Bongiorno v. Baquet, 20-cv-7288 (LJL)

Decision Date20 September 2021
Docket Number20-cv-7288 (LJL)
PartiesDR. WILLIAM BONGIORNO and BBB LAND HOLDINGS, S.A., Plaintiffs, v. WILLIAM BAQUET, et al., Defendants.
CourtU.S. District Court — Southern District of New York
OPINION AND ORDER

LEWIS J. LIMAN, UNITED STATES DISTRICT JUDGE

Defendants Fordham Financial Management, Inc., Fordham Holdings Group Inc., Six Diamond Resorts International, Inc., Six Diamond Resorts International, S.A., William Baquet, Phyllis Henderson, Charles Giordano, Bruce Inglis, Bob Sagarino Richard Kiibler, and Premchand Beharry move to dismiss the Amended Complaint, pursuant to Federal Rule of Civil Procedure 12(b)(1) for lack of subject matter jurisdiction pursuant to Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim for relief, and pursuant to Federal Rule of Civil Procedure 9 for failure to allege fraud with particularity. Dkt. No. 66. Defendants also move for an order sanctioning Plaintiffs under Federal Rule of Civil Procedure 11 and 28 U.S.C. § 1927. Dkt. No. 87. In addition to opposing Defendants' motions, Plaintiffs William Bongiorno and BBB Land Holdings, S.A. move to strike the exhibits submitted with Defendants' reply in support of their motion to dismiss. Dkt. No. 101.

For the following reasons, the motion to strike is granted in part and denied in part, the motion to dismiss is granted, and the motion for sanctions is denied.

BACKGROUND

The facts stated in the Amended Complaint are accepted as true for purposes of this motion.

I. The Relevant Parties

Plaintiff William Bongiorno (Bongiorno) is the sole owner of BBB Land Holdings, S.A. (“BBB Land” and collectively with Bongiorno, Plaintiffs), a corporation organized and existing under and by virtue of the law of Panama. Dkt. No. 41 (“Amended Complaint” or “Am. Compl.”) ¶¶ 3-4, 66, 99.

This case concerns loans and investments made by Bongiorno beginning in 2007 to Defendant Six Diamonds Resorts International, Inc. (“SDRI, Inc.”), a company with a Panamanian subsidiary, Defendant Six Diamonds Resorts International, S.A. (“SDRI, S.A.”), whose business is “to attempt to develop world class real estate resorts and communities in Panama for tourism and retirement destinations.” Id. ¶¶ 16-17. Defendants Frank Delape (“Delape”) and William Baquet (Baquet) created this subsidiary of SDRI, Inc. Id. ¶¶ 5-6, 16, 24. They also opened Defendant Landbridge Holdings International, S.A. (“LBH”), a company incorporated in Panama, as a vehicle for land acquisition and the development of high-end resorts in Panama. Id. ¶¶ 18, 23-24. LBH became a joint venture partner with SDRI, S.A., with the parent company SDRI, Inc. incurring all expenses of LBH. Id. ¶ 24.

Defendant Delape was CEO of SDRI, Inc. before Plaintiff Bongiorno served as CEO from 2010 to 2015. Id. ¶¶ 30, 64. Defendant Richard Kiibler (“Kiibler”) is alleged to be “Delape's right hand man.” Id. ¶¶ 7, 29. Defendants Bob Sagarino (“Sagarino”), Bruce Inglis (“Inglis”), and Premchand Beharry (“Beharry”) are on the Board of Directors of SDRI, Inc. Id. ¶¶ 11-13, 20.

Defendant Baquet was also CEO of Defendant Fordham Financial Management, Inc. (“FFM”), a New York-based registered broker-dealer and member of the National Association of Securities Dealers. Id. ¶¶ 14, 51, 61. Defendant Charles Giordano (“Giordano”) was and is a financial advisor at FFM and was a financial advisor to Bongiorno. Id. ¶¶ 8, 14, 21-22.

Defendant Phyllis Henderson was and is a Compliance Officer for FFM. Id. ¶ 9. Defendant ThinkEquity is a division of FFM. Id. ¶ 19. FFM is owned by Defendant Fordham Holdings Group Inc. (“FHG”). Id. ¶¶ 15, 40.

II. The Relevant Events
A. Bongiorno's Involvement with SDRI, Inc.

1. Bongiorno's Introduction to SDRI, Inc. and Initial Investments in the Company in 2007

Bongiorno first met FFM financial advisor Giordano in 2006. Id. ¶ 21. Giordano enticed Bongiorno to invest in a company called Isologen, an alleged maker of anti-wrinkle products, whose CEO was Delape. Id. ¶¶ 21, 23. The investment performed well, and Bongiorno secured a return on his investment.[1] Id. ¶ 22.

