Rajaratnam v. Motley Rice, LLC

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF NEW YORK

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RAJ RAJARATNAM,

Plaintiff,

MEMORANDUM & ORDER

-against-

18-cv-3234(KAM)(RML)

MOTLEY RICE, LLC, a South Carolina

limited liability company, MICHAEL

E. ELSNER, an individual, JAYAT P.

KANETKAR aka JAY KANETKAR, an

individual, RUDRA, an individual

named pseudonymously, BRIAN P.

MALLON, an individual, and JOHN

“HANK” ALLISON, an individual,

Defendants.

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MATSUMOTO, United States District Judge:

Nearly eleven years ago, plaintiff Raj Rajaratnam

(“plaintiff” or “Rajaratnam”) was named as a defendant in a

civil action in New Jersey federal court alleging he provided

material support to the Liberation Tigers of Tamil Eelam

(“LTTE”), a terrorist group more commonly known as the “Tamil

Tigers.” In 2011, a Vanity Fair article published statements by

a confidential FBI informant claiming that Rajaratnam had

expressed support for LTTE’s terrorist activities in prepared

remarks delivered at a 2002 fundraiser. Seven years later, with

his civil action in New Jersey federal court still pending,

Rajaratnam filed a suit in the Eastern District alleging federal

racketeering violations by the law firm representing plaintiff

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in the New Jersey action, the confidential FBI informant, and

three former federal agents associated with the Joint Terrorism

Task Force. Plaintiff asserts that the defendants comprise a

racketeering enterprise, the purpose of which is to illegally

obtain confidential investigatory materials from federal law

enforcement officials, which are used to identify wealthy

targets, like Rajaratnam, and then defame and file lawsuits

against them, in order to coerce a lucrative settlement.

Plaintiff’s action against the above-captioned defendants

alleges violations of the federal Racketeer Influenced and

Corrupt Organizations Act (“RICO”) and common law defamation.

(ECF No. 42, Amended Complaint (“Compl.”).)

Before the court are motions to dismiss by two sets

of defendants: (1) the law firm Motley Rice LLC (“Motley Rice”)

and its member, Michael E. Elsner (collectively, “Motley

Defendants”), (ECF No. 53-1, Mem. of Law in Supp. of Mot. by

Defendants Motley Rice and Michael E. Elsner to Dismiss Amended

Complaint (“Motley Mot.”)); and (2) defendants Jayat Kanetkar,

Brian Mallon, and John “Hank” Allison, all former members of the

federal Joint Terrorism Task Force (“JTTF Defendants”), (ECF No.

56-1, Mem. of Law in Supp. of Defendants Allison, Kanetkar and

Mallon’s Mot. to Dismiss Amended Complaint (“JTTF Mot.”)).

Plaintiff served an opposition to both motions, (ECF No. 58,

Consol. Mem. of Law in Opp. to Defendants’ Motions to Dismiss

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(“Opp.”)), to which both sets of defendants replied. (ECF No.

61, Motley Reply; ECF No. 60, JTTF Reply.)

For the reasons that follow, the court GRANTS

defendants’ motions, and DISMISSES the Amended Complaint in its

entirety.

BACKGROUND

The following facts are derived from the allegations

in plaintiff’s complaint, which the court assumes are true for

the purposes of defendants’ motions.

I. Parties

Plaintiff, an ethnic Sri Lankan Tamil, left Sri Lanka

when he was 14 years old and has a permanent residence in New

York, New York, though he was incarcerated in Massachusetts at

the time the Amended Complaint was filed. (Compl. ¶ 24.)

Defendant Motley Rice was founded in 2003 and is a “well-known”

South Carolina litigation firm representing primarily

plaintiffs. Motley Rice is registered to practice in New York

and maintains an office in this state. (Id. ¶ 18.)1 Michael

Elsner is a member of Motley Rice. (Id. ¶ 19.) Brian P. Mallon

is a former Special Agent with the United States Immigration and

Naturalization Service (“INS”) assigned to the Joint Terrorism

Task Force (“JTTF”). (Id. ¶ 20.) John “Hank” Allison is a

1 Motley Rice’s predecessor-in-interest was the law firm of Ness, Motley,

Loadholt, Richardson & Poole (“Ness Motley”). (Id.)

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former Special Agent with the Federal Bureau of Investigation

(“FBI”) assigned to the JTTF. (Id. ¶ 21.) Jayat P. “Jay”

Kanetkar (together, with Allison and Mallon, “JTTF Defendants”),

is also a former FBI Special Agent. (Id. ¶ 23.) The complaint

alleges that Kanetkar was the “handler” for defendant “Rudra,”

the pseudonym used for an FBI “Confidential Human Source.” (Id.

¶¶ 22-23.)2

II. Pertinent Allegations

A. Origins of the Enterprise3

Beginning in the 1970’s, Motley Rice’s predecessor,

Ness Motley, engaged in high volume personal injury asbestos

litigation, filing at least tens of thousands of lawsuits in

state and federal courts. (Compl. ¶ 30.) Ness Motley entered

into mass settlements to resolve asbestos claims, the merits of

which varied, and in the process, netted hundreds of millions of

dollars in contingency fees. (Id. ¶ 31.) In 2001, a lawsuit

alleged that Ness Motley improperly induced medical experts to

submit false testimony in asbestos personal injury suits, and

also thwarted legislative attempts to reform asbestos litigation

2 Plaintiff states that he has been unable to effect service of the

complaint on Rudra, whom he believes resides abroad in Sri Lanka. (See ECF

No. 63.) Rudra has not answered or otherwise moved to dismiss the complaint.

3 The court adopts certain words or phrases in the “Background” section

of this Memorandum and Order solely to describe the complaint’s allegations,

and not to endorse factual or legal assertions made by either party.

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through the use of threats and intimidation. (Id. ¶ 33.)4 Ness

Motley’s successor, Motley Rice, also earned substantial fees

through “bulk” settlements in litigation against tobacco

companies. (Id. ¶ 34.)

B. Use of Government Secrets

After the terrorist attacks on September 11, 2001,

Ness Motley filed a trillion-dollar lawsuit accusing Saudi

banks, charities, and members of the Saudi royal family of

financing al Qaeda (“9/11 Action”). (Compl. ¶ 36.) In 2002,

Motley Rice hired Jean-Charles Brisard as its lead investigator.

(Id. ¶ 38.) Brisard, a French author and analyst, claimed to

have ties with French intelligence. (Id.) Motley Rice sent

Brisard to Bosnia in 2003 to obtain a secret document in the

possession of the Central Intelligence Agency (“CIA”). (Id. ¶

39.) The Department of Justice (“DOJ”) initially opposed Motley

Rice’s efforts to obtain the document, but acquiesced after the

Bosnian Supreme Court “ask[ed]” the government to share to

document. (Id. ¶¶ 39-40.)

The document that Motley Rice sent Brisard to retrieve

“supposedly” included a list of donors to Osama bin Laden. (Id.

¶ 41.) Brisard changed the spelling of one name on the list

4 Plaintiff asserts Ness Motley’s alleged conduct constituted witness

tampering and obstruction under federal law, see 18 U.S.C. §§ 1512, 1505.

(Id.) The complaint does not state how the 2001 lawsuit was resolved.

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from “bin Mahfoodh” to “Khalid bin Mahfouz,” the latter being

one of the richest men in Saudi Arabia. (Id.) Motley Rice

named Khalid bin Mahfouz as a defendant in the 9/11 Action.

(Id. ¶ 42.) When Brisard’s alteration of the document came to

light, however, Motley Rice replaced him with Michael Asimos.

(Id.)

Using his access to information about the 9/11 Action,

Asimos shared intelligence with “low-level government

operatives,” including personnel at the Department of Defense

(“DoD”). (Id. ¶ 43.)5 Though Elsner, along with other Motley

Rice attorneys, knew that Asimos shared information collected

and generated for the 9/11 Action with DoD personnel, he

encouraged Asimos’s information-sharing because Motley Rice

wanted access to sensitive information about ongoing government

investigations. (Id.) Plaintiff claims that each government

operative that Asimos offered to share intelligence with was a

“public official.” (Id. ¶ 44.)6

C. Use of Military Intelligence

After the United States invasion of Iraq in March

5 The complaint refers to the “9/11 cases,” but the only 9/11-related

case mentioned is the 9/11 Action.

6 The complaint also claims that Asimos once travelled to Kabul,

Afghanistan, purportedly on behalf of the U.S. government, and returned with

a document identifying al Qaeda operatives who were authorized to carry

weapons in Afghanistan, but instead of delivering the document straight to

the Pentagon, like he was supposed to, he disclosed it to Motley Rice

attorneys first. (Id. ¶ 47.) The complaint does not allege this constituted

a predicate act under RICO.

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2003, Asimos sought entry into Iraq to “gather intel for Motley

Rice.” (Compl. ¶ 50.) Asimos called Mark Heilbrun, a

congressional staffer who worked with Senator Arlen Specter, and

falsely represented that Paul Wolfowitz, the Deputy Secretary of

Defense at the time, wanted Asimos in Iraq on a covert basis.

(Id.) To bolster his story, Asimos gave Heilbrun the cell phone

number of a contact at the Office of the Secretary of Defense,

Col. Steven Bucci, who corroborated Asimos’s story to Heilbrun.

(Id. ¶¶ 49, 51.) Asimos was eventually able to enter Iraq, and

gained “access” to the Iraqi National Congress (“INC”) by posing

as a representative of the Pentagon. (Id. ¶ 52.) Asimos’s INC

access begat further access to Iraqi governmental and

intelligence documents. (Id.) Eventually, Asimos was forced to

flee Iraq when an Iraqi government official inquired into his

credentials. (Id. ¶ 53.) Asimos’s and Bucci’s fabrication had

been perpetrated on Motley Rice’s behalf. (Id. ¶ 54.)

D. Rosetta

After Asimos returned from Iraq, Motley Rice helped

him form Rosetta Research and Consulting LLC (“Rosetta”).

(Compl. ¶ 55.) Rosetta’s stated mission was to perform

investigative work to support the 9/11 Action. (Id. ¶ 56.) In

reality, Asimos, along with Brian Mallon and other

investigators, used Rosetta to exploit government contacts to

obtain information to build a database of government

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intelligence on terrorism. (Id.) From June 2003 until 2006,

Motley Rice, Asimos, and Mallon used Rosetta to “obtain,

transport, transmit, and/or transfer in interstate or foreign

commerce documents worth more than $5,000 obtained by means of

false or fraudulent pretenses.” (Id. ¶ 57.) The complaint does

not specify the nature of the documents or how they were falsely

obtained.

