UNITED STATES DISTRICT COURT 

SOUTHERN DISTRICT NEW YORK 

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RITCHIE CAPITAL MANAGEMENT LLC, ) 

RITCHIE RISK-LINKED STRATEGIES ) 

TRADING (IRELAND), LIMITED, RITCHIE ) 

RISK-LINKED STRATEGIES TRADING ) 

(IRELAND) II, LIMITED, WALKERS SPV ) 

LIMITED, as trustee for Ritchie Risk-Linked ) Civil Action No. 07CV3494 (DLC) (DCF) 

Life Strategies Trust I and Ritchie Life Strategies ) 

Master Trust, and RITCHIE RISK-LINKED ) (ECF) 

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. ) 

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x 

MEMORANDUM IN SUPPORT OF DEFENDANTS’ 

MOTION TO DISMISS COUNTS I & II OF PLAINTIFFS’ 

PROPOSED SECOND AMENDED COMPLAINT 

 WILLIAMS & CONNOLLY LLP 

 ______________/s/______________ 

 Katherine G. Lindsey (KL-0902) 

 Dane H. Butswinkas 

 Robert M. Cary 

 David A. Forkner 

 Kenneth J. Brown 

 725 Twelfth Street, N.W. 

 Washington, D.C. 20005 

 (202) 434-5000 

 (202) 434-5029 (facsimile) 

Dated: September 21, 2007 Attorneys for Defendants

Case 1:07-cv-03494-DLC Document 59 Filed 09/21/2007 Page 1 of 33
i 

TABLE OF CONTENTS

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

FACTUAL BACKGROUND..........................................................................................................1 

ARGUMENT...................................................................................................................................2 

I. THE COURT LACKS PERSONAL JURISIDCTION OVER THE 

INDIVIDUAL DEFENDANTS...........................................................................................2 

II. PLAINTIFFS LACK STANDING TO ASSERT RICO CLAIMS .....................................7 

 A. Plaintiffs’ Alleged Injuries Were Not Proximately Caused by RICO 

 Violations....................................................................................................................7 

 B. Plaintiffs Fail Properly to Allege Clear and Definite RICO Damages .....................10 

 C. The “Investing Plaintiffs’ Lack Standing to Assert RICO Claims............................12 

III. PLAINTIFFS FAIL PROPERLY TO ALLEGE A PATTERN OF TWO OR 

MORE PREDICATE ACTS..............................................................................................14 

 A. Plaintiffs Fail Adequately to Plead Two Predicate Acts...........................................15 

 1. Plaintiffs Fail To Allege Certain Predicate Acts of Mail and Wire Fraud with Particularity as Required by Rule 9(b) ...........................................15 

 2. Plaintiffs Fail To Allege Wire Fraud Based on LST I’s Pre- and Post-Contractual Dealings with Ritchie I and II...............................................17 

 3. Intra-Office E-Mails Among Defendants Fail To Satisfy the Interstate 

 Transmission Requirement of 18 U.S.C. § 1343 ..............................................18 

 4. Plaintiffs Fail To Establish Reliance on Communications Between 

 Defendants and Third-Party Brokers ................................................................19 

 B. Plaintiffs Fail To Establish Continuity......................................................................20 

 1. Plaintiffs Fail To Allege Closed-Ended Continuity...........................................20 

 2. Plaintiffs Fail To Allege Open-Ended Continuity .............................................21 

IV. THE CORPORATE DEFENDANTS CANNOT BE RICO “PERSONS” GIVEN 

THE ENTERPRISES IDENTIFIED BY PLAINTIFFS....................................................23 

V. PLAINTIFFS FAIL TO STATE A CLAIM UNDER 18 U.S.C. § 1962(d)......................24 

CONCLUSION..............................................................................................................................25 

Case 1:07-cv-03494-DLC Document 59 Filed 09/21/2007 Page 2 of 33
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TABLE OF AUTHORITIES 

FEDERAL CASES 

Abrahams v. Young & Rubicam, Inc., 79 F.3d 234 (2d Cir. 1996)..................................................9 

Alex Brown & Sons, Inc. v. Marine Midland Banks, Inc., No. 96 Civ. 2549 RWS, 1997 

WL 97837 (S.D.N.Y. Mar. 6, 1997) ....................................................................................1

Alexandra Global Master Fund, Ltd. v. Ikon Office Solutions, Inc., No. 06 Civ. 

5383(JGK), 2007 WL 2077153 (S.D.N.Y. July 20, 2007) ................................................18 

In re Am. Express Co. S’holder Litig., 39 F.3d 395 (2d Cir. 1994).............................................8, 9 

Am. Home Mortgage Corp. v. UM Sec. Corp., No. 05 Civ. 2279, 2007 WL 1074837 

(S.D.N.Y. Apr. 9, 2007).....................................................................................................12 

Anatian v. Coutts Bank (Switzerland) Ltd., 193 F.3d 85 (2d Cir. 1999)........................................15 

Anglo-Iberia Underwriting Mgmt. Co. v. Lodderhose, 282 F. Supp. 2d 126 

(S.D.N.Y. 2003).................................................................................................................11 

Anza v. Ideal Steel Supply Corp., 126 S. Ct. 1991 (2006)...................................................7, 10, 12 

At The Airport, LLC v. Isata, LLC, 438 F. Supp. 2d 55 (E.D.N.Y. 2006).....................................13 

Avecmedia, Inc. v. Gottschalk, No. 03 Civ. 7831, 2004 WL 1586411 

(S.D.N.Y. July 14, 2004) .....................................................................................................5 

Bank of China v. NBM LLC, 359 F.3d 171 (2d Cir. 2004) ............................................................19 

BCCI Holdings (Luxembourg), Societe Anonyme v. Pharaon, 43 F. Supp. 2d 359 

(S.D.N.Y. 1999).................................................................................................................13 

Beatie & Osborn LLP v. Patriot Sci. Corp., 431 F. Supp. 2d 367 (S.D.N.Y. 2006) .......................4 

Bell Atl. Corp. v. Twombly, 127 S. Ct. 1955 (2007) ........................................................................1 

Bensusan Rest. Corp. v. King, 126 F.3d 25 (2d Cir. 1997)..............................................................5 

In re Bridgestone/Firestone, Inc. Tires Prods. Liab. Litig., 155 F. Supp. 2d 1069 

(S.D. Ind. 2001) .................................................................................................................12 

Bulk Oil (USA) Inc. v. Sun Oil Trading Co., 584 F. Supp. 36 (S.D.N.Y. 1983)..............................3

Cedric Kushner Promotions, Ltd. v. King, 533 U.S. 158 (2001)...................................................23 

Center Cadillac, Inc. v. Bank Leumi Trust Co. of N.Y., 808 F. Supp. 213 (S.D.N.Y. 1992).........18 

Chambers v. Time Warner, Inc., 282 F.3d 147 (2d Cir. 2002)......................................................18 

Chandradat v. Navillus Tile, No. 03 Civ. 10093(RJH), 2004 WL 2186562 

(S.D.N.Y. Sept. 28, 2004)..................................................................................................13 

Case 1:07-cv-03494-DLC Document 59 Filed 09/21/2007 Page 3 of 33
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Chong v. Healthtronics, Inc., No. CV-06-1287 SJF MLO, 2007 WL 1836831 

(E.D.N.Y. June 20, 2007) ....................................................................................................6 

Cofacredit, S.A. v. Windsor Plumbing Supply Co., 187 F.3d 229 (2d Cir. 1999)..............14, 18, 21 

CPF Premium Funding, Inc. v. Ferrarini, No. 95 Civ. 4621(CSH), 1997 WL 158361 

(S.D.N.Y. Apr. 3, 1997).....................................................................................................25

Crab House of Douglaston, Inc. v. Newsday, Inc., 418 F. Supp. 2d 193, 206 

(E.D.N.Y. 2006).................................................................................................................24

CutCo Indus., Inc. v. Naughton, 806 F.2d 361 (2d Cir. 1986) ........................................................4 

Debary v. Harrah’s Operating Co., Inc., 465 F. Supp. 2d 250 (S.D.N.Y. 2006)............................3

DeFalco v. Bernas, 244 F.3d 286 (2d Cir. 2001) ..........................................................................20 

Defazio v. Wallis, No. 05-CV-5712 (ADS)(ARL), 2007 WL 2193929 

(E.D.N.Y. July 14, 2007) .............................................................................................16, 19 

Dietrich v. Bauer, 76 F. Supp. 2d 312 (S.D.N.Y. 1999)................................................................24

Denney v. Deutsche Bank AG, 443 F.3d 253 (2d Cir. 2006) ...........................................................7 

D.H. Blair & Co., Inc. v. Gottdiener, 462 F.3d 95 (2d Cir. 2006)...............................................5, 6

Drake v. Lab. Corp. of Am. Holdings, No. 02-CV-1924 (FB) (RML), 2007 WL 776818 

(E.D.N.Y. Mar. 13, 2007) ....................................................................................................6 

Eternity Global Master Fund Ltd. v. Morgan Guar. Trust Co. of N.Y., 375 F.3d 168 

(2d Cir. 2004).....................................................................................................................15 

FD Property Holding, Inc. v. U.S. Traffic Corp., 206 F. Supp. 2d 362 (E.D.N.Y. 2002).......22, 23 

Fezzani v. Bear, Stearns & Co., Inc., No. 99CIV0793RCC, 2005 WL 500377 

(S.D.N.Y. Mar. 2, 2005) ....................................................................................................14 

Finnegan v. Univ. of Rochester Med. Ctr., 180 F.R.D. 247 (W.D.N.Y. Jun 30, 1998)...................1

First Capital Asset Memt. v. Satinwood, Inc., 385 F.3d 159 (2d Cir. 2004) ......................... passim

First Nationwide Bank v. Gelt Funding Corp., 27 F.3d 763 (2d Cir. 1994)........................7, 11, 12 

Fogie v. THORN Ams., Inc., 190 F.3d 889 (8th Cir. 1999) ...........................................................25 

Gates v. Wilkinson, No. 01 Civ. 3145 GBD, 2003 WL 21297296, at *1 

(S.D.N.Y. Jun. 4, 2003) .......................................................................................................3

GICC Capital Corp. v. Tech. Fin. Group, Inc., 67 F.3d 463 (2d Cir. 1995) .....................20, 21, 22 

Greenwald v. Hall, No. 01 Civ. 5405(RO), 2003 WL 164279 (S.D.N.Y. Jan. 23, 2003).............13 

Case 1:07-cv-03494-DLC Document 59 Filed 09/21/2007 Page 4 of 33
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Gross v. Bare Escentuals, Inc., No. 03 Civ. 3089(RLC), 2005 WL 823889 

