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July 30, 1993



The opinion of the court was delivered by: WILLIAM C. CONNER


Conner D.J.:

 Plaintiffs Borden, Inc., et. al. bring this action against Spoor Behrins Campbell & Young, Inc. ("SBCY"), each of SBCY's principals (T. Richard Spoor, Kenneth R. Behrins, Robert L. Campbell, and Michael D. Young), First Interstate Investment Services, Inc. ("FIIS"), and First Interstate Bank, Ltd. ("FIB") for violations of section 10(b) of the Securities and Exchange Act of 1934, 15 U.S.C. § 78j(b), and SEC Rule 10b-5 promulgated thereunder; *fn1" violations of the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. § 1961 et seq; and for numerous common law violations. The action is presently before the Court on the parties' cross motions for partial summary judgment. The motions are denied.


 SBCY is a personal financial planning boutique established in 1978 which was acquired by FIB, through FIB's subsidiary FIIS, on May 25, 1983, and operated as a wholly owned subsidiary from that date until the end of 1987. On February 2, 1979, Borden, Inc. ("Borden") retained SBCY to provide financial advice to a selected group of its executives ("the individual plaintiffs") for a period of one year, and the contract was renewed annually through the end of 1985. During the course of this relationship, SBCY recommended that these Borden executives purchase interests in a number of limited partnerships as tax shelters. The gravamen of the complaint is that by failing to disclose payments SBCY received from each of these partnerships, defendants fraudulently induced 51 purchases by the individual plaintiffs of interests in 20 separate limited partnerships.

 In support of the instant motions, plaintiffs argue that the undisputed facts show that SBCY received undisclosed commissions on 40 of their purchases in 15 of the limited partnership at issue, *fn2" and defendants FIB and FIIS ("the FIB defendants") argue that they can not be held liable for SBCY's alleged fraudulent behavior that occurred prior to their acquisition of SBCY. Both summary judgment motions are denied.


 I. Plaintiffs' Motion For Partial Summary Judgment

 Plaintiffs seek partial summary judgment on the following claims: Rule 10b-5, (direct, aiding and abetting, and control person liability) (Counts I, II, XVI), RICO (Counts XIV, XV), common law fraud (Count IV), breach of fiduciary duty (Count VIII); aiding and abetting common law tort (Court XIII); breach of contract (Count VI); and imposition of a constructive trust (Count XII). *fn3" In urging us to grant their motion, plaintiffs argue that summary judgment in this case is particularly appropriate because if the case were to go to trial, the Court and not a jury would sit as the finder of fact. Pls.' Br. in Reply at 7. Contrary to plaintiffs' counsel's insinuation, the standard for granting summary judgment under Rule 56, Fed. R. Civ. P., remains the same whether a jury trial or a bench trial is anticipated. In either case summary judgment may be granted only when, after drawing all reasonable inferences in favor of the party opposing the motion, no reasonable trier of fact could find for the nonmoving party. Lund's, Inc. v. Chemical Bank, 870 F.2d 840, 844 (2d Cir. 1989). A summary judgment is not appropriate where material factual matters are in dispute. National Union Fire Ins. Co. v. Turtur, 892 F.2d 199, 203 (2d Cir. 1989). In support of their motion, plaintiffs contend that the undisputed facts demonstrate that SBCY received undisclosed commissions on the investments at issue. However, a review of the discovery materials submitted pursuant to this motion reveals that the matter of SBCY's alleged commissions is hotly contested. Since only the finder of fact at trial may weigh the credibility of contradictory evidence, the submissions of plaintiffs' counsel are not the stuff of which summary judgments are made. *fn4"

 A. There Is A Question Of Fact As To Whether SBCY Received Undisclosed Commissions.

 Defendants do not dispute that SBCY received fees from a number of the limited partnerships at issue for various types of services and, at trial, plaintiffs may contend that there was inadequate disclosure of each of these payments which created a conflict of interest for SBCY. However, plaintiffs' basis for the instant motion is much narrower. The evidence presented by plaintiffs shows only that, for the subset of investments at issue, SBCY did not disclose that it would receive any fees in the form of commissions. Plaintiffs unsuccessfully attempt to show from undisputed evidence that SBCY received commissions on these investments.

