The Bankruptcy Appellate Panel reversed an order of the bankruptcy court and remanded. The court held that the bankruptcy court erred in ruling that the debtor’s oral misrepresentations regarding certain assets and items of income were statements respecting his financial condition that excepted a loan from nondischargeability based on fraud under the Bankruptcy Code.
Jason Belice and his wife petitioned for chapter 7 relief. Michael Barnes filed an adversary proceeding alleging that Belice had obtained a loan from him by fraud. Barnes asserted that in obtaining the loan Belice had fraudulently misrepresented his salary, the amount of rent that he could afford, that he was a San Diego Chargers season ticket holder, that he had purchased a $28,000 engagement ring, that he had voluntarily left his law firm to pursue more lucrative transportation and computer businesses, that loan collateral would be Belice’s partial ownership interest in an entertainment establishment in Macau that was very successful and would likely soon be sold to the Sands Casino Company, and that Belice’s interest in that partnership was worth far more than the loan he was to obtain from Barnes. Barnes also alleged that Belice had fraudulently failed to disclose that he was being sued for $530,000 as a guarantor of a debt of the Running Horse Development Group, LLC.
