                                                           FILED
                                                            FEB 26 2015
 1                         NOT FOR PUBLICATION
                                                        SUSAN M. SPRAUL, CLERK
 2                                                        U.S. BKCY. APP. PANEL
                                                          OF THE NINTH CIRCUIT
 3                  UNITED STATES BANKRUPTCY APPELLATE PANEL
 4                            OF THE NINTH CIRCUIT
 5   In re:                        )        BAP No. NC-14-1154-JuTaPa
                                   )
 6   DEBRA A. HART,                )        Bk. No. 11-42424
                                   )
 7                  Debtor.        )        Adv. No. 11-04177
     ______________________________)
 8                                 )
     DEBRA A. HART,                )
 9                                 )
                    Appellant,     )
10   v.                            )        M E M O R A N D U M*
                                   )
11   BEVERLY KARAEFF,              )
                                   )
12                  Appellee.      )
     ______________________________)
13
                 Argued and Submitted on February 19, 2015
14                     at San Francisco, California
15                         Filed - February 26, 2015
16             Appeal from the United States Bankruptcy Court
                   for the Northern District of California
17
        Honorable William J. Lafferty, Bankruptcy Judge, Presiding
18                       _________________________
19   Appearances:     David Ashley Smyth argued for appellant Debra A.
                      Hart; Steven J. Hassing argued for appellee
20                    Beverly Karaeff.
                           _________________________
21
     Before:   JURY, TAYLOR, and PAPPAS Bankruptcy Judges.
22
23
24
25
26       *
          This disposition is not appropriate for publication.
27 Although it may be cited for whatever persuasive value it may
   have (see Fed. R. App. P. 32.1), it has no precedential value.
28 See 9th Cir. BAP Rule 8024-1.

                                      -1-
 1           Chapter 71 debtor Debra A. Hart appeals from the bankruptcy
 2   court’s judgment in favor of appellee-creditor, Beverly Karaeff,
 3   finding the amount of $450,000 (plus prejudgment interest of
 4   $222,904.11 for a total of $672,904.11) nondischargeable under
 5   § 523(a)(2)(A).
 6           We AFFIRM the bankruptcy court’s decision finding that the
 7   debts associated with the August 15, 2007 transaction
 8   ($200,000), the August 27, 2007 transaction ($100,000), and the
 9   May 20, 2008 transaction ($100,000) are nondischargeable in the
10   total amount of $400,000.     The bankruptcy court found the
11   $50,000 debt associated with the December 10, 2007 transaction
12   was discharged:     “Debtor was not sufficiently involved in the
13   . . . $50,000 in a manner that would support non-
14   dischargeability as to her.”       Because the $50,000 amount was
15   included in the judgment ($450,000), we REMAND this matter to
16   the bankruptcy court for the limited purpose of entering a
17   corrected judgment in the amount of $400,000 plus prejudgment
18   interest.
19                                 I.    FACTS
20           The bankruptcy court wrote an extensive Memorandum Decision
21   following an eight-day trial on the underlying adversary
22   proceeding in this case.     We borrow heavily from the bankruptcy
23   court’s recitation of the facts but do so in a summary fashion
24   for purposes of this appeal.
25
26       1
          Unless otherwise indicated, all chapter and section
27 references are to the Bankruptcy Code, 11 U.S.C. §§ 101-1532, and
   “Rule” references are to the Federal Rules of Bankruptcy
28 Procedure.

                                        -2-
 1   A.   Prepetition Events
 2        Debra is a licensed real estate agent and her husband,
 3   Clyde Hart (referred to as Toby throughout these proceedings) is
 4   a real estate broker and real estate developer.    Their son Lance
 5   held a contractor’s license.    Debra, Toby and Lance owned
 6   various real estate-related businesses.
 7        1.   New Horizon Investments, Inc.
 8        In September 2002, Debra formed New Horizon Investments,
 9   Inc. (NHII), now a suspended California corporation, as a
10   vehicle through which to receive her real estate sales
11   commissions to minimize her tax liability.    In June 2004, Debra
12   and Toby jointly owned a sixty percent equity interest in NHII
13   and Lance owned the remaining forty percent equity.    Debra was
14   the President and Toby was the Secretary of the company, at
15   least initially.    Lance served as Chief Financial Officer and
16   Vice–President of NHII during the period of formation of GTP
17   Properties Ltd. (GTP).
18        2.   GTP Properties Ltd.
19        GTP was a limited partnership formed in 2004, with NHII as
20   the sole general partner.    The Harts used GTP from time to time
21   in efforts to develop the Shady Glen property (further described
22   below).   To that end, with the assistance of counsel, they
23   drafted a Private Placement Memorandum (PPM), Subscription
24   Agreement (SA) and Limited Partnership Agreement (LPA) for GTP.
25        The PPM was intended as an aid to those considering
26   investing in GTP.    The PPM identifies GTP as a limited
27   partnership created for the sole purpose of acquiring and
28   developing Shady Glen and states that the general partner of

                                     -3-
 1   GTP, NHII, is under contract to purchase the property from a
 2   third party.    The goal of the “Shady Glen Real Estate Project”
 3   was to build, and ultimately sell to “third party buyers,” two
 4   homes on two lots.    The PPM also states that, through the
 5   efforts of NHII, the property has been approved for a lot split
 6   and that design plans for two 5000 square foot houses are being
 7   considered.    The PPM goes on to state that NHII is under
 8   contract to purchase Shady Glen, that as part of the project
 9   NHII will sell its entire interest in the property to GTP for
10   $2,000,000 (the “Purchase Price”) and that upon payment of the
11   Purchase Price, GTP would hold title to Shady Glen “free and
12   clear.”
13        The PPM states that NHII shall raise the capital necessary
14   to develop the Shady Glen property by sale of 120 partnership
15   units at $30,000 each.    Thus, the entire capitalization of the
16   partnership was to be raised by equity investments from
17   partners.    The PPM expressly states:
18               [In] the event that there remains an
                 undersubscription of the Partnership Units,
19               the General Partner would reject all
                 investor subscriptions, promptly notify the
20               subscribed investors of such rejection, and
                 promptly return to the subscribed investors,
21               in full, any subscription monies paid by
                 them.
22
23        The PPM describes NHII as a California corporation whose
24   shareholders are Toby and Debra Hart, as husband and wife, as to
25   a sixty percent interest, and Lance, as to a forty percent
26   interest.    Toby, Debra and Lance were identified as the
27   directors of the corporation; Toby was President of the
28   corporation, Debra was Secretary–Treasurer and Lance was

