as to do substantial justice," Fed.R.Civ.P. 8(f).
The issue before the Court on a Rule 12(b)(6) motion "is not
whether a plaintiff will ultimately prevail but whether the
claimant is entitled to offer evidence to support the claims."
Villager Pond, Inc. v. Town of Darien, 56 F.3d 375, 378 (2d
Cir. 1995), cert. denied, 519 U.S. 808, 117 S.Ct. 50, 136
L.Ed.2d 14 (1996) (quoting Scheuer, 416 U.S. at 236, 94 S.Ct.
1683). Recovery may appear remote and unlikely on the face of the
pleading, but that is not the test for dismissal under Rule
12(b)(6). Gant v. Wallingford Bd. of Educ., 69 F.3d 669, 673
(2d Cir. 1995) (quoting Weisman v. LeLandais, 532 F.2d 308, 311
(2d Cir. 1976) [per curiam]).
B. Fed.R.Civ.P. 9(b)
When pleading a claim for fraud or misrepresentation, the
plaintiff must aver the alleged fraudulent acts with
particularity as required by Fed.R.Civ.P. 9(b). See Luce v.
Edelstein, 802 F.2d 49, 54 (2d Cir. 1986). Although "knowledge"
and "condition of mind" may be stated in general terms (see
Fed.R.Civ.P. 9[b]), the circumstances surrounding the alleged
fraud must be pled with particularity. See Moore v. Painewebber,
Inc., 189 F.3d 165, 173 (2d Cir. 1999); Farley v. Baird,
Patrick & Co., 750 F. Supp. 1209, 1217 (S.D.N.Y. 1990) (quoting
Eickhorst v. American Completion & Dev. Corp., 706 F. Supp. 1087,
1091 (S.D.N.Y. 1989)).
To satisfy the particularity requirement of Rule 9(b), the
"complaint must adequately specify the statements it claims were
false or misleading, give particulars as to the respect in which
plaintiff contends the statements were fraudulent, state when and
where the statements were made, and identify those responsible
for the statements." Moore, 189 F.3d at 173 (quoting Cosmas v.
Hassett, 886 F.2d 8, 11 [2d Cir. 1989]). Specifically, "the
complaint must allege the time, place, speaker, and sometimes
even the content of the alleged misrepresentation." Ouaknine v.
MacFarlane, 897 F.2d 75, 79 (2d Cir. 1990).
Facts must be pled with sufficient particularity to support a
"strong inference" that the defendant possessed the requisite
fraudulent intent or scienter. See Shields v. Citytrust
Bancorp, 25 F.3d 1124, 1128 (2d Cir. 1994). Moreover, such
allegations may not merely rest upon statements based on
"information and belief." See Di Vittorio v. Equidyne Extractive
Indus., Inc., 822 F.2d 1242, 1247 (2d Cir. 1987) (citations
The particularity requirement of Rule 9(b) is designed to serve
several important policies, such as to afford the defendant fair
notice of the claims, to safeguard the defendant's reputation and
also to inhibit the institution of "strike suits." See
Campaniello Imports v. Saporiti Italia S.p.A., 117 F.3d 655, 663
(2d Cir. 1997).
The defendants essentially make three arguments in support of
their motion to dismiss. First, the defendants argue that the
complaint is deficient under Rule 9(b) as it fails to specify the
time, place, speaker and content of the alleged
misrepresentations. Second, the defendants submit that the
complaint fails to plead the proper elements of a RICO violation
and a RICO conspiracy. Finally, the defendants claim that the
complaint fails to plead the elements of conversion and breach of
The Court is satisfied that the complaint provides the
defendants with fair notice of the claims so as to afford them
the opportunity to answer the complaint and prepare for trial.
The complaint details the operation of the premium finance
industry; the history and relationship between the plaintiffs and
the defendants; and the alleged continuing scheme by the
defendants to defraud the plaintiffs. While the complaint does
not specifically identify each defendant who prepared the
approximate 45 premium finance agreements and who made the
alleged fraudulent representations, at this stage in the
litigation it is reasonable to believe that it would be difficult
for the plaintiffs to have such knowledge. The Court must afford
the plaintiffs some latitude with regard to the specificity of
the complaint where the specific defendant who made certain
misrepresentations is apparently not known. The complaint does
provide the name of each purported "company" which the defendants
allegedly proffered as the beneficiary of the premium finance
agreement. As such, the Court is satisfied that the makers of the
alleged fraudulent statements, namely the defendants, can
adequately interpose an answer and prepare for trial as this
information is within their knowledge.
