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FIRST CAPITAL ASSET MANAGEMENT v. BRICKELLBUSH

United States District Court, Southern District of New York


July 29, 2002

FIRST CAPITAL ASSET MANAGEMENT, INC., ET ANO., PLAINTIFFS,
V.
BRICKELLBUSH, INC., ET AL., DEFENDANTS.

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

              MEMORANDUM OPINION

Plaintiffs are judgment creditors of certain of the defendants and allege that they have been hindered by violations of the Racketeer Influenced and Corrupt Organizations Act ("RICO")*fn1 and various state law torts in their efforts to collect their judgments. Their initial complaint was dismissed substantially on the ground that it failed sufficiently to allege a pattern of racketeering activity.*fn2 The moving defendants Ahmed Vahabzadeh ("Ahmed"), Afsar Vahabzadeh ("Afsar"), the Estate of Soleyman Vahabzadeh ("Soleyman's Estate"), Satinwood, Inc. ("Satinwood"), Sphinx Rock, N.V. ("Sphinx Rock"), and Savco, S.A. ("Savco")*fn3 now seek an order dismissing (1) the amended complaint against the moving defendants for failure to state a claim pursuant to Rule 12(b)(6) or, in the alternative, pursuant to Rule 12(b)(1) for lack of standing and subject matter jurisdiction, and (2) all claims against Afsar, Ahmed, and Afiwa, S.A. ("Afiwa") pursuant to Rule 12(b)(2) for lack of personal jurisdiction.

The amended complaint asserts eight claims for relief. Counts One through Four are New York law fraudulent conveyance claims against Sohrab, Ahmed, Afsar, Soleyman's Estate, Sphinx Rock, Satinwood, Peninsula, and "John Does 1-20." Count Five is substantive RICO claim under 18 U.S.C. § 1962(c) against Sohrab and Afsar. Count Six is a RICO conspiracy claim under 18 U.S.C. § 1962(d) against Sohrab, Ahmed, and Afsar. Count Seven is a reverse corporate veil piercing and alter ego liability claim against Afiwa. Count Eight is a successor liability, common corporate enterprise, and alter ego liability claim against Savco.

I. Standing

As the moving defendants' standing arguments implicate the Court's subject matter jurisdiction,*fn4 the Court will address these arguments first.

A. Applicable Standard

It is unclear whether dismissal for lack of standing properly is sought under Rule 12(b)(6) or Rule 12(b)(1).*fn5 The question is academic, however, because even when a standing motion is considered under Rule 12(b)(6), the district court is authorized to consider matters outside the pleadings and to make findings of fact when necessary.*fn6 Because the more recent Second Circuit authority suggests that dismissals for lack of standing more properly are sought under Rule 12(b)(1),*fn7 the applicable standards under Rule 12(b)(1) and 12(b)(6) are not materially different in the standing context,*fn8 and the moving defendants' ask for dismissal pursuant to Rule 12(b)(1), the Court will consider the standing arguments under Rule 12(b)(1).

In resolving a motion to dismiss for lack of subject matter jurisdiction under Rule 12(b)(1), a district court may refer to evidence outside the pleadings, such as affidavits and other documents.*fn9 While the plaintiff has the ultimate burden of establishing subject matter jurisdiction and generally must establish jurisdiction by a preponderance of the evidence when the defendant makes a "factual challenge" on a Rule 12(b)(1) motion,*fn10 "where `[subject matter] jurisdiction is so intertwined with the merits that its resolution depends on the resolution of the merits, the trial court should employ the standard applicable to a motion for summary judgment.'"*fn11 Here, the proximate cause and injury questions central to the standing determination would be bound up also in any jury award of damages.*fn12 Thus, standing and the merits are intertwined, and the Court will employ the summary judgment standard on this Rule 12(b)(1) motion.

B. RICO Standing

1. General Principles

To invoke RICO's civil remedies, a plaintiff must have been "injured in his business or property by reason of a violation of section 1962."*fn13 This language "has been construed to require that in order to merit standing, a civil RICO plaintiff must establish that the RICO violation at issue was a proximate cause of the injury to the plaintiffs business or property for which redress is sought."*fn14 "Because a plaintiff must show injury `by the conduct constituting the violation' of RICO, the injury must be caused by a pattern of racketeering activity violating section 1962 or by individual RICO predicate acts."*fn15

Plaintiffs make only bare bones allegations of injury to their business and property. They assert, on both the substantive and conspiracy claims, the following:

"Plaintiffs have suffered injuries proximately caused by the bankruptcy crimes and mail frauds set forth above, including, but not limited, to the following:

(a) The loss of any ability to satisfy their claims and judgments out of assets Sohrab was entitled to inherit from Soleyman and receive from Soleyman's Estate.

(b) The attorneys fees and expenses incurred in prosecuting their objections to Sohrab's fraudulent Chapter 7 petition in the First Capital v. Vahabzadeh adversary proceeding.

-and-

(c) The loss of any ability to execute directly against the assets Sohrab had gratuitously transferred to Afsar and Sohrab's siblings."*fn16

Plaintiffs' allegations of injury thus can be divided into two categories for purposes of the standing analysis: the inability to collect their judgments (the "Lost Debt" injury) (sections (a) and (c) above), and the cost of pursuing their objections to Sohrab's bankruptcy discharge (the "Legal Fees" injury) (section (b) above).

2. Lost Debt Injury

Whether plaintiffs have standing based on their alleged Lost Debt injury is controlled by Stochastic Decisions, Inc. v. DiDomenico.*fn17 The plaintiff in that case was a judgment creditor of various defendants and their companies. As in this case, one of the defendant companies filed a bankruptcy petition that was dismissed when the company failed to file financial reports.*fn18 The plaintiff brought a civil RICO action charging the defendants with conspiracy to commit bankruptcy, wire, and mail fraud for the purpose of preventing the plaintiff from collecting the outstanding judgments.*fn19 The complaint alleged that the property transfers effected in the course of the conspiracy were fraudulent conveyances under state law and that the overall scheme constituted common law fraud.*fn20 Thus, while not identical, the facts of Stochastic and the facts of this case are substantially similar.

