Fincke v. Radley, No. 14-1276 (1st Cir. 2015)
Annotate this CaseEven after receiving investments from four investors of over $20 million from 2001 to 2005, Access Cardiosystems, Inc. filed for Chapter 11 bankruptcy protection in 2005. Four investors filed a third amended complaint against Access’s founder, director, and officer, Randall Fincke, alleging, among other claims, that Fincke had violated the Massachusetts blue sky law. The bankruptcy court found as a matter of fact that Fincke had made a false statement of material fact to investors in violation of the blue sky law and that one such investor was entitled to $1.5 million in damages for his investments that Fincke solicited “by means of” that material misstatement. On appeal, these findings were affirmed by the district court. The Supreme Court affirmed, holding (1) the bankruptcy court did not err in finding that Fincke knew or should have known of the falsity of the misstatement and that the falsity could not be cured by warnings; (2) it was not inconsistent for the bankruptcy court to find this particular misstatement was material to investors; and (3) the bankruptcy’s finding as to damages was not in error.
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