In re Mascio, No. 25-10631 (Aug. 22, 2025)

Case details
Country
United States
Jurisdiction
Colorado (CO)
Court
Colorado Supreme Court
Decided
Aug. 22, 2025
Disposition
Motion Denied
In re Mascio, Slip Copy (2025) © 2025 Thomson Reuters. No claim to original U.S. Government Works.12025 WL 2434832Only the Westlaw citation is currently available.United States Bankruptcy Court, D. Colorado.IN RE: Jeffrey Allan MASCIO, Debtor.Peter and Suzanne Graham, Plaintiffs,v.Jeffrey Allan Mascio, Defendant.Bankruptcy Case No. 25-10631 TBM|Adv. Pro. No. 25-1157 TBM|Filed: August 22, 2025Attorneys and Law FirmsRogelio Omar Riojas, Goldfarb & Huck Roth Riojas, PLLC,Seattle, WA, for Plaintiff.Katayoun A. Donnelly, Azizpour Donnelly LLC, Denver,CO, Roger K. AdamsAdams Law LLC, Denver, CO, forDebtor.Jonathan Dickey, Kutner Brinen Dickey Riley, P.C., Denver,CO, for Trustee.ORDER DENYING MOTION TO DISMISSBankruptcy Judge Thomas B. McNamaraI. Introduction.*1 Peter and Suzanne Graham (the “Grahams”) are theholders of a final judgment issued by a Washington StateCourt (the “Judgment”) in the face amount of $1,500,000.00against Jeffrey Mascio (the “Debtor” or “Mr. Mascio”) forsecurities fraud. The Judgment entered on June 14, 2017, theDebtor appealed the Judgment and the Washington Court ofAppeals affirmed the Judgment. Mr. Mascio did not furtherappeal the affirmance. The Grahams engaged in extensivecollection efforts to no avail. They assert that Mr. Masciohas gone to great lengths to frustrate the Grahams’ collectionefforts, including by concealing assets and transferring hisincome and assets to an offshore trust, the “JG Family Trust”or the “Cook Island Trust” (the “Trust”).The Grahams’ collection efforts have been further stymied bythe Debtor's filing for bankruptcy protection under Chapter7 of the Bankruptcy Code,1 first on June 24, 2024, In reMascio, 24-13493 TBM (Bankr. D. Colo) (the “First Case”),and again on the filing of this Chapter 7 case on February5, 2024 in the main bankruptcy case captioned: In re JeffreyAllan Mascio, Case. No. 25-10631 TBM (Bankr. D. Colo.)(the “Main Case”). The Court dismissed the Debtor's FirstCase on August 9, 2024 pursuant to Section 521(i) for theDebtor's failure to file the documents required by Section521(a). (First Case Docket No. 19.)2Subsequently, on May 8, 2025. the Grahams commenced thisAdversary Proceeding, Peter and Suzanne Graham v. JeffreyAllan Mascio (In re Mascio), Adv. Pro. No. 25-1157 TBM(Bankr D. Colo.) (the “Adversary Proceeding”), by filing a“Complaint for Denial of Discharge and/or Determinationthat Debt is Not Dischargeable.” (Docket No. 1, the“Complaint.”) Through the Complaint, the Grahams object tothe Debtor's bankruptcy discharge under Sections 727(a)(2),(a)(3), (a)(4) and (a)(5). Additionally, the Plaintiffs requesta declaration that the debt set forth in the Judgment isnondischargeable pursuant to Sections 523(a)(2), (4) and (6).Rather than filing an answer to the Complaint, the Debtor,apparently acting on a pro se basis,3 filed his “CombinedMotion to Dismiss Adversary Complaint and to Strike Filingsby Unauthorized Attorney.” (Docket No. 6, the “Motion toDismiss” and “Motion to Strike.”) The Grahams filed an“Opposition to Defendant's Combined Motion to Dismiss andMotion to Strike” (Docket No. 7, the “Opposition.”) On June20, 2025, the Debtor submitted his “Reply in Support ofCombined Motion to Dismiss and to Strike.” (Docket No. 8,the “Reply.”) For the reasons set forth below, the Court deniesthe Motion to Dismiss.II. Jurisdiction and Venue.*2 The Court has subject matter jurisdiction over thisAdversary Proceeding concerning the Debtor's entitlementto a discharge and the dischargeability of a particulardebt pursuant to 28 U.S.C. § 1334. This dispute is acore proceeding under 28 U.S.C. §§ 157(b)(2)(B), (b)(2)(I) and (b)(2)(J), because it seeks a determination as to thedischargeability of a particular debt and a challenge to theDebtor's entitlement to a discharge. Venue is proper in thisCourt under 28 U.S.C. §§ 1408 and 1409.
In re Mascio, Slip Copy (2025) © 2025 Thomson Reuters. No claim to original U.S. Government Works.2III. Procedural Background.The Grahams filed their Complaint seeking to deny theDebtor his discharge overall and/or in the alternative, toexcept from any discharge the Debtor may receive, their debtrepresented by the Judgment. The Grahams assert that: theDebtor has attempted to shield his assets from collectionby the Grahams (using a variety of illegal schemes); hehas openly admitted that the purpose of the Trust is toinsulate assets from creditors, particularly the Grahams; hehas failed to disclose assets on his bankruptcy filings; thereare unexplained inconsistencies between the Schedules theDebtor filed in his First Case and in the Main Case; and hehas made false oaths in his Schedules. The Grahams relyheavily on the factual findings of fraud, including false andfraudulent representations, which the Washington State Courtstated in the Judgment. The Grahams do so in support of boththeir objections to the Debtor's discharge and their Claims forRelief under Section 523(a)(2), (a)(4) and (a)(6).Although the Judgment is not attached to the Complaint, itis integral to the Complaint. The Debtor does not dispute thefact that the Washington State Court entered the Judgment orthat the Washington Court of Appeals affirmed the Judgment.See Motion to Dismiss at 3 and Reply at 3-6.In the Motion to Dismiss, the Debtor argues that: (1) thePlaintiffs’ counsel is not authorized to practice in the UnitedStates District Court for the District of Colorado (the “DistrictCourt”). As such, he asserts that counsel cannot practicein this Court and his filings should be stricken. Then, theDebtor contends that Complaint should be dismissed forfailure to state a claim under Fed. R. Civ. P. 12(b)(6) asmade applicable to this Adversary Proceeding by Fed. R.Bankr. P. 7012, because: (1) the Judgment “is dormant andunenforceable”; (2) the Judgment “may not be a basis for anondischargebility action [under Section 523(a)(2), (4), and(6)] where no new fraud or willful conduct is pled;” and(3) the Grahams have failed to plead specific facts showingthe Debtor's fraudulent intent or concealment of assets. TheDebtor alleges: “Plaintiffs rely