Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

100,000 VICTIM FAMILIES v. SCHULTE ROTH & ZABLE

July 12, 2000

100,000 VICTIM FAMILIES NOTE HOLDERS OWNERS OF SECURITIES IN TOWERS FINA[N]CIAL CORPORATION AND STEVEN J. HOFFENBERG, PURSUANT TO COURT ORDERED RESTITUTION, PLAINTIFF,
V.
SCHULTE ROTH & ZABLE [CORRECT SPELLING ZABEL], EAB BANK [ALSO KNOWN AS EUROPEAN AMERICAN BANK], RON DRAKE AND LASSALE [CORRECT SPELLING LASALLE] NATIONAL BANK, DEFENDANTS.



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

ORDER

I. Background

In 1997, U.S. District Court Judge Robert W. Sweet sentenced Plaintiff Steven J. Hoffenberg ("Plaintiff" or "Hoffenberg") to a term of twenty years imprisonment and ordered that Hoffenberg pay $475,157,340.00 in restitution following Hoffenberg's conviction for defrauding the bondholders and noteholders of Towers Financial Corporation ("Towers") through an extensive so-called "Ponzi" scheme. In the case at bar, Plaintiff, as a pro se litigant, sues two Towers bondholders, EAB Bank and LaSalle National Bank, the (bondholders') law firm of Schulte Roth & Zabel (Schulte Roth), and Ron Drake, who allegedly "was and is the president of a special workout corporation created by EAB Bank" (collectively "Defendants"), on behalf of himself and the 100,000 noteholders of Towers. (Compl. ¶ 6.) Hoffenberg is seeking $200,000,000 for alleged "fraudulent intent, fraudulent misrepresentation, and fraud by the defendants in looting $200. Million Dollars of claims and assets from plaintiff victims." (Compl. at 1.) Among other things, Plaintiff claims that the Defendants willfully withheld information from the United States Bankruptcy Court for the Southern District of New York regarding the "real value of the asset claims" of the 100,000 noteholders during the Towers bankruptcy proceeding in 1993 (Compl. ¶ 23), thereby denying them recovery of their investment in "high yi[e]ld high risk junk notes & bonds in Towers Financial Corporation." (Compl. ¶ 25.)

Defendants filed a motion, dated September 8, 1999, to dismiss Plaintiffs claims, pursuant to Federal Rules of Civil Procedure 8(a)(2) and 12(b)(6), and to enjoin the Plaintiff from bringing any future lawsuits against the Defendants or otherwise harassing them in any matter. Plaintiff filed a response to Defendants' motion on October 31, 1999. On January 19, 2000, United States Magistrate Judge Douglas F. Eaton, to whom the matter had been referred, issued a report and recommendation ("Report") recommending that the Defendants' motion to dismiss be granted; that Plaintiff be precluded from amending his complaint and enjoined from filing future suits against the Defendants; and that this Court should issue no orders to the Bureau of Prisons regarding Mr. Hoffenberg's incarceration status and privileges.

On February 14, 2000, the Plaintiff filed objections to the Report and the Defendants filed a reply to the Plaintiffs objections on February 28, 2000. Plaintiff asserts, in his objections, that he has standing to proceed on his own behalf; that leave to amend the complaint should be granted: and that the Court should not enjoin him from bringing further suits against Defendant Schulte Roth & Zabel.*fn1 For the reasons set forth below, the Court adopts Judge Eaton's Report and Recommendation insofar as it dismisses Plaintiffs complaint; the Court will allow Plaintiff to amend his individual complaint against Defendant Schulte Roth & Zabel; and the Court does not reach the issue of an injunction.

II. Standard of Review

A district court evaluating a Magistrate's report may adopt those portions of the report to which no "specific, written objection" is made, as long as those sections are not clearly erroneous or contrary to law. Fed.R.Civ.P. 72(b); Thomas v. Am, 474 U.S. 140, 149, 106 S.Ct. 466, 88 L.Ed.2d 435 (1985); Greene v. WCI Holdings Corp., 956 F. Supp. 509, 513 (S.D.N.Y. 1997). Where timely objections are made to a Magistrate's report, the District Judge must make a de novo determination as to the objected to issues, but is not required to conduct a de novo hearing. See Cespedes v. Coughlin, 956 F. Supp. 454, 463 (S.D.N.Y. 1997); East River Sav. Bank v. Secretary of Housing and Urban Development, 702 F. Supp. 448, 453 (S.D.N.Y. 1988). Thereafter, a district court may accept, reject, or modify, in whole or in part, the findings and recommendations of the Magistrate. See DeLuca v. Lord, 858 F. Supp. 1330, 1345 (S.D.N.Y. 1994); Walker v. Hood, 679 F. Supp. 372, 374 (S.D.N.Y. 1988); East River Sav. Bank, 702 F. Supp. at 453. Also, the Court must liberally construe the claims of a pro se litigant. See, e.g., Marmolejo v. United States, 196 F.3d 377, 378 (2d Cir. 1999); Brown v. Croce, 967 F. Supp. 101, 103 (S.D.N.Y. 1997) (citing Haines v. Kerner, 404 U.S. 519, 520-21, 92 S.Ct. 594, 30 L.Ed.2d 652 (1972)).

III. Analysis

Here, the uncontested portions of the Report and Recommendation are supported by the facts and are in conformity with the law and are, therefore, adopted by the Court. The Court has undertaken a de novo review with respect to the contested issues which are Mr. Hoffenberg's standing to proceed; amending the complaint; and enjoining further litigation.

A. Standing

1. Standing to bring suit on behalf of the noteholders

Plaintiff filed this action on behalf of himself and the "100,000 Victim Families Note Holders Owners of Securities in Towers Fina[n]cial Corporation." (Compl. at 1.) Magistrate Judge recommended that Plaintiffs claim on behalf of the noteholders of Towers be dismissed for lack of standing because "[i]t is well settled in this circuit that pro se plaintiffs cannot act as class representatives." (Report at 5 (quoting McLeod v. Crosson, 1989 WL 28416, at *1 (S.D.N.Y. Mar. 21, 1989).)) Plaintiff does not object to this recommendation and claims that he "will not act for class [going forward] in the instant action." (Pl.'s Objections to Report ¶ 17(a).) The Court, therefore, adopts this Report recommendation and concludes that Hoffenberg lacks standing to sue on behalf of the Towers noteholders.

2. Standing to proceed with this action individually


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.