The complaint describes three phases of the pattern of
alleged fraudulent activity: (1) the obtaining of sums of money
from Herbstein as a result of Bruetman's fraudulent
representations with respect to the capital contributions to
and proposed formation of IxC and its predecessor; (2) the
Bruetman Defendants' fraudulent misappropriations and transfers
of money from IxC; and (3) the Bruetman Defendants' fraudulent
scheme to divest Herbstein of his financial and ownership
interests in IxC.
In July, 1988, Bruetman and High Tech instructed the
president of Altec-2 to transfer $24,000 to the account of High
Tech at Boulevard bank, and further instructed him to enter
that amount in the books as "repayment of debt from [IxC] to
High Tech" when no such debt existed and no such payment had
been authorized by the director of IxC.
On August 16, 1988, Bruetman, High Tech and Altec-2 caused to
be transmitted by wire from Illinois to Herbstein in New York
a letter asking Herbstein to divest himself of his half
ownership in IxC.
On December 16, 1988, Bruetman, Tash, Altec-2 and High Tech
caused to be transmitted by wire from Illinois to Herbstein in
New York a memorandum written by the president of Altec-2 to
the board of directors concerning the negotiation of the sale
of the shares of IxC held by Altec-2.
On or about January 18, 1989 Bruetman, High Tech, and Altec-2
caused to be transmitted by wire from Illinois to Herbstein in
New York an accounting which allegedly fraudulently attributed
to IxC expenses and debts that had nothing to do with IxC, but
related solely to the business of High Tech and Altec-2.
On July 12, 1989 Bruetman, Tash, High Tech and Altec-2 caused
a letter signed by Tash and addressed to the new accountants
for IxC to be mailed from Illinois to Herbstein in New York and
to the accountants in Buenos Aires, which contained allegedly
Process was served on Altec-2 by means of service upon its
director, Bruetman, in Illinois.
On a motion to dismiss pursuant to Rule 12(b)(2),
Fed.R.Civ.P., all pleadings and affidavits are construed in the
light most favorable to the plaintiffs, and all doubts are to
be resolved in the plaintiff's favor. CutCo Indus., Inc. v.
Naughton, 806 F.2d 361, 365 (2d Cir. 1986). To withstand a
12(b)(2) motion to dismiss, a plaintiff need only make out a
prima facie case of personal jurisdiction. Beacon Enterprises,
Inc. v. Menzies, 715 F.2d 757, 768 (2d Cir. 1983).
The complaint invokes federal question jurisdiction pursuant
to the civil RICO statute, which authorizes national service of
process. 18 U.S.C. § 1965. When a complaint invokes federal
question jurisdiction under a statute providing for nationwide
service of process, the jurisdictional inquiry focuses on the
defendant's contacts with the entire United States, not just
the forum state. Mariash v. Morrill, 496 F.2d 1138, 1143 (2d
Cir. 1974). Therefore, due process requires only that a
defendant in such a suit have minimum contacts with the United
States. Perez-Rubio v. Wyckoff, 718 F. Supp. 217, 228 (S.D.N Y
1989) (citing International Shoe Co. v. Washington,
326 U.S. 310, 316, 66 S.Ct. 154, 158, 90 L.Ed. 95 (1945)).
Under the due process clause, personal jurisdiction may be
asserted over an individual who is not present where the
defendant is (1) doing business in the state; (2) doing an act
in the state; or (3) causing an effect in the state by an act
done elsewhere. Leasco Data Processing Equip. Corp. v. Maxwell,
468 F.2d 1326, 1340 (2d Cir. 1972). In an international context
in particular, the third test must, however, be applied with
caution. "The person sought to be charged must know, or have
good reason to know, that his conduct will have effects in the
state seeking to assert jurisdiction over him." Id. at 1341. It
is not enough that causing an injury within the forum may be
foreseeable, within the meaning of proximate causation and tort
liability; rather, "the foreseeability that is critical to due
process analysis . . . is that
the defendant's conduct and connection with the forum state are
such that he should reasonably anticipate being haled into
court there." World-Wide Volkswagen Corp. v. Woodson,
444 U.S. 286, 295, 100 S.Ct. 559, 566, 62 L.Ed.2d 490 (1980).
For the purposes of the instant motion, the facts as alleged
establish conduct and connection to the United States on the
part of Altec-2 such that the corporation could reasonably
anticipate being haled into court here. Construing the
allegations in the complaint in the light most favorable to
Herbstein, Altec-2 caused letters and other documents
containing fraudulent statements to be mailed and transmitted
by wire in the United States. Some of these communications
concerned the purported negotiation of shares of IxC held by
Altec-2. When Altec-2 undertook this allegedly fraudulent
activity directed at a corporation in which it owned a half
interest the other half of which was owned by a New York
resident, it could reasonably anticipate being haled into court
there. See Perez-Rubio, 718 F. Supp. at 231 (law firm involved
in legal work for investment companies could reasonably
anticipate being haled into court in the United States where at
least some of the beneficial owners were residents of the
Furthermore, the RICO claim arises out of and directly
relates to the contacts alleged as the basis for personal
jurisdiction: the allegedly fraudulent mail and wire
communications. The instant case is therefore distinguishable
from Helicopteros Nacionales de Colombia, S.A. v. Hall,
466 U.S. 408, 104 S.Ct. 1868, 80 L.Ed.2d 404 (1984), cited by
Altec-2 for the proposition that a defendant's purchases in the
forum state are an insufficient basis for personal jurisdiction
where such purchases or contacts do not relate to the causes of
action alleged by a plaintiff. See Helicopteros, 466 U.S. at
414 & n. 8, 104 S.Ct. at 1872 & n. 8 (distinguishing between
"general jurisdiction," where cause of action does not relate
to the foreign corporations activities in the forum state, and
"specific jurisdiction," where such a relationship exists).
Moreover, the conduct alleged in the instant case does not
describe a situation where the occurrence of events in New York
or in the United States was fortuitous. See World-Wide
Volkswagen, 444 U.S. at 286, 100 S.Ct. at 561-62, (due process
cause prohibits exercise of personal jurisdiction by Oklahoma
long arm statute over New York corporation in products
liability action arising out of automobile accident in Oklahoma
involving vehicle sold in New York to New York residents).
World-Wide Volkswagen, cited by Altec-2 for the proposition
that a court will not exercise personal jurisdiction where
defendant sells no products nor maintains offices in forum
states, is further distinguishable from the instant case as the
RICO statute, unlike the cause of action in World-Wide
Volkswagen, provides for national service of process. See
Mariash, 496 F.2d at 1143.
Herbstein has therefore alleged conduct of Altec-2 sufficient
to meet the minimum contacts standard required by due process.
For the reasons set forth above, Altec-2's motion is denied.
It is so ordered.
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