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