United States District Court, S.D. New York
JENNIFER S. WILKOV, Plaintiff,
AMERIPRISE FINANCIAL SERVICES, INC., f/k/a AMERICAN EXPRESS FINANCIAL ADVISORS, INC., and NEW YORK COUNTY DISTRICT ATTORNEY, Defendants.
MEMORANDUM OPINION AND ORDER
TAYLOR SWAIN, United States District Judge.
October 7, 2015, Defendant Ameriprise Financial Services,
Inc., f/k/a American Express Financial Advisors, Inc.
(“Ameriprise”), removed this case from the
Supreme Court of the State of New York, asserting that this
Court has subject matter jurisdiction of this case under 28
U.S.C. § 1332. (Docket entry no. 1 (“Notice of
Removal”).) In the Notice of Removal, Ameriprise
asserted that, although both Plaintiff Jennifer S. Wilkov and
Defendant New York County District Attorney (the
“DA” and, together with Ameriprise,
“Defendants”) were citizens of the State of New
York, the New York County District Attorney had been
“improper[ly]” joined to the matter because
“there is no possibility, based on the pleadings, that
the plaintiff can state a cause of action against the
[DA].” (Notice of Removal, p. 3.)
Court ordered Ameriprise to show cause why the joinder of the
DA to this action was fraudulent (docket entry no. 47), and
Ameriprise responded on December 21, 2016 (docket entry no.
49). Additionally, both Ameriprise and the DA have moved,
pursuant to Federal Rule of Civil Procedure 12(b)(6), to
dismiss Plaintiff's Amended Complaint (docket entry no.
24) for failure to state a claim.
Court has carefully reviewed the submissions of all parties
submitted in connection with the instant motions, including
Ameriprise's response to the Court's Order to Show
Cause and, for the following reasons, finds that the joinder
of the DA to this action was fraudulent and therefore does
not defeat this Court's subject matter jurisdiction, and
further grants both Defendants' motions to dismiss.
following recitation of facts is drawn from the Amended
Complaint (docket entry no. 24 (“AC”)), the
well-pleaded factual allegations of which are taken as true
for the purposes of this motion to dismiss, as well as the
public record, including records of earlier civil and
criminal cases, of which the Court may take judicial
hired Wilkov as a financial advisor in approximately December
2000, pursuant to an employment agreement. (AC ¶¶
7-8.) In approximately 2004, Wilkov became a Franchisee with
Ameriprise, and signed Ameriprise's Franchise Agreement.
(AC ¶ 9.) Wilkov alleges, upon information and belief,
that the Franchise Agreement required Ameriprise to supervise
all aspects of Wilkov's activities as an investment
advisor. (AC ¶ 10.)
2004, Wilkov began investigating a possible investment
opportunity in the California real estate market with a
company called CPM Holdings. (AC ¶¶ 12-13.) Wilkov
was referred to this opportunity by her brother. (AC ¶
12.) Wilkov alleges that Ameriprise was required to review
all transactions involving family members, but did not
provide any independent review or supervision of Wilkov's
investments in CPM Holdings. (AC ¶ 14.) However, Wilkov
did make her compliance supervisor aware of the CPM Holdings
investment, and was told that Ameriprise did not invest in
real estate, and Wilkov was therefore “on her
own” with respect to that investment. (AC ¶
15-16.) Wilkov alleges that Ameriprise required her to
complete a form that was not compliant with applicable
regulations in order to continue investing with CPM Holdings.
(AC ¶ 16-17.)
to public records maintained by the Financial Industry
Regulatory Authority (“FINRA”), Wilkov's
association with Ameriprise ended in August 2005.
(See Declaration of Virginia T. Shea, Esq., at Ex. A
(FINRA BrokerCheck report).) The CPM Holdings investment was
ultimately revealed to be fraudulent, leading Wilkov to plead
guilty on January 22, 2008, to multiple fraud-related charges
in New York State court. (See docket entry no. 30
(Declaration of ADA Elizabeth Krasnow (“Krasnow
Decl.”)), Ex. B (People v. Wilkov, Ind. No.
2765/07, Plea Transcript (“Plea Tr.”)).) Wilkov
alleges, on information and belief, that in testimony before
the Grand Jury considering whether to indict her, Ameriprise
employees falsely represented to the Grand Jury that Wilkov
did not inform Ameriprise about the investment in CPM
Holdings. (AC ¶ 21.)
her plea allocution, Wilkov admitted that she began
soliciting investors for the investments in CPM Holdings in
January 2005. (Plea Tr. 13:25-14:3.) Wilkov further admitted
that she failed to disclose to her Ameriprise clients that
she was receiving commissions from CPM Holdings. (Plea Tr.
14:10-15.) She also admitted that she falsely told her
Ameriprise clients that she had worked with CPM Holdings and
its principals in the past, and had done due diligence on the
investment, when in reality she “had no basis for
recommending their company and their investments.”
(Plea Tr. 15:3-7.) Wilkov's investors lost all of their
money. (Plea Tr. 15:25-16:2.) Wilkov herself received $142,
000 in referral commissions from CPM Holdings. (Plea Tr.
from the criminal case, in June 2007, the DA commenced a
civil asset forfeiture proceeding against Wilkov. (AC ¶
45.) In connection with the forfeiture proceeding, Wilkov was
ordered to liquidate her apartment and provide the proceeds
to the DA. (AC ¶ 46.) Wilkov did so, and her attorneys
provided checks totaling $190, 192.22 to the DA to be placed
in escrow. (AC ¶ 47.) From that escrow account, the New
York State Court overseeing the forfeiture proceeding ordered
certain funds paid to Wilkov's lawyers and additional
monies paid to Wilkov's victims. (AC ¶¶ 48-51.)
Wilkov alleges that a remaining balance of $21, 528.36 was
not allocated or returned to her. (AC ¶ 51.) Wilkov
signed a Stipulation of Discontinuance of the asset
forfeiture proceeding in which Wilkov specifically waived
“each and every defense, objection, remedy and/or right
of appeal she may have under the constitutions, statutes,
common law, and equitable doctrines of the United States and
the State of New York in connection with the . . .
disposition of the . . . civil forfeiture action against
her.” (Krasnow Decl., Ex. H (Morgenthau v.
Wilkov, No. 405072/07, Stipulation of Discontinuance).)
2011, Plaintiff's father commenced a FINRA proceeding
against Ameriprise.In that proceeding, Ameriprise was
“found to have committed common law fraud, securities
fraud, negligence, breach of contract, and other findings,
” and Plaintiff was absolved of contributory liability.
(AC ¶ 25.) The Amended Complaint asserts, without
specificity, that “testimony” from the FINRA
hearing “made it clear that facts, including the
allegations proffered to the District Attorney were
deliberately false.” (AC ¶ 26.)
Verified Complaint filed in New York State Court, Wilkov
asserted two causes of action against Ameriprise (for breach
of contract or unjust enrichment, and for fraud) and one
cause of action against the DA. (Notice of Removal, Ex. 1
(Verified Complaint).) The cause of action against the DA was
captioned as one “for permanent injunction, mandamus,
and/or other equitable relief.” (Id., p. 7.)
Amended Complaint filed in this Court, Wilkov reasserted
these three claims and added a fourth cause of action,
against the DA, for prosecutorial misconduct and for ...