Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

In re Platinum-Beechwood Litigation

United States District Court, S.D. New York

December 24, 2019

In re PLATINUM-BEECHWOOD LITIGATION
v.
PLATINUM MANAGEMENT (NY) LLC et al., Defendants. MARTIN TROTT and CHRISTOPER SMITH, as Joint Official Liquidators and Foreign Representatives of PLATINUM PARTNERS VALUE ARBITRAGE FUND L.P. (in Official Liquidation), and PLATINUM PARTNERS VALUE ARBITRAGE FUND L.P. (in Official Liquidation, Plaintiffs), MELANIE L. CYGANOWSKI, as Equity Receiver for PLATINUM PARTNERS CREDIT OPPORTUNITIES MASTER FUND LP, PLATINUM PARTNERS CREDIT OPPORTUNITIES FUND (TE) LLC, PLATINUM PARTNERS CREDIT' OPPORTUNITIES FUND LLC, PLATINUM PARTNERS CREDIT OPPORTUNITIES FUND INTERNATIONAL LTD., PLATINUM PARTNERS CREDIT OPPORTUNITIES FUND INTERNATIONAL (A) LTD., and PLATINUM PARTNERS CREDIT OPPORTUNITIES FUND (BL) LLC, Plaintiff,
v.
BEECHWOOD RE LTD. et al., Defendants.

          MEMORANDUM ORDER

          JED S. RAKOFF, U.S.D.J.

         Familiarity with the procedural background to Trott et al. v. Platinum Management (NY) LLC et al., 18-cv-10936 (JSR) (the "Trott action") and Cyganowski v. Beechwood Re Ltd. et al., 18-cv-12018 (JSR) (the "Cyganowski action") is here assumed. As relevant here, defendant Ezra Beren was belatedly served with a second amended complaint by plaintiffs Martin Trott and Christopher Smith, as Joint Official Liquidators and Foreign Representatives of Platinum Partners Value Arbitrage Fund L.P. (in Official Liquidation) ("PPVA") and with an amended third-party complaint by third-party plaintiff Senior Health Insurance Company of Pennsylvania ("SHIP") in (the Cyganowski action.) See Second Amended Complaint, 18-cv-10936, ECF No. 285 ("SAC"); Third-Party Complaint, 18-cv-12018, ECF No. 381 ("SHIP TPC").

         Now before the Court is Beren's motion to dismiss all claims against him in the SAC and the SHIP TPC. 18-cv-10936, ECF No. 490; 18-CV-12018, ECF No. 472; 18-cv-6658, ECF No. 704. For the reasons set forth below, the Court grants the motion to dismiss the Sixteenth Count (civil conspiracy) and the Seventeenth Count (civil RICO) in the SAC and the Fifth Count (civil conspiracy) and the Seventh Count (unjust enrichment) in the SHIP TPC, but denies the motion in all other respects.

         The Second Amended Complaint in the Trott Action

         I. Allegations in the Second Amended Complaint

         The following allegations against Beren are taken from the SAC and are assumed true for the purposes of assessing the motion to dismiss the SAC claims against Beren in the Trott action:

         Beren is part of the groups called the "Platinum Defendants" and the "Beechwood Defendants" in the SAC. SAC ¶ 3. Familiarity with the general allegations against the Platinum Defendants and the Beechwood Defendants is here assumed. See generally SAC. While Beren is implicated in certain instances of group pleading, the individualized allegations against Beren boil down to the following:[1]

From March 2007 until December 2015, Beren served as Vice President of Platinum Management. In January 2016, Beren was hired by BAM (defined below) as a credit analyst. [SAC ¶ 113.]
[Beren] until the end of 2015 was an investment manager with responsibility for overseeing and managing PPVA's subsidiary RJ Credit and its various investments (e.g., PEDEVCO), among other investments, as well as a required member of the valuation committee that had responsibility for valuing all of PPVA's assets and investments and was paid a salary plus incentive compensation based on the increased value of the investments he managed, whether realized or unrealized. In 2014, Beren also entered into an investment management agreement with BAM, for which he was paid based on the performance of the investments he managed, so he personally benefitted from the inflated asset values assigned to PPVA's assets by the Platinum Defendants and from the inflated distributions, fees and other payments made to Platinum Management by PPVA. Beren worked for BAM/the Beechwood Entities even when those parties ostensibly were on opposite sides of a transaction from PPVA. As of January 1, 2016, he worked at BAM full time. [SAC ¶ 12(xiii).]
Due to his management role with Platinum Management and Beechwood, Beren was involved in the acts that comprise the First and Second Schemes, including the misrepresentation of PPVA's NAV, the creation of Beechwood and the series of transactions between Beechwood Entities and PPVA that are included in the Second Scheme. [SAC ¶ 144.]
Beren was a portfolio manager for various PPVA investments and in that capacity participated in meetings of the valuation committee. As such, he personally benefitted from the inflated asset values assigned to PPVA's assets by the Platinum Defendants, and from the inflated distributions, fees and other payments made to Platinum Management by PPVA. [SAC ¶ 115. ]
The portfolio managers, such as Small, Beren, Levy and Steinberg also contributed to valuation and risk determinations. [SAC ¶ 256.]
The Platinum Defendants aggressively exercised this power, through Nordlicht, as well as through Levy and Small who were the portfolio managers for Black Elk. However, the other individual Platinum Defendants, including Bodner, Huberfeld, Landesman, Saks, Manela, SanFilippo, Ottensoser, Beren and Fuchs were aware of and participated in the actions and transactions with respect to Black Elk and the Black Elk Scheme as set forth below. [SAC ¶ 466.]

         The SAC brings claims against Beren, in his capacity as part of the Platinum Defendants, for breach of fiduciary duty (First and Second Counts), aiding and abetting breach of fiduciary duty (Third Count), fraud (Fourth Count), constructive fraud (Fifth Count), aiding and abetting fraud (Sixth Count), civil conspiracy (Sixteenth Count), and civil RICO (Seventeenth Count). It also brings claims against him, in his capacity as part of the Beechwood Defendants, for aiding and abetting breach of fiduciary duty (Seventh Count), aiding and abetting fraud (Eighth Count), unjust enrichment (Fourteenth Count), civil conspiracy (Sixteenth Count), and civil RICO (Seventeenth Count).

         II. Analysis

         In order to survive a motion to dismiss, a plaintiff must "state a claim to relief that is plausible on its face." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).[2] "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. When adjudicating a motion to dismiss, the Court "accept[s] all factual allegations in the complaint and draw[s] all reasonable inferences in the plaintiff's favor." ATSI Commc'ns, Inc. v. Shaar Fund, Ltd., 493 F.3d 87, 98 (2d Cir. 2007). Any claim rooted in fraud is subject to the heighted pleading standard of Rule 9(b). See Fed.R.Civ.P. 9(b).

         The relevant legal standards for each specific claim are set forth in the earlier Opinions and Orders of this Court disposing of other defendants' motions to dismiss the SAC and the SHIP TPC. See In re Platinum-Beechwood Litig., No. 18-cv-10936 (JSR), 2019 WL 1570808, at *8-10 (S.D.N.Y. Apr. 11, 2019) ("Trott FAC MTD Opinion"); In re Platinum-Beechwood Litig., No. 18-cv-10936 (JSR), 2019 WL 2569653, at *2-4 (S.D.N.Y. June 21, 2019) ("Trott SAC MTD Opinion"); In re Platinum-Beechwood ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.