UNITED STATES DISTRICT COURT 

SOUTHERN DISTRICT OF NEW YORK 

RITCHIE CAPITAL MANAGEMENT, L.L.C., 

RITCHIE RISK-LINKED STRATEGIES 

TRADING (IRELAND), LIMITED, RITCHIE 

RISK-LINKED STRATEGIES TRADING 

(IRELAND) II, LIMITED, WALKERS SPV 

LIMITED, as trustee for Ritchie Risk-Linked 

Life Strategies Trust I and Ritchie Life Strategies 

Master Trust, and RITCHIE RISK-LINKED 

STRATEGIES TRADING, LTD., 

 Plaintiffs, 

v. 

COVENTRY FIRST LLC, THE COVENTRY 

GROUP, INC., MONTGOMERY CAPITAL, 

INC., LST I LLC, ALAN BUERGER, 

CONSTANCE BUERGER, REID S. 

BUERGER, ANTONIO MUNIZ, ALEX 

SELDIN, NEAL JACOBS, EILEEN SHOVLIN, 

and JIM DODARO, 

 Defendants 

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07 Civ. 3494 (DLC) 

ECF Case 

REVISED MEMORANDUM OF LAW IN SUPPORT OF 

PLAINTIFFS’ MOTION FOR RECONSIDERATION 

AND FOR LEAVE TO FILE THEIR 

PROPOSED SECOND AMENDED COMPLAINT

Lawrence S. Robbins (LR-8917) 

Gary A. Orseck 

Rachel S. Li Wai Suen 

Daniel R. Walfish 

ROBBINS, RUSSELL, ENGLERT, 

 ORSECK & UNTEREINER LLP 

1801 K Street, N.W., Suite 411 

Washington, D.C. 20006 

Tel: (202)775-4500 

Fax: (202)775-4510 

Dated: August 24, 2007 

Thomas P. Puccio 

LAW OFFICES OF THOMAS P. PUCCIO 

230 Park Avenue 

New York, NY 10169 

Tel: (212) 883-6383 

Fax: (212) 883-6388 

Counsel for Plaintiffs 

Case 1:07-cv-03494-DLC Document 54 Filed 08/24/2007 Page 1 of 56
i 

TABLE OF CONTENTS 

Page 

TABLE OF AUTHORITIES.......................................................................................................... ii 

INTRODUCTION .......................................................................................................................... 1 

I. Breach of Fiduciary Duty: The Opinion Failed To Recognize That The 

Contractual Disclaimer Of A Partnership Relation Cannot Possibly 

Bind Non-Contracting Parties And, In Any Event, Did Not Constitute 

A General Disclaimer Of A Fiduciary Relationship In This Case................................ 2 

II. Fraud: The Opinion Failed To Consider Claims By And Against NonContracting Parties And Overlooked Several Reasons Why The Fraud 

Claims Do Not Duplicate The Contract Claims ........................................................... 4 

III. Fraudulent Inducement: The Opinion Misapplied Controlling Law 

And Misapprehended The Claims By And Against Entities Not Party 

To The MPPAs ............................................................................................................. 7 

IV. Personal Jurisdiction: The Court Overlooked That Montgomery 

Capital, Inc. Is Subject To Personal Jurisdiction On Any Claim, A 

Point Implicitly Conceded By Defendants ................................................................... 9 

CONCLUSION............................................................................................................................. 10 

Case 1:07-cv-03494-DLC Document 54 Filed 08/24/2007 Page 2 of 56
ii 

TABLE OF AUTHORITIES 

Page(s) 

CASES

Bagdon v. Phil. & Reading Coal & Iron Co., 217 N.Y. 432 (1916) ............................................ 10 

Bd. of Managers of 411 E. 53rd St. Condo. v. Dylan Carpet, Inc., 582 N.Y.S.2d 

1022 (1st Dep’t 1992) ............................................................................................................... 6 

Blue Chip Emerald LLC v. Allied Partners, Inc., 750 N.Y.S.2d 291 

(1st Dep’t 2002) ........................................................................................................................ 4 

Brunetti v. Musallam, 783 N.Y.S.2d 347 (1st Dep’t 2004) ............................................................ 3 

Cassata v. Brewster-Allen-Wichert, Inc., 670 N.Y.S.2d 552 (2d Dep’t 1998)............................... 4 

Danann Realty Corp. v. Harris, 5 N.Y.2d 317 (1959) ................................................................... 8 

Deerfield Commc’ns Corp. v. Chesebrough-Ponds, Inc., 68 N.Y.2d 954 (1986) .......................... 6 

EEOC v. Waffle House, Inc., 534 U.S. 279 (2002)......................................................................... 9 

First Bank of the Ams. v. Motor Car Funding, 690 N.Y.S.2d 17 (1st Dep’t 1999)........................ 6 

Great Earth Int’l Franchising Corp. v. Milks Dev., 311 F. Supp. 2d 419 

(S.D.N.Y. 2004)........................................................................................................................ 7 

Hargrave v. Oki Nursery, Inc., 636 F.2d 897 (2d Cir. 1980) ......................................................... 5 

Harsco Corp. v. Segui, 91 F.3d 337 (2d Cir. 1996)........................................................................ 8 

In re T.J. Ronan Paint Corp., 469 N.Y.S.2d 931 (1st Dep’t 1984) ................................................ 3 

M’Baye v. World Boxing Ass’n, 429 F. Supp. 2d 652 (S.D.N.Y. 2006)....................................... 10 

Meinhard v. Salmon, 249 N.Y. 458 (1928)..................................................................................... 3 

Mfrs. Hanover Trust Co. v. Yanakas, 7 F.3d 310 (2d Cir. 1993) ................................................... 8 

Shrader v. CSX Transp., Inc., 70 F.3d 255 (2d Cir. 1995) ............................................................. 1 

Spodek v. Neiss, 756 N.Y.S.2d 903 (2d Dep’t 2003)...................................................................... 4 

Telecom Int’l Am., Ltd. v. AT & T Corp., 280 F.3d 175 (2d Cir. 2001) ..................................... 4, 5 

Triangle Underwriters, Inc. v. Honeywell, Inc., 604 F.2d 737 (2d Cir. 1979) ............................... 7 

Case 1:07-cv-03494-DLC Document 54 Filed 08/24/2007 Page 3 of 56
TABLE OF AUTHORITIES—Continued 

Page(s) 

iii 

STATUTES AND RULES

Fed. R. Civ. P. 09(b) ..................................................................................................................... 2, 5 

Fed. R. Civ. P. 59(e) ....................................................................................................................... 1 

Local Civ. R. 6.3............................................................................................................................. 1 

N.Y. Bus. Corp. L. § 1304 ............................................................................................................ 10 

Case 1:07-cv-03494-DLC Document 54 Filed 08/24/2007 Page 4 of 56
Plaintiffs submit this Memorandum of Law in support of their motion for reconsideration 

of the Court’s July 17, 2007 Opinion and Order (“Opinion”), and for leave to file their Proposed 

Second Amended Complaint, attached hereto as Exhibit A.1

INTRODUCTION

On July 17, 2007, this Court issued its Opinion granting Defendants’ motion to dismiss 

the Complaint as to all counts, and granting leave to amend the Complaint as to the breach of 

contract claim on behalf of two plaintiffs and the Section 1962(c) and 1962(d) claims under the 

Racketeer Influenced and Corrupt Organizations Act (“RICO”) on behalf of all Plaintiffs. We 

respectfully ask that the Court reconsider its dismissal of the fraud, fraudulent inducement, and 

fiduciary duty claims without leave to amend, as well as its ruling that personal jurisdiction over 

Montgomery Capital, Inc. has not been established in relation to the remaining RICO claims. 

A motion for reconsideration under Fed. R. Civ. P. 59(e) should be granted if “the 

moving party can point to controlling decisions or data that the court overlooked.” Shrader v. 

CSX Transp., Inc., 70 F.3d 255, 257 (2d Cir. 1995); see also Local Civ. R. 6.3. We believe that 

the Opinion misapplied several precedents and overlooked key factual allegations in the 

Complaint. We recognize in retrospect that some of these allegations perhaps could have been 

more clearly drawn to show, among other things, that some Plaintiffs have claims that others 

may lack, while some Defendants lack defenses that others may have. The Proposed Second 

 1

 At a conference on August 10, 2007, the Court invited Plaintiffs to file a proposed further 

amended complaint containing revised fraud, fraudulent inducement, and fiduciary duty claims, and 

correspondingly to revise the present motion. Accordingly, Plaintiffs here explain not only why 

reconsideration of certain matters in the Opinion is warranted, but also why leave should be given to 

replead the fraud, fraudulent inducement, and fiduciary claims as set forth in the Proposed Second 

Amended Complaint. With respect to the contract and RICO allegations, and the averments relating to 

personal jurisdiction, the Proposed Second Amended Complaint is identical or virtually so to the First 

Amended Complaint, in which Plaintiffs took advantage of the Court’s leave to amend those allegations. 

Case 1:07-cv-03494-DLC Document 54 Filed 08/24/2007 Page 5 of 56
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Amended Complaint is designed to clarify the differences among the parties and the relevant 

relationships, as well as to alleviate potential Rule 9(b) concerns. 

Although we believe that the Court erred with regard to all of the claims in the Complaint 

and to personal jurisdiction, we respectfully ask the Court to reconsider the dismissal of Counts 

Four, Five, and Six (as well as its ruling regarding personal jurisdiction over Montgomery 

Capital), and to permit repleading on those claims in accordance with the Proposed Second 

Amended Complaint. 

I. Breach of Fiduciary Duty: The Opinion Failed To Recognize That The 

Contractual Disclaimer Of A Partnership Relation Cannot Possibly Bind 

Non-Contracting Parties And, In Any Event, Did Not Constitute A General 

Disclaimer Of A Fiduciary Relationship In This Case 

The Court dismissed the claim of breach of fiduciary duty (Count Six of the Complaint) 

based on a clause in the Master Policy Purchase Agreements (“MPPAs”) that provides that 

“[n]othing contained in this Agreement is intended to . . . create the relationship of . . . a 

partnership or joint venture.” Opinion at 15. We submit that this ruling overlooks several 

essential points. 

The basic nature of the arrangement here – as Plaintiffs have endeavored to make clearer 

in the Proposed Second Amended Complaint (“SAC”) (e.g., SAC ¶¶ 4-8) – is that Ritchie 

Capital Management, L.L.C. (“RCM”), as adviser and fiduciary to (as well as holder of 

beneficial interests in) Ritchie Risk-Linked Life Strategies Trust I, Ritchie Life Strategies Master 

Trust, and Ritchie Risk-Linked Strategies Trading, Ltd. (all three entities collectively, the 

“Investing Plaintiffs”), caused the Investing Plaintiffs to become, together with Coventry, the de 

facto equity shareholders in Plaintiffs Ritchie Risk-Linked Strategies Trading (Ireland), Limited 

(“Ritchie I”) and Ritchie Risk-Linked Strategies Trading (Ireland) II, Limited (“Ritchie II”) 

(collectively, the “Contracting Plaintiffs”). 