(S.D.N.Y. Apr. 8, 2005).......................................................................................................3

Harsco Corp. v. Segui, 91 F.3d 337 (2d Cir. 1996).................................................................15, 17 

Hecht v. Commerce Clearing House, Inc., 897 F.2d 21 (2d Cir. 1990) ....................................9, 24 

Holmes v. Sec. Investor Prot. Corp., 503 U.S. 258 (1992)..................................................7, 10, 13 

Int’l CableTel Inc. v. Le Groupe Videotron Ltee, 978 F. Supp. 483 (S.D.N.Y. 1997)..................17 

Jazini v. Nissan Motor Co., 148 F.3d 181 (2d Cir. 1998)................................................................4 

Karabu Corp. v. Gitner, 16 F. Supp. 2d 319 (S.D.N.Y. 1998)....................................................5, 6 

Keeton v. Hustler Magazine, Inc., 465 U.S. 770 (1984)..................................................................2 

Kinetic Instruments, Inc. v. Lares, 802 F. Supp. 976 (S.D.N.Y. 1992) ...........................................5 

Kirwin v. Price Comms. Corp., 391 F.3d 1323 (11th Cir. 2004)...................................................25 

Lehigh Valley Indus., Inc. v. Birenbaum, 389 F. Supp. 798 (S.D.N.Y.), aff'd, 527 F.2d 87 

(2d Cir. 1975).......................................................................................................................6 

Lucente v. IBM Corp., 310 F.3d 243 (2d Cir. 2002)........................................................................1 

Manson v. Stacescu, 11 F.3d 1127 (2d Cir. 1993).........................................................................13 

Mathon v. Feldstein, 303 F. Supp. 2d 317 (E.D.N.Y. 2004) .........................................................18 

McCoy v. Goldberg, 748 F. Supp. 146 (S.D.N.Y. 1990)...............................................................18 

McLaughlin v. Anderson, 962 F.2d 187 (2d Cir. 1992).................................................................23 

Merck & Co. v. Mediplan Health Consulting, Inc., 425 F. Supp. 2d 402 (S.D.N.Y. 2006)............5 

Mills v. Polar Molecular Corp., 12 F.3d 1170 (2d Cir. 1993) ......................................................16 

Motorola Credit Corp. v. Uzan, 322 F.3d 130 (2d Cir. 2003).......................................................12 

Nader v. Getschaw, No. 99 Civ. 11566 (LAP), 2000 WL 1471553 

(S.D.N.Y. Sept. 29, 2000)....................................................................................................4 

Nasik Breeding & Research Farm Ltd. v. Merck & Co., Inc., 165 F. Supp. 2d 514 

(S.D.N.Y. 2001)...........................................................................................................15, 24 

Nat’l Group for Commc'ns. & Computers Ltd. v. Lucent Techs. Inc., 420 F. Supp. 2d 253 

(S.D.N.Y. 2006).................................................................................................................24 

Nuevo Mundo Holdings v. PriceWaterhouse Coopers LLP, No. 03 Civ. 0613 (GBD), 

2004 WL 2848524 (S.D.N.Y. Dec. 09, 2004) .....................................................................2 

Oneida Indian Nation of New York v. City of Sherrill, 337 F.3d 139 (2d Cir. 2003), rev’d 

on other grounds, 544 U.S. 197 (2005) ...............................................................................1 

Case 1:07-cv-03494-DLC Document 59 Filed 09/21/2007 Page 5 of 33
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Parker v. Columbia Pictures Indus., 204 F.3d 326 (2d Cir. 2000)................................................25

In re PaineWebber Ltd. P’ships Litig., 171 F.R.D. 104 (S.D.N.Y. 1997).....................................11 

Plount v. Am. Home Assurance Co., Inc., 668 F. Supp. 204 (S.D.N.Y. 1987)..............................22 

PT United Can Co. v. Crown Cork & Seal Co., Inc., 138 F.3d 65 (2d Cir. 1998) ..........................2 

Puerto Rico Maritime Shipping Auth. v. Almogy, 510 F. Supp. 873 (S.D.N.Y. 1981)....................4 

Rand v. Anaconda-Ericsson, Inc., 794 F.2d 843 (2d Cir. 1986)..............................................13, 14 

Regency Capital, LLC v. Corpfinance Int’l, Inc., No. 02 Civ. 5615 (KTD), 

2003 WL 22400200 (S.D.N.Y. Oct. 20, 2003)....................................................................2 

Ritchie Capital Mgmt., L.L.C. v. Coventry First LLC, N0. 07 Civ. 3494, 

2007 WL 2044656 (S.D.N.Y. July 17, 2007) ............................................................ passim 

Sathianathan v. Smith Barney, Inc., No. 04-7122, 2007 WL 576097 

(S.D.N.Y. Feb. 21, 2007)...................................................................................................25 

Sedima, S.P.R.L. v. Imrex Co., 473 U.S. 479 (1985) .......................................................................7 

Singh v. Parnes, 199 F. Supp. 2d 152 (S.D.N.Y. 2002) ..........................................................21, 22 

Skylon Corp. v. Guilford Mills, Inc., No. 93-CV-5581, 1997 WL 88894 

(S.D.N.Y. Mar. 3, 1997) ..............................................................................................22, 25 

Sobek v. Quattrochi, No. 03 Civ. 10219(RWS), 2004 WL 2809929 

(S.D.N.Y. Dec. 8, 2004).....................................................................................................14 

Societe Anonyme v. Pharaon, 43 F. Supp. 2d 359, 365-66 (S.D.N.Y. 1999)................................13 

Stern v. Leucadia Nat’l Corp., 844 F.2d 997 (2d Cir. 1988).........................................................16 

United Artists Theatre Circuit v. Sun Plaza Enter. Corp., 352 F. Supp. 2d 342 

(E.D.N.Y. 2005).................................................................................................................17 

United States v. Private Sanitation Indus. Ass’n of Nassau/Suffolk, Inc., 44 F.3d 1082 

(2d Cir. 1995).......................................................................................................................6 

Utz v. Correa, 631 F. Supp. 592 (S.D.N.Y. 1986).........................................................................19 

Vicon Fiber Optics Corp. v. Scrivo, 201 F. Supp. 2d 216 (S.D.N.Y. 2002)..............................9, 16 

Wachovia Bank v. Schmidt, 126 S. Ct. 941 (2006)..........................................................................2 

Walther v. Maricopa Int’l Inv. Corp., No. 97 Civ. 4816(HB), 1998 WL 186736 

(S.D.N.Y. Apr. 17, 1998).....................................................................................................6 

Weizmann Inst. of Sci. v. Neschis, 229 F. Supp. 2d 234 (S.D.N.Y. 2002).....................................21 

Welsh v. Servicemaster Corp., 930 F. Supp. 908 (S.D.N.Y. 1996) .................................................6 

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Wiltshire v. Dhanraj, 421 F. Supp. 2d 544 (E.D.N.Y. 2005) ........................................................21 

STATE CASES 

Lama Holding Co. v. Smith Barney, Inc., 688 N.E.2d 1370 (N.Y. 1996) .....................................11 

Landoil Res. Corp. v. Alexander & Alexander Servs., Inc., 565 N.E.2d 488 (N.Y. 1990)..............3 

Laufer v. Ostrow, 434 N.E.2d 692 (N.Y. 1982)...............................................................................3 

People v. Byrne, 570 N.E.2d 1066 (N.Y. 1991) ............................................................................24 

FEDERAL STATUTES 

15 U.S.C. § 22..................................................................................................................................3 

18 U.S.C. § 1341......................................................................................................................15, 16 

18 U.S.C. § 1343................................................................................................................15, 16, 18 

18 U.S.C. § 1962(c) ............................................................................................................... passim 

18 U.S.C. § 1962(d) ............................................................................................................... passim

18 U.S.C. § 1964(c) .......................................................................................................................14 

18 U.S.C. § 1965..........................................................................................................................2, 3 

Fed. R. Civ. P. 8(a) ........................................................................................................................23 

Fed. R. Civ. P. 9(b) ................................................................................................................ passim 

Fed. R. Civ. P. 12(b)(2)................................................................................................................2, 6 

Fed. R. Civ. P. 12(b)(6)..............................................................................................................7, 18 

Fed. R. Civ. P. 16(b) ......................................................................................................................25 

STATE STATUTES

N.Y. C.P.L.R. § 301.....................................................................................................................3, 4 

N.Y. C.P.L.R. § 302.............................................................................................................3, 4, 5, 6 

Case 1:07-cv-03494-DLC Document 59 Filed 09/21/2007 Page 7 of 33
On July 17, 2007, the Court dismissed Plaintiffs’ complaint in its entirety. As to 

Plaintiffs’ §§ 1962(c) and (d) RICO claims, the Court noted that “[i]t [was] impossible to assess 

whether the complaint states a claim without having a more definite statement of the claim.” 

Ritchie Capital Mgmt., L.L.C. v. Coventry First LLC, No. 07 Civ. 3494 (DLC), 2007 WL 

2044656, at *10 (S.D.N.Y. July 17, 2007) (“Ritchie”). Consequently, the Court granted 

Plaintiffs leave to replead these claims, which Plaintiffs have attempted to do in Counts I and II 

of their proposed second amended complaint (“SAC”).1 Like its predecessor, however, the SAC 

contains RICO allegations that are legally insufficient and implausible, consisting of little more 

than “labels and conclusions, and a formulaic recitation of the elements of cause[s] of action.” 

Bell Atl. Corp. v. Twombly, 127 S. Ct. 1955, 1964-65 (2007). As such, Plaintiffs’ repleaded 

RICO claims should be rejected. See id. (deficiencies in the complaint should “be exposed at the 

point of minimum expenditure of time and money by the parties and the court”).2

FACTUAL BACKGROUND

Coventry First LLC (“Coventry First”) created, and remains the leading company in, the 

life settlement industry. SAC ¶ 40. Its business operations include the purchase of life insurance 

policies (“Policies”), which it either holds or sells to third-parties. In cases where it holds 

Policies, Coventry First pays applicable premiums and collects the death benefits. Id. ¶ 37. 

Here, by contrast, Coventry First sold Policies to LST I, LLC (“LST I”), which in turn sold them 

 

1

 The Court also permitted Plaintiffs to replead their breach of contract claim. See SAC ¶¶ 122-

29 (Count V). Because a partial motion to dismiss extends the time to answer, Defendants have 

not answered Plaintiffs’ breach of contract claim. See Finnegan v. Univ. of Rochester Med. Ctr., 

180 F.R.D. 247, 250 (W.D.N.Y. June 30, 1998); Alex Brown & Sons, Inc. v. Marine Midland 

Banks, Inc., No. 96 Civ. 2549 RWS, 1997 WL 97837, at *7 (S.D.N.Y. Mar. 6, 1997). 

