Investor does not have to show reliance, rules Wisconsin Court of Appeals.

• Date: 12 May 2008
• Published date: 12 May 2008

Byline: David Ziemer

After an entrepreneur's promises of a commuter airline failed to take wing, an angry investor does not need to prove that he relied on those misstatements in order to bring a lawsuit under Wisconsin's securities fraud statute.

The state's appellate court also found that causation is presumed. Thus, a plaintiff needs only to show that the defendant's misrepresentation or omission was material to prevail under sec. 551.59.

In 2001, Wallace J. Hilliard formed Florida Air Holdings, Inc., envisioning it as a commuter airline operating in Florida.

However, Hilliard's dream never got off the ground. The Department of Transportation would not issue a Part 121 operating certificate.

In addition, Florida Air defaulted on more than $3.5 million in loans.

Nevertheless, in 2002, Florida Air sought investors. The sales materials represented that the airline was ready to fly and that governmental approval was anticipated in the very near future.

In addition, no mention was made of the defaulted loans. Florida Air has never operated as a commuter airline, although it did operate as a charter airline.

Herbert J...