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Mikhlin v. HSBC

February 26, 2009


The opinion of the court was delivered by: Charles P. Sifton (electronically signed) United States District Judge


SIFTON, Senior Judge.

Alexander Mikhlin, Boris Tulman, GBA International Holding Group, Inc. ("GBA"), Nash Trucking, Inc., and Borax Paper, Inc. ("plaintiffs") commenced this action against defendants HSBC, Patricia Frey,*fn1 Gennario DiNatale a/k/a Gerard DiNatale a/k/a Gennaro DiNatale, Fortunato DiNatale, Alabama Realty Partners, LLC, Silver Pasta, LLC, and Gold Pasta, LLC on March 31, 2008.*fn2

Plaintiffs assert claims under the Civil Racketeering Influenced and Corrupt Organizations Act ("RICO"). See 18 U.S.C. §§ 1961 et seq. Specifically, plaintiffs allege violations of 18 U.S.C. § 1962(b)-(d), which is quoted in full below. Now before this Court are the HSBC defendants' and the DiNatale defendants' motions to dismiss. For the reasons set forth below, the motions are granted.


The following facts are taken from plaintiff's complaint in this action and the parties' papers submitted in connection with this motion. The facts alleged in the Complaint are presumed to be true for the purposes of the 12(b)(6) motion to dismiss.

Plaintiffs allege that each plaintiff is either a producer of fresh pasta, a supplier of packaging materials for the pasta products, or a shipper of the pasta products. Compl. ¶ 1.*fn3 Non-party Canada Bread purchased pasta products from GBA and submitted purchase orders to plaintiffs*fn4 on a weekly basis. Id. Canada Bread wired payment for its orders directly into the business operating account of plaintiff GBA. Id. GBA's operating account was held at a branch of HSBC in Brooklyn, New York, managed by defendant Priscilla Frey. Id. at ¶ 3.

In September 2006, defendant Fortunato DiNatale*fn5 opened a second operating account for GBA, with the assistance of defendant Frey, who "permitted, authorized, cooperated, concealed and/or fraudulently permitted" him to do so "so as to defraud, induce, convert, and intercept monies wired by Canada Bread..."*fn6 Id. Fortunata DiNatale was listed as the sole signatory on the second operating account, although he had no involvement as an official or shareholder in GBA. Id. ¶ 5. This second account was concealed from plaintiffs. Id. ¶¶ 2,3.

Defendants then sent correspondence to Canada Bread directing it to wire payments into the second operating account, which Canada Bread did. Id. ¶ 4. Defendants had total control over the deposits in the second operating account and virtually all the wired deposits were funneled to Fortunato DiNatale, Gennario DiNatala, Alabama Realty, Silver Pasta or Gold Pasta.*fn7

Canada Bread's payments, totaling approximately $880,000, were deposited into this account from September 2006 through March 2007. Id. ¶ 5.


In considering a motion pursuant to Rule 12(b)(6), a court should construe the complaint liberally, "drawing all reasonable inferences in the plaintiff's favor," Chambers v. Time Warner, Inc., 282 F.3d 147, 152 (2d Cir. 2002) (citing Gregory v. Daly, 243 F.3d 687, 691 (2d Cir. 2001)), although "mere conclusions of law or unwarranted deductions" need not be accepted. First Nationwide Bank v. Helt Funding Corp., 27 F.3d 763, 771 (2d Cir. 1994). Indeed, conclusory allegations "will not suffice to prevent a motion to dismiss." Smith v. Local 819 I.B.T. Pension Plan, 291 F.3d 236, 240 (2d Cir. 2002). On a motion to dismiss, "[t]he issue is not whether a plaintiff will ultimately prevail but whether the claimant is entitled to offer evidence to support the claims." Villager Pond, Inc. v. Town of Darien, 56 F.3d 375, 378 (2d Cir. 1995).

Nevertheless, to survive a 12(b)(6) motion to dismiss, the allegations in the complaint must meet the standard of "plausibility." See Bell Atl. Corp. v. Twombly, 127 S.Ct. 1955, 1970 (2007). Although the complaint need not provide "detailed factual allegations," id. at 1964; see also ATSI Commc'ns v. Shaar Fund, Ltd., 493 F.3d 87, 98 n. 2 (2d Cir. 2007)(applying the standard of plausibility outside Twombly's anti-trust context), it must "amplify a claim with some factual allegations . . . to render the claim plausible." Iqbal v. Hasty, 490 F.3d 143, 157-158 (2d Cir. 2007) (emphasis in original) (holding that the plaintiff's complaint adequately alleged the personal involvement of the Attorney General because it was plausible that officials of the Department of Justice would be aware of policies concerning individuals arrested after 9/11). The test is no longer whether there is "no set of facts" that plaintiff could prove "which would entitle him to relief." Bell Atlantic, 127 S.Ct. at 1969 (quoting Conley v. Gibson, 355 U.S. 45-46 (1957)) ("[t]he phrase is best forgotten as an incomplete, negative gloss on an accepted pleading standard"). Rather, the complaint must provide "the grounds upon which [the plaintiff's] claim rests through factual allegations sufficient 'to raise a right to relief above the speculative level.'" ATSI Commc'ns, 493 F.3d at 98 (quoting Bell Atlantic, 127 S.Ct. at 1965).

The relevant provisions of RICO provide that:

(b) It shall be unlawful for any person through a pattern of racketeering activity or through collection of an unlawful debt to acquire or maintain, directly or indirectly, any interest in or control of any enterprise which is engaged in, or the activities of which affect, interstate or foreign commerce.

(c) It shall be 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.

(d) It shall be unlawful for any person to conspire to violate any of the provisions of subsection (a), (b), or (c) of this section.

18 U.S.C. § 1962(b)-(d).

I. First and Second Causes ...

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