2

 These repleaded claims are not part of Plaintiffs’ motion for reconsideration. Therefore, 

Defendants have filed this motion (1) to dismiss those claims in the event the Court allows 

Plaintiffs to file Counts I and II of the SAC or (2) to demonstrate the futility of Plaintiffs’ 

proposed amendments. See Oneida Indian Nation of New York v. City of Sherrill, 337 F.3d 139, 

168 (2d Cir. 2003), rev’d on other grounds, 544 U.S. 197 (2005) (“A proposed amendment to a 

pleading would be futile if it could not withstand a motion to dismiss pursuant to Rule 

12(b)(6).”); Lucente v. IBM Corp., 310 F.3d 243, 258 (2d Cir. 2002) (same). 

Case 1:07-cv-03494-DLC Document 59 Filed 09/21/2007 Page 8 of 33
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to Ritchie Risk Linked Strategies (Ireland) I (“Ritchie I”) and Ritchie Risk Linked Strategies 

(Ireland) II (“Ritchie II”). The LST I-Ritchie sales were made pursuant to two Master Policy 

Purchase Agreements (“MPPAs”), which were negotiated at arm’s length by experienced 

counsel representing each party. SAC. ¶ 6. These transactions are the centerpiece of this 

dispute. LST I negotiated and performed the MPPAs in good faith, and Defendants made no 

misrepresentations to Plaintiffs. Nevertheless, as required, Defendants assume that Plaintiffs’ 

factual allegations are true for the purpose of the motion to dismiss. 

ARGUMENT

I. THE COURT LACKS PERSONAL JURISDICTION OVER THE INDIVIDUAL 

 DEFENDANTS.

 Plaintiffs bear the burden of separately establishing personal jurisdiction over each 

defendant. Keeton v. Hustler Magazine, Inc., 465 U.S. 770, 781 n.13 (1984) (“Each defendant’s 

contacts with the forum state must be assessed individually.”). They fail to carry that burden for 

the individual defendants. Thus, Plaintiffs’ RICO claims against these defendants should be 

dismissed pursuant to Fed. R. Civ. P. 12(b)(2). 

 Title 18 U.S.C. § 1965 controls the exercise of personal jurisdiction under RICO. 

Pursuant to § 1965(a), “a civil RICO action can only be brought in a district court where personal 

jurisdiction based on minimum contacts is established as to at least one defendant.” PT United 

Can Co. v. Crown Cork & Seal Co., Inc., 138 F.3d 65, 71 (2d Cir. 1998). Jurisdiction over the 

remaining defendants can be obtained under § 1965(b), but only on a “showing that the ‘ends of 

justice’ so require.” Id. To satisfy that requirement, Plaintiffs must establish that no district 

court could exercise personal jurisdiction over all Defendants. Nuevo Mundo Holdings v. 

PriceWaterhouse Coopers LLP, No. 03 Civ. 0613 (GBD), 2004 WL 2848524, at *7 (S.D.N.Y. 

Dec. 9, 2004); Regency Capital, LLC v. Corpfinance Int’l., Inc., No. 02 Civ. 5615 (KTD), 2003 

WL 22400200, at *1 (S.D.N.Y. Oct. 20, 2003). 

 This impossibility of trial in one action does not apply here, as the Eastern District of 

Pennsylvania could exercise personal jurisdiction over all Defendants. Each Defendant is either 

Case 1:07-cv-03494-DLC Document 59 Filed 09/21/2007 Page 9 of 33
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a resident of, incorporated in, or has its principal place of business and members in Pennsylvania. 

See SAC ¶¶ 25–35; Wachovia Bank v. Schmidt, 126 S.Ct. 941, 952 (2006) (corporation’s 

citizenship stems from its state of incorporation and principal place of business); see also Debary 

v. Harrah’s Operating Co., Inc., 465 F. Supp. 2d 250, 258 (S.D.N.Y. 2006) (“[C]itizenship of a 

limited liability corporation is determined by reference to the citizenship of its members.”) 

(citations omitted). Consequently, to maintain personal jurisdiction over the individual 

defendants, Plaintiffs must establish each of them has minimum contacts with New York. 

 Plaintiffs seek to establish minimum contacts for the individual defendants under § 

1965(a) by citing to New York law – specifically caselaw concerning general jurisdiction, as 

codified in N.Y. C.P.L.R. § 301 and New York’s long-arm statute, N.Y. C.P.L.R. §§ 302(a)(1), 

302(a)(2), and 302(a)(3). See SAC. ¶ 13.3 Initially, Plaintiffs fail to allege facts giving rise to 

general jurisdiction over these Defendants under § 301. New York courts have general 

jurisdiction over a non-domiciliary if it is engaged in a continuous and systematic course of 

business there. Landoil Res. Corp. v. Alexander & Alexander Servs., Inc., 565 N.E.2d 488, 490 

(N.Y. 1990) (citations omitted). Plaintiffs, however, do not allege the individual defendants 

conducted a continuous or systematic course of business in New York. Nor can they. To satisfy 

§ 301, the individual defendants must conduct business in New York in their individual capacity. 

See Laufer v. Ostrow, 434 N.E.2d 692, 696 (N.Y. 1982). Plaintiffs must also allege the 

individual defendants were conducting business “at the time the action is brought.” Gross v. 

 

3

 Under the RICO statute, any civil RICO case “may be instituted in the district court of the 

United States for any district in which such person resides, is found, has an agent, or transacts his 

affairs.” 18 U.S.C. § 1965(a). None of these statutory factors provides for personal jurisdiction 

over the individual defendants. The individual defendants do not reside in this district. 

Likewise, none of the individual defendants may be “found” in this district or has an agent in this 

district. Finally, the “transacts his affairs” language of § 1965(a) has been held to be 

synonymous with the “transacts business” language of § 12 of the Clayton Act, 15 U.S.C. § 22. 

Gates v. Wilkinson, No. 01 Civ. 3145 GBD, 2003 WL 21297296, at *1 (S.D.N.Y. Jun. 4, 2003). 

The test for transacting business for venue purposes under the antitrust laws, in turn, is coextensive with the test for jurisdiction under New York C.P.L.R. § 302. Bulk Oil (USA) Inc. v. 

Sun Oil Trading Co., 584 F. Supp. 36, 39-40 (S.D.N.Y. 1983). Plaintiffs have failed to establish 

jurisdiction under § 302, as discussed, infra. 

Case 1:07-cv-03494-DLC Document 59 Filed 09/21/2007 Page 10 of 33
4

Bare Escentuals, Inc., No. 03 Civ. 3089(RLC), 2005 WL 823889, at *3 (S.D.N.Y. Apr. 8, 2005); 

Puerto Rico Maritime Shipping Auth. v. Almogy, 510 F. Supp. 873, 878 (S.D.N.Y. 1981). The 

SAC is devoid of such allegations. 

Plaintiffs also fail to allege personal jurisdiction under New York’s long-arm statute, 

N.Y. C.P.L.R. §§ 302(a)(1), 302(a)(2), or 302(a)(3). The statute provides several bases upon 

which to allege personal jurisdiction. Plaintiffs have not alleged an adequate factual basis for 

any of them. First, § 302(a)(1) allows for personal jurisdiction over a non-domiciliary who 

“transacts any business within the state.” N.Y. C.P.L.R. § 302(a)(1). A non-domiciliary 

transacts such business “when he purposefully avails [himself] of the privilege of conducting 

activities within [New York], thus invoking the benefits and protections of its laws.” CutCo 

Indus., Inc. v. Naughton, 806 F.2d 361, 365 (2d Cir. 1986). Although Plaintiffs recite the 

elements of § 302(a)(1), see Compl. ¶ 5, they do not allege sufficient facts to support those 

elements with respect to the individual defendants. See Jazini v. Nissan Motor Co., 148 F.3d 

181, 185 (2d Cir. 1998) (rejecting allegations regarding jurisdiction that were nothing more than 

a “restatement” of the standards laid out in the case law). 

Plaintiffs claim “Coventry employees and executives frequently communicated by email 

and telephone with RCM employees in New York,” including Alan Buerger, Reid Buerger, 

Antonio Muniz, and Alex Seldin. SAC ¶ 17. But unspecified e-mail and telephone 

communications by “Coventry employees” are insufficient. Beatie & Osborn LLP v. Patriot Sci. 

Corp., 431 F. Supp. 2d 367, 388 (S.D.N.Y. 2006); see also Nader v. Getschaw, No. 99 Civ. 

11556 (LAP), 2000 WL 1471553, at *5 (S.D.N.Y. Sept. 29, 2000) (mere fact that parties 

discussed terms of services over the telephone while plaintiff was in New York, in and of itself, 

does not confer jurisdiction over defendants).4

 Even where there is a showing that business was 

 

4

 Here, LST I – a Delaware Corporation with its principal place of business in Pennsylvania – 

contracted to sell Policies to Ritchie I and II, two “Irish corporations with offices in Ireland.” 

SAC ¶ 22. To the extent plaintiffs purchased subordinated securities from these Irish 

corporations, those plaintiffs are not domiciled in New York, and the purchases would have 

taken place in Ireland. See id. ¶¶ 21, 23-24. 

Case 1:07-cv-03494-DLC Document 59 Filed 09/21/2007 Page 11 of 33
5

transacted, there must be a “substantial nexus” between that business and the cause of action. 

D.H. Blair & Co., Inc. v. Gottdiener, 462 F.3d 95, 105 (2d Cir. 2006); Avecmedia, Inc. v. 

Gottschalk, No. 03 Civ. 7831, 2004 WL 1586411, at *5 (S.D.N.Y. July 14, 2004) (cause of 

action “arises from” a defendant’s New York contacts if the contacts are “substantially 

proximate to the allegedly unlawful acts”). Here, Plaintiffs have not identified e-mail or 

telephone communications in New York by individual defendants that have a substantial nexus 

to Policies purchased by Ritchie I and II or the claims in this litigation. 

Alternatively, Plaintiffs claim the individual defendants controlled Coventry First. Id. 

To make a prima facie showing of control, however, Plaintiffs must “sufficiently detail the 

Defendant’s conduct so as to persuade a court that the defendant was a ‘primary actor’ in the 

specific matter in question.” Karabu Corp. v. Gitner, 16 F. Supp. 2d 319, 324 (S.D.N.Y. 1998) 

(citations omitted). Importantly, “control cannot be shown based merely upon a defendant's title 

or position within the corporation, or upon conclusory allegations that the defendant controls the 

corporation.” Id.; see also Merck & Co. v. Mediplan Health Consulting, Inc., 425 F. Supp. 2d 

402, 420 (S.D.N.Y. 2006); Kinetic Instruments, Inc. v. Lares, 802 F. Supp. 976, 984 (S.D.N.Y. 

