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December 21, 1999


The opinion of the court was delivered by: Spatt, District Judge.


The plaintiffs Arizona Premium Finance, Inc. ("Arizona") and Westchester Premium Acceptance Corp. ("Westchester"), finance the payments of insurance premiums for various businesses. The two individually named defendants, Anthony Bielli and Arthur Bielli, are both licensed insurance brokers. The four corporate defendants, including Arthur M. Bielli & Company of New York, Inc., Tony Bielli & Co. of New York, Invc., TBI International Insurance Brokers Ltd., and Global Insurance Brokerage Inc. are insurance brokerage agencies.

The plaintiffs claim that the defendants forwarded to them fraudulent premium finance agreements. The finance agreements are alleged to have contained false statements including non-existent insurance policies, fictitious insureds, forged signatures, incorrect policy information and incorrect inception dates of the policies. Based upon these alleged fraudulent premium finance agreements, the plaintiffs contend that they paid in excess of $1 million to the defendants which money was intended to be used solely for the purpose of financing the insurance policies as set forth in the agreements. The plaintiffs contend that instead of financing insurance, the plaintiffs contend that the defendants converted the funds for their own use and proceeded to secrete the assets which they fraudulently obtained.

Presently before the Court is defendant Anthony Bielli's motion to dismiss the complaint pursuant to Rule 12(b)(6) and 9(b) of the Federal Rules of Civil Procedure ("Fed.R.Civ.P."). In addition, defendants Arthur M. Bielli, Arthur M. Bielli & Co. of New York, Inc., Tony Bielli & Co. of New York, Invc., and TBI International Insurance Brokers Ltd. join in Anthony Bielli's motion to dismiss. Global Insurance Brokerage Inc. has not similarly moved.


The following facts are taken from the plaintiffs' complaint, filed on September 13, 1999. In 1998, the defendants began transacting business with the plaintiff Arizona. At that time, the defendants forwarded to Arizona what they represented to be premium finance agreements seeking financing for insurance that they were placing on behalf of their clients. In 1999, the defendants began transacting business with Westchester, and similarly forwarded it premium finance agreements seeking financing for their insurance clients.

The plaintiffs assert that the premium finance agreements contained false and fraudulent information including non existent insurance policies, inflated premiums, incorrect insurance carriers, false and ficticious names of insureds, forged signatures of insureds, incorrect policy information, incorrect inception dates of insurance policies and miscellaneous incorrect premium and policy information. Based upon the fraudulent information, the plaintiffs, who were licensed lending institutions pursuant to the New York Banking Law, advanced large sums of money to the defendants for what they believed were financed insurance premiums. The plaintiffs contend that they forwarded sums in excess of $1 million to the defendants for the purpose of financing insurance policies, but unknown to them, the funds were instead diverted for their own personal use.

The plaintiffs' complaint, consisting of 41 pages and 376 paragraphs refers to approximately 45 separate fraudulent premium finance agreements. By way of example, the plaintiffs allege that on separate occasions the defendants forwarded them premium finance agreements listing the entity "TAB Enterprises" as the insured. The complaint states that TAB Enterprises was formed in 1986 and dissolved in 1991, at which time the defendant Arthur M. Bielli was the president of the corporation. The complaint further claims that at the time of the submission of the premium finance agreement, Arthur Bielli knew that the corporation did not exist, had no assets and thus had no need to acquire insurance. Based upon the representations in the premium finance agreement, the plaintiffs forwarded the defendants approximately $110,000. Instead of this money going to Lloyds of London, as represented by the defendants, it was diverted for the personal use of the defendants. In similar detail, the complaint goes on to describe numerous other transactions where the defendants forwarded fraudulent premium finance agreements and received large sums of money that were not used to finance insurance policies, but were diverted for the personal use of the defendants.

As a result of this conduct, the plaintiffs filed an eight count complaint alleging violations of the civil RICO statute, conversion and breach of contract.


A. Fed.R.Civ.P. 12(b)(6)

On a motion to dismiss for failure to state a claim, the Court should dismiss the complaint pursuant to Rule 12(b)(6) if it appears "beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Northrop v. Hoffman of Simsbury, Inc., 134 F.3d 41, 44 (2d Cir. 1997) (quoting Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 101-02, 2 L.Ed.2d 80 (1957)); see also IUE AFL — CIO Pension Fund v. Herrmann, 9 F.3d 1049, 1052 (2d Cir. 1993), cert. denied, 513 U.S. 822, 115 S.Ct. 86, 130 L.Ed.2d 38 (1994). The Second Circuit stated that in deciding a Rule 12(b)(6) motion, "a district court must limit itself to facts stated in the complaint or in documents attached to the complaint as exhibits, or incorporated in the complaint by reference." Newman & Schwartz v. Asplundh Tree Expert Co., Inc., 102 F.3d 660, 662 (2d Cir. 1996) (quoting Kramer v. Time Warner, Inc., 937 F.2d 767, 773 (2d Cir. 1991)); see also International Audio-text Network, Inc. v. AT & T Co., 62 F.3d 69, 72 (2d Cir. 1995); Paulemon v. Tobin, 30 F.3d 307, 308-09 (2d Cir. 1994).

It is not the Court's function to weigh the evidence that might be presented at a trial; the Court must merely determine whether the complaint itself is legally sufficient, see Goldman v. Belden, 754 F.2d 1059, 1067 (2d Cir. 1985), and in doing so, it is well settled that the Court must accept the factual allegations of the complaint as true, see Strom v. Goldman, Sachs & Co., 202 F.3d 138, 140 (2d Cir. 1999); LaBounty v. Adler, 933 F.2d 121, 123 (2d Cir. 1991); Procter & Gamble Co. v. Big Apple Indus. Bldgs., Inc., 879 F.2d 10, 14 (2d Cir. 1989), cert. denied, 493 U.S. 1022, 110 S.Ct. 723, 107 L.Ed.2d 743 (1990), and construe all reasonable inferences in favor of the plaintiff. See Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 40 L.Ed.2d 90 (1974); Leeds v. Meltz, 85 F.3d 51, 53 (2d Cir. 1996); LaBounty, 933 F.2d at 123; Bankers Trust Co. v. Rhoades, 859 F.2d 1096, 1098 (2d Cir. 1988), cert. denied, 490 U.S. 1007, 109 S.Ct. 1642, 104 L.Ed.2d 158 (1989).

The Court is mindful that under the modern rules of pleading, a plaintiff need only provide "a short and plain statement of the claim showing that the pleader is entitled to relief," Fed.R.Civ.P. 8(a)(2), and that "[a]ll pleadings shall be so construed 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. ...

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