                                     -4-
 1   Vice–President.
 2         The SA changed the financial arrangements described in the
 3   PPM slightly, by decreasing the purchase price for each
 4   Partnership unit to $25,000 (for a total of 144 Units), but
 5   retained the overall capital to be raised, solely via equity
 6   investments, at $3,600,000.   The language quoted above from the
 7   PPM concerning the effect of an undersubscription of the
 8   Partnership was repeated verbatim in the second paragraph of the
 9   SA.
10         Consistent with the provisions of the PPM and the SA, the
11   LPA states that the sole purpose of the Partnership is to
12   acquire and develop Shady Glen and that the funds necessary for
13   the project, the sum of $3,600,000, will be raised via the sale
14   of equity investments to limited partners.   The LPA identifies
15   NHII as the General Partner and gives the General Partner fairly
16   standard powers of control and management of Partnership
17   operations and assets.
18         The Harts first used GTP to raise capital in June 2004.
19   Four partners, including Gary and Janette Drew, invested a total
20   of $800,000.   The Harts gave the Drews the PPM, SA and LPA which
21   pertained to two homes on two lots.   The Drews eventually
22   invested a total of $200,000 in the project.
23         3.   Shady Glen
24         Shady Glen was a 2.21 acre parcel of undeveloped land on a
25   hillside in Walnut Creek, California.   NHII acquired Shady Glen
26   from Eugene Wolsky via a “Vacant Land Purchase Agreement,” dated
27   September 2, 2003, that called for the property to be
28   transferred to NHII for a total price of $1,200,000, with a

                                    -5-
 1   closing to occur on January 9, 2004.    Although Wolsky gave NHII
 2   a grant deed dated January 23, 2004, in fact the escrow for the
 3   transaction did not close, and the deed was not recorded, until
 4   July 2, 2004, when NHII provided Wolsky the proceeds of a loan
 5   in the amount of $800,000 from Sequoia Mortgage Capital
 6   (“Sequoia”).    Thereafter, NHII effected a lot split into what
 7   would be known as “Lot A” and “Lot B,” each slightly larger than
 8   one acre.
 9        In 2006, Toby and Debra, through their roles in NHII,
10   transferred both lots to Debra, personally, as her sole and
11   separate property.    Lot B was deeded to Debra on August 1, 2006.
12   Lot A was deeded to Debra on September 7, 2006.    Each deed was
13   recorded shortly after its execution.
14        4.     The Transactions Between Karaeff And The Harts
15        Debra met Karaeff at an open house that Debra hosted in
16   2004.     Debra listed and sold Karaeff’s Oakland home in 2004 and
17   was Karaeff’s agent when she purchased a home in the Harts’
18   Diablo neighborhood that year.    Toby and Lance remodeled that
19   home for a total cost of approximately $300,000.    During this
20   time, Karaeff became a close friend of Debra, Toby and the Hart
21   family generally.
22        When Karaeff entered the scene as a lender and/or an
23   investor in the Shady Glen project, Debra owned the entire
24   property.    The house on Lot A was under construction, financed
25   through a construction loan from Washington Mutual Bank (“WAMU”)
26   in the total amount of $1,837,500 which was secured by a deed of
27   trust on Lot A.    Lot B was undeveloped at that time and was
28   security for obligations to Sequoia.    Sequoia held deeds of

                                      -6-
 1   trust on Lot B securing a $400,000 loan obtained on August 1,
 2   2006, and a $200,000 loan obtained on October 19, 2006.
 3        In 2007, Karaeff obtained an equity line of credit on her
 4   home and began investing, or loaning, various sums of money with
 5   the Harts.    Four transactions are relevant in this appeal.
 6        On August 15, 2007, Karaeff advanced $200,000 (it is
 7   disputed whether it was a loan or an investment).    In connection
 8   with this transaction Debra gave her the PPM, SA and LPA, but
 9   this time the documents pertained to the development of one home
10   on Lot B.    The bankruptcy court refers to these documents signed
11   by Karaeff as relating to “GTP II.”    Referring to this version
12   of documents, the bankruptcy court found Debra had primarily
13   prepared the PPM.
14        Karaeff loaned another $100,000 on August 27, 2007, and
15   $50,000 on December 10, 2007.
16        On May 20, 2008, she made a short-term loan of $100,000
17   through Toby, ostensibly to one of his associates,
18   Mr. Mendleson.
19        The Harts did not pay Karaeff back any portion of the
20   $200,000 she advanced nor did she receive payment on her other
21   loans.   Eventually, Karaeff learned that Lot A and Lot B had
22   been lost to foreclosure.
23   B.   Bankruptcy Events
24        On March 4, 2011, Debra filed her chapter 7 petition.
25        On June 4, 2011, the Drews filed an adversary proceeding
26   against Debra, Toby and others seeking to have their debt in the
27   amount of $200,000 found nondischargeable under § 523(a)(2)(A)
28   and (a)(4).