After a bench trial, the Stochastic court awarded judgment to the plaintiff against most of the defendants.*fn21 It awarded the plaintiff $467,477.24 on the civil RICO claim, which consisted of $50,000 in legal fees expended by plaintiff in attempting to collect its state court judgments*fn22 and $317,477.24 in RICO attorneys fees and expenses incurred in pursuing the RICO action.*fn23 The district court determined that the plaintiff was not entitled to the amounts owed on the state court judgments or the attorneys fees spent litigating those actions.*fn24

The plaintiff appealed, arguing that it was entitled to recover the amounts of its state court judgments. The Second Circuit, however, flatly rejected this argument.*fn25

The Stochastic panel reaffirmed the principle laid down in Bankers Trust Co. v. Rhoades,*fn26 that "a debt is `lost[,]' and thereby becomes a basis for RICO trebling[,] only if the debt (1) cannot be collected (2) `by reason' of a RICO violation."*fn27 It reasoned that "a RICO claim does not accrue until it is established that collection of the claim or judgment has been successfully frustrated."*fn28 The court held that, to the extent the plaintiff successfully collected on the state court judgments by reason of their state law fraudulent conveyance claims, those amounts would reduce the RICO injury pro tanto, before any trebling occurred. Because the plaintiffs collection efforts were ongoing (by reason of the federal court action itself), and the actual amount of its injury was indefinite and unprovable, plaintiff did not yet have standing under RICO.*fn29

Here, plaintiffs do not allege that collection of the amounts owed on the state court judgments has been "successfully frustrated," much less how any such ultimate frustration was a proximate consequence of any of defendants' predicate acts. Indeed, an affidavit submitted by plaintiffs counsel, Eric Berry, suggests that plaintiffs have commenced and prosecuted to judgment or settlement five lawsuits against transferees of Sohrab's allegedly fraudulently conveyed assets.*fn30 Their efforts, as evidenced by the state law claims in this case, are continuing and have met with varying degrees of success, grossing $370,000 as of the date of Mr. Berry's affidavit.*fn31 In short, plaintiffs neither have alleged nor offered any proof that the collection of the debt has been frustrated as a proximate consequence of any of the defendants' alleged predicate acts.*fn32 Accordingly, plaintiffs lack RICO standing based on their alleged Lost Debt injury.

3. Legal Fees Injury

Plaintiffs seek also to recover under RICO the "attorneys fees and expenses incurred in prosecuting their objections to Sohrab's fraudulent Chapter 7 petition in the First Capital v. Vahabzadeh adversary proceeding."*fn33 This allegation and its supporting proof are sufficient to confer standing for the substantive RICO claim against Sohrab and the RICO conspiracy claim against Sohrab, Ahmed, Afsar, and Schlegelmilch, but not the substantive RICO claim against Afsar.

Bankers Trust and Stochastic offer substantial guidance on this point as well. Since Bankers Trust, it has been well settled that legal fees may constitute RICO damages when they are the proximate consequence of a RICO violation.*fn34 The defendants there had initiated fraudulent lawsuits against the plaintiffs in South Carolina and New York and allegedly bribed the judge in the South Carolina action, all in an effort to frustrate collection of the debt owed the plaintiff.*fn35 The Second Circuit held that the plaintiff could recover as RICO damages (1) legal fees and other expenses incurred in fighting the frivolous lawsuits in New York, (2) legal fees and other expenses spent in overcoming bribe-induced decisions in the South Carolina action, and (3) legal fees and other expenses incurred in obtaining a revocation of the initial reorganization plan.*fn36 In Stochastic, the court held that the plaintiff could recover as RICO damages legal fees and other expenses incurred in its attempt to collect the state court judgments,*fn37 but that it could not recover its fees and expenses incurred in originally obtaining those judgments.*fn38

a. Substantive RICO Claim: Sohrab

Among the scores of predicate acts allegedly committed by Sohrab, the following are particularly relevant: (1) on July 17, 1997, Sohrab filed a materially false bankruptcy petition*fn39 in violation of 18 U.S.C. § 152(2); (2) on July 17, 1997, Sohrab transferred $95,000 he held in an account at Bank of New York in the name of Vahabzadeh & Co. to an account at Credit Suisse in Zurich controlled by his wife Ninni's brother, Ali Ladjevardi,*fn40 in violation of 18 U.S.C. § 152(1) and 18 U.S.C. § 152(7); (3) on May 13, 1997, Sohrab and Ninni executed a separation agreement in which Sohrab, without consideration, ostensibly waived a claim to an equitable distribution of his and Ninni's marital property*fn41 in violation of 18 U.S.C. § 152(1) and 18 U.S.C. § 152(7); (4) on September 4, 1997, Sohrab made false statements concerning his family's financial affairs and his interest in Soleyman's Estate and in the Vahabzadeh family business at a meeting of his creditors*fn42 in violation of 18 U.S.C. § 152(3); and (5) on September 16, 1997, Sohrab made similar false statements under oath during an examination by his creditors conducted under Bankruptcy Rule 2004*fn43 in violation of 18 U.S.C. § 152(3).

There is at least a genuine issue of fact regarding whether these predicate acts proximately caused plaintiffs to incur legal fees and other expenses in prosecuting their objections to Sohrab's bankruptcy petition in the First Capital v. Vahabzadeh adversary proceeding. A "RICO pattern or acts proximately cause a plaintiffs injury if they are a substantial factor in the sequence of responsible causation, and if the injury is reasonably foreseeable or anticipated as a natural consequence."*fn44 It seems entirely foreseeable that these acts designed to hide assets and obtain a wrongful discharge of debts would cause creditors to expend money to block such a discharge and recover any fraudulently transferred assets. In other words, the adversary proceeding, with its attendant costs, may be viewed as an expected and natural consequence of the type of conduct allegedly engaged in by Sohrab. And it seems that the alleged predicate acts enumerated above played a substantial role in plaintiffs' decision to pursue the adversary proceeding: all of them were mentioned by Judge Gallet as grounds upon which plaintiffs sought denial of Sohrab's petition.*fn45 Accordingly, plaintiffs have standing to pursue their substantive RICO claim against Sohrab because of the Legal Fees injury.*fn46

b. RICO Conspiracy Claim: Sohrab, Afsar, Ahmed, and Schlegelmilch

In light of the above, the standing question regarding the RICO conspiracy claim can be disposed of without much difficulty. To have standing to bring a RICO conspiracy claim, the plaintiffs must demonstrate that at least one Section 1961 predicate act taken in furtherance of the RICO conspiracy proximately caused injury to their business or property.*fn47 Here, plaintiffs' conspiracy allegations encompass the predicate acts of Sohrab discussed above.*fn48 And there is at least an issue of fact regarding whether they were taken in furtherance of a conspiracy formed by Sohrab, Ahmed, Afsar, and Schlegelmilch in Geneva,*fn49 which had as its object "to transfer and conceal assets of Sohrab in contemplation of and during Sohrab's bankruptcy case to the detriment of plaintiffs, the Chapter 7 Trustee and Sohrab's other creditors."*fn50 Thus, the Legal Fees injury flowing from Sohrab's predicate acts confers standing on plaintiffs on their RICO conspiracy claim as well.

