Opinion ID: 6113
Heading Depth: 2
Heading Rank: 2

Heading: Raising a Genuine Issue of Material Fact

Text: 15 The SEC amply established its entitlement to summary judgment on the fraud claims. The summary judgment evidence proffered by the SEC showed, inter alia, that Recile repeatedly misrepresented to investors that he had obtained long-term financing for and had leased 700,000 square feet of Place Vendome, when in fact he had done neither. He further represented to the investors that their funds would be used to pay preacquisition financing costs, when in fact over $3,000,000 of the funds were diverted to Recile and his friend's personal use. Moreover, Recile never disclosed this use of the funds to his investors. Finally, Hannover Corporation--which Recile had represented to be a successful real estate development company owning substantial real estate--was in fact a management company that did not own any real estate. 16 In response to the SEC's well documented motion, Recile offered an Opposing Statement of Material Facts consisting primarily of conclusionary denials, improbable inferences, and legalistic argumentation. 14 On appeal, Recile--after repeatedly reiterating that a factual dispute exists 15 --identifies only two specific facts as disputed. First, Recile contends that the Mercedes allegedly purchased for Phillips was in fact purchased for business purposes, and that this purchase was disclosed to all potential investors. Even if we accept arguendo Recile's version of this assertion, it fails in and of itself to create a genuine issue of material fact. It does so because it does not refute the other, significantly more important misrepresentations, such as the false statements regarding the financing and leasing status of Place Vendome, that amply satisfy the materiality element of a securities fraud claim. 16 17 Recile's second factual claim is premised on an implausible inference. He argues that the accounting in the special master's report reveals that there was no misuse of the investors' funds. Yet Recile does not dispute the figures contained in those reports--figures which ultimately reveal that Recile and Phillips diverted over $3,000,000 to personal use. To claim that such diversion does not constitute misuse is simply incredible. 17 18 As a final argument, Recile points to no specific facts but instead launches a desperation kamikaze strike at his perceived tormentors: the failure of Place Vendome was due, not to the fraud of Recile, but to the heavy-handed conduct of the government coupled with greedy, self-centered parties in Baton Rouge. In addition to having no support in the record, this assertion is besides the point. Recile was not charged with fraudulent failure--he was charged with making fraudulent statements and omissions in connection with the sale of securities. Whether the project should have succeeded or failed--and to whom credit or fault for the ultimate result belongs--has no bearing on whether Recile's conduct violated the securities laws. 18 19