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Levine v. Torino Jewelers

March 22, 2006


The opinion of the court was delivered by: Denise Cote, District Judge

Plaintiff Noel Levine ("Levine") brings this action against Torino Jewelers, Ltd. ("Torino") and several individuals associated with Torino, alleging claims under the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. §§ 1961 et seq., as well as claims for fraud, aiding and abetting fraud and embezzlement, and unjust enrichment under New York law. The defendants have moved to dismiss the First Amended Complaint ("Complaint"). For the reasons stated below, defendants' motion is granted in part and denied in part.


All claims are as alleged in the Complaint, unless otherwise noted. From 1996 through May 2003, Wendie Lauriola ("Lauriola") embezzled over $6 million from Levine. Levine is the owner of a real estate management company. In 1990, he hired Lauriola as the secretary and administrative assistant of the management company. In addition to her duties in managing the finances of the management company, Lauriola managed Levine's personal finances.

Lauriola, aided by her husband, Salvatore Lauriola, embezzled money from Levine by various means, including forging his name on checks drawn from his accounts. Levine was awarded a default judgment of more than $7 million against Lauriola and her husband in New York state court in 2003. In 2004, the federal government commenced a criminal proceeding against Wendie and Salvatore Lauriola. They pleaded guilty to bank fraud and were sentenced to 54 and 44 months' imprisonment, respectively. Plaintiff was able to recover an unspecified amount of the New York judgment by gaining title to real estate properties owned by the Lauriolas in South Carolina and Westchester County, New York, but represents that he has been able to recover "little" of the total funds embezzled by the Lauriolas.

Plaintiff alleges that, in a series of more than two hundred transactions, Lauriola made at least $1,107,290 in "purchases" from Torino. Levine alleges that these transactions, many of which did not involve actual sales of jewelry, were part of a money laundering scheme facilitated by defendants Gili Vaturi ("Vaturi"), Tiran Sinai, and Nirit Sinai.*fn1 According to plaintiff, Torino would charge Lauriola's credit cards, purportedly for jewelry purchases, and Lauriola would pay the credit card companies with checks drawn directly on Levine's accounts or with checks drawn on her own account, which contained money embezzled from Levine. Defendants would retain a percentage of the proceeds and transfer the balance to Lauriola in cash. Defendants fabricated bogus invoices to create the appearance that the transactions were legitimate.*fn2 Levine further alleges that "[a]s additional or alternative consideration for her role, the defendants on occasion provided . . . Lauriola with assorted items of jewelry," In addition, Lauriola paid Vaturi and Nirit Sanai personally for their participation in the scheme with personal checks. Levine alleges that the defendants "were aware that the monies . . . Lauriola used to pay the credit card 'purchases' were actually plaintiff's embezzled funds obtained by . . . Lauriola by virtue of her active engagement in forging plaintiff's signature on his checks."

On March 23, 2005, Levine filed this action, alleging RICO and New York state law claims against the defendants. On July 15, 2005, plaintiff amended his Complaint. Levine's amended Complaint alleges that Torino is an "enterprise" within the meaning of the RICO statute, and that Vaturi, Tiran Sinai and Nirit Sinai are each a "person" under the statute. Levine contends that Vaturi, Tiran Sinai, and Nirit Sinai each committed multiple related acts of laundering of monetary instruments, in violation of 18 U.S.C. § 1956(a)(1)(B)(i), and that the scheme was open-ended by nature. He also pleads a claim of conspiring to violate the RICO statute, 18 U.S.C. § 1962(c), against Vaturi, Tiran Sinai, and Nirit Sinai. Levine brings New York state law claims of fraud, aiding and abetting fraud and embezzlement, and unjust enrichment against Vaturi, Tiran Sinai, and Nirit Sinai, and constructive fraud and actual fraud under New York Debtors and Creditors Law §§ 273 and 276 against all defendants. Levine also brings a claim for attorneys' fees under New York Debtors and Creditors Law § 276-a against all defendants.

Defendants move to dismiss on a number of grounds. They contend that Levine lacks standing to assert a RICO claim. They challenge the sufficiency of his allegations supporting both the substantive RICO charge and the RICO conspiracy charge. They also contend that, if the RICO claims are dismissed, the Court should decline to exercise supplemental jurisdiction over the state law claims. In the alternative, defendants move for dismissal of the state law claims on various substantive grounds.


A complaint must contain "a short and plain statement of the claim showing that the pleader is entitled to relief." Rule 8(a)(2), Fed. R. Civ. P. The purpose of this requirement is to give fair notice of a claim and the grounds upon which it rests so that the opposing party may identify the nature of the case, respond to the complaint, and prepare for trial. Swierkiewicz v. Sorema, N.A., 534 U.S. 506, 512 (2002). Rule 8 is fashioned in the interest of fair and reasonable notice, not technicality, and therefore is "not meant to impose a great burden upon a plaintiff." Dura Pharms., Inc. v. Broudo, 544 U.S. __, __, 125 S.Ct. 1627, 1634 (2005). "The complaint thus need not set out in detail the facts upon which the claim is based." Twombly v. Bell Atlantic Corp., 425 F.3d 99, 107 (2d Cir. 2005) (citation omitted). If it is clear, however, that "no relief could be granted under any sets of facts that could be proved consistent with the allegations," the claim should be dismissed. Swierkiewicz, 534 U.S. at 514. In construing the complaint, the court must "accept all factual allegations in the complaint as true and draw inferences from those allegations in the light most favorable to the plaintiff." Jaghory v. New York State Dep't of Educ., 131 F.3d 326, 329 (2d Cir. 1997).

I. RICO Claims

The RICO statute makes it unlawful for any person employed by or associated with any enterprise engaged in, or the activities of which affect, interstate or foreign commerce, to conduct or participate, directly or indirectly, in the conduct of such enterprise's affairs through a pattern of racketeering activity or collection of unlawful debt.

18 U.S.C. § 1962(c). "[R]acketeering activity" covers specified felonious activities, including violations of 18 U.S.C. § 1956, which prohibits the laundering of monetary instruments. 18 U.S.C. § 1961. In addition to criminal penalties, the RICO statute provides for civil remedies that may be pursued by any person "injured in his business or property by reason of a violation of section 1962." 18 U.S.C. § 1964(c).

Defendants argue that plaintiff's RICO claim must be dismissed because (1) he lacks standing, (2) he does not adequately allege predicate acts of money laundering, (3) his allegations do not amount to a "pattern of racketeering activity," (4) he does not describe acts constituting "participation" in the enterprise by any defendant, and (5) he fails to allege a ...

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