1992). Plaintiffs also fail to allege facts suggesting the individual defendants exercised control 

over Coventry First or LST I in the transaction at issue – the sale of Policies to Ritchie I and II. 

See Karabu, 16 F. Supp. 2d at 325 (dismissing complaint against individual defendants that was 

“devoid of any factual specificity indicating how each of the six defendants participated in the 

allegedly tortious conduct or what role they each played”). 

 Second, § 302(a)(2) provides “personal jurisdiction over any non-domiciliary . . . who . . . 

commits a tortious act within the state . . . .” Id. To qualify, a defendant’s tortious conduct must 

have occurred within New York. See Bensusan Rest. Corp. v. King, 126 F.3d 25, 28 (2d Cir. 

1997). Plaintiffs do not allege the individual defendants committed tortious acts while physically 

present in New York. See id. (defendant’s physical presence in New York is a prerequisite to 

jurisdiction under § 302(a)(2)). 

Case 1:07-cv-03494-DLC Document 59 Filed 09/21/2007 Page 12 of 33
6

Third, Plaintiffs fail to identify tortious acts by individual defendants outside of New 

York that caused injury to a person in New York as required by § 302(a)(3)(ii). By its terms, 

§ 302(a)(3)(ii) applies only to tort claims – not RICO. Walther v. Maricopa Int’l. Inv. Corp., No. 

97 Civ. 4816(HB), 1998 WL 186736, at *8 n.3 (S.D.N.Y. Apr. 17, 1998). Moreover, Plaintiffs 

do not – and cannot – allege they were injured in New York. See SAC ¶¶ 21-24. Plaintiffs are 

thus forced to argue that individual defendants “bought hundreds, if not thousands, of life 

insurance policies – including on information and belief policies procured by fraud and bidrigging. . . .” SAC ¶ 18. But that allegation is insufficient to confer personal jurisdiction for a 

variety of reasons. 

Conclusory allegations stated only upon “information and belief” do not establish 

personal jurisdiction. Chong v. Healthtronics, Inc., No. CV-06-1287 SJF MLO, 2007 WL 

1836831, at *6 (E.D.N.Y. June 20, 2007); see also United States v. Private Sanitation Indus. 

Ass’n of Nassau/Suffolk, Inc., 44 F.3d 1082, 1084 (2d Cir. 1995) (refusing to consider attorney 

affidavit not based on personal knowledge for the purposes of Rule 12(b)(2) motion); Welsh v. 

Servicemaster Corp., 930 F. Supp. 908, 909 (S.D.N.Y. 1996). Nor do Plaintiffs specify which if 

any of the Policy owners were allegedly injured, which, if any, individual defendants were 

allegedly involved in the sale of tainted Policies, whether individual defendants were primary 

actors in these transactions, see Karabu Corp., 16 F. Supp. 2d at 324, or whether Plaintiffs 

purchased policies from New York policy holders who were allegedly defrauded. See D.H. Blair 

& Co., 462 F.3d at 105. Finally, Plaintiffs fail to allege that any individual defendant derived 

substantial revenue from interstate commerce as required under § 302(a)(3)(ii). See Drake v. 

Lab. Corp. of Am. Holdings, No. 02-CV-1924 (FB) (RML), 2007 WL 776818, at *11 (E.D.N.Y. 

Mar. 13, 2007) (“revenues from interstate commerce derived by a corporation cannot be 

attributed to its non-domiciliary employee”); Lehigh Valley Indus., Inc. v. Birenbaum, 389 F. 

Supp. 798, 805 (S.D.N.Y.) (same), aff’d, 527 F.2d 87 (2d Cir. 1975). 

Case 1:07-cv-03494-DLC Document 59 Filed 09/21/2007 Page 13 of 33
7

II. PLAINTIFFS LACK STANDING TO ASSERT RICO CLAIMS. 

 “A RICO plaintiff ‘only has standing if, and can only recover to the extent that, he has 

been injured in his business or property by the conduct constituting the [RICO] violation[,]’ and 

only when his or her ‘actual loss becomes clear and definite.’” Denney v. Deutsche Bank AG, 

443 F.3d 253, 266 (2d Cir. 2006) (quoting First Nationwide Bank v. Gelt Funding Corp., 27 F.3d 

763, 767-69 (2d Cir. 1994)). Plaintiffs cannot satisfy either requirement, and their RICO claims 

consequently should be dismissed pursuant to Fed. R. Civ. P. 12(b)(6). 

A. Plaintiffs’ Alleged Injuries Were Not Proximately Caused by RICO 

 Violations.

 Under 18 U.S.C. § 1962(c), Plaintiffs must allege they were harmed directly by the 

conduct constituting the RICO violation, i.e., the predicate acts. See Sedima, S.P.R.L. v. Imrex 

Co., 473 U.S. 479, 496 (1985) (“Any recoverable damages occurring by reason of a violation of 

§ 1962(c) will flow from the commission of the predicate acts.”) (footnote omitted). Plaintiffs 

must show the predicate acts “not only [were] a ‘but for’ cause of [their alleged] injury, but 

[were] the proximate cause as well.” Holmes v. Secs. Investor Prot. Corp., 503 U.S. 258, 268 

(1992). “When a court evaluates a RICO claim for proximate causation, the central question it 

must ask is whether the alleged violation led directly to the plaintiff’s injuries.” Anza v. Ideal 

Steel Supply Corp., 126 S. Ct. 1991, 1998 (2006); First Nationwide, 27 F.3d at 769 (“[T]o have 

standing under RICO, the plaintiff must allege that the defendant’s violations were a proximate 

cause of the plaintiff’s injury, i.e., that there was a direct relationship between the plaintiff’s 

injury and the defendant’s injurious conduct.”) (quotation omitted). 

 Here, the connection between the alleged predicate acts and the injury alleged is too 

attenuated to satisfy the proximate cause requirement. The alleged predicate acts consist almost 

entirely of mail and wire fraud against Policy owners. See SAC ¶¶ 84(e)-(q).5

 As in their 

 

5

 Indeed, Plaintiffs’ allegations concerning predicate acts are based almost entirely on the 

allegations made by the NYAG, whose lawsuit is unrelated to any Plaintiff in this case. The only 

exceptions are (1) allegations so devoid of specifics as to plainly violate Fed. R. Civ. P. 9(b), see

SAC ¶¶ 84(a)-(d); and (2) two allegations of fraud against one or more Plaintiffs that fail to state 

Case 1:07-cv-03494-DLC Document 59 Filed 09/21/2007 Page 14 of 33
8

original complaint, Plaintiffs’ theory of harm is not that Ritchie I or II were directly harmed by 

purchasing specific Policies tainted by alleged fraud. That theory would limit Plaintiffs’ 

recovery, if any, to the affected Policies. Instead, Plaintiffs theorize that the value of all Policies 

purchased by Ritchie I and II declined after the NYAG filed a civil lawsuit that exposed 

Defendants’ allegedly unlawful Policy origination practices. See id. ¶ 86 (“The market value of 

those policies has greatly diminished since the [NYAG]’s action was commenced.”); id. ¶ 95 

(“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.”) (emphasis added). This 

exposure, in turn, allegedly caused Moody’s Investor Services (“Moody’s”) to withdraw a 

preliminary securitization rating for a small number of the Policies purchased by Ritchie I and II. 

See id. ¶ 88 (“When the [NYAG]’s action became public, Moody’s withdrew its rating. . . .”). 

Plaintiffs claim the withdrawal of Moody’s rating “interfered with the salability and value of the 

life insurance policies at issue.” Id. ¶ 90. 

Plaintiffs’ alleged harm does not flow directly from the predicate acts. First, Plaintiffs 

claim they were injured by disclosure of the alleged predicate acts to the market, rather than the 

acts themselves. If, as Plaintiffs allege, Moody’s withdrew its rating due to the filing of the 

NYAG complaint, see SAC ¶ 88 (rating alleged withdrawn due to “uncertainty surrounding the 

transaction in light of the complaint filed by the [NYAG]”); id. ¶ 86 (“The market value of those 

policies has greatly diminished since the [NYAG]’s action was commenced.”), then Plaintiffs 

were harmed by a market reaction to the filing of a civil suit alleging misconduct. Such harm 

does not establish proximate causation as a matter of law. See In re Am. Express Co. S’holder 

Litig., 39 F.3d 395, 400 (2d Cir. 1994) (dismissal of RICO claims brought by corporate 

shareholders whose alleged injuries were not proximately caused by the alleged predicate acts of 

 

a mail or wire fraud claim for the same reason they fail to state a common law fraud claim, see

SAC ¶¶ 84(r) and (s). See Section IV.A.2, infra. 

Case 1:07-cv-03494-DLC Document 59 Filed 09/21/2007 Page 15 of 33
9

fraud and bribery, but rather by the fact that those activities did not have their intended effect and 

instead were uncovered and exposed); Abrahams v. Young & Rubicam, Inc. 79 F.3d 234, 239 (2d 

Cir. 1996) (dismissal where plaintiff injured only “by fallout from the scheme’s exposure”); 

Hecht v. Commerce Clearing House, Inc., 897 F.2d 21, 24 (2d Cir. 1990) (no proximate 

causation where former employee alleged exposure of RICO scheme had resulted in his 

economic loss). Indeed, under their theory, Plaintiffs would be harmed whether or not 

Defendants engaged in improper Policy origination practices, i.e., whether or not the NYAG suit 

was ultimately resolved in Defendants’ favor. Proximate causation plainly does not exist under 

these circumstances. See Vicon Fiber Optics Corp. v. Scrivo, 201 F. Supp. 2d 216, 219 

(S.D.N.Y. 2002) (dismissing RICO claim where the alleged injury “happened, or could have 

happened” even absent the predicate acts). 

Second, Plaintiffs stood to benefit from the alleged predicate acts. Under Plaintiffs’ 

theory, Defendants and the Investing Plaintiffs were “co-owners” of Ritchie I and II. SAC ¶ 8. 

Defendants sold Policies to Ritchie I and II, “intend[ing] all along that [Ritchie I and II] would 

re-sell the life insurance products at a profit in a securitization transaction.” Id. ¶ 7. Those 

profits were allegedly to be shared by Defendants and the Investing Plaintiffs. Id. ¶¶ 8, 45 

(“[P]rofits and losses would be shared.”). Had the NYAG suit never been filed, under Plaintiffs’ 

theory, the Plaintiffs and Defendants would have benefited from the alleged predicate acts by 

gaining a larger, more diverse portfolio of policies than would have been available for sale 

absent Defendants’ alleged misconduct. See NYAG Compl. ¶ 26 (purpose of bid rigging 

allegedly was to ensure Coventry First would win policy auctions). Where, as here, Plaintiffs 

claim to be harmed by conduct from which they would have benefited, they cannot establish 

proximate causation. See In re Am. Express Co., 39 F.3d at 400 (dismissing claims where 

defendants’ actions, “however misguided and injurious to American Express in the end, were 

undertaken to further American Express’s competitive interests”). 