E. Use of Bribes to Access FBI Databases

Rosetta offered valuable information to Mike Dick,

Mallon’s friend at the FBI, in exchange for his assistance with

Rosetta’s operations, and even gave Dick a Rosetta email

address. (Compl. ¶ 61.) According to plaintiff, Rosetta’s

offers of valuable information were bribes because Dick was a

“public official.” (Id. ¶ 62.) Dick’s relationship with

Rosetta drew the scrutiny of the DOJ’s Office of the Inspector

General and, eventually, he was reprimanded. (Id. ¶ 63.) In

addition, an “unnamed FBI analyst” who worked for Rosetta and

searched confidential FBI databases on behalf of the “Motley

Rice Enterprise” was also a “public official.” (Id. ¶¶ 64-65.)

Plaintiff “believes” that discovery will show that “Asimos,

Mallon, and/or another agent of Rosetta and/or the Motley Rice

Enterprise offered things of value” to the analyst in violation

of the federal bribery statute. (Id. ¶ 65.)

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F. Witness Manipulation

In 2004, Motley Rice wanted to bring Haji Bashir

Noorzai, an Afghan drug lord, into the United States to serve as

a witness in the 9/11 Action. (Compl. ¶ 68.) Rosetta contacted

a DEA employee, who agreed to facilitate Noorzai’s entry into

the country. (Id.) Motley Rice reversed course when it learned

that the DEA planned to arrest Noorzai; Mallon and Asimos

delivered Noorzai to the DEA once he arrived in the United

States. (Id. ¶¶ 69-70.) Mallon and Asimos’s false promise of

“employment” to Noorzai was transmitted “via international

wire,” purportedly an act of criminal wire fraud. (Id. ¶ 71.)

G. Access to JTTF Materials and Information

In or before 2009, Mallon “enlisted” Kanetkar and

Allison, former JTTF colleagues, “into the conspiracy.” (Compl.

¶ 72.) While working as JTTF agents, Kanetkar and Mallon worked

with Rudra, a Confidential Human Source. (Id. ¶ 73.) Kanetkar

and Mallon introduced Rudra to Motley Rice circa 2009. (Id. ¶

74.)7 Between 2009 and 2018, Mallon, Kanetkar, Allison, and

Rudra transported “via interstate or foreign wire or by

travelling across state lines” documents and materials that

Rudra obtained while working on behalf of the FBI, and which

7 The complaint asserts that Rudra’s identity was a government secret and

that, by disclosing his identity to Motley Rice, Kanetkar and Mallon violated

the Attorney General’s Guidelines Regarding the Use of FBI Confidential Human

Sources. (Id.)

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were “worth more than $5,000 to Motley Rice.” (Id. ¶ 75.)

H. Targeting Rajaratnam

The JTTF Defendants previously worked together on a

criminal investigation into the Tamil Tigers, which led to a

series of prosecutions in the Eastern District of New York.

(Compl. ¶ 80.) Investigators working on the case approached

Rajaratnam about donations he and his father made to the Tamil

Rehabilitation Organization (“TRO”), a Maryland-based 501(c)(3)

entity, between 2002 and 2006. (Id. ¶ 81.) In 2007, after

allegations surfaced that TRO was funding the Tamil Tigers, the

United States Department of the Treasury designated the TRO as

an organization supporting a terrorist group. (Id. ¶ 82.) As a

result, Rajaratnam promptly ceased donations to TRO and

cooperated with the JTTF investigation of LTTE. (Id. ¶¶ 82-83.)

He was not prosecuted in connection with the investigation.

(Id. ¶ 83.) The JTTF Defendants did, however, learn sensitive

information about Rajaratnam’s wealth, and “along with far more

sensitive government materials,” passed this information along

to Motley Rice. (Id. ¶ 84.)

I. Unlawful Use of Government Assets to Target Rajaratnam

On October 16, 2009, the FBI arrested Rajaratnam for

insider trading. Six days later, he was named as a defendant in

a civil suit in the District of New Jersey, captioned Krishanthi

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v. Rajaratnam, 09-cv-5395 (“NJ Action”). (Compl. ¶ 85.)8 Motley

Rice filed the complaint initiating the NJ Action. (See NJ ECF

No. 1, NJ Complaint (“NJ Compl.”).) The NJ Complaint alleges,

inter alia, that:

In November 2002, Raj Rajaratnam was a guest speaker

at an ITSA’s [(Ilanka Tamil Sangam USA, a non-profit

Tamil-related organization)] fundraising event held in

North Brunswick, New Jersey. An LTTE flag and

informational brochures concerning the LTTE were

placed on a table in the conference hall. In his

speech to the organization, Rajaratnam referred to the

struggle in Sri Lanka and asked those in attendance to

support the struggle. As if to clarify, Rajaratnam

described those in attendance who support the struggle

in Sri Lanka as terrorists, noting that he was married

to a terrorist because his wife is an Indian Punjabi.

. . . He further described those supporters in

attendance as not just terrorists but as freedom

fighters.

(NJ Compl. ¶ 113.) This allegation was false. Plaintiff’s

speech focused on the importance of philanthropy and support for

the Tamil community; plaintiff did not encourage those present

at the November 2002 event (“November Event”) to support LTTE

and he did not describe them as both “terrorists” and “freedom

fighters.” (Compl. ¶ 87.) At the time Motley Rice filed the NJ

Action, the FBI possessed a recording and transcript of the

November 2002 event that belied Motley Rice’s allegations about

Rajaratnam’s remarks at the November 2002 Event. (Id.)

8 The caption “NJ ECF No. _” is used herein to refer to filings on the NJ

Action electronic docket. The court takes judicial notice of the docket in

the NJ Action. See Pani v. Empire Blue Cross Blue Shield, 152 F.3d 67, 75

(2d Cir. 1998) (a court may rely on “matters of public record” in deciding

a motion to dismiss under Rule 12(b)(6)).

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J. Bribery of a Government Witness

The JTTF Defendants shared Rudra’s identity with the

Motley Defendants, even though Rudra was a confidential source

for the United States government. (Compl. ¶ 90.) Between 2009

and 2018, “Motley Rice and/or the [JTTF Defendants]” made

payments to Rudra in excess of $75,000. (Id. ¶ 91.) Rudra was

not an expert witness in, and did not prepare an expert report

for, the NJ Action. (Id.) Though Rudra was deposed in the NJ

Action in 2018, as of January 18, 2019, he had not appeared as a

witness at trial or at an evidentiary hearing. (Id.)

“Apparently, the payments [to Rudra] were used to fund living

arrangements, consumer goods, and extraneous travel unrelated to

Rudra’s testimony in the [NJ Action] . . . .” (Id.)

In addition, on February 5, 2010, Motley Rice filed an

affidavit from Rudra in the NJ Action. (Id. ¶ 94.)9 Motley Rice

“hid that affidavit” by filing it right before the close of

discovery in the NJ Action. (Id.) Rajaratnam’s NJ Action

counsel took Rudra’s deposition for four days in July 2018.

(Id. ¶ 95.) Plaintiff “is informed and believes that, since at

9 The complaint cites to ECF No. 325 in the NJ Action, but that document

is a December 13, 2016 letter by Rajaratnam’s NJ Action counsel requesting a

conference to address “disclosures by Motley Rice . . . that the

investigators whose identity Motley Rice was ordered to disclose . . . are in

fact three former [JTTF] law enforcement officials who investigated on behalf

of the government the very same subject matter that Motley Rice is now

pursuing in its civil litigation.” (NJ ECF No. 325.) The complaint does not

cite to the Rudra affidavit itself.

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least 2009, Motley Rice, Elsner, and the [JTTF Defendants] . . .

persuaded, or attempted to persuade, Rudra to cooperate, . . .

with the intent to influence his testimony in the [NJ Action].”

(Id. ¶ 96.)10 The complaint alleges that these acts constituted

witness tampering. (Id.)

K. The Vanity Fair Article and the 2009 Press Release

On October 23, 2009, Motley Rice issued a press

release stating, inter alia, “[i]n November 2002, Rajaratnam,

speaking at a fundraiser for the Association of Tamils of Sri

Lankan USA (“ITSA”), called those supporting the Tamils’

struggle in Sri Lanka ‘terrorists,’ later adding that they were

not just terrorists but also ‘freedom fighters’” (“2009 Press

Release”). (Compl. ¶ 97.) Then, on September 30, 2011, Vanity

Fair published an article by David Rose entitled “Crouching

Tiger, Hidden Raj” (“Vanity Fair Article” or “Article”). (Id. ¶

100.)11 According to the Vanity Fair Article, Rajaratnam was the

“star speaker” of the November 2002 Event, but “[u]nbeknownst to

Rajaratnam,” the audience that night included an FBI informant,

nicknamed Rudra, who was equipped with a concealed recording

10 The complaint does not indicate what aspect of Rudra’s testimony

defendants influenced or attempted to influence, or otherwise identify the

“false statements” in Rudra’s affidavit or his deposition.

11 The Vanity Fair Article is attached as Exhibit D to the Declaration of

Larry H. Krantz, counsel for the JTTF Defendants, in Support of their Motion

to Dismiss (“Krantz. Decl.”). (ECF No. 56-2, Krantz Decl. at Ex. D, pp. 119-

123.) The Article, on which the complaint relies and bases certain critical

allegations, is appropriately incorporated by reference.

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device. (Id. 1-2.) Rudra, the article explains, had worked

undercover for eleven years, and his secret recordings had been

used by the DOJ in 20 successful criminal prosecutions. (Id.

2.)

The Vanity Fair Article related Rudra’s recollection

of the November 2002 Event:

Rudra says his memory of what Rajaratnam said at the

gala is clear, and it is supported by his former

F.B.I. handlers, who heard the recordings when they

were made. “He got up and, flanked by L.T.T.E. flags,

he said, ‘Everyone must support the Tigers’ cause,’”

Rudra recalls. “He mentioned the fact that his wife

was an Indian Sikh [a minority group from which some

had also mounted a terrorist campaign aimed at

creating a separate state]. Rajaratnam said: ‘They’re

terrorists. We’re terrorists. We are all freedom

fighters.’ Everyone laughed. Then he added: ‘They’re

our terrorists, and you all must support this

struggle.’”

(Id. (brackets in original).) The Vanity Fair Article also

identifies Kanetkar as “Rudra’s main F.B.I. handler from 1999

until he left the bureau in June 2006 . . . .” (Id.; Compl. ¶

101.) Though the Article notes that Elsner’s firm filed a claim

against Rajaratnam on behalf of LTTE victims, it did not

“indicate that Kanetkar and Rudra were working for Motley Rice

at the time they gave their interviews to Vanity Fair.” (Compl.

¶ 101.)