 1. SBCY's Disclosure Of Payments Received From The Partnerships At Issue.

 Pursuant to this motion the totality of SBCY's fee disclosure is not before the Court. Each of the 15 limited partnerships that are the subject of this motion was distributed pursuant to a private placement memorandum ("PPM"). However, out of these lengthy documents, plaintiffs submit only the two or three selected pages which discuss the commission, if any, that would be paid to purchasing representatives. As plaintiffs point out, none of the PPMs discloses commissions paid to SBCY. *fn5" In addition, purchasing questionnaires were executed by the individual plaintiffs in connection with a number of the limited partnerships at issue, and plaintiffs selectively cite these documents as well. The placement questionnaires for two of the limited partnerships are attached as exhibits to the motion, and plaintiffs' counsel purports to have copied into plaintiffs' brief selected paragraphs from the questionnaires for seven other limited partnerships. *fn6" Every excerpt plaintiffs cite from SBCY's disclosure documents is designed to show that SBCY represented to plaintiffs that it would not receive commissions on their investments. Plaintiffs' limited analysis of SBCY's disclosure narrows the scope of this motion. In order to prevail, plaintiffs must demonstrate from the uncontested facts that SBCY received commissions pursuant to each investment at issue.

 2. The Undisputed Facts Do Not Show That SBCY Received Commissions On The Investments At Issue.

 Plaintiffs fail to present the Court with undisputed evidence that SBCY received commissions on the investments that are the subject of this motion. Kenneth Behrins, the SBCY principal responsible for negotiating the fees with the general partners and promoters, and Michael Young, another SBCY principal, maintain that the fees received from the limited partnerships were paid for due diligence, surveillance, and monitoring, and therefore did not constitute commissions. Behrins Dep. at 163, 359; Young Dep. at 80-83. *fn7" Defendants also provide the Court with SBCY's response to plaintiffs' interrogatory in which SBCY lists the non-sales services performed for each limited partnership. Defs.' Ex. in Op. 47. The fact that plaintiffs submit a multitude of documents, in an attempt to impeach the evidence put forth by defendants, confirms the existence of a fundamental factual dispute which compels us to deny plaintiffs' motion. Nevertheless, we discuss plaintiffs' submissions and show why they fail to establish conclusively that SBCY received commissions on the investments at issue.

 Many of the documents cited by plaintiffs use ambiguous terms such as "investment fees", Pls.' Ex. 15, or "placement fees" *fn8" to describe the payments that SBCY received from the limited partnerships. Nonetheless plaintiffs' counsel argues that these documents constitute undisputed evidence that SBCY received commissions on the investments in question. However, Kenneth Behrins' deposition states that the term "placement fees" was not intended to be synonymous with "commission", *fn9" and therefore these documents merely reveal a disputed issue of fact.

 Further, many of the documents that plaintiffs cite describe SBCY's aggregate revenue stream and thus fail unambiguously to support the conclusion that SBCY received commissions on the specific investments at issue. For example, plaintiffs make much of documents associated with Covington & Burling's (FIB's outside counsel) analysis of whether SBCY's activities required it to register as a broker/dealer. The first of these are some handwritten notes attributed to Phyllis Thompson, a Covington & Burling associate, which state that SBCY received fees for, among other things, finding investors for the general partners in limited partnerships. Pls.' Ex. 9. Thompson also received a letter from Young of SBCY that described the payments from the limited partnerships as investment management fees. Pls.' Ex. 6. Young's letter explained that the magnitude of these fees was dependent on two factors; first, the amount of time, travel, and expenses which would be incurred over the life of the investment, and second the amount the general partner would have received for placing the equity absent SBCY's services. *fn10" Id. Thompson then wrote a memorandum which analyzed whether an investment advisory firm, which received commissions for acting as a purchasing representative for its clients' limited partnership tax shelter investments, was required to register as a broker/dealer. Pls.' Ex. 16. Even if we were to conclude that these documents demonstrate that SBCY had some commission income, there is no evidence that those commissions were received in connection with the investments that are the subject of the instant motion. Properly disclosed commissions may have been received by SBCY from a number of sources. plaintiffs represent only about 10% of SBCY's total client base, *fn11" and commission revenue on SBCY's balance sheet may have resulted from commissions on investments by other SBCY clients. Moreover, SBCY may have received properly disclosed commissions on some of the plaintiffs' investments which are not part of this motion. For example plaintiffs do not seek summary judgment for their investments in the Virginia Square limited partnership, and plaintiffs admit that the PPM for this investment disclosed that SBCY would receive a 6% commission on the sale of each partnership interest. Pls.' Br. in Sup. at 17. *fn12" Thus, even if plaintiffs' evidence demonstrated that SBCY had some revenue from commissions, this does not support the conclusion that SBCY received commissions on the small subset of investments that are presently before the Court. *fn13"