In or about 2007, Delape and Baquet invited Bongiorno and others on an all-expenses paid trip to Panama to pitch an opportunity to participate in SDRI, Inc.'s initial public offering (“IPO”) and to make bridge loans to the company.[2] Id. ¶ 25. During the presentations in Panama, Baquet and Delape “personally guaranteed” that investments in SDRI, Inc. would be secured by land held by LBH, which was then in a joint venture with SDRI, Inc.'s subsidiary SDRI, S.A. Id. ¶ 26. One of the properties purchased by SDRI, S.A. was called the “Brenon

Property.” Id. ¶¶ 26, 79. In 2007, Bongiorno purchased 500, 000 shares of SDRI, Inc. BB stock for $1 a share for a total of $500, 000. Id. ¶ 28. Later that same year, he purchased an additional 100, 000 shares of SDRI, Inc. CC stock at $1 a share, for a total of $100, 000. Id.

In purchasing these shares, Bongiorno relied on Baquet and Delape's statements that “LBH owns all the properties” and that the properties are worth $30 million in total. Id. ¶ 29. The Amended Complaint alleges, however, that the LBH land Bongiorno was promised would secure his investments was “not owned by defendants but by the Panamanian government. Id. ¶ 27. The land took the form of Right of Possession (“ROP”) parcels that “present unique obstacles to financing, developing and construction and to rationalizing title.” Id. In fact, [c]ertain ROP lands are not recorded in any central recording system.” Id. In addition, investors were not informed that a rival for the property was contesting the ROP, which further complicated the possibility of possession and development. Id. None of the investors were advised of these obstacles before signing on. Id. Further, Bongiorno did not know that Kiibler, who had personally done the appraisal, was “Delape's right hand man.” Id. ¶ 29.

2. Bongiorno's Loans to SDRI, Inc. Beginning in 2007 and His Tenure as CEO from 2010 to 2015

During this time, Bongiorno also made several of what he characterizes as loans to SDRI, Inc. First, close in time to the purchase of stock from the IPO in 2007, Bongiorno was asked by Giordano, Delape, and Baquet to make a bridge loan of $50, 000 to SDRI, Inc., which was repaid shortly after it was extended. Id. ¶ 34.

Almost simultaneously after he was repaid, “in 2007 or 2008 or “in August 2008, ”[3]Bongiorno made another bridge loan to SDRI, Inc., this time, for $101, 000 at the request of Baquet and Delape and with additional assurances from Giordano, Baquet, and Delape “that the investment was good and secured by land.” Id. ¶¶ 34, 36, 72. The Amended Complaint alleges that Baquet represented to Bongiorno that the note would be secured by a “first lien on the Brenon Property, ” that the Brenon Property had an appraised value of $8 million, and that the note would be repaid in six months from the anticipated sale or mortgaging of the Brenon Property with an 8% annual interest earned. Id. ¶¶ 72-73. The Amended Complaint also alleges Bongiorno entered into the loan based on the representation that he was receiving a pro rata share of ownership in the Brenon Property. Id. ¶ 73. The appraisal of the Brenon Property was obtained by Kiibler who-unbeknownst to Bongiorno and other investors-worked for Delape; there was no qualified appraisal on the Brenon Property. Id. ¶¶ 72, 76. Baquet and Delape allegedly knew this $8 million valuation was “severely excessive and inflated” and was “insufficient to pay off the loans secured by” the property. Id. ¶ 72. After receiving the promissory note prepared at SDRI, Inc.'s offices in Texas, Bongiorno mailed back a check for $101, 100[4] from New York. Id. ¶ 74.

Then, in April 2009, Bongiorno made another loan to SDRI, Inc. in the sum of $100, 000 at the request of Baquet and Delape who told him that the loan was needed as operating capital and that repayment would be secured by the Brenon Property. Id. ¶¶ 36, 79. This second promissory note stated: [I]n the event of a sale of the Brenon Properties, the proceeds of such sale shall be applied first to the repayment of indebtedness held by the mortgagee and second, to the payment of the amounts due under this note . . . proceeds after payment of the mortgagee paid on a pro-rata basis, if not in full.” Id. ¶ 80. As with the previous loan, Bongiorno decided to make this loan based on the representations that he was a secured lender to SDRI, Inc., that he would be receiving a pro rata share of ownership in the Brenon Property, that the land would be sold or mortgaged so that the note would be paid off in six months with an 8% annual interest earned, and that the property was valued at $8 million. Id. ¶ 81. Again, the promissory note was prepared in Texas and emailed to Bongiorno in New York; upon receipt, he mailed a check back to SDRI, Inc.'s offices in Texas. Id. ¶ 83.

In 2010, Bongiorno agreed to become CEO of SDRI, Inc., taking over the position held by Delape. Id. ¶ 30. As CEO, Bongiorno “br[ought in] a major hotel hotel partner willing to participate in the development, ” but Baquet and Delape “were unwilling to enter into the required negotiations.” Id. ¶ 33. Bongiorno therefore resigned as CEO on December 1, 2015. Id. ¶¶ 33, 63.

During the period in which he was CEO, Bongiorno again at the request of Baquet and Delape made a series of loans totaling $169, 833 “to keep SDRI, Inc. going.” Id. ¶ 37. In December 2014, Bongiorno requested a third promissory note for this amount because he was concerned about the lack of progress in the development of the Panamanian properties.” Id. ¶ 87. When he decided to resign as CEO, Bongiorno demanded that Baquet provide the promissory note. Id. ¶ 37. Bongiorno was told by Baquet with reassurance from Delape ...

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