on conclusory allegationsregarding a valid offshore trust and fail to allege specificmisconduct or concealment within one year of the bankruptcyfiling.” Motion to Dismiss at 2. As part of his conclusorychallenges, the Debtor tosses in an undeveloped argument thatthe Complaint does not meet the pleading requirements ofFed. R. Civ. P. 9(b) to plead fraud with specificity. The issuesraised by the Motion to Dismiss, the Opposition and the Replyare fully briefed and ripe for adjudication.IV. Legal Standards for Motions to Dismiss.The Motion to Dismiss states that it is made pursuantto Federal Rules of Civil Procedure 12 (b)(6), as madeapplicable by Federal Rule of Bankruptcy Procedure 7012.The Defendant also moves to strike all filings submittedby Plaintiffs’ attorney R. Omar Riojas, who he erroneouslycontends is not admitted to practice before the U.S. DistrictCourt of the District of Colorado. Motion to Dismiss at 1.The Debtor also alludes to Fed. R. Civ. P. 9(b). The Motion toDismiss is far from a model of clarity.A. Law Applicable to Motions to Dismiss Under Fed. R.Civ. P. 12(b)(6).*3 Fed. R. Civ. P. 12(b)(6) provides:(b) Every defense to a claim for relief in any pleading mustbe asserted in the responsive pleading if one is required.But a party may assert the following defenses by motion ...(6) failure to state a claim upon which relief can be granted.When considering a motion to dismiss under Fed R. Civ.P. 12(b)(6), the Court must accept as true all well-pleadedfactual allegations in a complaint and view them in thelight most favorable to the plaintiff. Burnett v. Mortg. Elec.Registration Sys., Inc., 706 F.3d 1231, 1235 (10th Cir. 2013).A complaint will be dismissed unless it “contain[s] sufficientfactual matter, accepted as true, to ‘state a claim to relief thatis plausible on its face.’ ” Ashcroft v. Iqbal, 556 U.S. 662, 678(2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570(2007)).A claim is considered “plausible” when the complaintcontains facts which allow the Court “to draw the reasonableinference that the defendant is liable for the misconductalleged.” Id. “Plausible” does not mean “probable”, althoughthe plaintiff must show that its entitlement to relief is morethan speculative. See id. (“Determining whether a complaintstates a plausible claim for relief will... be a context-specifictask that requires the reviewing court to draw on its judicialexperience and common sense. But where the well-pleadedfacts do not permit the court to infer more than the merepossibility of misconduct, the complaint has alleged – but ithas not ‘show[n]’ – ‘that the pleader is entitled to relief.’ ”);
In re Mascio, Slip Copy (2025) © 2025 Thomson Reuters. No claim to original U.S. Government Works.3Twombly, 550 U.S. at 556 (“Asking for plausible grounds toinfer an agreement does not impose a probability requirementat the pleading stage; it simply calls for enough fact to raisea reasonable expectation that discovery will reveal evidenceof illegal agreement”). If the allegations in a complaint “areso general that they encompass a wide swath of conduct,much of it innocent, then the plaintiffs ‘have not nudged theirclaims across the line from conceivable to plausible.’ ” Kan.Penn Gaming, LLC v. Collins, 656 F.3d 1210, 1215 (10thCir. 2011) (citation omitted). Put another way, “the complaintmust give the Court reason to believe that this plaintiff has areasonable likelihood of mustering factual support for theseclaims.” Ridge at Red Hawk, L.L.C. v. Schneider, 493 F.3d1174, 1177 (10th Cir. 2007) (emphasis in original).The Court is bound to accept well-pleaded factual allegationsas true but will not give deference to legal conclusions.“Threadbare recitals of the elements of a cause of action,supported by mere conclusory statements, do not suffice.”Iqbal, 556 U.S. at 678. Legal conclusions must be supportedby well-pleaded factual allegations, which can be assumed astrue and evaluated as to whether they plausibly give rise to therequested relief. Id. at 679. This process is “a context-specifictask” which depends on the elements of a particular claim andrequires the Court “to draw upon its judicial experience andcommon sense.” Burnett, 706 F.3d at 1236 (quoting Iqbal, 556U.S. at 679). Careful evaluation is necessary to ensure thatdefendants are sufficiently able to prepare their defenses andavoid facially groundless litigation.*4 Ultimately, the critical question is: “assum[ing] the truthof all well-pleaded facts ... and draw[ing] all reasonableinferences therefrom in the light most favorable to theplaintiffs,” whether the complaint “raise[s] a right to reliefabove the speculative level.’ ” Dias v. City & County ofDenver, 567 F.3d 1169, 1178 (10th Cir. 2009) (quotingTwombly, 550 U.S. at 555). It is a very low threshold.“[G]ranting [a] motion to dismiss is a harsh remedy whichmust be cautiously studied, not only to effectuate the spirit ofthe liberal rules of pleading but also to protect the interests ofjustice.” Dias, 567 F.3d at 1178 (quoting Duran v. Carris, 238F.3d 1268, 1270 (10th Cir. 2001)) (brackets in original). Thus,“a well-pleaded complaint may proceed even if it strikes asavvy judge that actual proof of those facts is improbable, and‘that a recovery is very remote and unlikely.’ ” Twombly, 550U.S. at 556 (quoting Scheuer v. Rhodes, 416 U.S. 232, 236,(1974)).Notably, a motion to dismiss under Fed. R. Civ. P. 12(b)(6) isnot a mechanism to dispute the facts. Brokers’ Choice of Am.,Inc. v. NBC Universal, Inc., 757 F.3d 1125, 1135 (10th Cir.2014) (“The court's function on a Rule 12(b)(6) motion is notto weigh potential evidence that the parties might present attrial, but to assess whether the plaintiff's amended complaintalone is legally sufficient to state a claim for which relief maybe granted.”). Accordingly, when ruling on a Fed. R. Civ. P.12(b)(6) motion to dismiss, the Court “must examine only theplaintiff's complaint [and] must determine if the complaintalone is sufficient to state a claim.” Jackson v. Integra, Inc.,952 F.2d 1260, 1261 (10th Cir. 1991); see also Dean WitterReynolds, Inc. v. Howsam, 261 F.3d 956, 961 (10th Cir. 2001)(generally, it is “unacceptable for a court” to look “beyond thefour corners of the complaint” when deciding a “Rule 12(b)(6) motion to