Lloyd Ward Found Not Credible by Bankruptcy Court – Discharge DENIED

In the interest of disclosure, former debt settlement attorney Lloyd Ward, from Dallas Texas, and I have some history. You can click here to filter through it.

Since that time people have sent me updates about what is going on with the attorney. In 2014, Lloyd Ward filed for bankruptcy protection.

Just today I received an anonymous file drop regarding that bankruptcy case.

I want to make sure I don’t say anything that might be considered slanderous so I’ll just let the court document talk.

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Keep in mind, attorney Lloyd Ward is an officer of the court and I would assume he would have some responsibility to get the facts right.

The Judge in this case appears to have taken Ward out behind the woodshed and gave him a talking to.

From the court document:

Ward Knowingly and Fraudulently Made a False Oath or Account.

The Plaintiffs ask this Court to deny Ward’s receipt of a discharge because he knowingly and fraudulently made a false oath or account as proscribed by 11 U.S.C. § 727(a)(4)(A). More particularly, the Plaintiffs allege that Ward falsely testified at both trial and his § 341 meeting of creditors and that he filed multiple false documents with the Court under penalty of perjury, namely the Schedules and SOFA and the Amended Schedules and Amended SOFA.”

Ward Misrepresented His Income in his SOFA and Amended SOFA

The Court finds that Ward, a lawyer and sophisticated businessman who has run multiple companies for many years, was undoubtedly aware of this distinction. Despite this, Ward chose to limit his initial disclosure to exclude substantial expenses paid on his behalf by entities he controlled, which creditors later learned was not less than $50,000 per year (and likely more). Although the Amended SOFA attempts to correct this omission, the amendment was filed nearly nine months into the Case and only after significant discovery had occurred and it was clear that the Judgment Creditors were going to aggressively pursue collection of the Judgment as permitted under the Bankruptcy Code. Thus, under the facts of this Case, the Court finds that Ward’s Amended SOFA does not negate the false oath that Ward made in his SOFA. In re Duncan, 562 F.3d at 695. Accordingly, the Court finds that Ward misstated his gross income for each of 2012, 2013, and 2014 (YTD) on his SOFA by intentionally failing to disclose significant expenses paid on his behalf by companies he controlled.”

Ward Misrepresented His Income on Schedule I and His Wife’s Income on Schedule I and Amended Schedule I.

“Based upon this record, there is no question that the elements of a § 727(a)(4) claim are satisfied here. Ward filed his Schedule I and Amended Schedule I under penalty of perjury. The false statements regarding Amanda’s income appear on both documents, while the false statements regarding Ward’s income (i) appear on Schedule I, and (ii) were made by Ward at trial. These statements were not only clearly false, but also material to the Case because the documents and testimony disclosing Ward’s and Amanda’s income bear a direct relationship to Ward’s estate, while the statements and testimony regarding Ward’s income also concern the discovery of assets, Ward’s business dealings, and/or the existence and disposition of his property. Also, based upon this evidentiary record, the Court finds that Ward was undoubtedly aware that both (i) the amounts listed for his and Amanda’s income, and (ii) his testimony regarding calculation of the $6,000 he added to Amended I were false.”

Ward Testified Falsely Regarding the Circumstances Surrounding the Purchase of the Vehicles Listed in his Schedule B and Amended Schedule B.

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“The Court is also satisfied that Ward’s fraudulent intent has been proven. When questioned at trial about his false testimony at the § 341 meeting, Ward testified that he was not prepared to answer the question at the § 341 meeting. Tr. Trans. 12/13/16 at 126:14-21 (Ward). If Ward was not prepared to answer the question at his § 341 meeting, why did he? Ward is a lawyer and undoubtedly understands the importance of giving true and accurate testimony, particularly after being placed under oath. Moreover, his explanation about his false testimony at the § 341 meeting does nothing to explain his false testimony at trial. Ward’s actions clearly showed, at the very least, a reckless disregard for the truth sufficient to find that he made the false oaths with fraudulent intent. In re Duncan, 562 F.3d at 695.”

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Ward Testified Falsely Regarding the Funding of the Ward Family Trust.

Ward also gave false testimony at the § 341 meeting regarding money used to fund the Ward Family Trust, a trust established with Amanda as the trustee and Amanda’s and his children as the beneficiaries. Tr. Trans. 12/13/16 at 96:7-12 (Ward). At the § 341 meeting, Ward testified that Amanda’s family funded the trust, except for approximately $125,000 that was funded by Lloyd Ward & Associates, P.C. Id. at 96:7-97:24 (Ward). That testimony was false, and Ward admitted at trial that, at his direction, his entities had funded more than $500,000 into the trust. Id. (Ward). Moreover, all money that came into and went out of the Ward Family Trust did so at Ward’s direction. Id. at 97:21-98:7 (Ward). Later, after the trust was funded, virtually all money in the trust was distributed out to Ward and his entities.”