Case 1:07-cv-03494-DLC Document 54 Filed 08/24/2007 Page 6 of 56
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Ritchie I and Ritchie II in turn each entered into a contract – an MPPA – with Coventry’s 

special-purpose subsidiary LST I LLC (“LST”) for the purchase of life insurance policies. These 

MPPAs were only two out of a large number of pertinent agreements governing the whole 

arrangement. (Plaintiffs have tried to make this point clearer in the SAC. See SAC ¶¶ 45, 48, 51.) 

Thus, accepting for present purposes that, in the MPPAs, Ritchie I and Ritchie II disclaimed a 

partnership or joint venture relation with LST, (1) the Plaintiffs not party to the MPPAs did no 

such thing, and (2) the disclaimer does not apply to the Defendants not party to the MPPAs. 

The Court states that the Investing Plaintiffs “have pleaded no adequate bases for 

establishment of a fiduciary relationship absent one between the defendants and Ritchie I and II.” 

Opinion at 16. But the Complaint and the SAC allege several grounds for a fiduciary relationship 

between, on the one hand, the Investing Plaintiffs and, on the other, LST’s parents and affiliates, 

including: (a) the joint equity-like investment in Ritchie I and Ritchie II, and (b) the fact that 

Plaintiffs (specifically, the Investing Plaintiffs) provided the funding for an investment 

arrangement that Defendants in practice had the responsibility for managing. See Compl. ¶¶ 30-

33; SAC ¶¶ 4-8, 45-53. 

Plaintiffs cited several cases in their brief in opposition (see Pl. Mem. in Opp’n (“Pl. 

Mem.”) 17-18, 21-22) demonstrating that these arrangements are textbook bases for a fiduciary 

relationship (see Brunetti v. Musallam, 783 N.Y.S.2d 347, 349 (1st Dep’t 2004) (relationship 

between investors in a close corporation “imposes a high degree of fidelity”); In re T.J. Ronan 

Paint Corp., 469 N.Y.S.2d 931, 936 (1st Dep’t 1984) (same); Meinhard v. Salmon, 249 N.Y. 

458, 462-64 (1928) (arrangement where one party provides the funding and the other manages 

the investment creates “fiduciary duties akin to those of partners”)), and there is extensive 

additional authority supporting a finding of a fiduciary relationship in the circumstances 

Case 1:07-cv-03494-DLC Document 54 Filed 08/24/2007 Page 7 of 56
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presented by this case. E.g., Spodek v. Neiss, 756 N.Y.S.2d 903 (2d Dep’t 2003) (finding a 

fiduciary relationship between shareholders in a close corporation); Blue Chip Emerald LLC v. 

Allied Partners Inc., 750 N.Y.S.2d 291, 294 (1st Dep’t 2002) (co-venturer managing the 

investment owed fiduciary duty to other co-venturer); Cassata v. Brewster-Allen-Wichert, Inc., 

670 N.Y.S.2d 552, 553 (2d Dep’t 1998) (“The shareholders of a close corporation owe each 

other a duty to act in good faith”). The Opinion overlooks these points. 

Similarly, the Opinion does not address the fact that the disclaimer does not apply to any 

of the Defendants not party to the MPPAs. The Complaint fairly alleges – although the SAC 

strives to make it clearer (see SAC ¶¶ 2, 6-8, 45) – that LST’s parents were equity stake-holders 

in Ritchie I and Ritchie II and therefore owed the Investing Plaintiffs fiduciary duties. By the 

same token, the Coventry entities’ role as de facto decision-makers with respect to the funds 

contributed by Plaintiffs also grounds a fiduciary relationship. 

Even beyond these points, the disclaimer provision at issue says only that the parties have 

not formed a “partnership” or “joint venture.” As Plaintiffs have explained (see Pl. Mem. 21), a 

fiduciary relation may be formed even when a “partnership” or “joint venture” is not. The 

allegations described in the preceding paragraphs allege circumstances that would create a 

fiduciary relation even without a partnership or a joint venture. 

II. Fraud: The Opinion Failed To Consider Claims By And Against NonContracting Parties And Overlooked Several Reasons Why The Fraud 

Claims Do Not Duplicate The Contract Claims 

The Court dismissed the fraud claims (Count Four of the Complaint) based on the theory 

that “a fraud claim will not lie if it arises ‘out of the same facts as plaintiff’s breach of contract 

claim.’” Opinion at 17 (quoting Telecom Int’l Am., Ltd. v. AT & T Corp., 280 F.3d 175, 196 (2d 

Case 1:07-cv-03494-DLC Document 54 Filed 08/24/2007 Page 8 of 56
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Cir. 2001)).2 Citing this principle, the Court held that Plaintiffs did not identify a “separate legal 

duty” in support of the fraud claim, nor had Plaintiffs pointed to representations “collateral” to 

the contract. Id. at 18. Concluding that the fraud claim “appears to rest entirely on the subjects 

covered in the representations and warranties” contained in the two MPPAs, the Court ruled that 

any misrepresentations or omissions relating to the contracts must be pleaded as a breach of 

contract claim. Id. This reasoning overlooks several key points. 

First, the Opinion misreads Telecom International, which did not make the sweeping 

pronouncement that under New York law, a contract claim and a fraud claim can never cover the 

same facts or subject matter. Rather, in that case the Second Circuit stated the well-settled (but 

here inapplicable) principle that an ordinary contract claim cannot be converted into a fraud 

claim merely by alleging that at the time of contracting, the defendant misrepresented its 

intention to perform the contract. See Telecom Int’l, 280 F.3d at 196. That rule is not so broad 

that an act that grounds a breach of contract claim can never be the basis for a claim sounding in 

tort. E.g., Hargrave v. Oki Nursery, Inc., 636 F.2d 897, 899 (2d Cir. 1980) (misrepresentation 

was actionable as both breach of contract and fraud); see also Pl. Mem. 15-16. 

Second, the Opinion overlooks the fact that the fraud claim is asserted by a number of 

Plaintiffs not party to the MPPAs against a number of Defendants not party to the MPPAs. Even 

if the Court’s reading of Telecom International were correct – and we believe that it is not – that 

would have nothing to do with the Investing Plaintiffs’ fraud claims against the Coventry 

entities, or with the Contracting Plaintiffs’ fraud claims against Coventry First LLC (the main 

 2

 The Court also stated that Counts Four and Five suffered from Rule 9(b) pleading defects. 

Opinion at 17, 19. Plaintiffs respectfully disagree but have attempted in the Proposed Second Amended 

Complaint to alleviate potential Rule 9(b) difficulties.

Case 1:07-cv-03494-DLC Document 54 Filed 08/24/2007 Page 9 of 56
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operating vehicle for Defendants’ dealings with Plaintiffs) and Montgomery Capital. The 

Opinion makes no mention of these claims. 

Third, the Opinion overlooks the fact that Plaintiffs have identified a separate legal duty 

to disclose. As the opposition brief explained, the Complaint alleged that the Coventry entities 

owed Plaintiffs a duty of disclosure. Pl. Mem. 16-18. That duty arose either from the fiduciary 

relation created by the joint investment, partnership, or joint venture, or simply from the fact that 

the Coventry entities and their officers possessed superior knowledge even as the Plaintiffs were 

acting on the basis of mistaken information. Compl. ¶¶ 30-33, 38, 66, 87-89. 

Fourth, Plaintiffs have alleged misrepresentations and omissions apart from and 

“collateral” to the main duty to perform under the contracts. To begin with, the Complaint 

alleges misrepresentations made after the execution of the purchase agreements relating to the 

New York Attorney General’s investigation during a June 2006 telephone call. Id. ¶¶ 50-51. In 

the SAC, Plaintiffs have strived to give greater specificity to these allegations (see SAC ¶¶ 70-

79). If not for the June 2006 misrepresentations, Plaintiffs would have terminated the 

arrangement with Defendants, and thereby saved significant sums of money. Plaintiffs have 

attempted to convey in the SAC (see id. ¶ 80) that the statements in the June 2006 call 

constituted misrepresentations of present facts collateral to the contract. See First Bank of the 

Ams. v. Motor Car Funding, Inc., 690 N.Y.S.2d 17, 21 (1st Dep’t 1999) (fraud claim predicated 

on post-contract representation was not duplicative of breach of contract claim) (citing Deerfield 

Commc’ns Corp. v. Chesebrough-Ponds, Inc., 68 N.Y.2d 954 (1986)); Bd. of Managers of 411 

E. 53rd St. Condo. v. Dylan Carpet, Inc., 582 N.Y.S.2d 1022, 1023 (1st Dep’t 1992) (false 

statement of fact made after execution of contract was collateral to the contract).

Case 1:07-cv-03494-DLC Document 54 Filed 08/24/2007 Page 10 of 56
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Additionally, in documents sent to the Plaintiffs, including the Investing Plaintiffs, before 

the formation and execution of the purchase agreements, the Defendants not party to the MPPAs 

misrepresented existing, external facts about their products and business practices. See Compl. 

¶¶ 27-33, 35-39, 87. These misrepresentations are clearly either “collateral” or “extraneous” to 

the MPPAs; the misrepresentations do not form any part of the primary performance obligation 

under the MPPAs, and they were made prior to the existence of the MPPAs. See, e.g., Triangle 

Underwriters, Inc. v. Honeywell, Inc., 604 F.2d 737, 747 (2d Cir. 1979) (the fraud was collateral 

or extraneous to the contract because it consisted of “independent false representations, made 

before there ever was a contract between the parties, which led [plaintiff] to enter into it”); see 

also Pl. Mem. 15-16. 

Finally, Plaintiffs are prepared to prove that at least some of them did suffer special 

damages. In the SAC, Plaintiffs have alleged the special damages that RCM and the Investing – 

as opposed to Contracting – Plaintiffs in particular suffered in connection with setting up the 

Ritchie IV arrangement and the securitization transaction. See SAC ¶¶ 92-94, 110, 116; see also

Compl. ¶ 64. These damages, which are out-of-pocket expenses unrecoverable as damages for 

breach of contract, were a direct and proximate result of Defendants’ fraud and fraudulent 

conduct. See Great Earth Int’l Franchising Corp. v. Milks Dev., 311 F. Supp. 2d 419, 430 

(S.D.N.Y. 2004) (special damages flow “directly and proximately from the fraud, rather than 

from the breach of contract”).

III. Fraudulent Inducement: The Opinion Misapplied Controlling Law And 

Misapprehended The Claims By And Against Entities Not Party To The 

MPPAs 

The essence of the fraud-in-the-inducement claim is that, had Plaintiffs known that the 

relevant representations were false, they never would have contracted with Defendants. The 

Case 1:07-cv-03494-DLC Document 54 Filed 08/24/2007 Page 11 of 56
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Court dismissed the fraudulent inducement claim (Count Five of the Complaint) on the strength 

of the integration clause in the MPPAs. Opinion at 19-20. In this connection, the Court also ruled 

that: 

[s]ince the acts which the plaintiffs allege the fraud induced were the entry into 

the two agreements that Ritchie I and II executed, the [integration clause] is 

sufficient to bind not just the signatories but the other plaintiffs. 

