In the

United States Court of Appeals

For the Seventh Circuit ____________

No. 06-3396

IN RE:

AVIE E. COHEN,

Debtor.

FISCHER INVESTMENT CAPITAL, INC.,

Plaintiff-Appellant,

v.

AVIE E. COHEN,

Defendant-Appellee.

____________

Appeal from the United States District Court

for the Northern District of Illinois, Eastern Division. 

No. 06 C 3190—James F. Holderman, Chief Judge.

____________

ARGUED FEBRUARY 12, 2007—DECIDED NOVEMBER 9, 2007

____________

Before KANNE, ROVNER and SYKES, Circuit Judges.

ROVNER, Circuit Judge. In March 2000, Fischer Investment Capital, Inc. (“Fischer”) loaned $207,000 to Avie

Cohen and his company, The Joblotter Inc. (“Joblotter”).

The loan was secured by, among other things, Joblotter’s

accounts receivable. When Cohen failed to timely repay

the debt, Fischer sued and won a default judgment

against Cohen in state court. But before Fischer could

enforce the judgment, Cohen declared bankruptcy. Fischer

filed an adversary complaint in the bankruptcy court
2 No. 06-3396

alleging that the list of Joblotter’s accounts receivable

was false and misleading, that it fraudulently induced

Fischer to make the loan, and that as a result, Cohen’s

debt to Fischer was not dischargable. The bankruptcy

court granted summary judgment to Cohen, ruling that

there was no evidence that the list of accounts receivable was materially false or misleading, or that Cohen

had an intent to defraud Fischer. The district court

affirmed. Our jurisdiction arises under 28 U.S.C. § 1291

and we now affirm as well.

I.

Avie Cohen was in the business of liquidating inventory.

He and Holly Borchert operated Joblotter out of their

home. Through their business, they bought, sold, and

brokered transactions in obsolete, damaged, and overstocked goods. In March 2000, Joblotter needed operating

capital and approached Fischer for a loan. Fischer asked

Joblotter to supply a list of accounts receivable to support the loan application and Borchert provided Fischer

with such a list.

The list of accounts receivable was a three-page long

hand-written document that purported to show Joblotter’s

accounts receivable at various times in March 2000. The

first page, dated March 9, 2000, showed Joblotter had

receivables totaling $110,409.13. The second page, dated

March 23, 2000, is captioned in large letters “Approx.

Acct.’s Receivable” [sic] and shows receivables of

$104,854.40. The third page is titled “2000 Invoices” and

has no total, but we calculate it as $96,021.81. Some of

the entries on the first two pages, totaling about $26,000

in receivables, do not have invoice numbers assigned to

them. Borchert testified that those receivables without

invoice numbers were “just hopeful” but that she believed the list to be accurate at the time she gave it to
No. 06-3396 3

Fischer. Cohen testified that he did not participate in the

preparation or presentation of the list.

On March 23, 2007, Fischer loaned $207,000 to Joblotter.

Cohen signed a promissory note and security agreement

that provided that the loan was to be secured by collateral

including “all . . . accounts receivable . . . whether now

existing or hereafter arising or acquired.” Fischer’s

president testified that absent the list of accounts receivable, Fischer would not have made the loan.

Joblotter and Cohen were both responsible for repayment of the loan, and both defaulted on it. Fischer sued

them in Illinois state court for breach of the promissory

note and security agreement. The state court entered a

default judgment in favor of Fischer for over half a million

dollars. But Fischer never colleted its default judgment

because shortly after Fischer began collection proceedings, Cohen filed a voluntary petition for relief under

Chapter 7 of the Bankruptcy Code.

Fischer responded with a timely adversary complaint

in the bankruptcy court alleging that Cohen’s debt was

not dischargable under 11 U.S.C. § 523(a)(2)(B) because

Joblotter’s list of accounts receivable was false and

misleading, and fraudulently induced Fischer to make

the loan. The bankruptcy court granted summary judgment to Cohen, holding that Fischer had failed to produce

any evidence to support two of the requirements for nondischargability: material falsity, see § 523(a)(2)(B)(i), and

intent to deceive, see § 523(a)(2)(B)(iv).

II.

We review the bankruptcy court’s grant of summary

judgment de novo, meaning that we will affirm only if

there are no genuine issues of material fact and the

moving party is entitled to judgment as a matter of law.
4 No. 06-3396

See In re Globe Bldg. Materials, Inc., 463 F.3d 631, 632

(7th Cir. 2006). The bankruptcy code provides an exception

to the general rule of discharge in bankruptcy if, in certain

circumstances, the debtor obtained money, property,

services, or credit through the use of false written statements. 11 U.S.C. § 523(a)(2)(B). The statute provides, in

relevant part, that the falsehood must be material and

deliberate:

“(a) A discharge . . . does not discharge an individual

debtor from any debt . . . (2) for money . . . to the

extent obtained by . . . (B) use of a statement in

writing—

(i) that is materially false;

(ii) respecting the debtor’s or an insider’s financial

condition;

