United States Bankruptcy Appellate Panel
                            FOR THE EIGHTH CIRCUIT



                                       No. 09-6065


In re:                                       *
                                             *
Svetlana Sergeyevna Ungar,                   *
                                             *
         Debtor.                             *
                                             *
Olim Islamov,                                *
                                             *
         Plaintiff - Appellee.               *        Appeal from the
                                             *        United States
               v.                            *        Bankruptcy Court for the
                                             *        District of Nebraska
Svetlana Sergeyevna Ungar,                   *
                                             *
         Defendant - Appellant.              *



                                 Submitted: April 15, 2010
                                   Filed: May 21, 2010



Before SCHERMER, FEDERMAN and VENTERS, Bankruptcy Judges

SCHERMER, Bankruptcy Judge
       Svetlana Sergeyevna Ungar (the “Debtor”) appeals from an order of the
bankruptcy court1 excepting the debts owed by the Debtor to Olim Islamov (the
“Creditor”) from the Debtor’s bankruptcy discharge and entering a money judgment
for the amount owed. We have jurisdiction over this appeal from the final order and
judgment of the bankruptcy court. See 28 U.S.C. § 158(b). For the reasons set forth
below, we affirm.

                                         ISSUES

      The issues on appeal are whether the bankruptcy court properly: (1)
excepted the debt owed by the Debtor to the Creditor from the Debtor’s discharge;
and (2) entered a money judgment in the amount of $228,791.00. We agree with
the bankruptcy court’s decisions to except the debt from the Debtor’s discharge
under section 523(a)(2)(A) of Title 11 of the United States Code (the “Bankruptcy
Code”) and to enter a money judgment.

                                    BACKGROUND

      This matter came before the bankruptcy court for trial on the complaint filed by
the Creditor, seeking inter alia to except certain debts owed to him by the Debtor from
discharge under sections 523(a)(2)(A) and (a)(6) of the Bankruptcy Code. The
relevant facts are as follows.

       The Creditor emigrated to the United States from Tajikistan and the Debtor
emigrated to the United States from Moldova. They both live in Nebraska and they
met in 2002. Both parties spoke fluent Russian, and they conversed in that language.
In 2003, the Debtor began telling the Creditor about her stock market day-trading
activities.

       1
            The Honorable Thomas L. Saladino, Chief United States Bankruptcy Judge for the
District of Nebraska.

                                              2
       The Creditor graduated from an economics university in Moscow. He worked
in various jobs in the former Soviet Union, including as an auditor for the Ministry of
Foreign affairs and a finance director for a scientific industrial association, and he
formed his own company to conduct market research and facilitate trade. The Debtor
graduated from Doane College in Crete, Nebraska. She worked at several jobs in
Nebraska, including as a vocational counselor, bookstore manager, investment
operations assistant, computer operator and driver/warehouse assistant.

        At trial, the Creditor testified about the relationship between the parties, but the
Debtor did not testify to rebut his statements. According to the Creditor, in response
to the Debtor’s offer to day trade on his behalf, the Creditor gave the Debtor
$25,000.00 to invest for him. Thereafter, he regularly delivered funds to the Debtor
for the same purpose. The funds that the Creditor delivered to the Debtor were
comprised of his own funds, including advances on his credit cards, and funds from
his friends and family. The Debtor placed the funds in her own Ameritrade account,
and she purchased and sold stocks through her Ameritrade account.

       The parties’ characterization of their arrangement differs. At a deposition, the
Debtor claimed that the transactions were a loan or a series of loans and that she was
free to use the money as she wished. The Creditor characterized the transactions as
investments. He testified that each month the Debtor was to pay him the interest owed
on the credit card debt he had incurred to invest with the Debtor. He understood that
the parties would split the profits from the day-trading. As stated above, the Debtor
did not testify at trial to rebut the Creditor’s testimony.2




       2
             The characterization of the transactions as loans or investments does not change the
result of this matter and, accordingly, we need not decide whether the transactions were loans or
investments.