Id. at 20. This ruling overlooks three points. 

First, as the Opinion recognizes (at 19), under New York law, an integration clause will 

bar a claim of fraudulent inducement only in the special case that the clause “contain[s] explicit 

disclaimers of the particular representations that form the basis” of the fraud claim. Mfrs. 

Hanover Trust Co. v. Yanakas, 7 F.3d 310, 316 (2d Cir. 1993) (emphasis added) (citing Danann 

Realty Corp. v. Harris, 5 N.Y.2d 317, 320 (1959)); see also Harsco Corp. v. Segui, 91 F.3d 337, 

345 (2d Cir. 1996) (“where a party specifically disclaims reliance upon a particular 

representation in a contract, that party cannot . . . claim it was fraudulently induced to enter into 

the contract by the very representation it has disclaimed reliance upon”). 

What the Opinion overlooks is that the integration clause in this case does not disclaim 

reliance on the representations that Plaintiffs have put at issue. To the contrary, it does the exact 

opposite: the clause states that LST “has not made any representations or warranties other than 

as set forth herein.” MPPA § 7.12 (emphasis added). Plaintiffs have alleged that they were 

relying on (among other things) several of the very representations and warranties “set forth 

herein.” As Plaintiffs have never disclaimed reliance on the representations in the contract, the 

integration clause cannot possibly bar them from claiming fraudulent inducement based on those 

very representations.3

 3

 The Court also held as to the fraudulent inducement count that the alleged misrepresentations 

and omissions are “not extraneous to the contract” and should be pleaded as a breach of contract claim. 

Case 1:07-cv-03494-DLC Document 54 Filed 08/24/2007 Page 12 of 56
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Second, the dismissal rests on the premise that the MPPAs were the only contracts 

alleged by Plaintiffs to be fraudulently induced. See Opinion at 20. But that is not true. The 

Complaint alleged (at ¶ 94) that the induced acts include the execution of multiple agreements 

between Plaintiffs and Defendants, not just the MPPAs, as well as the abortive Ritchie IV 

arrangement (see id. ¶ 64). Plaintiffs have attempted to make these allegations clearer in the 

SAC. See SAC ¶¶ 80, 92, 113, 115. For this reason, the Court was mistaken to conclude that the 

integration clause bars the fraudulent inducement claims by the Investing Plaintiffs, or any of the 

Plaintiffs’ claims against a Defendant other than LST. 

Third, a contract cannot bind a non-party (EEOC v. Waffle House, Inc., 534 U.S. 279, 

294 (2002)), and the Investing Plaintiffs, as well as most of the Coventry Defendants, are not 

signatories to the MPPAs. Therefore, these parties cannot possibly be affected one way or the 

other by the integration clause in the MPPAs. The integration clause is addressed only to 

information being furnished by LST to Ritchie I and Ritchie II. The Complaint, by contrast, is 

fairly read – and the SAC tries to make it even clearer, see SAC ¶¶ 53-58 – that Defendants other 

than LST are responsible for misrepresentations and omissions, and not just to Ritchie I and 

Ritchie II, but also to the Investing Plaintiffs. 

IV. Personal Jurisdiction: The Court Overlooked That Montgomery Capital, 

Inc. Is Subject To Personal Jurisdiction On Any Claim, A Point Implicitly 

Conceded By Defendants 

The Opinion states that personal jurisdiction as to Montgomery Capital, Inc. “has not

sufficiently been pled . . . as to the remaining RICO claims.” Opinion at 26. The Opinion does 

not indicate precisely what is deficient about the relevant allegations and evidentiary 

 

Opinion at 21. This conclusion is incorrect for the reasons expressed above (at pp. 6-7) in relation to the 

fraud claim: The Complaint alleges misstatements and omissions that are plainly collateral or extraneous 

to the contracts. Many of Defendants’ misrepresentations took place well before the formation of the 

agreements at issue and induced the Plaintiffs to enter into those agreements. 

Case 1:07-cv-03494-DLC Document 54 Filed 08/24/2007 Page 13 of 56
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submissions. In any event, we submit that the Court has overlooked at least one point so 

incontestable that even Defendants have ceased to challenge it. 

It is a completely settled matter of civil procedure that a corporation licensed to do 

business in New York is subject to personal jurisdiction in New York on any claim. Pl. Mem. 3 

& n.3 (citing, inter alia, Bagdon v. Phil. & Reading Coal & Iron Co., 217 N.Y. 432 (1916), and 

M’Baye v. World Boxing Ass’n, 429 F. Supp. 2d 652, 658 (S.D.N.Y. 2006) (“New York courts 

are in general agreement that a foreign corporation submits itself to the jurisdiction of New York 

courts when it registers to do business within this state under [N.Y. Bus. Corp. L.] § 1304”)). 

Montgomery Capital, Inc. is such a corporation, which is undoubtedly why in the New York 

Attorney General action, Montgomery Capital expressly conceded that it is subject to personal 

jurisdiction in New York. See id. at 2-3. Indeed, after Plaintiffs’ opposition brief called all of 

these points to the attention of Defendants’ counsel (who did not represent Montgomery Capital 

in the Attorney General action), their reply brief quite pointedly refrained from contesting the 

Court’s jurisdiction over Montgomery Capital. See Def. Reply Br. 1. 

CONCLUSION

 For the foregoing reasons, the Court should reconsider its Opinion and Order of July 17, 

2007, insofar as it dismisses Counts Four, Five, and Six of the Complaint without leave to amend 

and rules that personal jurisdiction has not been established over Defendant Montgomery 

Capital, Inc. The Court should grant leave to replead those claims as set forth in the attached 

Proposed Second Amended Complaint. 

Case 1:07-cv-03494-DLC Document 54 Filed 08/24/2007 Page 14 of 56
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Dated: August 24, 2007 

Respectfully submitted, 

LAW OFFICES OF THOMAS P. PUCCIO 

Thomas P. Puccio 

230 Park Avenue 

New York, NY 10169 

Tel: (212) 883-6383 

Fax: (212) 883-6388 

ROBBINS, RUSSELL, ENGLERT, 

 ORSECK & UNTEREINER LLP 

By: s/ Lawrence S. Robbins 

Lawrence S. Robbins (LR-8917) 

Gary A. Orseck 

Rachel S. Li Wai Suen 

Daniel R. Walfish 

1801 K Street, N.W. Suite 411L 

Washington, D.C. 20006 

Tel: (202) 775-4500 

Fax: (202) 775-4510 

Counsel for Plaintiffs 

Case 1:07-cv-03494-DLC Document 54 Filed 08/24/2007 Page 15 of 56
Exhibit A 

Case 1:07-cv-03494-DLC Document 54 Filed 08/24/2007 Page 16 of 56
UNITED STATES DISTRICT COURT 

SOUTHERN DISTRICT OF NEW YORK 

RITCHIE CAPITAL MANAGEMENT, L.L.C., 

RITCHIE RISK-LINKED STRATEGIES 

TRADING (IRELAND), LIMITED, RITCHIE 

RISK-LINKED STRATEGIES TRADING 

(IRELAND) II, LIMITED, WALKERS SPV 

LIMITED, as trustee for Ritchie Risk-Linked 

Life Strategies Trust I and Ritchie Life 

Strategies Master Trust, and RITCHIE RISKLINKED STRATEGIES TRADING, LTD., 

Plaintiffs, 

v. 

COVENTRY FIRST LLC, THE COVENTRY 

GROUP, INC., MONTGOMERY CAPITAL, 

INC., LST I LLC, ALAN BUERGER, 

CONSTANCE BUERGER, REID S. 

BUERGER, ANTONIO MUNIZ, ALEX 

SELDIN, NEAL JACOBS, EILEEN SHOVLIN, 

and JIM DODARO, 

Defendants. 

)

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07 Civ. 3494 (DLC) 

ECF Case 

[PROPOSED] SECOND 

AMENDED COMPLAINT 

 Plaintiffs, through their attorneys, for their Second Amended Complaint against 

Defendants allege as follows: 

NATURE OF THE ACTION

1. This is an action under the federal Racketeer Influenced and Corrupt 

Organizations Act (“RICO”), and for fraud, fraudulent inducement, breach of fiduciary 

duty, and breach of contract. It is brought to recover damages caused to Plaintiffs by 

Defendants’ pervasive fraud in the “life settlements” industry – that is, the secondary 

market for life insurance policies. In a life settlement transaction, an investor buys a life 

insurance policy from the policy’s owner at a discount, pays the policy’s premiums as 

Case 1:07-cv-03494-DLC Document 54 Filed 08/24/2007 Page 17 of 56
they come due, and then collects the death benefits. Coventry First LLC is a major player 

in the life settlement industry, but its bid-rigging and fraud have resulted in civil 

proceedings by the New York Attorney General and the Florida Office of Insurance 

Regulation against itself and its affiliates. 

2. Defendants Coventry First LLC (“Coventry First”) and LST I LLC 

(“LST”) are owned by Defendant Montgomery Capital, Inc. (“Montgomery Capital”) and 

affiliated with Defendant The Coventry Group, Inc. (all four entities, together with 

affiliates, to be referred to collectively as “Coventry”). Coventry First is the main 

operating subsidiary for Coventry’s activities in the life settlement field. Montgomery 

Capital is a holding company, and LST is a special-purpose vehicle that serves an alter 

ego for Montgomery Capital and Coventry First. 

3. Coventry is owned and controlled by the Buerger family, which includes 

Defendants Alan Buerger, Constance Buerger, and Reid S. Buerger. Defendant Antonio 

Muniz is the chief financial officer of Coventry First and Montgomery Capital. The other 

individual defendants are or were executives and employees of Coventry First. Many if 

not all of these defendants, as well as Coventry’s employees generally, held themselves 

out in emails and otherwise as representing “Coventry” rather than any particular entity 

or entities in the Coventry corporate family. 

4. Ritchie Capital Management, L.L.C. (“RCM”), as adviser and fiduciary to 

(as well as holder of pecuniary interests in the value of) Ritchie Risk-Linked Life 

Strategies Trust I, Ritchie Life Strategies Master Trust, and Ritchie Risk-Linked 

Strategies Trading, Ltd. (all three entities collectively, the “Investing Plaintiffs”), caused 

the Investing Plaintiffs to become de facto equity shareholders in Plaintiffs Ritchie Risk2 

Case 1:07-cv-03494-DLC Document 54 Filed 08/24/2007 Page 18 of 56
Linked Strategies Trading (Ireland), Limited (“Ritchie I”) and Ritchie Risk-Linked 

Strategies Trading (Ireland) II, Limited (“Ritchie II”). 

5. Coventry (through a shell company known as Sandy Run Ltd.) also 

became a de facto equity shareholder in Ritchie I and Ritchie II. (Sandy Run is a mere 

alter ego, agency, and instrumentality of Montgomery Capital and the Coventry corporate 

family. The affairs of Sandy Run are completely dominated by Montgomery Capital and 

the Coventry corporate family. On information and belief, Sandy Run’s officers and 

directors all are officers and directors of Coventry First and Montgomery Capital. Sandy 

Run conducts no business of its own but is merely a vehicle for holding the subordinated 

securities of Ritchie I and Ritchie II.) 

