Sunday, May 08, 2005

Rabbi Judah Feinerman, of Far Rockaway, Queens confessed to stealing $20 million in insurance fees from clients who were left without insurance

2 Comments:

At 4:52 AM, Blogger jewishwhistleblower said...

1)
http://www.nypost.com/news/regionalnews/43732.htm

SCAM RABBI'S PRAYER
By CARL CAMPANILE

May 8, 2005 -- A prominent Orthodox Jewish leader is begging a federal judge for mercy in the hope of avoiding prison time for a multimillion-dollar business scam — and he has a slew of rabbis, civic and business leaders pleading his cause, The Post has learned.
Rabbi Judah Feinerman, 79, of Far Rockaway, Queens, confessed to being a crooked insurance broker who, along with a co-defendant, collected $20 million from trucking companies and firms without ever setting up the policies with insurance companies. He used the money to pay for a home in Boca Raton, Fla., among other personal expenses.

Feinerman's downfall has reverberated through the tightly knit Orthodox Jewish community. More than 100 friends have written Manhattan federal Judge Richard Holwell appealing for compassion.

Among those going to bat for Feinerman is Touro College President Bernard Lander, who said Feinerman's "life has been replete with acts of decency and charity," Lander said.

Herbert Dobrinsky, vice president of Yeshiva University, said Feinerman "opened his home to individuals and families who became destitute."

Rabbi Aaron Eli Glatt, an infectious-disease specialist, wrote, "There are literally thousands of individuals who have directly benefited from this good man's hospitality and kindness."

Widely regarded as a charitable man who helped build synagogues and financed tuition for needy students, Feinerman was treasurer of the Synagogue Council of America. He long was a trustee on the governing board of his alma mater, Yeshiva, and chaired the board of the university's rabbinical school from 1986 to 2000.

He was also one of 20 U.S. Jewish leaders invited to a historic gathering at the Vatican in 1990.

"I stand before you today as a broken individual. I pleaded guilty to a crime because I am guilty," Feinerman said in a statement he has prepared for his sentencing.

He repented having "sullied" his family, which includes four children, 17 grandchildren and three great-grandchildren.

"I am old. I am tired," said Feinerman, who is in ailing health. "My fear now is that I may die alone in jail . . . Judge Holwell, with every fiber of my being, I hope to seek atonement for my misdeeds and I beg for your mercy."

His sentencing is slated for May 19. The U.S. Bureau of Prisons has recommended 30 months in jail.

2)
http://www.usdoj.gov/usao/nys/Press%20Releases/FEBRUARY04/Feinerman.Indict1PR.pdf

United States Attorney Southern District of New York FOR IMMEDIATE RELEASE CONTACT: U.S. ATTORNEY’S OFFICE FEBRUARY 5, 2004
MARVIN SMILON, HERBERT HADAD,MICHAEL KULSTAD
PUBLIC INFORMATION OFFICE(212) 637-2600
FBI JOSEPH A. VALIQUETTE JAMES M. MARGOLIN (212) 384-2715, 2720 U.S. POSTAL INSPECTION SERVICE DAVID ENG (212) 330-3387

CHAIRMAN OF THE BOARD AND PRESIDENT OF INSURANCE AGENCY INDICTED BY U.S. FOR $20 MILLION FRAUD; ACCUSEDOF USING FUNDS FOR YACHTS AND NIGHTCLUB SPREES
DAVID N. KELLEY, the United States Attorney for the Southern District of New York, PASQUALE D’AMURO, the AssistantDirector in Charge of the New York field Office of the FBI, and WILLIAM E. KEZER, the Postal Inspector in Charge of the New York Division of the United States Postal Inspection Service, announced today the unsealing in Manhattan federal court of a 32-count Indictment charging JUDAH FEINERMAN, the Chairman of theBoard and owner of C.S.I.R. Enterprises, Inc. (“CSIR”), aninsurance brokerage agency in Manhattan, and FRANK P. DEPRISCO,the President of CSIR, in connection with a massive scheme toobtain $20 million in insurance premiums and fees by fraud. The Indictment charges FEINERMAN and DEPRISCO withconspiracy, wire fraud and mail fraud, and also charges DEPRISCO with witness tampering and obstruction of justice.

According to the Indictment, between 1998 and February 2003, the defendants and their co-conspirators offered to place insurance policies for various CSIR clients, collected millionsof dollars in premiums and fees to pay for that insurance, and then never placed the insurance. The Indictment also chargesthat DEPRISCO, FEINERMAN and others placed insurance for CSIR clients, then either cancelled that insurance or replaced it withlesser coverage, but retained the premiums collected or divertedthose funds to other purposes. For example, the Indictment charges that in July 1998, DEPRISCO and FEINERMAN billed R.D. Management (“R.D.”), a realestate management firm located in Manhattan, $1.9 million for a three-year insurance policy issued by Zurich Insurance Co. (“Zurich”). In early 1999, in order to avoid paying the remaining installments on that policy, the defendants directed anemployee at CSIR to cancel the Zurich policy without informing R.D., and to replace it with a less expensive policy from another insurance company. According to the Indictment, the defendants then submitted fake invoices charging R.D. millions of dollarsthrough 2002 for the Zurich policy as well as for other insurance that was cancelled or never placed. The Indictment further charges that during 2002, DEPRISCO and FEINERMAN collected more than $10 million from 14 different commercial trucking companies located throughout the United States to pay for insurance policies that the defendants claimed CSIR had placed through Lloyds of London. It was also
charged that at DEPRISCO’s direction, employees of CSIR sent out fake insurance binders to prove that the insurance existed, and misrepresented that certain investor groups affiliated with Lloyds of London were underwriting the insurance. According to the Indictment, this insurance did not exist, and CSIR had no authority to issue the polices through Lloyds of London. The Indictment also charges that after DEPRISCO and FEINERMAN admitted to their clients in September 2002 that the Lloyds of London insurance did not exist, they continued to collect premiums for other non-existent insurance from other victims. The Indictment alleges that from October 2002 through February 2003, DEPRISCO and FEINERMAN collected more than $1.3 million from Bennett International, a trucking company located in Georgia, to pay for insurance that was never issued. In addition, according to the Indictment, DEPRISCO and FEINERMAN collected more than $800,000 from Algin Management, aproperty management firm located in Forest Hills, New York, forinsurance, most of which was cancelled or never placed becausethe defendants diverted those funds to pay CSIR’s lawyers. In all, the Indictment alleges that the defendants andtheir co-conspirators obtained approximately $20 million throughthe scheme, and that 18 companies and their insurance agents were defrauded. The Indictment charges that the defendants diverted the proceeds from this scheme to FEINERMAN’s personal bank account; to the defendants’ family members, personal associates, and co-
conspirators; and to DEPRISCO in the form of cash. In addition,it was charged, the defendants spent millions of dollars inproceeds from the scheme, on, among other things: two yachts; DEPRISCO’s residence; FEINERMAN’s wife’s home in Boca Raton,Florida; restaurant and night club bills sometimes exceeding $10,000 per night; gambling at casinos in Las Vegas; personal bodyguards; limousine services; and numerous other personal expenses of the defendants. The Indictment further charges that when DEPRISCO and one of his co-conspirators (“CC #1”), who was an employee of CSIR, determined in September 2002 that CSIR could no longer hide the fact that the Lloyds of London insurance it had been selling did not exist, DEPRISCO paid CC #1 to take responsibility for the scheme, and agreed to take care of CC #1's wife should CC #1 go to prison. According to the Indictment, at DEPRISCO’s direction, CC #1 prepared a handwritten letter at that time in which he took sole responsibility for the scheme. The Indictment further charges that over the next several months, after DEPRISCO learnedthat the FBI and a grand jury in Manhattan were investigating the scheme, DEPRISCO directed CC #1 to tell the FBI that DEPRISCO and FEINERMAN were not involved in the scheme, and that CC #1 had paid bribes to two insurance brokers in order to facilitate the scheme. According to the Indictment, in December 2002, pursuant to his arrangement with DEPRISCO, CC #1 told this story, which was false, to federal investigators during a meeting at the United States Attorney’s Office in Manhattan. The Indictment also seeks forfeiture of all property derived from proceeds of the alleged scheme, including approximately $20 million. Both DEPRISCO and FEINERMAN surrendered to the FBI today, and are scheduled to be presented today on these charges before United States Magistrate Judge DOUGLAS F. EATON. If convicted, DEPRISCO and FEINERMAN face maximum penalties of up to 20 years in prison for each wire and mailfraud charge, and up to 5 years for the conspiracy charge. In addition, DEPRISCO faces a maximum penalty of 10 years in prisonfor the witness tampering charge, and 20 years in prison for the obstruction of justice charge. Both defendants also face finesof more than $1 million. DEPRISCO, 40, lives in Brooklyn, New York. FEINERMAN, 78, lives in Far Rockaway, New York.
Mr. KELLEY praised the outstanding investigative efforts of both the Federal Bureau of Investigation and the United States Postal Inspection Service, and noted that the investigation is ongoing. Assistant United States Attorney JONATHAN R. STREETERin charge of the prosecution. The charges contained in the Indictment are merely accusations, and the defendants are presumed innocent unless and until proven guilty.
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At 5:22 AM, Blogger jewishwhistleblower said...

