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JORDAN

July 19, 2001

THE JORDAN (BERMUDA) INVESTMENT COMPANY, LTD., PLAINTIFF,
V.
HUNTER GREEN INVESTMENTS LTD., ET AL., DEFENDANTS.



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

    OPINION

Defendants Rosenman & Colin LLP, Fred M. Santo (collectively the "Rosenman defendants"), Investment Management Services, Inc., International Fund Services, Inc., European Fund Services Limited and Thomas F. Grizzetti (collectively the "IMS defendants") have moved to dismiss the complaint pursuant to Rules 9(b) and 12(b)(6), Fed.R.Civ.P. Plaintiff Jordan (Bermuda) Investment Company, Ltd. opposes. For the reasons set forth below, the motions will be granted.

The Parties and Relevant Entities

Plaintiff the Jordan (Bermuda) Investment Company, Ltd. ("JBIC") is a corporation organized and existing under the laws of Bermuda, with its principal place of business in the State of Illinois. The sole shareholder of JBIC is The Jordan Trust, also known as the Jordan Charitable Remainder Trust ("the Jordan Trust"), which is organized and existing under the laws of Illinois. Its sole trustee, John W. Jordan II ("Jordan") is a resident and citizen of Illinois.

The Beacon Emerging Debt Fund, Ltd. ("Beacon" or "the Fund") is a corporation organized under the laws of the British Virgin Islands and has been liquidated pursuant to winding up proceedings in the High Court of Justice in the British Virgin Islands ("B.V.I.").

Beacon Emerging Growth Fund LP ("Beacon Growth") is a limited partnership organized and existing under the laws of Delaware.

Defendant Hunter Green Investments Ltd. ("Hunter Green Ltd.") is a corporation organized and existing under the laws of the B.V.I. with a principal place of business in Connecticut. At all times relevant to this action, Hunter Green was the investment manager for Beacon and Beacon Growth.

Defendant Hunter Green Investments LLC ("Hunter Green LLC") is a limited liability company organized and existing under the laws of Connecticut, with a principal place of business in Connecticut. Hunter Green LLC was the Primary Sub-Advisor and Commodity Trading Advisor to Beacon at all times relevant to this action.

Defendant John Shilling ("Shilling"), a resident and citizen of Connecticut, was and remains a director of Hunter Green LLC.

Defendant Ilya Kaminsky ("Kaminsky") is a United States citizen*fn1 who was at all times relevant to this action a director and Chief Investment Officer of Hunter Green Ltd. and a director of Hunter Green LLC.

Defendant Jonathan Vinnik ("Vinnik") is a United States citizen*fn2 who was at all times relevant to this action a director of both Hunter Green Ltd. and Hunter Green LLC.

Defendant International Fund Services (Ireland) ("IFSI"), a corporation organized and existing under the laws of the B.V.I., was the Administrator of Beacon in 1998.

Defendant Investment Management Services Inc. ("IMS"), a corporation organized and existing under the laws of Delaware, has its principal place of business in New York City. IMS was the effective administrator of Beacon during 1998.

Defendant International Fund Services Inc. ("IFS") is a corporation organized and existing under the laws of the State of Connecticut, with a principal place of business in New York.

Defendant Thomas F. Grizzetti ("Grizzetti") was a director of IMS, IFS and IFSI during 1998.

Defendants Mark William Solly ("Solly"), William James Cowell ("Cowell"), and European Fund Services Limited ("EFS") were directors of Beacon during 1998.

Defendant Susan Byrne ("Byrne") was a director of IFSI and IFS during 1998.

Defendant Rosenman & Colin LLP ("Rosenman") is a limited liability partnership engaged in the practice of law in New York City. At all times relevant to this action, Rosenman was legal counsel to Beacon, Beacon Growth, Hunter Green Ltd., Hunter Green LLC, IFSI, IMS, and IFS.

Defendant Fred M. Santo ("Santo"), a New York resident, is an attorney who represented Beacon on behalf of Rosenman during all times relevant to this action.

Background

All of the facts alleged in the complaint are deemed true for the purposes of this motion to dismiss. The Trust is a tax-exempt charitable remainder unitrust. If the Trust used leverage (i.e. borrowed money) to make investments, it would risk accruing unrelated business taxable income.

Beacon was a corporation organized to achieve a high return on interest income by investing in emerging markets. Its confidential Private Placement Memorandum ("PPM"), which offered Class A shares, warned that Beacon utilized a high-risk investment strategy employing leverage. Beacon borrowed funds from securities brokers and others and used Beacon's securities or other assets as security for its leveraged investments.

While notifying potential investors that "[t]he Fund is also authorized to issue, and has issued, other classes of shares which have different investment objectives and have been offered on different terms and conditions than the Shares" (PPM at 9), the PPM specified that:

no offering literature or advertising in any form whatsoever shall be employed in the offering of the shares except for this memorandum[;] no person has been authorized to make any representation or provide any information with respect to the shares except with such information as is contained in this memorandum and, if given or made, such representations or ...

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