Nuevos Destinos, LLC v. Peck

• Decision Date: 02 December 2019
• Docket Number: Case No. 3:19-cv-00045
• Parties: Nuevos Destinos, LLC, et al., Plaintiffs, v. Samuel Peck, et al., Defendants.
• Court: U.S. District Court — District of North Dakota

Nuevos Destinos, LLC, et al., Plaintiffs, v. Samuel Peck, et al., Defendants.

Case No. 3:19-cv-00045

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NORTH DAKOTA EASTERN DIVISION

December 2, 2019

MEMORANDUM AND ORDER

I. INTRODUCTION

This case caught a second wind in North Dakota after its transfer from the U.S. District Court for the District of Columbia. The complaint alleges that 21 Defendants, nine of which have entered appearances, engaged in a racketeering scheme to defraud the Plaintiffs and others of millions of dollars—in Peru. The Plaintiffs contend that the Defendants operated a de facto Ponzi scheme with Peruvian businesses dealing in agricultural goods, ripping off investors and then, with the promise of repaying past losses, enlisting those same investors to recruit new victims.

The complaint includes five counts: (1) violation of 18 U.S.C. § 1962(c), otherwise known as the Racketeer Influenced and Corrupt Organizations Act ("RICO"); (2) conspiracy to violate RICO under 18 U.S.C. § 1962(d); (3) conspiracy to commit fraud; (4) fraud; and (5) breach of contracts. In eight separate motions, each of the nine appearing Defendants has moved to dismiss predicated on either lack of jurisdiction or failure to state a claim or both. Doc. Nos. 133-38, 141-42. In turn, the Plaintiffs have moved for permission to conduct jurisdictional discovery. Doc. No. 129. The parties have exhaustively briefed the issues (essentially twice now), and the Court has weighed all the arguments presented in this forum and the District of Columbia. For the reasons below, the Defendants' eight motions to dismiss are granted. The Plaintiffs' motion to conduct jurisdictional discovery is concomitantly denied.

II. BACKGROUND

As it must at the motion to dismiss stage, the Court accepts the complaint's factual allegations as true. See Doc. No. 1. Considering the number of defendants, a brief introduction of the parties is necessary at the outset. A summary of the allegations in the complaint and a synopsis of the procedural history follows.

A. Introduction of Parties

The Plaintiffs are two business entities and one individual. Nuevos Destinos, LLC ("NDL") is a limited liability company registered in Florida that purchases agricultural goods in Peru and exports them to the United States and elsewhere. Id. ¶ 9. Its principal place of business during the time period relevant to this lawsuit was the District of Columbia. Id. Nuevos Destinos Peru, S.A.C. ("NDP") is a business entity organized in Peru that "purchased agricultural products from Peru on behalf of NDL" as its agent. Id. ¶ 10. Like its American counterpart, NDP's principal place of business was the District of Columbia. Id. William P. Cook ("Cook"), a citizen of Virginia, is the individual plaintiff. Id. ¶ 11. Cook "personally financed" the transactions at issue and is a principal of NDL along with his wife, Ileana M. Boza, a U.S. permanent resident from Peru. Id. ¶¶ 9, 11.

Because most of the named Defendants have yet to appear, the Court will primarily discuss the nine Defendants that have responded to the claims through the pending motions. With that said, three Defendants that have not appeared warrant introduction for context because of their centrality to the claims. The first is Ignacio Harten Rodriguez Larrain ("Harten"), the alleged"central mastermind" of the purported racketeering enterprise. Id. ¶ 13. He is a citizen of Peru that may currently be living in the United States. Id. Second is Agricola Peruana Del Sol, S.R.L. ("APS"), a now defunct Peruvian business entity controlled by Harten as its General Manager that exported agricultural goods from Peru to the United States and abroad. Id. ¶¶ 13, 15. As alleged, APS served as the vehicle through which Harten and the other Defendants defrauded the Plaintiffs. Id. And third is Peruvian Organic International Trading, S.A.C. ("POIT"), the "successor in interest" to APS and an asserted wellspring of continued fraudulent activity that Harten covertly runs. Id. ¶ 23.

The appearing Defendants consist of one United States citizen, one United States corporation, five Peruvian citizens, and two Peruvian business entities. Chief among them is Samuel Peck ("Peck"), who along with Harten is alleged to have been the racketeering scheme's primary architect. Id. ¶ 12. Peck co-founded APS with Harten and was the company's majority shareholder. Id. A citizen of Colorado, he is also the Vice President of SKE Midwestern, Inc. ("SKE"), another named Defendant. Id. SKE, an agricultural export corporation that is incorporated and has its principal place of business in North Dakota, lost millions to Harten in a previous business deal gone bad. Id. ¶ 17. Peck and Harten allegedly used APS to recoup SKE's losses through further fraud. Id.

Moving to the Peruvian Defendants,¹ Emilio Farah ("Farah"), another former victim of Harten's fraudulent machinations and a citizen of Peru, sought to sell agricultural products with NDL and first introduced Cook to Harten. Id. ¶ 16. Farah is also the purported principal ofDefendants Convalor, S.A.C. ("Convalor") and Confactor, S.A.C. ("Confactor"), two Peruvian business entities. Id.