dismiss”); Miller v. Glanz, 948 F.2d 1562, 1565(10th Cir. 1991) (same). The Court “cannot review mattersoutside of the complaint.” Integra, 952 F.2d at 1261.B. Law Applicable to Motions to Dismiss Under Fed. R.Civ. P. 9(b).A party asserting a claim for fraud is subject to theheightened pleading requirements of Fed. R. Civ. P. 9(b)(as incorporated by Fed. R. Bankr. P. 7009). See Wagnerv. Cunningham (In re Vaughan Co., Realtors), 481 B.R.752, 757 (Bankr. D. N.M. 2012) (party asserting claimunder Section 548(a)(1)(A) must plead fraud under the 9(b)heightened pleading standard); Tronox, Inc. v. AnadarkoPetroleum Corp. (In re Tronox, Inc.), 429 B.R. 73, 92 (Bankr.S.D.N.Y. 2010), (allegations of fraud must be pled withparticularity under Rule 9(b) and such requirement protects“the defending party's reputation, discourage[s] meritlessaccusations, and provide[s] detailed notice of fraud claimsto defending parties”); Picard v. Cohmad Sec. Corp. (Inre Bernard L. Madoff Inv. Sec. LLC), 454 B.R. 317, 329(Bankr. S.D.N.Y. 2011) (actual fraudulent transfer claimsmust meet the heightened pleading requirements of Rule 9(b)whether brought under the Bankruptcy Code or applicableNew York fraudulent transfer law). Under Rule 9(b), a partyalleging fraud “must state with particularity the circumstancesconstituting fraud ... [though] [m]alice, intent, knowledge andother conditions of a person's mind may be alleged generally.”Fed. R. Civ. P. 9(b).As the Tenth Circuit has explained it:[C]laims comply with Rule 9(b) when they “provid[e]factual allegations regarding the who, what, when, whereand how of the alleged claims.” ... But, “in determining
In re Mascio, Slip Copy (2025) © 2025 Thomson Reuters. No claim to original U.S. Government Works.4whether a plaintiff has satisfied Rule 9(b), courts mayconsider whether any pleading deficiencies resulted fromthe plaintiff's inability to obtain information in thedefendant's exclusive control.” . . . This reflects theprinciple that “Rule 9(b) does not require omniscience;rather the Rule requires that the circumstances of the fraudbe pled with enough specificity to put defendants on noticeas to the nature of the claim.”*5 U.S. ex rel. Polukoff v. St. Mark's Hosp., 895 F.3d 730,745 (10th Cir. 2018) (internal citations omitted).V. Factual Allegations in the Complaint.Based upon the foregoing legal standards, the focus of theCourt's inquiry for the Motion to Dismiss is on the “well-pleaded facts” alleged in the Complaint. The Court notesthat the Judgment is central to the Complaint and the Debtordoes not dispute the fact of the Judgment. The Debtor onlychallenges the enforceability and the preclusive effect of theJudgment, neither of which is the proper subject of a motion todismiss under Rule 12(b)(6). The Complaint asserts, amongother things, the following facts which the Court quotesverbatim as they are recited in the Complaint:7. In a Washington state court proceeding, which resultedin a Judgment of the King County Superior Court(“Judgment”) and an opinion of the Washington StateCourt of Appeals affirming the Judgment (Graham v.Mascio, 6 Wn. App. 2d 1028, at *1 (2018) (“Court ofAppeals Opinion”)), Mascio was found to have engaged insecurities fraud with respect to the Grahams. The pertinentfacts underlying the Judgment and Court of AppealsOpinion are set forth below.8. The Grahams had previously established an investmentaccount with a firm called Carina Wealth Management(“Carina”). The Grahams’ financial objectives includedretirement savings, paying for their children's education,and providing support for aging parents. Consistentwith these investment objectives, Plaintiffs worked withCarina to develop an investment portfolio consisting ofmainstream, moderate-risk assets such as blue-chip stocks.9. In 2010, Meridian Capital Management (“Meridian”), acompany owned and operated by Mascio, acquired Carinaand assumed control over Plaintiffs’ investment account.10. Plaintiffs repeatedly and clearly communicated theirdesire that Mascio/Meridian pursue a prudent investmentstrategy. Indeed, “Meridian identified the Grahams’ short-term investment risk tolerance to be ‘moderate.’ ” Courtof Appeals Opinion, at *1. Moreover, Mascio expresslyassured the Grahams that he intended to avoid takingexcessive risks, including saying to Plaintiffs that “[t]hefirst step in making you money is not losing your money.”11. In 2015, Mascio/Meridian requested that Plaintiffs opena new account with a brokerage firm called InteractiveBrokers, which included functionality for various exotic,speculative and high-risk transactions, and for whichMascio/Meridian would have trading authority. Plaintiffsexpressed concern and reiterated their aversion to suchhigh-risk investments, with Mr. Graham stating: “I'd justlike [to] make sure we're not going to be jumping into abunch of speculative or highly leveraged trading that I don'thave a good understanding of. Please confirm.” Court ofAppeals Opinion, at *1. In response, Mascio stated in anemail:All of the disclosure[s] are to give you access to thefull capabilities of [Interactive Brokers]. These includeinternational Exchanges such as China and Europe,FOREX, Futures, options on futures, [etc]. We will mostlikely never access the full spectrum of capabilities andwill not be venturing into high risk high speculationmarkets.*6 Id. at *2 (underline in Court of Appeals Opinion;boldface/italics added). In reliance on Mascio's assurances,Plaintiffs authorized opening the Interactive Brokersaccount.12. However, as the Washington State Courts laterconcluded, Mascio's statements to Plaintiffs were false andfraudulent. Indeed, at time he wrote the above statement,Mascio in fact intended to engage in exceedingly riskytransactions with Plaintiffs’ life savings, in order to obtainperformance-based compensation for himself.13. Contrary to the assurances he gave Plaintiffs,Mascio began making trades with the Grahams’ accountinvolving a securities derivative called “VXX.” VXX isan “exchange-traded note” intended to track a separatemeasure of market volatility called VIX, which is itselfgenerated by algorithms based on movements in stockoptions prices. “VXX is highly volatile and unpredictable,posing tremendous risk.” Court of Appeals Opinion, at *2.