3)
Young drug firm now struggling to stay afloat

DENISE SMITH AMOS
April 12, 1993
St. Petersburg Times

Pinellas boosters thought they had scored a coup when they lured Fountain Pharmaceuticals Inc. away from Knoxville, Tenn., three years ago.

At the time the young health-care company was expected to employ 30 people and to grow to 75 employees in three years. Company founder Michael Fountain predicted sales of $10-million or more. County commissioners approved a $7-million industrial development revenue bond.

Three years later, publicly traded Fountain Pharmaceuticals is struggling to remain a going concern.

High administrative expenses and executive shakeups have left the company short on cash. The company gave back its bond, dropped plans for a manufacturing plant and cut expenses. It also re-examined conflicting relationships with company principals and shareholders.

And this month Fountain is introducing a new product line in an attempt to keep the company alive.

"I hope it will have a quick infusion (of revenues)," said John Walsh, Fountain's president.

"But it should not only be quick, but a sustained one. We're launching something that hopefully grows and grows over many years. It's quicker than only doing work for other pharmaceutical companies, because that takes time."

Fountain has its roots in the pharmaceutical business. Founded in 1989, it was one of a handful of companies that manufacture liposomes for the drug industry. Liposomes are microscopic fat cells that encapsulate medicines and other substances to transport them quickly beneath the skin and tissue to the target area.

But the drug business has not been enough to sustain Fountain.

Since its founding, Fountain has generated only minimal revenues but lost more than $8.8-million and nearly depleted a $10-million capital fund, gained from private investors and a public offering in 1990, according to company documents filed with the Securities and Exchange Commission.

The company may run out of operating funds this fall, the documents state. The company's independent auditors' report contained an explanatory paragraph questioning its ability to continue.

"We are not without plans to generate additional funds, if that becomes necessary," Walsh said. "When you're in the start-up mode, you're going to have the losses and not have the income."

In its early years Fountain wasted money on executive salaries and fees, said Dr. Charles Baxter, a Dallas surgeon and former board member. Its board, he said, was slow to prevent the expenditures because many members were unfamiliar with start-up companies.

"A greater percentage of the yearly budget had gone into what was not working, rather than what was working," he said.

Since Walsh joined the company last July, he has drastically cut costs, allowed some executives to leave and shifted the company's marketing emphasis to a new line of non-prescription, doctor-recommended skin care products.

Called the Lyphazome line, Fountain's sun screens, lotions and creams can be marketed quickly and relatively inexpensively to a larger audience than pharmaceutical manufacturers, he said. Fountain hopes to reach dermatologists, who, company officials hope, will recommend the over-the-counter products to consumers.

The liposomes enable them to be waterproof and rub-proof, he said.

Fountain also is continuing inroads in drug research and development, including developing a compound that delivers medication to burn victims and a pill that would eliminate the needles for vaccines.

But Fountain's progress has been marred by some changes at the top.

Michael Fountain, a company founder and the inventor of its proprietary technologies, resigned as the president in June. He has returned as a part-time consultant with a contract that will expire in August. He said that because he controls nearly 20 percent of the company's voting rights, he expects to remain involved.

Clark A. Marcus, a lawyer and former chairman of Fountain, resigned last July. Marcus' law firm had acted as general counsel. At Fountain, Marcus was paid an annual salary and benefits of nearly $200,000 for fiscal year 1991, and his law firm collected $123,000 in legal fees. Former board member Baxter said he was paid too much, given the company's small revenue base. Marcus, who now resides in Clearwater, disagrees, saying he was compensated for abandoning his lucrative law firm in New York. The New York Times two years ago wrote a story detailing Marcus' involvement in two other publicly traded start-ups in which he was paid disproportionately to those companies' revenues. The companies were investigated by the SEC. Marcus disputes the facts and conclusions of that story.

"(Fountain's) progress made during my time there was, by all indications, remarkable," he said.

"In a year and a half the company went from a lab in a remote part of the country to a company with a number of research contracts with major pharmaceutical companies, with a full-blown product line in Nieman Marcus, a private label line in Kmart, a sun screen with worldwide distribution and a major penetration in the diabetic market."

Two other former Fountain executives who, Baxter said, the board felt were overcompensated, were asked to resign in 1992. They have sued, alleging breach of contract.

And there are other concerns.

According to SEC documents, the company failed to update its stock offering materials from March 12 through July 29, 1992. The company is legally liable for any financial damages of people who exercised their options to purchase stock during that time. So far, no one has sued. The lapse occurred during executive changes, Walsh said.

