir. 2015) (unpublished); Ginsberg, 570 F.3d at

1280 (affirming bankruptcy court’s five-year suspension of an attorney and his firm from

practicing before the bankruptcy court); In re Evans, 801 F.2d 703, 706 (4th Cir.1986) (“A

court has the inherent authority to disbar or suspend lawyers from practice ... derived

167 The Court is quite familiar with Mr. Barclay. In recent years, he has commenced hundreds of

bankruptcy cases as counsel of record. The Court has harbored some suspicions regarding his conduct.

For example, Mr. Barclay has filed applications for fee installment payments contending that virtually all of

his clients are unable to pay bankruptcy filing fees in full when their cases start. That approach is unusual:

other attorneys and debtors not utilizing Mr. Barclay’s services do not universally assert that they are unable

to pay filing fees in full. The Court has some other concerns with Mr. Barclay’s work in other cases.

However, in this Adversary Proceeding, the UST only introduced evidence regarding Mr. Barclay’s

malfeasance in the Main Case. Accordingly, in its consideration of sanctions, the Court has limited its

analysis only to Mr. Barclay’s misconduct in the Main Case.

disbarring attorney for pattern of malfeasance); Husain, 533 B.R. at 697-700

(permanently suspending attorney from practice of bankruptcy law for repeatedly signing

documents for clients, having clients sign incomplete documents, and reusing client

signatures); T.H., 529 B.R. at 146-47 (suspending bankruptcy lawyer from practice for 60

days based upon numerous violations of statutes and rules); Seare, 515 B.R. at 615

(affirming bankruptcy court’s monetary and non-monetary sanctions against attorney

based, in part, on failure of lawyer to comply with rules of professional conduct); Parker,

466 B.R. at 548-51 (upholding bankruptcy court’s decision to suspend attorney for

repeatedly failing to remit filing fees and making other false and misleading statements to

the court); In re MPM Enters, 231 B.R. 500, 504 (D. E.D.N.Y. 1999) (finding Court had

inherent power “to permanently bar an attorney from appearing in any Bankruptcy Court

in the Eastern District.”); Ludwick, 185 B.R. at 247 (imposing a two-year suspension for

attorney who forged debtor signature); In re Nesom, 76 B.R. 101, 102 (Bankr. N.D. Tex.

1987) (finding bankruptcy attorney subject to sanctions, including 60–day suspension, for

forging debtor's signature on statement of affairs, schedules, and schedule of current

income). The foregoing authorities all support the Court suspending the Defendants from

the practice of law for a fixed period.

Proceedings for disbarment or suspension “are not for the purpose of punishment,

but rather seek to ‘determine the fitness of an officer of the court to continue in that

capacity and to protect the courts and the public from the official ministration of persons

unfit to practice.’” Husain, 533 B.R. at 697 (quoting In re Echeles, 430 F.2d 347, 349-50

(7th Cir. 1970)). The Court takes no pleasure in suspending the Defendants from

practicing bankruptcy law in the Court. It is a sad day for the profession and the Court.

But, the Court has a duty to protect the Court and the public from the type of malfeasance

perpetrated by the Defendants.

In determining the type of sanction to impose, the Court considers both the severity

of the violations and what is necessary to protect the integrity of the Court and the

profession. The Court also has exhaustively canvassed the caselaw (cited immediately

above) which strongly supports suspension as a reasonable remedy in the type of

circumstances outlined in the Complaint. As advocated by the UST, the Court also has

considered the American Bar Association’s Standards for Imposing Lawyer Sanctions

(the “ABA Standards”), which are not binding on the Court. ABA JOINT COMM. ON PRO.

SANCTIONS, STANDARDS FOR IMPOSING LAWYER SANCTIONS Standard 1.3 (2005). See

Nguyen, 447 B.R. at 277 (ABA Standards “remain a helpful guide in the imposition of

sanctions” but their consideration is not mandated); Husain, 533 B.R. at 698 (considering

ABA Standards in determining appropriate sanction).

ABA Standards § 2 identifies the following as potential disciplinary sanctions:

disbarment; suspension; interim suspension; reprimand; admonition; probation;

restitution; assessment of costs; limitation on practice and other remedies.168 ABA

Standards § 3 provides guidance on how to select amongst the available sanctions:

168 In the vernacular of the ABA Standards, “[d]isbarment terminates the individual’s status as a

lawyer” while “suspension is the removal of a lawyer from the practice of law for a specified minimum period

of time” greater than six months but less than three years. ABA Standards §§ 2.2 and 2.3.

