The opinion of the court was delivered by: EUGENE H. NICKERSON
NICKERSON, District Judge:
Plaintiffs Ada Turkish Trask and her son, Arthur Turkish, brought these two cases in the Supreme Court, Nassau County against family members and their associates.
In one case (92 CV 4036) plaintiffs Turkish, as co-trustee of a trust for Trask, and Trask, as grantor and beneficiary of the trust and as a member of the Dora and Jacob Cohen Charitable Foundation, Inc. (the "Foundation"), allege that defendants fraudulently procured a global settlement agreement in 1987 (the "Settlement Agreement"), resolving intra-family state and federal litigation. In the other case (92 CV 4037) Trask alleges, on behalf of and solely for the benefit of the Foundation, that a fraud had been perpetrated on the Foundation. Both cases alleged violations of the Racketeer Influenced and Corrupt Organizations ("RICO") Act, 18 U.S.C. §§ 1961-68, and state law.
These cases were removed to federal district court based on the RICO claims. The first case, 92 CV 4036, was assigned to Judge Denis R. Hurley. The second case, 92 CV 4037, was assigned to these chambers.
By memorandum and order dated April 9, 1993 in 92 CV 4037, Trask v. Kasenetz, 818 F. Supp. 39 (E.D.N.Y. 1993), familiarity with which is assumed, this court dismissed RICO claims made on behalf of the Foundation, concluding, among other things, that the complaint did not allege that the Foundation had been injured in its "business or property" and that the single alleged act of attempted extortion did not constitute a "pattern." The court remanded the remaining state claims to the state court.
Meanwhile, defendants moved before Judge Hurley to dismiss or alternatively for summary judgment in the first case, 92 CV 4036. That motion remains undecided. Plaintiffs moved to reargue the motion in 92 CV 4037 and to consolidate both cases. This court then caused 92 CV 4036 to be assigned here on consent of Judge Hurley and of all parties.
Plaintiffs now move to amend both complaints, submitting an identical Proposed Second Amended Complaint (the "Amended Complaint") in each action. Because all material issues properly raised in the prior pending motions are subsumed in the motion to amend the complaint in 92 CV 4036, this court discusses solely that motion. Insofar as defendants move for summary judgment in that case, the motion is premature.
The proposed amended complaint alleges, in substance, the following.
The litigants are the children and grandchildren of Jacob Cohen, who died in 1974, and three family associates.
Trask is the daughter of Jacob Cohen and the beneficiary of two trusts. One she created in 1981 (the "Trask Trust"). The other was established by her father in 1961 (the "Cohen-Trask Trust"). The property in this trust has been transferred to the Trask Trust. Trask is also a member and former trustee of the Foundation.
Turkish, Trask's son, is a co-trustee of the Trask Trust.
Defendant William Kasenetz ("Kasenetz") is a son-in-law of Trask's father, Jacob Cohen, of whose estate he is co-executor. Kasenetz is also a trustee of the Cohen-Trask Trust and a member, trustee, and president of the Foundation.
Defendants Joel Cohen and Alan Cohen are the grandsons of Jacob Cohen and the sons of Samuel Cohen, now deceased, of whose estate Joel Cohen is the personal representative.
Defendant Daniel Eisenberg and "nominal defendant" Harry Rebell are not family members. Eisenberg is a co-executor of the estate of Jacob Cohen and a member and trustee of the Foundation. Rebell served as an accountant for many persons and entities referred to in this litigation and was a trustee of the Cohen-Trask Trust until 1988.
Defendants Gary B. Freidman and Iver Kasenetz are not named in the RICO claim but are members and trustees of the Foundation. Freidman is the law partner of Eisenberg. Iver Kasenetz is the son of William Kasenetz.
The Alleged Intra-Family Fraud and Extortion
At various unspecified times Samuel Cohen wrongfully borrowed substantial sums from the family businesses. In one transaction he used some $ 8 million to acquire, with Meyer Lansky, an interest in the Flamingo Hotel of Las Vegas, Nevada. In 1971 he pleaded guilty to conspiring with Lansky to skim $ 36 million from that hotel to avoid the payment of income taxes.
Samuel Cohen's sons, Joel and Alan, were also involved in financial transactions linked to members of organized crime. They borrowed money from the family businesses to invest in various entities, including the Cricket Club of Miami and the Comal Corp.
This lawsuit and plaintiffs' prior lawsuits, traced to their source, spring from these loans.
1. The alleged Jacob Cohen estate fraud
After Jacob Cohen died in 1974, his estate sold his interest in the family businesses to Alan Cohen, Joel Cohen, and Kasenetz. To induce Trask to agree to the sale, the three buyers fraudulently concealed, among other things, amounts they and Samuel Cohen owed to the family businesses.
In 1979 Trask commenced an action in Nassau County court to compel an accounting of the Cohen-Trask Trust. In 1981 she brought a federal RICO action before Judge Constantino in this district, alleging that Kasenetz, Samuel Cohen, Alan Cohen, Joel Cohen, and Eisenberg had failed to make material disclosures in connection with the sale of the interest in family businesses owned by the estate of Jacob Cohen. Defendants allegedly sent materials by mail as late as 1983 in an effort to conceal this fraud.
2. The alleged Settlement Agreement fraud
In 1987, some two years after Samuel Cohen died, the parties to the state and federal actions entered into the Settlement Agreement, resolving all pending claims. In that agreement, Joel Cohen, Alan Cohen, the estate of Samuel Cohen, and Kasenetz represented, based on the advice of accountants, that all loans made by entities in which Trask's trusts had any interest had been fully repaid with 6% simple interest.
The agreement provided that, "In the event that the foregoing representations are inaccurate to any extent, then the sole remedy of the Releasors shall be to require William Kasenetz, Alan Cohen, Joel Cohen or the Estate of Samuel Cohen, respectively, to make payment in full of the balance of any such unpaid loans to the extent of their several obligations, together with interest at the rate of six (6%) percent simple interest."
The agreement also provided that the estate of Samuel Cohen would pay $ 1,163,529 to Trask or the Trask Trust; Kasenetz would pay $ 36,471 to Trask and $ 520,000 to Spizz & Cooper, her counsel; and Trask and Turkish would release defendants in the actions from legal claims. The parties apparently performed on each of these promises.
At various times between 1988 and 1992, defendants assured Trask, Turkish, and plaintiffs' counsel that the loans and interest had been fully repaid and discouraged plaintiffs from conducting an independent ...