According to plaintiff, a “now-unclassified

transcript” of Rudra’s recording at the November 2002 Event

demonstrates that Rudra’s quotation of Rajaratnam’s remarks was

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false. (Id. ¶ 103.) In addition to Rudra’s false quotation of

plaintiff, the complaint alleges the Vanity Fair Article

published other falsehoods promoted by Rudra and Kanetkar, such

as a claim by Kanetkar that two Tamil Tiger members once went to

Rajaratnam’s house to “arrange” to get money. (Id. ¶ 104.)

Kanetkar and Rudra were “agents and/or employees of Motley Rice”

at the time they made these statements to Vanity Fair, and the

dissemination of these statements to Vanity Fair was

“coordinated” by Motley Rice, Elsner, Kanetkar, and Rudra. (Id.

¶¶ 105-06.)

L. Fraudulent Concealment

A series of “red flags” brought Motley Rice’s

“criminal enterprise” to plaintiff’s attention. First, in

September 2016, two years after the close of discovery, Motley

Rice disclosed that one of its witnesses was a former

Confidential Human Source with the United States government.

(Compl. ¶ 113.) When Motley Rice finally disclosed Rudra’s

existence, it misspelled his real name in different ways to

prevent Rajaratnam’s counsel from investigating him or

connecting him to documents in which he was referenced. (Id.)

Second, in November 2016, Motley Rice disclosed that it had

retained three former JTTF law enforcement agents to serve as

“non-testifying experts.” (Id. ¶ 114.) Once Rajaratnam learned

the identities of these agents, i.e. the JTTF Defendants, he was

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able to discover that they had participated in the JTTF

investigation into LTTE terrorism. (Id.) Third, in December

2016, Rajaratnam’s counsel in the NJ Action learned that Motley

Rice had, up to that point, paid Rudra approximately $40,000.

(Id. ¶ 115.)

When Rudra retained independent counsel in late 2017,

he began producing documents that “hint[ed] at the extent to

which Motley Rice and the [JTTF Defendants] have been working to

conceal their crimes and thus protect their longstanding and

highly profitable enterprise.” (Id. ¶ 117.) In 2018, Motley

Rice and Rudra made additional disclosures in the NJ Action,

including: (1) a 17-page print-out of cell phone text messages

between Rudra and Elsner; (2) over 3,000 pages of documents and

correspondence between Rudra and “Motley Rice and/or the [JTTF

Defendants];” (3) 60 pages of expense records, “which revealed

$35,000 of previously-undisclosed payments to Rudra;” and (4) a

limited production of documents that had been in the JTTF

Defendants’ possession since the NJ Complaint was filed. (Id.

¶¶ 118-26.)12 Furthermore, a 2009 memorandum produced on August

17, 2018 revealed that the JTTF Defendants mailed Motley Rice

“hard copies of documents and materials received from Rudra,

which Rudra obtained by working on behalf of the FBI.” (Id. ¶

12 With the exception of the $35,000 payment to Rudra, plaintiff does not

describe the contents of these disclosures.

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141.)

Motley Rice also opposed Rajaratnam’s efforts to

modify a Discovery Confidentiality Order (“DCO”) governing the

disclosure of documents produced in the NJ Action. Though

plaintiff alleges the DCO prevents him from viewing or learning

the contents of documents designated as confidential, Jones Day,

his counsel in the NJ Action, informs him that “many of the

documents Defendants have designated directly support the

allegations herein, and evidence additional wrongdoing by

Defendants.” (Id. 1 n.1.) Because “Jones Day is currently

constrained by the DCO—to which they object—from sharing

substantively the information in these documents,” plaintiff is

“constrained in [his] ability to fully describe the criminal

enterprise and its acts.” (Id.)

M. Bribery of Rudra is Revealed

On December 20, 2016, Elsner filed affidavits by the

three JTTF Defendants. (Compl. ¶ 133; NJ ECF No. 382.)

Allison’s affidavit stated, “I have provided no payments or

promise of payments to [Rudra] on my own behalf or on behalf of

Motley Rice LLC.” (Compl. ¶ 135.) Mallon’s affidavit echoed

Allison’s statements, with the caveat that payments were made

for Rudra’s “out-of-pocket expenses and travel expenses related

to his role as a fact witness in this case.” (Id.) However, in

2018, Rudra produced documents “that revealed that Allison and

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Mallon’s statements were false.” (Id. ¶ 136.)13 Plaintiff

further alleges that Elsner’s filing of Allison’s and Mallon’s

affidavits violated the federal wire fraud statute. (Id. ¶

137.)

N. Orchestration of the Vanity Fair Article is Revealed

On May 17, 2017, Elsner filed a letter in the NJ

Action which stated that Motley Rice was “not involved in the

creation or ‘orchestration’ of the Vanity Fair article.”

(Compl. ¶ 145.) But metadata from Motley Rice’s August 17, 2018

production in the NJ Action reveals that the JTTF Defendants

forwarded information about Rudra to the author of the Vanity

Fair Article as early as April 29, 2011, five months before the

Article was published. (Id. ¶ 146.) Allison’s and Mallon’s

affidavits were thus false, and the Motley Defendants’ filing of

those false affidavits in the NJ Action constituted wire fraud.

(Id. ¶ 147.)

O. Defendants Concede That They Lied About Rajaratnam

After Rudra’s 2018 disclosures in the NJ Action,

Rajaratnam’s counsel moved for sanctions pursuant to Rule 11 of

the Federal Rules of Civil Procedure. (Compl. ¶ 149.) On

October 3, 2018, Motley Rice moved to amend its complaint to

13 The complaint cites NJ ECF Nos. 382 and 344 (Exs. H, Q, D, U, V), with

parenthetical explanations suggesting the JTTF Defendants “loaned” money to

Rudra. Though the court attempted to review these documents on the NJ

Action’s electronic docket, access to the documents was restricted.

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withdraw the allegation regarding Rajaratnam’s remarks at the

November 2002 Event. (Id.) On November 13, 2018, Motley Rice

filed an amended complaint in the NJ Action striking the

allegation regarding Rajaratnam’s speech. (Id.; NJ ECF No.

384.) Motley Rice insisted the amendment was “not an

acknowledgement that the withdrawn allegations are incorrect or

false.” (Compl. ¶ 150; NJ ECF No. 375-2.) But plaintiff

alleges that Motley Rice knew the allegations concerning the

November 2002 Event were false when it filed the NJ Complaint

because Rudra described the speech to Motley Rice’s

investigators months before the firm initiated the NJ Action,

and the transcript and record of Rajaratnam’s speech made clear

that the allegations regarding the November 2002 Event were not

as Rudra claimed. (Compl. ¶ 150.) Motley Rice’s pleadings in

the NJ Action, dated October 22, 2009, June 13, 2014, and March

8, 2016, all contained these falsehoods, and therefore,

plaintiff alleges, were all separate instances of wire fraud.

(Id. ¶ 152.)

III. Causes of Action

Claims One and Two of the complaint assert claims

under RICO, 18 U.S.C. § 1962(c), against all defendants.

(Compl. ¶¶ 155-75.) Claim Three asserts a cause of action under

18 U.S.C. § 1962(a) of the RICO statute against the Motley

Defendants for deriving income from a pattern of racketeering

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activity, and Claim Four asserts a RICO conspiracy under 18

U.S.C. § 1962(d) against the individual defendants. (Id. ¶¶

176-86.) The complaint alleges that “Motley Rice had an ongoing

business relationship with one or more of: [Motley Rice

founders] Joe Rice [and] Ron Motley, Michael Elsner, Jay

Kanetkar, Brian Mallon, John Allison, Rosetta, Mike Asimos,

Jean-Charles Brisard, Steven Bucci, Mike Dick, and Rudra, such

that their relationship constituted an ‘association in fact’

enterprise [(“Enterprise”)].” (Id. ¶ 156.) This Enterprise

allegedly caused plaintiff damage through an “open-ended”

pattern of racketeering activity that began as early as the

1990’s. (Id. ¶¶ 159-61.)

Finally, Claim Five of the complaint asserts a

defamation claim relating to the publication of the Vanity Fair

Article in 2011. (Id. ¶¶ 187-99.) Plaintiff alleges that

Kanetkar and Rudra, in coordination with Motley Rice, made

“false and defamatory” statements about plaintiff to David Rose

of Vanity Fair. (Id. ¶ 188-89.) When Vanity Fair published

these statements, plaintiff suffered “public contempt, disgrace,

personal and professional harm, and ridicule;” his personal

safety was jeopardized; and he can no longer “integrate back

into, and interact with, society in the United States” and

elsewhere. (Id. ¶¶ 192-95.) Plaintiff claims he did not learn

of Rudra’s identity “until on or after November 14, 2016,” and

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did not learn that Kanetkar was acting at the direction of

Motley Rice until the same date. (Id. ¶¶ 196-97.)

IV. The Motions

Defendants move to dismiss the complaint in its

entirety. In the main, they assert that plaintiff’s RICO

allegations are thinly-clothed malicious prosecution and

defamation claims. Defendants contend that any allegedly

improper litigation activity in the NJ Action, or defamatory

statements to Vanity Fair, do not constitute “predicate acts”

under RICO, (Motley Mot. 9-10), and that the purported crimes

committed before the NJ Action commenced in 2009 are not

sufficiently related to the Enterprise’s alleged racketeering

activity in the NJ Action. (Id. 6-7, 22; JTTF Mot. 16.)

Defendants assert that these pleading deficiencies are

incompatible with a “pattern of racketeering activity” under 18

U.S.C. § 1961(5), a threshold requirement for RICO, without

which, plaintiff’s RICO claims cannot be sustained. (Motley

Mot. 10, 22.) Defendants further attack the RICO claims as

time-barred, and maintain that plaintiff’s alleged injuries are

too attenuated to sustain a RICO claim. (Id. 14, 24; JTTF Mot.

19.)

Plaintiff counters that each predicate act has been

adequately alleged and, at the very least, raises factual

questions that preclude dismissal at the motion to dismiss

21

stage. (Opp. 19-26.) Plaintiff asserts that the complaint

alleges cognizable injuries that resulted in investors

jettisoning business ventures with plaintiff, banks freezing his

funds, and increasing the costs to defend the NJ Action. (Id.

39.) In addition, plaintiff acknowledges that RICO claims are

subject to a four-year statute of limitations, but denies that

his RICO claims accrued in 2009, when the NJ Action was filed,

and instead asserts that he only discovered the first “storm

warnings” in 2016, which alerted plaintiff that he was the

victim of “something more than malicious prosecution.” (Id. 40-

41.) Plaintiff contends that, at a minimum, because the

defendants’ fraudulent concealment raises questions as to

whether plaintiff’s claims are “clearly” time-barred, dismissing

the RICO claims at this stage is improper. (Id. 40-43.)

