IN RE: ACCESS CARDIOSYSTEMS, INC., Debtor; RANDALL FINCKE, Appellant,
ACCESS CARDIOSYSTEMS, INC.; JOHN J. MORIARTY; RICHARD F. CONNOLLY, JR.; JOSEPH R. ZIMMEL; NORTH AMERICAN ENTERPRISES, INC.; JOHN MORIARTY AND ASSOCIATES, Appellees
APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MASSACHUSETTS. Hon. Nathaniel M. Gorton, U.S. District Judge.
John J.E. Markham, II, with whom Markham & Read was on brief, for appellant.
Barry C. Klickstein, with whom Sara A. Colb and Day Pitney LLP were on brief, for appellees.
Before Lynch, Chief Judge, Howard and Barron, Circuit Judges.
LYNCH, Chief Judge.
This appeal concerns the construction and application of a section of the Massachusetts Uniform Securities Act, Mass. Gen. Laws ch. 110A, § 410(a)(2), both as to the materiality of a misrepresentation and as to when an offer or sale has been made " by means of" such a misrepresentation. There is surprisingly little case law interpreting the statute's phrase " by means of." We are mindful that this provision is to be " construed as to . . . make uniform" state securities laws and " to coordinate the interpretation and administration of this chapter with the related federal regulation." Id. § 415.
Access Cardiosystems, Inc. (" Access" ) was a small startup company, a purveyor of portable automated external heart defibrillators (" AED" ). Despite investments from four investors of over $20 million from 2001 to 2005, the company struggled and eventually filed for Chapter 11 bankruptcy protection in 2005. The founder, director, and officer of Access was Randall Fincke.
Four investors, in a third amended complaint filed on April 5, 2007, alleged that Fincke had violated Mass. Gen. Laws ch. 110A, § 410(a)(2), and had committed fraud, negligent misrepresentations, and numerous breaches of fiduciary duty. The bankruptcy court heard many witnesses over the course of successive trials on liability and then on damages. The bankruptcy court found as a matter of fact that (i) Fincke had made a false statement of material fact to investors in violation of the Massachusetts blue sky law, Mass. Gen. Laws ch. 110A, § 410(a)(2), and (ii) that one such investor, Joseph Zimmel, was entitled to damages, totaling $1.5 million, for his investments that Fincke solicited " by means of" that material misstatement. Access Cardiosystems, Inc. v. Fincke (In re Access Cardiosystems, Inc.), 404 B.R. 593, 698-99 (Bankr. D. Mass. 2009) (hereinafter Access II) (liability); Access Cardiosystems, Inc. v. Fincke (In re Access Cardiosystems, Inc.), 460 B.R. 67, 83 (Bankr. D. Mass. 2011) (hereinafter Access IV) (damages).
These findings were affirmed on appeal to the district court.
See Fincke v. Access Cardiosystems, Inc. (In re Access Cardiosystems, Inc.), 488 B.R. 1, 7-10 (D. Mass. 2012).
Fincke has appealed those two findings to us. We affirm. The extensive background and facts of the case are stated in both the bankruptcy and the district court opinions. ...