Jackson v. Fischer

• Decision Date: 15 March 2013
• Docket Number: No. C 11–2753 PJH.,C 11–2753 PJH.
• Citation: 931 F.Supp.2d 1049
• Court: U.S. District Court — Eastern District of California
• Parties: Suzanne D. JACKSON, Plaintiff, v. William FISCHER, et al., Defendants.

931 F.Supp.2d 1049

Suzanne D. JACKSON, Plaintiff,

v.William FISCHER, et al., Defendants.

No. C 11–2753 PJH.

United States District Court, N.D. California.

March 15, 2013.

Alan H. Kaufman, Kaufman LLC, New York, NY, David Edward Snyder, Robert John Stumpf, Sheppard Mullin Richter & Hampton LLP, San Francisco, CA, for Plaintiff.

Tanya Herrera, Theodore A. Griffinger, Jr., Stein & Lubin LLP, Curtis Edward Smolar, Fox Rothschild LLP, San Francisco, CA, John Stuart Claassen, Claassen, Professional Corporation, Gregory Michael Doyle, Collins & Doyle Law Firm, Oakland, CA, David Robert Sidran, Thomas M. Crowell, Toschi Sidran Collins & Doyle, APC, Pleasanton, CA, Mary Cousland Garfein, Attorney at Law, Walnut Creek, CA, for Defendants.

ORDER GRANTING MOTIONS TO DISMISS

PHYLLIS J. HAMILTON, District Judge.

Defendants' motions to dismiss the second amended complaint for failure to state a claim came on for hearing before this court on December 5, 2012. Plaintiff Suzanne D. Jackson appeared by her counsel Alan H. Kaufman and Robert J. Stumpf; defendants Jon Sabes, Steven Sabes, and Marvin Siegel appeared by their counsel Tanya Herrera; defendants Mani Koolasuriya and Monvia Inc. appeared by their counsel Jake Molland; defendant Jorge Fernandes appeared by his counsel Mary C. Garfein; and defendant New Moon Girl Media, Inc. (or New Moon Girl LLC) appeared by its counsel Gregory M. Doyle and Thomas M. Crowell. Having read the parties' papers and carefully considered their arguments and the relevant legal authority, the court hereby GRANTS the motions as follows.

BACKGROUND

This is a securities fraud case that was originally filed in June 2011, by plaintiff Suzanne D. Jackson. In the second amended complaint (“SAC”), plaintiff asserts claims against 20 defendants—William Fischer; Jon Sabes; Steven Sabes; Marvin Siegal; Brian Campion; Lonnie Bookbinder; Mani Koolasuriya; Jorge Fernandes; Joshua Rosen; Steve Waterhouse; Jean Paul a/k/a “Buzzy” Lamere; Upper Orbit LLC; SpeciGen, Inc.; Peer Dreams, Inc.; Notebookz Inc.; ILeonardo.com, Inc.; New Moon LLC; Monvia LLC; CII Limited; and Sazani Beach Hotel.

• Defendant William Fischer (“Fischer”) is alleged to be an “investment manager” who placed Mrs. Jackson into numerous assertedly risky investments. He allegedly represented himself as a “sophisticated investment advisor” with “connections to high tech issuers” and “access to early investment opportunities,” but is in fact (according to plaintiff), a twice-convicted felon who has served time prison. He is also alleged to be the president of defendant SpeciGen, Inc. (“SpeciGen”).

• Defendant Upper Orbit LLC (“Upper Orbit”) is a Minnesota limited liability company, whose sole member is alleged to be Fischer.

• Defendants Jon Sabes (“J. Sabes”) and Steven Sabes (“S. Sabes”) are alleged to be Minnesota investors and financial services executives, and both are allegedly on the board of SpeciGen.

• Defendant Marvin Siegel (“Siegel”) is a pharmaceutical industry executive, and CEO of Robbeson Inc. (not a defendant), which is located in Pennsylvania. Plaintiff alleges that “[a]t times pertinent to this matter,” Siegel was the Chief Executive Officer (“CEO”) of SpeciGen.

• Defendant Lonnie Bookbinder (“Bookbinder”) is a biopharmaceutical industry executive and West Coast Regional Director at Calvert Research, located in North Carolina. Plaintiff alleges that “[a]t times pertinent to this matter,” Bookbinder was the CEO of SpeciGen.

• Defendant Jean Paul “Buzzy” Lamere (“Lamere”) was formerly president of a now-defunct company called Toppost, and is currently president of IPRental.com. Plaintiff alleges that “[a]t times pertinent to this matter,” Lamere served as a “consultant” to SpeciGen, and that he is a convicted felon. He allegedly resides in Minnesota and maintains an office in San Francisco, California.

• Defendant SpeciGen is a developmental biotech company, based in Palo Alto, and a Delaware corporation.

• Defendant Brian Campion (“Campion”) is allegedly the current president of SpeciGen, and was formerly Vice President for Corporate Development.

• Defendant Mani Koolasuriya (“Koolasuriya”) is an internet industry executive and managing partner of defendant Monvia Inc. (“Monvia”), located in Redwood City, California. Plaintiff alleges that “[a]t times pertinent to this matter,” Koolasuriya was an executive and director of defendant PeerDreams, Inc. (“PeerDreams”), and supposedly a “co-venturer” with Fischer and “involved in other investments with plaintiff Jackson.”