c. Substantive RICO Claim: Afsar

Plaintiff alleges that Afsar committed the following predicate acts: (1) at an unspecified time in early 1997, she received assets from Sohrab, which he purportedly inherited from Soleyman's Estate and transferred to her overseas, all in violation of 18 U.S.C. § 152(7);*fn51 (2) on September 16, 1998, she falsely stated in a letter sent to Sohrab and intended for the bankruptcy court that she had no documents in her possession relating to Soleyman's Estate or the financial affairs of her late husband;*fn52 (3) on March 24, 1998, as part of the adversary proceeding, she submitted an affidavit stating falsely that Soleyman had been an Iranian citizen and not a Swiss citizen, presumably in violation of 18 U.S.C. § 152(3);*fn53 (4) she caused Russell McRory, in his capacity as her attorney, to submit a declaration dated to the bankruptcy court, dated March 4, 1998, in which he stated that Soleyman, at the time of his death, owned no bank, brokerage, investment or other type of account, presumably in violation of 18 U.S.C. § 152(3);*fn54 (5) she caused Mr. McRory, in his capacity as her attorney, to submit a declaration to the bankruptcy court, dated June 12, 1998, in which he stated that Schlegelmilch had informed him that there were no assets in Soleyman's Estate at the time of his death beyond personal effects, furnishings in his home and nonworking automobiles, both over 20 years old, presumably in violation of 18 U.S.C. § 152(3);*fn55 and (6) on various dates between 1997 and 1999, she sent money to Sohrab, allegedly out of assets unlawfully transferred to her in 1997 by Sohrab, in violation 18 U.S.C. § 152(7).*fn56 For the sake of convenience, the Court will analyze the predicate acts listed above in two groups: the "Adversary Proceeding Predicate Acts" (including predicate acts (2) through (5)) and the "Transfer Predicate Acts" (including predicate acts (1) and (6)).

Plaintiffs have failed to demonstrate an issue of fact regarding whether the Adversary Proceeding Predicate Acts proximately caused Legal Fees injury. As defendants point out, these predicate acts all occurred after commencement, and as part, of the adversary proceeding for which legal fees and expenses are claimed as RICO injury.*fn57 While in other circumstances the alleged dilatory tactics might have increased the costs of prosecuting the adversary proceeding, here there is undisputed evidence that plaintiffs' attorney charged them a flat fee for this action.*fn58 Thus, it is impossible for the Court to see how these predicate acts possibly could have increased the legal expenses incurred by plaintiffs in pursuing denial of Sohrab's discharge.

Nor do the Transfer Predicate Acts support plaintiffs' standing on their substantive RICO claim against Afsar. If Afsar had committed such acts, it would be easy to see how they might proximately have caused an increase in plaintiffs' legal fees for many of the same reasons discussed above with respect to Sohrab's predicate acts. However, plaintiffs have failed adequately to plead, much less provide any factual support for, these predicate acts.

"Section 152(7) [of the Bankruptcy Code] makes it unlawful for any person, in contemplation of his [or her] bankruptcy or that of another person or corporation, to transfer or conceal knowingly and fraudulently `his [or her] property or the property of such other person or corporation.' By its plain language, therefore, Section 152(7) makes it a crime for a person to transfer or conceal knowingly an fraudulently . . . the property of another person [in contemplation of that other person's bankruptcy]. . . ."*fn59

Rule 9(b) of the Federal Rules of Civil Procedure applies to allegations of bankruptcy fraud under Section 152(7).*fn60 While the original complaint provided detail regarding when money allegedly was transferred to Sohrab from Afsar, it was silent on when the money was received from the debtor.*fn61 The amended complaint adds a mountain of new allegations asserting, on information and belief, that Soleyman owned assets at the time of his death and that Sohrab received an inheritance.*fn62 Nevertheless, there still is nothing in the amended complaint detailing when*fn63 or how*fn64 any transfer to Afsar was accomplished. These omissions are particularly glaring because Afsar's receipt of Sohrab's assets in contemplation of his bankruptcy is the gravamen of the alleged predicate act.*fn65 Without any rational and specific allegations regarding Afsar's receipt of Sohrab's assets, predicate act (1) fails for lack of particularity under Rule 9(b). Furthermore, without specific allegations regarding Afsar's receipt of Sohrab's assets, plaintiffs' allegations regarding Afsar's subsequent transfers of funds to Sohrab in 1997 through 1999 (making up predicate act (6) above) also fail for lack of particularity. Plaintiffs have failed to allege sufficient, specific facts supporting their contention that the ultimate source of the transfers was Sohrab and not Afsar herself. If she was the source of the funds, there was no violation of Section 152(7). Accordingly, the Transfer Predicate Acts do not support plaintiffs' standing on their substantive RICO claim against Afsar.

For the foregoing reasons, plaintiffs lack standing to bring their substantive RICO claim against Afsar.

II. Personal Jurisdiction

The moving defendants challenge also the Court's personal jurisdiction over Ahmed, Afsar, and Afiwa. In its prior opinion, the Court disposed of the jurisdictional issue, reasoning that if the RICO conspiracy count were sufficient, a prima facie showing of personal jurisdiction over Afsar, Ahmed, and Schlegelmilch would be established by virtue of their status as alleged co-conspirators of Sohrab, over whom personal jurisdiction was and is undisputed.*fn66 As defendants correctly point out, however, more than a prima facie showing of conspiracy is required to establish personal jurisdiction over an alleged co-conspirator under New York's long-arm statute.*fn67 Accordingly, the Court will address its personal jurisdiction over Afsar, Ahmed, and Afiwa before proceeding further.

A. Applicable Standard

"In deciding a pretrial motion to dismiss for lack of personal jurisdiction a district court has considerable procedural leeway. It may determine the motion on the basis of affidavits alone; or it may permit discovery in aid of the motion; or it may conduct an evidentiary hearing on the merits of the motion."*fn68 Here, the Court has not conducted an evidentiary hearing but previously authorized the parties to conduct discovery on jurisdictional issues.*fn69

In Ball v. Metallurgie Hoboken-Overpelt, S.A.,*fn70 the Second Circuit made clear that, in the face of a challenge to a district court's personal jurisdiction over a defendant, "the plaintiffs obligation varies depending on the procedural posture of the litigation."*fn71 Prior to discovery, a plaintiff challenged by a Rule 12(b)(2) motion may defeat the motion by "pleading in good faith legally sufficient allegations of jurisdiction."*fn72

"Prior to the holding of an evidentiary hearing, the plaintiff need only make a prima facie showing that jurisdiction exists. Where as here, there has been discovery on the issue of [personal] jurisdiction, the plaintiffs prima facie showing must include `an averment of facts that, if credited by the trier, would suffice to establish jurisdiction over the defendant.' The plaintiff cannot rely merely on conclusory statements*fn73 or allegations; rather, the prima facie showing must be `factually supported.'"*fn74

A prima facie case is established if the plaintiff presents sufficient evidence to defeat a motion for directed verdict.*fn75 In other words, the standard is akin to that on a motion for summary judgment.*fn76 The pleadings, documents, and other evidentiary materials must be "`construed in the light most favorable to plaintiff and all doubts are resolved in its favor.'"*fn77 Thus, once a plaintiff has alleged facts that, if proved, would support jurisdiction, a defendant cannot win a Rule 12(b)(2) motion merely by denying plaintiffs allegations. Rather, the defendant's moving papers must "`entirely refute the plaintiffs allegations.'"*fn78

B. Jurisdictional Facts

The following facts are drawn from the amended complaint, affidavits, and documentary exhibits submitted by both parties.