At least two conflicts of interest cost the company money, Baxter said. Marcus' role as chief executive and chairman did not prevent him from charging substantial legal fees as general counsel, even though the board had expected to save money with this arrangement, Baxter said. The company has obtained new counsel. And, during fiscal 1991 and 1992, Fountain paid insurance premiums totaling $236,600 to an insurance brokerage 90 percent owned by Judah Feinerman, a principal shareholder. A subsequent bidding process has netted Fountain less expensive insurance, Baxter said.

Walsh said he does not question past expenditures; he is concentrating on generating revenues.

"Even though I thought we could have done things faster, I still contend that this is going to be one of the fastest growing start-up companies, with products out in the market," Walsh said.

"We will rise or fall with the Lyphazome technology. Right now we're starting to rise."

COLOR PHOTO; COLOR PHOTO, V. JANE WINDSOR; COLOR PHOTO, Special to the Times; Fountain Pharmaceuticals: 93, (3); Caption: President John Walsh; Lauren Kamer, a research chemist, works at Fountain Pharmaceuticals, 11201 Concept Blvd., Suite A, Largo; Microscopic "capsules," liposomes, that carry substances into the human body

4)
Decision of Interest.
June 11, 2003
New York Law Journal

Southern District

Judge Kram

RD Management Corp. v. Samuels - Plaintiff RD Management Corp. ("RD") brings this action against Walter Samuels, Marilyn Joy Samuels ("Joy Samuels") and J&W Management Corp. ("J&W") alleging violations of the Racketeer Influenced and Corrupt Organization Act ("RICO"), 18 U.S.C. 1961 et seq., and common law claims of conversion, breach of fiduciary duty, conspiracy to convert RD funds, and conspiracy to commit fraud. Defendants move to stay this action pending arbitration or, in the alternative, to dismiss the RICO claims pursuant to Federal Rule of Civil Procedure 12(b)(6). For the reasons set forth below, the motion to stay this action pending arbitration is denied, and the motion to dismiss the RICO claims is granted in part and denied in part.

Background

RD is a New York corporation engaged in the business of developing and managing commercial real estate, mainly retail shopping centers. See Compl. at pp.pp.6, 17. Defendant Walter Samuels is a shareholder and was president and a director of RD until September 10, 2002. See id. at pp.7; Affidavit of Jonathan D. Lupkin, dated November 15, 2002 ("Lupkin Aff."), Ex. 9, Minutes of Special Meeting of RD Board of Directors. Defendant Joy Samuels is also a shareholder of RD. See Compl. at pp.8. Defendant J&W is a New York corporation engaged in property management and purportedly owned, operated and controlled by Walter and Joy Samuels. See id. at pp.9.

RD is responsible for procuring and maintaining all forms of insurance necessary for the properties and assets it manages. See id. at pp.17. RD alleges that while Walter Samuels was president of the company, he had final decision-making authority on insurance-related matters. See id. Beginning in or about November 1995, RD retained C.S.I.R. Enterprises, Inc. ("CSIR") and Judd Associates, Ltd. ("Judd") for the purpose of obtaining insurance coverage for RD's properties and assets. See id. at pp.19. Judah Feinerman, Frank DePrisco, Sr., and Frank P. DePrisco, Jr., are allegedly affiliated with either CSIR or Judd (collectively, the "RD Brokers"). See id. at pp.pp.12-14. The RD Brokers are retail insurance brokers in the business of procuring insurance policies for their customers, either directly with various insurance companies or through entities known as wholesale brokers. See id. at pp.18. The business relationship between RD and the RD Brokers ended in January 2001. See id. at pp.20.

According to the complaint, from early 1998 through January 2001, Walter Samuels and the RD Brokers allegedly collaborated in an insurance fraud scheme whereby RD incurred damages in excess of $11 million. See id. at pp.pp.3, 56-57. The alleged fraudulent scheme was accomplished using two different strategies: (1) the RD Brokers allegedly collected premium payments from RD for insurance coverage that they never procured for the company, see id. at pp.pp.24-30; and (2) the RD Brokers allegedly failed to turn over to RD refunds for premium payments previously paid by the company for insurance policies that the RD Brokers cancelled. See id. at pp.pp.24, 31-55. In return for Walter Samuels's alleged participation in the scheme, the RD Brokers allegedly funneled in excess of $600,000 to him, Joy Samuels and J&W. See id. at pp.pp.61-75.

On April 6, 2001, RD filed an action against the RD Brokers in New York State Supreme Court, New York County, RD Mgmt. v. C.S.I.R. Enters., Inc. et al., Index No. 601751/01, regarding their respective roles in the alleged insurance fraud scheme. See Lupkin Aff., Ex. 2. On or about March 6, 2002, the RD Brokers filed a third-party complaint against Walter Samuels in New York State Court. See id.

RD commenced the instant action on or about May 16, 2002 in New York State Supreme Court, New York County, and on June 24, 2002, defendants removed it to this Court. The first five causes of action, four claims under RICO and one claim for conversion, are asserted against all three defendants. The remaining three causes of action, claims for breach of fiduciary duty, conspiracy to convert RD funds and conspiracy to commit fraud, are asserted against only Walter Samuels. As to the four RICO claims, two claims are under Section 1962(c) and two claims are under Section 1962(d). In the first Section 1962(c) claim (Count I), RD alleges that its business relationship with CSIR and Judd constituted an association-in-fact enterprise (hereinafter the "RD/Insurance Brokers Enterprise"). In the second Section 1962(c) claim (Count II), RD alleges a second association-in-fact enterprise comprised of defendants together with the RD Brokers (hereinafter the "SamuelsD Brokers Enterprise"). Both Section 1962(c) claims are based on alleged predicate acts of mail and wire fraud, commercial bribery and money laundering. In the two Section 1962(d) claims (Counts III and IV), RD asserts that defendants conspired with each other and the RD Brokers to violate Section 1962(c), thus violating Section 1962(d).

On or about July 8, 2002, Walter Samuels commenced two arbitrations relating to Realty Equity Limited Partnership ("RELP") and FW Associates ("FW"). See Affidavit of Walter R. Samuels, dated September 26, 2002 ("Samuels Aff."), Exs. B & C, Demands for Arbitration. RELP is a Connecticut limited partnership with Walter Samuels, Jay Furman and Michael Ades as general partners, and seven limited partners, including Richard Birdoff. See Samuels Aff., Ex. B. FW is a New York general partnership with Walter Samuels, Furman and the Jay F. Corp. as partners. See Samuels Aff., Ex. C. RELP and FW are each in the real estate business, and both have retained RD to manage their respective properties. See Samuels Aff., Exs. B & C. The partnership agreements for RELP and FW each contain an arbitration clause. See Samuels Aff., Exs. D & E.

