(S.D. Ind. Jan. 14, 2015)
The district court affirms the bankruptcy court’s nondischargeability judgment in the amount of $3 million. The debtor obtained $3 million from a business contact to invest in certain stock. The debtor proceeded to use the funds for other purposes until the investor requested return of the funds, at which time the funds had been spent or lost by the debtor on other ventures. The debtor argued on appeal that if the funds had been invested per the agreement, there would have been a loss based on the drop in value of the stock over the time period in question. Thus, the debtor argued, that drop in value should reduce the amount of the judgment. The court holds that the bankruptcy court properly held that the full $3 million was obtained through fraud and that while the stock may have dropped in value the investor never had an opportunity to take the risk because the debtor failed to comply with the agreement. Opinion below.
Author: Matt Lindblom