Broker-Dealer Litigation - Greenberg Traurig LLP

equipment he contributed to the company in order to increase his equity in the company. Despite
the fact that plaintiff adequately pleaded “enterprise” under New Jersey’s broad definition, there
was no evidence in the record that defendant engaged in a pattern of racketeering activity.
Accordingly, the court granted defendant’s motion for summary judgment.
In re Jamuna Real Estate, LLC, 460 B.R. 661 (Bankr. E.D. Pa. 2011).
In denying defendant’s motion for summary judgment on a civil RICO claim, the
Bankruptcy Court held that the claim was not predicated on a securities sale, and therefore the
bar on predicating RICO claims on securities law violations (at 18 U.S.C. § 1964(c)) did not
apply. The court found that the transactions that formed the basis for the claim were mortgage
and equipment loans for defendants’ fast-food businesses. The plaintiff was therefore not an
investor in the businesses, but rather an ordinary commercial lender.
McCoy-McMahon v. Godlove, 2011 WL 4820185 (E.D. Pa. Sept. 30, 2011).
The court granted defendants’ motion to dismiss plaintiff’s RICO claim, arising from her
“squeeze-out” as a minority shareholder of a corporation. The court, while finding that plaintiff
alleged the requisite two or more RICO predicate acts of mail and wire fraud, said that the acts
nonetheless did not constitute a pattern of related activity. The court found that defendants’ acts,
as alleged, were part of two separate schemes, as the purpose of each scheme, as well as its
respective victims, were different.
Amos v. Franklin Fin. Servs. Corp., 2011 WL 2111991 (M.D. Pa. May 26, 2011).
Former shareholders of CFI, a company that was merged into defendant corporation, sued
defendant corporation and other former shareholders and officers of CFI, alleging among other
things, violations of RICO for operating CFI in a way that diluted the value of the payment to
plaintiff shareholders upon the merger relative to the payments received by defendant
shareholders. The court dismissed the action, finding that plaintiffs failed to state RICO claims
because of the statutory exception for fraud in the sale of securities. Here, the allegations in the
complaint constituted actionable securities fraud claims under Rule 10b-5, as plaintiffs alleged
that defendants made misrepresentations as to the value of CFI in connection with the sale of
securities during the merger. Accordingly, they were barred by the Private Securities Litigation
Reform Act.
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