 The few documents that specifically characterize the fees paid to SBCY by partnerships which are the subject of this motion do not conclusively establish that the payments were commissions. SBCY's cash receipts ledgers for 1985 and 1986 show that SBCY received $ 150,000 from the Searay limited partnership and $ 3,400 from the T.W. Decisions limited partnership both of which were entered under the column for "placement fees". Pls.' Ex. 25, 26; see also Pls.' Ex. 28 (discussing "placement fees" from the T.W. Decision limited partnership). However, as discussed above, defendants provided evidence that the term "placement fees" is not synonymous with the term "commissions". Behrins Dep. at 120. Similarly, there is a handwritten memorandum from Behrins of SBCY to Dale Welton, a financial officer of FIIS, in which Behrins states that SBCY expects to receive payments from the Transpac, Mt. Ida, Marbury, and Frick limited partnerships in early 1984, and Behrins asks Welton if this income might be looked upon as earned in 1983 for purpose of a calculation that was to be made with regard to FIB's acquisition of SBCY. Welton agreed to discuss the matter with James Fox, President and CEO of FIIS. Pls. Ex. 18. Welton's follow up memorandum to Fox describes these payments as "commissions/fees". Pls.' Ex. 19. The fact that Welton used the term "commissions/fees" suggests his uncertainty as to the actual nature of the fees; Welton's deposition states that the fees discussed in his memorandum were for due diligence and other similar services. Welton Dep. at 54. Therefore, this document is not unambiguous support for the conclusion that these payments were commissions as opposed to some other type of fee. *fn14" Even if it were, the evidence would have to be weighed by the finder of fact against denials by Behrins and Young that any commissions were received by SBCY. Behrins Dep. at 163, 359; Young Dep. at 80-83.

 The weakness of plaintiffs' motion is most clearly evident in their reply brief. Plaintiffs' counsel cites Behrins' deposition testimony discussing the various non-sales services provided in exchange for the fees received from the Historic Inns, Mt. Ida, and Searay limited partnerships. Pls.' Ex. R 35,36,33. Plaintiffs' counsel then contends that the Court should disbelieve this evidence because Behrins is an interested party and suggests that we draw a negative inference from defendants' failure to corroborate Behrins' statement with affidavits from the promoters of the limited partnerships. Pls.' Br. in Reply at 45-46. In resolving this motion we are required to draw all factual inferences in defendants' favor; plaintiffs' impeachment of Behrins' credibility must be reserved for the finder of fact at trial. As discussed above, whether SBCY received commissions pursuant to plaintiffs' investments in the limited partnerships at issue is a question of fact that may not be resolved upon summary judgment. *fn15"

 B. Since The Undisputed Facts Do Not Show That SBCY Received Undisclosed Commissions, Plaintiffs' Motion Must Be Denied.

 Inadequate disclosure lies at the core of each claim on which plaintiffs seek summary judgment, and since plaintiffs have failed to show from the undisputed facts that SBCY received undisclosed commissions, their motion is denied. Plaintiffs' Rule 10b-5 and common law fraud claims obviously require some central fraudulent conduct, and fraud is also at the heart of the predicate acts supporting the RICO claims. Thus plaintiffs' motion must be denied as to these claims. Further, plaintiffs have failed to demonstrate SBCY's breach of fiduciary duty or any basis upon which to establish a constructive trust in plaintiffs' favor as a matter of law.

 Borden's breach of contract allegation against SBCY and its principals is the only claim that requires more analysis. Borden entered into a written agreement with SBCY to provide a number of its executives with financial planning services. Pls.' Ex. 2. Although the terms of this contract did not preclude SBCY from receiving payments from limited partnerships, SBCY represented in its initial letter to Borden that it was not a seller of financial instruments, and plaintiffs argue that this representation should be incorporated into the agreement. Pls.' Ex. 1. Even if we were to accept plaintiffs' interpretation of the agreement, summary judgment would not be appropriate because plaintiffs fail to show from the uncontested facts that SBCY received commissions from the limited partnerships and thus plaintiffs cannot demonstrate that SBCY "sold" securities to Borden executives in breach of this agreement. Plaintiffs' motion is therefore denied in full. *fn16"

  II. The FIB Defendants' Motion For Partial Summary Judgment

 The FIB defendants make their own motion for partial summary judgment. Of the 20 limited partnerships which are the subject of this action, nine were fully funded prior to FIB's, May 23, 1983, acquisition of SBCY. The FIB defendants seek partial summary judgment as to these investments. As movant, the FIB defendants now face the same obstacles that led to the denial of plaintiffs' motion. All inferences which our prior analysis made in defendants' favor now cut against granting defendants' motion because summary judgment is appropriate only if no reasonable fact finder could find for the nonmoving party. Lund's, 870 F.2d at 844.