1. Afsar

Afsar is a resident and citizen of Switzerland.*fn79 She had an apartment at 15 West 53rd Street in New York City from 1985 through 1997.*fn80 In the amended complaint, plaintiffs assert that title was held by Savco,*fn81 of which Afsar allegedly was an officer and part owner. Other evidence suggests that Afsar owned the apartment at the time of its sale on June 23, 1997.*fn82

From 1978 through 1996, Afsar had bank accounts at J.P. Morgan in New York that held as much as $25 million to $30 million. From the mid-1980's through the present, she has maintained an account at the New York branch of ABN AMRO, N.V.*fn83 Although plaintiffs provide no evidentiary support for their allegations about Afsar's bank accounts, defendants apparently do not dispute them.*fn84

Plaintiffs allege that Afsar made many business trips to New York from 1980 to the present and that she has engaged in numerous "New-York situated" business transactions, both for her own account and on behalf of her husband, Soleyman, for whom she held a power of attorney over his accounts at the New York branch of ABN AMRO, N.V. They contend also that she engaged in New-York situated business activities through her nominee and relative, Dara Vahabzadeh, who holds power of attorney with respect to Afsar's account at the New York branch of ABN AMRO, N.V.*fn85 Plaintiffs do not, however, provide any detail at all regarding these alleged transactions. They do not hint as to their substance or timing within this twenty-year time period. Nor is there factual support provided for any of them.

On September 16, 1998, Afsar sent a letter intended for delivery to the United States Bankruptcy Court in Manhattan in which she falsely asserted that she had no documents relating to her deceased husband Soleyman's financial affairs.*fn86 Plaintiffs allege also that Afsar committed bankruptcy fraud outside of the country by fraudulently concealing, receiving, and hiding Sohrab's assets from his creditors and the Chapter 7 trustee.*fn87 As explained above, however, the latter allegations are not pleaded with the requisite particularity under Rule 9(b) and therefore may not be considered in determining the Court's personal jurisdiction over Afsar.

Finally, plaintiffs contend that Sohrab's acts within New York are attributable to Afsar because she is a co-conspirator in a RICO scheme with him.*fn88

2. Ahmed

Ahmed is a resident and citizen of Switzerland.*fn89 Plaintiffs allege that he acted as a lender in "several transactions" in New York. They specify two: (1) a 1988 real estate loan of $700,000 to Kingsbrook Partners, which was secured by a mortgage covering land in Orange County, New York, and (2) the 1995 assignment of this mortgage to Sohrab's wholly-owned company, Vahabzadeh & Co., Inc.*fn90 Defendants' do not dispute these allegations.

Ahmed received promissory notes from Sohrab, including one in the amount of $850,000, on or about October 1, 1991. Furthermore, between late 1993 and 1995, Ahmed and Sohrab engaged in a series of "New York-connected" transactions aimed at making Sohrab appear judgment proof, apparently not in connection with the lawsuits underlying this action. During these transactions, Ahmed allegedly made numerous telephone calls and wrote letters to his attorney, Raymond McRory, whose office is in Garden City, New York, and to Sohrab, a resident of Manhattan. Additionally, Ahmed made a business trip to New York in May 1995, during which he received "telecopies" from Mr. McRory at the Carlyle Hotel in Manhattan.*fn91

Plaintiffs allege also that Ahmed attended "six or seven" business meetings in New York with Mr. McRory between 1980 and the present. These meetings allegedly occurred "in 1990, 1992 and 1995 and possibly other years." Plaintiffs make no more specific allegations regarding these meetings.

Ahmed was involved in a business transaction in New York in August 1995 in which Sohrab and Peninsula, allegedly Sohrab's alter ego, conveyed part of their interests in certain limited partnerships to Satinwood and Sphinx Rock (the "Timberland & Tiburon Transaction"). The transaction closed in Garden City, New York. Certain documents related to the transaction were executed by Manou Faily in New York on behalf of Satinwood and Sphinx Rock.*fn92 Mr. McRory represented Brickellbush, Satinwood, and Sphinx Rock in the transaction*fn93 and discussed its structural aspects with Ahmed, who apparently acted on behalf of Sphinx Rock.*fn94

Plaintiffs allege that Sphinx Rock and Satinwood are investment vehicles that are dominated and controlled by Ahmed. Defendants have admitted in prior motion papers that Sphinx Rock is owned by Ahmed and Satinwood by Sarlima, N.V., a Netherlands Antilles company also owned by him.*fn95 Plaintiffs produced a July 20, 1995 letter faxed from Manou Faily to Ahmed requesting that Ahmed cause Sphinx Rock and Sarlima to transfer the funds required to consummate the Timberland & Tiburon Transaction to Mr. McRory's escrow account.*fn96 With respect to Sphinx Rock, plaintiffs allege further that in July or August 1995, Ahmed agreed on behalf of Sphinx Rock to transfer a portion of outstanding loan repayments it was entitled to as a result of the Timberland & Tiburon Transaction to Jens Schlegelmilch's company, Sintor Associated, without the knowledge or consent of N.V. Fides, the Netherlands Antilles corporation that is the managing director of Sphinx Rock.*fn97 They contend further that when Sphinx Rock and Satinwood later sold the Timberland and Tiburon properties, Ahmed caused at least part of the proceeds to be paid directly to himself.*fn98 Defendants produced no evidence to contradict plaintiffs' allegations regarding the connections between Ahmed and Sphinx Rock and Satinwood.

Plaintiffs allege further that Ahmed engaged in business in New York through his agents, Cimbalo and Sphinx Rock. They claim that Ahmed controlled Cimbalo, although ostensibly it was managed by a Dutch corporation known as ABN AMRO Trustcompany, N.V. and beneficially owned largely by Soleyman Vahabzadeh.*fn99 Plaintiffs only support for this contention is an allegation that when Cimbalo sought to enforce certain loan agreements, Ahmed dealt with Mr. McRory and Sohrab, who were involved in the attendant lawsuit.*fn100 Plaintiffs do not specify what business, besides the Timberland & Tiburon Transaction, Sphinx Rock allegedly carried on in New York. Nor do they allege any further business activity in New York by Cimbalo.