In the RELP arbitration, Walter Samuels asserts that Furman, Ades and Birdoff engaged in improper self-dealing, breaches of fiduciary duties and other wrongful acts. See Samuels Aff., Ex. B. In the FW arbitration, Walter Samuels alleges that Furman engaged in improper self-dealing, breaches of fiduciary duties and other wrongful acts. See Samuels Aff., Ex. C. In both arbitrations, Samuels seeks dissolution of the partnerships and a winding-up of their respective affairs, and an accounting. See Samuels Aff., Exs. B & C.

In response to Walter Samuels's demands for arbitration, on or about July 29, 2002, RD filed two petitions in New York State Supreme Court, New York County, RD Mgmt. Corp., et al v. Walter Samuels, Index No. 116754/02, and RD Mgmt. Corp., et al v. Walter Samuels, Index No. 116755/02, seeking to stay the arbitrations. See Lupkin Aff., Exs. 3 & 4. The state court hearing those matters issued two identical orders restraining the arbitrations "from considering issue of whether [Walter Samuels] committed RICO violations or whether his claimed actions were not RICO violations." Lupkin Aff., Exs. 5 & 6, Orders dated September 30, 2002.

Discussion

I. Motion to Stay Action Pending Arbitrations

Defendants seek a stay of this action pending the completion of the RELP and FW arbitrations. Under the Federal Arbitration Act ("FAA"), 9 U.S.C. 3, a district court "must stay proceedings if satisfied that the parties have agreed in writing to arbitrate an issue or issues underlying the district court proceedings." Worldcrisa Corp. v. Armstrong, 129 F.3d 71, 74 (2d Cir. 1997). However, Section 3 of the FAA does not apply to parties who have not agreed to arbitrate. See Citrus Mktg. Bd. of Israel v. J. Lauritzen A/S, 943 F.2d 220, 224-25 (2d Cir. 1991). In the action pending before this Court, the agreements to arbitrate are contained in the partnership agreements for RELP and FW. Because RD is not a signatory to either partnership agreement, a stay of this action cannot be justified under the FAA. See Provident Bank v. Kabas, 141 F. Supp. 2d 310, 318 (E.D.N.Y. 2001).

A court, "despite the inapplicability of the FAA, may stay a case pursuant to 'the power inherent in every court to control the disposition of the causes on its docket with economy of time and offset for itself, for counsel, and for litigants.'" Worldcrisa, 129 F.3d at 76 (quoting Nederlandse Erts-Tankersmaatschappij, N.V. v. Isbrandtsen Co., 339 F.2d 440, 441 (2d Cir. 1964)); see also Landis v. North Am. Co., 299 U.S. 248, 254 (1936). "It is appropriate, as an exercise of the district court's inherent powers, to grant a stay where the pending arbitration is an arbitration in which issues involved in the case may be determined." Sierra Rutile Ltd. v. Katz, 937 F.2d 743, 750 (2d Cir. 1991); see also Orange Chicken, L.L.C. v. Nambe Mills, Inc., No. 00 Civ. 4730, 2000 WL 1858556, at *9 (S.D.N.Y. Dec. 19, 2000)(finding a stay appropriate where "the claims in the instant action and those being adjudicated in arbitration arise out of the same series of alleged acts"); Midland Walwyn Capital Inc. v. Spear, Leeds & Kellogg, No. 92 Civ. 2236, 1992 WL 249914, at *2 (S.D.N.Y. Sept. 22, 1992)("Courts in this district have repeatedly granted stays pending arbitration where the nonarbitrable issues overlap the arbitrable issues, thus minimizing inconsistent results and conserving judicial resources."); Hikers Indus., Inc. v. William Stuart Indus. Ltd., 640 F. Supp. 175, 178 (S.D.N.Y. 1986)("A stay as to claims against a non-arbitrating party defendant is properly granted where the arbitration of the plaintiff's claims against a defendant party to the arbitration would at least partially determine the issues which form the basis of the claim against that non-arbitrating defendant."). The party seeking the stay "bears the burden of demonstrating that such a stay is justified." Worldcrisa, 129 F.3d at 76.

Here, defendants have not sustained their burden of demonstrating that a stay is justified. While numerous officers and directors of RD, including Walter Samuels, Furman, Birdoff and Ades, are also partners of RELP and FW, the factual allegations in the complaint in this action do not arise out of the same series of alleged acts as the factual allegations in the two demands for arbitration. Each cause of action recited in the complaint is predicated upon defendants' alleged participation in an insurance fraud scheme. Moreover, both the RELP and FW arbitrations are restrained from considering whether Walter Samuels's alleged conduct constitutes a RICO violation. See Lupkin Aff., Exs. 5 & 6. In contrast, in each demand for arbitration, Walter Samuels alleges that his partners in both RELP and FW engaged in conduct that enriched themselves personally while causing the partnerships to incur unnecessary and expensive financial burdens. In these circumstances, where the result of the arbitrations will not substantially resolve any issue in this action, a stay of this action is not warranted.

II. Motion To Dismiss RICO Claims

A. Legal Standard

On a motion to dismiss made pursuant to Rule 12(b)(6), the Court is required to accept as true the factual assertions in the complaint and documents appended to the complaint and to draw all reasonable inferences in plaintiff's favor. See Harris v. City of New York, 186 F.3d 243, 247 (2d Cir. 1999). The Court's function on a motion to dismiss is "not to weigh the evidence that might be presented at trial but merely to determine whether the complaint itself is legally sufficient." Goldman v. Belden, 754 F.2d 1059, 1067 (2d Cir. 1985). Therefore, a complaint should not be dismissed "unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim that would entitle him to relief." Conley v. Gibson, 355 U.S. 41, 45-46, 78 S. Ct. 99 (1957).

B. Analysis

RD alleges two substantive civil RICO violations, 18 U.S.C. 1962(c)(Counts I and II), and two conspiracies to commit such violations. 18 U.S.C. 1962(d)(Counts III and IV). RD alleges that defendants were members of two RICO enterprises as defined by 18 U.S.C. 1961(4): first, an association-in-fact enterprise based upon the business relationship between RD and its two insurance brokers, CSIR and Judd, the RD/Insurance Broker Enterprise, and second, another association-in-fact enterprise, the SamuelsD Broker Enterprise, which consisted of Walter Samuels, Joy Samuels, J&W and the RD Brokers. Defendants first contend that both Section 1962(c) claims must be dismissed because RD has failed to allege cognizable RICO enterprises. Specifically, defendants argue that the complaint fails to plead a common purpose for either enterprise. Furthermore, defendants also assert that the RICO enterprise alleged in Count II, the SamuelsD Broker Enterprise, should be dismissed because RD has failed to properly allege its hierarchy or structure, or that defendants participated in the management or operation of it. Lastly, defendants argue that since the complaint fails to allege a substantive violation of RICO, the complaint also fails to set forth a viable claim for conspiracy to commit such a violation. The Court addresses each of defendants' arguments in turn.