Defendants also urge the court to retain supplemental

jurisdiction over plaintiff’s state law defamation claim, and to

dismiss it with prejudice. (Motley Mot. 26-30; JTTF Mot. 26-

29.) New York’s Civil Practice Law and Rules (“CPLR”) § 215(3)

imposes a one-year limitations period for defamation claims,

running from the date of publication of the statements at issue.

Defendants note plaintiff filed suit for defamation well beyond

the one-year limitation period, and deny the applicability of

any recognized tolling doctrine. Even if New York had a

“discovery rule” for defamation claims, defendants say, Rudra

22

and Kanetkar were both clearly identified in the Vanity Fair

Article in 2011. (Motley Mot. 28-30.) Plaintiff, on the other

hand, insists New York’s one-year statute of limitations was

tolled on both equitable and statutory grounds, and that, at the

very least, the application of any tolling doctrine is a

question of fact that cannot be resolved at the pleading stage.

(Id. 44-46.)

LEGAL STANDARD

“To survive a motion to dismiss pursuant to Rule

12(b)(6), a complaint must contain sufficient facts that if

accepted as true ‘state a claim to relief that is plausible on

its face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)

(quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)).

“A well-pleaded complaint must contain ‘a short and plain

statement of the claim showing that the pleader is entitled to

relief, in order to give the defendant fair notice of what the .

. . claim is and the grounds upon which it rests.’” Carson

Optical Inc. v. eBay Inc., 202 F. Supp. 3d 247, 252 (E.D.N.Y.

2016) (citing Twombly, 550 U.S. at 555). A complaint providing

only “labels and conclusions” or “a formulaic recitation of the

elements of a cause of action will not do.” Twombly, 550 U.S.

at 555.

In deciding the motion, “courts must consider the

23

complaint in its entirety, as well as other sources courts

ordinarily examine when ruling on Rule 12(b)(6) motions to

dismiss, in particular, documents incorporated into the

complaint by reference, and matters of which a court may take

judicial notice.” Tellabs, Inc. v. Makor Issues & Rights, Ltd.,

551 U.S. 308, 322 (2007). The court may also consider documents

that the plaintiff relied on in bringing the action and that are

either in the plaintiff’s possession or that the plaintiff knew

of when bringing suit. Chambers v. Time Warner, Inc., 282 F.3d

147, 153 (2d Cir. 2002); Brass v. Am. Film Techs., Inc., 987

F.2d 142, 150 (2d Cir. 1993); Cortec Indus., Inc. v. Sum Holding

L.P., 949 F.2d 42, 47–48 (2d Cir. 1991), cert. denied, 503 U.S.

960 (1992); McKevitt v. Mueller, 689 F. Supp. 2d 661, 665

(S.D.N.Y. 2010). Where the complaint cites or quotes from

excerpts of a document, the court may consider other parts of

the same document submitted by the parties on a motion to

dismiss. 131 Main St. Assocs. v. Manko, 897 F. Supp. 1507, 1532

n. 23 (S.D.N.Y. 1995). If “the documents contradict the

allegations of a plaintiff's complaint, the documents control

and the [c]ourt need not accept as true the allegations in the

complaint.” 2002 Lawrence R. Buchalter Alaska Tr. v.

Philadelphia Fin. Life Assurance Co., 96 F. Supp. 3d 182, 199

(S.D.N.Y. 2015) (quoting Bill Diodato Photography LLC v. Avon

Prods., Inc., No. 12–CV–847, 2012 WL 4335164, at *3 (S.D.N.Y.

24

Sept. 21, 2012)) (collecting authorities).

DISCUSSION

I. RICO Claims

Section 1964(c) of RICO provides a private right of

action to any person injured in his business or property by

reason of a violation of RICO’s substantive provisions, codified

in section 1962. “To establish a RICO claim, a plaintiff must

show: (1) a violation of . . . 18 U.S.C. § [1962]; (2) an injury

to business or property; and (3) that the injury was caused by

the violation of Section 1962.” Cruz v. FXDirectDealer, LLC,

720 F.3d 115, 120 (2d Cir. 2013) (quoting DeFalco v. Bernas, 244

F.3d 286, 305 (2d Cir. 2001)). To establish a violation under

18 U.S.C. § 1962, a plaintiff must show “(1) conduct (2) of an

enterprise (3) through a pattern (4) of racketeering activity.”

Kim v. Kimm, 884 F.3d 98, 103 (2d Cir. 2018) (quoting DeFalco,

244 F.3d at 306)).

A “pattern of racketeering activity” is defined by the

statute as “at least two acts of racketeering activity” within a

ten-year period. 18 U.S.C. § 1961(5). “Racketeering activity”

is defined to include any “act” indictable under various

specified federal statutes, including, as relevant here, the

mail and wire fraud statutes, the bribery statute, and the

witness tampering statute. See 18 U.S.C. § 1961(1) (defining

25

“racketeering activity” to include offenses indictable under 18

U.S.C. §§ 1341 (mail fraud), 1343 (wire fraud), 201 (bribery),

and 1512 (witness tampering)). Two predicate acts are necessary

to constitute a pattern, though not always sufficient. See

Sedima, S.P.R.L. v. Imrex Co., 473 U.S. 479,496 n. 14 (1985)

(“The implication is that while two acts are necessary, they may

not be sufficient.”); see also United States v. Indelicato, 865

F.2d 1370, 1382 (2d Cir. 1989) (“The legislative history is . .

. inconsistent with a rule that any two acts of racketeering

activity, without more, suffice to establish a RICO pattern.”).

Courts have cautioned that RICO is as “an unusually

potent weapon—the litigation equivalent of a thermonuclear

device.” Halvorssen v. Simpson, No. 218CV2683ENVRLM, 2019 WL

4023561, at *3 (E.D.N.Y. Aug. 26, 2019) (quoting Katzman v.

Victoria’s Secret Catalogue, 167 F.R.D. 649, 655 (S.D.N.Y. 1996)

(citation omitted), aff’d, 113 F.3d 1229 (2d Cir. 1997)). Given

the “powerful incentive for plaintiffs to attempt to fit garden

variety fraud claims within the standard of civil RICO” due to

“the allure of treble damages, attorney’s fees, and federal

jurisdiction,” courts must “scrutinize civil RICO claims early

in the litigation to separate the rare complaint that actually

states a claim for civil RICO from that more obviously alleging

common law fraud.” Holmes v. Parade Place, LLC, No. 12-CV-6299

(GBD) (DF), 2013 WL 5405541, at *14 (S.D.N.Y. Sept. 26, 2013)

26

(citation omitted); see also Olympicorp Int’l LLC v. Farm Rich

Foods, LLC, No. 13-CV-4094 (ENV), 2013 WL 6194238, at *2

(E.D.N.Y. Nov. 25, 2013) (observing that RICO, when “often

invoked inappropriately,” becomes “a mere saber to be rattled”).

A. Relatedness

1. Legal Standard

The Supreme Court has interpreted the phrase “pattern

of racketeering activity” to require both that the RICO

predicates pose a threat of continuous criminal activity (the

“continuity” requirement) and that they be related to each other

(the “relatedness” requirement). Reich v. Lopez, 858 F.3d 55,

59 (2d Cir. 2017) (citing H.J. Inc. v. Nw. Bell Tel. Co., 492

U.S. 229, 239 (1989)). RICO targets conduct that “amount[s] to

or pose[s] a threat of continued criminal activity.” H.J., 492

U.S. at 239. Because RICO does not apply to “isolated or

sporadic criminal acts,” it has a relatedness requirement in

addition to the continuity requirement. Indelicato, 865 F.2d at

1383 (internal quotation marks omitted). Predicate crimes must

be related both to each other (“horizontal relatedness”) and to

the enterprise as a whole (“vertical relatedness”). Reich, 858

F.3d at 60-61 (citing United States v. Cain, 671 F.3d 271, 284

(2d Cir. 2012)).

In H.J. Inc. v. Northwestern Bell Telephone Company,

27

the Supreme Court clarified that predicate acts are horizontally

related when they: “have the same or similar purposes, results,

participants, victims, or methods of commission, or otherwise

are interrelated by distinguishing characteristics and are not

isolated events.” 492 U.S. at 240. Where the putative

enterprise is primarily a legitimate business, courts must

determine whether there is a relationship between the predicate

crimes themselves; to do so, courts inquire whether the crimes

share “purposes, results, participants, victims, or methods of

commission.” Id.; see also Indelicato, 865 F.2d at 1382

(looking to “temporal proximity, or common goals, or similarity

of methods, or repetitions”). “‘[W]here the enterprise in

question is not primarily in the business of racketeering,’

overlapping participants, without more, are insufficient to show

horizontal relatedness.” Halvorssen, 2019 WL 4023561, at *5

(quoting Reich, 858 F.3d at 62).

The Second Circuit’s 2017 decision in Reich v. Lopez

is instructive. Plaintiff Otto J. Reich, the principal of a

consulting firm specializing in anti-corruption, alleged that

Derwick Associates (“Derwick”), a Venezuelan energy company,

bribed Venezuelan energy officials to secure energy contracts at

inflated prices without public bidding, then subcontracted out

the work while retaining significant profits. 858 F.3d at 58.

In 2012, Derwick’s principals filed state court defamation suits

28

against a Venezuelan bank that was threatening to expose

Derwick’s criminal activities. Id. Derwick hatched a plan to

sever the bank’s relationship with Reich. Id. A Derwick agent

called a major shareholder of the bank and falsely stated that

Reich was in cahoots with Derwick. Id. The call achieved

Derwick’s goal: the bank cut ties with Reich. Id. at 58-59.

Around the same time, one of Derwick’s principals peddled the

same falsehood to another client of Reich’s, Eligio Cedeño, and

achieved the same result: Cedeño fired Reich. Id. All told,

Derwick’s actions cost Reich thousands of dollars monthly in

consulting fees. Id.

Reich filed a RICO action against Derwick’s principals

alleging predicate crimes of wire fraud arising from the false

phone calls, and violations of the Travel Act arising from

Derwick’s bribery of Venezuelan officials. Id. The district

court dismissed Reich’s RICO claim for failure to plead a

“pattern of racketeering activity,” and the Second Circuit

affirmed. Applying the H.J. factors to assess relatedness, the

Second Circuit found that even though Derwick’s principals

partook in both the alleged wire fraud and bribery, “little

else” linked the two predicates:

As to the Travel Act violations, they were

accomplished by the payment of bribes; the result was

that Derwick secured energy contracts; and the victims

were competing energy contractors and the government

29

of Venezuela; whereas the wire fraud was accomplished

by false phone calls, the result was that two clients

terminated Reich, and the victims were Reich himself

and his firm. The methods of commission, victims, and

results of the predicate acts are all dissimilar and

weigh against relatedness.