In imposing a sanction after a finding of lawyer misconduct, a

court should consider the following factors: (a) the duty

violated; (b) the lawyer’s mental state; (c) the potential or

actual injury caused by the lawyer’s misconduct; and (d) the

existence of aggravating or mitigating factors.

The Court already has exhaustively identified the duties violated by the

Defendants. Mr. Barclay violated: Sections 526(a)(1), (a)(2), and (a)(3); Section 528; and

Fed. R. Bankr. P. 1008 and 9011(b) and (f). He also violated professional duties owed to

the Court, the Debtors, and the public. He engaged in repeated dishonesty, fraud, deceit,

and misrepresentations. He committed malfeasance prejudicial to the administration of

justice. He forged signatures. He promoted physical harm to opposing counsel through

infection with a deadly disease. He provided incompetent legal services to the Debtors.

He caused his clients to be sanctioned for his own misconduct. He repeatedly failed in

his duty of candor to the Court. And he tried to recruit a third-party creditor to participate

in a scheme to defraud the Court, the Chapter 7 Trustee, and other creditors by securing

dismissal of the Main Case.

ABA Standards § 4.62 suggests that “[s]uspension is generally appropriate when a

lawyer knowingly deceives a client, and causes injury or potential injury to the client.”

ABA Standards § 6.12 is similar and indicates that “[s]uspension in generally appropriate

when a lawyer knows that false statements or documents are being submitted to the court

. . . and takes no remedial action, and causes injury or potential injury to a party . . . or

causes an adverse or potentially adverse effect on the legal proceeding.” ABA Standards

§§ 4.42, 6.22, 6.32, and 7.2 also counsel that suspension is the recommended sanction in

the type of circumstances proven in this Adversary Proceeding.

Regarding the Mr. Barclay’s mental state, in response to the Order to Show Cause

Mr. Barclay claimed to have been diagnosed with “Adjustment Disorder,” which he

characterized as a “physical reaction to psychological trauma” caused by this Adversary

Proceeding. But the Court did not receive any admissible evidence on the topic. At trial,

Mr. Barclay failed to present any mitigation evidence about his mental state or otherwise.

Given the dearth of information, the Court is not able to weigh Mr. Barclay’s mental state

in the sanctions calculus.

With respect to the injuries caused by the Defendants, Mr. Barclay harmed his

clients. Among other things, the Debtors were sanctioned for failure to turn over

information to the Chapter 7 Trustee. But the noncompliance with the Turnover Order

was due entirely to Mr. Barclay’s conduct. Mr. Barclay also harmed his clients in other

ways, including not keeping them apprised of the Main Case and rendering incompetent

legal services. He unnecessarily prolonged their case and instigated much unnecessary

litigation. In addition, Mr. Barclay harmed the Chapter 7 Trustee. He impeded the

Chapter 7 Trustee’s investigation into the Debtors’ assets. And he caused the Chapter 7

Trustee to incur legal fees and costs because of his malfeasance. Mr. Barclay also

interfered with the administration of justice in the Main Case.

the recommended course (before assessment of aggravating and mitigating

circumstances). ABA Standards § 9.22 lists eleven “aggravation factors” while ABA

Standards § 9.32 identifies thirteen “mitigation factors.” The Court has considered all the

aggravation factors and mitigation factors. The Court did not receive any admissible

evidence about most of the factors. And many of the remaining factors do not apply to

the factual circumstances presented in this Adversary Proceeding. In the end, the Court

tallies a few aggravation factors: a pattern of misconduct; and multiple offenses. On the

other side, no mitigation factors have been established. So, the aggravation factors and

mitigation factors are mostly a wash and do not change suspension as the most

appropriate remedy.

Recognizing that suspension from practice is a severe sanction, the Court

determines that a lesser sanction (such as reprimand, admonition, or monetary sanctions)

would not adequately address Mr. Barclay’s gross malfeasance in the Main Case and his

intentional bad-faith abuse of the bankruptcy system. However, in exercising its

discretion, the Court concludes that the seven-year suspension term proposed by the

UST is too long. Instead, the Court determines that a three-year suspension is best

tailored to the circumstances and would still permit Mr. Barclay to return to practice in the

Court if he is able to do so in compliance with the provisions of the Bankruptcy Code, the

Federal Rules of Bankruptcy Procedure, and the Colorado Rules of Professional Conduct.