1. Section 1962(c) Claims

Section 1962(c) makes it "unlawful for any person employed by or associated with any enterprise engaged in, or the activities of which affect, interstate of foreign commerce, to conduct or participate, directly or indirectly, in the conduct of such enterprise's affairs through a pattern of racketeering activity." 18 U.S.C. 1962(c). To establish a claim for a civil violation of Section 1962(c), "a plaintiff must allege that he was injured by defendants' (1) conduct (2) of an enterprise (3) through a pattern (4) of racketeering activity." Cofacredit, S.A. v. Windsor Plumbing Supply Co., Inc., 187 F.3d 229, 242 (2d Cir. 1999); see also Sedima, S.P.R.L. v. Imrex Co., 473 U.S. 479, 496, 105 S. Ct. 3275 (1985). These requirements must be sufficiently alleged as to each individual defendant. See De Falco v. Bernas, 244 F.3d 286, 306 (2d Cir. 2001).

a. Enterprise

"Enterprise" is defined as any "individual, partnership, corporation, association, and any union or group of individuals associated in fact although not a legal entity." 18 U.S.C. 1961(4). In pleading the element of "enterprise," the plaintiff need satisfy only the notice pleading requirements of Federal Rule of Civil Procedure 8(a). See In re Sumitomo Copper Litig., 955 F. Supp. 451, 454 (S.D.N.Y. 1998). To demonstrate an "association-in-fact" enterprise, the plaintiff must show that a "group of persons associated together for a common purpose of engaging in a course of conduct which functioned then as a continuing unit." Procter & Gamble Co. v. Big Apple Indust. Bldgs., Inc., 879 F.2d 10, 18 (2d Cir. 1987)(internal quotations omitted)(citing United States v. Turkette, 452 U.S. 576, 583, 101 S. Ct. 2524 (1981)). Courts in this Circuit construe the enterprise element of RICO liberally. See, e.g., United States v. Indelicato, 865 F.2d 1370, 1382 (2d Cir. 1989)("the language and the history suggest that Congress sought to define that term as broadly as possible")(construing 18 U.S.C. 1961(4)).

i. RD/Insurance Broker Enterprise

1.Common Purpose of the Enterprise

The complaint alleges that the RD/Insurance Broker Enterprise was based upon the business relationship between RD and its two insurance brokers, CSIR and Judd, whereby RD purchased insurance coverage for the properties it managed through CSIR and Judd from November 1995 through January 2001.

In Manhattan Telecomms. v. DialAmerica Corp., 156 F. Supp. 2d 376 (S.D.N.Y. 2001), the plaintiff was a customer of the defendant telemarketing services provider, and asserted a Section 1962(c) claim alleging that it was victimized by the defendant's fraudulent billing practices. In that case, the alleged association-in-fact enterprise consisted of the defendant telemarketing services provider and its customers, and the purported purpose of the enterprise was for customers to receive telemarketing sales services from the defendant. Id. at 382. The court found that such a purpose was the business of the defendant, and therefore the plaintiff and the defendant were "no more united in an enterprise than any vendor and its customers." Id. As a result, the court dismissed the RICO claim for failure to adequately plead an enterprise.

As in Manhattan Telecomms., the purpose of the RD/Insurance Broker Enterprise is merely the business of both CSIR and Judd, the procurement of insurance coverage for their customers. This cannot constitute an enterprise under RICO because RD and the insurance brokers were in a vendor-customer relationship and thus did not share a common purpose. See id. at 382. Therefore, RD failed to sufficiently plead that the RD/Insurance Broker Enterprise is an association-in-fact enterprise. Accordingly, the first Section 1962(c) claim (Count I) is hereby dismissed.

ii. SamuelsD Brokers Enterprise

1. Common Purpose of the Enterprise

Defendants argue that as to the SamuelsD Broker Enterprise, the complaint does not allege that defendants knew about the RD Brokers misappropriation of insurance premiums, or that defendants intentionally did anything to facilitate such misconduct, and thus fails to allege that defendants shared a common purpose with the RD Brokers. This argument is without merit. The complaint alleges that the RD Brokers billed RD for insurance coverage they never procured and failed to return money to RD for cancelled insurance policies. See Compl. at pp.pp.25-55. The complaint also alleges that Walter Samuels wrongly deterred RD employees from discovering the insurance fraud scheme and also directed RD employees to continue paying the RD Brokers for insurance coverage. See id. at pp.pp.59-60. Moreover, the complaint alleges that as a result of Walter Samuels's efforts, defendants received illegal kickbacks from the RD Brokers. See id. at pp.pp.61-75.

In support of their argument that the SamuelsD Brokers Enterprise lacks a common purpose, defendants rely heavily on Feinberg v. Katz, No. 99 Civ. 45, 2002 WL 1751135 (S.D.N.Y. July 26, 2002). However, that case is inapposite. In Feinberg, the plaintiffs alleged that Norman Katz and his son, Stephen Katz, constituted an association-in-fact enterprise engaged in the systematic looting of corporate assets. Id. at *12. The court noted that nearly all of the allegations regarding the misappropriation scheme detailed acts of looting by Stephen, not by Norman, and the plaintiffs alleged only one specific act of looting by Norman. Id. at *14. The court further noted that "[w]ithout any facts which might suggest that Norman knew of and participated in Stephen's assorted fraudulent activities, there can be no reasonable suggestion that the two worked together for the common purpose of looting" the company. Id. at *15. As a result, the court dismissed the RICO claim because plaintiffs inadequately plead an association-in-fact enterprise. Id.

By contrast, the complaint in this action sets forth factual allegations as to the involvement of both the RD Brokers and defendants in the insurance fraud scheme and the benefits each received therefrom. Thus, contrary to defendants' argument, the facts alleged in the complaint provide a reasonable inference that the individuals participating in the SamuelsD Brokers Enterprise shared a common purpose, to enrich themselves at the expense of RD.

Defendants also argue that it is entirely illogical for them to have shared a common purpose with the RD Brokers to steal from RD. According to defendants, given Walter Samuels's substantial ownership interests in the properties RD manages, his personal damages resulting from the alleged insurance fraud scheme vastly exceeded the alleged illegal kickbacks they allegedly received. This contention is not a basis for dismissing the RICO claims at this stage of the litigation. On a motion to dismiss, the Court is not to weigh the evidence, and every reasonable inference must drawn in favor of the plaintiff. See Harris, 186 F.3d at 247. As set forth above, the Court finds that RD has sufficiently plead a common purpose as to the SamuelsD Brokers Enterprise.

