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Keogler v. Krasnoff

Court of Appeals of Georgia

July 1, 2004, Decided

A04A0028, A04A0029.

Opinion

 [**789]  [*250]   Mikell, Judge.

After a jury returned a verdict in favor of Robert M. Krasnoff in this securities fraud action, the trial court entered a judgment for Krasnoff, Barbara C. Krasnoff, and the Krasnoff Family Irrevocable Trust (collectively referred to herein as the “Krasnoffs”). In Case No. A04A0028, Linda G. Keogler and Helen M. Keogler appeal the judgment, arguing that the trial court's charge to the jury was  [*251]  erroneous. In Case No. A04A0029, the Krasnoffs cross-appeal, challenging the trial court's denial of their motions for directed verdict. We affirm the judgment in Case No. A04A0028 and dismiss Case No. A04A0029 as moot.

The record shows that this litigation arose out of the failure of SGE Mortgage Funding Company (“SGE”), a mortgage company based in Tifton. SGE was founded in approximately 1987 by defendant Steven Cason, who served as its CEO and president throughout the company's existence. 1 SGE operated by obtaining private funds from [***2]  individuals, then loaning these funds to homeowners. The loans from the private investors were secured by mortgages on the homeowners' property. The private investors had the option to handle the paperwork associated with the loans. But if asked, SGE would handle the paperwork, collect payments from homeowners, and make payments to the investors.

The written loan agreements provided the terms of the loan, including the length of the loan and the interest rate, and listed the homeowners to whom SGE would loan the funds and the homeowners' addresses. The investor had the option to accept or reject the listed collateral, to service the loan, and  [**790]  to retain the right to foreclose if the homeowners failed to pay their mortgages.

Krasnoff was SGE's largest investor. 2 During the 1990s, Krasnoff made dozens of loans to SGE. Krasnoff testified that several of his family members invested [***3]  in SGE and that his attorney, Wes Warren, who had represented him for many years also invested in SGE. When the company failed, Krasnoff lost over $ 2 million.

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268 Ga. App. 250 *; 601 S.E.2d 788 **; 2004 Ga. App. LEXIS 886 ***; 2004 Fulton County D. Rep. 2228

KEOGLER et al. v. KRASNOFF et al.; and vice versa.

Subsequent History:  [***1]  Cert. applied for.

Writ of certiorari denied Keogler v. Krasnoff, 2005 Ga. LEXIS 106 (Ga., Jan. 24, 2005)

Prior History: Securities fraud. Fulton Superior Court. Before Judge Russell.

Disposition: Judgment affirmed in Case No. A04A0028. Appeal dismissed as moot in Case No. A04A0029.

CORE TERMS

securities fraud, scienter, investors, misrepresentation, homeowners, reckless, common law fraud, deceive, funds, trial court, loans

Securities Law, Civil Liability, Fraudulent Interstate Transactions, General Overview, Civil Liability Considerations, Preservation of Remedies & Rights, Torts, Business Torts, Fraud & Misrepresentation, Negligent Misrepresentation, Civil Procedure, Jury Trials, Jury Instructions