that his property affords and transfers and for value in good faith this appeal focuses on just three transfers they were just over a million dollars and they were made on the central of the two thousand and seven to re purchase three loans made by kate way to one borrower named watt h u a zoo ex hugh longs which gateway had funded on or about august twenty third two thousand and seven repurchase wasn't anything out of the ordinary way as well was out of the ordinary with respect to these particular loans which is why we've focused this appeal on these loans on the just as the ones we that has the money to travel debt with many many loans and what we're focusing this appeal on are the facts relating to the loans which there was evidence of irregularities detected with those loans and the fact that they had been transferred or rejected by three different investors and that there was evidence that they're the expert testimony show that they should have been suspicious about these loans that were the fact that they were subprime and the had and they had a commitment from an investor every time they stole the lawn they had what they call these locks which are in file and everything so investor knew when it committed to buy these loans that at least on paper that this was  your argument is your argument that the people should have known there was a problem both by being rejected by others applying some kind of commercial standards and just to candy's comment about bogus is that your human are more to it well you know because on the essence of it i mean the kenny e mail specifically is that your argument goes or more to it factually is that it may be enough i'm just asking well when you say the other read there's evidence i didn't i didn't say there was other evidence i said evidence of a you pointed to that other institutions had rejected those moms i thought you said that when you say that yes i did i think that's not but there's  more to it than just the fact that other institutions have rejected the longs what else is it besides that and mr kinney statement of bogus what else you say would force us to find that there was bad fa lack of good faith in just the fact that the there was evidence in addition to the kenny e mails there was evidence at trial that these loans were problematic and they stood out from all the rest of the logs and those facts were that force a finding of lack of good faith as a matter of law was certainly if you accept the canny e mails as it can e mails out for a minute and look at judge  sheds question with respect to the other evidence that this forced us to make a finding reversing the lower court a bit well the answer is yes and the mic explain why under the five forty eight if you're on inquiry notice if you know if you know and as we're saying that can e mails that was actual knowledge of the fraudulent purpose of the transfer then you don't have a five forty eight c defense you deem to have knowledge in you except the money and at the risk of having to pay it back or if the other product that is should have known and that's been interpreted to mean that if you are an inquiry notice of the possible fraudulent purpose of the transfer that you receive then you are required to conduct improve a trial that you did a reasonably diligent investigation measured by the standards of the particular industry and that you did an investigation and either that these should have been suspicious about the long side but it been an increase that is it and that evidence is what that includes being returned three times by three different investors which the evidence was and the expert testimony was that side business proposition well it's not a business proposition the more i mean when you have a sale of belong to an investor the will be that investors pick up some loans because they think they're good of loan and i don't understand why that would be evidence of the issue of whether the market was in turmoil and the evidence was that  investors were changing their requirements from time to time and that's what made it difficult in some instances to find investors to pick up some of these laws in the secondary market but in each case faith after to day trial the district court did find what do you say is the standard of review of that particular well the the bankruptcy courts say this about this record we explain that in our preview district court in evaluating what the bankruptcy court did did not correctly apply the appropriate standard in determining whether they had reached the five forty eight  from before the bankruptcy judge it was got paid on december eleventh two thousand and seven essentially closed the books there be no further investigation there was no evidence of any contact so that when kenny mr kenny on december on january eleventh indicated told subordinate that this is the guy who sold us these completely bogus loans it reflects his state of mind on the date of the translator a month earlier because there was nothing in between that time thought about it informed opinion in that timeframe where's the evidence that he necessarily thought that on the day of the transfer that he necessarily form that opinion on the day of the transfer we it's from the facts that there is no evidence or if there's necessarily so i said because see this you could have this argument today and in a month from now you could tell somebody made that panel was tough for me that it mean that you thought of the second you month later those loans were bogus that was i mean he formed the opinion that they were bogost based on that day and the day of the transfer well the point is there was no evidence of any communication work fine and there's also have it as a mistake and he was a hands on person who did the time good none of that goes to my point i don't think do you know that you necessarily i mean what i'm trying to say to you that there was evidence that i know have led to him yet but just because there's evidence as mean that the fact finder has to accept your view of that evidence does it there's no point no i mean obviously that's the have to but we're trying to if you want then you want the court to even if you accept the bogus has to mean what you say yes but i was saying is that it's an illogical conclusion to reach based on the evidence that there were problems with his long he's a hands on person there's no evidence of learning in between the bank to produce him to explain that a trial when it was their burden to establish the defense a hail mary pass based on this one e mail that was sent there were two emails there are upwards there was a second e mail that was related but it's the main mainly the one but you're you're right you're right your honor there was a second e mail that that smoking gun for a number of reasons the judge really focused on the fact that there was nothing whatsoever else in the record that would support the notion that it was a smoking gun  that there was affirmative testimony from somebody who worked side by side with mr kenny that if mr kenny had become aware that there was fraud or suspicion he would have known about it he was a kind of guy that would have been talking about it and the fact is there was nothing in the record other than the two e mails that suggested that there was anything suspicious in his mid to go to found could the code of found that e mail to create at least some evidence of inquiry notice could dakota oh yes the court could have and the court to simply exercise its discretion not to after looking at the entire record i think the trustees case is based on the proposition that there's only one possible logical interpretation that's the dictionary interpretation and that the judge was precluded from what he did which was consider the entire actually investigated af am as a client in the manner that it investigated other clients an authority that i was looking for was whether the loans themselves and not just your view about it but what evidence on those points was before the trial  i want to know whether there