Third, Plaintiffs do not sufficiently allege Ritchie I or II actually purchased improperly 

originated Policies. Nor can they. Plaintiffs claim “Coventry” sells Policies to a number of 

Case 1:07-cv-03494-DLC Document 59 Filed 09/21/2007 Page 16 of 33
10

institutional investors, including American International Group (“AIG”), Citigroup, and 

Berkshire Hathaway. SAC ¶ 41. According to Plaintiffs, “[b]y 2005, Coventry First or its 

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

benefits.” Id. ¶ 40. Yet Plaintiffs identify less than 25 policies that allegedly were originated 

unlawfully. Id. ¶¶ 61-62. Most of these policies, in turn were originated before Plaintiffs began 

negotiating with LST I to buy Policies. Id. ¶¶ 42-44, 84(e)-(j). Nonetheless, even assuming 

Plaintiffs purchased these Policies – a claim they do not make – there is no basis for Plaintiffs’ 

claim that these Policy purchases diminished the market value of all other policies owned by 

Ritchie I and II. See id. ¶¶ 86-87. 

Finally, Plaintiffs are not direct victims of the alleged predicate acts. This conclusion is 

confirmed by the purposes underlying RICO’s proximate cause requirement, including (1) the 

difficulty of determining damages attributable to the alleged RICO violation; (2) the difficulty of 

apportioning damages among injured parties, and (3) the ability of other parties to vindicate the 

aims of the statute. Holmes, 503 U.S. at 269; see also Anza, 126 S.Ct. at 1998. Here, it would be 

difficult, if not impossible, to determine what portion of Plaintiffs’ alleged damages are 

attributable to alleged RICO violations. Plaintiffs allege the Policies declined in value since the 

NYAG suit was initiated. SAC ¶ 86. But market fluctuations can occur for many reasons, and it 

would require a complex assessment to establish that a decline was the product of Defendants’ 

alleged misconduct. See, e.g., Anza, 126 S.Ct. at 1998. The Court would need to calculate the 

portion of decline attributable to the alleged pattern of racketeering activity as opposed to market 

forces, Plaintiffs’ own financial mismanagement, and the like. The requirement of a direct injury 

“is meant to prevent these types of intricate, uncertain inquiries from overrunning RICO 

litigation.” Id. 

B. Plaintiffs Fail Properly To Allege Clear and Definite RICO Damages. 

Plaintiffs do not dispute that Ritchie I and II are entitled to over $2.5 billion in death 

benefits under the Policies. See SAC ¶ 37 (“The buyer of the policy continues to pay premiums 

until the insured’s death, at which point the buyer claims the death benefit.”). Instead, they 

Case 1:07-cv-03494-DLC Document 59 Filed 09/21/2007 Page 17 of 33
11

concoct a damages theory that ignores the value of the death benefits. Plaintiffs assert Ritchie I 

and II never intended to hold the Policies until the death benefits accrued. Rather, they claim 

“Coventry and the Investing Plaintiffs intended all along that the Contracting Plaintiffs would resell the life insurance products for a profit in a securitization transaction.” Id. ¶ 7. Plaintiffs say 

they “anticipated a profit” from the securitization, id. ¶ 87, but that their ability to realize such a 

profit was thwarted by the NYAG lawsuit and Moody’s subsequent withdrawal of a preliminary 

securitization rating on a small number of Policies. Id. ¶¶ 88-90. In other words, Plaintiffs’ 

RICO damages theory is that, despite retaining the right to billions of dollars in death benefits, 

the Policies were not fit to be sold in the secured transaction contemplated by Ritchie I and II, 

and that Plaintiffs lost the profits they anticipated from that transaction. 

This theory suffers from at least three defects. First, Plaintiffs may not recover their 

anticipated profits. Rather, because their RICO claim is based on fraud, Plaintiffs may recover 

only demonstrable, out-of-pocket losses. See, e.g., First Nationwide, 27 F.3d at 768; see also

Anglo-Iberia Underwriting Mgmt. Co. v. Lodderhose, 282 F. Supp. 2d 126, 133 (S.D.N.Y. 2003) 

(“RICO’s damages provisions only apply to actual, out-of-pocket financial loss”) (quotation 

omitted); In re PaineWebber Ltd. P’ships Litig., 171 F.R.D. 104, 129 (S.D.N.Y. 1997) (“New 

York law precludes the recovery of lost profits in fraud actions, and the RICO claim . . .is 

predicated on fraud.”); Lama Holding Co. v. Smith Barney, Inc., 688 N.E.2d 1370, 1373-74 

(N.Y. 1996) (no lost profits for fraud). 

Second, the notion that Plaintiffs should be permitted to sue Defendants because the 

Policies allegedly were unfit for a securitized transaction contradicts § 3.02(c) of the MPPAs, 

which provides: “Seller makes no representation or warranty as to (i) the fitness of any Life 

Settlement Policy for any particular use or business purpose of the Purchaser, . . . [or] (iv) the 

amount the Purchaser ultimately will recover as proceeds of any Life Settlement Policy or the 

timing of its receipt of any such amounts . . . .” MPPAs § 3.02(c) (emphasis added). 

Third, Plaintiffs’ alleged damages are impermissibly speculative. Under § 1964(c), 

RICO plaintiffs must allege damages that are “clear and definite.” First Nationwide, 27 F.3d at 

Case 1:07-cv-03494-DLC Document 59 Filed 09/21/2007 Page 18 of 33
12

767; see also id. at 769 (plaintiff did not state a claim because its losses could not yet be 

determined); Motorola Credit Corp. v. Uzan, 322 F.3d 130, 135 (2d Cir. 2003) (“[A] cause of 

action does not accrue under RICO until the amount of damages becomes clear and definite.”) 

(internal punctuation omitted); Am. Home Mortgage Corp. v. UM Secs. Corp., No. 05 Civ. 2279, 

2007 WL 1074837, at *4 (S.D.N.Y. Apr. 9, 2007) (complaint dismissed for lack of standing 

where plaintiff alleged no facts to allow the court to assess lost opportunities to sell unforeclosed 

loans on secondary market). Here, Plaintiffs’ allegations concerning lost profits are entirely 

speculative. See SAC ¶ 12 (Plaintiffs “cannot yet calculate their damages with precision”). 

Indeed, Plaintiffs do not suggest how their purported damages could be determined. At a 

minimum, their theory would require the Court to calculate the price Plaintiffs would have 

received for each Policy with and without Moody’s rating, a conjectural exercise involving a 

host of complex economic factors. Such conjecture will not support a RICO claim. See Anza, 

126 S. Ct. at 1998; In re Bridgestone/Firestone, Inc. Tires Prods. Liab. Litig., 155 F. Supp. 2d 

1069, 1090-92 (S.D. Ind. 2001). 

C. The “Investing Plaintiffs” Lack Standing To Assert RICO Claims. 

Plaintiffs claim Policies purchased by Ritchie I and II were devalued when Defendants’ 

alleged fraudulent origination practices were revealed by the NYAG lawsuit. SAC ¶¶ 88-90 

(Moody’s Investor Services withdrew preliminary securitization rating based on the NYAG 

action, which “directly interfered with the salability and value of the life insurance policies at 

issue”). The SAC makes clear, however, that only Ritchie I and II, as the Policies’ purchasers, 

have standing to claim a RICO violation. Id. ¶ 6 (Policies purchased by Ritchie I and II only); 

id. ¶ 86 (“Ritchie I and Ritchie II own the life insurance policies at issue.”). By contrast, the 

entities Plaintiffs call “Investing Plaintiffs” – i.e., Ritchie Risk-Linked Life Strategies Trust I, 

Ritchie Life Strategies Master Trust, and Ritchie Risk-Linked Strategies Trading, Ltd. – were 

merely “equity shareholders in” Ritchie I and II. Id. ¶ 4.6

 As Plaintiffs explain: “[t]he 

 

6

 Plaintiffs claim Ritchie Capital Management, LLC (“RCM”) is an advisor and fiduciary to the 

Investing Plaintiffs and holds a pecuniary interest therein. SAC ¶ 4. None of these roles, 

Case 1:07-cv-03494-DLC Document 59 Filed 09/21/2007 Page 19 of 33
13

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

committed capital to, and became owners of subordinated securities in, Ritchie II and Ritchie II, 

which entitled the Investing Plaintiffs . . . to receive the profits of Ritchie I and Ritchie II after 

other debts have been paid.” Id. ¶ 45. 

The law is clear that the Investing Plaintiffs lack RICO standing because their alleged 

harm – i.e., the reduced value of their subordinated securities in Ritchie I and II – is merely 

derivative of the harm allegedly suffered by these entities. As the Second Circuit has observed: 

A shareholder generally does not have standing to bring an individual action 

under RICO to redress injuries to the corporation in which he owns stock. This is 

true even when the plaintiff is the sole shareholder of the injured corporation. 

Since the shareholder’s injury, like that of the creditor, generally is derivative of 

the injury to the corporation, the shareholder’s injury is not related directly to the 

defendant’s injurious conduct. 

Manson v. Stacescu, 11 F.3d 1127, 1131 (2d Cir. 1993) (citing Holmes, 503 U.S. at 268-69 and 

Rand v. Anaconda-Ericsson, Inc., 794 F.2d 843, 849 (2d Cir. 1986)) (other citation omitted); see 

also Rand, 794 F.2d at 849 (“We agree with the district court that plaintiffs lack standing to sue 

under RICO . . . . The legal injury, if any, was to the firm. Any decrease in value of plaintiffs’ 

shares merely reflects the decrease in value of the firm as a result of the alleged illegal 

conduct.”); At The Airport, LLC v. Isata, LLC, 438 F. Supp. 2d 55, 62 (E.D.N.Y. 2006) (“This . . 

. generally prevents a party, such as a shareholder in a corporation or a member of a limited 

partnership, from asserting a RICO cause of action in his or her individual capacity based on 

claims of injury suffered by a third-party in which he or she has a financial interest.”); 

Chandradat v. Navillus Tile, No. 03 Civ. 10093(RJH), 2004 WL 2186562, at *5 (S.D.N.Y. Sept. 

 

however, provide RCM with standing to assert a RICO claim. See, e.g., BCCI Holdings 

(Luxembourg), Societe Anonyme v. Pharaon, 43 F. Supp. 2d 359, 365-66 (S.D.N.Y. 1999) 

(fiduciaries lacks standing under RICO); Greenwald v. Hall, No. 01 Civ. 5405(RO), 2003 WL 

164279, at *1 (S.D.N.Y. Jan. 23, 2003) (trust beneficiaries lack RICO standing to sue for injuries 

allegedly sustained by trust). 

