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CONSPIRACY JURISDICTION DISCUSSED IN THIS COMPLEX LITIGATION INVOLVING MANY INTER-RELATED INTERNATIONAL CORPORATIONS AND ALLEGATIONS OF FRAUD.

The First Department, in an issue-rich decision which is sparse on facts, determined several jurisdiction and choice of law issues in a complex lawsuit involving a great many inter-related international corporations and allegations of fraud. One of the many jurisdiction issues discussed is so-called “conspiracy jurisdiction;” a sample of that discussion follows:

The remaining possibility for obtaining jurisdiction over defendants-appellants is conspiracy jurisdiction … . Defendants contend that the complaint does not allege an agreement by the Citco defendants to participate in a conspiracy to defraud Massachusetts Bay Transportation Authority Retirement Fund (MBTARF) and that MBTARF failed to identify an overt act. However, we find that the complaint contains factual allegations from which such an agreement can be inferred … . It also alleges an overt act, namely, that alleged co-conspirators Mr. Fletcher and FAM took $7.1 million of MBTARF’s investment in nonparty Fletcher Fixed Income Alpha Fund, Ltd. (Alpha) and used it in violation of Alpha’s offering memorandum as partial repayment of Leveraged’s loan to Citco Bank and SFT … .

Turning to the additional requirements for conspiracy jurisdiction … , we must examine Leveraged’s and Fletcher Income Arbitrage Fund Ltd. (Arbitrage)’s conspiracy claims with respect to personal jurisdiction. Leveraged and Arbitrage’s conspiracy claims allege that Mr. Fletcher and FAM fraudulently transferred cash from plaintiff Fletcher International, Ltd. to Unternaehrer in the FIP Transaction. The transfer was made by instructing SFT to transfer money from FIP’s account to Citco Bank’s account at HSBC New York, for further credit to SFT, for further credit to Unternaehrer. Using a New York bank account for a fraudulent scheme constitutes a tort within New York … .

MBTARF’s conspiracy claim alleges that Mr. Fletcher and FAM made misrepresentations to it about how its investment would be used. It also alleges that they diverted its money. Drawing inferences in favor of plaintiffs … , we find that the misrepresentation and diversion occurred in New York because FAM and Mr. Fletcher were located there.

We find that the additional Lawati factors (102 AD3d at 428) are satisfied as to Citco Group but not Citco Global. Since Citco Group is the parent, it is logical to infer that Citco Cayman (a New York co-conspirator because it has not contested jurisdiction) acted under its control. However, since Citco Global is only a sibling of Citco Cayman, it is not as logical to infer that Citco Cayman acted under Citco Global’s control. FIA Leveraged Fund Ltd. v Grant Thornton LLP, 2017 NY Slip Op 03887, 1st Dept 5-16-17

 

CIVIL PROCEDURE (CONSPIRACY JURISDICTION DISCUSSED IN THIS COMPLEX LITIGATION INVOLVING MANY INTER-RELATED INTERNATIONAL CORPORATIONS AND ALLEGATIONS OF FRAUD)/JURISDICTION  (CONSPIRACY JURISDICTION DISCUSSED IN THIS COMPLEX LITIGATION INVOLVING MANY INTER-RELATED INTERNATIONAL CORPORATIONS AND ALLEGATIONS OF FRAUD)/CONSPIRACY JURISDICTION (CONSPIRACY JURISDICTION DISCUSSED IN THIS COMPLEX LITIGATION INVOLVING MANY INTER-RELATED INTERNATIONAL CORPORATIONS AND ALLEGATIONS OF FRAUD)/CORPORATION LAW (JURISDICTION, CONSPIRACY JURISDICTION DISCUSSED IN THIS COMPLEX LITIGATION INVOLVING MANY INTER-RELATED INTERNATIONAL CORPORATIONS AND ALLEGATIONS OF FRAUD)/FRAUD (CONSPIRACY JURISDICTION DISCUSSED IN THIS COMPLEX LITIGATION INVOLVING MANY INTER-RELATED INTERNATIONAL CORPORATIONS AND ALLEGATIONS OF FRAUD)

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