                                     -7-
 1           Two days later, Karaeff filed an adversary proceeding
 2   against Debra, Toby, Lance, Two Harts, Inc.,2 Two Harts
 3   Construction & Development Incorporated and NHII, seeking to
 4   have $450,000 found nondischargeable under § 523(a)(2)(A) and
 5   (a)(4).
 6           Lance, Toby and Two Harts, Inc. filed motions to dismiss in
 7   both adversary proceedings on the grounds that the bankruptcy
 8   court did not have jurisdiction to enter a judgment against them
 9   and a judgment could not be rendered nondischargeable against
10   them because they were not debtors in the related bankruptcy
11   case.     The bankruptcy court granted both motions and dismissed
12   the adversary proceedings as to these non-debtor defendants.
13   Karaeff later sued Toby for fraud in state court.
14           Subsequently, the bankruptcy court entered an order
15   granting Karaeff’s Civil Rule 423 motion to consolidate her
16   adversary proceeding with the Drews’ adversary proceeding for
17   all purposes.     Debra did not appeal that order.   Karaeff’s and
18   the Drews’ adversary proceedings were jointly tried on
19   April 1-4, May 6-7, and August 5, 6, 8 and 9, 2013.     Following
20
21       2
             Lance owned Two Harts, Inc.
22       3
          Civil Rule 42(a), made applicable to bankruptcy
23 proceedings by Rule 7042, provides:

24       (a) Consolidation. If actions before the court involve
         a common question of law or fact, the court may:
25
26       (1) join for hearing or trial any or all matters at
         issue in the actions;
27       (2) consolidate the actions; or
         (3) issue any other orders to avoid unnecessary cost or
28       delay.

                                      -8-
 1   the trial, the bankruptcy court issued separate memoranda of
 2   decision for the respective cases of Karaeff and the Drews.
 3        The bankruptcy court found in favor of Debra and against
 4   the Drews based upon the statute of limitations.
 5        In this case, the bankruptcy court noted that Karaeff’s
 6   financial involvement with the Harts and their entities was
 7   contested.    During the trial, Debra denied any involvement in
 8   the various transactions.       The bankruptcy court stated that it
 9   was “struck by the Harts’ consistent failure to offer rational,
10   sensible, candid explanations regarding the transactions giving
11   rise to these disputes.”    The court further stated that “the
12   ‘story’ to which the Harts testified, as regarding most disputed
13   facts, ranged from implausible, to logically inconsistent, to
14   entirely self-serving.”    Therefore, the bankruptcy court based
15   its conclusions of law in large part on the facts it found and
16   determined through the credible testimony of Karaeff.
17        The court determined that Debra made false
18   misrepresentations in connection with the $200,000
19   loan/investment and that the other elements of § 523(a)(2)(A)
20   were met.    With respect to the August 27, 2007, and May 20,
21   2008, loans, both in the amount of $100,000, the bankruptcy
22   court found that Debra’s involvement in the transactions rose to
23   a level sufficient to find nondischargeability.      The bankruptcy
24   court entered the nondischargeability judgment in favor of
25   Karaeff on March 14, 2014.      Debra timely appealed.
26                             II.    JURISDICTION
27        The bankruptcy court had jurisdiction pursuant to 28 U.S.C.
28   §§ 1334 and 157(b)(2)(I).       We have jurisdiction under 28 U.S.C.

                                        -9-
 1   § 158.
 2                                 III.    ISSUES
 3           A.   Whether the bankruptcy court erred by finding the
 4   $200,000 debt nondischargeable; and
 5           B.   Whether the bankruptcy court applied an incorrect
 6   legal standard regarding Debra’s state of mind for a finding of
 7   fraud in connection with the August 27, 2007 $100,000
 8   transaction and May 20, 2008 $100,000 transaction.4
 9                          IV.   STANDARDS OF REVIEW
10            The question of whether a particular debt is dischargeable
11   is a mixed question of fact and law that we review de novo.
12   See Honkanen v. Hopper (In re Honkanen), 446 B.R. 373, 382 (9th
13   Cir. BAP 2011); see also Searles v. Riley (In re Searles),
14   317 B.R. 368, 373 (9th Cir. BAP 2004) (stating that mixed
15   questions are reviewed de novo when they require the court “to
16   consider legal concepts and exercise judgment about values
17   animating legal principles.”).
18           To the extent an issue within the mixed question can be
19   identified as solely a question of fact, it is subject to a
20   clearly erroneous standard of review.          See Rose v. United
21
22       4
            Debra listed five issues in her opening brief which we
23   distilled into the two claims of error as set forth above.
     Karaeff contends that Debra waived some of her listed issues
24   because they were not included in Debra’s Statement of Issues
     (SOI) on Appeal (which originally stated twenty-two issues). We
25   disagree there is any waiver on this basis. See Office of the
26   U.S. Tr. v. Hayes (In re Bishop, Baldwin, Rewald, Dillingham &
     Wong, Inc.), 104 F.3d 1147, 1148 (9th Cir. 1997) (arguments not
27   specifically listed in an SOI are not waived) and Wages v. J.P.
     Morgan Chase Bank, N.A., (In re Wages), 508 B.R. 161, 164 (9th
28   Cir. BAP 2014).

                                          -10-
 1   States, 905 F.2d 1257, 1259 (9th Cir. 1990).       Moreover, the
 2   clearly erroneous standard does not permit us to conduct a
 3   de novo review of the evidence, but it does allow this Panel to
 4   consider whether there was enough evidence in the record to
 5   support the factual findings of the bankruptcy court.       See
 6   Civil Rule 52(a) (made applicable to bankruptcy proceedings by
 7   Rule 7052(a)).
 8        A finding of whether a requisite element of a
 9   § 523(a)(2)(A) claim is present is a factual determination that
10   we review for clear error.     See Anastas v. Am. Sav. Bank
11   (In re Anastas), 94 F.3d 1280, 1283 (9th Cir. 1996); Candland v.
12   Ins. Co. Of N. Am. (In re Candland), 90 F.3d 1466, 1469 (9th
13   Cir. 1987) (whether there has been a misrepresentation is a
14   finding of fact reviewed for clear error); Cowen v. Kennedy
15   (In re Kennedy), 108 F.3d 1015, 1018 (9th Cir. 1997) (intent to
16   deceive under § 523(a)(2)(A) is a question of fact).       A
17   bankruptcy court’s factual findings are clearly erroneous if
18   they are illogical, implausible, or without support from
19   inferences that may be drawn from the record.       United States v.
20   Hinkson, 585 F.3d 1247, 1259–61 (9th Cir. 2009) (en banc).
21                             V.    DISCUSSION
22   A.   Legal Standards:   § 523(a)(2)(A)
23        Under § 523(a)(2)(A), a debtor is not discharged in
24   bankruptcy from any debt obtained by “false pretenses, a false
25   representation, or actual fraud.”       The creditor bears the
26   burden, under the preponderance of the evidence standard, of
27   demonstrating each of the following five elements:
28   (1) misrepresentation, fraudulent omission or deceptive conduct