In re Mascio, Slip Copy (2025) © 2025 Thomson Reuters. No claim to original U.S. Government Works.514. Plaintiffs learned that Mascio was trading in VXX, andexpressly instructed him to stop doing do.15. Mascio ignored Plaintiffs’ instructions and, in August2015, used Plaintiffs’ investment funds to engage in anenormous, highly leveraged, and ultimately disastroustransaction in VXX. As the Court of Appeals explained:Meridian engaged in a strategy known as a “syntheticshort” of VXX in the Grahams’ accounts. This purchaseand sale strategy is effectively a bet that the value of theunderlying asset, the VXX security, will decrease.The VXX short maneuver turned out to be a very badbet. The value of VXX increased, rather than decreased.Because Meridian had placed the bet “on margin,”essentially borrowing money from Interactive Brokersto fund the VXX purchases, when the Grahams beganlosing money, Interactive Brokers’ margin requirementsled to the automatic sale of securities in the Grahams’account to pay off the debt owed to Interactive Brokers.As a result, between August 21 and 25, 2015, theGrahams lost over $1 million.Court of Appeals Opinion, at *2.16. Plaintiffs filed a lawsuit against Mascio and Meridian inKing County, Washington, Superior Court, asserting (interalia) claims under the Washington State Securities Act(“WSSA”).17. Plaintiffs propounded Requests for Admissions toMascio and Meridian, which (due to their failure to answer)were deemed admitted by the Superior Court. Mascioconclusively admitted, inter alia, that:• “[Y]ou were an investment advisor to the Plaintiffs.”• “Plaintiffs did not authorize you to make transactionsinvolving VXX.”• “Peter Graham specifically told you not to make furthertransactions involving VXX.”• “[Y]ou told the Plaintiffs, ‘The first step in making youmoney is not losing your money.’ ”• “[I]n an email to the Plaintiffs on May 27, 2015,you stated: ‘We will most likely never access the fullspectrum of capabilities and will not be venturing intohigh risk high speculation markets.’ ”• “[T]he transactions with regard to VXX are high risk highspeculation markets.”• “[A]t the time you wrote the May 27, 2015 email youintended to engage Plaintiffs’ investment assets in highrisk high speculation markets.”• “[T]he VXX Transactions (as defined in the Complaint)were motivated by a desire to earn performance-basedincome for yourself.”*7 • “[A]s a direct result of the VXX Transactions (asdefined in the Complaint), the Plaintiffs’ investmentportfolio lost cash value of at least $1,070,915.40.”18. Based on these admissions as well as other unrebuttedevidence, the Superior Court granted summary judgmentto Plaintiffs on their WSSA claim.19. On June 14, 2017, the Superior Court entered theJudgment against Mascio and Meridian in the amountof $1,513,426.83 (which amount included principal,prejudgment interest, costs and attorneys’ fees). TheJudgment continues to accrue post- judgment interest at arate of 12% per annum.20. Mascio and Meridian appealed the Judgment. TheWashington Court of Appeals affirmed. Dispositively here,the Court of Appeals concluded that the gravamen of theJudgment was that Mascio had violated ... WSSA securitiesfraud [law] .... As the Court of Appeals concluded, theSuperior Court had properly found (including based onMascio and Meridian's binding admissions) that Mascioand Meridian committed fraudulent acts in violation ofRCW 21.20.010:The Grahams presented undisputed evidence that onMay 27, 2015, Mascio represented to Peter Grahamthat he and Meridian would not be “venturing intohigh risk[,] high speculation markets,” but on theday he made this representation, he intended to dothe exact opposite. Meridian and Mascio admittedthe Grahams had not authorized Mascio to make theVXX transactions, the transactions were not suitablesecurities transactions for them, and the VXX shortsales were high risk, high speculation trades, whichexposed the Grahams’ investment portfolio to unlimitedrisk. Meridian and Mascio admitted the Grahams hadinstructed Mascio that preserving investment capital wasa top priority.
In re Mascio, Slip Copy (2025) © 2025 Thomson Reuters. No claim to original U.S. Government Works.6Meridian argued below and on appeal that the termsof the 2015 agreement provided Mascio with thecontractual authorization to engage in the risky,speculative trades. But according to Peter Graham'sundisputed testimony, the 2015 agreement permittedtrading in riskier and more exotic securities than heand his wife were comfortable with, and he soughtconfirmation that Mascio would not be engagingin that type of trading before the Grahams signedthe 2015 agreement. Mascio admitted he sent hisconfirming email before the Grahams executed the2015 agreement. Moreover, Meridian's argument andMascio's testimony contradict their admissions that theGrahams never authorized this type of risky investmentand specifically instructed Mascio not to enter into thistype of speculative trade...The undisputed evidence also establishes thatMeridian's untrue statement of fact was the proximatecause of the Grahams’ losses. Meridian and Mascioadmitted that Interactive Brokers liquidated theGrahams’ stock portfolio because the VXX transactionsthey conducted placed the portfolio outside ofInteractive Brokers’ margin requirements. They alsoadmitted that as a direct result of the VXX transactions,the Grahams’ investment portfolio lost cash valueof at least $1,070,915.40. This evidence establishesproximate cause as a matter of law.Court of Appeals Opinion, at *9-10 (underline in original;boldface/italics added).21. Mascio did not seek further review. The Judgment andCourt of Appeals Opinion are final and binding, and asdiscussed further below, preclude a discharge of the subjectdebt.*8 22. Plaintiffs also brought Mascio's misconduct tothe attention of the Washington Department of FinancialInstitutions (“DFI”). DFI likewise concluded that Masciohad violated WSSA with respect to the Grahams, andbanned Mascio from acting as a broker or investmentadvisor in Washington.23. As a result of Mascio's unlawful hiding of assets(discussed below), Plaintiffs have only collected a deminimis amount. Meanwhile, post-judgment interest hasaccrued since 2017. The unpaid amount of the Judgmentcurrently exceeds $2,900.000.00.24. Plaintiffs have engaged in extensive collection efforts,including in Colorado where Mascio appears to bedomiciled. In order to frustrate collection and conceal hisassets, Mascio (both directly, and via business associatesand companies he and his associates controlled) providedfalse, fraudulent and perjurious responses to discovery.25. As just a few examples, Mascio and his croniesaverred (under penalty of perjury) that Mascio was notworking and had no significant sources of income, andthat one of his entities, Bertram Global Finance, Inc.(“Bertram”) was inactive and being shut down. But, infact, during this period Mascio was CEO of a combinedUS-Canadian cannabis enterprise called “Cannabis One”and/or “INDVR”, and was being paid a generous salaryby Cannabis One/INDVR (which, as discussed below, wasbeing funneled directly to Mascio's bogus “Trust”). And farfrom being an inactive shell entity, Bertram was, in fact, theprimary U.S. entity for the Cannabis One/INDVR business.Due to the fraudulent misrepresentations and omissionsmade or directed by Mascio, Plaintiffs did not learn aboutMascio's substantial income from Cannabis One/INDVR intime to effectively exercise remedies such as garnishment.....27. Mascio has attempted to shield his assets fromcollection by the Grahams through a variety of illegalschemes. The centerpiece of these schemes is an allegedtrust known as the “JG Family Trust” or “Cook IslandTrust”) (the “Trust”).28. The Trust is facially invalid for a number of reasons.Most fundamentally, it is a self-settled trust, i.e., Mascioand his wife are both the grantors and beneficiaries.But “a spendthrift trust where the settlor is also abeneficiary cannot ‘protect the settlor beneficiary fromfuture creditors.’ ” ....29. The Trust is also a sham. “A sham trust is one where thedebtor (1) retains too much control over the trust property;(2) ignores legal formalities; and (3) uses the property ashis own. When the debtor ‘uses the property as his own,the property is treated as owned by the transferor ratherthan the entity that is the nominal owner.’ ” Peters, 2010WL 3894035 at *8 (citation omitted). Here, Mascio appearsto have unbridled discretion of the use of Trust funds,including adding, withdrawing, and utilizing Trust assetsfor his own financial convenience. At most, Mascio's crony“Trustees” simply carry out his instructions.
