Not what you're
looking for? Try an advanced search.
Buy This Entire Record For
July 19, 2001
THE JORDAN (BERMUDA) INVESTMENT COMPANY, LTD., PLAINTIFF,
HUNTER GREEN INVESTMENTS LTD., ET AL., DEFENDANTS.
The opinion of the court was delivered by: Sweet, District Judge.
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
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
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
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.
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 ...