Josephs v. Marzan

Decision Date05 January 2022
Docket NumberCIVIL 21-0749 (JRT/DTS)
CourtUnited States District Courts. 8th Circuit. United States District Court of Minnesota
PartiesMICHALEEN JOSEPHS, Plaintiff, v. ALBERTO JOSE MARZAN and PRESS MEDIA GROUP, INC. d/b/a VumaTV, Defendants.

Caitlinrose H. Fisher and Matthew D. Forsgren, FORSGREN FISHER MCCALMONT DEMAREA TYSVER LLP, for plaintiff.

Alberto Jose Marzan, pro se defendant.

Press Media Group, Inc., pro se defendant.

MEMORANDUM OPINION AND ORDER GRANTING DEFAULT JUDGMENT

JOHN R. TUNHEIM, CHIEF JUDGE UNITED STATES DISTRICT COURT

Plaintiff Michaleen Josephs brought this action against Defendants Alberto Jose Marzan and Press Media Group, Inc. (PMG) in connection with a series of investment loans Josephs made to the Defendants and other payments Josephs made for Defendants' benefit. Josephs filed a Motion for Default Judgment against both defendants requesting monetary damages and equitable relief. The Court will grant the Motion for Default Judgment and will award damages and equitable relief.

BACKGROUND

On March 22, 2021, Josephs filed a Complaint against both Defendants. (Compl., Mar. 22, 2021, Docket No. 1.) The Complaint alleges that Marzan induced Josephs to loan money to and invest in PMG and pay other expenses for Marzan and PMG conditioned on a series of promises that she would be paid back. (Id. ¶¶ 45-58, 60-93, 101-19.) Josephs and PMG entered into two written promissory notes guaranteeing repayment of $150, 000 that Josephs wired PMG as a loan and of $47, 000 in expenses Josephs had paid for PMG's benefit. (Id. ¶¶ 88-91; Compl Exs. A-B.) Marzan also personally guaranteed these notes in a written contract that also allowed Josephs to recover attorney fees and costs associated with enforcing payment. (Compl. ¶¶ 92-93; Compl., Ex. C.) Josephs also allowed Defendants to use her credit cards, wired money to them, and paid other expenses for their benefit. (Compl ¶¶ 72-76, 80-83, 106, 108.)

The Complaint alleges that instead of a legitimate investment Marzan and PMG defrauded Josephs. (See, e.g., id. ¶¶ 3-8, 44-57, 68-71, 146-157.) For example, Josephs wired PMG a $150, 000 loan-later secured by a promissory note-after Marzan represented to her that PMG had secured $2.5 million in funding from other investors and had never taken on debt. (Id. ¶¶ 48-49, 51, 56-58.) These representations were false. (Id. ¶¶ 50, 52-54.) In furtherance of this fraud, Marzan caused the use of both interstate wires and mail. (E.g., id. ¶¶ 147-48.)

The Complaint further alleges that Marzan has a history of engaging in various fraudulent schemes beginning at least by 2013. (Id. ¶¶ 31-37.) This includes insurance fraud, another investment-related fraud, and defrauding Josephs and other victims in connection with the scheme alleged in this case. (Id. ¶¶ 7, 32, 36, 71, 146.)

In addition to the debts owed to Josephs, the Complaint alleges that Marzan and PMG have a series of unpaid debts, default judgments, and court-ordered restitution awards. (Id. ¶¶ 41, 121-23.) According to the Complaint, Marzan has avoided criminal penalties on two occasions on the condition of repaying victims but has failed to fully do so in one case and only repaid another defrauded investor when criminal prosecution resumed after Marzan failed his payment obligations. (Id. ¶¶ 32-41.) Outside the Complaint, Josephs documented 8 default judgments from 2014 to 2020 against Marzan, PMG, and another company associated with Marzan. (Decl. of Matthew Forsgren (“1stForsgren Decl.”), Exs. C-J, Aug. 19, 2021, Docket No. 13.)[1]

Marzan has created a new company: Jupiter Rising Film. (Compl. ¶ 137.) The Complaint alleges that Marzan and Jupiter Rising Film seek funding without disclosing Marzan's history of fraud. (Id. ¶¶ 139-40.)

Josephs alleges that Marzan sought and received a temporary harassment restraining order against Josephs to prevent her from seeking repayment of the money Josephs was owed. (Id. ¶¶ 134-35.) Josephs moved to quash the restraining order and the parties engaged in two discovery conferences and an evidentiary hearing with witnesses that resulted in the Minnesota state district court vacating the restraining order. (1st Forsgren Decl. ¶ 23, Ex. O.) Until the restraining order was lifted, Josephs was unable to seek recovery of the various debts she was owed. (Compl. ¶¶ 6, 134.)