 The conspiracy counts embody plaintiffs' primary theory for extending liability to the FIB defendants for pre-acquisition claims. *fn17" Plaintiffs contend that beginning in 1979, SBCY and the general partners and promoters of the various limited partnerships at issue formed a conspiracy to defraud investors, and that the FIB defendants joined this conspiracy on or about the time of their acquisition of SBCY and thereby became responsible for all of the conspiracy's past and future civil liabilities. Pls.' Br. in Op. at 29-31. *fn18" The FIB defendants do not contest the application of the "late joinder" rule to the case at bar, and argue only that parent and subsidiary corporations may not conspire with each other as a matter of law and, alternatively, that the undisputed facts do not support a finding that they conspired to defraud plaintiffs.

 A. A Finding That The FIB Defendants Conspired With Their Subsidiary Is Not Precluded As A Matter Of Law.

 The FIB defendants point to the parent-subsidiary relationship that existed between themselves and SBCY and argue that this eliminates the possibility of a conspiracy between defendants. To support their position, the FIB defendants largely rely on the Supreme Court's holding in Copperweld Corp. v. Independence Tube Corp., 467 U.S. 752, 81 L. Ed. 2d 628, 104 S. Ct. 2731 (1984). We are not convinced that Copperweld's reasoning should be extended to the securities fraud, RICO, and common law conspiracies at bar; even if it were so extended, plaintiffs point to a number of third parties - with no corporate relationship to defendants - with whom a reasonable fact finder might find that defendants conspired.

 In Copperweld, the Supreme Court held that a conspiracy in restraint of trade, in violation of section 1 of the Sherman Antitrust Act, could not be found where the players included only a parent corporation and its wholly owned subsidiary. The court noted that vigorous competition, which is at the base of our free market economy, is dependent upon the ability of firms to execute unitary corporate policy and therefore concluded that concerted action within a firm or between a firm and its wholly owned subsidiary is not constrained by section 1 of the Sherman Act. Id. at 769-774. Since we see no similar social benefit flowing either from agreements to commit securities fraud or to establish and maintain racketeering enterprises, or from joint tortious behavior, we question whether Copperweld should be extended to these contexts. Other courts have acknowledged that Copperweld's reasoning is specific to the antitrust context and have not applied it to RICO conspiracies. Rouse v. Rouse; 1990 U.S. Dist. LEXIS 13879, 1990 WL 160194, *13 (N.D.N.Y. 1990); Ashland Oil, Inc. v. Arnett, 875 F.2d 1271, 1281 (7th Cir. 1989); Shearin v. E.F. Hutton Group, Inc., 885 F.2d 1162, 1166-67 (3d Cir. 1989); Curley v. Cumberland Farms Dairy, Inc., 728 F. Supp. 1123, 1135 (D.N.J. 1989); see Haroco, Inc. v. American Nat'l Bank and Trust Co., 747 F.2d 384, 403 n.22 (7th Cir. 1984), aff'd on other grounds, 473 U.S. 606, 87 L. Ed. 2d 437, 105 S. Ct. 3291 (1985). The FIB defendants do not cite, nor have we discovered, any reliable authority stating whether New York law permits finding civil conspiracies between parent and subsidiary corporations. *fn19" There is some logic in the position that entities, which are made distinct by state corporate law, are also separate entities capable of entering into illicit agreements under state civil conspiracy law. However, we need not reach this issue because the conspiracy at bar includes participants with no corporate relationship to defendants.