• Defendant Jorge Fernandes (“Fernandes”) is a high tech industry executive, alleged to currently be the chairman of VIVOtech, Inc., and chief executive of Mobilbucks, Inc. (“Mobilbucks”), located in Santa Clara, California. Plaintiff alleges that “[a]t times pertinent to this matter,” Fernandes was a director of defendant Monvia, and CEO of Mobilbucks.

• Defendant Monvia is alleged to be a Delaware corporation, based in Redwood City, California, with some apparent connection to defendant PeerDreams.

• Defendant PeerDreams is or was a Delaware corporation.

• Defendants Steve Waterhouse (“Waterhouse”) and Joshua Rosen (“Rosen”—“a film director and internet entrepreneur” located in Berkeley, California) were founding directors of defendant Notebookz, Inc. (“Notebookz”). Rosen was also founder and CEO of defendants Notebookz and ILeonardo.com, Inc. (“ILeonardo.com”).

• Defendants Notebookz and ILeonardo.com are or were Delaware corporations.

• Defendant New Moon Girl Media, Inc., or New Moon Girl LLC (“New Moon”) is a print and on-line media company based in Minnesota. Its state of incorporation (assuming it is a corporation) is not alleged in the SAC.

• Defendant CII Ltd. is a Caymans Island corporation allegedly formed by Fischer to invest in defendant Sazani Beach Hotel (located in Zanzibar, Tanzania) and other entities in Tanzania, Dubai, and elsewhere.

Plaintiff allegedly became acquainted with Fischer in October 2006. Beginning in the fall of 2006, Fischer suggested numerousinvestments to plaintiff, and she eventually invested (or loaned Fischer and/or various companies) between $3,000,000 and $4,000,000.

Plaintiff alleges that beginning in December of 2006 with a $250,000 loan to SpeciGen, Fischer “acting with, through and as agent and broker for the other defendants,” solicited loans and investments from plaintiff, in companies that included SpeciGen, Notebookz, ILeonardo.com, PeerDreams, CII Limited, Sazani Beach Hotel, New Moon, Toppost (not a defendant), and Rate–it–All (not a defendant). SAC ¶ 38.

Many of these investments were made via Upper Orbit, a limited liability company controlled by Fischer (and allegedly used by Fischer as a “broker-dealer”). See SAC ¶ 13. Plaintiff claims that Fischer never provided any written offering materials, or would provide her with documents to sign that had the signature page separate from the document; or that he would simply “orally inform” her of the investment, and direct her where to send the check. SAC ¶¶ 39–44.

In February 2008, Fisher allegedly made a proposition to plaintiff—that she loan Upper Orbit $1 million at 8% interest, plus a 40% share in the profits realized by Upper Orbit from “trading equities, making loans and investing in private equity opportunities.” SAC ¶ 53.

Plaintiff asserts that in the summer of 2008, she became concerned about the money she had invested with Fischer in the $1 million “trading account” and asked to have the money returned. SAC ¶ 57. In response, Fischer allegedly proposed a “restructuring” of loans plaintiff had made to Upper Orbit. SAC ¶ 58.

Plaintiff alleges that from the latter half of 2008 through 2009, Fischer continued to represent to her that he was working actively with SpeciGen, New Moon, PeerDreams, Toppost, and Notebookz to “improve their fortunes” and “turn it around.” SAC ¶ 59. By mid–2009, plaintiff allegedly became more concerned about missed loan payments, restructurings that were never finalized, a supposed sale of the Sazani Beach Hotel, and absence of current financial information. SAC ¶ 60.

In the SAC at ¶ 63, plaintiff lists the following statements allegedly made by Fischer between August 2008 and March 2010 for the purpose of “assuag[ing] her concerns about her investments”—

a. On August 4, 2008, Fischer reported he was meeting with a partner of a venture fund to review the SpeciGen patent portfolio, and told plaintiff that he had “pitched [the venture fund partner] about the hydrogen and now he has told partners at [the venture fund] and they are totally gungho about Thermal biology research.”

b. Also on August 4, 2008, Fischer reported that on August 1st, he had “signed a purchase agreement to sell the 50 shares of Sazani for $500,000” and that “[w]e close on the deal Oct. 1st.”

c. On August 18, 2008, Fischer advised that he would “be in Duluth with Mani [Koolasuriya] from Monvia ... for the rest of the week” and that they would be “getting ready for the New Moon site to launch ... and raising funds from local investors.”

d. On August 26, 2008, Fischer told plaintiff that “we are about to close a deal with Mobilbucks [run by Fernandes] in Dubai.”

e. On September 1, 2008, defendant Joshua Rosen reported, “This morning Mashable ranks ILeonardo.com above Google notebook as the best Research utility on the web.”

f. On October 27, 2008, Fischer “passed along” Koolasuriya's report that “the Dubai Cares deal signed” and that “[m]oney will start coming in by the end of week and all of it by November.” The “Dubai Cares” deal was allegedly represented as enhancing the value of PeerDreams, a Monvia project in which plaintiff had invested $200,000.

g. In late November 2008, Fischer (now allegedly employed by New Moon) wrote from Germany to say he was raising funds for New Moon in four German cities and would be doing further fund raising in Spain the following week.

h. In December 2008, Fisher reported, “I think I have gotten us a $300K...