Id. at 62 (emphasis in original).

The Second Circuit also considered the purpose of the

underlying wire fraud and Travel Act violations. Though both

predicates were committed for the purpose of helping Derwick,

Judge Jacobs, writing for a unanimous panel, reasoned that

construing purpose at so broad a level of generality “would make

the factor meaningless” because “virtually all crimes committed

on behalf of an enterprise are done to help it.” Id. (citations

omitted). Rather, the acts of wire fraud were intended to get

Reich fired; the Travel Act violations were committed to secure

energy contracts. Id. The distinct motives underlying the wire

fraud and Travel Act violations weighed against relatedness, as

did the other H.J. factors and, therefore, plaintiff failed to

plead a “pattern of racketeering activity.

H.J. and Reich thus delineate the contours of the

“relatedness” inquiry under RICO. The court will now apply the

relatedness test, which has been called “a bulwark against the

application of RICO to the perpetrators of ‘isolated’ or

‘sporadic’ criminal acts,” United States v. Daidone, 471 F.3d

371, 376 (2d Cir. 2006) (citation and internal quotation marks

30

omitted), to the instant complaint.

2. Application

Plaintiff alleges that the Enterprise committed acts

of racketeering activity prior to the NJ Action against

Rajaratnam, some dating as far back as the 1970s, before Motley

Rice even existed. The sprawling nature of the scheme alleged

by plaintiff necessitates a relatedness inquiry to separate the

wheat of the complaint from its chaff. The complaint avers

that Motley Rice is a legitimate business that is primarily

engaged in the practice of law. (Compl. ¶ 18 (“Defendant Motley

Rice, LLC is a well-known plaintiff side litigation firm founded

in 2003.”).) The relatedness analysis thus begins with the

factors identified in H.J.: similar “purposes, results,

participants, victims, [and] methods of commission.” 492 U.S.

at 240.

The participants in the NJ Action-related predicates

were Motley Rice and Michael Elsner, who filed the NJ Complaint,

the JTTF Defendants, with whom Motley Rice coordinated, and

Rudra, who was allegedly bribed by members of the Enterprise.

The participants accomplished their crimes by planting false

information about plaintiff in the Vanity Fair Article,

unlawfully obtaining and exploiting confidential government

information, and concealing evidence of their criminality by,

31

among other things, resisting disclosures in the NJ Action and

lying to the court. The victim, obviously, was Rajaratnam. The

purpose of the Motley Rice Enterprise’s predicate crimes was to

pressure Rajaratnam into settling the NJ Action, thus enriching

the Enterprise.

The alleged racketeering acts that preceded the NJ

Action ultimately have no apparent relation to the predicates

committed in the course of the NJ Action. These unrelated acts

may be grouped as follows:

Asbestos Litigation. According to the complaint,

Motley Rice’s predecessor, Ness Motley, began “flooding” courts

in the 1970s with voluminous personal injury cases claiming

asbestos-related injuries. (Compl. ¶ 30.) Ness Motley’s

founders supposedly used “threats” and “intimidation” to

obstruct a bill related to asbestos claims, in violation of 18

U.S.C. § 1505,14 and improperly induced medical experts to

provide false testimony, in violation of 18 U.S.C. § 1512. (Id.

¶ 33.)

The actions of Motley Rice’s predecessor are not

related in any conceivable way to the NJ Action or Rajaratnam.

Plaintiff does not claim that Elsner, Rudra, or the JTTF

14 Violations of 18 U.S.C. § 1505 are not predicate acts of racketeering

activity as defined by RICO. See 18 U.S.C. § 1961(1).

32

Defendants were involved in Ness Motley’s asbestos litigation

lawsuits. The complaint also does not allege that defendants

used threats or intimidation in connection with the NJ Action.

The complaint claims defendants procured Rudra’s testimony

through bribes, but does not allege that Ness Motley bribed the

experts in the asbestos cases. The result of Ness Motley’s

asbestos suits were “bulk” settlements. Though plaintiff

insists the overarching goal of the NJ Action is to coerce him

into a quick settlement, settlement is a goal that can be

ascribed to nearly every plaintiff litigating a civil case.

Whatever the purported goal of the NJ Action, the only results,

thus far, have been a protracted, decade-long federal

litigation, attorneys’ fees, and other intangible, alleged harms

to plaintiff. No particular persons or entities are identified

as the victims of Ness Motley’s asbestos suits and related

conduct, but suffice it to say, the victims did not include

Rajaratnam, who is the lone alleged victim of the NJ Action.

The 9/11 Action. Plaintiff alleges that, in the years

following the terrorist attacks of September 11, Jean-Charles

Brisard, Motley Rice’s lead investigator, falsified a document

listing donors to Osama bin Laden and, as a result, a wealthy

Saudi man by the name of Khalid bin Mahfouz was wrongly named in

a suit brought by Motley Rice on behalf of 9/11 terror attack

victims. (Compl. ¶¶ 39-42.) Brisard was then “replaced” with

33

Michael Asimos, who supposedly shared information about the 9/11

Action with DoD personnel in order to receive a “quid pro quo”—

the receipt of sensitive government information—from those same

DoD officials. Plaintiff claims Brisard’s and Asimos’s actions

violated the federal mail and wire fraud and bribery statutes.

As a preliminary matter, plaintiff’s fraud and bribery

claims in connection with Brisard, Asimos, and the 9/11 Action

are wholly conclusory and do not pass muster under basic notice

pleading requirements, much less Rule 9(b) of the Federal Rules

of Civil Procedure, applicable to claims sounding in fraud.

That glaring deficiency aside, there is plainly no relation

between the NJ Action and the allegations relating to the 9/11

Action. Asimos and Brisard are not parties to this proceeding,

and are not alleged to have participated in the NJ Action; the

victim of Brisard’s “falsification” was Khalid bin Mahfouz, not

Rajaratnam, and the complaint does not identify any victim of

Asimos’s conduct; bin Mahfouz was named in the 9/11 Action but

there is no mention of any settlement, the supposed goal of the

NJ Action; and falsifying an intelligence document, the method

whereby the Enterprise targeted bin Mahfouz, is not the same as

planting a story in a national magazine, or leveraging

government secrets for litigation advantage.

Rosetta. Asimos allegedly lied to a congressional

34

staffer and fabricated a story so that he could insinuate his

way into Iraq after the 2003 invasion by the United States.

(Compl. ¶¶ 49-54.) Asimos, Mallon, and other investigators also

used an entity called Rosetta, allegedly funded by Motley Rice,

to “secure profitable government contracts” and sell information

gathered in connection with the 9/11 Action. (Id. ¶ 55.)

Rosetta built “a massive database of government intelligence on

terrorism,” (id. ¶ 56), though plaintiff neglects to explain why

that project was criminal. Rosetta also offered information to

an FBI agent in the hopes he would return the favor, received

information from a different FBI agent, and took yet another FBI

agent on a “house-hunting trip ‘in anticipation of being hired

by Rosetta.’” (Id. ¶¶ 61-67.) Even ignoring the pleading

deficiencies in these allegations, which plaintiff conclusorily

asserts constitute bribery and sale of stolen property across

state lines, see 18 U.S.C. §§ 201, 2314, 2315, Rosetta’s acts

bear no plausible relation to the NJ Action.

Arrest of Afghan Drug Lord. In 2004 and 2005, at the

DEA’s request, Motley Rice allegedly induced a “notorious Afghan

drug lord” to come to the United States under false pretenses,

where he was arrested and sentenced to life in prison, thereby

committing wire fraud against the drug lord, 18 U.S.C. § 1343.

(Compl. ¶¶ 68-71.) Motley Rice’s allegedly duplicity in luring

an Afghan drug lord to his arrest is clearly unrelated to the NJ

35

Action or any act that allegedly harmed plaintiff.

Plaintiff has not pled any plausible connection

between the NJ Action, on the one hand, and Ness Motley’s

asbestos litigation, the 9/11 Action, Rosetta, or the deception

of an Afghan drug lord, on the other. Accordingly, these

alleged acts fail to establish a pattern of racketeering

activity. The court next turns to the remaining predicate acts

alleged in the complaint, which relate to the NJ Action and the

Vanity Fair Article.

B. Predicate Acts

Though defendants have raised a number of issues with

respect to plaintiff’s RICO claims, including whether Rajaratnam

actually suffered an injury, or whether the JTTF Defendants

participated in the management of the enterprise, the court need

proceed no further than considering the sufficiency, or lack

thereof, of the predicate acts alleged in the complaint. In

order to state a claim for a violation of RICO, plaintiff must

allege a pattern of racketeering activity, which, at a minimum,

requires the commission of “at least two acts of racketeering

activity” within a ten-year period. 18 U.S.C. § 1961(5); see 18

U.S.C. §§ 1962(a)-(d).

1. Mail and Wire Fraud, 18 U.S.C. §§ 1341, 1343

“The essential elements of [mail and wire fraud] are

36

(1) a scheme to defraud[;] (2) money or property as the object

of the scheme[;] and (3) use of the mails or wires to further

the scheme.” United States v. Weaver, 860 F.3d 90, 94 (2d Cir.

2017) (citing United States v. Binday, 804 F.3d 558, 569 (2d

Cir. 2015)). “For both wire and mail fraud, the object of the

scheme to defraud must be money or property.” Westchester Cty.

Indep. Party v. Astorino, 137 F. Supp. 3d 586, 600 (S.D.N.Y.

2015) (citing United States v. Pierce, 224 F.3d 158, 165 (2d

Cir. 2000)) (emphasis in original). “In the context of mail

fraud and wire fraud, the words ‘to defraud’ commonly refer to

wronging one in his property rights by dishonest methods or

schemes, and usually signify the deprivation of something of

value by trick, deceit, chicane or overreaching.” Pierce, 224

F.3d at 165 (internal quotations omitted). “A scheme to

deceive, however dishonest the methods employed, is not a scheme

to defraud in the absence of a property right for the scheme to

interfere with.” Id. (citing Carpenter v. United States, 484

U.S. 19, 27–28 (1987)).

As fraud-based predicates, wire fraud and mail fraud

“must be pleaded with particularity in accordance with Federal

Rule of Civil Procedure 9(b).” Jus Punjabi, LLC v. Get Punjabi

US, Inc., 640 Fed. Appx. 56, 58 (2d Cir. 2016) (summary order)

(citing Lundy v. Catholic Health Sys. of Long Island Inc., 711

F.3d 106, 119 (2d Cir. 2013)). This particularity requirement

37

extends “to each defendant.” Fuji Photo Film U.S.A., Inc. v.