                                      -11-
 1   by the debtor; (2) knowledge of the falsity or deceptiveness of
 2   the representation or omission; (3) an intent to deceive;
 3   (4) the creditor’s justifiable reliance on the representation or
 4   conduct; and (5) damage to the creditor proximately caused by
 5   reliance on the debtor’s representations or conduct.    Ghomeshi
 6   v. Sabban (In re Sabban), 600 F.3d 1219, 1222 (9th Cir. 2010);
 7   Citibank v. Eashai (In re Eashai), 87 F.3d 1082, 1086 (9th Cir.
 8   1996).
 9        “The burden of showing something by a ‘preponderance of the
10   evidence,’ . . . ‘simply requires the trier of fact to believe
11   that the existence of a fact is more probable than its
12   nonexistence before [he] may find in favor of the party who has
13   the burden to persuade the [judge] of the fact’s existence.’”
14   Concrete Pipe & Prods. of Cal., Inc. v. Constr. Laborers Pension
15   Trust for S. Cal., 508 U.S. 602, 622 (1993) (citation omitted).
16        Because direct evidence of intent to deceive (the scienter
17   element) is rarely available, “the intent to deceive can be
18   inferred from the totality of the circumstances, including
19   reckless disregard for the truth.”   Gertsch v. Johnson &
20   Johnson, Fin. Corp. (In re Gertsch), 237 B.R. 160, 167–68
21   (9th Cir. BAP 1999); Household Credit Servs., Inc. v. Ettell
22   (In re Ettell), 188 F.3d 1141, 1145 n.4 (9th Cir. 1999)
23   (“reckless conduct could be sufficient to establish fraudulent
24   intent”); Houtman v. Mann (In re Houtman), 568 F.2d 651, 656
25   (9th Cir. 1978) (“Reckless indifference to the actual facts,
26   without examining the available source of knowledge which lay at
27   hand, and with no reasonable ground to believe that it was in
28   fact correct is sufficient to establish the knowledge

                                   -12-
 1   element.”).   Accordingly, a bankruptcy court may find the
 2   requisite intent “where there has been a pattern of falsity or
 3   from a debtor’s reckless indifference to or disregard of the
 4   truth.”   Khalil v. Developers Sur. & Indem. Co. (In re Khalil),
 5   379 B.R. 163, 174–75 (9th Cir. BAP 2007) (discussing intent to
 6   deceive in the context of § 727(a)).
 7        Finally, we are mindful that “exceptions to discharge
 8   should be strictly construed against an objecting creditor and
 9   in favor of the debtor.”   Snoke v. Riso (In re Riso), 978 F.2d
10   1151, 1154 (9th Cir. 1992); Mele v. Mele (In re Mele), 771 F.3d
11   1119, 1125 (9th Cir. 2014).
12   B.   The bankruptcy court did not err in finding that the
          $200,000 debt was nondischargeable.
13
14        After a multi-day trial, the bankruptcy court determined
15   that all the elements for finding the $200,000 nondischargeable
16   were met based on the following:
17        Misrepresentations:   Debra was aware of Karaeff’s
18   significant home equity.   Debra told Karaeff that Karaeff
19   “needed to get her money working for her” which evidences
20   Debra’s involvement in soliciting money from Karaeff and also
21   goes to her role in inducing Karaeff’s reliance.
22        The court found that Debra made the following statements to
23   Karaeff with regard to the $200,000 transferred August 15, 2007,
24   for the development of Lot B through what Debra and Toby
25   represented to be a limited partnership: (1) Debra told Karaeff
26   that $200,000 was needed immediately to begin construction on
27   Lot B; (2) Debra gave Karaeff the SA, which included the
28   statement that, in the event of under-subscription, all

                                    -13-
 1   subscription monies would be returned to the limited partners;
 2   (3) Debra gave Karaeff the LPA, the stated primary purpose of
 3   which was the development of Lot B; and, (4) Debra told Karaeff
 4   that the property was free and clear of liens.    All of these
 5   statements were false.
 6        Knowledge That The Statements Were False:    Debra admitted
 7   that she had no intention to develop Lot B at the time she
 8   convinced Karaeff to invest as a limited partner for Lot B’s
 9   development.   She stated that she wanted to live in the home on
10   Lot A, without the inconvenience of a neighboring residence on
11   Lot B.   None of the $200,000 was used for the development of
12   Lot B.   The Harts had no plans to build a house on Lot B, but
13   nonetheless represented to Karaeff that such a home would be
14   sold with profits distributed to partners within a year.    Even
15   with a substantial underscription, Debra never attempted to
16   return Karaeff’s investment.   Finally, the property was not free
17   and clear at the time that Karaeff committed her $200,000.
18        Intent to Deceive:   Debra intended to deceive Karaeff and
19   induce her reliance on those statements.   Debra supplied
20   partnership documents for GTP II, a sham “partnership” which was
21   never formed and was never intended to be formed.    Debra also
22   convinced Karaeff to commit $200,000 after Karaeff expressed
23   that she was initially inclined to invest $100,000.
24        Justifiable Reliance:    The court determined that Karaeff’s
25   reliance on Debra’s statements was justifiable.    Debra and
26   Karaeff were close friends.    Karaeff had no prior experience in
27   real estate development through a partnership.    Karaeff trusted
28   the expertise of her friend, Debra, who convinced her that the

