In Re Sharpe

351 B.R. 409 (2006)

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Nature of the Case

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Facts

D filed his voluntary chapter 7 petition in bankruptcy on October 13, 2005. P filed her complaint on March 13, 2006. P and D met sometime in December of 2004, shortly after P's divorce had become final, and they became fast friends and 'best friends.' During the period of their friendship, P and D spent a large amount of time together and spoke to each other almost every day on the telephone. P has a high school degree, an undergraduate degree, and a Master's degree. P had been married for 25 years upon her divorce and is the mother of three adult children. Her divorce from her one-and-only husband left her in a comfortable financial position, although she testified that she never informed D that she was well-off. D's educational background was not defined at trial, and he claimed he had had drug and alcohol abuse problems and that he had not, as of the time of trial, been able to overcome such problems. P and D were involved in UltimateMatch com, which, Mr. Sharpe testified, was a dating service/direct marketing enterprise in which revenues were obtained both from customers who used the dating service and through distributors who sold the business to other customers and distributors. P testified that D represented to her that he owned 10% of UltimateMatch.com and said that he would give P 3% of the company. D has no documentation to support his ownership claim. D's Schedule B lists '7% of Ultimate Match, a part of SMUM, LP - contested and unliquidated. D was fired from his position with UltimateMatch.com, whatever that position may have been, in September of 2005. D was unemployed at the time of filing bankruptcy. P made two loans to D evidenced by promissory notes and made several other loans not so documented. All of such loans, the parties agree, aggregate to $150,000. D scheduled P as an unsecured creditor in the amount of $175,000 describing the nature of her debt as a 'personal loan.' P is also listed on D's Schedule D as the holder of a purchase money security interest in the amount of $13,500 in a 2.87-carat diamond ring. P also testified that she permitted D to drive her vehicle and that some months he paid her for the use of the vehicle and some months he did not. There was testimony that he put a radar detector in the car, but also that the car was returned to her with a broken headlight, which P was required to repair herself. P testified that it was not until August of 2005 that she became aware of D's financial condition when he told her that he did not have any money and that he intended to file bankruptcy. D had, for some months, been preparing to file for bankruptcy protection. D's former office assistant, Eileen Wolkowitz, testified that Mr. Sharpe maintained a file into which bills were placed, which at her deposition she had referred to as a 'bankruptcy file.' She testified that D would instruct her not to pay certain bills as they came due. Ms. Wolkowitz also testified that there were times when she wanted to pay bills, but D would not let her. An e-mail from Steve Smith to D reflects that at least as of September 6, 2005, D had been planning to file bankruptcy. D wore custom-made suits and designer-label clothes and accessories. P testified that D's manner of dress led her to believe that he was a wealthy man. Ms. Wolkowitz also testified that D led a lifestyle that led her to believe that he was a successful, wealthy person and that she believed D intended to lead people to believe that he was a wealthy person. D utilized an American Express card, which had his name on it but was to an account belonging to Johnny Vaughn, a friend of D. The account was used to make many extravagant purchases. D stipulated to the fact that high-dollar charges reflected on an American Express bill, were his charges. Ms. Wolkowitz testified that over the 11 years that she has known D, she has known him to make a lot of money and to have lost a lot of money. D believed his own B.S. about how someday things will work out his way and he will be as rich as he aspires to be. D lived extravagantly, flying on a business associate's Lear jet, dining in expensive restaurants (often with P in tow), drinking expensive wines, and shopping in designer boutiques and expensive stores, such as Cartier. P presented photographs to the court, showing D beside a Lear jet and one of a mansion, as evidence that D wished to portray himself as a man of significant means. On MySpace.com, D claimed he was a 'funny guy with a killer body and money to burn seeks classy woman who doesn't believe everything she reads!' P claimed D was a con artist. D claimed he never intended to defraud people. D also orally claimed he was essentially hiding assets from his second wife, Jennifer Sharpe, in order to prevent her from obtaining her share of those assets as part of the then-pending divorce settlement. D claims most of what was done was for UltimateMatch.com. D asserts that repayment of the loans was to be from D's income from UltimateMatch.com. D claims his money was commissions advanced from Steve Smith against commissions from UltimateMatch.com. P's consistent testimony throughout the trial was that she made the loans based upon her belief that Mr. Sharpe was a man of means, based upon his appearance and behavior, and, chiefly, upon D's representations that he had the funds to repay hidden away pending his divorce from Jennifer Sharpe.