McNulty, 640 F. Supp. 2d 300, 314 (S.D.N.Y. 2009). “To satisfy

this requirement, a complaint must specify the time, place,

speaker, and content of the alleged misrepresentations, explain

how the misrepresentations were fraudulent and plead those

events which give rise to a strong inference that the

defendant[] had an intent to defraud, knowledge of the falsity,

or a reckless disregard for the truth.” Jus Punjabi, 640 Fed.

Appx. at 58 (bracket in original, internal quotation marks

omitted) (quoting Cohen v. S.A.C. Trading Corp., 711 F.3d 353,

359 (2d Cir. 2013)); see also First Capital Asset Mgmt., Inc. v.

Satinwood, Inc., 385 F.3d 159, 178-79 (2d Cir. 2004).

The complaint’s mail and wire fraud allegations break

down into two categories. The first consists of electronic

court filings on the New Jersey District Court’s docket,

including “false statements” regarding Motley Rice’s acquisition

and use of confidential government information, allegedly

obtained through Rudra and the JTTF Defendants, (Compl. ¶¶ 138-

44), as well as Allison and Mallon’s affidavits, electronically

filed by Elsner in the NJ Action, which represented that the

JTTF Defendants had not paid Rudra to be a fact witness in the

case. (Id. ¶¶ 135-37.) The second false statement category

concerns Motley Rice’s dissemination of the 2009 Press Release

and its “orchestrating and planting ‘fake news’” about

38

Rajaratnam’s remarks and the November 2002 Event in the Vanity

Fair Article, which was thereafter “disseminated via interstate

wires on Vanity Fair’s website.” (Id. ¶¶ 97-99, 106-07.)

For the reasons discussed below, these allegations

fail to state a claim for mail or wire fraud.

a. False Statements in the NJ Action

Plaintiff’s allegation, that defendants committed mail

and wire fraud by disseminating false statements to the New

Jersey District Court with the intent to coerce plaintiff into

settling, runs headlong into “the overwhelming weight of

authority [that] bars a civil RICO claim based on the use of the

mail or wire to conduct allegedly fraudulent litigation

activities as predicate racketeering acts.” Carroll v. U.S.

Equities Corp., No. 118CV667TJMCFH, 2019 WL 4643786, at *12

(N.D.N.Y. Sept. 24, 2019); see also Kim, 884 F.3d 98.15

15 See Estate of Izzo v. Vanguard Funding, LLC, No. 15-CV-7084 (ADS/GRB),

2017 WL 1194464, at *11 (E.D.N.Y. Mar. 30, 2017)(“[E]ven assuming that Urban

Financial’s August 29, 2011 mailing satisfies the elements of mail fraud—a

proposition that is questionable on the current record—the RICO claim fails

because the service and filing of litigation documents in the Foreclosure

Action cannot plausibly support a cognizable claim.”); see also Avraham v.

Lakeshore Yacht & Country Club, Inc., No. 5:15-CV-1297, 2016 WL 6585589, at

*12 (N.D.N.Y. Nov. 7, 2016) (“[A] defendant’s ‘use of mail and wire to

conduct allegedly fraudulent ‘litigation activities’ is insufficient to

establish predicate acts of racketeering.’ ”)(citation omitted); Saluzzo v.

Greenbaum, No. 110-CV-649 (GLS\RFT), 2011 WL 13234286, at *3 (N.D.N.Y. Feb.

4, 2011)(“[W]hile mail and wire fraud do constitute predicate acts under

RICO, . . . allegations of mail or wire fraud are nonetheless insufficient to

plead the necessary predicate act where the focus of those allegations is the

defendant’s litigation activities in pending litigation.”)(citation omitted).

Courts outside the Second Circuit are similarly skeptical of mail and wire

fraud predicates based on litigation activities. See Republic of Kazakhstan

v. Stati, 380 F. Supp. 3d 55, 61 (D.D.C. 2019)(“Courts do not allow allegedly

39

In Kim v. Kimm, the Second Circuit reviewed a district

court decision dismissing a RICO action against parties who had

previously brought a trademark infringement action against the

plaintiff. 884 F.3d 98. The crux of plaintiff’s RICO claim was

“four declarations” that defendants had prepared, signed, and

filed in the trademark action “with full knowledge that they

contained fraudulent representations intended to persuade the

district court to find in favor of [defendants].” Id. at 103.

The district court determined that these alleged litigation

activities could not provide a basis for predicate acts under

Section 1962(c). Id. Affirming on substantially identical

grounds, the panel noted the consensus among its sister circuits

that litigation activities were improper predicates for civil

RICO claims. Id. at 104 (collecting cases). The Second Circuit

was particularly concerned that allowing litigation activities

to state a claim under RICO could “spawn a retaliatory action”

fraudulent ‘litigation activities,’ such as filing fraudulent documents or

engaging in baseless litigation to serve as predicate acts for RICO . . .

where such acts constitute ‘the only allegedly fraudulent conduct.’”)

(citation omitted); Quick v. EduCap, Inc., 318 F. Supp. 3d 121, 141–42

(D.D.C. 2018) (“As Plaintiffs’ RICO claim is premised entirely on mailings

done for the purpose of litigation activity, they have failed to state a

claim.”); see also Snow Ingredients, Inc. v. SnoWizard, Inc., 833 F.3d 512,

525 (5th Cir. 2016) (“[P]rosecuting litigation activities as federal crimes

would undermine the policies of access and finality that animate our legal

system. Moreover, allowing such charges would arguably turn many state-law

actions for malicious prosecutions into federal RICO actions.”) (quoting

United States v. Pendergraft, 297 F.3d 1198, 1208 (11th Cir. 2002)); Auburn

Med. Ctr., Inc. v. Andrus, 9 F. Supp.2d 1291, 1298 (M.D. Ala. 1998)

(“Numerous other courts have found that the actions underlying claims for

malicious prosecution, or analogous actions in the litigation context, will

not support a RICO action.”).

40

for every unsuccessful lawsuit, “inundate federal courts with

procedurally complex RICO pleadings,” and undermine the

principles buttressing the res judicata and collateral estoppel

doctrines by raising doubts about the validity of documents

presented in the underlying litigation, and, ipso facto, the

judicial decisions that relied on those documents. Id.16

Plaintiff asserts that Kim and similar decisions do

not establish an “unqualified ‘safe harbor’ that immunizes

litigation-related activities from RICO liability.” (Opp. 10.)

Plaintiff relies on four cases in which litigation activities

supposedly comprised the basis for sufficiently pled RICO

claims. But none of those cases sustains the instant pleading.

United States v. Eisen, (cited at Opp. 11), concerned

the criminal prosecution of seven attorneys, investigators, and

office personnel of a Manhattan law firm (“Eisen Firm”), which

specialized in personal injury suits. 974 F.2d 246, 251 (2d

Cir. 1992). The evidence at trial in that case showed that the

defendants conducted the affairs of the Eisen Firm through a

“pattern of mail fraud and witness bribery by pursuing

counterfeit claims” by, among other things, “pressuring accident

16 Plaintiff argues that Kim left the door open to RICO claims based, in

part, on litigation activities, where defendants “also engaged in a variety

of other out-of-court actions to further this activity.” Id. at 105. As

discussed throughout this Memorandum and Order, any “other out-of-court

actions” alleged in the complaint are either deficiently pled, or fail to

establish relatedness or continuity, as are necessary to establish a pattern

of racketeering activity.

41

witnesses to testify falsely, paying individuals to testify

falsely . . . , paying unfavorable witnesses not to testify, and

creating false . . . evidence for use before and during trial.”

Id. Defendants operated this scheme to pursue over a dozen

counterfeit personal injury claims. Id. Defendants were

convicted by a jury and appealed. The appeal was denied.

As an appeal following a criminal jury trial and

verdict, Eisen is of limited utility in determining whether

plaintiff has pleaded mail and wire fraud with particularity in

a civil matter. Further, as another court observed, “the

predicate acts in Eisen amounted to far more than mere

‘litigation activities,’ and instead involved an extensive and

broader scheme to defraud defendants in the personal injury

lawsuits commenced by the Eisen Firm.” Curtis & Associates,

P.C. v. Law Offices of David M. Bushman, Esq., 758 F.Supp.2d

153, 176 (E.D.N.Y. 2010). Thus, in Eisen, the defendant

attorneys “went well beyond their capacities as legal

representatives” in conducting their fraudulent scheme. See

Morrow v. Blessing, No. 04-1161, 2004 WL 2223311, at *5 (E.D.

Pa. Sept. 29, 2004).

In another case cited by plaintiff, Sykes v. Mel

Harris and Assocs., LLC, (cited at Opp. 11), the defendants—Mel

Harris, LLC, a Manhattan law firm primarily engaged in debt

42

collection, and Leucadia, a group of entities that purchased and

collected defaulted debts—entered into agreements to purchase

debt portfolios, pursued high volume debt collection litigation

against the purported debtors, and sought collection of millions

of dollars in fraudulently obtained default judgments. 757 F.

Supp. 2d 413, 419 (S.D.N.Y. 2010). Leucadia and Mel Harris used

sewer service to effectuate their scheme. Over 90% of the

consumers named in the actions defaulted because they were not

actually served. Id. After a consumer failed to appear in

court, the defendants would move for default judgment by

providing the court with proofs of service and affidavits

attesting to personal knowledge of facts comprising the basis

for their legal claims. Id. The Sykes plaintiffs, consumers

who had been sued by defendants in state debt collection

actions, commenced a RICO action in federal court alleging that

defendants engaged in a scheme to defraud consumers of money

through fraudulent statements involving the use of the mail and

wires. Id. at 425.17

Sykes is readily distinguishable from the allegations

before this court. The gravamen of Mel Harris’s racketeering

activity was not so much litigation activities, as it was the

17 Judge Chin did not dismiss the RICO claim in Sykes but his decision did

not address whether litigation activities can support allegations of mail and

wire fraud for RICO purposes, see id., perhaps because the argument had not

been raised.

43

use of courts to obtain default judgments en masse against

defendants who had not been served. The “litigations” in Sykes

were mere perfunctory steps to cash in on a portfolio of

defaulted debts. Plaintiff cannot reasonably claim that the NJ

Action, a decade-long court battle in which Rajaratnam is one of

only three named defendants, is remotely akin to the industrial

scale state court litigations filed for the exclusive purpose of

obtaining default judgments in Sykes. Indeed, the concerns

about civil RICO litigation based on litigation activities that

so troubled the Second Circuit in Kim, were altogether

inapplicable in Sykes: there was little chance of “retaliatory

action” by the non-appearing consumers, and the RICO action

brought by those consumers did not risk eroding res judicata and

collateral estoppel doctrines because default judgments

typically are not preclusive. See Artmatic USA Cosmetics, a

Div. of Arthur Matney Co. v. Maybelline Co., a Div. of Schering

Plough, 906 F. Supp. 850, 856 (E.D.N.Y. 1995) (“The majority

view is that collateral estoppel based on default judgments is

undesirable.”) (collecting cases).

