Hawk Mountain LLC v. Raymond A. Mirra, Jr., Ram Capital Grp., LLC
| Decision Date | 03 June 2016 |
| Docket Number | Civil Action No. 13-2083-SLR-SRF |
| Parties | THE HAWK MOUNTAIN LLC, GIGI JORDAN, MICHELLE E. MITCHELL, and KIMBERLY JORDAN, Plaintiffs, v. RAYMOND A. MIRRA, JR., RAM CAPITAL GROUP, LLC D/B/A RAM CONSULTING GROUP, LLC, RAM CAPITAL II, LLC, RAM REALTY HOLDINGS, LLC, JOSEPH A. TROLIO, JR., JOSEPH T. MOLIERI, BRUCE KOLLEDA, MARK A. KOVINSKY, JOSEPH J. TROPIANO, JR., LLC, BERNARD EIZEN, PATRICK J. WALSH, DANIELLE STEWART, RENEE M. SIGLOCH, FREDERICK FORTE, VIRGINIA L. HALL, BARIKUO, and SHELLY DEMORA, Defendants. |
| Court | U.S. District Court — District of Delaware |
Presently before the court in this action brought under the Racketeer Influenced and Corrupt Organizations Act ("RICO") are the following motions: (1) the motion to dismiss for failure to state a claim upon which relief can be granted of defendant Bernard Eizen ("Eizen") (D.I. 62); (2) the motion to dismiss for failure to state a claim upon which relief can be granted of defendants Shelly Demora, Frederick Forte, Virginia L. Hall, Bruce Kolleda, Mark Kovinsky, Bari Kuo, Raymond A. Mirra, Jr., Joseph T. Molieri, RAM Capital Group LLC, RAM Capital II, LLC, RAM Realty Holdings LLC, Renee M. Sigloch, Danielle Stewart, Joseph A. Troilo, Jr., and Joseph Tropiano (collectively, the "RAM Defendants") (D.I. 63); (3) the motion to dismiss for failure to state a claim upon which relief can be granted of defendant Patrick Walsh ("Walsh") (together with Eizen and the RAM Defendants, "defendants") (D.I. 67); (4) the motion for sanctions filed by the RAM Defendants (D.I. 258); and (5) plaintiffs' motion for leave to file a sur-reply brief regarding the motion for sanctions (D.I. 305). For the following reasons, I recommend that the court grant the motions to dismiss, deny the motion for sanctions, and deny the motion for leave to file a sur-reply brief.
In 1991, plaintiff Gigi Jordan ("Jordan") founded Ambulatory Pharmaceutical Services, Inc. ("APS"), a healthcare company specializing in providing individualized home infusion services. (D.I. 47 at ¶¶ 6, 40) Following the success of APS, Jordan entered into a business relationship with Mirra2 from 1991 through 2008, forming a complex network of holding companies, active businesses, and real estate holdings and trusts. (Id. at ¶¶ 7, 40) Mirra represented to Jordan that defendants Troilo, Molieri, Kolleda, Kovinsky, Eizen, Tropiano, and Walsh managed, controlled, and implemented Jordan and Mirra's respective business and financial affairs and acted co-equally for Jordan and Mirra as fiduciaries in the execution of their duties. (Id. at ¶¶ 55, 292)
In 1997, Mirra, Troilo, Molieri, and Kolleda organized RAM Capital to serve as a holding company for Jordan and Mirra's joint assets and business ventures. (Id. at ¶ 45) In 2002 and thereafter, Mirra, Troilo, Molieri, Kolleda, Tropiano, Kovinsky, and Eizen organized variousholding companies and trusts to allegedly obfuscate the actual ownership interests of Jordan's business holdings. (Id.) Jordan and Mirra did not immediately separate their finances after they divorced in November 2001. (Id. at ¶ 47)
Plaintiffs Hawk Mountain LLC ("HM LLC"), Gigi Jordan ("Jordan"), Michelle E. Mitchell ("Mitchell"), and Kimberly Jordan ("Kim Jordan") (collectively, "plaintiffs") initiated the instant RICO action on December 23, 2013. (D.I. 1) On July 9, 2014, Plaintiffs filed their second amended complaint, seeking to recover more than $225,000,000.00 allegedly stolen by defendants through numerous acts of forgery and a pattern of bank, mail, and wire fraud. (D.I. 47 at ¶ 3) Jordan was the sole manager of HM LLC, a Delaware limited liability company organized on December 3, 2002. (Id. at ¶¶ 16-17) Mitchell, in her capacity as trustee of the Intercession Trust, is a current beneficiary of the Hawk Mountain Trust (the "HM Trust"), which held the membership interests in HM LLC as its sole asset. (Id. at ¶ 18) Kim Jordan is an indirect beneficiary of the HM Trust, having assigned her interest in the HM Trust to the Intercession Trust. (Id. at ¶ 19)
The RICO scheme alleged by plaintiffs in the present matter has four facets: (1) the alleged conversion of Jordan's bank accounts, (2) the alleged conversion of HM LLC and HM Trust assets, (3) the allegedly fraudulent property schemes, and (4) the allegedly fraudulent Separation and Distribution Agreement ("SDA").