6. Ritchie I and Ritchie II (collectively, the “Contracting Plaintiffs”) each 

entered into a contract with the Coventry alter ego LST to purchase life insurance policies 

that Coventry First had acquired on the open market. These contracts – which were only 

one set out of a large number of contracts governing the relationship between the sides – 

were known as Master Policy Purchase Agreements, or “MPPAs.” 

7. Coventry and the Investing Plaintiffs intended all along that the 

Contracting Plaintiffs would re-sell the life insurance products at a profit in a 

securitization transaction. 

8. The Investing Plaintiffs and Coventry, therefore, were carrying on, as the 

co-owners of Ritchie I and Ritchie II, in an arrangement in which profits and losses 

would be shared. The Investing Plaintiffs contributed the majority of the financing, while 

Coventry contributed the majority of the effort and expertise. 

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9. Defendants, however, concealed from Plaintiffs that Coventry First was 

systematically defrauding the owners of the policies, and then further deceived Plaintiffs 

as to the existence of an investigation by the Attorney General of New York into 

Defendants’ misconduct. Coventry First and its officers, moreover, falsely represented on 

numerous occasions that Coventry was in compliance with all applicable laws and 

regulations. 

10. After deceiving Plaintiffs as to the New York Attorney General’s 

investigation, Defendant Reid Buerger repeatedly invoked the Fifth Amendment when 

questioned in September 2006 about the illegal acts that Coventry had committed in 

relation to its acquisition of life insurance products from sellers. 

11. Coventry’s misconduct has damaged Plaintiffs, as described herein. 

JURISDICTION AND VENUE

12. The Court has jurisdiction over the subject matter of this action pursuant 

to 28 U.S.C. § 1331 because Plaintiffs bring claims under RICO, 18 U.S.C. § 1962. The 

Court has supplemental jurisdiction over the Plaintiffs’ state-law claims pursuant to 28 

U.S.C. § 1367(a). In the alternative, the Court has original subject matter jurisdiction over 

the state-law claims pursuant to 28 U.S.C. § 1332(a). While Plaintiffs cannot yet 

calculate their damages with precision, it is likely at least 700 million dollars. 

13. The Court has personal jurisdiction over Defendants because: (1) 

Defendants regularly transact business in New York and have entered into contracts with 

Plaintiffs in New York; (2) Defendants have committed tortious acts within New York; 

(3) Defendants have committed tortious acts outside New York causing injury to 

Plaintiffs and others in New York as set forth in this complaint, and regularly do business 

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and derive substantial revenue from services rendered in New York, and expect or should 

reasonably expect their acts to have consequences in New York. Defendants derive 

substantial revenue from interstate commerce. 

14. Coventry First and LST submitted in a series of agreements with Plaintiffs 

to the jurisdiction of the courts sitting in the State of New York for purposes of disputes 

arising out of their relationship with Plaintiffs. 

15. Defendant Montgomery Capital, Inc. is subject to general personal 

jurisdiction in New York because it is licensed to do business in New York under Section 

1304 of the New York Business Corporation Law. Indeed, Montgomery Capital 

explicitly conceded in an action brought by the New York Attorney General that 

“Montgomery Capital is subject to personal jurisdiction in New York.” 

16. Defendant The Coventry Group, Inc. receives a substantial portion of the 

operating income of Coventry First and is under common control with the other Coventry 

entities. The Coventry Group, Inc. also facilitated Coventry First’s misconduct in the 

marketplace. In particular, The Coventry Group, Inc. assisted Coventry First in its 

purchases by converting term life policies to universal life insurance, receiving fees from 

Coventry First in the process. 

17. Discussions between Coventry and representatives of RCM situated in 

New York began in March 2005. From March 2005 until November 2006, Coventry 

employees and executives frequently communicated by email and telephone with RCM 

employees in New York. Among the Coventry executives who frequently placed 

telephone calls and sent emails to RCM’s New York employees were Alan Buerger, Reid 

Buerger, Antonio Muniz, and Alex Seldin. 

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18. Each of the individual defendants has responsibility either for the overall 

management of Coventry or for Coventry First’s acquisition of life insurance policies. 

These defendants bought hundreds, if not thousands, of life insurance policies – 

including, on information and belief, policies procured by fraud and bid-rigging, as 

alleged herein – from New York sellers. These defendants also purchased numerous 

policies through New York brokers, and communicated and negotiated with brokers in 

New York in connection with those purchases. 

19. The individual defendants had knowledge of, and control over, Coventry 

First’s purchases of policies in New York. For instance, Neal Jacobs, Jim Dodaro, and 

Eileen Shovlin negotiated on behalf of Coventry First with brokers in New York for the 

purchase of policies. All purchases were approved by Reid Buerger. 

20. Venue is proper in this District pursuant to 28 U.S.C. §§ 1391(b)(2) and 

1965(a). In the alternative, venue is proper in this District pursuant to 28 U.S.C. 

§ 1391(a)(2). Coventry waived any objection to venue in this Court in a series of 

agreements with Plaintiffs. 

THE PARTIES

21. Plaintiff RCM is a limited liability company with its principal place of 

business in Lisle, Illinois. Its members are citizens of Illinois, Wyoming, Utah, and 

Arizona. 

22. Plaintiffs Ritchie I and Ritchie II are Irish corporations with offices in 

Ireland. 

23. Plaintiff Walkers, a Cayman Islands company with its principal place of 

business in the Cayman Islands, is sole trustee of Ritchie Trust I and Ritchie Master 

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Trust, each of which is a class of Ritchie Risk-Linked Strategies Series Trust, a Cayman 

Islands unit trust. 

24. Plaintiff Ritchie Risk-Linked is a Bermudan limited company with its 

principal place of business in Bermuda. 

25. Defendant Coventry First is a limited liability company with its principal 

place of business in Fort Washington, Pennsylvania. Coventry First’s sole member is 

Montgomery Capital. The officers of Coventry First include Alan Buerger, CEO and 

Treasurer; Constance Buerger, President and Secretary; and Reid S. Buerger, Vice 

President. 

26. Defendant Montgomery Capital is a Delaware corporation with its 

principal place of business in Fort Washington, Pennsylvania. The shareholders of 

Montgomery Capital are Alan Buerger, Constance Buerger, Reid S. Buerger, and the 

Reid S. Buerger Trust. The officers of Montgomery Capital include Alan Buerger, 

Constance Buerger, and Reid Buerger. 

27. Defendant The Coventry Group, Inc. is a Pennsylvania corporation with 

its principal place of business in Fort Washington, Pennsylvania. Its shareholders are 

Alan and Constance Buerger. Its officers include Alan Buerger, President, and Constance 

Buerger, Treasurer and Vice President. 

28. Defendant LST is a Delaware limited liability company. It is a whollyowned subsidiary of Montgomery Capital, which is its sole member. LST’s chief 

executive officer is Alan Buerger. 

29. LST is a mere alter ego, agency, and instrumentality of Montgomery 

Capital and the Coventry corporate family. The affairs of LST are completely dominated 

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by Montgomery Capital and the Coventry corporate family. On information and belief, 

LST – the name of which is believed to stand for “Life Settlement Transfers” – has no 

assets of its own, and its officers and directors all are officers and directors of Coventry 

First and Montgomery Capital. LST conducts no business of its own but was merely a 

conduit for Coventry’s sale of life insurance policies to Ritchie I and Ritchie II. 

30. Defendants Alan Buerger, Constance Buerger, and Reid S. Buerger are 

individuals residing in Pennsylvania. They own and control Coventry. Reid Buerger is 

the son of Alan Buerger, the founder and chief executive of the Coventry group. 

Constance Buerger, Alan Buerger’s wife and Reid Buerger’s step-mother, is president of 

Coventry First and chief operating officer of the Coventry group. 

31. Defendant Antonio Muniz has served as chief financial officer of 

Coventry First and of Montgomery Capital since 2003. On information and belief, he is a 

resident of Pennsylvania. 

32. Defendant Alex Seldin is General Counsel of Coventry. On information 

and belief, he is a resident of Pennsylvania. 

33. Defendant Neal Jacobs is Coventry’s Director of Financial Underwriting. 

On information and belief, he is a resident of Pennsylvania. 

34. Defendant Jim Dodaro is Coventry’s Vice President of Financial 

Underwriting. On information and belief, he is a resident of Pennsylvania. 

35. Eileen Shovlin is a Coventry Regional Vice President. On information and 

belief, she is a resident of Pennsylvania. 

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BACKGROUND: THE SECONDARY MARKET FOR LIFE INSURANCE

36. The life insurance policies at issue in this case insured persons, typically 

wealthy individuals 65 years of age and older, who have determined that they prefer (a) 

an immediate, lump-sum payment to (b) a payment to their beneficiaries when they die, 

along with the ongoing expense of premium payments. In a typical situation, a policy 

owner’s children have become financially independent, or the policy was purchased by a 

corporation that hired the insured as an executive but for which the insured no longer 

works. 

37. The life settlement payment will be more than the “surrender value” of the 

policy – the contractual price at which a policy owner can return the policy to the 

insurance company that issued it – but less than the death benefit. The buyer of the policy 

continues to pay premiums until the insured’s death, at which point the buyer claims the 

death benefit. Thus the investor is wagering that the value of the future death benefit will 

exceed the life settlement payment and the costs of paying premiums until the insured’s 

death. 

38. An insured can enter into a life settlement transaction in one of two ways. 

First, the insured (typically through a representative such as a financial advisor or 

planner, insurance agent, accountant, or attorney) might hire a life settlement broker to 

mount the equivalent of an auction, collecting bids on the policy from buyers (or from 

other brokers who in turn represent buyers). Second, the insured (again through a 

representative) might make direct contact with a buyer. 

39. Coventry First, together with any subsidiaries and affiliates, is one such 

buyer. Its work force includes persons with deep experience in the life insurance industry. 

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Case 1:07-cv-03494-DLC Document 54 Filed 08/24/2007 Page 25 of 56
40. Coventry First is a leading player in the secondary market for life 

insurance policies. It entered that market as a buyer in 2001, purchasing 436 policies 

representing $720 million in total death benefits in 2002. By 2005, Coventry First or its 

affiliates had purchased 1,318 life insurance policies representing more than $3 billion in 

death benefits. 

41. Coventry sells the policies that it purchases to institutional investors. Such 

investors have included the American International Group (“AIG”), Citigroup, Berkshire 

Hathaway, and the Ritchie group. 

DEFENDANTS’ ILLEGAL CONDUCT

A. Coventry Partners With Ritchie

42. Beginning in 2005, the Ritchie group began negotiating with Defendants 

an arrangement under which Ritchie would partner with Coventry for the purpose of 

investing in life insurance products and then re-selling them at a future point through a 

securitization transaction. 