Case 1:07-cv-03494-DLC Document 59 Filed 09/21/2007 Page 20 of 33
14

28, 2004) (“[I]t is well settled that shareholders . . . of a corporation lack standing to sue under 

RICO where their injuries derive from direct injuries to the corporation itself.”).7

Because any harm suffered by the Investing Plaintiffs is merely derivative of Ritchie I’s 

and II’s alleged harm, their recourse is not to sue on their own behalf. Instead, it is to allow 

Ritchie I and II to pursue a breach of contract claim against any appropriate Defendants, and to 

then collect the portion of these entities’ recovery (if any) to which they are entitled by virtue of 

their ownership interest. See Rand, 794 F.2d at 849 (“In RICO case, an indirectly injured party 

should look to the recovery of the directly injured party, not to the wrongdoer, for relief.”) 

(internal punctuation and quotation omitted). 

III. PLAINTIFFS FAIL PROPERLY TO ALLEGE A PATTERN OF TWO OR MORE 

 PREDICATE ACTS.

Plaintiffs’ RICO claims should be dismissed because they fail adequately to allege a 

pattern of racketeering activity. “[A] ‘pattern of racketeering activity’ consists of ‘at least two 

[predicate] acts of racketeering activity’ committed in a ten-year period, which ‘amount to or 

pose a threat of continued criminal activity.’” First Capital Asset Mgmt. v. Satinwood, Inc., 385 

F.3d 159, 178 (2d Cir. 2004) (quoting Cofacredit, S.A. v. Windsor Plumbing Supply Co., 187 

F.3d 229, 242 (2d Cir. 1999)) (internal citation omitted). 

 

7

 Elsewhere, Plaintiffs assert they “were fraudulently induced to invest . . . in life insurance 

policies that, because of Defendants’ racketeering activity, actually were worth . . . either nothing 

or a tiny fraction of what Plaintiffs paid for the policies.” SAC ¶ 102. To the extent Plaintiffs 

are attempting to portray the Investing Plaintiffs as having invested directly in Policies, their 

effort fails. By Plaintiffs’ own admission, only Ritchie I and II purchased Policies. Id. ¶ 6. To 

the extent the Investing Plaintiffs are alleging they were fraudulently induced to purchase 

subordinated securities in Ritchie I and II, their claim is barred by the Private Securities 

Litigation Reform Act (“PSLRA”). See 18 U.S.C. § 1964(c) (“[N]o person may rely upon any 

conduct that would have been actionable as fraud in the purchase or sale of securities to establish 

a violation of [§] 1962.”); Sobek v. Quattrochi, No. 03 Civ. 10219 (RWS), 2004 WL 2809989, at 

*3 (S.D.N.Y. Dec. 8, 2004) (PSLRA “prohibits RICO claims based on allegations of fraud in 

connection with the purchase or sale of securities”); see also Fezzani v. Bear, Stearns & Co., 

Inc., No. 99CIV0793RCC, 2005 WL 500377, at *3 (S.D.N.Y. Mar. 2, 2005) (same). 

Case 1:07-cv-03494-DLC Document 59 Filed 09/21/2007 Page 21 of 33
15

A. Plaintiffs Fail Adequately To Plead Two Predicate Acts. 

Plaintiffs claim Defendants committed several predicate acts, all of which allegedly 

violated 18 U.S.C. § 1343 (wire fraud) or 18 U.S.C. § 1341 (mail fraud). See SAC ¶ 84. These 

predicate acts consist of: (1) actions alleged in generalized terms that fail the pleading 

requirements of Rule 9(b), see id. ¶¶ 84 (a)–(d), (g), (p), and (q); (2) statements this Court found 

insufficient to constitute common law fraud, now denominated wire fraud, see id. ¶¶ 84(r), (s); 

(3) intra-office e-mails between Coventry employees that do not satisfy § 1343’s interstate 

commerce requirement, see id. ¶¶ 84(h)–(o); and (4) wire transmissions between Coventry 

employees and third-parties on which Plaintiffs do not (and cannot) claim they reasonably relied, 

see id. ¶¶ 84(e), (f), (k), (p), (q). 

1. Plaintiffs Fail To Allege Certain Predicate Acts of Mail and Wire 

 Fraud With Particularity As Required By Rule 9(b).

Mail and wire fraud must be alleged with particularity. See Fed. R. Civ. P. 9(b); Anatian 

v. Coutts Bank (Switzerland) Ltd., 193 F.3d 85, 88 (2d Cir. 1999); Satinwood, Inc., 385 F.3d at 

178 (“[A]ll allegations of fraudulent predicate acts [under RICO] are subject to the heightened 

pleading requirements of Federal Rule of Civil Procedure 9(b).”). This requires that Plaintiffs 

“‘(1) detail the statements (or omissions) [they] contend[ ] are fraudulent, (2) identify the 

speaker, (3) state where and when the statements (or omissions) were made, and (4) explain why 

the statements (or omissions) are fraudulent.’” Eternity Global Master Fund Ltd. v. Morgan 

Guar. Trust Co. of N.Y., 375 F.3d 168, 187 (2d Cir. 2004) (quoting Harsco Corp. v. Segui, 91 

F.3d 337, 347 (2d Cir. 1996)). In addition, Plaintiffs must “identify the purpose of the mailing 

within the defendant’s fraudulent scheme.” Nasik Breeding & Research Farm Ltd. v. Merck & 

Co., Inc., 165 F. Supp. 2d 514, 537 (S.D.N.Y. 2001) (citation omitted). 

It is unclear whether Plaintiffs intend for paragraphs 84(a)–(d) and (g) to constitute 

separate predicate acts. Compare, e.g., SAC ¶ 84(g) (alleging specific e-mail message 

“constitutes a predicate act of racketeering”) with id. ¶ 84(d) (no such allegation). To the extent 

this is Plaintiffs’ intent, the allegations in these paragraphs do not provide the information 

Case 1:07-cv-03494-DLC Document 59 Filed 09/21/2007 Page 22 of 33
16

required by Rule 9(b). See SAC ¶¶ 84(a)–(d) (generalized allegations of fraud, devoid of any 

particulars required by Rule 9(b)); id. ¶ 84(g) (failing to identify the sender of documents to 

third-party brokers or the brokers receiving such documents).8 Indeed, Plaintiffs almost 

uniformly attribute the statements in these paragraphs to “Defendants” collectively. See, e.g., id.

¶¶ 84(a)–(d). This “group pleading” violates Rule 9(b). See Mills v. Polar Molecular Corp., 12 

F.3d 1170, 1175 (2d Cir. 1993) (“Rule 9(b) is not satisfied where the complaint vaguely 

attributes the alleged fraudulent statements to ‘defendants’”). 

Similarly, in paragraphs 84(p) and (q) of the SAC, Plaintiffs do not affirmatively plead 

that alleged payments to third-party brokers and agreements with policy sellers were transmitted 

by mail or wire. See SAC ¶ 84(p) (“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.”) (emphasis added); id. ¶ 84(p) (“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.”) (emphasis added). The use of the mail or wires, however, 

is an indispensable element of mail or wire fraud. See Defazio v. Wallis, No. 05-CV-5712 

(ADS)(ARL), 2007 WL 2193929, at *5 (E.D.N.Y. July 14, 2007). Plaintiffs’ allegations 

concerning this element are not specific and do not rise even to the level of a pleading “on 

information and belief,” which is not permitted under Rule 9(b). See Stern v. Leucadia Nat. 

Corp., 844 F.2d 997, 1003-04 (2d Cir. 1988).9 

 

8

 Paragraph 62 of the NYAG complaint, which is referenced in ¶ 84(g) of the SAC, likewise fails 

to identify the sender or recipient of the referenced documents. Nor do (or could) Plaintiffs 

allege they reasonably relied on these communications. See Section IV(A)(4), infra. Paragraph 

84(g) also fails because “[a] predicate act does not proximately cause an injury if it merely 

furthers, facilitates, permits or conceals an injury that happened or could have happened 

independently of the act.” Vicon Fiber Optics, 201 F. Supp. 2d at 219; see also NYAG Compl. ¶ 

62 (false offer sheets created to hide compensation). 

9

 Nor could Plaintiffs have reasonably relied on such payments or agreements, which they never 

received. See Section IV(A)(4), infra. 

Case 1:07-cv-03494-DLC Document 59 Filed 09/21/2007 Page 23 of 33
17

2. Plaintiffs Fail To Allege Wire Fraud Based on LST I’s Pre- 

 and Post-Contractual Dealings With Ritchie I and II. 

 In paragraphs 84(r) and (s) of the SAC, Plaintiffs attempt to base predicate acts of wire 

fraud on the same allegations the Court held insufficient to constitute common law fraud. See

SAC ¶ 84(r) (alleged wire fraud based on statements in draft contracts between LST I and 

Ritchie I and II); id. ¶ 84(s) (alleged wire fraud based on post-contractual statements regarding 

matters expressly addressed by MPPAs); Ritchie, 2007 WL 2044656, at *7 (Plaintiffs failed to 

state common law fraud claims). These predicate acts fail for largely the same reasons the 

common law fraud claims failed. 

 First, the statements in question “rest entirely on the subjects covered in the 

representations and warranties contained in the agreements.” Ritchie, 2007 WL 2044656, at *7. 

Where a party allegedly makes false statements that are contained in a contract, the proper claim 

is for breach of contract, not fraud. Id.; Int’l CableTel Inc. v. Le Groupe Videotron Ltee, 978 F. 

Supp. 483, 489 (S.D.N.Y. 1997) (noting “overwhelming majority view . . . that a false promise, 

whenever made, cannot give rise to a fraud claim where that promise is directly incorporated into 

a written contract between the parties”). 

Second, the MPPAs’ integration clause disclaims reliance on the specific representations 

on which Plaintiffs rely. See Ritchie, 2007 WL 2044656, at *8 (“[T]he plaintiffs expressly 

disclaimed reliance on the very representations they now claim were fraudulent.”); Harsco, 91 

F.3d at 345–46 (“relying on the sophisticated context of [the subject] transaction to dismiss fraud 

claims based on less extensive integration clause than exists here); United Artists Theatre Circuit 

v. Sun Plaza Enter. Corp., 352 F. Supp. 2d 342, 351 (E.D.N.Y. 2005) (“Based on the integration 

clause, Plaintiff, a sophisticated corporation, has not alleged, nor can it, that it reasonably relied 

on any oral representations . . . .”). 

