Madanes v. Madanes
| Decision Date | 08 October 1997 |
| Docket Number | No. 96 CIV. 6398(LBS).,96 CIV. 6398(LBS). |
| Citation | 981 F.Supp. 241 |
| Parties | Monica MADANES, Plaintiff, v. Pablo MADANES; Miguel Madanes; Leiser Madanes; Richard Ortoli; Rubin & Bailin; Rubin, Kalnick, Bailin, Ortoli, Abady & Fry, P.C.; Baltimore Ltd.; Swansea Holding, Inc.; Transmarketing and Product Research Co. Panama; Procida, Ltd., a/k/a Pegaso Ltd.; and Does 1-10, Defendants. |
| Court | U.S. District Court — Southern District of New York |
Morrison & Foerster LLP, for Plaintiff, New York, NY, Charles L. Kerr, Carroll E. Neesemann, William E. Zuckerman, Of Counsel.
Arnold & Porter, for Defendants Pablo Madanes, Miguel Madanes, Leiser Madanes, Baltimore Ltd., Swansea Holdings, Inc., Procida Ltd. a/k/a Pegaso Ltd., and Transmarketing and Product Research Co. Panama, New York, NY, Michael D. Schissel, Tonia O. Klausner, R. Grant Brady, Of Counsel and Washington D.C., George E. Covucci, Tracey K. Friedlander, Of Counsel.
Piliero Goldstein Jenkins & Hall, LLP, for Defendants, Richard Ortoli, Rubin & Bailin, and Rubin, Kalnick, Bailin, Ortoli, Abady & Fry, P.C., New York, NY, Robert D. Piliero, Of Counsel.
Plaintiff Monica Madanes bring this action against various individual and corporate Defendants, alleging violations of RICO and asserting numerous statutory and common law claims under New York law. The Defendants move to dismiss the Complaint pursuant to Fed.R.Civ.P. 12(b)(1), 12(b)(2), 12(b)(6) and 9(b), as well as the doctrines of international comity, forum non conveniens and Princess Lida. For the reasons stated below, the Defendants' motions are granted in part and denied in part.
The Plaintiff Monica Madanes is an Argentine citizen and resident. The Defendants comprise two groups, individual and corporate. The individuals include Pablo Madanes, Miguel Madanes, Leiser Madanes ("Madanes Brothers"), all of whom are citizens and residents of Argentina; and Richard Ortoli ("Ortoli"), a New York lawyer, along with Rubin & Bailin ("R & B") and Rubin, Kalnick, Bailin, Ortoli, Abady & Fry, P.C. ("RKB"), Ortoli's New York law firms. The corporate Defendants include Baltimore Ltd. ("Baltimore"), a corporation formed under the laws of the British Virgin Islands; Swansea Holding, Inc. ("Swansea"), a Panamanian corporation registered to do business in New York; Transmarketing and Product Research Co. Panama ("Transmarketing"), a Panamanian Corporation; and Procida Ltd., a/k/a Pegaso Ltd. ("Procida"), a corporation formed under the laws of the Isle of Man.
The history of this case spans one decade, three continents and an array of prior lawsuits. At bottom, however, is a sibling rivalry not unlike those observed with tragic frequency in the annals of law and literature. The relevant allegations are summarized below.
Manuel Madanes was a wealthy Argentine businessmen. Prior to 1986, he managed the assets of the Madanes family, including those of his four children, Monica, Pablo, Miguel and Leiser Madanes. He did so pursuant to mutual powers of attorney executed by the Madanes siblings in 1970.
Following his wife's death in 1986, Manuel apparently "became despondent and lost interest in managing the Madanes family assets." (Compl. ¶ 26.) At that point, "the Madanes Brothers began taking managerial control over the Madanes family assets and investments, including many of Ms. Madanes' assets and investments." (Id.) Manuel died on November 23, 1988.
The Plaintiff alleges that around the time of her father's death, the Madanes Brothers initiated a scheme to divest her of her share of the family assets. She claims that "[w]orking together with Ortoli in New York, the Madanes Brothers began implementing a scheme in early 1988 to restructure all of the Madanes family overseas assets into various companies and trusts that would ensure that the Madanes Brothers would attain dominion and control over the assets, to the exclusion of their sister, Ms. Madanes, the rightful one-quarter owner of those assets." (Id. ¶ 1.) The allegation is that "the Madanes Brothers controlled the [family] assets for the sole purpose of enriching themselves." (Id. ¶ 2.) Ortoli, the family lawyer initially hired by Manuel in 1984, is alleged to have consorted with the Madanes Brothers since the outset of this scheme.
The Complaint describes a complex web of transactions involving the family assets. It also maintains that complexity itself has been one goal of these transactions, insofar as such complexity has impeded Ms. Madanes' ability to recover her share of the family assets. (Id. ¶ 22.) Mindful that the Plaintiff has alleged "that there exist additional accounts and assets of which she is not specifically aware" but to which she is entitled, (id. ¶ 3), the Court believes that Ms. Madanes' core allegations may be grouped into six analytically distinct categories. Each is described below.