C. As to the Civil Rico Cause of Action
The defendants claim that the complaint fails to plead the
elements of a RICO violation. The threshold pleading requirements
of a private action under RICO, Section 1962, were set forth by
the Second Circuit in Moss v. Morgan Stanley, Inc., 719 F.2d 5,
17 (2d Cir. 1983), cert. denied sub nom. Moss v. Newman,
465 U.S. 1025, 104 S.Ct. 1280, 79 L.Ed.2d 684 (1984), as follows:
To state a claim for damages under RICO a plaintiff
has two pleading burdens. First, he must allege that
the defendant has violated the substantive RICO
statute, 18 U.S.C. § 1962 (1976), commonly known as
"criminal RICO." In so doing, he must allege the
existence of seven constituent elements: (1) that the
defendant (2) through the commission of two or more
acts (3) constituting a "pattern" (4) of
"racketeering activity" (5) directly or indirectly
invests in, or maintains an interest in, or
participates in (6) an "enterprise" (7) the
activities of which affect interstate or foreign
commerce. . . . Plaintiff must allege adequately
defendant's violation of section 1962 before turning
to the second burden — i.e., invoking RICO's civil
remedies of treble damages, attorneys fees and costs.
. . . To satisfy this latter burden, plaintiff must
allege that he was "injured in his business or
property by reason of a violation of section 1962."
See also Pinnacle Consultants v. Leucadia Nat'l Corp.,
101 F.3d 900, 904 (2d Cir. 1996) (discussing the standards). Section 1962
prohibits, under subsections (a) through (d), the following: (a)
the use of income "derived . . . from a pattern of racketeering
activity" to acquire an interest in, establish, or operate an
enterprise engaged in or whose activities affect interstate
commerce; (b) the acquisition of any interest in or control of
such an enterprise "through a pattern or racketeering activity";
(c) the conduct or participation in the conduct of such an
enterprise's affairs "through a pattern of racketeering
activity"; and (d) conspiring to do any of the above.
18 U.S.C. § 1962(a)-(d); see also GICC Capital Corp. v. Technology
Finance Group, Inc., 67 F.3d 463, 465 (2d Cir. 1995), cert.
denied, 518 U.S. 1017, 116 S.Ct. 2547, 135 L.Ed.2d 1067 (1996).
To establish such a pattern of racketeering activity, "a
plaintiff must plead at least two predicate acts, show that the
acts are related and that they amount to, or pose a threat of,
continuing criminal activity." H.J. Inc. v. Northwestern Bell
Telephone Co., 492 U.S. 229, 239, 109 S.Ct. 2893, 106 L.Ed.2d
195 (1989). RICO is aimed at "racketeering activity," which the
statute defines, in relevant part, as certain acts indictable
under Federal law, including mail and wire fraud, and violations
of the Hobbs Act. 18 U.S.C. § 1961(1)(B).
A "pattern" requires at least two acts of "racketeering
activity," occurring within ten years of each other. See
18 U.S.C. § 1961(5). To reiterate, the term "racketeering activity"
refers to the predicate acts necessary to sustain a RICO claim
and include mail fraud, wire fraud, and the Hobbs Act. See
18 U.S.C. § 1961(1). Those predicate acts must be crimes under state
or federal law. United States v. Angelilli, 660 F.2d 23 (2d
Cir. 1981), cert. denied, 455 U.S. 910, 102 S.Ct.
1258, 71 L.Ed.2d 449, rehearing denied, 456 U.S. 939, 102 S.Ct.
1998, 72 L.Ed.2d 460 (1982); Mathon v. Marine Midland Bank,
N.A., 875 F. Supp. 986, 995 (E.D.N.Y. 1995).
Both the Supreme Court and Second Circuit have held that an
allegation of two acts of "racketeering activity," without more,
is not sufficient to establish a pattern. See H.J. Inc. v.
Northwestern Bell Tel. Co., 492 U.S. at 238-44, 109 S.Ct. 2893;
United States v. Indelicato, 865 F.2d 1370, 1381 (2d Cir.) (en
banc), cert. denied, 493 U.S. 811, 110 S.Ct. 56, 107 L.Ed.2d 24
(1989). To constitute a "pattern" of racketeering activity, the
predicate acts must be related and constitute a threat of
continued racketeering activity and this determination is to be
made on a case-by-case basis. H.J. Inc., 492 U.S. at 238-44,
109 S.Ct. 2893; see also United States v. Alkins, 925 F.2d 541,
551 (2d Cir. 1991) (predicate acts must be related and amount to
or pose a threat of continued criminal activity). In addressing
the determination about a "pattern" of racketeering activity the
Second Circuit noted that "[a]n interrelationship between acts,
suggesting the existence of a pattern, may be established . . .
[by] proof of their temporal proximity, or common goals, or
similarity of methods, or repetitions." Indelicato, 865 F.2d at
The plaintiffs' amended complaint alleges that the predicate
acts in support of the RICO claim are the defendants violations
of the mail and wire fraud statutes. The mail fraud statute,
18 U.S.C. § 1341, provides, in relevant part, that a person is
guilty of mail fraud if:
having devised or intending to devise any scheme or
artifice to defraud, or for obtaining money or
property by means of false or fraudulent pretenses,
representations, or promises . . . for the purpose of
executing such scheme or artifice or attempting so to
do, [the person] places in any post office or
authorized depository for mail matter, any matter or
thing whatever to be sent or delivered by the Postal
The crux of mail fraud and wire fraud is "an intent to
defraud." United States v. Bouyea,