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BEHETTE v. SALEEBY

January 25, 1994

MADELEINE BEHETTE, VICTOR SAMARA, WILLIAM SAMARA, GEORGE SHAHWAN, THEODORE HAMWAY, ABRAHAM HAMWAY, MICHAEL BEHETTE, ANTHONY BEHETTE, and ROBERT QUAT, Plaintiffs,
v.
JAMES SALEEBY, HARRY HOROWITZ, SENATOR REALTY, 301 STERLING ST. CORP., 32 SNYDER REALTY CORP., 1154 REALTY CORP., MALSHA REALTY CORP., 1004 REALTY CORP., 690 REALTY CORP., VICSAM REALTY CORP., SALOR REALTY CORP., and HORSAL REALTY CORP., Defendants.



The opinion of the court was delivered by: EUGENE H. NICKERSON

 NICKERSON, District Judge:

 Plaintiffs, nine individual investors, brought this action against James Saleeby and Harry Horowitz; their realty company, Senator Realty; and eleven corporations owned by the investors and the individual defendants. The 160-paragraph complaint purports to state nine claims, from RICO and securities regulation violations to state law fraud. Jurisdiction is based on the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. § 1961 et seq., the Securities Exchange Act of 1934, 15 U.S.C. § 78(b) et seq., and the Securities Act of 1933, 15 U.S.C. § 77 et seq.

 Plaintiffs brought an Order to Show Cause seeking (a) the attachment of the assets of defendants Saleeby, Horowitz, and Senator Realty; (b) an injunction preventing those defendants from taking any action on behalf of the other defendant corporations; (c) copies of an extensive list of business records; and (d) an accounting. Defendants Saleeby, Horowitz, and Senator Realty moved to dismiss the complaint.

 I

 The complaint is 38 pages long and unsigned. It purports to attach exhibits, but to the extent the court can find them they appear under different labels as exhibits to plaintiffs' Order to Show Cause. Construing plaintiffs' pleadings liberally in the extreme, as far as the court can determine, the complaint alleges, in substance, the following.

 A. General Investment Information

 Starting in December 1986 Saleeby and Horowitz induced the plaintiffs to invest money in the defendant corporations, formed to own and operate residential apartment buildings in Brooklyn and the Bronx.

 At unspecified times, starting in December 1986, Saleeby and Horowitz told plaintiffs that the two of them would not receive an ownership interest in the corporations, that they would manage the investments and the properties for no fee, and that their sole compensation would be 10% of the profit gained when the properties were sold. Also at unspecified times, Saleeby and Horowitz mailed and telegraphed to plaintiffs income and expense statements regarding the properties.

 B. Specific Investments

 With funds invested by plaintiffs, defendant 32 Snyder Realty Corp. purchased its property in 1987. Plaintiff Madeleine Behette invested $ 54,000 and was told she would receive a 33% interest in the property. In fact, she discovered at an unspecified date that she had received a 20% interest and that Saleeby and Horowitz had each received a 20% interest as well.

 32 Snyder Realty Corp. sold the property in 1989 for $ 225,000 more than the purchase price, but Madeleine Behette received only $ 56,000. Saleeby and Horowitz explained that she received little more than the amount she invested because they had to pay expenses, but they did not document those expenses.

 1154 Realty Corp. purchased its property for less than the total of plaintiffs' investments in 1987. At an unspecified time Madeleine Behette invested $ 125,000 in 1154 Realty Corp., and Horowitz told her she would receive a 33.25% interest in it. In 1992 she discovered that she had been issued only a 25% interest.

 Regarding 1154 Realty Corp. the complaint alleges a variety of management problems on information and belief. It also alleges, on information and belief, that Saleeby, Horowitz, and Senator acted as brokers for the prior owners of the property without disclosing that fact to plaintiffs.

 Regarding 23 Prospect Ave. Realty Corp. the complaint switches to the first person and alleges "I [unspecified] believe that Corporate monies have been diverted" to Saleeby and Horowitz. The 23 Prospect Ave. property was "recently lost in foreclosure."

 Defendant 1004 Realty Corp.'s property is also allegedly in foreclosure. The complaint alleges Saleeby and Horowitz mismanaged and failed to maintain the property.

 In August 1989 Madeleine Behette invested $ 100,000 in Malsha Realty Corp. Saleeby and Horowitz told Madeleine Behette that she would receive a 25% interest in Malsha. She later discovered that she was issued a 20.7792% interest.

 The complaint alleges little regarding defendants Vicsam Realty Corp. and 690 Realty Corp. except that Madeleine Behette invested in them (at an unspecified time in Vicsam and in April 1988 in 690 Realty) and that the tenant ...


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