Judge: Ruling in Schwyhart Fraud Case to Come In Weeks

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A ruling won’t be coming this week in the Dallas trial regarding alleged bankruptcy fraud by Bill and Carolyn Schwyhart.

Bankruptcy Judge Harlin Hale said from the bench during testimony Monday morning that he would make a ruling during the next few weeks.

The three-day trial recessed for lunch with Carolyn Schwyhart on the witness stand facing followup questions by the couple’s chief nemesis among their creditors: Brian Ferguson of Rogers.

Ferguson is trying to prove the Schwyharts have demonstrated a pattern of misconduct regarding full financial disclosure in their Chapter 7 case, filed on July 6, 2018 in Texas.

The Schwyharts are accused of knowingly and fraudulently making false statements under oath in their bankruptcy filings and during their creditors meeting.

They dispute the allegations, which are blocking the discharge of debts in their long-running bankruptcy case. 

Ferguson is trying to collect on more than $800,000 in judgments against Bill Schwyhart, the former high-flying northwest Arkansas developer who left millions of dollars of debt and judgments in the wake of his post-2008 meltdown.

If the Schwyharts are successful, they are expected to exit bankruptcy court creditor free.

If their defense fails, the couple’s debts won’t be discharged, leaving Ferguson and other creditors free to pursue financial claims against them.

Ferguson believes the Schwyharts are the hidden beneficiaries of a once-secret legal settlement that produced $3 million for them and re-established their ownership of their million-dollar mansion in Rogers through a shrouded arrangement.

The trial reconvenes at 1:30 p.m.