The remaining Defendants, collectively referred to as "the Costa Defendants," are all individual Peruvian citizens and members of Harten's family. Jorge Harten Costa, Sr. ("Jorge, Sr.") is Harten's father and served as a designated agent for APS, meaning his signature was required—at least initially—for Harten to access the company's funds. Id. ¶ 20. Harten's brother, Jorge Emilio Harten Rodriguez Larrain, Jr. ("Jorge, Jr."), was also a designated agent for APS and is now a shareholder in POIT. Id. ¶¶ 21, 23. Ofelia Maria Rodriguez Larrain Salinas de Harten ("Ofelia") is Harten's mother and Jorge, Sr.'s wife. Id. ¶ 22. Ofelia is allegedly POIT's "nominal public head." Id. Last is Javier Rodriguez Larrain Salinas ("Javier"), Ofelia's brother and Harten's uncle. Id. ¶ 24. Javier attended the initial meeting between Cook and Harten and propped up APS's legitimacy to NDL after having fallen victim to the scheme himself. Id.

B. Alleged Racketeering Activity

The claimed racketeering enterprise took form in 2007 after Peck started doing business with Harten on behalf of SKE. Id. ¶ 67. Allegedly a "compulsive gambler and former drug addict" who "owed money to a number of Lima's casinos," Harten quickly proved a less than trustworthy business associate. Id. ¶ 72. Peck and Harten then formed APS so that SKE could "exercise control over Harten" in future business dealings. Id. ¶ 67.

Harten initially held only a small ownership interest in APS, while Peck and two other U.S. citizens owned the remainder. Id. ¶ 68. Jorge, Sr., a lawyer, chartered APS with "safeguards" designed to constrain Harten's control over the company's funds. Id. ¶ 69. Specifically, Jorge, Sr., Jorge, Jr., and Peck oversaw APS's operations as "Apoderados" (designated agents) and hadto authorize any checks issued or cash withdrawn from company accounts. Id. With the safeguards in place, SKE then moved forward with a $1 million purchase of agricultural goods from APS. Id. Not long after, APS "ceased delivering product entirely." Id. ¶ 70. By May 2011, SKE had paid APS $3.6 million with little to nothing to show for it. Id. ¶ 74. SKE's President then told Peck "that his job was on the line and to do whatever it took to get [SKE's] money back from APS and Harten." Id. ¶ 73.

In response, APS reorganized. Jorge, Sr. removed entirely the prior restrictions on Harten's access to the company's funds, "making Harten the sole signatory on all of the APS accounts" in July 2011. Id. ¶ 77. Harten's ownership share increased in tandem to almost 50%, a move Peck characterized as "necessary to 'incentivize Harten' to work to recover SKE's lost $3.6 million." Id. ¶¶ 74-75. Peck remained the majority shareholder, with the other two U.S. citizens' shares becoming effectively nonexistent. Id. ¶ 75.

Untethered from corporate restraints, Harten and Peck devised the scheme that would ultimately ensnare the Plaintiffs. The plan called for Peck to "issue facially valid purchase orders on behalf of SKE and then Harten would shop them around to financing sources in Lima and abroad." Id. ¶ 76. Harten and Peck allegedly sold the purchase orders to investors with no intent of delivering product, pocketing the proceeds to repay SKE and strong-arming victims into joining the scheme with similar promises of eventual recompense. The scheme's first victims were Harten's own family members, including his uncle, Javier, who lost $500,000. Id. ¶ 79. Peruvian businessmen such as Farah, who lost $1.5 million, made for later targets. Id. ¶¶ 80-81.

NDL entered the picture in 2012. Id. ¶ 32. Up to that point, NDL had financed other export companies in Peru. Id. ¶ 31. Beginning that year, however, NDL ventured into the export businessdirectly. Id. To facilitate a potential business relationship, Farah introduced NDL to Harten in Peru in April 2012. Id. ¶ 32. Farah told NDL that "he had a good experience with Harten and APS" from a recent contract and that Harten was "honest" and "well connected." Id. Shortly thereafter in May, NDL met Peck and Harten at a lunch in Lima. Id. ¶ 88. Peck identified himself as an SKE employee and told NDL "that he had worked for a long time with Harten and APS, and Peck was very pleased with the relationship." Id. At no time during this meeting did Peck identify himself as a co-founder or majority shareholder of APS. Id. ¶ 91. Harten's family members, including Jorge, Sr. and Javier, also extolled Harten's reputation as an honest businessman. Id. ¶¶ 102-06, 112.

NDL inked its first contract with APS that same month to purchase 1566.6 metric tons of product for $1,584,600. Id. ¶¶ 36-37. APS delivered less than 64 metric tons. Id. ¶ 37. Despite the rocky start, NDL entered into several more contracts with APS spanning from May through October 2012. Id. ¶¶ 45, 47, 58, 64-65. NDL's...