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

> United States Bankruptcy Court, D. Colorado · January 10, 2023

URL: https://www.frixlaw.com/law-library/cases/10455335

## Case

- **Court:** United States Bankruptcy Court, D. Colorado
- **Decided:** January 10, 2023
- **Opinion:** 100trialcourt
- **Cited by:** 0 later opinions in the Frix Law Library

## Citator (automated)

- No negative treatment found by the automated citator. That is not the same as a confirmation that the case is good law; read the citing cases.
- Full citator and citing cases: https://www.frixlaw.com/law-library/cases/10455335

## How later opinions describe it (automated extraction)

- holding that Section 526 applied to both individual attorney and law firm

## Opinion text

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 atto

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/10455335. Public record. Not legal advice.