The opinion of the court was delivered by: KEVIN FOX, Magistrate Judge
REPORT AND RECOMMENDATION
TO THE HONORABLE GEORGE B. DANIELS, UNITED STATES DISTRICT
Plaintiff Barton Fleishman ("Fleishman") filed this action pro
se, as the assignee of Mir-Bar Realty Corporation ("Mir-Bar"),
alleging usury and violations of the Racketeer Influenced and
Corrupt Organizations Act, 18 U.S.C. § 1961, et seq., ("RICO"
or "RICO Act") against defendants Victoria Peslak Hyman ("V.
Hyman"); Platinum Designs, Inc. ("Platinum Designs"); Steven
Hyman ("S. Hyman"); Bruce D. Friedberg ("Friedberg"); Friedberg &
Associates ("F&A"); Jack Hollander ("Hollander"); Robert L.
Rattet ("Rattet"); Jonathan S. Pasternak ("Pasternak"); Rattet,
Hollander & Pasternak, L.L.P. ("RHP"); Northern Equity,
Inc.*fn1 ("Northern Equity"); Lawrence I. Linksman
("Linksman"); Bridge Funding, Inc. ("Bridge Funding"); New York
Urban, Inc. ("New York Urban"); Fundex Capital Corporation
("Fundex"); Liberty Finance Corporation ("Liberty Finance"); and Anglo African
Shipping Company of New York, Inc. ("Anglo African")
(collectively, "defendants").*fn2 The defendants have all
filed motions to dismiss the complaint, pursuant to Fed.R. Civ.
P. 9(b) and 12(b)(6). S. Hyman, V. Hyman, and Platinum Designs
(collectively, "Hyman defendants") have also moved for sanctions,
pursuant to Fed.R. Civ. P. 11 ("Rule 11").
The plaintiff alleges that in 1997, Mir-Bar sought to prevent
the sale, upon a foreclosure judgment, of real estate it owned,
located at 27-A Harrison Street, New York, New York ("Property").
According to the complaint, Mir-Bar was referred by Hollander to
Linksman for assistance in this effort, and Linksman, in turn,
referred Mir-Bar to V. Hyman. For these referrals, Hollander and
Linksman allegedly demanded fees of $25,000 each, and were paid
$25,000 and $12,500, respectively, by Mir-Bar.*fn3 On April 4, 1997, Mir-Bar entered into an agreement with V.
Hyman ("Hyman Agreement"),*fn4 the text of which is
incorporated into the complaint and a copy of which is attached
thereto. According to the Hyman Agreement, Mir-Bar arranged for
V. Hyman to purchase the mortgage, note and foreclosure judgment
for the Property from their previous holder. In exchange for a
one-time payment of $85,000 and eleven monthly payments of $9,375
by Mir-Bar to V. Hyman, the Hyman Agreement granted Mir-Bar the
right, for a period of one year, to purchase the mortgage, note
and foreclosure judgment from V. Hyman for $750,000, plus an
amount equal to certain costs incurred by V. Hyman in purchasing
these instruments from their previous holder. Additionally, the
Hyman Agreement required Mir-Bar to place in escrow, inter
alia, a fully executed deed transferring title of the Property
to V. Hyman. The escrowed items were to be held by Friedberg, an
attorney who was an agent of V. Hyman. The complaint
characterizes the Hyman Agreement as a $750,000 loan and the
payments by Mir-Bar to V. Hyman, Hollander and Linksman as
interest. The complaint also alleges that, pursuant to the Hyman
Agreement, Fleishman placed certain "equities" in escrow, whose
total value was $300,000.
