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CERTILMAN v. HARDCASTLE
January 24, 1991
BERNARD CERTILMAN, ROBERT CERTILMAN, LEE CERTILMAN, AND STEVEN CERTILMAN, INDIVIDUALLY AND AS SHAREHOLDERS OF HARDCASTLE, LTD. ON BEHALF OF THEMSELVES AND ALL OTHER SHAREHOLDERS OF HARDCASTLE, LTD., AND BERNARD CERTILMAN, ROBERT CERTILMAN, STEVEN CERTILMAN, & LEE CERTILMAN, INDIVIDUALLY, PLAINTIFFS,
HARDCASTLE, LTD., STUART BECKER, ORDEN REID, WILLIAM IRVIN, HARRY SHUFRIN, AND JAMES HAGADORN, DEFENDANTS.
The opinion of the court was delivered by: Mishler, District Judge.
MEMORANDUM OF DECISION AND ORDER
Defendants Stuart Becker ("Becker") and Harry Shufrin
("Shufrin") move to dismiss the complaint pursuant to
Fed.R.Civ.P. 9(b) (failure to plead fraud with particularity)
and 12(b)(6) (failure to state a claim upon which relief can be
Plaintiffs allege that they were fraudulently induced by
defendants into purchasing securities in defendant Hardcastle,
Ltd. ("Hardcastle"). Plaintiffs allege various state law
grounds for relief, including common law fraud and Section
352-c of the New York General Business Law (Article 23-A) (the
"Martin Act"), and claim violations of Section 10(b) of the
Securities Exchange Act of 1934, 15 U.S.C. § 78j(b) ("Section
10(b)"), and the Racketeer Influenced and Corrupt Organizations
Act, 18 U.S.C. § 1962, 1964(c), (d) ("RICO").
Defendants Becker and Shufrin argue that the common law
fraud, Section 10(b), and RICO claims in the complaint should
be dismissed because they are not pleaded with the requisite
particularity and fail to state a claim upon which relief can
FRAUD AND SECTION 10(b) CLAIMS
Plaintiffs allege that Becker, Shufrin, and the three other
named individual defendants were directors and "controlling
persons" of defendant Hardcastle. (Complaint paras. 7-11, 31).
Plaintiffs further allege the following:
12. In April of 1985 defendant Shufrin with the
knowledge and consent and under the direction of
defendants Becker, Irvine and Reid, solicited
Plaintiffs, in the Eastern District of New York,
by use of the mails and telephone to subscribe
for stock in defendant Hardcastle.
14. At or about the time of said solicitation,
representations were made by Defendants to
Plaintiffs as follows:
a) That defendant Hardcastle was in the business
of providing technological integration of
computer systems and software programs for its
b) That defendant Hardcastle owned state of the
art equipment including computer systems,
optical scanners, disc converters and laser
c) That defendant Hardcastle was able to convert
over 500 different computer and word processing
d) That defendant Hardcastle had contracts for
its services and was then doing business with
numerous companies including but not limited to
1. American Broadcasting Company
2. American Express Company
4. Bear Sterns [sic] and Company
8. International Business ...
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