The opinion of the court was delivered by: THOMAS PLATT, JR., Senior District Judge
Before this Court are motions brought by International Foreign
Currency, Inc. ("IFC"), Thomas Qualls ("Qualls") and Michael
Kourmolis ("Kourmalis"), (collectively "Defendants"), to dismiss
pursuant to Fed.R. Civ. P. 12(b)(1) for lack of subject matter
jurisdiction, and 12(b)(6), for failure to state a claim, the
action commenced by the Commodities Futures Trading Commission
("CFTC" or "Plaintiff"). For the following reasons, Defendants' motions are DENIED.
The CFTC brought suit against Defendants pursuant to the
Commodity Exchange Act ("CEA") as amended by the Commodity
Futures Modernization Act ("CFMA"). Defendant Qualls is the
President of IFC, and Kourmalis "has identified himself variously
as a `Senior Account Executive' and as `Vice President of
Accounts' for IFC." (Compl. at ¶¶ 9-10). The CFTC alleges that
from November 27, 2001 until at least July 11, 2003, Defendants
offered and sold foreign currency futures contracts over the
phone to the retail public out of the IFC office in Garden City,
New York. (Compl. at ¶ 11).
In the course of his solicitations, Defendant Kourmolis
allegedly explained to at least one customer, Mrs. Blakers, that
she would have an individual bank account with IFC and that Chase
Manhattan Bank would insure the account for up to twenty-five
million dollars. (Compl. at ¶ 13). Mrs. Blakers subsequently
wired approximately $10,000 to IFC and Kourmalis sent her a
written "Confirmation of Funds Transfer," stating that IFC had
opened a personal account in her name and would begin trading on
her behalf. (Compl. at ¶¶ 13-14); (Pl. Exh. 12).*fn1
According to the complaint and Plaintiff's accompanying
exhibits, however, Mrs. Blakers' money was neither deposited into
an individual bank account nor transferred to IG Index, a London
company, which Defendants allege executed the foreign currency
transactions for IFC. (Compl. at ¶ 18); (Qualls Aff. at 1-2).
Instead, Mrs. Blakers' funds were deposited into one account,
Qualls' personal account, and were apparently used to pay for his
personal expenses. (Id).*fn2 Her funds were also not
insured by Chase Manhattan Bank and when Mrs. Blakers later
attempted to close out her account, IFC ceased communication with
her, and to date, has not returned any of her funds. (Compl. at
CFTC filed suit on July 23, 2003, alleging violations of §
4(a), § 4(b)(a)(2)(i) § 4(b)(a)(2)(iii) of the CEA, in addition
to § 1.1(b) of the Commission Regulations. (Compl. at ¶¶ 3-5).
Defendants subsequently filed the instant motions and oral
argument was heard on March 19, 2004.
DISCUSSION A. Standard of Review
i. Fed.R. Civ. P. 12(b)(1)
When considering a motion to dismiss for lack of subject matter
jurisdiction, a court may look at materials other than the
pleadings to decide the jurisdictional question. Sharp v.
Bivona, 304 F. Supp. 2d 357, 362 (E.D.N.Y. 2004) (citing
Robinson v. Gov't of Malaysia, 269 F.3d 133, 141 n. 6 (2d Cir.
2001)). The Court must accept all facts alleged in the complaint
as true but the Court may not make inferences in favor of the
party asserting jurisdiction. Smith v. Barnhart,
293 F. Supp. 2d 252, 254 (E.D.N.Y. 2003). While the party invoking the
jurisdiction of the Court has the burden of proof, "dismissal is
inappropriate unless it appears beyond doubt that the plaintiff
can prove no set of facts which would entitle him or her to
relief." Fortress Bible Church v. Feiner, No. 03-4235, 2004
U.S. Dist. LEXIS 9614, at *3 (S.D.N.Y. March 29, 2004) (citing
Sec. Investor Prot. Corp. v. BDO Seidman, LLP, 222 F.3d 63, 68
(2d Cir. 2000)).
ii. Fed.R. Civ. P. 12(b)(6)
When considering a motion to dismiss for failure to state a
claim, the Court "must `accept all of the plaintiff's factual
allegations in the complaint as true and draw inferences from
those allegations in the light most favorable to the plaintiff."
Bivona, 304 F. Supp. 2d at 362 (quoting Desiderio v. Nat'l
Ass'n of Sec. Dealers, Inc., 191 F.3d 198, 202 (2d Cir. 1999)). The
motion should be granted if "it appears beyond doubt that the
plaintiff can prove no set of facts in support of his claim which
would entitle him ...