Ward Failed to Accurately Disclose the Operating Dates of Entities He Controlled.

The entities Ward added to his Amended SOFA in response to Item 18 appear to be entities that had no corporate books and that Ward, although he knew they existed, did not believe were “related to him.” Id. 120:14-121:4 (Ward). According to Ward, his failure to schedule these entities was related to the large number of entities he operated through. Id. 120:24-25 (Ward) (“Now we incorporate—are incorporated under a large number of companies….”). Ward’s explanations ring hollow. Ward chose how many entities he would operate through; just as he chose not to get corporate books for some of those entities. Yet, once again, he failed to evaluate carefully what information he was required to disclose in response to SOFA Item 18. This is simply another example of Ward’s intentional deception or, at the very least, reckless disregard and gross carelessness, in preparing documents filed with the Court under penalty of perjury.”

Section 727(a)(5) – Ward has Failed to Explain Satisfactorily a Loss of Assets.

At trial, Ward testified that he was the sole officer of Lloyd Ward Group, P.C. Tr. Trans. 12/12/16 at 239:13-241:10 (Ward). The 2010 tax return of that entity shows compensation to officers of $1,325,000. PX 73 at 00209 (Line 7). When questioned about this compensation, Ward testified that his prior testimony that he was the sole officer of Lloyd Ward Group, P.C. was not accurate and that Lloyd Ward Group, P.C. had two additional officers, a CFO and a CEO. Tr. Trans. 12/12/16 at 268:6-24 (Ward). When pressed, however, Ward testified that each of these additional officers was paid approximately $130,000 (which Plaintiff’s counsel rounded to $200,000 each during further questioning, resulting in the Plaintiffs’ rough estimate of $900,000 in compensation paid to Ward). Id. 269:3-10 (Ward). Ward then testified that the 2010 tax return he was being questioned from had been superseded and the Court was directed to the 2010 tax return beginning at PX 73, Bates no. 00199. However, when shown that the return beginning at Bates no. 00199 also showed officer compensation of $1,350,000, Ward testified that he did not believe that return was the correct return either, despite the stipulation of his counsel that was a true and accurate copy of the return as filed with the IRS. Id. at 270:9-25 (Ward).41 The Court ultimately bound Ward to his counsel’s stipulation regarding PX 73 being the filed 2010 tax returns for Lloyd Ward Group, P.C. Id. at 273:18-19. Thus, the Plaintiffs established that, in 2010, Ward received, at most, $1,350,000 or, at least, $900,000 in compensation as an officer of Lloyd Ward Group, P.C. When questioned by his counsel regarding those funds and where they went, Ward testified that a third party (Mr. Miles) had been “misallocating funds” in relation to Lloyd Ward Group, P.C. and “had been showing expenses that didn’t exist, and taking money out of the company under the payroll. And at the time, we approximated it to be about $900,000.” Tr. Trans. 12/13/16 at 149:19-25 (Ward). Ward further testified that these actions resulted in a lawsuit and a judgment against Mr. Miles, Silverleaf Debt Solutions, and Debt RX that, Ward testified “was right at $900,000 against [Mr. Miles’] companies [and] ended up being over $2 million.” Id. at 151:17-25 (Ward). Finally, Ward testified that he believes the judgment against the Mr. Miles’ entities is uncollectible. Id. at 154:2-6 (Ward). Other than this, Ward gave no explanation of where the $900,000 of compensation the tax return shows he was paid went. The Court finds Ward’s testimony regarding the $1,350,000 (or $900,000) of compensation paid to him unpersuasive for several reasons. First, Ward’s testimony in this regard, in fact throughout the trial, was self-serving, not credible, or both. Ward’s testimony often changed based upon the situation he was presented with – e.g., he was the only officer, until shown substantial compensation to officers; the tax returns were accurate, until they conflicted with his schedules or were harmful to him. Second, if Ward’s testimony is to be believed and the $900,000 was somehow absconded with by Mr. Miles, why would Lloyd Ward Group, P.C. include the amount as “[c]ompensation to officers” on its tax returns when (i) the funds were allegedly stolen from it (so there wouldn’t have been anything to pay to its officers as compensation), and (ii) there is absolutely nothing in the record indicating that Mr. Miles was an officer of Lloyd Ward Group, P.C.? See Tr. Trans. 12/12/16 at 268:6-25 (Ward testifying that Don Frey and Robert Pendergrast served as CEO and CFO, respectively, and that his earlier testimony that he was the sole officer was not accurate). It is simply not plausible that Ward (a lawyer and sophisticated businessman) would permit an entity he controlled to file a tax return showing substantial compensation to him if, in fact, that money was not paid to him.

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Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.
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