43. In the spring and summer of 2005 and afterwards, Alan Buerger, Reid 

Buerger, Constance Buerger, and Antonio Muniz, in connection with the negotiations 

with the Ritchie group, represented to RCM (and in particular to John (“Jeff”) 

Mulholland, Duncan Goldie-Morrison, and Thane Ritchie) that the life insurance policies 

in which Coventry First transacts have no legal taint and that Coventry purchases policies 

and otherwise conducts itself in accordance with law. 

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44. Rounds of negotiations were concluded in June 2005, September 2005, 

December 2005, and June 2006. Each round culminated in the commitment by the 

Investing Plaintiffs of additional capital. 

45. The purchasers of the policies were Plaintiffs Ritchie I and Ritchie II. The 

Investing Plaintiffs and Coventry jointly committed capital to, and became owners of 

subordinated securities in, Ritchie I and Ritchie II, which entitled the Investing Plaintiffs 

and Coventry pursuant to a set of Intercreditor Agreements, among other instruments, to 

receive the profits of Ritchie I and Ritchie II after other debts have been paid. 

46. The Ritchie group was a partner, joint venturer, and co-venturer of 

Coventry. While the Investing Plaintiffs contributed the great majority of the financing to 

the partnership and venture, Coventry’s specialty was in analyzing and servicing life 

insurance policies. 

47. Plaintiffs relied at all times on Defendants’ expertise, as well as their 

honesty and integrity. It was Coventry’s responsibility to seek out and purchase 

individual policies that met certain pre-defined criteria that the parties had agreed on. 

Each month, pursuant to an elaborate series of contracts, Coventry would notify Ritchie I 

and Ritchie II that Coventry had a certain dollar amount’s worth of qualifying policies to 

sell. Ritchie I and Ritchie II then would pay the necessary funds to Coventry, which 

would transfer the policies to Plaintiffs. 

48. It was, moreover, Coventry’s responsibility to service the policies, 

including, among other things, tracking premium payments and claims for death benefits 

from the issuing life insurance companies, determining when a claim for a death benefit 

could be made and placing the claim, monitoring the health of the insureds, and 

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maintaining current information on the issuing life insurance companies. These 

obligations are set forth in Servicing and Monitoring Agreements between, on the one 

hand, the Contracting Plaintiffs, and on the other, Coventry First. 

49. Day-to-day administration of the policies, in other words, was in the hands 

of Coventry. Ritchie I and Ritchie II had only to send to a third-party intermediary a 

check for the total premium payments due each month, and Coventry First directed the 

intermediary to disburse the appropriate amounts to each issuing life insurance company. 

50. Coventry also assumed responsibility for helping to market the life 

insurance policies for resale. In the MPPAs, not just LST but all of its “Affiliates” – in 

other words, the entire Coventry corporate family – promised “to cooperate with [the 

Contracting Plaintiffs] “to remarket and sell, transfer, convey or assign [the policies].” 

See Exhibit B to the MPPAs. 

51. And in a set of Investment Administration and Servicing Agreements, a 

Coventry affiliate named Montgomery Limited agreed to “give advice and make 

recommendations to the [Contracting Plaintiffs] concerning “(i) the identification of 

potential purchasers of . . . life insurance policies . . . (ii) the value and marketability of 

its portfolio of life settlement policies or of individual policies or groups of policies, (iii) 

the selection of . . . intermediaries by or through whom such transactions might be 

executed or carried out,” as well as the securitization of the policies. 

52. Montgomery Limited is a mere alter ego, agency, and instrumentality of 

Montgomery Capital and the Coventry corporate family. The affairs of Montgomery 

Limited are completely dominated by Montgomery Capital and the Coventry corporate 

family. On information and belief, Montgomery Limited’s officers and directors all are 

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officers and directors of Coventry First and Montgomery Capital. Montgomery Limited 

on information and belief conducts no business of its own but is merely a vehicle for 

Coventry’s provision of advice on the resale of the policies. 

53. Plaintiffs, especially the Investing Plaintiffs, reposed their trust and 

confidence in Defendants, who were in a position of superior knowledge and information 

with respect to the purchase of the policies. Plaintiffs were not involved in the purchase 

of the policies from the insureds and had no information about what the insureds were 

told and what they knew in connection with the sale of their policies. 

54. Plaintiffs had no reason to believe that Defendants were engaging in 

misconduct in the purchase of the policies, much less that Coventry First was under 

investigation for that misconduct. Plaintiffs, acting through RCM, had conducted due 

diligence on Defendants and relied on them precisely because they had a reputation for 

integrity in the life settlements industry and projected an image of cleanliness. The 

Coventry executives with whom Plaintiffs dealt – in particular Defendants Reid Buerger, 

Antonio Muniz, and Alan Buerger – appeared to be legitimate businessmen and 

frequently assured RCM (as representative of the Investing Plaintiffs) that Coventry, 

unlike some of its competitors, was scrupulous about complying with regulatory 

requirements. 

55. In drafts of an MPPA between Ritchie I and LST sent by email on, among 

other occasions, June 20, 24, and 30, 2005, to, among others, John (Jeff) Mulholland of 

RCM (which was acting as the representative of the Investing Plaintiffs), Coventry First 

represented that: 

(a) “The consummation of the transactions contemplated by this 

Agreement and the fulfillment of the terms hereof will not violate any 

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United States federal, state or local law or regulation, violate, result in 

the breach of any terms and provisions of, nor constitute an event of 

default under, the certificate of formation or the operating agreement 

of the Seller, or violate or breach any of the terms or provisions of, or 

constitute an event of default under, any agreement to which the Seller 

is a party or by which it shall be bound; nor violate any order, 

judgment or decree applicable to the Seller of any United States 

federal or state court, regulatory body, administrative agency or other 

United States federal or state government instrumentality having 

jurisdiction over the Seller or its properties.” 

(b) “There is no action, suit or proceeding before or by any court, 

regulatory body, administrative agency or other governmental agency 

or body . . . now pending, or to the Seller’s knowledge, threatened, 

against or affecting the Seller or its assets or properties: . . . seeking to 

prevent the consummation of any of the transactions contemplated by 

this Agreement, or . . . seeking any determination or ruling that might 

materially and adversely [a]ffect the performance by the Seller of its 

obligations under, or the validity and enforceability of, this 

Agreement.” 

(c) “With respect to each Life Settlement Policy: . . . Prior to the transfer 

of each Life Settlement Policy to [Ritchie I], the Seller shall have 

taken all action under applicable law in each relevant jurisdiction in 

order to protect and perfect the ownership of the Seller in such policy . 

. . .” 

(d) “All Life Settlement Policies the purchases of which are being funded . 

. . have been (A) Originated by the Seller or an Affiliate of the Seller 

in one or more transactions that in all material respects were in 

accordance with and in compliance with all applicable United States 

federal, state and local laws, rules and regulations applicable to life 

settlement transactions and the purchase and resale of life insurance 

policies, or (B) purchased from an unaffiliated third party in one or 

more transactions that, to the Seller’s knowledge, were in accordance 

with and in compliance with, in all material respects, all applicable 

United States federal, state and local laws, rules and regulations 

applicable to the purchase of life insurance policies from third persons 

that are not the Original Sellers.” 

56. These drafts culminated in an MPPA between Ritchie I and LST for the 

sale of policies. The amended and restated version of that contract, dated as of September 

8, 2005 (the “Ritchie I Policy Purchase Agreement”) was signed for Coventry by Alex 

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Seldin. In this document, Coventry First and Montgomery Capital (acting through its alter 

ego LST) made representations substantially identical to those referred to in paragraph 55

above. 

57. In drafts of an MPPA between Ritchie II and LST sent by email on, 

among other occasions, December 7, 2005, to, among others, John (Jeff) Mulholland of 

RCM (which was acting as the representative of the Investing Plaintiffs), Coventry First 

made representations substantially identical to those referred to in paragraph 55 above. 

58. These drafts culminated in an MPPA between Ritchie II and LST dated as 

of December 15, 2005 (the “Ritchie II Policy Purchase Agreement”), and signed for 

Coventry by Alex Seldin. In this document, Coventry First and Montgomery Capital 

(acting through its alter ego LST) made representations identical to those made in the 

Ritchie I Policy Purchase Agreement. 

B. Defendants’ Fraud

59. In fact, however, Defendants were engaged in pervasive fraud. The fraud 

was three-fold: first, Defendants systematically defrauded the insureds from whom 

Coventry First purchased policies; second, Defendants defrauded Plaintiffs in concealing 

from them the dishonest and unlawful conduct; and third, Defendants defrauded Plaintiffs 

in concealing from them that Coventry First was under investigation by the Attorney 

General of New York. 

Defendants’ Fraud Against Sellers of Policies

60. Coventry First’s fraud against those from whom it purchased policies took 

two general forms. First, when life settlement brokers pretended to conduct auctions, 

Coventry First would pay the brokers undisclosed fees not to relay or otherwise act on 

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offers from Coventry First’s competitors. Second, Coventry First would provide brokers 

with a “gross offer” – a lump sum to be divided between a broker and policy owner with 

the seller never learning the amount of the sum and therefore the amount retained by the 

broker – and then falsify documentation in order to conceal from the seller part or all of 

the broker’s compensation. 

61. Following are some illustrative examples, taken from the complaint filed 

by the Attorney General of New York in October 2006, of the first category of fraud 

against those from whom Coventry First purchased policies. 

(a) In 2003, a 79-year-old living in Hawaii decided to sell his 

$400,000 life insurance policy. He sold the policy to Coventry First on April 16, 2003 for 

$102,000, of which he received $78,000 and a broker received $24,000. But another 

broker, Life Settlement Alliance (“LSA”), had a better offer, for $108,000, from another 

buyer. Coventry First paid $12,000 to LSA not to present the higher bid, and never 

disclosed the fee to the seller of the policy. In September 2006, Reid Buerger invoked the 

Fifth Amendment when asked by the New York Attorney General whether he approved 

the payment to LSA in exchange for LSA to sit on a better offer. 

(b) A family trust hired a broker to put on the market a $4.9 million 

policy insuring an 80-year-old woman. The broker solicited bids from Coventry First and 

from AllSettled, a broker. In September 2004, Coventry First submitted an offer of 

$705,000 and learned the next month of a competing offer for $880,000 submitted by 

AllSettled. Neal Jacobs, Coventry First’s Director of Financial Underwriting, contacted 

AllSettled’s President Michael Krasnerman to work out a deal, and Krasnerman 

requested a 1.5% payoff to step aside. Coventry First and AllSettled eventually agreed 

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17 

that Coventry First would pay $49,000, or 1% of the death benefit, and in exchange 

AllSettled would stand down. An email from Jacobs to Krasnerman on November 2, 

2004 stated: “for [insured’s initials], the number is 49.” On November 11, 2004, Lenore 

Saracino, a vice president at AllSettled, wrote a note: “Close file[.] Have a co-brokering 

fee with Coventry.” On December 28, 2004, the trust received $800,000, of which 

$142,500 went to the broker. 

