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Bankr. E.D.N.C.: In re Purdy- Dismissal with Prejudice for Forged Letter

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By Ed Boltz, 26 February, 2024

Summary:

The Purdys filed a Chapter 13 bankruptcy and were subject to the local form Order and Notice, which imposed,  among other requirements  and restrictions,  that they obtain prior approval from the bankruptcy court before incurring new debts in excess of $10,000.  Two years later,  on December 8, 2021,  the Purdys moved to incur a mortgage to finance a home.  While the Trustee did not object to that motion,  the bankruptcy court sua sponte denied the motion (including a subsequent denial of a motion to reconsider) on January 5,  2022.  In April of 2022,  after being provided information regarding the Purdy's income,  the Trustee discovered that they were making a monthly mortgage payment,  having gone forward with the purchase and financing of a home- despite the earlier denial by the bankruptcy court.  While continuing to pursue the mortgage financing,  Ms.  Purdy, shaving the truth far too close, informed the lender that the Trustee had not opposed the motion and provided a letter that appeared to be on the Trustee's letterhead and to include his signature stating that "[o]ut office fully supports Marcus and Amanda Purdy obtaining a mortgage." This letter was a forgery by Ms. Purdy.

The Trustee moved to dismiss the Purdy's case and following a hearing on September 27, 2022,  the bankruptcy dismissed the case with prejudice.  The Purdys appealed arguing that the bankruptcy court erred in admitting the forged letter into evidence as they had not contested that they had violated the local Order and Notice.  The district court upheld the admission of the forged letter,  as it was relevant to the Purdys' opposition to the motion to dismiss their case.  The district court also declined to consider the "irrelevant and baseless"

arguments raised by Purdy's that their self-described "housing decision" caused no damage to any party or that the local rules  were "unconstitutionally nonuniform",  abridged substantive rights and violated the separation of powers.  The district court also upheld the dismissal with prejudice and further referred the matter to the U.S. Attorney for the Eastern District of North Carolina.

Commentary:

The argument by the Purdys that their fraud should be excused as it did not cause any damage to any party  was similarly recently rejected in New York v.  Trump.

Despite the referral, it does not yet  appear in PACER that any criminal charges have been brought against Ms.  Purdy or any other party.

For a copy of the opinion, please see:

To read a copy of the transcript, please see:

To read a copy of the transcript, please see:

Blog comments

Attachment
Document
in_re_purdy.pdf (160.97 KB)
Document
purdy_appellees_brief.pdf (393.34 KB)
Document
purdy_reply_brief.pdf (92.05 KB)
Document
purdy_appellants_brief_compressed_3.pdf (525.8 KB)
Category
North Carolina Bankruptcy Cases
Eastern District

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