In Guzman v. Hecht, (cited at Opp. 11-12), a New York

law firm misrepresented the nature of the legal services it

would provide to clients seeking immigration relief. No.

18CV3947(DLC), 2019 WL 1315888, at *1 (S.D.N.Y. Mar. 22, 2019).

Though Judge Cote denied a motion to dismiss plaintiff’s RICO

44

claim, further explication of the facts and holding in Guzman is

unnecessary. Guzman is inapt because, unlike here, the RICO

claim did not arise from adversarial litigation activities, but

rather, defendants’ misrepresentations to putative clients about

the nature of legal services their law firm would provide.

Lastly, plaintiff relies on Feld Entertainment Inc. v.

American Society for the Prevention of Cruelty to Animals, 873

F. Supp. 2d 288 (D.D.C. 2012). (Opp. 12.) Feld Entertainment

was the defendant in an earlier, long-running suit asserting

violations of the Endangered Species Act, based on its use of

Asian elephants in circus productions (“ESA Action”). 873 F.

Supp. 2d at 299. The plaintiffs in the ESA Action were several

non-profit animal rights organizations and one individual

plaintiff, Thomas Rider. Id. Following a bench trial, the

court in the ESA Action concluded that Rider did not have

Article III standing, and further found that he was “not

credible” because he was “essentially a paid plaintiff and fact

witness” whose sole source of income throughout the litigation

was provided by the animal advocacy organizations which had been

his co-plaintiffs in the ESA Action. Id. Feld then turned

around and sued the animal rights organizations and their

counsel of record, arguing that the ESA plaintiffs’ payments to

Rider during that litigation violated RICO. Id. at 300.

45

Judge Emmet Sullivan denied defendants’ motion to

dismiss and permitted discovery on the RICO claim. Id. at 322.

Judge Sullivan acknowledged “that courts have refused to allow

litigation activities such as filing fraudulent documents or

engaging in baseless litigation to serve as predicate acts for

RICO,” but considered this restriction limited to “circumstances

where such acts constitute the only allegedly fraudulent

conduct.” Id. at 318 (internal quotations and citations

omitted). Feld’s lawsuit went beyond those limited

circumstances:

[W]here additional allegations of extortion or some

other pattern of racketeering activity are involved,

courts have found that alleged mail and wire fraud

violations arising out of malicious prosecution or

abuse of process could be RICO predicate acts. This

case, at least at the pleading stage, falls into the

latter category. Plaintiff’s allegations in the FAC

are not limited to claims that defendants filed false

documents with the Court or otherwise engaged in

frivolous and harassing litigation; they claim the

entire lawsuit was based on bribery of the lead

plaintiff and witness.

Id. at 318-319 (emphasis added, internal citation and quotation

marks omitted).

Though Rajaratnam has alleged that the NJ Action was

facilitated by bribes paid to Rudra, a claim the court deals

with below, the complaint does not allege that the NJ Action was

based entirely on information or testimony provided by Rudra, or

confidential government documents stolen by the JTTF Defendants

46

and transmitted to Motley Rice. The initial NJ Complaint

alleged Rajaratnam and his father made donations to TRO,

including a $1 million personal contribution from Rajaratnam to

TRO that was allegedly funneled to Sri Lanka; that TRO provided

LTTE with material support; and incorporated written statements

by Rajaratnam’s father in support of LTTE. (NJ Compl. ¶¶ 12,

96, 102, 110-11.) Even after Motley Rice retracted the

allegations arising from Rajaratnam’s purported statements at

the November 2002 Event, which Rudra claimed to have recorded,

the bulk of the allegations in the initial NJ Complaint remain

pending, (NJ ECF No. 384, ¶¶ 11, 267-68, 314, 320), and there is

no allegation by Rajaratnam that they are each based on bribery

or other crimes. The court, therefore, finds that Feld, which

is not controlling in any event, is distinguishable.

Based on the foregoing, plaintiff cannot rely on

defendants’ litigation activities in the NJ Action to plead the

predicate acts of mail or wire fraud for his civil RICO claim.

A civil RICO action in a neighboring federal district is not the

appropriate mechanism to seek redress for false statements made

in court filings by a litigation adversary. More appropriate

measures may include a motion for Rule 11 sanctions, motions to

preclude or strike testimony, and, if necessary, a motion for

relief under Federal Rule of Civil Procedure 60(b)(3) for fraud

on the court.

47

b. The Vanity Fair Article and 2009 Press

Release

Plaintiff alleges that Motley Rice committed wire

fraud when it issued the 2009 Press Release falsely representing

that Rajaratnam made pro-LTTE remarks at the November 2002

Event. (Compl. ¶ 97-98.) Elsner, Kanetkar, and Rudra, in

coordination with Motley Rice, allegedly committed wire fraud

again in 2011 when they parroted the same misrepresentations

about Rajaratnam to Vanity Fair. (Id. ¶ 103-07.) Plaintiff

claims these statements were made as part of a scheme to

“wrongfully obtain money” from him by increasing pressure on

plaintiff to settle the NJ Action. (Id. ¶ 97.)

Just as courts are loath to permit litigation

activities to be shoehorned into civil RICO predicates, courts

express similar reticence towards attempts to recast defamatory

statements as mail and wire fraud violations. “The mere fact

that a statement is negative or even defamatory . . . does not

make it fraudulent. In order for a statement to be actionable

under the mail and wire fraud statutes, a plaintiff must allege

the existence of a scheme, conscious and knowing intent to

defraud on the part of the speaker, and the materiality of the

misrepresentation.” Li Jun An v. Hui Zhang, No. 13 Civ.

5064(PKC), 2013 WL 6503513, at *6 (S.D.N.Y. Dec. 6, 2013); see

also McEvoy Travel Bureau, Inc. v. Heritage Travel, Inc., 904

48

F.2d 786, 791 (1st Cir. 1990) (“[N]ot every use of the mails or

wires in furtherance of an unlawful scheme to deprive another of

property constitutes mail or wire fraud.”).

The Vanity Fair Article and 2009 Press Release are not

suitable foundations for wire fraud. At the outset, plaintiff

claims the widely-disseminated falsehoods published in the

Vanity Fair Article caused him to suffer “public contempt,

disgrace, personal and professional reputational harm, and

ridicule.” (Compl. ¶ 192.) It is well-established, however,

that reputational harm alone, cannot support a claim for mail or

wire fraud. Kimm v. Lee, No. 04 CIV. 5724 (HB), 2005 WL 89386,

at *4 (S.D.N.Y. Jan. 13, 2005), aff'd sub nom. Kimm v. Chang

Hoon Lee & Champ, Inc., 196 F. App'x 14 (2d Cir. 2006) (“Though

Kimm may well have suffered reputational injury as a result of

the defendants’ alleged acts, no one was induced to part with

anything of value as a result.”) (internal quotation marks and

citation omitted); United States v. Ferrara, 701 F. Supp. 39, 43

(E.D.N.Y. 1988), aff’d, 868 F.2d 1268 (2d Cir. 1988) (“[I]f

one’s reputation-standing alone-could be construed as property,

then any ordinary defamation action could be brought under the

mail fraud statute-a startling proposition.”).

Plaintiff also alleges that the Vanity Fair Article

and 2009 Press Release caused him financial harm. (Compl. ¶

49

190.) The complaint does not specify what financial harm

plaintiff actually suffered, a pleading deficiency under Rule

9(b), but avers that Motley Rice intended the publication of the

false statements about Rajaratnam’s speech to increase pressure

on him to settle the NJ Action. The court declines to credit

this allegation because it rests on the implausible notion that

Rajaratnam somehow would have been deceived or tricked into

settling the NJ Action based on claims that he knew had no basis

in fact. It defies common sense that plaintiff relied on

statements he knew were false, or that Motley Rice plausibly

expected to induce Rajaratnam’s reliance on falsehoods about his

remarks at the November 2002 Event, when Rajaratnam himself was

the one who made the speech. Indeed, the complaint neglects to

explain why or how Vanity Fair’s broader publication of

statements that had already been presented to the court in the

NJ Action would, suddenly, prompt plaintiff to settle that case,

especially if plaintiff knew he could disprove the false

statements about his remarks at the November 2002 Event in the

course of discovery.

Construing the allegations liberally, plaintiff

appears to claim that Motley Rice intended to compel a

settlement offer from Rajaratnam by leveraging against him the

reputational stigma that flowed from the 2009 Press Release and

Vanity Fair Article. Plaintiff’s attempt to “spin an alleged

50

scheme to harm a plaintiff’s [] reputation” into a RICO claim

fails, see Kimm, 2005 WL 89386, at *5, and federal courts

routinely and soundly reject such attempts. See, e.g., Ctr. for

Immigration Studies v. Cohen, 410 F. Supp. 3d 183, 191 (D.D.C.

2019) (dismissing RICO claim where plaintiff has “clearly tried

to shoehorn a defamation claim into the RICO framework”);

Kimberlin v. Nat'l Bloggers Club, No. GJH-13-3059, 2015 WL

1242763, at *9 (D. Md. Mar. 17, 2015) (dismissing plaintiff's

RICO claim for the additional reason that it “reflect[ed] more

of an attempt to spin an alleged scheme to harm his reputation

than it reflects a viable RICO claim”); Ritchie v. Sempra

Energy, No. 10-cv-1513, 2013 WL 12171757 at *4 (S.D. Ca. Oct.

15, 2013) (finding that allegations of a smear campaign, through

a website and press releases, containing false statements

regarding market analysis, designed to injure the company’s good

will and lower its stock prices, did not state a predicate

offense under RICO); Manax v. McNamara, 660 F. Supp. 657, 660

(W.D. Tex. 1987), aff'd, 842 F.2d 808 (5th Cir. 1988) (where

defendant coordinated false and misleading press articles

harmful to plaintiff, the scheme was not a fraud on tangible or

intangible rights, but rather was an effort to damage his

reputation, and thus, could not be a predicate act under RICO).18

18 Plaintiff’s principal authority to the contrary, Frydman v.

Verschleiser, 172 F. Supp. 3d 653 (S.D.N.Y. 2016), is distinguishable. (Opp.

51

Accordingly, plaintiff has failed to plead the

predicate acts of mail or wire fraud. The court now turns to

the other predicate acts alleged in the complaint.