Swansea Holding, Inc. ("Swansea") was incorporated in Panama in 1984. Soon thereafter the Board of Directors of Swansea granted to Ortoli a general power of attorney to act on behalf of this entity. Ms. Madanes has been a beneficiary of Swansea since its inception, and the Madanes Brothers became joint beneficiaries in 1986.
Starting in late 1985, Swansea invested $6.2 million in West Street Associates, a New York limited partnership which owned a building at 250 West Street in New York City. This building was eventually sold at a profit. Ms. Madanes alleges that in June of 1987, Miguel directed Ortoli to transmit to the Dolmy Account,1 located in Switzerland and under the exclusive control of the Madanes Brothers, all funds paid over to Swansea by West Street Associates resulting from the sale of 250 West Street. (Id. ¶ 95.) She further alleges that Ortoli soon thereafter instructed the manager of West Street Associates to make this transfer, and that between June 1987 and December 1988, West Street Associates transferred to the Dolmy Account over $7.6 million in funds belonging to Swansea "by means of wire transfers between New York City and Zurich, Switzerland." (Id. ¶ 97.) This money allegedly was later transferred to a secret escrow account at Credit Suisse Zurich ("Escrow Account") and then into the Procida Account in Switzerland. (Id. ¶¶ 134-35.)2 The Plaintiff claims that she has never received her rightful share of these distributions ("Swansea Distributions").
Bingham Investment Limited ("Bingham") and Tetra Investment Limited ("Tetra") were corporations formed under Bahamian law by Manuel in 1986. Each entity had related company management accounts ("Bingham and Tetra Accounts"). Upon Manuel's death, Ms. Madanes and the Madanes Brothers each owned a one-quarter beneficial interest and had signatory authority over the Bingham and Tetra Accounts. (Id. ¶¶ 111-12.)
The Plaintiff alleges that the Madanes Brothers made at least two fraudulent diversions with respect to these accounts. First, she contends that in November of 1988, Pablo directed Boston Trust to transfer over $1.6 million out of the Bingham Account to an account entitled Niwer, S.A., at Republic National Bank New York in New York City, which was controlled exclusively by the Madanes Brothers ("Niwer Transfer"). (Id. ¶ 113.)
Second, the Plaintiff alleges that following the death of Manuel, Pablo ordered the transfer of "all the funds out of the Bingham and Tetra Accounts to Account Number 541056 at Credit Suisse Zurich ("Transmarketing Account') owned by Transmarketing and in fact controlled by the Madanes Brothers." (Id. ¶ 114.) In fact, claims Ms. Madanes, between December 14, 1988 and January 29, 1990, a total of at least $17.2 million was transferred from the Bingham and Tetra Accounts to the Transmarketing Account. (Id. ¶ 116.) Like the Swansea Distributions, the funds in the Transmarketing Account were later transferred to the Escrow Account and then into the Procida Account in Switzerland.3 The Plaintiff contends that the Madanes Brothers wrongly diverted the Transmarketing funds to their own use. (Id. ¶ 118.)
As of December 1988, the four Madanes siblings jointly owned an account at Credit Suisse, New York ("New York Account"). The Plaintiff contends that between January 1989 and November 1992, the Madanes Brothers directed the transfer of approximately $7.5 million from the New York Account to other accounts in furtherance of their fraudulent scheme. (Id. ¶¶ 120-21.) She maintains that "the accounts to which some or all of the New York funds were transferred were owned or controlled exclusively by one or more of the Madanes Brothers." (Id. ¶ 122.)
A series of British Virgin Islands Trusts was established by the Madanes Brothers in late 1988 and 1989.4 One such set of trusts was entitled Parkhurst Trusts I-V. At the time these entities were created, Trust I pertained to Manuel, Trust II to Monica, Trust III to Miguel, Trust IV to Leiser and Trust V to Pablo. The trustee for Parkhurst Trusts I-V was Westchase Ltd. ("Westchase"), of which Ortoli was the director.
Under the Instruments of Trust, as of December 1989, Parkhurst Trusts II-V each owned a 25% interest in Lacovia, Inc. ("Lacovia"), a British Virgin Islands corporation created to hold the Madanes' family's interest in four other corporations. (Id. ¶¶ 42, 47.) Ortoli was the director of Lacovia. Periodically, the four companies owned by Lacovia would issue distributions of significant sums of money, which Ortoli would record in his capacity as director of both Lacovia and Westchase (the trustee of Parkhurst Trusts II-IV). The Plaintiff alleges that at the direction of the Madanes Brothers, Westchase and Ortoli "never transferred a full one-fourth of those funds to Parkhurst II and/or Ms. Madanes." (Id. ¶ 87.) This allegation is made upon information and belief.
Upon the death of Manuel, each...
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