                                     -14-
 1   investment was a good idea through any number of statements both
 2   oral and contained within the partnership documents Debra had
 3   supplied to Karaeff.
 4        Damages:   Karaeff was damaged in the initial amount of
 5   $200,000 as a result of her reliance on Debra’s false
 6   statements.
 7        On appeal, Debra challenges the bankruptcy court’s findings
 8   on several grounds.    First, Debra argues that the court erred in
 9   finding that (1) she told Karaeff that $200,000 was needed
10   immediately to begin construction on Lot B and (2) she gave
11   Karaeff the LPA, the stated primary purpose of which was the
12   development of Lot B.   Debra maintains that the bankruptcy court
13   erroneously based these findings on the premise that she knew
14   that Lot B could never be developed because she had decided
15   irrevocably that she wanted someday to live in the house on
16   Lot A and never have a neighbor on Lot B.   According to Debra,
17   “this was not [her] testimony on the issue.”   She also stated
18   that Toby wanted to build on Lot B and “. . . well if that is
19   what he wishes that is where - what we’re going to do.”
20        Whether there has been a misrepresentation is a finding of
21   fact reviewed for clear error.    In re Candland, 90 F.3d at 1469.
22   The record shows that at another point during the trial Debra
23   testified:    “I had no intention of having another home built on
24   Lot B ever.”    Further, Toby testified that from the time Karaeff
25   paid the $200,000 until the date Lot B was lost to foreclosure
26   there was no construction done on Lot B.    He also testified that
27   he had no idea where the money was actually used.
28        The bankruptcy court did not find the Harts’ testimony

                                      -15-
 1   credible.   Based on the court’s credibility determination, a
 2   rational factfinder could find that Debra’s contradicting
 3   statements regarding the development of Lot B were not worthy of
 4   belief and could reasonably infer that neither Debra nor the
 5   Harts ever intended to construct a home on Lot B.    Where there
 6   are two permissible views of the evidence, the factfinder’s
 7   choice between them is not clearly erroneous; this applies to
 8   credibility-based findings and to findings based on inferences
 9   from other facts.   Lewis v. Ayers, 681 F.3d 992, 999 (9th Cir.
10   2012); Leon v. IDX Sys. Corp., 464 F.3d 951, 958 (9th Cir.
11   2006); Anderson v. City of Bessemer City, N.C., 470 U.S. 564,
12   574 (1985).   In short, we discern no clear error.
13        Next, Debra argues the bankruptcy court erred in finding
14   that she made a false statement when she gave Karaeff the SA,
15   which included the statement that, in the event of
16   undersubscription, all subscription monies would be returned to
17   the limited partners.   Debra submits that there is no evidence
18   in the record to show that at the time Karaeff transferred the
19   $200,000, she intended that it would not be returned should the
20   remaining investment money not be raised.
21        Again, there is no merit to this argument.   Whether there
22   is an intent to deceive is a question of fact subject to the
23   clearly erroneous standard.   In re Kennedy, 108 F.3d at 1018.
24   Likewise, we review the sufficiency of the evidence to support a
25   factual finding under the clearly erroneous standard.   See
26   Civil Rule 52(a).   Because Debra asserts there is no evidence
27   regarding her intent to deceive, our review under the clearly
28   erroneous standard requires a complete set of the trial

                                    -16-
 1   transcripts and other relevant evidence considered by the
 2   bankruptcy court.   See Friedman v. Shelia Plotsky Brokers, Inc.
 3   (In re Friedman), 126 B.R. 63, 68 (9th Cir. BAP 1991) (citing
 4   Fed. R. App. P. 10(b)(2) which provides that “[i]f the appellant
 5   intends to urge on appeal that a finding or conclusion is
 6   unsupported by the evidence or is contrary to the evidence, the
 7   appellant shall include in the record a transcript of all
 8   evidence relevant to such finding or conclusion.”).   Debra
 9   failed to include a complete set of the trial transcripts in the
10   record and has included the direct testimony by declaration of
11   only Karaeff and herself.   Therefore, we are unable to address
12   Debra’s “no evidence” argument.   See Ehrenberg v. Cal. State
13   Univ., Fullerton Found. (In re Beachport Entm’t), 396 F.3d 1083,
14   1087 (9th Cir. 2005) (failure to provide essential transcripts
15   or portions thereof can result in an adverse decision on the
16   merits).
17        Moreover, whether Debra had the intent to deceive is a
18   question of fact that can be inferred from the totality of the
19   circumstances, so Debra’s credibility is an important factor.
20   Here, the bankruptcy court properly considered the totality of
21   the circumstances and did not find the Harts’ testimony
22   credible.   The court found Debra’s intent to deceive was
23   “readily” apparent:
24        Debtor supplied Karaeff with partnership documents for
          GTP II, a sham ‘partnership’ which was never formed,
25        and was never intended to be formed. Debtor made
          other false statements regarding the development of
26        Lot B, which she admitted was never going to happen on
          her watch and she also convinced Karaeff to commit
27        $200,000 after Karaeff expressed that she was
          initially inclined to invest $100,000.
28

                                    -17-
 1   These findings, which turned on credibility determinations, are
 2   not clearly erroneous.
 3        Debra also challenges the bankruptcy court’s finding that
 4   her statement to Karaeff that the property was free and clear of
 5   liens amounts to a false misrepresentation.     According to Debra,
 6   the bankruptcy court’s finding was based upon Karaeff’s
 7   statement in her direct written testimony referring to a
 8   statement allegedly made orally by Debra when they first visited
 9   the Shady Glen site:
10        Debi told me that she had found the property one day
          and wrote a check for it on the spot without even
11        telling her husband. She said the property was free
          and clear.
12
13   Debra argues that this statement by the bankruptcy court is not
14   quoted but paraphrased, and it does not specify whether
15   Karaeff’s claim was that the property was free and clear when
16   purchased or free and clear at the time that the statement was
17   made.   Debra also maintains that the investment documents and
18   the alleged description of the investment say nothing about the
19   property being free and clear of liens until it is purchased by
20   the limited partners, at which time the owner (and presumably
21   his mortgages) would be paid off.     Debra opines that it is
22   irrelevant to the buyer whether the seller owns the property
23   free and clear of liens since whatever liens are on the property
24   will be paid off in escrow.   In the end, Debra asserts there is
25   not enough information as to what was said or heard or
26   understood by either Debra or Karaeff regarding the casual “no
27   lien” statement during that first visit to Shady Glen to
28   constitute evidence of dishonesty on Debra’s part.