Third, Plaintiffs have expressly disavowed any claim based on alleged misrepresentations 

concerning the fact or nature of the NYAG investigation or lawsuit. See Exhibit (“Ex.”) 1 ¶ 7 

(Amendment to Amended and Restated Intercreditor Agreement providing: “[T]he Attorney 

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18

General Action does not as of [January 29, 2007] constitute . . . an event of default (whether 

matured or unmatured) or termination event under any of the other Transaction Agreements.”).10 

 3. Intra-Office E-Mails Among Defendants Fail To Satisfy the Interstate 

 Transmission Requirement of 18 U.S.C. § 1343. 

In paragraphs 84(h)–(o) of the SAC, Plaintiffs claim intra-office e-mails between 

Defendants Jim Dodaro, Reid Buerger, Neal Jacobs, Eileen Shovlin, and an unnamed 

“Coventry[] accountant” constitute predicate acts of wire fraud. Such intra-office 

communications do not satisfy § 1343’s interstate transmission requirement. 

“The wire fraud statute [18 U.S.C. § 1343] requires that the defendant communicate by 

wire in interstate or foreign commerce in furtherance of a scheme to defraud. Purely intrastate 

communication [is] beyond the statute’s reach.” Cofacredit, 187 F.3d at 243 (emphasis added) 

(quotation and citation omitted). This requirement that a plaintiff allege and prove that the wire 

communication actually crossed state lines makes the wire fraud statute more stringent than the 

mail fraud statute. See Center Cadillac, Inc. v. Bank Leumi Trust Co. of N.Y., 808 F. Supp. 213, 

227 (S.D.N.Y. 1992) (“Wire fraud requires the additional element of a communication crossing 

state lines.”). Moreover, the law enacts a presumption that wire communications among 

residents of the same state are purely intrastate. McCoy v. Goldberg, 748 F. Supp. 146, 154 

(S.D.N.Y. 1990) (“Where all parties are New York residents, all telephone calls are presumed to 

be intrastate and, absent any indication otherwise, the predicate act of wire fraud is not stated.”); 

see also Mathon v. Feldstein, 303 F. Supp. 2d 317, 324 (E.D.N.Y. 2004) (“Because all of the 

defendants are New York residents, and no interstate calls are alleged in the complaint, it is 

 

10 Plaintiffs expressly reference the Intercreditor Agreement in the SAC, and as such it may be 

considered in connection with this motion. See SAC ¶ 45; Alexandra Global Master Fund, Ltd. 

v. Ikon Office Solutions, Inc., No. 06 Civ. 5383(JGK), 2007 WL 2077153, at *1 (S.D.N.Y. July 

20, 2007) (“In deciding a [Rule 12(b)(6)] motion . . ., the Court may consider documents that are 

referenced in the Complaint, documents that the plaintiff relied on in bringing suit and that are 

either in the plaintiff’s possession or that the plaintiff knew of when bringing suit, or matters of 

which judicial notice may be taken.” (citing Chambers v. Time Warner, Inc., 282 F.3d 147, 153 

(2d Cir. 2002))) (other citations omitted). 

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19

unreasonable to assume that interstate use of the wires occurred.”) (quotation omitted); Utz v. 

Correa, 631 F. Supp. 592, 595-96 (S.D.N.Y. 1986) (“[T]he only inference that can be made from 

the complaint is that . . . [a]ll the telephone calls . . . were intrastate in nature, while the predicate 

act of wire fraud requires an interstate telephone call. Such communications are insufficient to 

constitute a violation of the wire fraud statute.”) (emphasis in original). Here, Plaintiffs claim all 

parties to the predicate acts alleged in paragraphs 84(h)–(o) are Pennsylvania residents working 

for businesses with their principal places of business in Pennsylvania. See SAC ¶¶ 30, 33–35 

(Buerger, Jacobs, Dodaro, and Shovlin all Pennsylvania residents), id. ¶¶ 25–29 (Defendants 

Coventry First, Montgomery Capital, and The Coventry Group have principal place of business 

in Fort Washington, Pennsylvania, and Defendant LST I is mere alter ego of Montgomery 

Capital). Moreover, the SAC contains no other allegation that the communications referenced in 

these paragraphs crossed state lines. As such, Plaintiffs cannot overcome the legal presumption 

that the referenced communications were purely intrastate, and thus not actionable as wire fraud. 

Defazio, 2007 WL 2193929, at *5 (“[T]he plaintiffs do not allege that any wire communications 

occurred in interstate or foreign commerce. . . . Thus, . . . the plaintiffs’ wire fraud allegations 

are insufficient to serve as a predicate act under the RICO statute.”). 

4. Plaintiffs Fail To Establish Reliance on Communications Between 

 Defendants and Third-Party Brokers. 

 “[T]o prevail in a civil RICO action predicated on any type of fraud, . . . the plaintiff 

must establish ‘reasonable reliance’ on the defendants’ purported misrepresentations or 

omissions.” Bank of China v. NBM LLC, 359 F.3d 171, 178 (2d Cir. 2004). Here, Plaintiffs 

identify as predicate acts of mail or wire fraud (they do not specify which): (1) a small number 

of e-mails between two Defendants and two third-party brokers, see SAC ¶¶ 84(e), (f), (k); (2) 

payments allegedly made by Coventry First to these brokers, see id. ¶ 84(p); and (3) purchase 

agreements between Coventry First and unnamed Policy sellers, see id. ¶ 84(q).11 Plaintiffs 

 

11 For purposes of this paragraph, these e-mails, payments and agreements collectively are 

referred to as “transmissions.” 

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20

concede, however, that they neither received nor relied on any of these transmissions. Id. ¶ 53 

(“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.”). Indeed, “Plaintiffs learned of [this alleged] misconduct only when the [NYAG] 

brought suit against Coventry in October 2006.” Id. ¶ 68. In fact, Plaintiffs apparently still have 

not seen these transmissions, as they cannot say they were made by mail or wire. See id. ¶¶ 

84(p) and (q). Nor do Plaintiffs claim they purchased any of the specific Policies to which these 

transmissions pertained. Plaintiffs cannot have reasonably relied on transmissions they never 

received concerning Policies that Ritchie I and II did not purchase. 

B. Plaintiffs Fail To Establish Continuity. 

Besides requiring that Plaintiffs allege at least two predicate acts within a ten-year period, 

RICO’s pattern requirement also includes a “continuity” component, obliging Plaintiffs to allege 

that the pattern “amount[s] to or pose[s] a threat of continued criminal activity.” Satinwood, Inc.

385 F.3d at 178. To satisfy the continuity requirement, Plaintiffs must allege “either an openended pattern of racketeering activity (i.e., past criminal conduct coupled with a threat of future 

criminal conduct) or a closed-ended pattern of racketeering activity (i.e., past criminal conduct 

extending over a substantial period of time).” Id. at 180. Here, Plaintiffs fail to adequately 

allege either a closed-ended or open-ended continuity. 

 1. Plaintiffs Fail To Allege Closed-Ended Continuity. 

A closed-ended pattern of racketeering activity involves a series of related predicate acts 

“extending over a substantial period of time.” GICC Capital Corp. v. Tech. Fin. Group, Inc., 67 

F.3d 463, 466 (2d Cir. 1995); DeFalco v. Bernas, 244 F.3d 286, 321 (2d Cir. 2001). The Second 

Circuit has “never found a closed-ended pattern where the predicate acts spanned fewer than two 

years.” Satinwood, Inc., 385 F.3d at 181; see also DeFalco, 244 F.3d at 321 (“[T]his Court has 

never held a period of less than two years to constitute a ‘substantial period of time.’”). 

Excluding intrastate e-mails and, for the sake of argument, retaining all other alleged predicate 

acts pleaded by Plaintiffs, the predicate acts lasted for 19 months from November 2004 to June 

Case 1:07-cv-03494-DLC Document 59 Filed 09/21/2007 Page 27 of 33
21

2006. See SAC ¶¶ 84(e)–(f), (k), (r), (s). See GICC Capital Corp., 67 F.3d at 467 (actions that 

do not qualify as predicate racketeering activity are not included in the calculation); Cofacredit, 

187 F.3d at 243 (omitting intrastate wire-fraud communications from continuity analysis). This 

nineteen month period is not enough to meet the minimum two year threshold for establishing a 

closed-ended pattern. See Satinwood, Inc., 385 F.3d at 181; Wiltshire v. Dhanraj, 421 F. Supp. 

2d 544, 550 (E.D.N.Y. 2005) (“nineteen-month period of predicate activity is . . . insufficient 

under Second Circuit precedent to establish closed-ended continuity”). Accordingly, the only 

way Plaintiffs’ RICO claims can survive is if they allege an open-ended pattern. 

2. Plaintiffs Fail To Allege Open-Ended Continuity. 

“To satisfy open-ended continuity, the plaintiff need not show that the predicates 

extended over a substantial period of time but must show that there was a threat of continuing 

criminal activity beyond the period during which the predicate acts were performed.” 

Satinwood, Inc., 385 F.3d at 181 (quoting Cofacredit, 187 F.3d at 242). Here, Plaintiffs’ 

allegations are insufficient to establish open-ended continuity. 

First, Plaintiffs’ SAC contains no allegation that there was a threat of continuing criminal 

activity, much less facts demonstrating such a threat. Absent such allegations, Plaintiffs’ RICO 

claims should be dismissed. See Weizmann Inst. of Sci. v. Neschis, 229 F. Supp. 2d 234, 257 

n.30 (S.D.N.Y. 2002) (conclusory allegations regarding open-ended continuity are insufficient); 

Singh v. Parnes, 199 F. Supp. 2d 152, 161 (S.D.N.Y. 2002) (“continuity standard must be met by 

factual assertions”). 

Second, this case involves legitimate business activities. See SAC ¶¶ 39-41 (“Coventry 

First is a leading player in the secondary market for life insurance policies.”). Where, as here, 

Defendants “primarily conduct[] a legitimate business, there must be some evidence from which 

it may be inferred that the predicate acts were the regular way of operating business, or that the 

nature of the predicate acts themselves implies a threat of continued criminal activity.” 

Cofacredit, S.A., 187 F.3d at 243. Plaintiffs allege neither requirement. To be sure, Plaintiffs do 

not allege unlawful origination practices were Defendants’ regular way of conducting business. 

Case 1:07-cv-03494-DLC Document 59 Filed 09/21/2007 Page 28 of 33
22

Instead, Plaintiffs claim that by 2005, Defendants originated over 1,318 Policies with a total 

death benefit exceeding $3 billion. SAC ¶ 40. Of these Policies, Plaintiffs have identified a 

handful of policies which they claim were originated unlawfully. Plaintiffs have identified even 

fewer alleged predicate acts committed by a small number of Coventry First employees. See id.

