Debt Resulting from Fraud is Not Dischargeable in Bankruptcy
Post 5230
Read the full article at https://lnkd.in/gpF3y7Vd, see the video at https://lnkd.in/gR5cVcbY and at https://lnkd.in/gch6Q4_V, and at https://zalma.com/blog plus more than 5200 posts.
Knowing Misappropriation and Conversion of Funds is Fraud
In re Matthew Jene Tubbs (Bankr. N.D. Tex., Fort Worth Div., No. 22-42728-MXM-7; Adv. No. 23-04019-mxm), October 15, 2025 .
Key Facts
Plaintiffs (Robles) and Defendant (Tubbs) met through their church; both held leadership roles. In Feb 2021 Robles home suffered major water damage from Winter Storm Uri and insurance paid $173,000.
In the Fall of 2021: Tubbs represented to Mr. Robles that he personally built a newer house and large barn on his parents’ property “with his own hands” (except foundation/insulation). That he had 10 years’ experience overseeing window/door installations at a major home-improvement chain, was a licensed contractor (false) and carried general contractor liability insurance.
Relying on these representations and Tubbs’s church handyman work, Robles hired Tubbs as general contractor for insurance repairs + upgrades, even though Tubbs had no prior general contracting experience.
The parties did not enter into a formal written contract. Instead, the parties jointly created a detailed budget Spreadsheet (labor + materials by room) and an 8–9 week timeline (later revised to end of Feb 2022).
Plaintiffs advanced $216,000 to Tubbs. Tubbs made almost no meaningful progress by August 2022 and was fired. Most items on the Spreadsheet never started. Flooring and kitchen cabinets he did start were defective and had to be redone. Tubbs failed to buy most materials despite having the funds and could not account for the money. Tubbs admitted on June 10, 2022: “I do not have the money to finish the project right now.” Tubbs admitted he used project funds for personal expenses (floor sander $5,000; personal credit-card bills $8,581).
Tubbs claimed he paid himself ~$78,000 as a legitimate GC/overhead fee ($10k/month). Court rejected this as not credible and unsupported by the Spreadsheet or timeline. Tubbs raised numerous defenses (undue influence by church authority, insurance fraud by plaintiffs, no binding contract, Tex. Prop. Code § 162.031(b) trust-fund defense, illegality, unclean hands, mistake, statute of frauds, etc.).
Legal Conclusions
§ 523(a)(2)(A) – False Pretenses / False Representation (nondischargeable)
Court found Tubbs made three material false representations that induced plaintiffs to hire him and advance funds:
He built the house and barn himself.
He was a licensed contractor.
He carried GC liability insurance.
The Court concluded that the Plaintiffs justifiably relied on these representations and rejected Tubbs’s “puffery” argument. The entire $152,610.05 debt was found to be nondischargeable on this ground alone (court did need to reach a finding of “actual fraud.)
§ 523(a)(6) – Willful and Malicious Injury (nondischargeable)
The statute requires deliberate/intentional injury (not just intentional act), or objective substantial certainty of harm + subjective motive, or intent to cause the actual injury.
Tubbs’s knowing misappropriation and conversion of at least $152,610.05 of project funds for personal use while knowingly leaving the job incomplete constituted willful and malicious injury to plaintiffs’ property.
Contract debts can be nondischargeable under § 523(a)(6) when the breach/conversion is intentional and harmful.
All of Tubbs’s Defenses Overruled
No undue church influence.
No insurance fraud or unclean hands by plaintiffs.
Valid oral contract existed (Spreadsheet + communications).
Tex. Prop. Code § 162.031(b) trust-fund defense inapplicable because the $78,000+ was not legitimately spent on the project or reasonable overhead/GC fee.
Conclusion
The bankruptcy court entered a nondischargeable judgment of $152,610.05 against debtor Matthew Tubbs in favor of the Robles, based on false representations that induced the contract and willful/malicious conversion of construction funds. Tubbs’s numerous defenses were rejected as not credible or legally unsupported.
Judgment for plaintiffs Felipe and Shereen Robles in the amount of $152,610.05, declared nondischargeable in Tubbs’s Chapter 7 bankruptcy under both 11 U.S.C. §§ 523(a)(2)(A) (false pretenses/representations) and 523(a)(6) (willful and malicious injury).
ZALMA OPINION
The availability of a great deal of insurance money creates a temptation to even honest church going people. Mr. Tubbs was tempted, lied about his abilities and took the insurance money designated to repair the home of Felipe and Shereen Robles and used it to pay off his ongoing debts and then filed bankruptcy hoping to avoid paying back what he owed. The bankruptcy court found that he defrauded the Robles’ and could not discharge that debt.
(c) 2025 Barry Zalma & ClaimSchool, Inc.
Please tell your friends and colleagues about this blog and the videos and let them subscribe to the blog and the videos.
Subscribe to my substack at https://barryzalma.substack.com/subscribe
Go to X @bzalma; Go to Barry Zalma videos at Rumble.com at https://rumble.com/account/content?type=all; Go to Barry Zalma on YouTube- https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg; Go to the InsuranceClaims Library – https://lnkd.in/gwEYk.
Insurance Expert May Not Testify to Speculative and Contains Unsupported Conclusions.
Posted on September 18, 2026 by Barry Zalma
See the full video at and at https://rumble.com/v7fmifw-expert-may-only-testify-to-what-experience-supports.html
In Michele A. Over, and The Estate Of Paul R. Over v. State Farm Mutual Automobile Insurance Company, and State Farm Fire And Casualty Company, Civil Action No. 23-cv-02243-PAB-STV, United States District Court, D. Colorado (September 14, 2026) Michele and Paul Over sued State Farm Fire and State Farm Auto over hail-damage and stolen-vehicle claims.
