meet with Hamanaka to discuss how to maintain the manipulative RADR
positions and artificially support prices. At the direction of
Levett and Vincent, Winchester introduced and CLR held outright
Comex positions for Sumitomo of 2229 contracts and 1696 warrants
for a total of 3925 on September 1, 1993. On September 2, 1993,
those holdings increased to 4974 contracts and 1916 warrants, for
a total of 6890 lots. CLR held that total position of 6890 lots
for Sumitomo through October 29, 1993. On September 17, 1993, CLR,
per its own officers and Winchester, executed a contingency plan,
effectively liquidating most parts of the June RADR transaction. Hamanaka
effectively caused Sumitomo to pay out or be debited approximately $6
million in additional payments to CLR, for itself and Winchester, in
connection with this contingency plan.
On or about January 4, 1994, Levelt and Vincent caused a Winchester
subsidiary in New Jersey to execute fraudulent transactions in connection
with the unwinding of the manipulative RADR transaction. These
transactions involved 3, 220 lots (80,500 tons) of three months copper
for an approximate value of $140 million.
In February, 1994, Leighton and Hamanaka attended the annual Comex
Copper Club activities in New York. They met "separate from the main
activities of Copper Week," and discussed, among other things, CLR's
financing of Sumitomo's copper trading. Jacobson Aff Ex.23.
In February, 1994, Levett and Vincent introduced CLR to Defendant
Global Minerals and Metal Corporation ("Global") in New York. CLR issued
a "terms of business letter" to Global on February 8, 1994, after Levett
and Vincent caused Winchester Brokerage Limited to secure a guarantee of
$250,000.00 on Global's behalf. In a letter dated January 10, 1995,
Defendant Bipin Shah ("Shah"), a principal of Global, sought additional
financing for copper transactions by forwarding Global's financial
statement for 1994 to Vincent and requesting that Winchester increase
Global's credit line to the maximum extent possible.
Levett and Vincent also caused Winchester to purchase large amounts of
Comex futures contracts in 1995 and 1996, in order to artificially
inflate Comex futures prices. As investigators from the CFTC and other
exchanges examined the manipulators during 1996, the Defendants needed to
take focused actions in order to reduce their LME long futures positions
and appease the regulators, while continuing to artificially support and
manipulate prices. In order to compensate for the reductions in
Sumitomo's positions, Levett and Vincent caused Winchester Trading
Limited to purchase large Comex copper futures contract long positions
through another Winchester subsidiary, Winchester Holdings USA. Levett
and Vincent caused Winchester Trading Limited to purchase more than
2,000 contracts by early January, 1996 and more than 4,000 contracts by
February, 1996, and to continue to hold those contracts until at least
March, 1996 when Sumitomo no longer needed to reduce its positions to
appease the regulators. These positions, purchased on New York's Comex,
called for delivery of more than three times the total copper stocks that
were then held in Comex warehouses, and they had a significant upward
effect on copper prices. On January 26, 1996, CLR expressed its concern
over these Comex positions when Gamble spoke by telephone with Philip
Bellanti of Winchester Trading Limited ("Bellanti") and pointed out the
size of Winchester Trading Limited's March Comex copper position of 6000
lots, which "represented in excess of 20% of the open interest and
substantially more of the fairly meager stocks held by Comex." Jacobson
Aff. Ex. 35.
In connection with these activities, Levett and Vincent traveled to New
York and other locations in the United States frequently in late 1995. In
October, 1995, Vincent's business costs for travel to New York and other
locations in the United States was approximately 12,200 for travel
and currency and £ 26,300 for hire of aircraft. In addition, Winchester
identified Levett and Vincent as the persons controlling the Winchester
Trading Limited positions on a CFTC form identifying special accounts
filed on January 24, 1996.
A motion to dismiss under Rule 12 must be denied "unless it appears
beyond doubt that the plaintiff can prove no set of facts in support of
his claim which would entitle him to relief" Scheuer v. Rhodes,
416 U.S. 232, 236, 94 S.Ct. 1683, 40 L.Ed.2d 90 (1974) (quoting Conley
v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957)). For
purposes of this motion, the factual allegations in the Complaints are
accepted as true, and all inferences are drawn in favor of the pleader.
Mills v. Polar Molecular Corp., 12 F.3d 1170, 1174 (2d Cir. 1993)
A. PERSONAL JURISDICTION
Rule 4(k)(1)(A) of the Federal Rules of Civil Procedure provides,
"Service of a summons or filing a waiver of service is effective to
establish jurisdiction over the person of a defendant (A) who could be
subjected to the jurisdiction of a court of general jurisdiction in the
state in which the district court is located."*fn2 Fed. R. Civ. P. 4
(k)(1)(A). Levett and Vincent were served in Monaco pursuant to Rule 4
(1) of the Federal Rules of Civil Procedure. Thus, this Court must look
to New York's long-arm statute to determine whether this Court may
exercise personal jurisdiction over Levett and Vincent. Fed. R. Civ. P. 4
(k)(1)(A); Bensusan Restaurant Corp. v. King, 126 F.3d 25, 27 (2d Cir.