                                                3
       The Debtor regularly provided the Creditor with detailed reports regarding the
profits that were being made on the Ameritrade account. The unrebutted testimony
and evidence at trial revealed that after the first few months of the Creditor’s
investment, the amount of profit and account balance reported by the Debtor greatly
exceeded the actual profit and account balance. The Creditor testified that he
continued to invest with the Debtor based on the Debtor’s false reports of profits and
account balances, which he believed to be true at the time. The Creditor
acknowledged that part of the risk of investing in the stock market is that the
investment could be lost. However, he explained at trial that he had instructed the
Debtor that he did not want his principal investment to be at risk and, accordingly, she
should stop investing if there were losses on the account.

       Until 2007, the Creditor continued to forward funds to the Debtor based on the
false, but favorable, reports prepared by the Debtor. The Debtor returned to the
Creditor a portion of the amount of money that the Creditor gave to the Debtor.
According to the Creditor, part of the money that the Debtor returned to him was a
return of principal and another part was a repayment of the interest on the credit card
debt that he incurred to obtain funds to invest with the Debtor. In 2007, the Creditor
stopped investing with the Debtor when he learned that there was no money in the
Debtor’s Ameritrade account. He also learned that all of the money he had given to
the Debtor to invest was either spent by her or lost in the stock market.

       After the Creditor stopped forwarding funds to the Debtor for her day-trading
activities, the Debtor filed a voluntary petition for relief under Chapter 7 of the
Bankruptcy Code. The bankruptcy court held a trial on the merits of the Creditor’s
complaint and entered an order and judgment, holding that the amount of $228,791.00
owed from the Debtor to the Creditor is non-dischargeable in the Debtor’s bankruptcy
case. The bankruptcy court examined the undisputed facts and determined that the
elements of fraud were satisfied. Specifically, the bankruptcy court explained that the
Debtor initially induced the Creditor to invest with her by promising him a profit.

                                           4
Thereafter, she induced him to continue forwarding funds to her by showing
documentation of alleged earnings on the account, which were false representations
to him about the value of the account and the profit made on his investment. It
explained that the Creditor’s reliance was justifiable in light of his knowledge of the
risks involved with investing in the stock market and the representations that the
Debtor made to him.

       Next, to determine the amount of the non-dischargeable debt, the bankruptcy
court noted that part of the $503,791.00 that the Creditor delivered to the Debtor to
invest for him was returned to the Creditor over the years. It explained that that the
Creditor testified that a certain portion of the amount returned was paid to reimburse
the Creditor for interest on his credit card borrowings, rather than repaying the
principal amount of his investment. Accordingly, the bankruptcy court entered
judgment in favor of the Creditor in the amount of $228,791.00.

                            STANDARD OF REVIEW

       We review the bankruptcy court’s findings of fact for clear error and its
conclusions of law de novo. First Nat’l Bank of Olathe v. Pontow, 

, 609
(8th Cir. 1997); Merchs. Nat’l Bank of Winona v. Moen (In re Moen), 

,
790 (B.A.P. 8th Cir. 1999). Whether a requisite element of a claim under Section
523(a)(2)(A) is present is a factual determination that is reviewed for clear error. R
& R Ready Mix v. Freier (In re Freier), __ F.3d __, 

, at *3 (8th Cir.
May 10, 2010)(citing 

). “A finding is ‘clearly erroneous'
when although there is evidence to support it, the reviewing court on the entire
evidence is left with the definite and firm conviction that a mistake has been
committed.” Anderson v. Bessemer City, 

, 573 (1985) (quoting U.S. v.
U.S. Gypsum Co., 

, 395 (1948)). We give due regard to the bankruptcy
court’s opportunity to judge the credibility of witnesses. Fed. R. Bankr. P. 8013.



                                          5
                                   DISCUSSION

       The bankruptcy court correctly determined that the debts owed from the Debtor
to the Creditor were excepted from discharge in the Debtor’s bankruptcy case and
entered a judgment for the specific amount of the debt that represented money
obtained by fraud.

