United States District Court, S.D. New York
RANVIR YADAV, VEENA YADAV, PRIYANKA YADAV, SIDHARTH YADAV, SURINDER AHLUWALIA and DEEPAK SETH Plaintiffs,
OPINION AND ORDER
HENRY PITMAN, Magistrate Judge.
Ranvir Yadav, Veena Yadav, Priyanka Yadav, Surinder Ahluwalia and Deepak Seth commenced this action against Rajeev a/k/a "Roger" Punj, alleging claims for (1) violation of the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. § 1962(c), (2) violation of Section 10(b) of the Securities Exchange Act and Rule 10b-5, 15 U.S.C. § 78j(b), 17 C.F.R. § 240.10b-5, (3) conversion, (4) unjust enrichment, (5) breach of contract, (6) attempting to defraud clients in violation of the Commodities Exchange Act, 7 U.S.C. § 6b(a)(2)(A-B), (7) failing to make certain reports and maintain certain records in violation of the Commodities Exchange Act, 7 U.S.C § 6g, and (8) failing to segregate and separately account for customer funds in violation of the Commodities Futures Trading Commission's Rule 20, 17 C.F.R. § 1.20 (2013).
By notice of motion dated February 15, 2013 (Docket Item 66), plaintiffs moved for summary judgment with respect to their claims for fraud in violation of the Securities Exchange Act and Rule 10b-5, conversion, breach of contract and unjust enrichment. For the reasons set forth below, plaintiffs' motion is granted in its entirety.
Defendant maintained long-standing relationships with the plaintiffs, based on a common heritage and religion, and family ties (Affirmation of Adam J. Gana, dated Feb. 15, 2013 (Docket Item 67) ("Gana Aff.") Ex. D at ¶¶ 5-6; Ex. E at ¶¶ 5-6, Ex. F at ¶¶ 5-6, Ex. G at ¶¶ 5-6, Ex. H at ¶¶ 5-7). Defendant represented to plaintiffs that he was a registered commodities broker with the National Futures Association ("NFA") and that he worked at an unidentified Commodity Exchange (Gana Aff., Ex. D at ¶¶ 7-8, Ex. E at ¶¶ 7-8, Ex. F at ¶¶ 7-8, Ex. G at ¶¶ 7-8, Ex. H at ¶¶ 8-9). Defendant identified his trading firm as "K & M Commodities" and "Kap Trading, " or colloquially as "Kaplan's investment firm, " and provided plaintiffs with "Kap Trading" business cards (Gana Aff., Ex. D at ¶ 9, Ex. E at ¶ 9, Ex. F at ¶ 9, Ex. G at ¶ 9, Ex. H at ¶ 10). Defendant also appears to have claimed that he had a professional relationship with two trading firms identified as SMW Trading and FC Stone (see Gana Aff., Ex. D at ¶¶ 13-14, Ex. E at ¶¶ 13-14). Defendant further represented to plaintiffs that he could only make investments for them in his own name and directed plaintiffs to make checks payable directly to him or to provide him with cash (Gana Aff., Ex. D at ¶ 12, Ex. E at ¶ 12, Ex. F at ¶ 12, Ex. G at ¶ 12, Ex. H at ¶ 13).
A. Investments by Ranvir and Veena Yadav
Plaintiffs Ranvir and Veena Yadav ("RVY") provided defendants with $25, 000 on November 18, 2005 to open an account with SMW Trading for the purchase of United States Treasury Bills (Gana Aff., Ex. D at ¶ 13, Ex. E at ¶ 13, Ex. N at pg. 4). On April 12, 2006, RVY provided defendant with an additional $100, 000 to invest in an account at FC Stone (Gana Aff., Ex. D at ¶ 15, Ex. E at ¶ 15, Ex. N at pg. 5-8). After defendant told RVY that there was a "margin balance" at FC Stone, plaintiffs gave defendant an additional $32, 000 to deposit into the account on April 28, 2006 (Gana Aff., Ex. D at ¶ 16). However, at the end of that month, defendant provided RVY with an account statement showing that defendant deposited $132, 000 and had lost $131, 838 (Gana Aff., Ex. D at ¶ 17, Ex. Q at pg. 1).
Separately, defendant solicited RVY to invest through "K & M Commodities, " "Kap Trading" or "Kaplan's investment firm" ("KAP") (Gana Aff, Ex. D at ¶ 22). On April 19, 2006, RVY provided defendant with a $25, 000 check for this investment, and, from December 2006 through December 2007, they supplemented that investment with ten additional checks totaling $381, 000 and $35, 000 in cash (Gana Aff., Ex. D at ¶ 29, Ex. E at ¶ 26, Ex. N at 9, 11-20). In February and March of 2008, RVY provided defendant with an additional $200, 000 for the account (Gana Aff., Ex. D at ¶ 27, Ex. N at pg. 21, 24-29). At the point when RVY had invested $250, 000 in the scheme, defendant provided a "purported account statement" that claimed that this investment had grown to $950, 000 (Gana Aff., Ex. D at ¶ 25, Ex. E at ¶ 22). However, defendant's bank statements demonstrate that defendant deposited all of RVY's checks directly into his personal bank account and never invested anything on behalf of RVY (Gana Aff., Ex. T).
Defendant also entered into a contract with Ranvir Yadav on October 7, 2006 under which Yadav agreed to lend defendant $50, 000 in return for 35 monthly payments of $1, 000 and a lump sum payment of $50, 000 at the end of the 35-month period (Gana Aff., Ex. D at ¶¶ 19-21, Ex. M).
In total, defendant repaid $93, 000 to RVY between April 2006 and March 2008 out of the $848, 000 that was either lent to or invested through defendant (Gana Aff., Ex. D at ¶ 31, Ex. E at ¶ 28, Ex. O at pg. 8-13).
B. Investments by Priyanka Yadav
Defendant also solicited funds from Priyanka Yadav ("PY") for KAP, and, between December 1, 2005 and February 7, 2008, PY provided defendant with three checks totaling $100, 000 to invest on PY's behalf (Gana Aff., Ex. F at ¶¶ 14-15, Ex. N at pg. 11, 23). However, defendant's bank statements shows that these checks were also deposited directly into defendant's personal bank account and were never ...