                                    -18-
 1        These arguments are not only unclear but also unconvincing.
 2   Even assuming there was error, it was harmless when the
 3   bankruptcy court identified numerous other misrepresentations
 4   made by Debra to Karaeff.   Any one of these statements would be
 5   sufficient to support the nondischargeability of the $200,000
 6   debt without the “no lien” statement.   Moreover, in considering
 7   the totality of the circumstances to determine whether Debra had
 8   the intent to deceive, the bankruptcy court could properly
 9   consider whether Debra’s “no lien” statement to Karaeff during
10   the first visit to the Shady Glen property was part of a pattern
11   of falsity.   In sum, Debra has offered no basis for us to
12   overturn the bankruptcy court’s conclusion that the $200,000
13   debt was nondischargeable based on Debra’s fraud.
14        Debra also makes a number of arguments in her reply brief
15   about the bankruptcy court’s findings on the $200,000 debt.    We
16   do not consider them because arguments raised for the first time
17   in a reply brief are waived.   Coleman v. Quaker Oats Co.,
18   232 F.3d 1271, 1289 n.4 (9th Cir. 2000).
19   C.   The bankruptcy court did not err in finding that the
          August 27, 2007 debt in the amount of $100,000 was
20        nondischargeable.
21        With respect to this debt, the bankruptcy court noted that
22   Karaeff conceded that Debra was not present when Karaeff and
23   Toby entered into the August 27, 2007 loan for $100,000.
24        The bankruptcy court’s Memorandum Decision reflects that
25   after eight days of trial, Debra brought an oral motion under
26   Civil Rule 52 for judgment on partial findings with respect to
27   the August 27, 2007 $100,000 loan.    After discussion concerning
28   the motion, the court determined that Karaeff was not alleging

                                    -19-
 1   any direct involvement by Debra and must prove this aspect of
 2   her case, if at all, by resort to imputation of Toby’s
 3   fraudulent statements on a partnership theory.   After trial, in
 4   its written findings of fact and conclusions of law, the
 5   bankruptcy court sua sponte reconsidered that aspect of its
 6   decision.   Upon reconsideration, the court found that Debra was
 7   “directly involved” in the August 27, 2007 $100,000 transaction
 8   such that the debt was nondischargeable in her bankruptcy.
 9        In her original SOI, Debra listed as an issue:   Whether the
10   bankruptcy court committed an error of law or an abuse of
11   discretion that during the trial, the judge stated that out of
12   the four loans involved in the trial, the middle two loans
13   involving $150,000 were out.    No defense was given on those two
14   loans.   In his decision he stated he revisited “those loans” and
15   included them in the judgment.    In her opening brief, Debra does
16   not raise, challenge, or otherwise analyze whether the
17   bankruptcy court’s decision to sua sponte reconsider its earlier
18   ruling had any impact on her.    Therefore, any arguments relating
19   to this issue are waived.   Indep. Towers of Wash. v. Wash.,
20   350 F.3d 925, 929 (9th Cir. 2003) (“[W]e cannot ‘manufacture
21   arguments for an appellant’ and therefore we will not consider
22   any claims that were not actually argued in appellant’s opening
23   brief.”).
24        The bankruptcy court found that Debra was directly involved
25   in the August 27 transaction in the following ways:
26        (1) Approximately one month earlier, in July 2007,
          Debra told Karaeff on two occasions that she needed to
27        get her money working for her; the Court has already
          found that Debra was aware of Karaeff’s equity in her
28        home and instrumental in helping Karaeff obtain the

                                      -20-
 1        line of credit that would finance the $100,000
          advanced on August 27, 2007; (2) Debra made false and
 2        misleading statements to Karaeff regarding Lot A—the
          development project that would purportedly benefit
 3        from the $100,000 loan. Debra took Karaeff to Shady
          Glen, showed her the house on Lot A and said that it
 4        would be completed within 30 to 45 days. Whether this
          statement was false when made or an overly optimistic
 5        projection could be argued. But Debra also said that
          the property was free and clear of liens, which was
 6        clearly a false statement; (3) Karaeff’s relationship
          with Debra was such that statements by Debra carried
 7        significant weight on a personal level, given their
          friendship, and on a professional level, given Debra's
 8        presentation as an individual with knowledge and
          expertise in real estate development. The Court
 9        believes that Toby, on his own, could not have
          obtained this $100,000. Debra's conduct, through
10        these false and misleading statements, was essential
          to Karaeff's decision to advance funds (emphasis
11        added).
12        The bankruptcy court further found:
13        Toby then came to Karaeff on the date in question and
          said that he needed $100,000 to finish the house on
14        Lot A. This statement was false when made. The money
          that Karaeff loaned was never used to develop Lot A.
15        In his trial testimony, Toby said he could not recall
          whether any amount of that sum was used in the
16        construction on Lot A. But during his deposition,
          Toby admitted that none of the proceeds of that loan
17        was used for Shady Glen. Toby intended to deceive
          Karaeff by inducing her reliance on the false
18        statement. He did so, and Karaeff justifiably relied
          on Toby's statement. Damages resulted when the money,
19        loaned for the completion of Lot A, was not used in
          any part for that purpose and was not returned to
20        Karaeff.
21        The bankruptcy court noted that the Ninth Circuit ruled,
22   under similar facts, that an individual in Debra’s position may
23   be held directly responsible for her role in a fraudulent
24   scheme.   La Trattoria, Inc. v. Lansford (In re Lansford),
25   822 F.2d 902, 904–05 (9th Cir. 1987).   In In re Lansford, the
26   Ninth Circuit concluded that, by virtue of her participation and
27   involvement in a fraudulent transaction, a wife could be held
28   culpable for that transaction, even where her husband actually