2. Structural Hierarchy

Defendants next argue that the complaint does not sufficiently allege the structural hierarchy of the SamuelsD Brokers Enterprise. However, such evidence is not required in alleging a Section 1962(c) claim. The existence of an association-in-fact enterprise "is oftentimes more readily proven by what it does rather than by abstract analysis of its structure," and evidence of its structure is merely one means of demonstrating enterprise. United States v. Coonan, 938 F.2d 1553, 1559 (2d Cir. 1991) (emphasis in original). In fact, the Second Circuit has repeatedly found a sufficient enterprise where the complaint alleges a group without a centralized hierarchy existing for the sole purpose of carrying out a pattern of racketeering acts. See, e.g., Moss v. Morgan Stanley Inc., 719 F.2d 5, 22 (2d Cir. 1983)(enterprise found for a single two-year transaction, where employees acquired inside knowledge of a tender offer and contacted a trader who asked a stockbroker to buy stock for employees); Mazzei v. United States, 700 F.2d 85, 88 (2d Cir. 1983)(holding that an enterprise consisting of a group of individual bettors and Boston College basketball players constituted a proper enterprise that was formed exclusively to shave points in nine games and to maximize gambling proceeds); United States v. Errico, 635 F.2d 152, 156 (2d Cir. 1980)(holding that an enterprise properly consisted of a network of jockeys and bettors who joined together for the sole purpose of fixing and betting on horse races). In light of clear Second Circuit precedent, RD need not plead the structural hierarchy of the SamuelsD Brokers Enterprise to adequately plead an association-in-fact enterprise.

3. Operation or Management Test

Defendants also argue that the complaint fails to adequately allege that they participated in the management or operation of an enterprise. In Reves v. Ernst & Young, 507 U.S. 170, 113 S. Ct. 1163 (1993), the Supreme Court found that liability under Section 1962(c) requires that a defendant be a participant "in the operation or management of the enterprise itself." Id. at 185. The Court further explained that "[i]n order to 'participate, directly or indirectly, in the conduct of such enterprise's affairs,' one must have some part in directing those affairs." Id. at 179. The Court then went on to note that "the word 'participate' makes clear that RICO liability is not limited to those with primary responsibility for the enterprise's affairs ... but some part in directing the enterprise's affairs is required." Id.

Here, the complaint alleges that Walter Samuels shielded the insurance fraud scheme from discovery and directed RD employees to continue paying the RD Brokers for insurance coverage. During 1999, RD's controller, Jeff Sinacore, learned that the RD Brokers owed RD approximately $1 million for unearned or returned insurance premiums. See Compl. at pp.59. After Sinacore advised the RD Brokers that RD intended to withhold payments pending receipt of the unpaid balance, Walter Samuels directed Sinacore to ignore the outstanding balance and to not withhold funds from the RD Brokers. See id. The complaint also alleges that defendants directed the RD Brokers to funnel kickbacks to them out of the proceeds from the insurance fraud scheme, and identifies three vehicles through which the kickbacks were paid. See id. at pp.pp.62-75. At this early stage of the litigation, these allegations are sufficient to infer that the defendants had some part in directing the affairs of the SamuelsD Brokers Enterprise. See In re Sumitomo Copper Litig., 104 F. Supp. 2d 314, 318 (S.D.N.Y. 2000); Mezzonen, S.A. v. Wright, No. 97 Civ. 9380, 1999 WL 1037866, at *10-*12 (S.D.N.Y. Nov. 16, 1999). Accordingly, defendants' motion to dismiss the SamuelsD Brokers Enterprise (Count II) is hereby denied.

2. Section 1962(d) Claims

Defendants move to dismiss the two Section 1962(d) claims on the basis that RD has failed to state claims under Section 1962(c). Section 1962(d) prohibits any person from conspiring to violate any of the substantive provisions of Section 1962(a)-(c). See 18 U.S.C. 1962(d). The first Section 1962(d) claim (Count III) is based upon the RD/Insurance Broker Enterprise (Count I), and the second Section 1962(d) claim (Count IV) is based upon the SamuelsD Brokers Enterprise (Count II). To state a claim under Section 1962(d), a plaintiff must allege that "each defendant, by words or actions, manifested an agreement to commit two predicate acts in furtherance of the common purpose of the RICO enterprise." Int'l Brotherhood of Teamsters v. Carey, 163 F. Supp. 2d 271, 285 (S.D.N.Y. 2001)(quotation omitted); see also Cofacredit, S.A. v. Windsor Plumbing Supply Co., Inc., 187 F.3d 229, 244 (2d Cir. 1999). Because RD's first Section 1962(c) claim (Count I) fails as plaintiff has insufficiently plead an association-in-fact enterprise, RD's corresponding claim under Section 1962(d) (Count III) must also be dismissed. However, as discussed above, because defendants' motion to dismiss RD's second Section 1962(c) claim (Count II) is denied, defendants' motion to dismiss the second Section 1962(d) claim (Count IV) must also be denied.

Conclusion

For the reasons set forth above, defendants' motion to stay this action pending the resolution of the RELP and FW arbitrations is denied, and defendants' motion to dismiss is granted with respect to the first Section 1962(c) claim (Count I), and the first Section 1962(d) claim (Count III) and denied with respect to the second Section 1962(c) claim (Count II), and the second Section 1962(d) claim (Count IV). The parties are hereby directed to appear for a pre-trial conference on June 25, 2003, at 10:30 a.m., in Room 906, 40 Centre Street, New York New York.

So Ordered.

5)
CSIR execs indicted for $20 mln insurance fraud.
February 5, 2004
Reuters News

NEW YORK, Feb 5 (Reuters) - Federal prosecutors on Thursday unsealed a 32-count indictment against two top executives of CSIR Enterprises Inc., a New York insurance brokerage, saying they fraudulently obtained $20 million.

The pair spent millions on yachts, nightclub sprees and other luxury items, prosecutors said.

The U.S. Attorney for the Southern District of New York said it charged Judah Feinerman, CSIR's 78-year-old chairman, and Frank Deprisco, its 40-year-old president, with conspiracy, wire fraud and mail fraud. Deprisco also was charged with witness tampering and obstruction of justice.

Eighteen companies and insurance agents were defrauded, the U.S. Attorney's office said.

If convicted, both defendants face prison terms of up to 20 years on various charges, and fines of more than $1 million. They surrendered to the FBI on Thursday, prosecutors said.

Feinerman did not immediately return a message left at his Far Rockaway, New York, home.

Deprisco, who lives in Brooklyn, New York, and CSIR could not be reached for comment.

Online court records did not list a lawyer for either defendant.

Prosecutors said the defendants and others between 1998 and February 2003 collected millions of dollars in premiums and fees to pay for insurance, but never put the policies in force. They said the defendants also placed some insurance policies, but cancelled them or replaced them with lesser policies, while retaining or diverting the higher premiums.

Feinerman and Deprisco, prosecutors said, spent millions of dollars of ill-gotten proceeds on "two yachts; Deprisco's residence; Feinerman's wife's home in Boca Raton, Florida; restaurant and night club bills sometimes exceeding $10,000 per night; gambling at casinos in Las Vegas; personal bodyguards; limousine services, and numerous other personal expenses."

Feinerman and Deprisco face up to 20 years in prison on each wire and mail fraud charge, and up to five years in prison for conspiracy. Deprisco faces up to 10 years for witness tampering, and up to 20 years for obstruction of justice.