1997) (Van Graafeiland, J.); PDK Labs. Inc. v. Friedlander, 103 F.3d 1105,
1108 (2d Cir. 1997) (Feinberg, J.). Since this Court determines that it
may exercise personal jurisdiction over Levett and Vincent pursuant to
New York's long-arm statute, "the court then must decide whether such
exercise comports with the requisites of due process." Bensusan
Restaurant Corp., 126 F.3d at 27. See also Metropolitan Life Ins. Co. v.
RobertsonCeco Corp., 84 F.3d 560, 567 (2d Cir. 1996) (Cabranes, J.),
cert. denied, 519 U.S. 1006, 117 S.Ct. 508, 136 L.Ed.2d 398 (1996) and
519 U.S. 1007, 117 S.Ct. 508, 136 L.Ed.2d 398 (1996).
1. The Legal Standard
Plaintiffs bear the burden of establishing that this Court has personal
jurisdiction over Levett and Vincent. Bank Brussels Lambert v. Fiddler
Gonzalez & Rodriguez, 171 F.3d 779, 784 (2d Cir. 1999) (Sotomayor, J.).
obligation varies depending on the procedural posture
of the litigation. Prior to discovery, a plaintiff
challenged by a jurisdiction testing motion may defeat
the motion by pleading in good faith, see Fed. R.
Civ. P. 11, legally sufficient allegations of
jurisdiction. At that preliminary stage, the
plaintiff's prima facie showing may be established
solely by allegations. After discovery, the
plaintiff's prima facie showing, necessary to defeat a
jurisdiction testing motion, must include an averment
of facts that, if credited by the trier, would suffice
to establish jurisdiction over the defendant. Hoffritz
for Cutlery. Inc. v. Amajac. Ltd., 763 F.2d , at
57; Birmingham Fire Ins. Co. v. KOA Fire & Marine
Ins. Co., 572 F. Supp. 962, 964 (S.D.N.Y. 1983). At
that point, the prima facie showing must be factually
Ball v. Metallurgie Hoboken-Overpelt. S.A., 902 F.2d 194, 197 (2d Cir.
J.). See also Jazini v. Nissan Motor Co. Ltd., 148 F.3d 181,
184 (2d Cir. 1998) (Friedman, J.) (quoting Ball, 902 F.2d at 197);
PDK Labs, Inc., 103 F.3d at 1108 (same); Metropolitan Life Ins.
Co., 84 F.3d at 566-67 (same). If"an evidentiary hearing is held, the
plaintiff must demonstrate the court's personal jurisdiction over the
defendant by a preponderance of the evidence." Metropolitan Life Ins.
Co., 84 F.3d at 567. Eventually, either at an evidentiary hearing or at
trial, Plaintiffs must establish that this Court may exercise personal
jurisdiction over Levett and Vincent by a preponderance of the evidence.
A.I. Trade Finance. Inc. v. Petra Bank, 989 F.2d 76, 79-80 (2d Cir. 1993)
Contrary to Defendants' contentions, Plaintiffs do not need to
establish that this Court may exercise personal jurisdiction over Levelt
and Vincent by a preponderance of evidence at this time, because this
Court has not held an evidentiary hearing. The parties, however, have
engaged in extensive discovery thus far, but have not engaged in
discovery specifically against Levett and Vincent. It is unclear whether
Plaintiffs may make their prima facie showing of jurisdiction by merely
making legally sufficient allegations of jurisdiction, or whether
Plaintiffs must make a prima facie showing of jurisdiction that includes
an averment of facts that, if credited by the ultimate trier of fact,
would suffice to establish personal jurisdiction over Levett and
Vincent. As discussed below, Plaintiffs have met the higher burden.
Thus, it is unnecessary for this Court to consider which burden is
appropriate when a plaintiff has conducted extensive discovery, but has
not engaged in discovery against the relevant defendant.
For purposes of this motion, this Court may rely on the allegations in
the complaint and the affidavits submitted by the parties. A.I. Trade
Finance. Inc., 989 F.2d at 79. In evaluating Plaintiffs' prima facie
showing of jurisdiction, this Court must construe all pleadings and
affidavits in the light most favorable to Plaintiffs and resolve all
doubts in Plaintiffs' favor. PDK Labs. Inc., 103 F.3d at 1108; A.I. Trade
Finance. Inc., 989 F.2d at 79-80. In addition, this Court should draw all
inferences in favor of Plaintiffs. IUE AFL-CIO Pension Fund v. Herrmann,
9 F.3d 1049, 1052 (2d Cir. 1993) (Oakes, J.).
2. New York's Long-Arm Statute
This Court has specific jurisdiction over Levett and Vincent pursuant
to New York's long-arm statute, N.Y. C.P.L.R. 302(a) (McKinney 1990).
N Y C.P.L.R. 302(a) provides: