United States District Court, S.D. New York
ANASTASIOS THOMAS BELESIS and ATB HOLDING COMPANY, LLC, Plaintiffs,
SAMUEL D. WAKSAL, individually and as the Founder, Chief of Innovation, Science and Strategy, and Chairman of the Board of Kadmon Pharmaceuticals, LLC, and Kadmon Corporation, LLC, KADMON PHARMACEUTICALS, LLC, KADMON CORPORATION, LLC, KADMON HOLDINGS, LLC, and all other corporate entities operating under the KADMON name, and STEVEN GORDON, as Executive Vice President, General Counsel, and Chief Administrative, Compliance and Legal, Officer of Kadmon Pharmaceuticals, LLC, and Kadmon Corporation, LLC, Defendants.
OPINION & ORDER
A. ENGELMAYER, District Judge
September 29, 2016, the Court (per the Honorable Analisa
Torres, to whom this matter was then assigned) dismissed, for
failure to state a claim under Federal Rule of Civil
Procedure 12(b)(6), the original complaint in this action,
which brought three federal securities fraud claims and state
law claims sounding in breach of contract, breach of the
implied covenant of good faith and fair dealing, fraudulent
inducement, unjust enrichment, misrepresentation, and
tortious interference. See Dkt. No. 30 ("Sept.
29 Op."). Plaintiffs now move, under Federal Rule of
Civil Procedure 15(a), for leave to file an amended
complaint. Dkt. No. 35. Because amendment would be futile,
the Court denies the motion.
Anastasios Belesis is a New York-based broker-dealer who was
the CEO of John Thomas Financial ("JTF"), a
financial services firm that closed in July 2013. Compl.
¶¶ 42, 59-60, Dkt. No. 35-1. On December 5, 2013,
in an unrelated administrative action, the "SEC issued a
ruling barring Belesis personally from, inter alia,
associating with any 'broker, dealer, investment adviser,
municipal securities dealer, municipal advisor, transfer
agent, or nationally recognized statistical rating
organization.'" Id. ¶ 61. Belesis is
also the sole managing member of corporate plaintiff ATB
Holding Company, LLC ("ATB"). Id.
Samuel Waksal is a scientist and entrepreneur. Waksal founded
Kadmon Pharmaceuticals, LLC ("Kadmon"), a
biotechnology company that produces innovative medical
products. Id. at 2 & ¶ 12. On June 10,
2003, in an unrelated criminal action, Waksal pled guilty to
perjury, obstruction of justice, bank fraud, wire fraud,
conspiracy to obstruct justice, and conspiracy to commit wire
fraud. United States v. Waksal, 02 Cr. 1041, Dkt.
No. 61 (S.D.N.Y.June 6, 2013) (also filed in this case at
Dkt. No. 27-1). As part of a civil settlement with the
Securities and Exchange Commission ("SEC"), Waksal
agreed to be permanently barred from being an officer or
director in a public company. SEC v. Waksal, 2 Civ.
04407, Dkt. No. 41 (S.D.N.Y. Jan. 31. 2005); see
also Compl. ¶¶ 28-30.
Steven Gordon is executive vice president, general counsel,
and chief administrative, compliance, and legal officer of
Kadmon Pharmaceuticals and Kadmon Corporation. Compl.
¶¶ 14-19. Kadmon Corporation "is the parent
corporation of Kadmon Pharmaceuticals"; Kadmon Holdings
"is a Delaware limited liability company that is the
previous name of Kadmon Corporation, LLC." Id.
¶¶ 16-17. The Court refers collectively to Kadmon
Corporation, LLC, Kadmon Pharmaceuticals, and Kadmon
Holdings, LLC, as the "Kadmon Defendants."
The Securities Contracts
proposed securities fraud claims arise from two separate
contracts. The first contract allegedly occurred on July 12,
2010. It involved Waksal's agreeing to sell "1000
Class B (voting) units of Kadmon Pharmaceuticals LLC to ATB
Holding Company, LLC for $1.00, " with the securities to
be delivered "as soon as possible ... but no later than
September 30, 2010" (the "2010 Agreement").
Compl. ¶¶ 21-24; accord Compl. Ex. A, Dkt.
35-2. Plaintiffs allege that at the time the contract was
entered into, Waksal did not intend to honor this agreement.
Compl. ¶ 73(i). The proposed complaint does not contain
any allegations as to the context for, or the parties'
motivations for entering into, this agreement.
March 15, 2012, Belesis contacted Waksal and asked to receive
the securities that the 2010 Agreement had contemplated.
Id. ¶ 31. In response, plaintiffs allege,
"Kadmon" issued Belesis a "membership
certificate" for 120, 000 units of Kadmon Holdings, LLC,
in satisfaction of the 2010 Agreement. Id.
¶¶ 32-33; Compl. Ex. C, Dkt. No. 35-2. Plaintiffs
allege that Belesis refused to accept this certificate and
told Waksal later that day that the proffered securities were
worth less than the contracted-for amount. Compl.
¶¶ 34-35; see also Compl. Ex. B, Dkt. No.
35-2. The following day, March 16, 2012, Belesis emailed
Kenneth Goodwin, Denis Dufresne, and Waksal, telling them he
was returning the certificate and "requesting] that a
corrected certificate be issued." Compl. ¶ 35. As
in their initial Complaint, plaintiffs do not explain who
Goodwin and Dufresne are. The Court, however, assumes from
context that Goodwin was Belesis's attorney, and that
Dufresne was Waksal and/or Kadmon's lawyer. See,
e.g., Compl. Exs. B-E (exhibits containing email
addresses indicative of law affiliations).
alleged, a series of negotiations regarding the securities to
be issued followed. The proposed complaint alleges four
events in detail.
on June 29, 2012, Louis Lombardo allegedly emailed Avi
Mirman, Goodwin, and Gordon, a proposed letter agreement
reoffering 120, 000 Class A units in Kadmon Holdings, LLC to
Belesis. Compl. ¶¶ 36-39. Belesis rejected that
offer. M¶40. As in their initial Complaint,
plaintiffs' proposed complaint does not explain who
Mirman and Lombardo are. However, it appears from a publicly
available newspaper article that Mirman was an investment
banker working for Belesis, and Lombardo was counsel for
Waksal and Kadmon.
on June 30, 2012, Gordon emailed Robert Bursky (acting as
counsel for Belesis), Mirman, Dufresne, and Lombardo, and
opined that in connection with the issuance of a Kadmon
private placement memorandum, Belesis's ownership
interest in Kadmon "would have to be disclosed to our
auditors." Compl. ¶¶ 41-43; accord
Compl. Ex. E at 1. Gordon also stated that "in
compensation for [Belesis's] personal assistance to
[Waksal] in trying to work around [Waksal's] [Officer and
Director Bar], " Waksal would pay Belesis $15 million,
and Belesis would "sign some type of release" of
his other securities rights. Compl. Ex. E at 1.
on July 2, 2012, Waksal sent Belesis a letter agreement in
which Waksal set forth "the terms of the proposed
agreement in detail." Compl. ¶ 44. The letter
agreement stated that "[i]n consideration of the
advisory services that [Belesis has] and will render to me
personally, including your assistance and consultant
regarding my director and officer bar and ability to maintain
a role with Kadmon Holdings LLC, " Waksal would pay
Belesis an "Advisory Fee" that "shall be equal
to 10% of all cash proceeds received by [Waksal pursuant to
various potential Kadmon liquidity events], subject to an
aggregate cap of [$15 million]." See Compl. Ex.
F at 1-2; accord Compl. ¶ 45. The letter
agreement contemplated that Belesis and ATB will ...