Arm

Fred H. Arm appeals the judgment of the Bankruptcy Appellate Panel (the BAP) affirming the denial by the bankruptcy court under 11 U.S.C. § 523 (a)(2)(A) of the discharge of the debt owed by Arm to A. Lindsay Morrison, M.D., Inc. and Merlin L. Neff, M.D., Inc. We affirm the judgment of the BAP.

FACTS

The following facts were found after trial by the bankruptcy court:

In June 1989, Arm, together with three others including James Halstead and Robert Cooper, entered into a scheme by which an entity known as La Jolla Fidelity Trust (La Jolla) would issue surety bonds to persons lending to Halstead and Cooper. La Jolla was said by Arm to be “a Massachusetts trust,” although its legal status was never determined. It was not licensed to do business as an insurer of anything. Its assets were said by Arm to consist of $40 million, including gold bullion in banks in the Far East and Nova Scotia, an island in Hawaii, a herd of Arabian horses worth $15 million, a motion picture production company, 10 million shares of a publicly traded company, and a radio station. Arm said that these assets were pledged to La Jolla but produced no evidence of the pledges and even failed to identify the…