September 12, 2017
from the United States District Court for the Western
District of Wisconsin. No. 15-cr-lOO - William M. Conley,
Easterbrook, Kanne, and Williams, Circuit Judges.
jury returned a three-count indictment against Leon Fadden
for conduct related to bankruptcy fraud. Before trial, Fadden
proposed a theory-of-defense jury instruction for Counts 1
and 2. The district court rejected that instruction, instead
reciting the Seventh Circuit Pattern Instructions. A jury
convicted Fadden of all three counts. Fadden now appeals his
convictions on Counts 1 and 2, arguing that the district
court denied him a fair trial by refusing to read the jury
his theory-of-defense instructions. We affirm.
Fadden believed that the Internal Revenue Code did not apply
to him. From 2005 to 2013, he earned over $100, 000 per year
but did not submit tax returns. After an audit, the IRS
determined that Fadden owed back taxes and began to garnish
further levies on his paycheck, Fadden filed for bankruptcy.
This filing triggered an automatic stay that prevented the
IRS from collecting during his bankruptcy case. The following
month, Fadden filed bankruptcy schedules- forms in which the
debtor lists financial information such as debts, assets,
income, and expenses. There, Fadden claimed that he had no
legal, equitable, or future interest in any real property. He
also claimed that he had no interest in any decedent's
life insurance policy or estate.
Fadden's schedules did not tell the whole story. Before
he filed for bankruptcy, Fadden knew that he would receive
proceeds from the sale of his mother's home-at the time
listed by the executor of his mother's estate for $525,
000. And Fadden knew that he would receive thousands of
dollars as a beneficiary on two of his mother's life
days before Fadden was scheduled to meet with the bankruptcy
trustee-and more than a week after filing his
schedules-Fadden spoke to a paralegal in the U.S.
Trustee's Office. During that conversation, Fadden
mentioned for the first time that he was entitled to an
inheritance and asked to postpone his bankruptcy. But when
Fadden finally met with his bankruptcy trustee and an
attorney for the U.S. Trustee, he confirmed that his
schedules were accurate and denied receiving an inheritance.
He also denied having spoken to the paralegal at the U.S.
jury returned a three-count indictment against Fadden for his
failure to report these assets and for his statements during
the meeting. Count 1 charged him with violating 18 U.S.C.
§ 152(1) by concealing assets in bankruptcy. Count 2
charged him with violating 18 U.S.C. § 152(3) by making
false declarations on his bankruptcy schedules and statement
of financial affairs. Count 3 charged him with violating 18
U.S.C. § 1001(a)(2) by making false statements during
the investigation of his bankruptcy.
1 and 2 required the government to prove that Fadden acted
with an intent to deceive. At trial, Fadden planned to argue
that the government hadn't shown that he acted with that
intent. To bolster this strategy, Fadden proposed the
following theory-of-defense instruction:
It is the theory of the defense that Mr. Fadden did not fail
to disclose his inheritance on the schedules for the purpose
of deceiving the bankruptcy trustee. Rather, his omissions
were part of his continued failures to abide by the
particulars demanded in the bankruptcy filings and his course
of conduct throughout the bankruptcy, which is inconsistent
with an intent to deceive. If you find that Fadden's
omissions as charged ...