On September 14, 1998, Ahmed sent a letter intended for delivery to the United States Bankruptcy Court in Manhattan in which he falsely asserted that he had no documents relating to his deceased brother Soleyman's financial affairs.*fn101

Plaintiffs make some further miscellaneous allegations. They contend in the vaguest terms that "Ahmed traveled to New York in early May 1997 and met with his nephew, Sohrab, in connection with the transactions involved in Sohrab's bankruptcy and the instant lawsuit."*fn102 They specify nothing further regarding the nature of the transactions. Plaintiffs contend also that Ahmed, through various agents including Manou Faily, Sohrab, Iradj, Brickellbush, and Mr. McRory, engaged in "numerous New York-connected transactions."*fn103 The only such transaction mentioned is the sale of Afsar's apartment in New York. Further, Ahmed allegedly received funds transferred from Mr. McRory's escrow accounts in New York on August 25, 1988, March 6, 1990, and sometime in 1993.*fn104 Plaintiffs produced factual support for their assertion that Ahmed received funds transferred from Mr. McRory's account,*fn105 but failed to produce a shred of evidence regarding Ahmed's maintenance of accounts in New York.

Finally, plaintiffs contend that Sohrab's acts within New York are attributable to Ahmed because he is a co-conspirator in a RICO scheme with Sohrab.

3. Afiwa

Afiwa is a Panamanian corporation having its principal place of business in Geneva, Switzerland.*fn106 Allegedly, Afiwa is owned by Ahmed and is an operating company and investment vehicle for him. Plaintiffs allege that Ahmed has manipulated his finances in an attempt to render himself judgment proof and that he uses funds controlled by Afiwa for his personal expenses and personal investment.*fn107 They contend also that Ahmed regularly has channeled funds due to himself and Cimbalo into Afiwa's accounts.*fn108 Allegedly, Ahmed has unilateral control over all property held in the name of Afiwa.*fn109 Defendants apparently do not dispute these allegations.

On September 14, 1998, Afiwa sent a letter intended for delivery to the United States Bankruptcy Court in Manhattan in which it falsely asserted that it had no documents relating to Soleyman's Estate or financial affairs.*fn110

C. Jurisdictional Analysis

1. Basics

RICO does not provide for international service of process.*fn111 "Plaintiffs asserting RICO claims against foreign defendants must rely on the long-arm statute of the state in which they filed suit."*fn112 The Court must focus on the defendants' contacts with the forum state, not the United States as a whole.*fn113 Accordingly, the Court will apply New York jurisdictional law and analyze the defendants' contacts with New York.

The jurisdictional inquiry has two parts. "`First, [the court] must determine whether the plaintiff has shown that the defendant is amenable to service of process under the forum state's laws; and second, it must assess whether the court's assertion of jurisdiction under these laws comports with the requirements of due process.'"*fn114

2. Section 301

Plaintiffs baldly allege that this Court has personal jurisdiction over Afsar and Ahmed because they are or have been "doing business" in New York for purposes of Section 301 of New York's CPLR.*fn115 However, plaintiffs fail to address this ground for jurisdiction in their memorandum of law, and the Court considers it waived.*fn116 In any case, plaintiffs do not allege instate activity that is sufficiently "`continuous, permanent, and substantial'"*fn117 to subject Afsar or Ahmed to jurisdiction under Section 301.

With respect to Afsar, her ownership and sale of one piece of New York real estate does not constitute "business," and plaintiffs do not even allege that she ever took up residence in the apartment. Plaintiffs allege that she made business trips to New York and engaged in numerous business transactions here between 1980 and the present, but they provide absolutely no detail.*fn118 Afsar's maintenance of New York bank accounts is not alone sufficient to subject her to jurisdiction under Section 301.*fn119 Nor do her accounts alter her aggregate state activities to such an extent that the Court can say that she is "`present' in the State `not occasionally or casually, but with a fair measure of permanence and continuity. "*fn120

Plaintiffs allege at best that Ahmed engaged in seven or eight New York-related business transactions*fn121 and made eight business trips to New York in the past twenty years, and that he "controlled" Cimbalo and point to some of Cimbalo's activities in New York, although they do not make allegations sufficient to establish whether Cimbalo acted as Ahmed's agent in New York or was merely his alter ego. They make no allegations at all regarding what business Sphinx Rock carried on in New York, except for the Timberland & Tiburon Transaction.

Even if a foreign individual may be subject to personal jurisdiction in New York on the basis of his or her "doing business" within the state, plaintiffs have not made a prima facie showing that either Afsar or Ahmed engaged in the type of continuous and systematic activity required by Section 301.

D. Section 302

1. Afsar

Plaintiffs maintain that the Court has personal jurisdiction over Afsar under Section 302(a), subdivisions 2 and 3, of the CPLR. Plaintiffs have not made a prima facie showing on either of these grounds.

a. Section 302(a), subd. 2

Section 302(a), subd. 2, provides in part that a New York court may exercise personal jurisdiction over any nondomiciliary who "in person or through an agent" commits a tortious act within the state when the plaintiffs claim directly relates to or arises out of that tortious act.*fn122 Plaintiffs assert that Afsar is subject to the Court's personal jurisdiction by virtue of her status as a co-conspirator of Sohrab in a RICO scheme.

"[B]oth state and federal courts have found that where a plaintiff has presented a sufficient showing that a conspiracy exists, personal jurisdiction may exist over a defendant based on acts that were committed by his [or her] co-conspirators."*fn123 They do so by defining "`agent' as used in CPLR § 302(a), subd. 2, broadly to include not only a defendant's formal agents, but also, under certain circumstances, a defendant's co-conspirators."*fn124

To establish jurisdiction over a nondomiciliary defendant on the basis of the New York acts of a co-conspirator, the plaintiff must (1) establish a prima facie case of conspiracy, (2) allege specific facts warranting the inference that the defendant was a member of the conspiracy, (3) demonstrate the commission of a tortious act in New York, and (4) demonstrate the requisite agency relationship between the nondomiciliary defendant and the in-state tortfeasor.*fn125

Plaintiff alleges that Sohrab committed various bankruptcy frauds in New York, and the Court assumes the sufficiency of these allegations for the sake of argument. Putting aside the requirements of prongs one and two, however, plaintiffs have failed to make a prima facie showing regarding the fourth prong. "The requisite relationship between the defendant and its New York co-conspirator[] is established by a showing that: (a) the defendant had an awareness of the effects in New York of its activity; (b) the activity of the co-conspirator[] was to the benefit of the out-of-state conspirator[]; and (c) the co-conspirator[] acting in New York acted `at the direction or under the control' or `at the request or on behalf of the out-of-state defendant."*fn126