 Plaintiffs present a conspiracy which involved not only FIB, FIIS, and SBCY, but also the general partners and promoters of the various limited partners at issue. There is some evidence that the FIB defendants knew of, and agreed to participate in, a concerted action between SBCY and the partnership administrators to defraud plaintiffs. *fn20" The FIB defendants argue that they could not have engaged in such a conspiracy because they had no direct contact with the limited partnership promoters, participating in the affair only through their subsidiary, SBCY. However, to sustain a conspiracy claim, plaintiffs need show only that the conspirators "agreed on a common purpose" and need not show that every conspirator conspired directly with every other member of the conspiracy. United States v. Nerlinger, 862 F.2d 967, 973 (2d Cir. 1988); United States v. Friedman, 854 F.2d 535, 562 (2d Cir. 1988), cert. denied, 490 U.S. 1004 (1989). *fn21" Since, as shown below, a reasonable fact finder may conclude that, through an agreement with SBCY, the FIB defendants conspired with third parties to defraud plaintiffs, the conspiracy claims are not invalid as a matter of law.

  B. The Undisputed Facts Do Not Preclude A Finding That The FIB Defendants Conspired To Defraud Plaintiffs.

 The FIB defendants argue that the undisputed facts demonstrate that they did not conspire with SBCY to defraud plaintiffs. A conspiracy is an agreement between two or more persons to accomplish an unlawful purpose. Morse v. Weingarten, 777 F. Supp. 312, 318 (S.D.N.Y. 1991). The FIB defendants primarily argue that they did not know that SBCY was receiving undisclosed commissions and therefore could not have entered into an illicit agreement to defraud plaintiffs by concealing this fact; alternatively, they contend that even if they knew of SBCY's scheme to defraud, there is no evidence that they agreed to further these wrongful goals. Abrams v. Painewebber, Inc., 1991 U.S. Dist. 14819, 1991 WL 218106 (D.Conn. 1991). Since the undisputed facts do not support these arguments, the FIB defendants' summary judgment motion is denied.

 As a preliminary matter, we point out that direct proof of a conspiracy is seldom available, and therefore an illicit agreement may be shown via circumstantial evidence. H.L. Moore Drug Exch. v. Eli Lilly and Co., 662 F.2d 935, 941 (2d Cir. 1981), cert. denied, 459 U.S. 880, 74 L. Ed. 2d 144, 103 S. Ct. 176 (1982). Proof of tacit, as opposed to explicit, understanding is sufficient to show agreement, and among the factors a fact finder may consider in inferring a conspiracy are the relationship of the parties, proximity in time and place of the acts, and the duration of the actors' joint activity. Diduck v. Kaszycki & Sons Contractors, Inc., 774 F. Supp. 802, 813 (S.D.N.Y. 1991), aff'd in part, rev'd in part on other grounds, 974 F.2d 270 (2d Cir. 1992). Further, to demonstrate a conspiracy, plaintiffs need not show that each conspirator agreed to every detail of the conspiracy but only that each agreed on the "essential nature of the plan". United States v. Rosenblatt, 554 F.2d 36, 38 (2d Cir. 1977).

 The FIB defendants first contend that they had no knowledge of SBCY's fraud but admit that they knew that SBCY was receiving fees from the limited partnerships in which plaintiffs invested. In addition, because Dale Welton wrote a memorandum to James Fox in which he referred to SBCY fee income as income for "commissions/fees" and because the FIB defendants' outside counsel wrote a memorandum in which it analyzed whether SBCY's "commission" income would require SBCY to file with the SEC as a broker/dealer, a reasonable fact finder could also conclude that the FIB defendants knew that SBCY received commissions from the partnerships. See supra 11, 9. Thus, the FIB defendants argue only that they were not aware of SBCY's inadequate disclosure and always believed that SBCY was fully disclosing to its clients the commissions it received.

 To support their position, the FIB defendants point to the depositions of James Fox (president and CEO of FIIS), Dale Welton (senior vice president and CFO of FIIS), and William Bogaard (executive vice president and general counsel of FIB) in which each states that, relying completely on oral representation by SBCY principals, he believed that SBCY was fully disclosing the fees received from the partnerships. Fox Dep. at 29; Welton Dep. at 83-84; Bogaard Dep. at 96. However, Michael Young testified at deposition that when he told representatives of the FIB defendants that the fees were fully disclosed, he was asked to provide documents to corroborate this representation, and in response he provided the FIB defendants with the file on every limited partnership containing SBCY's disclosure documents and its revenue data. Young Dep. 114-15. As plaintiffs have demonstrated in support of their motion a review of these documents would have revealed that SBCY was not disclosing the commissions it received on plaintiffs' investments, *fn22" and Young stated that pursuant to FIB's acquisition of SBCY a number of FIB's agents reviewed these documents. Young Dep. 137. The FIB defendants contend that since Young admits he was not present during the review of these documents, Young Dep. 119, 138-39, his statements are not sufficient to show that any representative of the FIB defendants read the documents and detected the fraud. However, given that these files were provided at the request of the FIB defendants, and in the context of a discussion of the adequacy of SBCY's fee disclosures, we believe a reasonable fact finder would be justified in concluding that representatives of FIB examined these documents with an eye towards the adequacy of SBCY's fee disclosures. *fn23"

