Seattle Man Loses $3.9 Million Bankruptcy Discharge After Concealing Inheritance and Business Interest
A Seattle man in King County, Washington, who concealed an inheritance and his interest in a business has lost his bankruptcy discharge of more than $3.9 million after a trial victory by the Justice Department's U.S. Trustee Program (USTP), the Department announced on November 5.
On October 20, the Bankruptcy Court for the Western District of Washington entered a judgment revoking Nevin Middleton's chapter 7 bankruptcy discharge. As a result, Middleton remains liable for his debts, and creditors are free to pursue payment from him after the case is closed.
Middleton originally filed an individual chapter 11 reorganization case to resolve debts stemming from a failed custom home construction business, but the case was eventually converted to a chapter 7 liquidation. In April 2024, Middleton received his chapter 7 discharge of $3,967,997 in unsecured debt, most of it involving claims from creditors who had invested in his projects.
Several months later, at an evidentiary hearing over his claim to a homestead exemption on some of his real estate, Middleton disclosed for the first time that after filing for bankruptcy but before receiving his discharge, he had received two deposits totaling about $39,600 in distributions from his late father's probate estate to a business bank account he controlled. He had failed to list his inheritance rights and his interest in the business in his bankruptcy schedules and statements.
An investigation by the USTP's Seattle office found that Middleton had instructed his sister, the executor of the probate estate, to direct the funds to a business account that the private trustee administering his bankruptcy case was unaware of. At trial on the USTP's complaint to revoke his discharge, Middleton changed his story and testified that the funds were loans from his sister. After weighing the evidence, the bankruptcy court entered judgment in the USTP's favor, concluding that Middleton had obtained his discharge by fraud and had knowingly and fraudulently failed to report the funds to the chapter 7 trustee.
'The bankruptcy discharge is the key to a fresh start, but debtors must be transparent about their financial affairs to receive it,' said USTP Director Stephen V. Falanga. The USTP oversees the administration of bankruptcy cases, with 21 regions and 82 field offices nationwide. (Source: U.S. Department of Justice)
Source: U.S. Department of Justice
Published by GSM · USA (original Chinese edition)
Photo: 图：位于 Washington 的美国司法部罗伯特·肯尼迪大楼。APK 摄，CC BY 4.0，经 Wikimedia Commons。 / Photo: The Robert F. Kennedy Department of Justice Building in Washington. By APK, CC BY 4.0, via Wikimedia Commons.