Afsar's awareness regarding the effects in New York of Sohrab's in-state bankruptcy fraud fairly can be inferred from the allegations in the complaint. The gist of plaintiffs' allegations is that she consciously assisted Sohrab in evading his creditors. Plaintiffs, however, have not made a sufficient showing regarding her direction or control of his bankruptcy frauds. The amended complaint, in the most conclusory of terms, alleges that she "dominates and controls the Estate of Soleyman Vahabzadeh."*fn127 There are no more specific factual allegations regarding her control of the Estate nor any suggestion of how her domination of it enabled or necessitated her control over Sohrab's allegedly tortious acts. As noted above, plaintiffs' bare, conclusory allegation of control is not sufficient to make out its prima facie showing of jurisdictional facts.*fn128 Similarly, putting aside the alleged transfers that were not pled with particularity, plaintiffs have failed to allege or demonstrate how Afsar benefitted from Sohrab's New York acts.

b. Section 302(a), subd. 3

Section 302(a), subd. 3, confers personal jurisdiction over a nondomiciliary who commits a tort outside the state causing injury in the state when the plaintiff's claim arises out of that tortious act provided the nondomiciliary defendant either (i) regularly does or solicits business in New York, or engages in any persistent course of conduct or derives substantial revenue from goods used or consumed or services rendered, in New York, or (ii) expects or reasonably should expect the tortious act to have consequences in New York and derives substantial revenue from interstate or international commerce.*fn129

The out-of-state tortious act in question is Afsar's alleged act of mail fraud, which plaintiffs contend she committed when she sent a letter containing misrepresentations to the bankruptcy court in New York. There is no real dispute that plaintiffs adequately have alleged mail fraud. Defendants, however, contend that plaintiffs have not made a prima facie showing of injury within the state caused by Afsar's alleged tortious act. While defendants' specific argument is meritless, the Court nevertheless finds that plaintiffs have failed to establish that Afsar's act caused injury within the state.

Defendants argue that jurisdiction under Section 302(a), subd. 3, is improper because FCAM is a Delaware company and Oost-Leviense is a resident of Connecticut. Defendants' contention that there was no injury in New York because plaintiffs are not citizens or residents of New York is simply wrong. It is well settled that courts determining whether there is injury in New York apply the "situs-of-injury test, which asks them to locate the `original event which caused the injury.'"*fn130 In the case of fraud, "the critical question is . . . where the first effect of the tort was located that ultimately produced the final economic injury,"*fn131 and "the law of this Circuit is that plaintiffs reliance in New York on defendant's misrepresentations [transmitted from outside the state] fixes the situs of the injury in New York."*fn132

Nevertheless, plaintiffs have failed to make a prima facie showing that Afsar's alleged mail fraud caused them injury in New York. As noted above, plaintiffs claim two types of injury: Lost Debt injury and Legal Fees injury. With respect to Legal Fees injury, Afsar's letter could not have caused plaintiffs greater expense in prosecuting the adversary proceeding because she wrote the letter after it began, and undisputed evidence shows that plaintiffs paid their lawyers a flat fee for the entire action.*fn133 As for the Lost Debt injury, plaintiffs have failed to demonstrate that their collection efforts have been frustrated as a proximate consequence of any of the defendants' predicate acts, much less Afsar's letter.*fn134 Furthermore, this letter did not stand in the way of their obtaining a denial of Sohrab's discharge in the adversary proceeding for which it was written. Certainly plaintiffs do not allege nor provide factual support for the notion that they relied on Afsar's letter. In short, because plaintiffs have failed to make a prima facie showing that the out-of-state tortious act identified by plaintiffs caused them in-state injury, the Court may not exercise personal jurisdiction over Afsar based on Section 302(a), subd. 3.

In sum, the Court cannot exercise personal jurisdiction over Afsar under Sections 302(a), subdivisions 2 or 3. The action therefore must be dismissed with respect to her.*fn135

2. Ahmed

Read generously, plaintiffs' memorandum argues that the Court has in personam jurisdiction over Ahmed under Sections 302(a), subdivisions 1 through 3, based upon his own acts and those of his alleged agents. While they have made a prima facie showing that he is amenable to suit on the fraudulent conveyance claims found in Counts One and Two of the amended complaint, they have failed to do so with respect to the RICO conspiracy claim in Count Six.

a. Section 302(a), subd. 1

Plaintiffs argue that Ahmed is amenable to suit in New York because he carried out the Timberland & Tiburon Transaction in New York through his agents, Sphinx Rock, Satinwood, Brickellbush, Manou Faily, and Mr. McRory, and their fraudulent conveyance claims against him arise out of this transaction.*fn136

Section 302(a), subd. 1, authorizes New York courts to exercise jurisdiction over nondomiciliaries for tort and contract claims arising from a defendant's transaction of business in the state.*fn137 "It is a `single act statute' and proof of one transaction in New York is sufficient to invoke jurisdiction, even though the defendant never enters New York, so long as the defendant's activities here were purposeful and there is a substantial relationship between the transaction and the claim asserted."*fn138 "The phrase `transacts business' has been interpreted `to require a certain quality, rather than a specific quantity of contacts with New York.'"*fn139

There is no real dispute that the Timberland & Tiburon Transaction took place in New York and was a substantial business transaction for Sphinx Rock and Satinwood, the companies that thereby acquired allegedly valuable limited partnership interests. Nor is it controversial to assert that plaintiffs' fraudulent conveyance claims are directly related to the transaction. The question is whether Satinwood and Sphinx Rock engaged in the transaction in New York as agents on behalf of Ahmed.

It is well settled that a corporation may act as an agent for an individual for purposes of Section 302(a), subd. 1.*fn140 At this stage, plaintiffs must make a prima facie showing that Satinwood and Sphinx Rock acted for the benefit of, with the knowledge and consent of, and under some control by, Ahmed.*fn141

Mr. McRory's deposition testimony demonstrates that he and Manou Faily acted as agents of Satinwood and Sphinx Rock in carrying out the transaction. It shows also that Ahmed had knowledge of and consented to the companies' activities in this transaction.*fn142 The faxed letter from Faily to Ahmed on July 20, 1995 suggests at least that Ahmed had some control over the participation of Satinwood and Sphinx Rock in the transaction.*fn143 Finally, plaintiffs have demonstrated adequately that Satinwood and Sphinx Rock ultimately acted for the benefit of Ahmed because they produced evidence of Ahmed receiving a portion of Sphinx Rock's receipt of a loan repayment from Tiburon, Ltd. and Timberland, Ltd.*fn144 Thus, plaintiffs have made a prima facie that Ahmed is amenable to suit under the New York long-arm statute on the fraudulent conveyance claims in Counts One and Two. Due Process analysis for these counts will proceed below in another section.