 Further, as an investment advisor, SBCY was require to file ADV forms with the SEC and, after the acquisition, FIB undertook the responsibility of completing and filing these forms for SBCY. Pls.' Ex. 76 (Young Dep. at 104). In the ADV forms filed for 1986 and 1987 FIB made the following representation:


From time to time the applicant may have a financial interest through its advisory services rendered to an entity selling investment products to applicant's clients. In every such case a full written disclosure statement is provided to the client indicating the nature and extent of the potential conflict of interest and the extent of the financial interest.

 Defs.' Ex. 32,33 (emphasis added). The FIB defendants would have the Court rule that although FIB represented, in documents filed with the SEC, that SBCY disclosed the nature and extent of every conflict of interest through a "full written disclosure statement", no reasonable fact finder could conclude that FIB read these written disclosure statements. We find that a reasonable fact finder might easily draw the contrary inference that FIB read these documents pursuant to its preparation of these SEC filings.

 The FIB defendants' argument that they knew of the existence and the nature of SBCY's commission revenue, but never knew that the revenue was inadequately disclosed, is undermined by the FIB defendants' detailed review of the disclosure documents in the Searay limited partnership. The FIB defendants admit that they examined the disclosure documents in the Searay limited partnership, and although the Searay PPM discloses substantial fees to be paid to SBCY, the fees are characterized not as commissions but as financial consultation fees. See Defs.' Ex in Sup. 23. If a fact finder concludes, as one might, that the fees paid pursuant to the Searay limited partnership were commissions *fn24" and if the fact finder concludes that the FIB knew that the fees SBCY received from the limited partnerships were actually commissions, see supra 11,9, the FIB defendants may then be found to have known of SBCY's fraudulent behavior.

 The FIB defendants contend that, even if they knew of the fraud perpetrated by SBCY, there is no evidence that they supported the conspiracy's illicit goal. Abrams, 1991 U.S. Dist. LEXIS 14819, 1991 WL 218106; see In Re Investors Funding Corp. of N.Y. Sec. Litig., 523 F. Supp. 550, 557 (S.D.N.Y. 1980) (conspiracy requires a showing of knowing participation in and attachment to the conspiracy). The undisputed facts do not support this conclusion. The ADV forms filed by FIB represented that the only type of products "sold" by SBCY were financial planning packages for which SBCY received periodic fixed fees. Pls.' Ex 56. FIB omitted from these filings any discussion of SBCY's sales of limited partnership interests and the commission income received therefrom. At trial, the fact finder may determine that these omissions evidence FIB's desire to conceal SBCY's fraud from the investing public, and therefore the omissions may be found to constitute actions by FIB in furtherance of a conspiracy to defraud plaintiffs. *fn25" Cf Newburger, Loeb & Co., Inc. v. Gross, 563 F.2d 1057, 1074 (2d Cir. 1977), cert. denied, 434 U.S. 1035, 54 L. Ed. 2d 782, 98 S. Ct. 769 (1978) (civil conspiracy found where corporation knowingly acquiesced in wrongful transfer of partnership assets).

 In sum, there are sufficient facts to support a finding that the FIB defendants knew that SBCY was receiving commissions on plaintiffs' limited partnership investments, and that they knew those commission were inadequately disclosed to SBCY's clients. This, coupled with evidence that FIB actively attempted to conceal this fraud from the general public, is sufficient to support a finding that the FIB defendants conspired to defraud plaintiffs. Whether this evidence is sufficiently persuasive to produce a verdict in plaintiffs' favor on the conspiracy counts is a matter that may only be resolved at trial. However, as our analysis above indicates, plaintiffs have raised sufficient factual issues to defeat the FIB defendants' summary judgment motion.


 For the foregoing reasons, the parties' cross motions for summary judgment are denied.


 Dated: New York, New York

 July 30, 1993

 William C. Conner

 United States District Judge

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