were standard procedures whether they were followed and whether evidence of those standard procedures and compliance with them was before the trial  absolutely in all of those instances in fact the entire case was predicated on trying to demonstrate that to the court in response to your first question about the initial review before taking the mortgage lender on as a client alex seif though testified at great length about what steps were taken in order to do due diligence on the legitimacy  the financial capability of the mortgage lender before it was taken on that testimony was presented there was also testimony from  procedures the intake procedure the review of the particular loans and cells and mr mcgrath testified about the whole model the business model which goes to the point you honor was making that what was a review of the loans because it was a purchase and sale facility one of the critical things is that they were not underwriters of the loans they were mere temporary bridge lenders of these loans so they weren't looking at these loans as an underwriter the take out investors were really performing that task and what was done that the paperwork would come in the day before the loan was to be funded which was typical in the industry and they followed the industry standards of looking at it to make sure that the paperwork was consistent with whatever loan program they take out lender was offering were they offering interest only  facility at that time or not did have the criteria that the loan had to satisfy and if it met those things there was a specific checklist and there was a master mortgage agreement that we put into evidence and put on evidence that that was followed that had the procedures and that they were in fact all it was there any evidence of industry standards when that went along that been rejected about three other vendors there was our expert witness who the court found to be more credible and more helpful to the court testified that it was not unusual for loans to be rejected more than once and that the procedures were followed in the instance where they were rejected because of the business model and the fact that our client made a very small just a few hundred dollars on each transaction it was an enormous potential risk for them to be stuck with this loan that was certainly inconsistent testified that the repurchase indicated strength the strength of the loans that it's correct and it was critical and what happened is that they would that they would actually  that was part of what they were looking for also an initial review with whether they had the financial capability of repurchasing the loan but there were methods in order to keep shifting more risk in more  burden onto the to f m r i to give to incentivize them to ultimately repurchased alone and that was part of their business model also which was shown in the record they followed  asked you know is there a point where there's a tipping point when the loans have been repurchased a number of times for instance and the immediate response was that after the third repurchase the one that actually resulted in the transfer that i went to my client if they continued to do business with this client in the future they should have been more wary in the  e but at that point they were no longer doing any more business and there wasn't any reason to be doing any more investigation so part of what the argument that we're hearing on appeal is that missing evidence by saying that the tipping point already heard but i think if you review the record and review was actually said it was clear that the witness was talking about after the third be purchased there so why wasn't i question is why wasn't the fact finder clearly wrong about that finding partly your honour's point that the impression could have been formed after the fact after the transfer and there is a common one of the cases we cited in our brief then other words you think that there's no indication when his assessment of being bogus was for number one anything else also the what is the meaning of bogus you think it a bogus isn't necessarily mean fraudulent under just to you asked the question is whether that the e mails the smoking gun and they obviously were a smoking gun in the sense that they acknowledged the bogus nature of the lungs which would put them on the knowledge that will transfer is to buy those laws were for fraud on purpose because there's no reason to buy even weeks how do we put that a month earlier well the reason is that but the fact finder didn't find that it goes back to talk and question so how do we find that's clear air well certainly certainly he concluded no question about that that these were bogus  january sets what he says so he must have learned there's nothing there's no evidence that he learned something and january eleventh he must have known it some prior time to that so he would have been it's no he learned by january eleventh or he called the bogus but generally that's all we know from this record well we also know that he was in charge of the unit he would have learned he would have been the opportunity to have to have learned that these were bogus loans as funny of facts that would have led them to determine that these were and just don't have the e mail that says this was that he found this he could have found them over to the fact terminated them could have found out by the fact there are lots of ways he could have found out and probably did find out if you had evidence of that in the record you might be right but there's no evidence i don't want to belabor it but even if we accept bogus to mean what it means whatever it is is there that necessarily means he made that determination before january the eleventh germination of it being bogus yeah but you know i think i can say this what we've that there was information which likely led him to reach that conclusion prior to the transfer is no reason why he would have come to that conclusion afterwards  in the realm of speculation well it's not speculation i mean we have the entire e mail history that gateway retained on this and it's likely if there was some a vent that happened between the summer eleventh that we would have a record of that in a file and then get we did not produce mr kenny to explain it it was their burden to establish this defense in the first place all we have is their head of their program telling you his subordinate that these were bogus loans so obviously he had learned it prior to whether you'd call them as witnesses he's gone so he would be gone for purposes of gateway to well i mean the only evidence about that is that they tried to locate him and they couldn't find the can get him to sit for that position of course we would have been there as well just let me just it was because he thought the whole case was bogus maybe he did go another day with it i mean it i mean when you get to the term bogus i mean if you know there was a lot of discussion in the in the trial about this even the facts and and it's interesting in that term of art of bogus means phony because that's what the you that's a word that the u s attorney put into the statement of facts describing the loans that  making i just wanted to get back to you or judge had it says something about the fact that standard procedures were followed there are and there was evidence that they were doing that with respect to most of the loans and we don't dispute that and then again this is not a question of it was not another investor gateway is the funder of this they don't they don't buy the loans they funded the their purpose is to get out and what we were saying and what our whole premise is that finally put in a lot of evidence about their checking out an age at the beginning how they follow their procedures and so forth but not with to these loans and mistresses narrows this testimony was very clear that before they purchased those loans the they should've this is past the tipping point and they should have done something because three rejections is not normal