The operative dispute concerned State Farm Auto’s motion to exclude or limit opinions from plaintiffs’ insurance-industry expert, Aaron Castillo. Castillo.
Law
The proponent of expert testimony must establish by a preponderance of the evidence that an expert is qualified and that the opinions are helpful, sufficiently grounded, and reliably derived and applied. Experience-based opinions must explain how the...
150 Months in Prison for Tax Fraud
Post 4846
Posted on September 17, 2026 by Barry Zalma
See the full video at https://lnkd.in/g8rh3JBX and https://lnkd.in/gmkdy-9C, In United States Of America v. Thomas Addaquay, Nos. 25-10609, 25-10611, United States Court of Appeals, Eleventh Circuit (September 9, 2026) the Eleventh Circuit affirmed all challenged convictions, the 150-month aggregate sentence, and the challenged $4,123,474.55 restitution award.
FACTS
In United States Of America v. Thomas Addaquay, United States Of America v. Thomas Addaquay, Nos. 25-10609, 25-10611, United States Court of Appeals, Eleventh Circuit (September 9, 2026) the Eleventh Circuit affirmed all challenged convictions, the 150-month aggregate sentence, and the challenged $4,123,474.55 restitution award.
FACTS
Thomas Addaquay controlled United Consolidated Accounting and Business Services (UC), nominally a check-cashing business.
The government proved a three-stage tax-refund scheme that converted the resulting refund checks into usable funds through ...
Major Fraud Perpetrator Asserts Fifth Amendment Privilege to Avoid Prosecution
Post 5489
Posted on September 14, 2026 by Barry Zalma
Fraudster Refuses to Answer Questions About His Alleged Fraud
See the full video at https://lnkd.in/gvicAMDr and at https://lnkd.in/gvicAMDr
In Great American Insurance Co. v. Gemstone Property Management, LLC, et al., No. 23-cv-9100 (LJL), United States District Court, S.D. New York (September 8, 2026) Great American Insurance Company alleged that it was defrauded through a scheme in which Subin Associates, LLP recruited individuals to stage construction-site injuries, arranged unnecessary medical treatment and litigation funding, and pursued fraudulent personal-injury claims.
Luis Manuel Garcia Salcedo, resulted in a $6 million settlement. Non-party Jose Hernandez allegedly worked as an assistant manager at Subin, operated Hernandez Associates, and owned litigation-funding companies that shared office space with Subin and provided services to its clients.
After Great American ...
If Grounds For Dismissal Are Apparent From The Face Of The Complaint, A Court May Also Dismiss The Case on The Court’s Own Motion
Posted on October 5, 2026 by Barry Zalma
Pro Se Plaintiff Failed to Make a Short and Plain Statement
Post 4856
In Tak Lun Ng v. United Financial Casualty Company, No. 26-cv-03136-LJC, United States District Court, N.D. California (September 28, 2026) Tak Lun Ng, proceeding pro se, sued United Financial Casualty Company over a March 2, 2021 automobile accident and the insurer’s March 24, 2021 refusal to pay him.
He appeared to assert breach of contract, fraud, negligence, premises liability, product liability, and related theories. United removed the action from state court and moved to dismiss.
Ng missed that deadline but later filed several documents, including a motion for leave to amend, all of which the court reviewed.
LAW
Under Federal Rules of Civil Procedure, a complaint must provide a short and plain statement containing enough factual matter to state a facially plausible...
If Grounds For Dismissal Are Apparent From The Face Of The Complaint, A Court May Also Dismiss The Case on The Court’s Own Motion
Posted on October 5, 2026 by Barry Zalma
Pro Se Plaintiff Failed to Make a Short and Plain Statement
Post 4856
In Tak Lun Ng v. United Financial Casualty Company, No. 26-cv-03136-LJC, United States District Court, N.D. California (September 28, 2026) Tak Lun Ng, proceeding pro se, sued United Financial Casualty Company over a March 2, 2021 automobile accident and the insurer’s March 24, 2021 refusal to pay him.
He appeared to assert breach of contract, fraud, negligence, premises liability, product liability, and related theories. United removed the action from state court and moved to dismiss.
Ng missed that deadline but later filed several documents, including a motion for leave to amend, all of which the court reviewed.
LAW
Under Federal Rules of Civil Procedure, a complaint must provide a short and plain statement containing enough factual matter to state a facially plausible...
Employee Report of Fraud Results in Damages Suit After Qui Tam Suit Settled
No Statutory Hearing Right Arose Because No Dental Commission Complaint License Suspension, Revocation, Or Sanction Occurred.
Post 4855
Posted on October 2, 2026 by Barry Zalma
In Abbas Mohammadi et al. v. William M. Tong et al., No. AC 47598, Court of Appeals of Connecticut (September 29, 2026) Abbas Mohammadi owned and operated Columbia Dental, P.C., which provided dental services through multiple Connecticut offices; Columbia Oral Maxillofacial Imaging, LLC served as the billing entity.
From April 2012 to February 27, 2013, Columbia Dental employed Brittany Ames Mahoney as a dental assistant. During her employment, Mahoney claimed to have discovered certain billing irregularities, including, but not limited to, false and fraudulent reimbursement claims submitted to the Department of Social Services for services rendered to Medicaid beneficiaries. Mahoney filed a complaint and an affidavit in the United States District Court for the District of...
