Broker-Dealer Litigation - Greenberg Traurig LLP

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Marini v. Adamo, 2011 WL 4442710 (E.D.N.Y. Sept. 26, 2011).
The court denied defendants’ motion for summary judgment on plaintiffs’ RICO claim,
which alleged that defendants participated in a years-long scheme to induce plaintiffs to
fraudulently buy rare coins at inflated prices that resulted in millions of dollars in losses.
Rejecting defendants’ argument, the court found that plaintiffs had established the requisite
continuity of racketeering activity. Plaintiffs’ evidence supported a finding that the scheme
lasted about six years and involved several victims and dozens of fraudulent acts. The court also
rejected defendants’ argument that a RICO enterprise could not consist of a closed corporation
and a person who co-owned it because the co-owner and defendant were not sufficiently distinct.
The court found that the corporation and co-owner are distinct where the corporation was
incorporated under New York law, and as such was a distinct legal entity with rights, obligations
and powers different from those of the natural person who owned it.
Morris v. Zimmer, 2011 WL 5533339 (S.D.N.Y. Nov. 10, 2011).
Defendant Zimmer was an attorney who represented plaintiffs in a National Association
of Securities Dealers (“NASD”) arbitration in 2004. The arbitration settled prior to hearing for
about $80,000. Defendant did not pay over the settlement to plaintiffs, however, and told
plaintiffs that he had invested some of the money in his business. Plaintiffs said they did not
agree to such an investment, and demanded the return of their money. Defendant eventually
pleaded guilty to petit larceny misdemeanor in New York, and was disbarred in Maryland. In
this action, plaintiffs brought a variety of state-law claims against defendants, and sought leave
to amend to add a civil RICO claim alleging that defendant Zimmer’s conversion of the NASD
settlement money, and consequent misrepresentations, indicated a pattern of racketeering activity
in violation of RICO. The court denied plaintiffs’ motion, finding that the proposed additional
claim failed as a matter of law, because defendant Zimmer’s conduct all related to a single event,
and so did not amount to the requisite pattern of racketeering activity.
Picard v. Kohn, 2011 U.S. Dist. LEXIS 101261 (S.D.N.Y. Sept. 6, 2011).
The Trustee overseeing the liquidation of Bernard L. Madoff Investment Securities LLC
filed suit against Sonja Kohn, UniCredit Bank and others alleging their participation in the
Madoff Ponzi scheme. The District Court stated its reasons for withdrawing the bankruptcy
reference with respect to the Trustee’s RICO claims. Among the reasons stated was the fact that
the issues raised by defendants would require significant interpretation of RICO, including the
“RICO Amendment” that prevents securities law violations from being the predicate act for
RICO claims.
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