(c) In late 2004, Coventry First offered a broker $3.1 million for a 

policy with a $10 million death benefit. The policy insured a 79-year-old man from New 

Jersey and was owned by a family member. Near the end of the bidding process, 

AllSettled’s Saracino forwarded a competing offer of $3,525,000 to Coventry’s Jacobs, 

who forwarded it to Reid Buerger. Rather than compete with AllSettled, Coventry First 

entered into a side deal under which AllSettled would receive $200,000 in exchange for 

not presenting the higher offer. Jacobs sent AllSettled’s Krasnerman an email on 

December 16, 2004 stating “number is 200” and then followed up with an email to 

Coventry First’s accounting department: “[AllSettled is] now co-broker for $200K.” The 

purchase closed on December 28, 2004 with Coventry First paying $3.1 million, of which 

the seller’s broker received $153,053 and the seller received the remainder without ever 

learning of the better offer. 

62. The foregoing are merely illustrative examples. The New York Attorney 

General’s complaint (attached hereto as Exhibit A) sets forth many more examples of 

bid-rigging – in connection with a number of which Reid Buerger invoked the Fifth 

Amendment – and notes (at paragraph 46) that beyond those, the Attorney General’s 

office “has revealed literally dozens of other examples of bid rigging by Coventry and 

Case 1:07-cv-03494-DLC Document 54 Filed 08/24/2007 Page 33 of 56
Brokers.” Plaintiffs hereby incorporate by reference paragraphs 27 to 45 of the New York 

Attorney General’s complaint as if fully set forth herein. 

63. The Florida Office of Insurance Regulation (“FOIR”) also has uncovered 

numerous instances of bid-rigging, bribery, and fraud. The FOIR’s charging document 

(attached hereto as Exhibit B) accuses Coventry First of violating the Florida Insurance 

Code and orders Coventry First to show cause why its license for providing life 

settlements should not be suspended or revoked. Paragraphs 10 to 31 of the FOIR notice 

are hereby incorporated by reference. 

64. The second type of fraud against those from whom Coventry purchased 

policies involved the allocation of payments as between policy sellers and their brokers. 

As the New York Attorney General’s complaint explains, brokers, with the knowledge 

and assistance of Coventry First, frequently concealed from policy sellers the gross 

payment from Coventry First – and thus concealed as well the amount of their 

compensation. 

65. In some states – including Arkansas, Florida, Indiana, Kansas, Kentucky, 

Nebraska, Nevada, North Carolina, North Dakota, Ohio, Pennsylvania, Tennessee, and 

Utah – buyers of life insurance policies are required to disclose to sellers the amount of 

the broker’s compensation. In other states, there is no such requirement. In both types of 

states, however, Coventry First presented sellers with false documentation. 

66. For example, in one case Coventry First purchased a policy insuring an 

80-year-old man in New York. The seller of the policy received $317,000, the primary 

broker received $11,250, and another broker received $3,750. On July 27, 2004 Coventry 

First sent offer sheets to the brokers reflecting this compensation. The brokers signed and 

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returned the sheets to Coventry First, and that ended the bidding process. But later an 

advisor of the seller inquired of the first broker how much compensation the broker had 

or would receive. At the broker’s request, Coventry First supplied falsified offer sheets 

making it appear as if the first broker had received only $1,250 in compensation instead 

of the $11,250 he actually received. On August 31, 2004 Coventry First emailed the 

falsified offer sheets to the second broker for his signature. The second broker signed and 

returned the new offer sheets on September 2, 2004. 

67. In another case involving a policy insuring an 87-year-old man from 

Nevada, Coventry First agreed to pay $42,000 in broker compensation: $21,000 to LSA 

and $21,000 to a brokerage known as Advanced. A Coventry First vice president named 

Jim Dodaro emailed Reid Buerger and others at Coventry on December 22, 2004 to 

suggest that they falsify the disclosure forms attached to the purchase agreement: “Total 

comp is 42K to LSA (they were paying Advanced 21K of it). Looks like we have to do a 

new Ex A disclosing comp. Can we lower the gross offer by 22K, put 20K comp on the 

Ex A, defer 1K to LSA and pay 21K to Advance as a co-broker?” Following Dodaro’s 

suggestion, Coventry First disclosed only $20,000 on the “Exhibit A” disclosure form 

attached to the purchase agreement. The remaining $22,000 was paid to the brokers as a 

co-broker payment and deferred compensation but was never disclosed to the seller. In 

September 2006, Reid Buerger invoked the Fifth Amendment when asked why he agreed 

to alter the Exhibit A. 

Defendants’ Fraud Against Plaintiffs

68. Defendants deceived Plaintiffs as to Defendants’ practices in the purchase 

of life insurance policies. Plaintiffs knew nothing of, and in fact had no reason to know 

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of, Defendants’ systemic misconduct. Plaintiffs learned of the misconduct only when the 

Attorney General of New York brought suit against Coventry in October 2006. 

69. Defendants also deceived Plaintiffs as to the existence and target of the 

Attorney General’s investigation. Defendants first of all failed to disclose to Plaintiffs 

that an investigation of Coventry was under way. Plaintiffs learned of the investigation 

from the Attorney General’s lawsuit. In fact, the investigation began in or about June 

2005, and Defendants, on information and belief, knew of it no later than August 2006 

and quite possibly earlier. Defendants had a duty to disclose the investigation. 

70. Coventry First received a subpoena requesting documents from the New 

York Attorney General in early March 2006 but Defendants did not disclose the 

subpoena to Plaintiffs until a set of telephone conferences in June 2006. 

71. Reid Buerger and Alan Buerger subsequently stated to Mulholland of 

RCM (which represented the Investing Plaintiffs), among others, that Coventry had 

received no subpoenas since an earlier one in 2005 relating to the New York Attorney 

General’s investigation of AIG and its accounting practices. 

72. Even in June 2006, Coventry did not describe the subpoena or the risks 

associated with it fully and accurately. Defendants, however, once they chose to speak 

had a duty to speak completely and truthfully about the investigation and the likely 

consequences of it. 

73. On June 22, 2006 Alan Buerger disclosed to Mulholland of RCM that 

Coventry had in fact received a subpoena in March 2006, but represented that the focus 

and target of the New York Attorney General’s investigation were life settlement brokers, 

and in particular NFP, rather than Coventry. (NFP is “National Financial Partners,” a 

20 

Case 1:07-cv-03494-DLC Document 54 Filed 08/24/2007 Page 36 of 56
network of financial planners that, according to a June 12, 2006 article in TheStreet.com, 

was being investigated by the New York Attorney General. NFP owns a brokerage 

specializing in life settlements. On information and belief, some of NFP’s members had 

worked with Coventry First on the sale of life insurance policies.) 

74. On June 22, 2006, Alan Buerger emailed to Mulholland the article from 

TheStreet.com. Buerger, in sending Mulholland the article, adopted the statements in the 

article as his own, and thereby made misleading statements. Buerger deliberately led 

Mulholland to believe that the New York Attorney General was interested only in NFP, 

and that Coventry First had nothing to do with the practices being investigated by the 

New York Attorney General. Buerger had a duty to disclose that not just NFP, but also 

Coventry, was under investigation and engaged in the practices targeted by the New York 

Attorney General. 

75. On June 26, 2006, Alex Seldin, speaking on behalf of Coventry First and 

Montgomery Capital, stated in a telephone conference to Mulholland from RCM, among 

others, that there was “no action or investigation or anything against Coventry.” 

Participants in the June 26, 2006 call included, in addition to Seldin and Mulholland, 

Coventry’s outside counsel Dan Passage and RCM’s outside and in-house counsel. 

76. On June 27, 2006, Coventry’s outside counsel Brian Brooks, speaking on 

behalf of Coventry First and Montgomery Capital, stated in a telephone conference to 

Mulholland from RCM, among others, that “NFP was widely seen as the target” of the 

New York Attorney General’s investigation and that Coventry was merely “a source of 

information.” 

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77. Speaking through Brooks, Coventry First and Montgomery Capital also 

stated to Mulholland from RCM, among others, that the focus of the Attorney General’s 

request was compensation arrangements between providers and brokers, as well as 

disclosure to sellers; that one question on the subpoena asked whether Coventry had paid 

fees to brokers to provide non-competitive bids; and that the Attorney General was 

looking for bid-rigging. 

78. Through counsel, Coventry First and Montgomery Capital stated as well 

that a “substantially completed” review of Coventry’s emails had not revealed “anything 

like what [the New York Attorney General had previously] alleged against carriers” – 

that is, “fictitious bids to suppress competition.” Participants in the June 27, 2006 call 

included, in addition to Mulholland and Brooks, RCM’s outside and in-house counsel. 

79. These disclosures about the subpoena – which were separate from and 

collateral to any contract with any Plaintiff – were false and misleading, because, among 

other reasons, Alan Buerger, Reid Buerger, Coventry First, and Montgomery Capital 

failed to disclose that Coventry First was engaged in precisely the conduct targeted by the 

subpoena, and indeed affirmatively implied the opposite. 

80. After the communications with Coventry in June 2006, the Plaintiffs, 

relying on the above misrepresentations, continued to purchase policies from Coventry, 

and the Investing Plaintiffs entered into the Ritchie IV arrangement, defined and 

described in paragraph 92 below. 

THE PATTERN OF UNLAWFUL RACKETEERING ACTIVITY

81. As described in the preceding paragraphs, the Defendants conspired with 

one another to defraud the Plaintiffs and the policy owners from whom Coventry First 

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purchased life insurance policies. The Defendants participated in numerous racketeering 

activities in order to accomplish the purposes of their fraudulent scheme, namely, to 

induce policy owners to sell their policies in an unfairly rigged bidding process and to 

induce institutional investors, such as Plaintiffs, to partner with Defendants to obtain 

those policies. 

82. As part of the scheme to defraud, Defendants conspired together to devise 

and participate in a plan of deception, whereby they would and did use false and 

fraudulent pretenses, representations, promises, and statements calculated to deceive 

persons of ordinary prudence and due care and make material nondisclosures and 

concealment of fact and information essential to policy owners in deciding whether and 

for how much to sell their policies, and essential to institutional investors in deciding 

whether and on what terms to partner with Coventry in the secondary life insurance 

market. 

83. Thus, Defendants unlawfully, intentionally, and willfully, and with the 

intent to defraud, that is, knowingly and with specific intent to deceive in order to cause 

financial gain, procured or caused Coventry First to procure life insurance policies, and 

sold or caused Coventry to sell those policies to institutional investors to the detriment of 

such investors, including Plaintiffs. 

84. In carrying out the scheme to defraud policy owners and Plaintiffs, 

Defendants engaged in conduct in violation of the federal laws, including mail fraud in 

violation of 18 U.S.C. § 1341 and wire fraud in violation of 18 U.S.C. § 1343, as set forth 

below. 

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(a) Defendants have engaged in a scheme or artifice to defraud in 

which they have fraudulently and with fraudulent intent obtained 

life insurance policies and fraudulently induced institutional 

investors to purchase those policies from Defendants. This scheme 

entailed bid-rigging, bribery, and the falsification of documents 

pertaining to purchases of life insurance policies from policy 

owners. The scheme also included concealing from Plaintiffs both 

that conduct and the New York Attorney General’s investigation 

into that conduct. 