(iii) on which the creditor to whom the debtor is liable

for such money . . . reasonably relied; and

(iv) that the debtor caused to be made or published

with intent to deceive

11 U.S.C. § 523(a)(2)(B). Thus, to prevail on a claim under

this section, the creditor must prove that the debtor

made a materially false written statement about his

financial condition with the intent to deceive, and that

the creditor reasonably relied on the statement. In re

Sheridan, 57 F.3d 627, 633 (7th Cir. 1995). Because we

apply a presumption in favor of discharge in bankruptcy,

the creditor bears the burden to demonstrate by a preponderance of the evidence that the exception applies. In re

Morris, 223 F.3d 548, 552 (7th Cir. 2000). To stave off

summary judgment, once the moving party has claimed

an absence of evidence supporting an element of the nonmoving party’s case, the non-movant must point to facts

in the record showing there is a genuine issue for trial.

Scaife v. Cook County, 446 F.3d 735, 739 (7th Cir. 2006).

Mere speculation is insufficient to defeat a motion for
No. 06-3396 5

summary judgment. Chicago Dist. Council of Carpenters

Pension Fund v. Reinke Insulation Co., 464 F.3d 651, 659

n.4 (7th Cir. 2006).

A.

Fischer’s first argument is that the listed accounts

receivable were materially false because Borchert described some of them as “hopeful.” But Fischer points to

nothing in the record to suggest that any of these accounts

receivable, even if merely “hopeful” rather than definite,

lacked a basis in fact. Indeed, Fischer’s president conceded that he did not know (despite bearing the burden of

proof) whether any of the “hopeful” items were not “real

receivables” or were never collected. And of course the

fact that the debt was not repaid proves only that the

promissory note and security agreement was breached, not

that the unpaid debt is exempt from discharge in bankruptcy.

Fischer’s fall-back position is that many of the entries

on the list of accounts receivable were much larger (between $1,500 and $35,000) than Joblotter’s “typical”

receivables (between $200 and $2,000), and that therefore the list must have been materially false. But even if

we accept that some entries on the list were not typical of

Joblotter’s general receivables, that alone does not suggest that those entries were false, let alone materially so.

Accordingly, the bankruptcy judge’s determination that

Fischer failed to carry its burden of proof with regard to

the alleged material falsity of the list of accounts receivable is correct.

B.

Fischer next argues that the bankruptcy and district

courts erred in concluding that Fischer failed to supply
6 No. 06-3396

evidence that Cohen had an intent to deceive. In support

of its contention, Fischer offers a litany of incidents

bearing on Cohen’s character. For instance, Cohen offered

conflicting testimony on the whereabouts of his Rolex

watch, particular antiques, and certain automobile memorabilia. Cohen also testified at various times that he

does not work, that he occasionally works, and that he

works several times a week. Additionally, Cohen stated

in his bankruptcy petition that he received no income

from employment or operation of his business in 2004,

but in a deposition stated that he received compensation

for “job-lotting” services in the same year. Finally, Fischer

notes that Cohen was convicted of a felony about 20 years

ago for his role in connection with an insurance fraud

scheme.

All of this may suggest that Cohen has been dishonest

at times. But it was Borchert who prepared the list and

presented it to Fischer. Thus, even if there were inaccuracies in that list, and even if the evidence of Cohen’s

other dishonest acts were admissible under Federal

Rules of Evidence 404(b) and 609(b), there is still no

basis for attributing to Cohen any inaccuracies in

Borchert’s list. One may speculate that Cohen instructed

Borchert to falsify the list, or that Borchert falsified it

and told Cohen as much. But of course speculation is not

evidence. And further, when he was presented with the

list, Cohen said he did not recognize it and denied knowing whether it was given to Fischer. Accordingly, even

if the list was fraudulently prepared by Borchert, there

is no evidence that Cohen knew that to be the case.

Fischer argues that Borchert’s preparation of the list is

irrelevant because Cohen “adopted and used” the list as his

own. The parties do not dispute that Cohen adopted the

list, but Fischer has forfeited the argument that Cohen’s

adoption of the list necessarily requires a finding that he

intended to deceive Fischer. The argument was not raised
No. 06-3396 7

in Fischer’s response to Cohen’s motion for summary

judgment before the bankruptcy court, nor was it raised in

Fischer’s appellate brief before the district court. The first

time Fischer raised this argument, albeit obliquely, was in

his reply brief in the district court, and this, of course, was

too late. Arguments not raised in the bankruptcy court are

forfeited on appeal. See In re Image Worldwide, Ltd., 139

F.3d 574, 582 (7th Cir. 1998). In any event, the argument

is of no weight because there is no evidence that Borchert

created the list with an intent to deceive Fischer; there

was nothing deceitful for Cohen to “adopt” for himself.

III.

For the reasons stated above, the judgment of the

district court is AFFIRMED.

A true Copy:

Teste: 

 ________________________________

Clerk of the United States Court of

Appeals for the Seventh Circuit 

USCA-02-C-0072—11-9-07