In re Mascio, Slip Copy (2025) © 2025 Thomson Reuters. No claim to original U.S. Government Works.730. Mascio has also openly admitted that the purpose of theTrust is to insulate Mascio's assets from judgments (as wellas other creditors). As Mascio stated in a deposition:Q. Okay. What was the purpose of this trust?A. To keep people like the Grahams from filing frivolouslawsuits against their advisor. That's the truth.***A. Let's put it this way: I'm going to do everything in mypower to make sure that the Grahams never get a dime outof me. If it requires me to file for bankruptcy, I will do that.*9 ***Q. That was very fashionable for a while. You don't see theCook Islands that much anymore.A. It got expensive, so that's the reason. So maintaining itand dealing with it is expensive. But when you get peoplethat think they can go run down to court and get someclown judge in Washington to award them 1 million 5when they don't deserve it, it serves its purpose. That's theway I see it.***Q. Right. So when you say that you don't own any realproperty, you mean it.A. I mean it. I mean, I own nothing.***Q. Would your wife file [for bankruptcy] also?A. No. I mean, she's as much broke as I am, by design.31. In yet another one of his fraudulent attempts to evadecollection, Mascio testified at his deposition that the Trusthad not received any assets since he deeded his house tothe Trust in 2005:I know exactly how it works. So, for instance, let'ssay we win on appeal and the whole thing's tossed.Magically, I'm all of a sudden back in the same placeas I was in before. And if you bring a claim againstme again, strange, I'm no longer a beneficiary. That'spretty much the way it works. So there's no possibilityof having a claim against me and being able to touchthe trust. So all fraudulent conveyance is gone becauseit's been established since 2005, and there hasn't beenanything transferred into it since, and everything's beenestablished in the trust if it was ever established in thefirst place.(emphasis added). But this was yet another lie (and perjury)from Mascio. In fact, Mascio and his family have movedmassive amounts of stock, money, and likely other assetsinto the Trust, with no equivalent value received in return.32. ... “[w]hile Mascio was CEO of INDVR, he wouldalso direct that INDVR placed his salary and equity intothe Trust, rather than his personal account, in an obviousattempt to get around his obligation to pay the Grahams.”Case No. 25-10631-TBM, Dkt. # 20, p.9. Accordingto INDVR's securities filings, Mascio's cash salary was$26,000 (Canadian) per month, and $312,000 (Canadian)over just one 12-month period .... [S]ubstantial stock inINDVR was issued to the Trust.33. In addition, in its own litigation against Mascio,INDVR also established that Mascio also covertly funneledadditional moneys to the Trust during recent years,including from the “Cannabis Corp.” entity owned andoperated by Mascio and his wife.34. Moreover, Mascio's own bankruptcy schedules confirmthat the Mascio has funneled still more money intothe trust via bogus “rent” payments for the familyresidence. Mascio's disclosures in his now-dismissed2024 bankruptcy indicate that Mascio paid the Trustat least $15,000 per month—an amount convenientlycorresponding to the Mascios’ entire declared income atthe time—in “rent” for the house. This astronomical “rent”payment was for a home valued at a little over $1 million,which would fetch only a small portion of that “rent” figureon the open market. Yet now, according to his documentsfiled in the present bankruptcy, and at a time when hereports having no income, Mascio supposedly pays no rentto the Trust, but instead directly pays the mortgage paymentof about $3,500 per month. Case No. 25-10631-TBM, Dkt.Nos. 1 and 29. Obviously, no arm's length lease wouldhave basic terms fluctuate so wildly. In other words, thepurported “rent” payments were simply a smokescreen forMascio to move money into the Trust (and supposedly outof the reach of creditors) in whatever amounts he sees fit.*10 35. Mascio's bankruptcy filings contain numeroustroubling omissions, inconsistent and misstatements—inother words, Mascio is not only misleading his creditorsand the Trustee, but is also misleading the Court.
In re Mascio, Slip Copy (2025) © 2025 Thomson Reuters. No claim to original U.S. Government Works.836. For example, Mascio failed to disclose any of the assetsowned by the Trust (other than mentioning that he “rents”his home from the Trust. While Mascio apparently claimsthat Trust assets are exempt under 11 § 541(c)(2), thatclaim is frivolous. “In Colorado, only trusts enforceableunder state law as spendthrift trusts fall within the [§541(c)(2)] exception and are excluded from the assets of abankruptcy estate... If ‘trusts are shams or otherwise voidunder Colorado law the trust property is includable in thebankruptcy estate.’ ” .... the Trust is facially invalid.37. There are also unexplained inconsistencies betweenMascio's disclosures in his 2024 bankruptcy versus hispresent bankruptcy, including as to Mascio's income. Forinstance, in his 2024 bankruptcy, Mascio stated that hisincome for calendar year 2023 was $158,000. But in hiscurrent bankruptcy schedules, Mascio's income for thesame calendar year (2023) is now reported as being only$100,000, with no explanation as to the change.38. Similar inconsistencies exist with respect to Mascio'spurported liabilities, including without limitation themarkedly different treatment of Mascio's payment of “rent”and/or mortgage payments for his home.39....Mascio's contention that he owns no personal propertyof any significant value is also highly suspect. Mascioand his wife had substantial incomes for a number ofyears, and they also report high balances on credit facilities(e.g., Apple and Best Buy credit cards). That money wasobviously used to purchase something, but where it wentis not explained by Mascio's filings. In short, Masciolikely spent substantial funds on personal property whichMascio has failed to disclose. (As noted above, even ifMascio purported to move personal property into the bogusTrust, § 541(c)(2) does not shield that property from eitherdisclosure or turnover).....43. ... Mascio is bound by the Judgment and Courtof Appeals Opinion, which concluded he engaged inmisconduct subject to § 523(a)(2)(A).44. ... the Judgment and Court of Appeals Opinionexpressly found that Mascio violated RCW 21.20.010, theprovision of WSSA pertaining specifically to fraud, deceit,and false and misleading representations. Those findingsare binding on Mascio and squarely meet the requirementsfor an exception to discharge under § 523(a)(2)(A) – e.g.,Mascio's deliberately false assurances that he would not beventuring into high risk high-speculation markets were a“false pretense,” “false representation,” and “actual fraud,”on which Plaintiffs reasonably and detrimentally relied ....45. Finally, Mascio compounded his underlying securitiesfraud by making and/or directing others to make false,fraudulent and perjurious representations as to Mascio'sfinancial condition, including in Mascio's deposition,Mascio's responses to post- judgment discovery, andsubpoena responses submitted by Mascio's cronies. Forexample, Mascio lied about and concealed his businessactivity and income derived from Cannabis One/INDVR,thereby preventing timely collection efforts such asgarnishment of Mascio's earnings.*11 ....48. As Plaintiff's investment advisor, with authority to tradeon Plaintiffs’ account, Mascio was a fiduciary.49. ...Mascio engaged in fraudulent conduct with respect tohis fiduciaries, Plaintiffs.50....Mascio's conduct constitutes “defalcation.” ... Here,too, Mascio failed to follow the directives of his fiduciaries,including their instructions regarding risk tolerance andexpress prohibition on further transactions involving VXX.Mascio's defalcation was further motivated by Mascio'sself interest, i.e., his desire to obtain performance-basedcompensation for himself.....57. Mascio has, within one year of filing the subjectpetition, made fraudulent transfers to hinder, delay, ordefraud creditors (including Plaintiffs). Such fraudulenttransfers include, without limitation, his payment ofinflated “rent” and other transfers into the Trust.....66. ... Mascio has withheld records, including but notlimited to the records which the Court ordered producedin its Order of February 28, 2025. And again, given thatMascio's entire reported financial condition is a lie, itnecessarily follows that Mascio has, and will continue to,fail to provide full and accurate financial records.67. Mascio has, and will continue to, fail to explain the lossof assets, including without limitation, assets he has illicitlymoved into the Trust.
