Case Summary:
Success in a section 523(a)(2)(A) adversary proceeding requires that the Plaintiff prove the five elements of fraud. The Plaintiffs waived their fraud claims for any transaction before July 1999, but the Court examined the merits of those claims nonetheless. The Debtor, who owned a large amount of the subject stock, failed to disclose to the Plaintiffs his relationship with the corporation's insider, and that he was selling the stock away from his employing investment company. Even if the Plaintiffs' pre-1999 claims had not been time barred, those claims would have failed. The Debtor's omissions were immaterial to the plaintiffs, and under the unique facts in this case the Plaintiffs were following the Debtors lead and not his credentials when they bought the stock. The debtor also lacked the intent to deceive. The evidence indicated that the Debtor sincerely believed that he was letting his friends in on a great deal. The Plaintiffs also failed to demonstrate that they justifiably relied on the Debtor's false statements. The Plaintiffs never read the disclosure statements which were accurate assessments of the risk involved. As for the 1999 transaction, the Plaintiffs had all of the information, and received no false information from the Debtor upon which to rely.

Statute/Rule References:
11 U.S.C. § 523(a)(2)(A) -- Nondischargeability - Fraud
11 U.S.C. § 523(a)(4) -- Nondischargeability - Fraud in Fiduciary Capacity
Wis. Stat. § 893.93

Key Terms:
Fraud