However, "it is important to remember that a plaintiff . . . must secure personal jurisdiction over a defendant with respect to each claim [he or] she asserts."*fn145 Section 302(a), subd. 1, requires a "substantial nexus" between the cause of action and the defendants' activities in New York.*fn146 As plaintiffs implicitly acknowledge in their memorandum of law,*fn147 this nexus is lacking between the Timberland & Tiburon Transaction and plaintiffs' RICO conspiracy claim against Ahmed.

The Timberland & Tiburon Transaction occurred in 1995, and the amended complaint alleges that RICO conspiracy "began on January 16, 1997."*fn148 While the Timberland & Tiburon Transaction is part of the pattern of racketeering activity in which Sohrab allegedly engaged between 1995 and 1999, Count Six can be read only as alleging an agreement to further a distinct unlawful endeavor, one that did not come into being until 1997 and one that revolved primarily around Sohrab's alleged inheritance.*fn149 Thus, plaintiffs' RICO conspiracy claim against Ahmed does not arise from or directly relate to his transaction of business in New York state in 1995 through his agents, Satinwood and Sphinx Rock, and Section 302(a), subd. 1, does not provide personal jurisdiction over him on this claim.

Plaintiffs attempt also to invoke Section 302(a), subd. 1, for the RICO conspiracy claim by alleging that "Ahmed traveled to New York in early May 1997 and met with his nephew, Sohrab, in connection with the transactions involved in Sohrab's bankruptcy and the instant lawsuit."*fn150 This vague and conclusory allegation lacks the factual specificity necessary to contribute to plaintiffs' prima facie showing of jurisdiction.*fn151

b. Section 302(a), subd. 2

As with Afsar, plaintiffs seek to invoke Ahmed's status as an alleged co-conspirator to attribute Sohrab's in-state acts to Ahmed. Having underestimated what is required to demonstrate the requisite agency relationship in the co-conspirator context, plaintiffs' attempt to invoke Section 302(a), subd. 2, fails.

As noted above, "[t]he requisite relationship between the defendant and its New York co-conspirator[] is established by a showing that: (a) the defendant had an awareness of the effects in New York of its activity; (b) the activity of the co-conspirator[] was to the benefit of the out-of-state conspirator[]; and (c) the co-conspirator[] acting in New York acted `at the direction or under the control' or `at the request or on behalf of the out-of-state defendant."*fn152

Here, plaintiffs have not satisfied the control prong. They allege that Ahmed exercised de facto control over Soleyman's affairs during the latter part of his life, and that this demonstrates control because the alleged fraudulent conveyance of Sohrab's inheritance occurred as part of the disposition of Soleyman's estate.*fn153 Plaintiffs allege also that Ahmed had unchallenged authority within his family and called the January 16, 1997 meeting at which the conspiracy began.*fn154

These allegations go to Ahmed's alleged control of Vahabzadeh family matters in general rather than to the specific tortious acts purportedly committed by Sohrab in New York.*fn155 Moreover, plaintiffs adduce no evidence suggesting any degree of control by Ahmed over Sohrab's specific instate acts in furtherance of the alleged conspiracy. Finally, plaintiffs have not sufficiently alleged that Sohrab acted in New York for the benefit of Ahmed. Indeed, the gist of the complaint is that Sohrab acted in New York to frustrate his own creditors for his own economic advantage. Thus, co-conspirator jurisdiction under Section 302(a), subd. 2, is not available over Ahmed on the RICO conspiracy claim.

c. Section 302(a), subd. 3

As noted above, Section 302(a), subd. 3, confers personal jurisdiction over a nondomiciliary who commits a tort outside the state causing injury in the state when the plaintiffs claim arises out of that tortious act, and the nondomiciliary defendant either (i) regularly does or solicits business in New York, or engages in any persistent course of conduct or derives substantial revenue from goods used or consumed or services rendered in the state, or (ii) expects or reasonably should expect the tortious act to have consequences in the state and derives substantial revenue from interstate or international commerce.*fn156

Plaintiffs attempt to invoke Section 302(a), subd. 3, alleging that Ahmed sent a fraudulent letter to the bankruptcy court in Manhattan on September 4, 1998. For the reasons discussed above in connection with Afsar's letter to the bankruptcy court,*fn157 plaintiffs have not established that this alleged tortious act caused them injury within the state. Accordingly, plaintiffs' have failed to make a prima facie showing that the Court may exercise personal jurisdiction over Ahmed on the RICO conspiracy claim under Section 302(a), subd. 3.

d. Pendent Personal Jurisdiction

Plaintiffs attempt to invoke the doctrine of pendent personal jurisdiction to assert personal jurisdiction over Ahmed on the RICO conspiracy claim in Count Six, despite the Court's determination that Ahmed is not amenable to suit on this claim under New York law. They argue that the Court may exercise personal jurisdiction over Ahmed on Count Six because it has jurisdiction over him on Counts One and Two and the state and federal claims share a "common nucleus of operative fact."*fn158 Their argument lacks merit.

While the doctrine of pendent personal jurisdiction has received a warm welcome in this circuit,*fn159 it is not clear that it extends as far as plaintiffs argue.*fn160 But it is unnecessary to decide this question here, as plaintiffs' RICO conspiracy claim against Ahmed does not share a common nucleus of operative fact with their fraudulent conveyance claims against him.*fn161

As noted above, the amended complaint alleges that the RICO conspiracy involving Ahmed began in January of 1997 and that the fraudulent transaction that is the subject of Counts One and Two took place on July 31, 1995.*fn162 The time disparity itself suggests that the same underlying facts are not at issue in both claims.*fn163

Moreover, different evidence and different witnesses likely would be required to establish liability. For the fraudulent conveyance claims, the key issues would be whether Sohrab made the transfer in contemplation of bankruptcy (i.e., his intent) and his financial condition before and after the transaction, as well as possibly Ahmed's knowledge of Sohrab's intent and financial position. For the RICO conspiracy claim, the key issues would be what Ahmed, Afsar, Schlegelmilch, and Sohrab agreed in January 1997 to do and whether what they agreed to do or facilitate, if completed, would have constituted a substantive RICO violation.*fn164 The focus of the RICO conspiracy claim thus would be on the co-conspirators' conduct on January 16, 1997 and thereafter, not on events that transpired approximately a year-and-half before the conspiracy even came into existence.

In sum, plaintiffs' claims against Ahmed in Counts One and Two do not share a common nucleus of operative facts with their claims against him in Count Six.*fn165 Pendent personal jurisdiction over him on Count Six is not permissible, even assuming arguendo that pendent personal jurisdiction may be asserted over a federal claim based on a state claim.