Dischargeability

       Exceptions to discharge are usually “narrowly construed against the creditor
and liberally against the debtor, thus effectuating the fresh start policy of the Code.”
Caspers v. Van Horne (In re Van Horne), 

, 1287 (8th Cir.1987),
abrogated on other grounds, Grogan v. Garner, 

(1991). “The
Bankruptcy Code has long prohibited debtors from discharging liabilities incurred on
account of their fraud, embodying a basic policy animating the Code of affording
relief only to an ‘honest but unfortunate debtor.” Cohen v. de la Cruz, 

,
217 (1998)(internal citation omitted).

      Section 523(a)(2)(A)

       Bankruptcy Code Section 523(a)(2)(A) excepts certain debts from discharge.
It provides, in pertinent part, that a discharge:

      does not discharge an individual debtor from any debt . . . for money,
      property, services, or an extension, renewal, or refinancing of credit, to
      the extent obtained by . . . false pretenses, a false representation, or
      actual fraud, other than a statement respecting the debtor’s or an insider’s
      financial condition. 11 U.S.C. §523(a)(2)(A).




                                           6
A creditor’s success in a non-dischargeability action for actual fraud under Section
523(a)(2)(A) requires that creditor to prove, by a preponderance of the evidence, that:
(1) the debtor made a false representation; (2) at the time the representation was made,
the debtor knew it was false; (3) the debtor made the representation deliberately and
intentionally with the intention and purpose of deceiving the creditor; (4) the creditor
justifiably relied on the representation; and (5) the creditor sustained loss and damage
as a proximate result of the misrepresentation. Field v. Mans, 

, 74
(1995)(justifiable reliance); 

(burden of proof); 

(elements of proof under section 523(a)(2)(A))(citations omitted).

      The justifiable reliance element of fraud is at issue in this appeal. Specifically,
we consider whether the bankruptcy court erred when it determined that the Creditor
was justified in relying on the Debtor’s initial promise of a profit and continuing
representations that the day-trading activities were earning the Creditor a profit when,
in fact, the Ameritrade account balance was significantly less than the Debtor
represented it to be.

       The Supreme Court set forth a minimal standard of justifiable reliance in cases
for actual fraud under Bankruptcy Code section 523(a)(2)(A). Field, 

.
Justifiable reliance is a lower standard than reasonable reliance. Treadwell v.
Glenstone Lodge, Inc. (In re Treadwell), 

, 314 (B.A.P. 8th Cir.
2010)(citing Field, 

). Even when an investigation would have revealed
the falsity of the representation, reliance may be justifiable. Freier, __ F.3d __, 

, at *4 (citing 

). “[A] creditor ‘cannot recover
if he blindly relies upon a misrepresentation the falsity of which would be patent to
him if he had utilized his opportunity to make a cursory examination or
investigation.’” Freier, __ F.3d __ , 

, at *4 (citing Field, 516 U.S.
at 71)(quoting RESTATEMENT (SECOND) OF TORTS § 541 cmt. a (1976)).




                                           7
       The bankruptcy court did not err when it accepted the Creditor’s testimony and
determined that the Creditor justifiably relied on the Debtor’s representations. The
record demonstrates that the parties established a relationship of trust. In fact, the
Creditor so trusted the Debtor’s self-described trading acumen that he obtained money
from his friends and relatives to use in the Debtor’s day-trading activities. Over the
course of years, the Debtor continuously submitted false information to the Creditor
about the balance of the Ameritrade account and the purported profits he was earning.
The information provided by the Debtor was detailed. In addition, on various
occasions, the Debtor returned money to the Creditor. The Creditor relied on the
Debtor’s false statements of the account balance and profitability of the trades, her
return of funds to him and the trust that he believed they had established. He had no
duty to investigate whether the Debtor’s representations were correct. No “red flags”
were raised.