In re Mascio, Slip Copy (2025) © 2025 Thomson Reuters. No claim to original U.S. Government Works.9As noted previously, when considering a motion to dismissunder Fed R. Civ. P. 12(b)(6), the Court must accept as trueall well-pleaded factual allegations in a complaint and viewthem in the light most favorable to the plaintiff. Burnett, 706F.3d at 1235.VI. Legal Analysis.A. The Debtor's Motion to Strike is Meritless and hasbeen Withdrawn.The Debtor initially requested that the Court strike theComplaint and papers filed by the Grahams’ counsel(“Counsel”). The Debtor asserted without any factual basisthat Counsel was not admitted to practice in the Districtof Colorado. In the Opposition, Counsel met the Debtor'sargument head on with his “Declaration of R. Omar RiojasIn Support of Plaintiffs’ Opposition” (Docket No. 7-1, the“Declaration”). Counsel attached evidence to the Declarationshowing that he is admitted to practice in the District Courtand therefore, in this Court. It demonstrates that Counsel isadmitted and in “Good Standing” and has been admitted sinceFebruary 1, 2017.In his Reply, the Debtor refers to the Declaration andattachment as “newly disclosed information, which had itbeen included with the Complaint... would have eliminatedany need to challenge Mr. Riojas’ authority.” Reply, at 2. Assuch, the Debtor “withdraws the motion to strike only on thebasis of the attorney's admission status.” Id.Despite the Debtor's withdrawal, the Court addresses theMotion to Strike. The information provided on the DistrictCourt's webpage does not amount to “newly disclosedinformation.” It is publicly available and shows that Counselis in good standing in the District Court and was admittedin 2017. As such, the Debtor purported excuse for hisunfounded position rings hollow. The Debtor just advanced anobjective falsehood with no basis . Furthermore, an attorney'sadmission status has no bearing on a Rule 12(b)(6) motion.B. The Complaint Contains Sufficient FactualAllegations to State Claims for Relief under Sections 727and 523.*12 In the Motion to Dismiss, the Debtor argued that theComplaint should be dismissed for failure to state a claimunder Fed. R. Civ. P. 12(b)(6) as made applicable to thisAdversary Proceeding by Fed. R. Bankr. P. 7012 because: (1)the Judgment “is dormant and unenforceable in Colorado; (2)since the Judgment is unenforceable, it “may not be a basisfor a nondischargebility action [under Section 523(a)(2), (4),and (6)] where no new fraud or willful conduct is pled;” and(3) the Grahams have failed to plead specific facts showingthe Debtor's fraudulent intent or concealment of assets. TheDebtor's Fed. R. Civ. P. 12(b)(6) argument is totally genericand undeveloped.With respect to the Debtor's argument about the enforceabilityof the Judgment, such argument is inappropriate at Fed.R. Civ. P. 12(b)(6) Motion to Dismiss stage for multiplereasons. First, the Debtor invites the Court to look outsidethe “four corners” of the Complaint in respect to revivalof the Judgment. But that is impermissible. Howsam, 261F.3d at 961 (generally “unacceptable for a court” to look“beyond the four corners of the complaint” when decidinga “Rule 12(b)(6) motion to dismiss”). And, besides, theDebtor has not presented any admissible evidence on theissue. Second, the Debtor's contention that the Judgmentis unenforceable by reason of the lapse of time sounds asan affirmative defense which may be raised in the Debtor'sanswer and litigated on the merits. See Midland Funding,LLC v. Johnson, 581 U.S. 224, 230 (2017) (“the runningof a statute of limitation's period constitutes an affirmativedefense”). For example, in Malherbe v. Oscar Gruss &Son, Inc., 2023 WL 199425 (S.D.N.Y. Jan. 17, 2023), thedefendant moved to dismiss a complaint under Fed. R. Civ.P. 12(b)(6) claiming that underlying German judgments wereinvalid and unenforceable. The Court rejected the argumentand ruled:These arguments are prematurelyraised in support of a motion todismiss [under Fed. R. Civ. P. 12(b)(6)]. Plaintiff has no burden atthis stage other than to plead thatthe underlying judgment is final,conclusive, and enforceable, which ithas done. Proving one or multiplegrounds for nonrecognition is theburden of the Defendant, and onewhich can be satisfied only at laterstages of the proceedings, once raisedan affirmative defense ....