¶ 84(e)-(q).12 Moreover, the alleged predicate acts in this case are not inherently unlawful. See 

Skylon Corp. v. Guilford Mills, Inc., No. 93-CV-5581, 1997 WL 88894, at *6 (S.D.N.Y. Mar. 3, 

1997) (holding that predicate acts of “verbal and written misrepresentations made over the 

telephone and in letters, constituting wire and mail fraud” are not “inherently unlawful,” but 

rather are “typical of garden-variety fraud claims.”).13

Third, the alleged scheme against Plaintiffs was inherently terminable. Plaintiffs claim 

“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.” See SAC ¶¶ 94. But the amount of capital Plaintiffs had agreed to 

provide was finite. In each contract, Ritchie I and II agreed to limit the “Expected Capital” for 

purchasing policies to certain sum. See, e.g., Exs. 2-4 at Glossary of Defined Terms (defining 

“Expected Capital” for each agreement). Once that sum was exhausted, Ritchie I and II fulfilled 

their purchasing obligations and Defendants’ alleged representations and warranties regarding 

the origination of those policies expired. Id. at § 302(d). Thus, once Ritchie I and II exhausted 

their Expected Capital, the alleged scheme would have ended. See, e.g., GICC Capital Corp., 67 

F.3d at 466; FD Property Holding, Inc. v. U.S. Traffic Corp., 206 F. Supp. 2d 362, 371 

 

12 This number is reduced further when deficient alleged predicate acts are eliminated from the 

Court’s consideration. 

13 Plaintiffs cannot establish predicate acts were a way of conducting Defendants’ business by 

claiming the alleged acts are examples of Defendants’ unlawful activities. See Singh, 199 F. 

Supp. 2d at 162. Moreover, such diffuse, speculative and conclusory pleadings are insufficient 

to satisfy the particularity required to plead a RICO action grounded in fraud. See Plount v. Am. 

Home Assurance Co., Inc., 668 F. Supp. 204, 206 (S.D.N.Y. 1987). 

Case 1:07-cv-03494-DLC Document 59 Filed 09/21/2007 Page 29 of 33
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(E.D.N.Y. 2002) (“Allegations of conduct that by its nature or design has an intended and 

foreseeable endpoint will not constitute open-ended continuity.”) (citation omitted).14 

IV. THE CORPORATE DEFENDANTS CANNOT BE RICO “PERSONS” GIVEN 

 THE ENTERPRISES IDENTIFIED BY PLAINTIFFS. 

“[T]o establish liability under § 1962(c) one must allege and prove the existence of two 

distinct entities: (1) a ‘person’; and (2) an ‘enterprise’ that is not simply the same ‘person’ 

referred to by a different name.” Cedric Kushner Promotions, Ltd. v. King, 533 U.S. 158, 161 

(2001). Plaintiffs claim the alleged RICO enterprise is either “(a) Coventry First or, in the 

alternative, . . . (b) all of the Individual Defendants.”15 Under either formulation, the corporate 

defendants cannot be RICO “persons.” 

 Indeed, to the extent the alleged enterprise consists of Coventry First, Plaintiffs claim it is 

not distinct from any of the other corporate defendants. See SAC ¶ 2 (“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 as an alter ego for 

Montgomery Capital and Coventry First.”); Ritchie, 2007 WL 2044656, at *5 (Plaintiffs 

pursuing alter ego liability against “the three corporate defendants who did not sign the 

[MPPAs]”). The corporate defendants cannot simultaneously be the RICO person and the RICO 

enterprise. Cedric Kushner Promotions, Ltd., 533 U.S. at 161. 

 By contrast, insofar as the alleged enterprise consists of the individual defendants 

collectively, it is illogical to suggest that the corporate defendants “conduct[ed] or participate[d], 

 

14 Alternatively, to the extent Plaintiffs conclusorily assert Defendants sold tainted policies to 

other institutional investors, such allegations fail to comply with Fed. R. Civ. P. 9(b). See 

McLaughlin v. Anderson, 962 F.2d 187, 191 (2d Cir. 1992) (“Allegations of mail fraud [as RICO 

predicate acts] must be made with the particularity required by [Rule 9(b) ].”); FD Property 

Holding, 206 F. Supp. 2d at 371 (conclusory allegations defendants regularly conduct their 

business through similar fraudulent schemes insufficient). 

15 Defendants assume that in identifying “all of the individual defendants” as the alleged RICO 

enterprise, Plaintiffs mean “all of the individual defendants collectively.” If not, and Plaintiffs 

continue to claim any combination of the individual defendants may constitute the enterprise, the 

allegation violates Fed. R. Civ. P. 8(a). See Ritchie, 2007 WL 2044656, at *10. 

Case 1:07-cv-03494-DLC Document 59 Filed 09/21/2007 Page 30 of 33
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directly or indirectly, in the conduct of such enterprise’s affairs.” 18 U.S.C. § 1962(d).16 This 

construct disregards the fundamental corporate law principle that “corporations, which are legal 

fictions, can operate only through their designated agents and employees.” People v. Byrne, 570 

N.E.2d 1066, 1068 (N.Y. 1991). Indeed, Plaintiffs allege that certain individual defendants 

control the Corporate Defendants, SAC ¶ 30, and that other individual defendants were 

employed by these entities, id. ¶¶ 31-35. Here, as in every corporation, the individuals 

participate in the corporations’ affairs, not vice versa. 

V. PLAINTIFFS FAIL TO STATE A CLAIM UNDER 18 U.S.C. § 1962(d).

Plaintiffs’ RICO conspiracy claim fails for three reasons. First, because Plaintiffs have 

failed to state an actionable claim under § 1962(c), they cannot maintain a claim for conspiracy 

under § 1962(d). See Satinwood, Inc., 385 F.3d at 182 (“[B]ecause Plaintiffs did not adequately 

allege a substantive violation of RICO . . . the District Court properly dismissed [their claim] 

alleg[ing] a RICO conspiracy in violation of 18 U.S.C. § 1962(d).”). 

Second, Plaintiffs’ allegations of a conspiratorial agreement are entirely conclusory. 

SAC ¶ 81 (“Defendants conspired with one another to defraud the Plaintiffs”); id. ¶ 82 

(“Defendants conspired together to devise and participate in a plan of deception”) id. ¶ 105 

(“Defendants conspired within the meaning of 18 U.S.C. § 1962(d) to violate 18 U.S.C. §§ 

1962(c)”). Such allegations are insufficient to state a RICO conspiracy claim. See Hecht, 897 

F.2d at 25 (dismissing RICO claims because conspiracy allegations were conclusory); Nat’l 

Group for Commc’ns. & Computers Ltd. v. Lucent Techs. Inc., 420 F. Supp. 2d 253, 272 

(S.D.N.Y. 2006) (same); Nasik Breeding & Research, 165 F. Supp. 2d at 541 (same); Dietrich v. 

 

16 Additionally, for RICO purposes, simply establishing the presence of an enterprise is not 

enough. Plaintiffs must also allege that the defendants “conduct[ed] or participate[d], directly or 

indirectly, in the conduct of such enterprise’s affairs through a pattern of racketeering activity.” 

18 U.S.C. § 1962(c). To satisfy that standard, Plaintiffs must allege facts demonstrating 

Defendants played “some part in directing [the enterprise’s] affairs.” Satinwood, Inc., 385 F.3d at 

176. Here, Plaintiffs allege only conclusory facts of participation and control of the alleged 

enterprise consisting of the individual defendants. That is not enough. See Crab House of 

Douglaston, Inc. v. Newsday, Inc., 418 F. Supp. 2d 193, 206 (E.D.N.Y. 2006). 

Case 1:07-cv-03494-DLC Document 59 Filed 09/21/2007 Page 31 of 33
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Bauer, 76 F. Supp. 2d 312, 349 (S.D.N.Y. 1999) (same); CPF Premium Funding, Inc. v. 

Ferrarini, No. 95 Civ. 4621(CSH), 1997 WL 158361, at *6 (S.D.N.Y. Apr. 3, 1997) (same).17

Third, Defendants cannot conspire with one another as a matter of law. Plaintiffs allege 

each individual defendant is an employee and/or owner of the corporate defendants, and the 

corporate defendants are related to or wholly owned by one another. SAC ¶¶ 2-3, 25-35. 

Section 1962(d) does not apply to such related employees and corporate affiliates. See 

Sathianathan v. Smith Barney, Inc., No. 04-7122, 2007 WL 576097, at *5 (S.D.N.Y. Feb. 21, 

2007) (“[A] corporation cannot conspire with its employees or attorneys.”); Skylon Corp., 1997 

WL 88894, at *8 (noting, in combined discussion of §§ 1962(c) and (d), “impossibility of an 

intracorporate conspiracy in the context of a RICO claim”); Fogie v. THORN Ams., Inc., 190 

F.3d 889, 898 (8th Cir. 1999) (“[A]s a matter of law, a parent corporation and its wholly owned 

subsidiaries are legally incapable of forming a conspiracy with one another.”).18

CONCLUSION

 For the foregoing reasons, Defendants’ Motion to Dismiss Counts I and II of Plaintiffs’ 

Proposed Second Amended Complaint should be granted. 

 

17 The September 14, 2007 deadline for Plaintiffs to amend their Complaint has passed. 

Consequently, Plaintiffs can further amend their Complaint only on a showing of good cause. 

See Fed. R. Civ. P. 16(b); Parker v. Columbia Pictures Indus., 204 F.3d 326, 340 (2d Cir. 2000). 

18 But see Kirwin v. Price Comms. Corp., 391 F.3d 1323, 1326-27 (11th Cir. 2004) (recognizing 

circuit split on this issue). 

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CERTIFICATE OF SERVICE

I hereby certify that, on this 21st day of September, 2007, I caused true and correct copies 

of the foregoing to be served electronically via the Court’s ECF system on the following counsel: 

Lawrence S. Robbins, Esq. 

Gary A. Orseck, Esq. 

Daniel R. Walfish, Esq. 

Robbins, Russell, Englert, Orseck & Untereiner LLP 

1801 K Street, N.W. 

Washington, DC 20006 

(202) 775-4500 

(202) 775-4510 (telecopy) 

lrobbins@robbinsrussell.com 

gorseck@robbinsrussell.com 

dwalfish@robbinsrussell.com 

Thomas P. Puccio, Esq. 

Law Offices of Thomas P. Puccio 

230 Park Avenue 

New York, NY 10169 

(212) 883-6383 

(212) 883-6388 (telecopy) 

tpuccio@lotpp.com 

Attorneys for Plaintiffs

 ______________/s/______________ 

 Rachel R. Shanahan 

Case 1:07-cv-03494-DLC Document 59 Filed 09/21/2007 Page 33 of 33