The opinion
[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
________________________ FILED
U.S. COURT OF APPEALS
No. 08-13674 ELEVENTH CIRCUIT
FEBRUARY 24, 2009
Non-Argument Calendar
THOMAS K. KAHN
________________________
CLERK
D. C. Docket No. 08-80185-CV-AJ,
BKCY No. 06-12939-BKC-PC
In Re: FREDERICK LETO
Debtor.
_____________________________________
FREDERICK LETO,
Plaintiff-Appellant,
versus
CINDY CUTRO,
Defendant-Appellee.
________________________
Appeal from the United States District Court
for the Southern District of Florida
_________________________
(February 24, 2009)
Before CARNES, MARCUS and ANDERSON, Circuit Judges.
PER CURIAM:
Frederick Leto challenges the district court’s order affirming the bankruptcy
court’s denying him a discharge under 11 U.S.C. § 727(a)(2)(A). Leto contends
that he is entitled to discharge because he did not have fraudulent intent when he
transferred several pieces of real estate to a trust. He also contends that he is
entitled to discharge because the transfers occurred more than one year before he
filed his petition for bankruptcy. We affirm.
Under 11 U.S.C. § 727(a)(2), a debtor is not entitled to a discharge where
the debtor transfers property of his estate within one year before filing his
bankruptcy petition if the transfer is made “with the intent to hinder, delay, or
defraud a creditor.” 11 U.S.C. § 727(a)(2).
To successfully object to a discharge under § 727(a)(A), a creditor
must establish (1) that the act complained of was done within one year
prior to the date the petition was filed, (2) with actual intent to hinder,
delay, or defraud a creditor, (3) that the act was that of the debtor, and
(4) that the act consisted of transferring, removing, destroying, or
concealing any of the debtors property.
In re Jennings, 533 F.3d 1333, 1339 (11th Cir. 2008)
Leto first contends that he did not have fraudulent intent when he transferred
four pieces of real estate worth several million dollars into a trust because he did
not conceal the transfers. The bankruptcy court was unpersuaded by that
contention. It found that Leto transferred the property to the trust with the intent to
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hinder, delay, or defraud his creditor Cindy Cutro. “We review for clear error the
bankruptcy court’s factual determination that a debtor intends to hinder, delay or
defraud a creditor.” Id. at 1338. Where, as here, the district court has affirmed the
bankruptcy court’s findings, “we will apply the clearly erroneous doctrine with
particular rigor.” In re Wines, 997 F.2d 852, 856 (11th Cir. 1993) (quotation and
citation omitted).
There is ample evidence to support the bankruptcy court’s and district
court’s determination. Cutro had obtained a $7,000,000 judgment against Leto in
late 2005 based on the parties’ former business relationship. From 2004 to 2005,
Leto took steps to transfer millions of dollars worth of real estate into a trust,
which, in his own words, would allow Leto to “own nothing” but “control
everything.” Those transactions reflect several of the “indicia of fraud” that we
have identified in considering whether a debtor made a transfer with “actual intent
to defraud his creditors.” In re Jennings, 533 F.3d at 1339. For example, Leto
transferred the property without receiving any compensation. He also retained
possession and control of the property. Further, after transferring the property, he
was left with only $820 in assets. Finally, he made the transfers while he was
engaged in an ongoing business dispute with Cutro, during which she had
threatened to file suit. Cutro eventually followed through on that threat, resulting
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in a $7,000,000 judgment against Leto. Based on those facts, the bankruptcy court
did not clearly err in determining that Leto transferred the real estate with the intent
to hinder, delay or defraud Cutro.
Leto also argues that he is entitled to a discharge because he made the
transfers more than a year before he filed his bankruptcy petition. Like the
bankruptcy court and district court, we are unconvinced. Florida law requires
deeds transferring property to be signed in the presence of two subscribing
witnesses. See Fla. Stat. § 689.01. The initial deeds of transfer for two of the four
properties at issue failed to comply with that requirement. Under Florida law, “a
deed which lacks two subscribing witnesses is insufficient to convey title.”
American Gen. Equity, Inc. v. Countrywide Home Loans, Inc., 769 So. 2d 508,
509 (Fla. 5th DCA 2000). Therefore, the defective deeds did not result in a
transfer of the property. Instead, the transfer became effective when Leto filed
corrective deeds, which contained the required witnesses’ signatures, in December
of 2005. Leto filed his bankruptcy petition in June 2006, less than one year after
he transferred those two properties. As the district court correctly noted, “once
those two transfers qualify under § 727(a)(2)(A), challenges to the other two
transfers become moot.”
Leto transferred property within one year of his bankruptcy petition. The
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bankruptcy court found that Leto transferred the property with the intent to
defraud, hinder, or delay Cutro. The bankruptcy court’s denial of a discharge to
Leto under § 727(a)(2)(A) was proper.
AFFIRMED.
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