In re Mascio, Slip Copy (2025) © 2025 Thomson Reuters. No claim to original U.S. Government Works.10Id. at *3. The Court concurs. Finally, the Debtor's citationis COLO. REV. STAT. § 13-52-102(1) for the propositionthat “judgments become unenforceable in Colorado after sixyears” misapprehends the nature of execution on judgmentsin Colorado. COLO. REV. STAT. § 13-52-102(1) deals withthe expiration of judgment liens, not the enforceability ofjudgments. The Complaint neither alleges the existence ofa judgment lien nor does it rely upon one in support ofthe claims for relief. In any event, COLO. REV. STAT.§ 13-52-102(2)(a) establishes the general rule with respectto enforceability of judgments: “... execution may issue onany judgment ... to enforce the same at any time withintwenty years from the entry thereof, but not afterwards, unlessrevived as provided by law ....” As the Colorado SupremeCourt explained COLO. REV. STAT. § 13-52-102(1) asfollows:[a] party may not obtain payment of adebt through execution on a judgmentlien after the six-year limitationsperiod has passed unless the judgmentis revived .... The six-year limitationsperiod runs from the date of judgment,not the date the judgment is filedin Colorado. Baum v. Baum, 820P.2d 1122, 1123 (Colo.App.1991). Therunning of the statute of limitationsgoverning collection of payment ofthe debt through execution on thejudgment lien, however, does notextinguish the debt. See Estate ofRamsey v. State Dep't of Revenue, 42Colo. App. 163, 591 P.2d 591, 595(1979).*13 Mortg. Invs. Corp. v. Battle Mountain Corp., 70 P.3d1176, 1186 (Colo. 2003) (emphasis added); see also WellsFargo Bank, N.A. v. Kopfman, 226 P.3d 1068, 1071 (Colo.2010) (“While judgments in Colorado last for twenty years,judgment liens expire six years after entry of judgment.”). So,the argument raised in the Motion to Dismiss pertaining toenforceability of the Judgment, does not support dismissal atthis stage.However, the Court delves just a bit deeper. In the Complaint,the Plaintiffs asserted four claims for denial of discharge —under Sections 727(a)(2), (a)(3), (a)(4)(A) and (a)(5). Thoseprovisions state:The court shall grant the debtor a discharge, unless—...(2) the debtor, with intent to hinder, delay, or defraud acreditor or an officer of the estate charged with custodyof property under this title, has transferred, removed,destroyed, mutilated, or concealed, or has permitted to betransferred, removed, destroyed, mutilated, or concealed—(A) property of the debtor, within one year before thedate of the filing of the petition; or(B) property of the estate, after the date of the filing ofthe petition;(3) the debtor has concealed, destroyed, mutilated,falsified, or failed to keep or preserve any recordedinformation, including books, documents, records, andpapers, from which the debtor's financial condition orbusiness transactions might be ascertained, unless such actor failure to act was justified under all the circumstancesof the case;(4) the debtor knowingly and fraudulently, in or inconnection with the case —(A) made a false oath or account... ;(5) the debtor has failed to explain satisfactorily ... any lossof assets to meet the debtor's liabilities....11 U.S.C. §§ 727(a)(2), (a)(3),(a)(4)(A) and (a)(5). Putanother way, “[t]he debtor must deal fairly with creditors andwith the court. This obligation is imposed indirectly througha series of objections to discharge set out in Code § 727(a).Thus, § 727(a) provides a mechanism for proof of certainconduct by a debtor that may result in a denial of discharge.”In re Gordon, 526 B.R. 376, 387-88 (10th Cir. BAP 2015).The Plaintiffs’ Section 727(a) claims are centered both on themany findings of fact rendered by the Washington State Courtin the Judgment in support of its conclusion that the Debtorhad engaged in securities fraud as against the Grahams. Then,there are multiple allegations that the Debtor has failed tobe forthright in his bankruptcy filing as to the nature, extentand whereabouts of his assets. The Grahams allege that inresponse to their efforts to collect on the Judgment, “Mascio(both directly, and via business associates and companies
In re Mascio, Slip Copy (2025) © 2025 Thomson Reuters. No claim to original U.S. Government Works.11he and his associates controlled) provided false, fraudulentand perjurious responses to [Rule 69] discovery.” Compl. 24. They allege efforts by the Debtor to conceal his“generous salary by Cannabis One/INDVR (which ... wasbeing funneled directly to Mascio's bogus ‘Trust’.” Id. 25. They further allege the Debtor engaged in “fraudulentasset protection schemes,” primarily involving the Trust. TheGrahams contend that the Debtor “has funneled still moremoney into the trust via bogus ‘rent’ payments for the familyresidence.” Id. 34. The assert there are discrepancies in theamount of rent paid to the Trust between the Schedules theDebtor filed in his First Case and those in the Main Case. Andthe discrepancies have gone unexplained. Id. The Grahamsalso contend there are “Irregularities with Mascio's Currentand Prior Bankruptcy Disclosures” Id. ¶¶ 35-39.*14 As noted earlier, a proper complaint must “containsufficient factual matter, accepted as true, to ‘state a claimto relief that is plausible on its face.’ ” Iqbal, 556 U.S. at678. A claim is considered “plausible” when the complaintcontains facts which allow the Court to draw the reasonableinference that the defendant is liable for the misconductalleged. Ultimately, the critical question is: “assum[ing] thetruth of all well-pleaded facts ... and draw[ing] all reasonableinferences therefrom in the light most favorable to theplaintiffs,” whether the complaint “raise[s] a right to reliefabove the speculative level.’ ” Dias, 567 F.3d at 1178. It is avery low threshold.The Court determines that the Plaintiffs have passed thevery low Fed. R. Civ. P. 12(b)(6) dismissal threshold withrespect to their claims under Sections 727(a)(2), (a)(3), (a)(4)(A) and (5). The Debtor plainly is on notice of the factualbasis for the claims: that he has engaged in securities fraudagainst the Grahams, that he allegedly concealed assets andtransfers to the Trust, that he engaged in fraudulent schemesto evade paying the Judgment, including funneling variousassets to the Trust, not providing adequate information aboutthe Trust, including the purported “rent” payments and thennot explaining the differences in assets and liabilities betweenthe First Case and his current Main Case. Again, “granting [a]motion to dismiss is a harsh remedy which must be cautiouslystudied, not only to effectuate the spirit of the liberal rules ofpleading but also to protect the interests of justice.” Dias, 567F.3d at 1178. Thus, “a well-pleaded complaint may proceedeven if it strikes a savvy judge that actual proof of thosefacts is improbable, and ‘that a recovery is very remote andunlikely.’ ” Twombly, 550 U.S. at 556.In addition to the Section 727(a) claims, the Plaintiffs alsoasserted three claims for relief seeking a determination thatthe Judgment is nondischargeable: Sections 523(a)(2), (4) and(a)(6). Those provisions state:(a) A discharge under section 727 , ,,, does not dischargean individual debtor from any debt —....