Jordan opened a Merrill Lynch account based on Mirra's recommendation in 1992. (Id. at ¶ 60) Walsh became Jordan's broker and private banker at Merrill Lynch. (Id. at ¶ 61) In 1997, Walsh advised Jordan to open two additional Merrill Lynch accounts to participate in acovered writing account program intended to eliminate losses below the principal amounts invested. (Id. at ¶¶ 63-66)
In April 2002, Mirra, Troilo, Molieri, Kolleda, Kovinsky, and Tropiano conspired with Walsh to open a new Merrill Lynch account jointly held by Jordan and Mirra. (Id. at ¶¶ 69-70) They then deposited more than $14 million of Jordan's money into the joint account without Jordan's knowledge or consent. (Id. at ¶¶ 71-73) Four months later, in September 2002, Mirra, Troilo, Molieri, Kolleda, Kovinsky, Tropiano, and Walsh allegedly forged Jordan's signature on account opening documents for the joint account. (Id. at ¶ 74)
In January 2003, Mirra, Troilo, Molieri, Kolleda, Kovinsky, and Tropiano conspired with Walsh to convert Jordan's three individual Merrill Lynch accounts into joint accounts held with Mirra. (Id. at ¶¶ 76-82) Thereafter, Mirra, Troilo, Molieri, Kolleda, Kovinsky, Tropiano, and Walsh opened additional Merrill Lynch accounts jointly held by Jordan and Mirra by forging Jordan's signature on account application forms. (Id. at ¶¶ 83-89) Between 2003 and 2006, Mirra, Troilo, Molieri, Kolleda, Kovinsky, Tropiano, and Walsh forged Jordan's signature on wire transfer authorizations purporting to authorize Merrill Lynch to transfer Jordan's money to Mirra and various entities owned or controlled by defendants. (Id. at ¶¶ 90-92) Between 2005 and 2008, Mirra, Troilo, Molieri, Kolleda, Kovinsky, Tropiano, and Walsh forged Jordan's signature on loan applications and wire transfer authorizations, causing Merrill Lynch to loan millions of additional dollars to Mirra, RAM Capital, and other entities owned and controlled by Defendants, using Jordan's assets as collateral for the loans. (Id. at ¶¶ 93-99)
On August 29, 1997, Jordan sold APS to Integrated Health Services, Inc. ("IHS") in exchange for more than $34 million in cash and stock options. (Id. at ¶ 100) Mirra subsequentlyurged Jordan to open a Smith Barney brokerage account in March 1998 with the proceeds from the sale. (Id. at ¶ 101) In June 1998, Mirra encouraged Jordan to execute a Smith Barney trading agreement, which was faxed to the account broker. (Id. at ¶ 102) Mirra, Troilo, Molieri, Kolleda, and Tropiano then coordinated the liquidation of Jordan's stock in the Smith Barney brokerage account and fraudulently transferred the funds out of the account without Jordan's knowledge or consent. (Id. at ¶ 103)
In 1998, Mirra conferred with Jordan regarding an "offshore asset protection" plan involving multiple offshore trusts, LLC's, and bank accounts. (Id. at ¶¶ 104-107) Pursuant to Mirra's proposal, both he and Jordan would transfer $7 million to a bank account in Geneva, Switzerland (the "BJB account"). (Id. at ¶ 108) A Nevis-based LLC named West-Highland Company LLC ("West Highland") was established, to be owned by Jordan initially, and then the bank holding the $7 million contributions would be held in an account to be established in the name of West Highland at BJB in Geneva. (Id. at ¶ 109) Jordan signed an agreement in accordance with Mirra's proposal. (Id. at ¶ 110) In July 1999, Mirra, Troilo, Molieri, Kolleda, and Tropiano forged Jordan's authorization to transfer the funds in Jordan's Smith Barney account to the BJB account, comprising the total initial funding for West Highland's BJB account. (Id. at ¶ 113) In 2001, Mirra fraudulently induced Jordan to assign him a fifty percent interest in West Highland by falsely representing that he had contributed half of the funds deposited into the account. (Id. at ¶¶ 112, 115)
Mirra, Troilo, Molieri, Kolleda, and Tropiano also used forged and fraudulent documents transmitted by mail and wire to convert Jordan's assets in various other bank and mutual fund accounts for their own use. (Id. at ¶ 116)
In 2002, Mirra, Troilo, Kolleda, and Kovinsky conspired with Eizen, a trusts and estates lawyer, to create a Grantor Retained Annuity Trust ("GRAT") called the Hawk Mountain Trust ("HM Trust"), with Jordan's son as the beneficiary. (Id. at ¶ 119) Eizen never met with or spoke to Jordan. (Id.) In December 2002, Mirra, Troilo, Kolleda, and Kovinsky advised Jordan to contribute millions of dollars to HM LLC and the HM Trust, indicating that Jordan would retain control over the funds, and Jordan agreed. (Id. at ¶¶ 120-129) However, once Jordan's money was deposited into HM LLC's Merrill Lynch account and the HM Trust, Mirra, Troilo, Molieri, Tropiano, Kolleda, Kovinsky, and Eizen forged Jordan's signature on a series of documents to legitimize their unauthorized actions in asserting control over the HM Trust and HM LLC. (Id. at ¶¶ 131-168)
Between 2006 and 2009, Defendants engaged in various efforts to conceal their scheme, including asserting that RAM Capital and its affiliates had no remaining value to distribute to Jordan, forging Jordan's signature on documents changing the registered agent for HM LLC, and assigning ownership interests in HM LLC to third parties without Jordan's knowledge or consent. (Id. at ¶¶ 169-176) In November 2009, Mirra, Troilo, Molieri, Kolleda, Kovinsky, and Eizen forged Jordan's signature on a document called the "Receipt, Release,...
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