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ALTHOUGH THE DEFENDANT DIRECTORS ON THE BOARD OF GEROVA DID NOT RESIDE OR DO BUSINESS IN NEW YORK, OTHER GEROVA DEFENDANTS PARTICIPATED IN THE FRAUDULENT SCHEME IN NEW YORK, THEREBY PROVIDING A SUFFICIENT BASIS FOR LONG-ARM JURISDICTION (FIRST DEPT).

The First Department, in a memorandum decision that does not lay out the facts, determined that, although the defendant directors on the board of Gerova did not reside or do business in New York, other Gerova defendants participated in the fraudulent scheme in New York thereby providing a sufficient basis for long-arm jurisdiction (the decision doesn’t indicate what “Gerova” is):

The Supreme Court properly concluded that defendants are subject to jurisdiction under New York’s long-arm statute because they were part of a conspiracy that involved the commission of tortious acts in New York (CPLR 302[a][2]…). Defendants were directors on Gerova’s board during most of the time when Gerova was involved in a fraudulent scheme. The amended complaint details the conspiracy to commit fraud using Gerova, the agreements … to loot Wimbledon (plaintiff), and Wimbledon’s resulting insolvency … . Although defendants did not reside or do business in New York, other Gerova defendants were in New York or interacted regularly with New York, including one of the masterminds of the fraudulent scheme … . Regarding their overt acts in furtherance of the conspiracy, defendants’ approval of a Gerova proxy statement on which they are listed and which seeks approval of the sham acquisition of a reinsurance company, their receipt of “hush money” to ignore certain red flags at Gerova, and their failure to correct misrepresentations or disclose material information to the public sufficed at this stage. Although defendants did not mastermind the conspiracy, their receipt of “hush money” allows the reasonable inference that they exerted “control” to the extent that the fraud could not have been accomplished without their acquiescence to the proxy and other misconduct … . Wimbledon Fin. Master Fund, Ltd. v Weston Capital Mgt. LLC, 2018 NY Slip Op 02903, First Dept 4-26-18

​CIVIL PROCEDURE (ALTHOUGH THE DEFENDANT DIRECTORS ON THE BOARD OF GEROVA DID NOT RESIDE OR DO BUSINESS IN NEW YORK, OTHER GEROVA DEFENDANTS PARTICIPATED IN THE FRAUDULENT SCHEME IN NEW YORK, THEREBY PROVIDING A SUFFICIENT BASIS FOR LONG-ARM JURISDICTION (FIRST DEPT))/LONG-ARM JURISDICTION  (ALTHOUGH THE DEFENDANT DIRECTORS ON THE BOARD OF GEROVA DID NOT RESIDE OR DO BUSINESS IN NEW YORK, OTHER GEROVA DEFENDANTS PARTICIPATED IN THE FRAUDULENT SCHEME IN NEW YORK, THEREBY PROVIDING A SUFFICIENT BASIS FOR LONG-ARM JURISDICTION (FIRST DEPT))/FRAUD (CIVIL PROCEDURE, JURISDICTION, CONSPIRACY ALTHOUGH THE DEFENDANT DIRECTORS ON THE BOARD OF GEROVA DID NOT RESIDE OR DO BUSINESS IN NEW YORK, OTHER GEROVA DEFENDANTS PARTICIPATED IN THE FRAUDULENT SCHEME IN NEW YORK, THEREBY PROVIDING A SUFFICIENT BASIS FOR LONG-ARM JURISDICTION (FIRST DEPT))/CONSPIRACY (CIVIL PROCEDURE, LONG-ARM JURISDICTION, FRAUDULENT SCHEME, ALTHOUGH THE DEFENDANT DIRECTORS ON THE BOARD OF GEROVA DID NOT RESIDE OR DO BUSINESS IN NEW YORK, OTHER GEROVA DEFENDANTS PARTICIPATED IN THE FRAUDULENT SCHEME IN NEW YORK, THEREBY PROVIDING A SUFFICIENT BASIS FOR LONG-ARM JURISDICTION (FIRST DEPT))

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