(2) for money, property, services, or an extension,renewal, or refinancing of credit, to the extent obtainedby —(A) false pretenses, a false representation, or actualfraud, other than a statement respecting the debtor's oran insider's financial condition;(B) use of a statement in writing—(i) that is materially false;(ii) respecting the debtor's or an insider's financialcondition;(iii) on which the creditor to whom the debtor isliable for such money, property, services, or creditreasonably relied; and (iv) that the debtor caused to bemade or published with intent to deceive .......(4) for fraud or defalcation while acting in a fiduciarycapacity, embezzlement, or larceny;....(6) for willful and malicious injury by the debtor toanother entity or to the property of another entity ....The Section 523(a) claims are premised upon the debtestablished in the Judgment. Although the Grahams do notattach the Judgment, they recite many of the significantand relevant findings. And, the Debtor does not disputethe existence of the Judgment. The Washington State Courtfound the Debtor violated Washington securities laws in hisdealings with the Grahams having made false and fraudulentrepresentations to them. Compl. ¶12. The Washington StateCourt awarded the Grahams monetary damages in the amountof $1,513,426.83, plus post judgment interest accruing at 12%per annum. Id. 19. Coupled with the many other factualallegations set forth in the Complaint, the foregoing is morethan enough to state plausible claims for nondischargeability
In re Mascio, Slip Copy (2025) © 2025 Thomson Reuters. No claim to original U.S. Government Works.12under Sections 523(a)(2), (a)(4) and (a)(6). Therefore,dismissal under Section 12(b)(6) is not warranted.C. The Complaint Should Not be Dismissed for Failureto Plead Fraud with Particularity.*15 In the Motion to Dismiss, the Debtor argued:Plaintiffs rely on conclusoryallegations regarding a valid offshoretrust and fail to allege specificmisconduct or concealment withinone year of the bankruptcy filingsufficient to meet the heightenedpleading standard. See Fed. R.Bankr. P. 7009; Fed. R. Civ. P.9(b). The Complaint fails to allegeany new fraudulent conduct by theDefendant within the statutory periodthat would support a claim under11 U.S.C. §§ 523 or 727. Thepleading relies heavily on conclusoryallegations without specific factualsupport, fails to meet the specificityrequirements established by Rule 8(a)and Rule 9(b) of the Federal Rulesof Civil Procedure, as incorporated byBankruptcy Rule 7008 and 7009.(Docket No. 6 at 2.)The Debtor's foregoing Fed. R. Civ. P. 9(b) argument istotally generic and undeveloped. The Debtor also did nottie his position to any specific claims or elements ofclaims. Accordingly, the Debtor has functionally waived suchargument.However, the Court considers the issue further. All of theclaims advanced by the Plaintiffs (under both Sections 727(a)and 523(a)) are based on forms of alleged fraud. So, thePlaintiffs were obligated to plead fraud with particularityunder Fed. R. Civ. P. 9(b). The Court assesses that thePlaintiffs met that standard at the motion to dismiss stage.The core requirement of Fed. R. Civ. P. 9(b) is that “thecircumstances of the fraud be pled with enough specificityto put defendants on notice as to the nature of the claim.”St. Mark's Hosp., 895 F.3d at 745. The Complaint (coupledwith the referenced Judgment) is more than enough to put theDebtor on notice of the nature of the claims.In any event, the Debtor appears to misapprehend the natureof a complaint and an initial motion to dismiss. The Complaintdoes not need to include all of the Plaintiffs’ documentaryevidence. Evidence is presented at trial; and the Debtor willhave an opportunity to contest it then and there. Meanwhile,the Debtor's challenges to the enforceability of the Judgmentand its impact on the Section 523 and 727 claims for relief aremisplaced and not a basis for dismissal of the Complaint.VII. Admonition to the Debtor.The Debtor appears to have elected to proceed in this casewithout counsel. He may do so, but he is admonished thathe will be held to the same standards as parties who appearwith counsel. He has already engaged in improper conductin advancing an objectively false argument about opposingcounsel and citation of a fake case: In re Simpson, 2008 WL467698 (Bankr. D. Kan. 2008). Such case does not exist.Instead, the decision located at 2008 WL 467698 is, Roby v.American Airlines, Inc., 2008 WL 467698 (9th Cir. 2008),an opinion which has no bearing on this case. The Debtorstates the incorrect citation was an error, but he is cautionedthat he, like all the attorneys who appear in this Court, aresubject to all the requirements of Fed. R. Bankr. P. 9011. If theDebtor is using artificial intelligence, the Debtor is cautionedthat the use of artificial intelligence for research whether byattorneys or pro se parties is subject to Rule 11 complianceand the failure to ensure a citation is existent and stands forthe proposition for which it is cited may be sanctionable. SeeCoomer v. Lindell, 2025 WL 1865282, at *3 and *8 (D. Colo.Jul. 7, 2025).VIII. Conclusion and Order.*16 For the foregoing reasons, the Court DENIES theMotion to Dismiss.The Court FURTHER ORDERS that the Debtor shall filea responsive pleading to the Complaint within 14 days ofthe entry of this Order as provided for by Fed. R. Bankr. P.7012(a).
In re Mascio, Slip Copy (2025) © 2025 Thomson Reuters. No claim to original U.S. Government Works.13All CitationsSlip Copy, 2025 WL 2434832Footnotes1All references to the “Bankruptcy Code” are to the United States Bankruptcy Code, 11 U.S.C. § 101 et seq.Unless otherwise indicated, all references to “Section” are to sections of the Bankruptcy Code.2The Court will refer to documents filed in the CM/ECF docket for this Adversary Proceeding, using theconvention: “Docket No. ___ .” When referring to a document filed in either the First Case or the Debtor'sMain Case, the Court will use the convention: “First Case Docket No.___” or “Main Case Docket No. ”.3The Debtor purports to be unrepresented by counsel in this Adversary Case although he has legal counselin the Main Case. “The court, therefore, ‘review[s] h[is] pleadings and other papers liberally and hold[s] themto a less stringent standard than those drafted by attorneys.’ ” Heath v. Root9B, 2019 WL 1045668, at *2(D. Colo. Mar. 4, 2019) (quoting Trackwell v. United States, 472 F.3d 1242, 1243 (10th Cir. 2007) (citationsomitted)). See also, Thompson v. Coulter, 680 Fed. Appx. 707, 710 (10th Cir. 2017); Garrett v. Selby ConnorMaddux & Janer, 425 F.3d 836, 840 (10th Cir. 2005)); Hall v. Bellmon, 935 F.2d 1106, 1110 (10th Cir. 1991).However, the Court “ ‘cannot take on the responsibility of serving as the litigant's attorney in constructingarguments’ or the ‘role of advocate’ for a pro se plaintiff.” Root9B, 2019 WL 1045668 at *3 (quoting Garrett,425 F.3d at 840). The pro se plaintiff is required to follow the same rules of procedure that other litigants mustabide by. Garrett, 425 F.3d at 840 (quoting Nielsen v. Price, 17 F.3d 1276, 1277 (10th Cir. 1994)). Given thecomplexity of bankruptcy litigation, the Court encourages the Debtor to retain legal counsel.End of Document© 2025 Thomson Reuters. No claim to original U.S. Government Works.
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