       The Debtor claims that the Creditor could not have justifiably relied on her
representations because the Creditor was aware of the risks involved with investing
in the stock market. We will not disturb the bankruptcy court’s finding that, based on
his knowledge of the risks involved with investing in the stock market and the
representations that Debtor made to him, the Creditor’s reliance was justifiable. As
the bankruptcy court recognized, the Debtor’s argument misses the mark. The
transactions between the parties included a series and pattern of misrepresentations
by the Debtor that resulted in numerous deliveries of funds from the Creditor to the
Debtor, not only the Creditor’s initial $25,000.00 investment. There was no reason
why the Creditor should have known that the Debtor was submitting inaccurate
information to him.

      Section 523(a)(6)

      Based on our decision that the debts owed from the Debtor to the Creditor were
non-dischargeable under Bankruptcy Code section 523(a)(2)(A), we do not need to

                                          8
consider whether the same debts were excepted from the Debtor’s discharge under
section 523(a)(6). Stabler v. Beyers (In re Stabler), 

, 766 n. 2 (B.A.P.
8th Cir. 2009)(“[t]he Panel may affirm on any basis supported by the record”)(citing
Hall v. Lhaco, Inc., 

, 1193-94 (8th Cir. 1998)).

Money Judgment

       We first address the Debtor’s argument that the bankruptcy court exceeded its
jurisdiction when it awarded a money judgment to the Creditor. According to the
Debtor, the bankruptcy court could not enter a money judgment because the Creditor’s
complaint only sought a judgment of non-dischargeability and it did not seek a money
judgment. We reject the Debtor’s argument. We agree with the courts that have held
that bankruptcy courts have jurisdiction to liquidate debt and enter money judgments
in dischargeability actions. See, e.g., Johnson v. Riebesell (In re Riebesell), 

, 793-94 (10th Cir. 2009)(collecting circuit court cases); In re Asbury, 

, 823 (Bankr. W.D. Mo. 2009). In fact, in response to the Debtor’s attempt to bar
the Creditor from garnishing the Debtor’s wages to collect the amount of the
bankruptcy court’s judgment entered by the bankruptcy court, the district court
disallowed the Debtor’s collateral attack on the bankruptcy court’s judgment and
noted that “[w]ithout question, the bankruptcy court is vested with the authority to
enter money judgments as between creditors and bankruptcy petitioners.” Islamov v.
Ungar, No. 4:09CV3229, 

(D. Neb. Nov. 24, 2009).

       The Debtor cannot escape the fact that she recognized the Creditor’s request for
a money judgment by extensively litigating the amount of the judgment at trial.
Moreover, the record shows that the purpose of the complaint was to obtain a money
judgment if the debt was found to be non-dischargeable. There is simply no room left
for the Debtor to claim that the bankruptcy court lacked jurisdiction to enter a money
judgment.



                                           9
      In addition to the jurisdiction issue, the Debtor also argued that if the debt was
non-dischargeable, the amount of the money judgment should be less than the amount
of $228,791.00 that was awarded by the bankruptcy court. According to the Debtor,
the bankruptcy court should not have adopted the Creditor’s contention that part of the
sum of money returned by the Debtor to the Creditor represented interest on the
Creditor’s credit card and, therefore, did not count toward repayment of the Creditor’s
principal investment.

        The bankruptcy court acted properly when it awarded the Creditor damages in
an amount that would make him whole. Cohen v. de la Cruz, 

, 218
(1998)(“[o]nce it has been established that specific money or property has been
obtained by fraud . . . ‘any debt’ arising therefrom is excepted from discharge”). As
the bankruptcy court explained, the Debtor did not dispute the Creditor’s testimony
that a certain amount of the funds that the Debtor returned to the Creditor represented
the payment for interest on the Creditor’s credit card. It did not find any documentary
evidence to suggest otherwise. The Creditor’s undisputed testimony was that the
Debtor was to pay him the interest owed on the credit card debt he incurred to obtain
money to invest with the Debtor. It should not be a surprise to the Debtor that part of
her payment to the Creditor would count toward the Creditor’s credit card interest,
rather than repayment of the principal investment.

                                   CONCLUSION

      For the foregoing reasons, the decision of the bankruptcy court is AFFIRMED.




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