on 18 U.S.C. § 1962(d) must also be dismissed.
Since Organek was an independent contractor who did not participate in the operation or management of the Trupin organization, the Supreme Court's recent decision in Reves v. Ernst & Young, 122 L. Ed. 2d 525, 113 S. Ct. 1163 (1993) compels the dismissal of all RICO claims based on a violation of 18 U.S.C. § 1963(c). In Reves, the Court held that according to the language of 1963(c), under which a RICO defendant must "conduct or participate" in the enterprise, an outside defendant with no official position in the organization will only be liable if he or she is associated with and participates in the operation or management of the Trupin partnerships. Reves, U.S. , 122 L. Ed. 2d 525, 113 S. Ct. 1163, , 1993 U.S. LEXIS 1940, *26. Conclusory allegations that Organek "acted as an employee" do not suffice to meet this test, for the Plaintiffs must allege that Organek participated in the operation and management of the Rico enterprise. Organek and Continental have not been alleged to be general partners in any of the partnerships in either case, nor have they alleged that the services which Organek performed rise to the level of "operation or management" as that test is defined in Reeves. In any event, the plaintiffs' claims under Section 192(c) must fail absent adequate pleadings of predicate acts on the part of either Organek or Continental.
State Law Claims Against Organek
The dismissal of the securities fraud claims against Organek leaves only the state law claims, which must be dismissed for lack of pendent party jurisdiction. Absent these federal claims, the court no longer has subject-matter jurisdiction over Organek and Continental Realty; see Zaloom v. Trupin, Fed. Sec. L. Rep. (CCH) P 97,020 (S.D.N.Y. 1992); The Limited, 645 F. Supp. at 1046. The statute codifying the doctrines of ancillary and pendent jurisdiction into "supplemental jurisdiction" became effective only on or after December 1, 1990. Since the Alberti action was filed May 22, 1990, and the Morin action was filed in 1988, both cases are governed by Finley v. United States, 490 U.S. 545, 104 L. Ed. 2d 593, 109 S. Ct. 2003 (1989). According to the Second Circuit, after Finley, "the continued viability of the doctrine of pendent party jurisdiction in any context is seriously in question," Roco Carriers, Ltd. v. M/V. Nurnberg Exp., 899 F.2d 1292, 1295 (2d Cir. 1990); Staffer v. Bouchard Transp. Co., 878 F.2d 638, 643 n.5 (2d Cir. 1989). See Griffin V. McNiff, 744 F. Supp. 1237 (S.D.N.Y. 1990) (requesting parties to brief issue of pendent party jurisdiction in tax shelter limited partnership case), later proceeding, 1990 U.S. Dist. LEXIS 9088 (S.D.N.Y. July 18, 1990) (pendent party jurisdiction unavailable under Finley).
The Becker Defendants
The Becker Defendants' motion to reargue is denied, for the Becker Defendants have not shown any factual matter which this court overlooked in the opinion dated January 6, 1993. The Becker Defendants also allege that this Court failed to determine how the Becker defendants could have known the data they reported on was fraudulent. Since the Plaintiffs allege that the Becker Defendants' projections would be false if the Becker Defendants had understood that the syndication's tax deductions would be disallowed, the issue is whether the Becker Defendants knew of the potential tax problems.
Previous opinions of this Court dismissed the claims against the Becker Defendants on the grounds that the Plaintiffs had not pleaded facts from which it could be inferred that the accountants knew of any potential tax problems with the syndications. This was corrected in the third amended Complaints in Morin and in Alberti. As the Becker Defendants point out, it is well settled that an inference of fraud does not arise from the mere fact that an auditor reported on allegedly inaccurate data. O'Brien, 719 F. Supp. at 228; The Limited, 683 F. Supp. at 394; Dannenberg v. Dorison, 603 F. Supp. 1238, 1241 (S.D.N.Y. 1985). However if a plaintiff can plead facts showing that an outside defendant who owes no fiduciary duty to the plaintiff, such as an accountant or a surety, was aware of the misstatements in the PPM, that raises a factual issue. The problem comes from National Union Fire Ins. Co. v. Turtur, 892 F.2d 199, 202 (2d Cir. 1989):
In the course of ensuing discovery . . . . [it was] established that . . . a vice president of national Union responsible for computer equipment leasing bonds attended a seminar on equipment leasing limited partnerships . . . at which [he] received a memorandum which stated that another such Trupin partnership presented "a very aggressive structure with attendant risks." . . . . We agree with the district court's carefully phrased assessment that the Turturs "have barely raised a factual issue" in that respect.