According to the complaint, Mir-Bar also owned A Café, a
business that operated in Manhattan and which was under
bankruptcy protection in early 1998. The plaintiff alleges that
the bankruptcy court issued an order that would have resulted in
the dismissal of the bankruptcy petition had Mir-Bar deposited
$125,000 with that court on or before February 5, 1998, at 5:00
p.m. ("bankruptcy order"). Mir-Bar entered into an agreement with Bridge Funding ("Bridge
Agreement"), under which Bridge Funding was to lend Mir-Bar
$350,000,*fn5 to be used, in part, to make the payment
required by the bankruptcy order. The complaint alleges that
Linksman, who was president of Bridge Funding, entered into the
Bridge Agreement "through his companies," defendants Bridge
Funding, Fundex, Liberty Finance and Anglo African. The Bridge
Agreement also required Mir-Bar to pay to Bridge Funding a
commitment fee of $21,000, of which $3,500 was paid immediately.
The Bridge Agreement also required that the loan be secured by a
second mortgage upon the Property, and by unspecified assets
owned by the plaintiff and Miriam Fleishman, valued at no less
than $250,000. The terms of the Bridge Agreement permitted Bridge
Funding to cancel that agreement if Mir-Bar did not meet these
According to the complaint, Linksman demanded that the equities
owned by Fleishman that were being held in escrow, pursuant to
the Hyman Agreement, be released to Bridge Funding. The complaint
alleges that S. Hyman demanded a fee of $100,000 in exchange for
the release of the equities.*fn6 Mir-Bar alleges that
because it refused to pay this fee, Bridge Funding advised
Mir-Bar by telephone on the morning of February 5, 1998, that the
Bridge Agreement was canceled and that Bridge Funding would
retain the $3,500 commitment fee paid to it by Mir-Bar.
The plaintiff alleges that, later that day, Friedberg contacted
Mir-Bar by telephone and offered to deposit the required funds with the bankruptcy court
by the end of the day if Mir-Bar agreed to deed the Property to
V. Hyman. Mir-Bar rejected this offer.
Thereafter, according to the complaint, V. Hyman declared the
Hyman Agreement to be null and void, and caused a foreclosure
sale of the Property to be scheduled for February 24, 1998. The
complaint alleges that Friedberg demanded apparently on V.
Hyman's behalf a payment of $850,000 in order to satisfy the
mortgage on the Property. Mir-Bar, which had obtained funds from
another source, paid that amount to V. Hyman on February 19,
1998, in satisfaction of the mortgage and note that encumbered
The complaint claims that defendants' actions constitute: 1)
usury; 2) violations of New York, New Jersey, California, Arizona
and Pennsylvania criminal laws proscribing extortionate credit
transactions; and 3) violations of federal criminal laws against
mail fraud and wire fraud. In support of the mail fraud and wire
fraud allegations, the plaintiff alleges that the defendants made
use of the mails, the telephone and other wire communication
facilities for the purpose of defrauding Mir-Bar. The complaint
contends further that the defendants' conversion of escrow funds
to their own use violated an unspecified "State Statute" against
In further support of his RICO claims, the plaintiff also makes
the following allegations: 1) V. Hyman is an enterprise, and all
of the defendants, collectively, are an enterprise, within the
meaning of 18 U.S.C. § 1961; 2) the defendants' alleged
violations of state criminal laws occurred on more than one
occasion, within the ten year period preceding the filing of the
complaint, and constitute a pattern of racketeering activity, in
violation of 18 U.S.C. § 1962; 3) the defendants' alleged violations of federal mail fraud and
wire fraud statutes occurred on more than one occasion, within
the ten year period preceding the filing of the complaint, and
constitute a pattern of racketeering activity, in violation of
18 U.S.C. § 1962; and 4) the defendants "used income derived from a
pattern of racketeering activity in the operation of business."
Also included in the complaint are allegations that the
defendants conspired to violate the RICO statute, in violation of
18 U.S.C. § 1964(c), and that the defendants are each liable as
principals because they "aided, abetted, [c]ounseled, commanded,
induced or procured the commissions of the violations" of the
federal mail fraud, wire fraud, and RICO statutes.
On January 27, 2000, the district judge then assigned to this
action issued an order directing the plaintiff to file a RICO
statement no later than February 28, 2000 ("RICO Order").
Thereafter, the plaintiff filed an undated RICO statement, which
the docket sheet maintained for this action by the Clerk of Court
indicates was filed on March 7, 2000. Attached to the RICO
statement is a certificate of ...