Given the severity of the sanction, the Court also determines that no additional monetary

sanctions are warranted.

With respect to the extension of such suspension to DBPC, the Court parts ways

with the UST because the Court sees no way that DBPC can be permitted to practice law

with Mr. Barclay at the helm. After all, he is the sole owner of the law firm. He controls it

completely. All of the misconduct proved in the Adversary Proceeding was done under

the umbrella and name of DBPC too. So DBPC is responsible. DBPC may or may not

have other lawyers. The Court received no admissible evidence on that issue. But even

if other lawyers are employed at DBPC, Mr. Barclay (who will be suspended from the

practice of law for several years) is in no position to control and supervise such other

counsel. So, the suspension sanction will be extended to include DBPC too.

The UST also requested two other sanctions: nullification of any contract between

the Defendants and the Debtors; and referral to the Disciplinary Panel or Committee on

Conduct of the District Court. Any contract between the Defendants and the Debtors is

void as a function of Sections 526(c)(1) and 528(a). So, the Court concurs. The

proposed referral to the Disciplinary Panel or Committee on Conduct of the District Court

requires just a bit more analysis.

Local Bankruptcy Rule 9010-1(a) states that the “Local Rules of Practice of the

United States District Court for the District of Colorado, Section V – Attorney Rules will

apply” to the practice of law before the Bankruptcy Court. Section V Part V of the Local

Rules of Practice of the District Court provides a comprehensive system for attorney

discipline through both a Disciplinary Panel and a Committee on Conduct. The

Disciplinary Panel, which is composed of judicial officers, “shall have jurisdiction over all

discipline.” D.C. Colo.L.Atty.R. 6(a). The Committee on Conduct is charged with

investigating attorney misconduct and may issue a letter of admonition if the misconduct

does “not warrant submitting charges to” the Disciplinary Panel. D.C. Colo.L.Atty.R. 6(b)-

(c), 7(d), and 7(e)(2) and (3). The Committee on Conduct may “prepare charges and

submit them” to the Disciplinary Panel in more serious cases. D.C. Colo.L.Atty.R. 7(e)(3).

The Disciplinary Panel is authorized to conduct hearings and “censure, suspend, disbar,

or otherwise discipline” attorneys who commit misconduct. D.C. Colo.L.Atty.R. 7(f). So,

there is a fulsome mechanism available to discipline lawyers practicing in the District

Court. But that system is not the exclusive method for disciplining attorneys. D.C.

Colo.L.Atty.R. 1(d) states: “Nothing stated in these rules shall be deemed to negate or

diminish the express or inherent disciplinary powers of the court or a judicial officer.” See

Nguyen, 447 B.R. at 281 (“plain language of the Local [District Court] Rule does not

restrict the bankruptcy court’s inherent authority” to sanction attorneys).

The Court has elected to adjudicate this Adversary Proceeding and issue this

Memorandum Opinion rather than initially referring the matter to the Disciplinary Panel or

the Committee on Conduct of the District Court for several reasons. First, this Adversary

Proceeding was properly commenced in this Court by the UST and seeks the imposition

of sanctions pursuant to several parts of the Bankruptcy Code (Sections 105(a), 526, and

528) and Fed. R. Bankr. P. 1008 and 9011. These bankruptcy-specific matters seem

best addressed by the Court rather than through wholesale referral. Indeed, the issues

presented are “core proceedings” generally within the purview of the Bankruptcy Court

per 28 U.S.C. §§ 157(b)(2)(A) and 1334. And, the Tenth Circuit Court of Appeals has

instructed that “overseeing lawyers who represent bankruptcy debtors” is one of the “core

and traditional role[s]” of bankruptcy judges. Stewart, 970 F.3d at 1258. Second,

although the Court also is applying its inherent power to sanction, in the circumstances of

this Adversary Proceeding such inherent power is intertwined with the sanctions available

under bankruptcy statutes and procedural rules. The Court ascertains no sound way to

split the issues. Third, as a matter of judicial efficiency and economy the Court has

chosen to address all of the matters raised in the Complaint together. Fourth, the

Defendants have not argued for a wholesale referral of the matters raised in the

Adversary Proceeding to the Disciplinary Panel or the Committee on Conduct of the

District Court. Finally, the UST has requested that the Court adjudicate this Adversary

Proceeding and issue judgment on all the Causes of Action. As part of that process, the

UST has requested that the Court refer any remaining issues to the Disciplinary Panel or

the Committee on Conduct of the District Court.