6)
Case Summary
Manhattan Insurance Brokers Indicted on $20 Million Fraud Charges
February 27, 2004
White Collar Crime Reporter
Volume 18; Issue 06

The two principal owners and operators of a Manhattan insurance brokerage have been indicted on charges that they defrauded commercial customers out of $20 million in insurance premiums and spent the money on homes, yachts and nightclub excursions. United States v. Deprisco et al., No. 1:04-00091-RJH-ALL, indictment issued (S.D.N.Y., 2/3/2004).

Judah Feinerman, 78, the chairman of the board and owner of C.S.I.R. Enterprises Inc., and Frank P. Deprisco, 40, the company's president, surrendered to the FBI Feb. 5 after the indictment was issued. The two were charged with wire fraud, mail fraud and conspiracy. Deprisco was also charged with witness tampering and obstruction of justice.

According to the indictment, Feinerman and Deprisco conspired to collect millions of dollars in premiums and fees from their clients, which included trucking companies and property management firms. They then either never placed the insurance or replaced it with a lesser coverage but kept the premiums, the indictment says.

U.S. Attorney David N. Kelley of the Southern District of New York said the proceeds from the fraud were diverted to Feinerman's personal bank account and to the defendants' family members, associates and unnamed co-conspirators.

The defendants allegedly spent millions of dollars on two yachts, Deprisco's house, Feinerman's wife's Florida home, nightclub bills sometimes exceeding $10,000 a night, gambling at Las Vegas casinos and other personal expenses.

The indictment also alleges that Deprisco engaged in witness tampering and obstruction of justice when he paid an unnamed co-conspirator to take responsibility for the scheme and directed the co-conspirator to tell the FBI that Feinerman and Deprisco were not involved.

Each defendant faces maximum penalties of up to 20 years in prison for each wire and mail fraud charge and up to five years for each conspiracy charge. Deprisco also faces a maximum penalty of 10 years in prison for witness tampering and 20 years for obstruction. Both men also may be fined more than $1 million

In addition, the government is seeking forfeiture of all property derived from the proceeds of the alleged scheme.

Assistant U.S. Attorney Jonathan R. Streeter is leading the prosecution.

Full Case Name: United States v. Deprisco et al.|Short Case Name: United States v. Deprisco|Court: S.D.N.Y.|Case Action: indictment issued|Docket Number: No. 1:04-00091-RJH-ALL|Action Date: 2/3/2004

7)
Mystic Lightens Its Load of Financial Woe
by Quinn, William T
August 9, 2004
NJBIZ
Volume 17; Issue 32

A trucking company that transports gasoline strives to leave some toxic troubles behind

Mystic Tank Lines hopes its time in bankruptcy court will be like a visit to a fat farm-a chance to drop excess pounds and get back to a fighting weight in the fiercely competitive trucking business. The New York City-based company specializes in hauling gasoline and other petroleum products; its tanker trucks, painted in a two-tone light and dark green color scheme, are a familiar sight on highways throughout the Northeast.

Right now, Mystic looks to have a fair chance of rolling out of bankruptcy proceedings in better shape than it went in. But it still has hurdles to clear.

After filing a Chapter 11 petition for protection from creditors on June 1, Mystic has kept its fleet of more than 300 trucks on the road and has continued to Operate out of three trucking terminals in. New York and a fourth in Matawan.

"The business still seems very strong, the customer base is solid," says Daniel Stolz, a Millburn attorney who is counsel to the committee that represents Mystic's unsecured creditors. "Our hope is that we can restructure and reshape the company and have them pay their creditors back a substantial part of what they are owed."

In papers filed with the bankruptcy court in Trenton, Mystic claimed assets of $21.19 million against liabilities of $22.79 million and listed operating revenue of $42.4 million for 2003. Its operating loss reached some $4 million for the year. As a hauler of flammable material, the truck line provides a service that is hard to replace.

When the Chapter 11 petition was filed, Leonard Baldari, Mystic's owner and CEO, put most of the blame on "an insurance fraud" that he said had victimized the company.

But Baldari and Mystic executives conceded that other more mundane factors-such as high insurance and labor costs, the acquisition of a Connecticut trucking company that went sour last year and freight rates that had been eroded by rising operating costs-had also played a big role. "They seem to have grown substantially yet not achieved profitability through the growth," says Stolz.

It was the alleged insurance fraud that blew the biggest hole in Mystic's balance sheet before ripening into a scandal.

The details were first outlined by Mystic in a lawsuit it filed in December 2002 against C.S.I.R. Enterprises, a Manhattan insurance broker. Defendants included Judah Feinerman, the firm's owner and chairman, and Frank DePrisco, its president. Mystic charged that DePrisco had approached it in 2001 offering to arrange for the same insurance coverage the company then had at a lower price.

Mystic signed on with DePrisco and claimed it paid $6 million in premiums to C.S.I.R. and other entities for policies that didn't exist or were never put in place. Mystic said it faced millions of dollars more in losses from uncovered claims and costs absorbed in getting valid insurance in place.

In February, federal prosecutors in Manhattan indicted Feinerman and DePrisco on 32 counts of conspiracy and mail and wire fraud, and charged them with running a scheme that raked in $20 million in insurance premiums and other fees from 18 different companies.

According to the indictment, half the money allegedly scammed came from 14 trucking companies that thought they were buying insurance underwritten by Lloyd's of London, but actually got no coverage. Where the money was really going, according to prosecutors, was to fund lavish spending by Feinerman and DePrisco on yachts, a home for Feinerman's wife in Boca Raton, frolics in Las Vegas and $10,000-a-night outings to restaurants and night clubs.

No date has been set for Feinerman and DePrisco's trial on the criminal charges. But lawyers handling Mystic's civil case against them, which is pending in federal court in Brooklyn, say a settlement may be in the works.

"If anything, it may be negligence," says Malcolm Taub, a Manhattan lawyer who represents Feinerman, DePrisco and C.S.I.R. in the case. "We're settling it on that basis," Taub says. "We're delighted that the parties have finally come to some sort of sense."

Albert Ciardi III, a Philadelphia lawyer who is handling Mystic's bankruptcy case, says the company's total damages from the missing insurance total about $10 million.

Ciardi says Mystic has cut its operating loss in half since filing for bankruptcy court protection. The company has closed trucking terminals in Beacon Falls, Connecticut, and Providence, Rhode Island, along with two smaller facilities in Massachusetts, and has cut back service to customers throughout New England.

It laid off rank-and-file workers and some executives, and has moved to sell $1.5 million worth of trucks and trailers it no longer needs. The company also renegotiated its contract with Teamsters Local 469 in Hazlet, which covers about 90 drivers and other workers at its Matawan terminal. Mystic won concessions that included a freeze on wages, elimination of overtime and employee contributions to health insurance costs.