The damages alleged in the Complaint as demonstrated by supporting documentation Josephs filed with the Court show that Josephs loaned PMG or paid for expenses on behalf of PMG totaling $266, 233.36 from the written and oral contracts Josephs made with the Defendants over the course of the scheme. Josephs provided a $150, 000 loan and paid $47, 000 in expenses that were later guaranteed by two promissory notes entered into on January 16, 2020 at 8% interest, compounded annually with a December 13, 2020 maturity date. (Id. ¶¶ 87-90; Compl., Exs. A-B, Mar. 22, 2021, Docket No. 1-1.) She made wire transfers and Western Union transfers totaling $20, 600. (Compl. ¶ 129; Decl. of Michaleen Josephs (“Josephs Decl.”) ¶¶ 9-13, Ex. C at 2-10, Nov. 1, 2021, Docket No. 20; see also Josephs Decl., Ex. B at 2, Exs. D-E.) PMG and Marzan used her credit cards to charge a total of $46, 097.02 in expenses. (2nd Mem. Supp. Mot. Default J. at 14-15, Nov. 1, 2021, Docket No. 18; Josephs Decl. ¶¶ 15-18, Ex. B at 2-3, Ex. F.)[2] Josephs also incurred $2, 536.34 in miscellaneous expenses for PMG and Marzan.

(Josephs Decl. ¶¶ 19-25, Ex. B at 3, Exs. G-H.) Josephs has not been repaid any of these loans or expenses. (Compl. ¶¶ 129-31.)

In addition to these loans and expenses PMG and Marzan induced Josephs to pay as investment and business expenses, the Complaint alleges that Marzan sought her help securing, paying for, and furnishing an apartment for his personal use conditioned on an agreement that he would pay Josephs back. (Compl. ¶¶ 61, 109-10, 119.) Marzan never paid for the apartment and took the furniture without paying Josephs for it. (Id. ¶¶ 109, 119, 127-28.) Supporting documentation shows that Josephs paid $25, 155.00 in rent, a $3, 000 security deposit which she did not recover, and $17, 937.19 furnishing the apartment for a total of $46, 092.19. (Josephs Decl. ¶¶ 27-28, Exs. B, I-J, M.)

Finally, Josephs has also incurred significant attorney fees and costs seeking to recover in this case as well as opposing the harassment restraining order. (Mem. Supp. Mot. Default J. at 41, Aug. 19, 2021, Docket No. 12; 2nd. Decl. of Matthew Forsgren (“2ndForsgren Decl.”) ¶¶ 8-13, Nov. 1, 2021, Docket No. 19.) Josephs incurred $125, 442.60 in attorney fees and costs opposing the restraining order and $58, 284.50 through October 2021 in attorney fees and costs in this lawsuit.[3] (2nd Forsgren Decl. ¶¶ 10, 13, Exs. 1-3.)

Both Defendants were served on April 15, 2021. (Summons, May 19, 2021, Docket No. 4.) Neither Defendant made an appearance, answered, or filed any motion in the case. The clerk entered default against both Defendants on May 27, 2021. (Entry of Default, May 27, 2021, Docket No. 8.); see also Fed. R. Civ. P. 55(a). On August 19, 2021, Josephs filed a Motion for Default Judgment against both Defendants. (Mot. Default J., Aug. 19, 2021, Docket No. 10.). At the Motion Hearing on October 14, 2021, the Court ordered additional documentation of the requested monetary damages and briefing on the requested equitable relief. (Min. Entry, Oct. 14, 2021, Docket No. 17.) Josephs submitted this documentation and briefing on November 1, 2021. (2nd Mem. Supp. Mot. Default J.; 2nd Forsgren Decl.; Josephs Decl.)

DISCUSSION
I. CAUSES OF ACTION

“Upon default, the factual allegations of a complaint (except those relating to the amount of damages) are taken as true, but it remains for the court to consider whether the unchallenged facts constitute a legitimate cause of action, since a party in default does not admit mere conclusions of law.” Murray v. Lene, 595 F.3d 868, 871 (8th Cir. 2010) (quotation omitted). The Court concludes that the Complaint has properly alleged facts sufficient to support a viable cause of action on each claim.

Count I asserts a Racketeering Influenced and Corrupt Organizations (RICO) Act claim against Marzan under 18 U.S.C. §§ 1962(c), 1964. A RICO claim must have four elements: (1) an enterprise (2) engaged in racketeering activity (3) forming a pattern of such activity and (4) conduct of the defendant in support of the enterprise. Crest Const. II, Inc. v. Doe, 660 F.3d 346, 353 (8th Cir. 2011).

“Three elements must be proven to show that a RICO enterprise existed: (1) a common purpose that animates the individuals associated with it; (2) an ongoing organization with members who function as a continuing unit; and (3) an ascertainable structure distinct from the conduct of a pattern of racketeering.” United States v. Lee, 374 F.3d 637, 647 (8th Cir. 2004). The facts in the Complaint demonstrate a common purpose among Marzan and various entities including PMG of enriching Marzan and paying his personal expenses rather creating actual investment opportunities and legitimate businesses. The undisputed facts also demonstrate there is an ongoing organization with Marzan and various corporate entities functioning for this common purpose. Finally, they show that the structure is sufficiently distinct from the conduct and from Marzan. The entities are distinct from the conduct because they would still exist as businesses even if “the slate were wiped clean of the underlying racketeering activity.” See Handeen v. Lemaire, 112 F.3d 1339, 1352 (8th Cir. 1997). And the enterprise is sufficiently distinct from Marzan because he is distinct from PMG, a corporate entity with its own legal status and rights. See Cedric Kushner Promotions, Ltd. v. King, 533 U.S. 158, 163-65 (2001).

Therefore, Josephs adequately establishes...

To continue reading

Request your trial

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT