Facts

On Feb. 17, 2009, Leslie Klein ("Klein") on behalf of Leslie Klien & Associates, entered into a Memorandum of Agreement for Joint Venture (the "Gardner Memo").

On Feb. 17, 2009, Klein on behalf of BK Life Settlements, LLC ("BK Life") entered into a Life Insurance Policy Purchase Agreement ("Gardner LIPPA") with Andrew and Yvette Gardner ("Gardner") for the purchase of two $5 million life insurance Policies #1625579 & #1621379 totaling $10 million ("Gardner Policies") on the lives of Gardner. Klein designated Leslie Klien & Associates and David Berger as the sole beneficiaries of the Garner Policies. Klein had David Berger sign the Gardner LIPPA on behalf of the buyer BK Life.

In furtherance of the Gardner Memo, Berger paid Klein $400,000 towards the purchase of the two Gardner Policies.

Per the Gardner Memo, Klein promised to pay Berger $5 million upon the last Gardner to die.

Thereafter, Klein apparently sold portions or the entirety of the Gardner Policy to GMR Life Settlements LLC ("GMR Life") without consent. Klein concealed this information from Berger.

Thereafter, on or about May 2011, Klein apparently sold portions or the entirety of the Gardner Policy and to Life Capital Group, LLC ("LCG"), without Berger's consent. Klein concealed this information from Berger.

According to information recently received by Berger, Klein and Shlomo Yehuda Rechnitz of LCG, agreed that upon the death of Gardner, Klein and Rechnitz would be reimbursed the premiums that they paid, plus interest on the premiums. Thereafter, Klein and Rechnitz would split the profits 50/50 of the Gardner Policy, and Berger would receive his $5,000,000.00.

The Gardners apparently died in 2021 - 2022, and Klein collected the Gardner Proceeds, on the Gardner Policy. Klein concealed this information from Berger, misappropriated & kept the Gardner Proceeds, and failed to pay Berger the $5 million per the Gardner Memo.

On Feb. 22, 2023, Klein filed for bankruptcy, Case No. 2:23-bk-10990-SK (approximately $162,041,737.93 in claims)

PLAINTIFF'S CONTENTIONS: Berger contended that the $5 million misappropriated by Klein was a nondischargeable debt pursuant to 11 USC § 523(a)(2)(A) (fraud), 11 USC § 523(a)(4) (fiduciary fraud, embezzlement & larceny), and 11 USC § 523(a)(6) (conversion).

DEFENDANT'S CONTENTIONS: Klein filed an Answer after his default was taken without first moving to set aside the default, which the court disregarded.

Result

Judgment for nondischargeability of debt pursuant to 11 USC § 523(A)(2)(A), 11 USC § 523(A)(4), and 11 USC § 523(A)(6) in the amount of $7,401,369.86. Pursuant to by Bankruptcy Rule 3001(c)(2)(A), interest of 10% on the $5 million, since Feb. 17, 2009, comes to $2,401,369.86, bringing the total amount due to $7,401,369.86.