Since the Court already has decided to impose sanctions on the Defendants

including suspending the Defendants from practicing law in the Court, the only matter

remaining is whether additional sanctions are warranted such as suspending the

Defendants from practicing law in the District Court. In the judicious exercise of its

discretion, the Court declines to enter an injunction governing practice in the District

Court. That matter is best left to the Disciplinary Panel or the Committee on Conduct of

the District Court. Toward that end, the Court directs the Defendants to promptly submit a

copy of this Memorandum Opinion to the Disciplinary Panel and the Committee on

Conduct of the District Court. Additionally, the Court clarifies that the UST also may elect

Court pursuant to D.C. Colo.L.Atty.R. 7; provided, however, that any such complaint shall

only seek additional relief pertaining specifically to the Defendants’ ability to practice in

the District Court. The Court also directs the Defendants to promptly submit a copy of this

Memorandum Opinion to the Office of Attorney Regulation of the Colorado Supreme

Court.

VII. Conclusion and Order.

Accordingly, for the reasons set forth above, the Court Orders:

1. The Defendants (Devon Michael Barclay and Devon Barclay, P.C.) are

suspended immediately from practicing law before the United States Bankruptcy Court for

the District of Colorado for a period of three years from the date of this Memorandum

Opinion. For the sake of clarity, this suspension covers not only debtor representation but

any form of representation before the United States Bankruptcy Court for the District of

Colorado. It applies not only to future cases but to all pending cases as well.

2. The Clerk of Court shall deactivate the electronic filing privileges of the

Defendants as of January 25, 2023. This slight delay in deactivation is intended to allow

the Defendants time to file any necessary motions to withdraw. However, even though

the deactivation of filing privileges will not occur until January 25, 2023, the Defendants

are immediately prohibited from filing any new bankruptcy cases or engaging in any form

of legal representation except filing motions to withdraw.

3. The Defendants shall file motions to withdraw or substitute counsel (citing

this Memorandum Opinion) in all bankruptcy cases pending in the United States

Bankruptcy Court for the District of Colorado in which the Defendants are counsel of

record not later than January 24, 2023.

4. The Court recognizes that the Defendants are counsel of record in many

bankruptcy cases pending in the United States Bankruptcy Court for the District of

Colorado. Such cases include proceedings under Chapter 7 and Chapter 13 of the

Bankruptcy Code. The suspension of the Defendants from the practice of law may

warrant adjustments to some of the deadlines established in other cases and may also

create issues concerning the reasonableness of fees and the Defendants’ retention of

fees already paid in such other bankruptcy cases. However, the Court leaves to each

Presiding Judge in such other bankruptcy cases the determination of whether any

deadlines can or should be extended as a result of the suspension of the Defendants

from the practice of law as well as issues pertaining to the reasonableness of attorneys’

fees and potential disgorgement of attorneys’ fees.

5. The Defendants shall immediately cease any form of advertising indicating

the Defendants are available to provide bankruptcy services during the term of their

suspension from the practice of law in the United States Bankruptcy Court for the District

of Colorado.

practice of law in the United States District Court for the District of Colorado or the State

Courts of the State of Colorado. However, the Defendants shall promptly provide a copy

of this Memorandum Opinion to the Disciplinary Panel and the Committee on Conduct of

the United States District Court for the District of Colorado as well as the Office of

Attorney Regulation Counsel of the Colorado Supreme Court and file a certificate of

service and compliance with this Order in this Adversary Proceeding by January 24,

2023.

7. Any contract between the Defendants and the Debtors is declared void.

8. Upon the expiration of the three-year period of suspension, if the

Defendants wish to practice law in the United States Bankruptcy Court for the District of

Colorado, Mr. Barclay shall apply for reinstatement in this Court by moving to reopen this

Adversary Proceeding, filing such a request, and serving notice of the request on the

UST. Any such application must provide a sufficient factual and legal basis to justify the

Mr. Barclay continuing to practice law and must establish that: (1) Mr. Barclay is in good

standing with the Colorado Supreme Court and the United States District Court for the

District of Colorado; and (2) the Defendants have complied with all terms of this

Memorandum Opinion.

DATED this 10th day of January, 2023.

BY THE COURT:

Thomas B. McNamara,

United States Bankruptcy Judge