                                    -21-
 1   prepared the fraudulent statement.     The debtor husband made a
 2   false financial statement in connection with a purchase of a
 3   restaurant from plaintiff.    After debtor husband and debtor wife
 4   jointly filed bankruptcy, plaintiff brought an action under
 5   § 523(a)(2)(B) against both husband and wife.
 6        Instead of relying on imputation on a partnership theory
 7   through agency principles, the Ninth Circuit cited evidence
 8   which connected debtor wife to the financial statement and the
 9   deception.   Evidence establishing the debtor wife’s direct role
10   in the fraud included findings that: (1) debtor wife was
11   involved in initiating discussions with La Trattoria, even if
12   through her husband; (2) debtor wife discovered the potential
13   restaurant venture; and, (3) debtor wife signed the purchase
14   documents transferring the restaurant which repeated a
15   misrepresentation contained within the false financial
16   statement.   Id. at 904.   The Ninth Circuit found debtor wife
17   “culpably responsible” for the fraud.     Id.   It reversed the
18   ruling of this Panel that had declined to impose liability on
19   debtor wife due to lack of “knowledge or connivance” on her
20   part.   Id. at 903.
21        After considering the facts and holding in In re Lansford,
22   the bankruptcy court concluded:
23        Although Debra was not physically present when Karaeff
          loaned $100,000 at a meeting with Toby, this event
24        occurred approximately one month after Debra and
          Karaeff visited Shady Glen, and approximately two
25        weeks after Debra made other false statements about
          Shady Glen in connection with the ‘partnership
26        development of Lot B. In the middle weeks of August,
          Debra was instrumental in the process by which Karaeff
27        obtained the line of credit through which Karaeff
          would fund advances to Hart entity projects. The
28        Court finds Debra’s role in the fraud to be direct and

                                     -22-
 1        essential to its success. Her false statements
          regarding Lot A in July and early August of 2007 are
 2        properly carried forward to the August 27, 2007
          transaction date. . . . Based on the foregoing, all
 3        elements of [§] 523(a)(2)(A) are established . . . .
 4        On appeal, Debra argues that there is no evidence that
 5   Karaeff’s August 27, 2007 loan was made with her knowledge or
 6   participation.   Again, we cannot address Debra’s “no evidence”
 7   argument without the complete trial transcript and other
 8   evidence considered by the bankruptcy court.
 9        Next, citing Bullock v. BankChampaign, N.A., 133 S.Ct. 1754
10   (2013) and Sachan v. Huh (In re Huh), 506 B.R. 257 (9th Cir. BAP
11   2014) (en banc), Debra maintains there must be some evidence
12   that she knew Toby was asking Karaeff for additional loans and
13   that he was intending to defraud her and that she, Debra, had
14   participated directly in these fraudulent loans.    Debra fails to
15   provides any analysis as to how the holdings in Bullock and
16   In re Huh help her case.   Her challenge seems to be that the
17   bankruptcy court applied an incorrect legal standard regarding
18   her state of mind for a finding of fraud when she was neither
19   present when the loan was made to Toby nor did she have
20   knowledge of the loan.
21        The Supreme Court in Bullock held that the term
22   “defalcation” is treated similarly to “fraud” for purposes of
23   § 523(a)(4).   133 S.Ct. at 1756.   The court ruled that
24   defalcation “includes a culpable state of mind requirement akin
25   to that which accompanies application of the other terms in the
26   same statutory phrase.   We describe that state of mind as one
27   involving knowledge of, or gross recklessness in respect to, the
28   improper nature of the relevant fiduciary behavior.”    Id. at

                                    -23-
 1   1757.     Where actual knowledge is lacking, intent can still be
 2   shown for purposes of § 523(a)(4) if the “fiduciary ‘consciously
 3   disregards’ (or is willfully blind to) ‘a substantial and
 4   unjustifiable risk’ that his conduct will turn out to violate a
 5   fiduciary duty.”     Id. at 1759-60.
 6           The Panel in In re Huh considered the mental state for
 7   fraud set forth in Bullock in connection with the imputation of
 8   fraud under § 523(a)(2)(A) when a partnership or agent-principal
 9   relationship was found.     The Panel, sitting en banc, held that
10   before an agent’s fraud may be imputed to the debtor-principal,
11   for purposes of the discharge exception for debts obtained by
12   actual fraud, proof is required that the debtor is culpable,
13   that is, that the debtor “knew or should have known” of the
14   agent’s fraud, though the debtor need not have participated
15   actively in the fraud.     506 B.R. at 272.
16           Neither Bullock nor In re Huh help Debra on appeal.   There
17   is no indication that the holding in Bullock heightens the state
18   of mind required for fraud under § 523(a)(2)(A) as already
19   required in this Circuit.     Further, the bankruptcy court found
20   it unnecessary to find a “de facto partnership”5 through which
21   to impute Toby’s fraud to Debra under agency and partnership
22   principles because the court found “direct, culpable, conduct by
23   Debra and involvement by her in the fraud such that it is her
24   own.”     Therefore, the standards for the imputation of fraud set
25   forth in In re Huh are not applicable.
26
         5
27        Karaeff had alleged in her first amended complaint that
   Debra, Lance and Toby were “defacto partners” with each being the
28 agent of each of the others.

                                      -24-
 1          In addition, Debra never argues that the bankruptcy court’s
 2   reliance on In re Lansford was improper or otherwise misplaced.
 3   Even in the absence of “knowledge or connivance,” the holding in
 4   In re Lansford allows the imposition of liability when there is
 5   evidence showing Debra’s direct role in the fraud.    Here, the
 6   bankruptcy court considered Debra’s conduct and misleading
 7   statements made to Karaeff one month prior to this transaction,
 8   Debra’s close personal relationship with Karaeff, and Debra’s
 9   role in helping Karaeff obtain the substantial line of credit on
10   her property.    The bankruptcy court found that Debra’s conduct
11   and misleading statements were essential to Karaeff’s decision
12   to advance the funds.    Accordingly, the bankruptcy court found
13   sufficient circumstantial evidence from which to infer Debra’s
14   direct role in the fraud.
15          Debra does not challenge any of these findings on appeal
16   nor does she contend that these facts do not support an
17   inference of her direct involvement in the fraud.    In any event,
18   insofar as the bankruptcy court’s findings were based mostly on
19   its credibility determinations, such determinations are entitled
20   to special deference.    Leon v. IDX Systems Corp., 464 F.3d at
21   958.    In sum, Debra has offered no basis for us to overturn the
22   bankruptcy court’s conclusion that the $100,000 debt was
23   nondischargeable based on Debra’s direct involvement in the
24   fraud.
25   D.     The bankruptcy court did not err in finding that the
            May 20, 2008 debt in the amount of $100,000 was
26          nondischargeable.
27          In connection with this loan, Karaeff’s account is that she
28   was having dinner and watching television with Toby and Debra on