The company seeks similar give-backs from Teamsters Local 553 in Manhattan, which represents drivers at terminals in Astoria and Bayshore in Queens and Newburg, New York, but it has so far been unable to get a new agreement. As a result, Mystic is asking U.S. Bankruptcy Judge Raymond Lyons to let it void its New York Teamsters contract.

Ciardi says Mystic intends to come up with a reorganization plan later this year that will allow it to slash its debt and emerge from bankruptcy court. Such plans generally require creditors to write off some of what they are owed. Ciardi says the company has secured $6 million of credit from Wells Fargo Bank for continuing operations and has the support of trade vendors.

"From the lender's point of view, things seem to be moving all right," says Jeff Wurst, a Long Island lawyer who represents Wells Fargo. He notes that most companies that go into Chapter 11 proceedings never come out. However, he says, "We see no reason why this company would not be able to emerge from Chapter 11 in due course."

The fact that Mystic hauls gasoline and other combustible materials sets it apart from standard freight carriers, whose services could easily be replaced by competitors. Mystic's "equipment is specialized and they have a pretty dominant position in the market," says Bill Joyce, president of the New York State Motor Truck Association in Albany. "I don't know how you would fill that void if they went out of business."

The rebounding economy may also be on Mystic's side. After several rough years for trucking companies, "things are actually looking a bit better," Joyce says. More demand for goods means higher freight rates and better prospects for truckers, even ailing ones.

Copyright Snowden Publications, Inc. Aug 9, 2004 | email wquinn@njblz.com

8)
Demystifying a Trucker's Fall
November 29, 2004
NJBIZ
Volume 17; Issue 48

Back in June, when Mystic Tank Lines filed a chapter 11 petition in bankruptcy court in Trenton, owner Leonard Baldari said the trucking company's woes had been compounded by an insurance fraud scheme. Last week, he got some backing for his claim.

Judah Feinerman, the chairman and owner of CSIR Enterprises, an insurance broker which had worked for Mystic, pleaded guilty in federal court in Manhattan to conspiring to commit mail and wire fraud against Mystic and other clients. Feinerman and CSIR had been charged with collecting some $20 million in premiums from clients and assuring them they had liability coverage in place when in fact they didn't.

Mystic claimed in a 2002 lawsuit against CSIR, Feinerman and CSIR president Frank DePrisco that it had paid $6 million for insurance coverage it never received. Mystic had been one of the largest carriers of gasoline and other fuels in the Northeast. It has its headquarters in Queens, New York, and a trucking terminal in Matawan. It said the cost of paying claims itself and of buying replacement insurance contributed to a $4 million operating loss last year. The company's journey into bankruptcy was outlined in a story in the August 9th issue of NJBIZ.

Copyright Snowden Publications, Inc. Nov 29, 2004

9) Rabbi Judah Feinerman served as a member of the YU Board of Trustees and Chairman of the Board of Trustees of the affiliated Rabbi Isaac Elchanan Theological Seminary and, with his wife, Ruth, was a Guardian of Yeshiva University.
He was also president of Judd Associates, an insurance brokerage in New York.

10)
EMPLOYERS REINSURANCE CORPORATION, Plaintiff, -against- JUDD ASSOCIATES, LTD, C.S.I.R. ENTERPRISES, INC., JUDAH FEINERMAN, FRANK DEPRISCO SR., FRANK DEPRISCO JR., RAPID COVERAGE CORP., JUDAH FEINERMAN LIFE, BEACHWOOD HILLS MARKETING, INC., C.S.I.R. ENTERPRISES OF CONNECTICUT, INC., C.S.I.R. ENTERPRISES OF FLORIDA, INC., C.S.I.R. ENTERPRISES OF MICHIGAN, INC., and R.D. MANAGEMENT CORP., Defendants.

01 Civ. 9019 (TPG)

UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK

2005 U.S. Dist. LEXIS 5372


March 31, 2005, Decided
March 31, 2005, Filed

DISPOSITION: [*1] ERC's motion to file a further amended complaint granted.

COUNSEL: For Employers Reinsurance Corporation, Plaintiff: Edward Simon Benson, Nicoletti, Gonson & Spinner, LLP, New York, NY.

For Judd Associates, Ltd., C.S.I.R. Enterprises, Inc., Judah Feinerman, Frank Deprisco, Sr., Frank Deprisco, Jr., Rapid Coverage Corp., Judah Feinerman Life, C.S.I.R. Enterprises of Connecticut, Inc., C.S.I.R. Enterprises of Michigan, Inc., Beachwood Hills Marketing, Inc., Defendants: Michael S. Taub, New York, NY.

For R.D. Management Corp., Defendant: Jonathan Daniel Lupkin, DLA Piper Rudnick Gray Cary US LLP, New York, NY; Mark C. Zauderer, Solomon, Zauderer, Ellenhorn, Frischer & Sharp, New York, NY.

For Employers Reinsurance Corporation, Counter Defendant: Edward Simon Benson, Nicoletti, Gonson & Spinner, LLP, New York, NY.

JUDGES: THOMAS P. GRIESA, U.S.D.J.

OPINIONBY: THOMAS P. GRIESA

OPINION: Plaintiff Employers Reinsurance Corporation ("ERC") has moved to obtain a default judgment against all defendants, except C.S.I.R. Enterprises of Connecticut and R.D. Management Corporation, claiming that they failed to comply with the Court's December 1, 2003 order directing the corporate defendants to retain [*2] counsel and for such counsel to file a Notice of Appearance by January 15, 2004. In the alternative, ERC also moves to amend its complaint a second time to include information regarding the defense of an underlying action.

The motion for default judgment is denied. The alternative motion to amend the complaint is granted.

Facts

On or about June 2, 2003, original counsel for defendants, moved to be permitted to withdraw. This Court granted that motion on December 1, 2003, directing that the corporate defendants retain counsel and that such counsel file a notice of appearance by January 15, 2004.

On or about January 15, 2004, Malcolm Taub, Esq. wrote to this Court stating that he was representing defendants in various other matters and "became aware of your Honor's Order only yesterday." In this same letter, Taub requested a "one week extension of the time to file a Notice of Appearance." The request was granted.

Taub alleges that he filed a notice of appearance with the Court on January 22, 2004, the same date he sent copies of the Notice with a corresponding cover letter to Edward S. Benson, counsel for plaintiff. This letter was copied to Jonathan Lupkin, attorney for [*3] R.D. Management Corp. However, it appears that this notice was not in fact filed by the court at that time.

Taub now states that in light of this filing error, he is "refiling" the notice of appearance. Both the notice of appearance and the opposition papers on this motion therefore appear on the docket sheet as being filed on June 1, 2004.

Under these circumstances the court declines to enter a default judgment against defendants.

ERC's motion to file a further amended complaint is granted.

SO ORDERED.

Dated: New York, New York

March 31, 2005

THOMAS P. GRIESA

U.S.D.J.

 

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