(b) Defendants’ fraud was material, in that it influenced whether and 

at what price policy owners sold life insurance policies to 

Defendants. Defendants’ fraud likewise influenced whether and on 

what terms Plaintiffs agreed to invest with Defendants in life 

insurance policies. 

(c) Defendants through their fraudulent scheme obtained property 

from policy owners and from Plaintiffs. From policy owners, 

Defendants obtained life insurance policies. From Plaintiffs, 

Defendants obtained payment for life insurance policies, and 

therefore a profit, because Plaintiffs paid Defendants more for each 

policy than Defendant had paid for it. 

(d) Defendants’ fraudulent scheme was furthered by numerous uses of 

interstate wires and mail, some of which are described below. 

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(e) Neal Jacobs’s e-mail message to Michael Krasnerman on 

November 2, 2004, described in paragraph 61(b) of this complaint 

and paragraph 30 of the New York Attorney General’s complaint, 

violated the federal wire fraud statute (18 U.S.C. § 1343) and 

constitutes a predicate act of racketeering under 18 U.S.C. 

§ 1961(b). 

(f) Neal Jacobs’s e-mail message to Michael Krasnerman on 

December 16, 2004, described in paragraph 61(c) of this complaint 

and paragraph 32 of the New York Attorney General’s complaint, 

violated the federal wire fraud statute (18 U.S.C. § 1343) and 

constitutes a predicate act of racketeering under 18 U.S.C. 

§ 1961(b). 

(g) The e-mailing of falsified offer sheets on August 31, 2004, 

described in paragraph 66 of this complaint and paragraph 62 of 

the New York Attorney General’s complaint, violated the federal 

wire fraud statute (18 U.S.C. § 1343) and constitutes a predicate 

act of racketeering under 18 U.S.C. § 1961(b). 

(h) Jim Dodaro’s e-mail message to Reid Buerger on December 22, 

2004, described in paragraph 67 of this complaint and paragraph 

64 of the New York Attorney General’s complaint, violated the 

federal wire fraud statute (18 U.S.C. § 1343) and constitutes a 

predicate act of racketeering under 18 U.S.C. § 1961(b). 

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(i) Jim Dodaro’s e-mail message to Reid Buerger on March 5, 2003, 

described in paragraph 28 of the New York Attorney General’s 

complaint, violated the federal wire fraud statute (18 U.S.C. 

§ 1343) and constitutes a predicate act of racketeering under 18 

U.S.C. § 1961(b). 

(j) Reid Buerger’s e-mail message to Jim Dodaro on or about 

November 18, 2004, described in paragraph 33 of the New York 

Attorney General’s complaint, in which Reid Buerger approved a 

co-broker payment to the East Coast Settlement Company, violated 

the federal wire fraud statute (18 U.S.C. § 1343) and constitutes a 

predicate act of racketeering under 18 U.S.C. § 1961(b). 

(k) Each and every e-mail message sent by Jim Dodaro described in 

paragraphs 37 to 39 of the New York Attorney General’s 

complaint violated the federal wire fraud statute (18 U.S.C. 

§ 1343) and constitutes a predicate act of racketeering under 18 

U.S.C. § 1961(b). 

(l) Jim Dodaro’s e-mail message to Coventry’s accountant on May 5, 

2005, described in paragraph 40 of the New York Attorney 

General’s complaint, violated the federal wire fraud statute (18 

U.S.C. § 1343) and constitutes a predicate act of racketeering 

under 18 U.S.C. § 1961(b). 

(m) Jim Dodaro’s e-mail message to Eileen Shovlin on July 20, 2005, 

described in paragraph 43 of the New York Attorney General’s 

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complaint, violated the federal wire fraud statute (18 U.S.C. 

§ 1343) and constitutes a predicate act of racketeering under 18 

U.S.C. § 1961(b). 

(n) Eileen Shovlin’s e-mail message to Jim Dodaro on July 20, 2005, 

described in paragraph 43 of the New York Attorney General’s 

complaint, violated the federal wire fraud statute (18 U.S.C. § 

1343) and constitutes a predicate act of racketeering under 18 

U.S.C. § 1961(b). 

(o) Jim Dodaro’s e-mail message to Neal Jacobs on February 8, 2005, 

described in paragraph 44 of the New York Attorney General’s 

complaint, violated the federal wire fraud statute (18 U.S.C. 

§ 1343) and constitutes a predicate act of racketeering under 18 

U.S.C. § 1961(b). 

(p) The “co-broker” payments discussed in paragraphs 42 to 47 of this 

complaint and paragraphs 27 to 45 of the New York Attorney 

General’s complaint, as well as other such payments not 

specifically enumerated in the complaints, were made in 

furtherance of Defendants’ fraudulent scheme. To the extent that 

any of those “co-broker” payments were made by interstate wires 

or mail, defendants violated 18 U.S.C. § 1343 and 18 U.S.C. 

§ 1341, respectively. Each violation of these statutes is a predicate 

act of racketeering. 

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(q) The purchase agreements relating to the transactions described in 

paragraphs 61 to 67 of this complaint or paragraphs 27 to 45 of the 

New York Attorney General’s complaint, as well as other such 

purchase agreements not specifically enumerated in the 

complaints, made material misrepresentations and/or omissions of 

fact in furtherance of Defendants’ fraudulent scheme. In particular, 

the purchase agreements did not disclose to policy holders that 

Defendants had fraudulently influenced the purchase of their life 

insurance policies through tactics such as bid-rigging and cobroker payments. To the extent that any of those purchase 

agreements were transmitted by interstate wires or mail, 

defendants violated 18 U.S.C. § 1343 and 18 U.S.C. § 1341, 

respectively. Each violation of these statutes is a predicate act of 

racketeering. 

(r) In the negotiations that culminated in. among other things, the 

Ritchie I Policy Purchase Agreement and the Ritchie II Policy 

Purchase Agreement, as well as in the negotiations that culminated 

in the Ritchie IV arrangement (described and defined in paragraph 

92 below), Alex Seldin, Reid Buerger, and Antonio Muniz 

transmitted or caused to be transmitted over email documents 

containing the statements set forth in paragraphs 55 to 58 above. 

The transmission of these statements violated the federal wire 

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fraud statute (18 U.S.C. § 1343) and constitutes predicate acts of 

racketeering under 18 U.S.C. § 1961(b). 

(s) During the interstate telephone conferences occurring in or about 

June 2006, as described in paragraphs 70-79 of this complaint, 

Alex Seldin, Montgomery Capital, and Coventry First acted in 

furtherance of Defendants’ fraudulent scheme by misrepresenting 

to Plaintiffs their own activities and the nature of the New York 

Attorney General’s investigation. These misrepresentations 

violated the federal wire fraud statute (18 U.S.C. § 1343) and 

constitutes a predicate act of racketeering under 18 U.S.C. 

§ 1961(b). 

85. This enumeration of predicate acts of racketeering is not exhaustive. As 

explained in the New York Attorney General’s complaint, Defendants used interstate 

wires and mail on numerous other occasions in furtherance of their fraudulent scheme. 

DAMAGE TO PLAINTIFFS CAUSED BY DEFENDANTS’ ILLEGAL CONDUCT

86. Ritchie I and Ritchie II own the life insurance policies at issue. The market 

value of those policies has greatly diminished since the New York Attorney General’s 

action was commenced. 

87. Each of the plaintiffs anticipated a profit from the planned sale of the 

policies in a securitization transaction. For purposes of completing the securitization 

transaction, RCM and the Investing Plaintiffs, with the support and encouragement of 

Coventry, had obtained a pre-sale report and a rating from the Moody’s service on a 

number of the policies. 

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88. When the Attorney General’s action became public, Moody’s withdrew its 

rating “in light of the uncertainty surrounding the transaction in light of the complaint 

filed by the New York State Attorney General.” 

89. On information and belief, Moody’s had lost confidence in the health of 

the collateral – i.e., the policies. Specifically, Moody’s no longer believed in the 

representations and warranties made by Ritchie I and Ritchie II to potential investors in 

the securitization, which themselves relied on representations and warranties made by 

Coventry to Ritchie I and Ritchie II. Moody’s, that is, no longer believed that the policies 

had been purchased in compliance with applicable legal requirements. 

90. Defendants’ misconduct has thus directly interfered with the salability and 

value of the life insurance policies at issue. Defendants’ misconduct therefore harmed not 

only the Contracting Plaintiffs, but the Investing Plaintiffs, which are beneficially 

interested in the Contracting Plaintiffs and were owed independent fiduciary duties and 

other duties breached by Coventry. 

91. Ritchie I and Ritchie II continue to pay enormous amounts in premiums 

and fees to service the policies, the salability of which has been impaired by Defendants’ 

misconduct. 

92. Moreover, in or about June 2006, the Investing Plaintiffs committed 

additional capital to the arrangement with Coventry. The June 2006 commitment was 

known as “Ritchie IV.” The Ritchie IV transaction never resulted in the purchase of 

policies, but the Investing Plaintiffs – which were induced to enter into the Ritchie IV 

arrangement by Coventry’s fraudulent conduct in connection with Ritchie I and Ritchie 

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II, including the representations described in paragraphs 55 to 58 and 71 to 79 above – 

suffered substantial transaction costs and opportunity costs in connection with Ritchie IV. 

93. The Investing Plaintiffs also incurred substantial transaction costs in 

connection with the contemplated securitization transaction, which was the subject of 

over a year’s worth of legal, financial, and accounting work. 

94. The transaction costs relating to Ritchie IV and the attempted 

securitization transaction are special damages suffered by the Investing Plaintiffs. 

95. It was entirely foreseeable that Defendants’ misconduct would damage 

Plaintiffs in these ways. Defendants represented that the policies had been purchased in 

compliance with law. Defendants knew that Plaintiffs’ reason for purchasing and 

investing in the policies was to realize a profit by securitizing and selling them. 

Defendants also knew that they were participating in fraud on the owners of the policies – 

fraud that, if it came to light, would greatly diminish the salability and value of the 

policies and destroy the possibility of realizing a profit through the securitization. 

Defendants therefore knew that they were creating serious risks for Plaintiffs. 

96. Coventry First in substance was using Plaintiffs’ capital to acquire assets 

that, because of Coventry First’s own misconduct, turned out to be worth far less than 

what Plaintiffs had reason to believe they were worth. At the same time, Coventry was 

profiting from its misconduct, because it sold the policies to Plaintiffs at prices higher 

than those Coventry First paid. 

97. Had Plaintiffs known that Coventry First engaged in bid-rigging and other 

illegal practices, Plaintiffs never would have done business with Coventry, let alone 

continued to commit additional capital to the arrangement with Coventry. 

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COUNT ONE

 (Violation of RICO, 18 U.S.C. § 1962(c) – by all Plaintiffs against all Defendants) 

98. Each of the foregoing allegations is incorporated herein by reference. 

99. There is an enterprise within the meaning of 18 U.S.C. § 1961(4) 

consisting of (a) Coventry First, or, in the alternative, of (b) all of the individual 

defendants. 