                                     -25-
 1   May 20, 2008.   Toby was on the phone, stopped his conversation,
 2   and asked Karaeff if she would like to make a quick $6,000
 3   through loaning his associate $100,000 that would be paid back
 4   in thirty days at six percent interest.    It was later revealed
 5   to Karaeff, by Toby, that this associate was Mendelson.    Karaeff
 6   stated that Debra was present, the two looked at each other, and
 7   Debra smiled saying “it will be okay.”    The bankruptcy court
 8   found Karaeff’s testimony credible on the Mendelson transaction,
 9   in contrast to the Harts’ testimony which was evasive and relied
10   on facts not proven at trial.    The court further found that:
11        Debra and Toby jointly participated in this fraud,
          each making statements to solicit the Mendelson
12        $100,000 from Karaeff. Toby made the false statement
          that he would loan, on Karaeff’s behalf, $100,000 to
13        his friend. Debra’s statement “it will be okay”
          appears, at a minimum, to be sufficiently reckless to
14        be a false statement under 523(a)(2)(A). Even without
          finding that this statement on its own supports a
15        claim for non-dischargeability, Debra’s role in
          inducing Karaeff’s reliance on a false statement made
16        by Toby is sufficient direct involvement in the fraud
          such that fraudulent intent by Debra is found and she,
17        under Lansford, is responsible for any
          non-dischargeable debt.
18
19        The court next assessed Debra’s statement, “it will be
20   okay,” to determine whether it was so recklessly indifferent to
21   the truth as to be fraudulent.    The bankruptcy court found:
22        Debra was, at best, recklessly indifferent to the
          truth of her comforting assertion that Karaeff’s money
23        was safe with Mendelson, via Toby. Furthermore, the
          context of the transaction suggests that Debra knew
24        Toby’s motives and that the money was not going to
          Mendelson.
25
          Debra added her statement to bolster Toby’s false
26        statement and to induce Karaeff's reliance. The Court
          need not find this statement false in itself. It is
27        the most significant evidence of Debra’s involvement
          in the fraud, which was as follows: (1) Karaeff was
28        Debra's friend, who was socializing with Debra and

                                      -26-
 1        Toby on the night the transaction occurred; their
          relationship was such that Karaeff would rely on
 2        Debra’s advice and opinion; (2) Were the money to go
          to Shady Glen (and it appears that it was never
 3        transferred to Mendelson out of the Two Harts
          account), Debra would directly benefit from the
 4        Karaeff loan as it would go toward the construction of
          her home in an otherwise economically challenged
 5        project; (3) Debra, knowing that the money was not
          going to Mendelson, offered her assurance through
 6        smiling and saying “it will be okay.” This statement
          was intended to induce Karaeff's reliance on Toby's
 7        false statement. Finding Debra directly involved with
          the fraud, this Court concludes that this debt may be
 8        determined non-dischargeable in Debra’s bankruptcy.
 9        On appeal, Debra again complains there is no evidence in
10   the record to support the bankruptcy court’s decision.    She
11   further claims, without citation to any authority, that the
12   bankruptcy court’s finding of reckless indifference to the truth
13   without a finding of dishonesty is not enough.
14        We summarily dispose of Debra’s argument in relation to
15   this transaction.    To the extent Debra is relying on Bullock and
16   In re Huh, those cases do not help her case as explained above.
17   Here, applying the principles set forth in In re Lansford, the
18   bankruptcy court found that Debra directly participated in the
19   fraud.    In so finding, the court properly considered Debra’s
20   reckless disregard for the truth when she stated “it will be
21   okay.”    Under § 523(a)(2)(A), “the intent to deceive can be
22   inferred from the totality of the circumstances, including
23   reckless disregard for the truth.”     In re Gertsch, 237 B.R. at
24   167–68.    And, again, witness credibility played an important
25   role in the trial court’s determination.    In sum, Debra has
26   offered no basis for us to overturn the bankruptcy court’s
27   conclusion that the $100,000 debt was nondischargeable based on
28   Debra’s direct involvement in the fraud.

                                     -27-
 1   E.   Remaining Issues
 2        Debra contends that the bankruptcy court’s findings and
 3   evidence in the Drews’ adversary proceeding cannot be considered
 4   in this appeal.   Debra further asserts that Karaeff cannot
 5   allege for the first time on appeal that the findings or the
 6   evidence in Drew are relevant to Debra’s mens rea in Karaeff.
 7   Finally, she maintains that the Drews were strangers and Karaeff
 8   was a personal friend so statements in the Drew case should not
 9   be considered here.
10        Debra fails to point out what evidence is in the record
11   before us regarding the Drews’ case that has any bearing on the
12   issues raised in this appeal.     The bankruptcy court granted
13   Karaeff’s Civil Rule 42 motion to consolidate her adversary
14   proceeding with that of the Drews for all purposes, including
15   trial.   We found nothing in the record to show that she appealed
16   this order.   Instead she now complains about the effect of the
17   consolidation for the first time in this appeal which we do not
18   consider.   See Smith v. Marsh, 194 F.3d 1045, 1052 (9th Cir.
19   1999) (“[W]e will not consider arguments that are raised for the
20   first time on appeal.”).
21                              VI.   CONCLUSION
22        For the reasons stated, we AFFIRM the bankruptcy court’s
23   decision regarding the nondischargeability of the August 15,
24   2007 $200,000 debt, the August 27, 2007 $100,000 debt, and the
25   May 20, 2008 $100,000 debt for a total of $400,000.     Because the
26   bankruptcy court found the December 2007 debt dischargeable, but
27   also included this amount in the judgment for $450,000 (plus
28   prejudgment interest), we REMAND this matter to the bankruptcy

                                      -28-
 1   court for the limited purpose of correcting the judgment.
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