As plaintiffs have established no grounds upon which to exercise personal jurisdiction over Ahmed on the RICO conspiracy count, their claims against him in Count Six are dismissed.

3. Afiwa

Plaintiffs contend that Afiwa is subject to the personal jurisdiction of this court for two reasons: they allege that Afiwa (1) is Ahmed's alter ego and thus his jurisdictional contacts are attributable to Afiwa under the principles of agency*fn166 and (2) sent a fraudulent letter to the bankruptcy court in Manhattan.*fn167 These allegations, along with plaintiffs' evidentiary submissions, are insufficient to make out a prima facie showing of personal jurisdiction over Afiwa.

First, plaintiffs make no specific arguments regarding Afiwa in their opposition papers and cite no authority for their sweeping view of jurisdiction based on the alleged agency relationship between Ahmed and Afiwa. They certainly have not alleged either that Afiwa acted on behalf of Ahmed or that Ahmed acted on behalf of Afiwa in connection with the Timberland & Tiburon Transaction upon which Counts One and Two are based.

Plaintiffs' second allegation invokes Section 302(a), subd. 3. However, as noted above, plaintiffs have failed to make a prima facie showing that the letters sent to the bankruptcy court caused them injury within the state,*fn168 and thus Section 302(a), subd. 3, is unavailable as well.

Accordingly, plaintiffs have failed to make a prima facie showing of personal jurisdiction over Afiwa under New York law, and the claims against it are dismissed.

E. Due Process

Because the Court has determined that Ahmed is amenable to service of process under New York law on the fraudulent conveyance claims in Counts One and Two, it now must determine whether assertion of personal jurisdiction in the circumstances comports with the requirements of due process.*fn169

The due process test for personal jurisdiction has two related components: the "minimum contacts" inquiry and the "reasonableness" inquiry.*fn170 The Court first must determine whether the defendant has sufficient contacts with the forum state to justify the exercise of personal jurisdiction. Then, if minimum contacts are found, the Court undertakes the "reasonableness" inquiry and considers whether "the assertion of personal jurisdiction . . . is reasonable under the circumstances of the particular case."*fn171

1. Minimum Contacts

For purposes of the minimum contacts inquiry, "a distinction is made between `specific' jurisdiction and `general' jurisdiction."*fn172 "Specific jurisdiction exists when `a State exercises personal jurisdiction over a defendant in a suit arising out of or related to the defendant's contacts with the forum'; a court's general jurisdiction, on the other hand, is based on the defendant's general business contacts with the forum state and permits a court to exercise its power in a case where the subject matter of the suit is unrelated to those contacts."*fn173 The minimum contacts test for specific jurisdiction is less stringent than that for general jurisdiction.*fn174 Here, plaintiffs' fraudulent conveyance claims arise directly out of Ahmed's transaction of business in New York through corporate agents. The more lenient specific jurisdiction standard therefore applies.

To establish the minimum contacts necessary to justify specific jurisdiction, the plaintiff must show that the defendant "purposefully availed" himself of the privilege of doing business in New York and that the defendant could foresee being "haled into court" in the state.*fn175

Here, plaintiffs have made a prima facie showing that Ahmed deliberately engaged in a significant business transaction in New York when he caused Sphinx Rock and Satinwood to purchase certain limited partnership interests from Peninsula/Sohrab. Not only did the alleged transaction occur within the state, but Ahmed allegedly contracted with Sohrab, a resident of New York, and made use of the services of Mr. McRory, a New York attorney, to carry out the transaction. In light of plaintiffs' prima facie showing regarding the agency relationship between Ahmed and Satinwood and Sphinx Rock, the Timberland & Tiburon Transaction was certainly "action [by Ahmed] purposefully directed toward the forum state"*fn176 and Ahmed, via Sphinx Rock and Satinwood, certainly could foresee being sued in New York in connection with this transaction. Thus, the minimum contacts test is satisfied, and the Court will proceed to consider the reasonableness of exercising personal jurisdiction here.

2. Reasonableness

There are five reasonableness factors relevant to the inquiry here:

"(1) the burden that the exercise of jurisdiction will impose on the defendant;

(2) the interests of the forum state in adjudicating the case; (3) the plaintiff's interest in obtaining convenient and effective relief; (4) the interstate judicial system's interest in obtaining the most efficient resolution of the controversy; and (5) the shared interest of the states in furthering substantive social policies."*fn177

"While the exercise of jurisdiction is favored where the plaintiff has made a threshold showing of minimum contacts at the first stage of the inquiry, it may be defeated where the defendant presents `a compelling case that the presence of some other considerations would render jurisdiction unreasonable.'"*fn178 While defendants fail to make any arguments at all in their motion papers regarding due process, the Court nevertheless will consider the above factors.

Because Ahmed is a citizen and resident of Switzerland, the burden imposed on him would be significant, thus cutting against a finding of reasonableness.*fn179 This burden is not dispositive, however, because "often the interests of the plaintiff and the forum in the exercise of jurisdiction will justify even the serious burdens placed on the alien defendant."*fn180 This is such a case. New York has a strong interest here in enforcing its debtor-creditor law, as the fraudulent conveyances at issue allegedly were made to frustrate New York judgments. The plaintiffs also have strong interests in litigating in this forum, as the fraudulent conveyance claims are related to their RICO claims against Sohrab and many of the key events surrounding that claim allegedly transpired in New York. The final two factors do not cut strongly one way or the other.

On balance, and taking into consideration the presumption in favor of an exercise of jurisdiction once minimum contacts have been established, the Court finds that exercising personal jurisdiction over Ahmed on Counts One and Two is reasonable for purposes of the Due Process Clause. Accordingly, defendants' motion to dismiss Counts One and Two against Ahmed on jurisdictional grounds is denied.

III. Remaining Ground for Dismissal

The moving defendants seek also dismissal of all claims against them for failure to state a claim pursuant to Rule 12(b)(6) and for failure to comply with Rule 9(b). The entirety of their Rules 12(b)(6) and Rule 9(b) arguments revolve around plaintiffs' RICO claims. As all of the RICO claims against the moving defendants have been dismissed, this part of the motion is moot.

IV. Conclusion

For the foregoing reasons, the moving defendants' motion is disposed of as follows:

1. It is granted to the extent that the amended complaint is dismissed with respect to Afsar for lack of standing and lack of personal jurisdiction.

2. It is granted to the extent that the amended complaint is dismissed with respect to Afiwa for lack of personal jurisdiction.

3. It is granted to the extent that plaintiffs' RICO conspiracy claim against Ahmed is dismissed for lack of personal jurisdiction.

4. It is denied in all other respects.

SO ORDERED.


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