100. The enterprise referred to in the preceding paragraph is engaged in 

interstate commerce, as well as activities affecting interstate commerce, by purchasing 

life insurance policies in several states, including California, Hawaii, Nevada, and 

Florida, for the purpose of transferring those policies to Plaintiffs in other states. 

101. Defendants are all persons within the meaning of § 1962(c), distinct from 

the enterprises referred to in paragraph 99 (except that defendant Coventry First is 

distinct only from the enterprise referred to in paragraph 99(b)), and employed by or 

associated with that enterprise. Defendants did conduct or participate, directly or 

indirectly, in the conduct of the enterprise’s affairs through a pattern of racketeering 

activity within the meaning of 18 U.S.C. §§ 1961(1) and 1961(5) and § 1962(c), to wit: 

(a) Multiple instances of mail fraud in violation of 18 U.S.C. § 1341; 

and 

(b) Multiple instances of wire fraud in violation of 18 U.S.C. § 1343. 

102. Plaintiffs were injured in their business or property within the meaning of 

18 U.S.C. § 1964(c) by reason of the violation of 18 U.S.C. § 1962(c) committed by 

Defendants. Specifically, Plaintiffs were fraudulently induced to invest with Coventry in 

life insurance policies that, because of Defendants’ racketeering activity, actually were 

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worth, unbeknownst to Plaintiffs at the time, either nothing or a tiny fraction of what 

Plaintiffs paid for the policies. Indeed, because of Defendants’ racketeering activities 

Plaintiffs have received essentially nothing in return for their investment. Moreover, 

Plaintiffs were injured when they committed capital to Ritchie IV and incurred 

transaction costs in connection with the attempted securitization. Both Ritchie IV and the 

securitization turned out to be abortive ventures because of Defendants’ racketeering 

activities. 

103. Plaintiffs were injured in an as yet undetermined amount, believed to be 

not less than $700 million. Pursuant to 18 U.S.C. § 1964(c), Plaintiffs are entitled to 

recover treble damages and the cost of this suit, including a reasonable attorney’s fee. 

COUNT TWO

(Conspiracy to Violate RICO, 18 U.S.C. § 1962(d) – by all Plaintiffs against all 

Defendants) 

104. Each of the foregoing allegations is incorporated herein by reference. 

105. Defendants were all persons within the meaning of § 1962(d) and distinct 

from the enterprises referred to in paragraph 99 above (except that defendant Coventry 

First is distinct only from the enterprise referred to in paragraph 99(b)). Defendants 

conspired within the meaning of 18 U.S.C. § 1962(d) to violate 18 U.S.C. §§ 1962(c). In 

particular, Defendants conspired to conduct or participate, directly or indirectly, in the 

conduct of the enterprise’s affairs through a pattern of racketeering activity within the 

meaning of 18 U.S.C. §§ 1961(1) and 1961(5) and § 1962(c), to wit: 

(a) Multiple instances of mail fraud in violation of 18 U.S.C. § 1341; 

and 

(b) Multiple instances of wire fraud in violation of 18 U.S.C. § 1343. 

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106. Plaintiffs were injured in their business or property within the meaning of 

18 U.S.C. § 1964(c) in an as yet undetermined amount, believed to be not less than 

approximately $700 million, by reason of Defendants’ violation of § 1962(d). Pursuant to 

18 U.S.C. § 1964(c), Plaintiffs are entitled to recover treble damages and the cost of this 

suit, including a reasonable attorney’s fee. 

COUNT THREE

(Fraud – by all Plaintiffs against Coventry First, Montgomery Capital, LST, 

Alan Buerger, Reid S. Buerger, and Alex Seldin) 

107. Each of the foregoing allegations is incorporated herein by reference. 

108. As detailed herein, Coventry First, Montgomery Capital, LST, Alan 

Buerger, Reid Buerger, and Alex Seldin made material misstatements to Plaintiffs, and 

omitted to disclose material information that they were obligated to disclose to Plaintiffs, 

regarding (1) the circumstances under which owners of life insurance policies were 

induced to part with their policies, and (2) the existence and target of the New York 

Attorney General’s investigation into Coventry. 

109. These misstatements and omissions were committed knowingly, 

intentionally, and willfully, and were intended to induce Plaintiffs to rely on them. 

110. Reasonably relying on these misstatements and omissions, Plaintiffs acted 

to their detriment by investing in life insurance policies worth much less than Plaintiffs 

had reason to believe they were worth, and committing capital to Ritchie IV and 

attempting a securitization transaction. The Ritchie IV and securitization arrangements 

resulted in special damages, as set forth above, that were a direct and proximate result of 

Defendants’ fraud. 

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Case 1:07-cv-03494-DLC Document 54 Filed 08/24/2007 Page 50 of 56
111. As a direct and proximate result of Defendants’ fraud, Plaintiffs have 

suffered damages in an amount believed to be not less than $700 million. 

COUNT FOUR

(Fraudulent Inducement – by all Plaintiffs against Coventry First, Montgomery 

Capital, LST, Alan Buerger, Reid S. Buerger, and Alex Seldin) 

112. Each of the foregoing allegations is incorporated herein by reference. 

113. As detailed herein, in connection with, among other agreements, the 

Ritchie I Policy Purchase Agreement, the Ritchie II Policy Purchase Agreement, and the 

agreements relating to Ritchie IV, Coventry First, Montgomery Capital, LST, Alan 

Buerger, Reid Buerger, and Alex Seldin knowingly or recklessly made false and 

misleading statements to, and knowingly or recklessly concealed information from and 

did not disclose information to Plaintiffs regarding (1) the circumstances under which 

owners of life insurance policies were induced to part with their policies, and (2) the 

existence and target of the New York Attorney General’s investigation into Coventry. 

114. Under the circumstances, Coventry had a duty to disclose the omitted 

information. 

115. The misstatements and omissions were intended to induce, and did induce, 

Plaintiffs to act to their detriment in that (1) the Investing Plaintiffs caused the 

Contracting Plaintiffs to enter into, and the Contracting Plaintiffs in fact entered into, 

among other agreements, the policy purchase agreements, and (2) the Investing Plaintiffs 

entered into the Ritchie IV arrangement and attempted a securitization transaction. 

116. Plaintiffs entered into these arrangements to their detriment, as described 

herein. The Ritchie IV arrangement and the attempted securitization, moreover, resulted 

35 

Case 1:07-cv-03494-DLC Document 54 Filed 08/24/2007 Page 51 of 56
in special damages, as described above, that were a direct and proximate result of 

Defendants’ fraudulent conduct. 

117. As a direct and proximate result of Defendants’ fraudulent conduct, 

Plaintiffs have suffered damages in an amount believed to be not less than $700 million. 

COUNT FIVE

(Breach of Fiduciary Duty – by RCM, Walkers SPV Limited, and Ritchie RiskLinked Strategies Trading, Ltd. against Coventry First, Montgomery Capital, 

and LST)

118. Each of the foregoing allegations is incorporated herein by reference. 

119. The Investing Plaintiffs were the partners, joint venturers, and coventurers of Coventry First and Montgomery Capital. The Investing Plaintiffs had 

reposed their trust and confidence in Coventry First, Montgomery Capital, and LST, 

which collectively occupied a position of superior knowledge and control with respect to 

the purchase and servicing of life insurance policies. 

120. The fiduciary duty owed by Coventry to Plaintiffs obligated Defendants to 

make full disclosure of all material circumstances surrounding the purchase of life 

insurance policies, and of the existence of the New York Attorney General’s 

investigation. 

121. Defendants concealed this information and thereby misled Plaintiffs to 

their detriment in that they invested in life insurance policies worth much less than 

Plaintiffs had reason to believe they were worth, and committed capital to Ritchie IV. 

As a direct and proximate result of Defendants’ breach of fiduciary duty, Plaintiffs have 

suffered damages in an amount believed to be not less than $700 million. 

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COUNT SIX

(Breach of Contract – by Ritchie I and Ritchie II against LST, Coventry First, and 

Montgomery Capital) 

122. Each of the foregoing allegations is incorporated herein by reference. 

123. Pursuant to the Ritchie I Policy Purchase Agreement and the Ritchie II 

Policy Purchase Agreement, LST (an alter ego of Coventry First and Montgomery 

Capital), represented, among other things, that: 

(i) Coventry’s acquisition of policies was in compliance with all laws 

and regulations, there was no proceeding pending or threatened 

involving any agency or governmental body seeking to prevent the 

transactions contemplated by the agreements or seeking a 

determination that might affect the performance by Coventry of its 

obligations; 

(ii) before conveying the life insurance policies to Ritchie I or Ritchie II, 

Coventry would take all reasonable actions under applicable law to 

protect and perfect its ownership of the policy; and 

(iii) Coventry acquired the policies directly from the insureds in 

transactions that in all material respects complied with all applicable 

laws, or acquired the policies from third parties in transactions that 

to Coventry’s knowledge complied in all material respects with all 

applicable laws. 

124. Coventry breached its contracts with Ritchie I and Ritchie II in that these 

representations and warranties were false as to some or all of the policies purchased by 

Ritchie I and Ritchie II from Coventry. 

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125. Plaintiffs have performed their obligations under the policy purchase 

agreements. 

126. All conditions precedent to Defendants’ contractual liability have been 

performed or have occurred. 

127. To the extent any written notice requirement set forth in the policy 

purchase agreements is applicable, Plaintiffs have satisfied the requirement. 

128. By reason of Coventry’s breach, Plaintiffs have suffered damages in an 

amount believed to be not less than $700 million. 

129. Plaintiffs are entitled pursuant to the policy purchase agreements to 

rescind the life settlement transactions through which Coventry transferred the life 

insurance policies to them. 

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 WHEREFORE, Plaintiffs pray for judgment against Defendants as follows: 

(a) All damages proven pursuant to RICO, trebled as permitted by law; 

(b) All other compensatory damages sustained by Plaintiffs; 

(c) Punitive Damages, in an appropriate amount to be determined at trial; 

(d) Rescission of the relevant life settlement transactions between 

Plaintiffs and Defendants; 

(e) Attorneys’ fees and costs; 

(f) Prejudgment and post-judgment interest; and 

(g) Such other relief as the Court may deem just and proper. 

39 

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40 

 Respectfully submitted, 

 LAW OFFICES OF THOMAS P. PUCCIO 

Thomas P. Puccio 

230 Park Avenue 

New York, NY 10169 

Tel: (212) 883-6383 

Fax: (212) 883-6388 

ROBBINS, RUSSELL, ENGLERT, 

ORSECK & UNTEREINER LLP 

 By: _______________________________ 

Lawrence S. Robbins (LR-8917) 

Gary A. Orseck 

Rachel S. Li Wai Suen 

Daniel R. Walfish 

1801 K Street, N.W. 

Suite 411 

Washington, D.C. 20006 

Tel: (202) 775-4500 

Fax: (202) 775-4510 

 Counsel for Plaintiffs

Dated: August 24, 2007 

 Washington, D.C. 

Case 1:07-cv-03494-DLC Document 54 Filed 08/24/2007 Page 56 of 56