2. Witness Tampering, 18 U.S.C. § 1512

The federal witness tampering statute sanctions

persons who “corruptly persuade[] another person, or attempt[]

to do so . . . with intent to . . . cause or induce any person

to . . . withhold testimony, or withhold a record, document, or

other object, from an official proceeding.” 18 U.S.C. §

1512(b)(2)(A). The complaint alleges two incidences of witness

tampering, both of which fail for pleading purposes. First, on

February 5, 2010, Motley Rice procured an affidavit from Rudra

in connection with the NJ Action that contained “demonstrably

false statements.” (Compl. ¶ 94.) However, the complaint does

not state what these false statements are, much less how Motley

Rice “corruptly persuad[ed]” Rudra to furnish the purported

falsehoods. Though plaintiff alleges that Rudra received bribes

for his testimony in the NJ Action, there is no allegation

concerning the payment of money or other means of corrupt

18.) In Frydman, the defendants accessed the plaintiff’s email account to

learn about his impending business transactions and then sent emails to

potential business partners that defamed plaintiff, costing him a $10 million

loan and $1.4 million sublease. Id. at 600. The court distinguished Kimm,

which involved spreading false information in news articles with intent to

injure, but not the intent to defraud, i.e. to induce reliance. Id. at 669

(citing Kimm, 2005 WL 89386, at *4). The same distinction obtains here:

plaintiff fails to plausibly claim that he or anyone else relied on the

alleged falsehoods published in Vanity Fair and the 2009 Press Release.

52

persuasion in return for Rudra’s affidavit.

Second, plaintiff is “informed and believes” that

Motley Rice still has not produced documents in the NJ Action

that Rudra requested from the FBI, then passed on to the JTTF

Defendants, and which the JTTF Defendants, in turn, passed on to

Motley Rice. (Id. ¶ 130.) Plaintiff also “believes” that if

given the opportunity for further discovery, he will show that

Motley Rice and Elsner “corruptly persuaded, or attempted to

persuade” the JTTF Defendants and Rudra to withhold key evidence

from plaintiff. (Id. ¶ 131.)

Though “matters peculiarly within a defendant’s

knowledge” may be pled “on information and belief,” that does

not sanction the pleading of such matters without any detail

whatsoever. First Capital Asset Mgmt., 385 F.3d at 179. “Where

a plaintiff is permitted to plead on information and belief, the

‘complaint must adduce specific facts supporting a strong

inference of fraud or it will not satisfy even a relaxed

pleading standard.’” Fuji Photo Film U.S.A., 640 F. Supp. 2d at

310 (quoting Wood ex rel. U.S. v. Applied Research Assocs.,

Inc., 328 Fed. Appx. 744, 747 n.1 (2d Cir. 2009) (summary

order)); see also DiVittorio v. Equidyne Extractive Indus.,

Inc., 822 F.2d 1242, 1247 (2d Cir. 1987) (“[T]he allegations

must be accompanied by a statement of the facts upon which the

53

belief is based.”).

Plaintiff has adduced no factual basis for his

assertions of witness tampering, and, instead, alleges a

“formulaic recitation of the elements,” which Twombly prohibits.

550 U.S. at 555. Plaintiff also does not allege how Motley Rice

persuaded or attempted to persuade Rudra or the JTTF Defendants

to withhold documents or provide false statements. To the

extent plaintiff believes that Motley Rice has not complied with

its discovery obligations in the NJ Action, the appropriate

means of redress is a motion to compel before the New Jersey

District Court.

3. Violations of 18 U.S.C. §§ 1957, 2314, and 2315

The complaint alleges that Motley Rice received and

transported FBI documents that Rudra had “obtained while working

on behalf of the FBI” or had “requested . . . outside the Touhy

process,” and “compensated Rudra” for them. (Compl. ¶¶ 75, 77,

78, 141.) The RICO statute defines racketeering activity to

include, inter alia, acts indictable under Sections 1957, 2314,

and 2315 of Title 18 of the United States Code. See 18 U.S.C. §

1961(1). Section 1957, a money laundering statute, outlaws

monetary transactions in criminally derived property that is of

a value greater than $10,000 and is derived from specified

unlawful activity. Id. § 1957. Section 2314 prohibits, among

54

other things, the interstate or foreign transport of goods

valued at $5,000 or more, that have been stolen, converted, or

taken by fraud. Id. § 2314. Section 2315 prohibits the knowing

receipt, sale, concealment, possession, or disposition of stolen

goods that have been transported interstate or abroad after

being stolen, unlawfully converted, or taken. Id. § 2315.

Plaintiff fails to plausibly allege violations of

sections 1957, 2314, and 2315 for three distinct reasons.

First, under sections 2314 and 2315, FBI documents are not

“goods” because they are not ordinarily bought or sold in

commerce. “The Second Circuit has held that the phrase ‘goods,

wares, or merchandise’ is ‘a general and comprehensive

designation of such personal property or chattels as are

ordinarily a subject of commerce.’” United States v. Farraj,

142 F. Supp. 2d 484, 487 (S.D.N.Y. 2001) (quoting In re

Vericker, 446 F.2d 244, 248 (2d Cir. 1971)). In Vericker, the

Second Circuit explicitly held that FBI documents were not

“goods, wares, or merchandise” within the meanings of 18 U.S.C.

§§ 2314 and 2315 because “the substance contained in the

documents was not ordinarily the subject of commerce.” 446 F.2d

at 248. Here, plaintiff conspicuously fails to allege the

nature or contents of documents that were the subject of the 18

U.S.C. §§ 2314 and 2315 violations, much less that the

documents’ substance was “ordinarily the subject of commerce.”

55

Second, notwithstanding the Second Circuit’s ruling in

Vericker, plaintiff fails to plausibly allege that the documents

in question were “stolen,” see 18 U.S.C. § 2314, 2315, or

“criminally derived.” Id. § 1957. The complaint alleges that

Rudra “obtained” “copies of documents and materials . . . while

working on behalf of the FBI,” “requested [and presumably

received] additional documents from the FBI,” and the JTTF

Defendants then transported those copies across state lines to

Motley Rice. (Compl. ¶¶ 75, 77.) Aside from formulaic

recitations of legal elements, the complaint does not allege

that the documents were “stolen, converted or taken by fraud.”

See United States v. Schultz, 333 F.3d 393, 399 (2d Cir. 2003)

(“[18 U.S.C. § 2314] applies to goods that are ‘stolen,

unlawfully converted, or taken.’”) (citation omitted); see also

United States v. Aleynikov, 676 F.3d 71, 78 (2d Cir. 2012)

(“However, there is no violation of the statute [18 U.S.C. §

2314] unless the good is transported with knowledge that ‘the

same’ has been stolen.”). Plaintiff merely alleges that Rudra

“obtained” the documents but offers no allegations to support

the claim that the documents were taken by theft, conversion, or

fraud. In fact, plaintiff alleges in one instance that Rudra

requested documents from the FBI, but did not follow proper

protocol,19 and then passed the documents on to the JTTF

19 According to plaintiff, Rudra acted “outside the Touhy process.” The

56

Defendants. (Compl. ¶ 77.) Plaintiff does not claim that

Rudra’s purported breach of protocol constituted a criminal act

or could be reasonably construed as theft, conversion, or taking

by fraud.

Third, the court cannot discern any basis for

plaintiff’s assignment of “value” to the allegedly stolen

documents. Plaintiff claims the documents were worth at least

$5,000 or $10,000, but, without more, this is clearly just an

attempt to satisfy statutory thresholds. See 18 U.S.C. §§ 1957

(property must be worth at least $10,000); id. §§ 2314, 2315

(goods must be worth at least $5,000). Like the other

allegations in the complaint, plaintiff offers a bare recital of

the elements of a cause of action. That is insufficient under

Twombly. In a similar vein, the allegations in support of the

stolen property predicates assert that, over a nine-year period,

the JTTF Defendants received from Rudra, and transmitted to

Motley Rice, some unspecified number of documents, with no

detail as to their contents or the means of transmission. This

falls far short of notice pleading requirements under Rule 8 of

complaint does not elaborate what this means, but the Motley Defendants

reasonably surmise that this refers to the so-called “Touhy regulations” at

28 C.F.R. § 16.22, a Department of Justice regulation prohibiting the

production of DOJ materials in a civil proceeding. (Motley Mot. 21.)

Plaintiff’s opposition does not cite to a single authority stating that 28

C.F.R. § 16.22 imposes criminal penalties or otherwise creates a private

civil cause of action for breaches of the Touhy protocol, or any instance in

which an alleged violation of 18 U.S.C. §§ 1957, 2314, or 2315, was based on

disclosure or receipt of documents in contravention of 28 C.F.R. § 16.22.

57

the Federal Rules of Civil Procedure.

In sum, the complaint fails to adequately plead

violations of 18 U.S.C. §§ 1957, 2314, and 2315.

4. Bribery, 18 U.S.C. § 201

Finally, plaintiff claims that Motley Rice made “over

$75,000” in payments to Rudra in connection with the NJ Action

between 2009 and 2018. (Compl. ¶¶ 91-92, 115.) Though Motley

Rice classified the payments as expense reimbursements related

to Rudra’s role as a fact witness in the NJ Action, (see id. ¶

135), plaintiff alleges the payments were actually bribes that

Rudra “used to fund living arrangements, consumer goods, and

extraneous travel unrelated to Rudra’s testimony.” (Id. ¶ 91).

Plaintiff concludes that the payments to Rudra could not have

been reasonably related to time spent providing testimony, but

were in fact intended to “secure and influence” his testimony in

the NJ Action. (Id. ¶ 92.) Rajaratnam further alleges, on

information and belief, that Motley Rice “gave, offered, or

promised [Rudra] additional things of value,” and otherwise

“corruptly persuaded, or attempted to persuade Rudra to

cooperate” as well as to withhold discovery documents from

plaintiff in the NJ Action. (Id. ¶¶ 93, 96, 131.)

Neither the complaint nor plaintiff’s opposition

clarifies which subparagraph of the federal bribery statute

58

defendants supposedly violated. Because the complaint alleges

bribery of a witness, the court assumes that plaintiff is

alleging defendants violated 18 U.S.C. § 201(b)(3) and (c)(2),

which prohibit payments or promises of value to a witness for or

because of their testimony.20 Critically, however, subparagraph

(d) of the statute exempts “the payment, by the party upon whose

behalf a witness is called and receipt by a witness, of the

reasonable cost of travel and subsistence incurred and the

reasonable value of time lost in attendance at any such trial,

hearing, or proceeding.” 18 U.S.C. § 201(d).

Plaintiff contends that whether or not the $75,000 in

20 Section 201(b)(3) imposes criminal penalties on a person who:

directly or indirectly, corruptly gives, offers, or promises

anything of value to any person, or offers or promises such

person to give anything of value to any other person or entity,

with intent to influence the testimony under oath or affirmation

of such first-mentioned person as a witness upon a trial,

hearing, or other proceeding, before any court, any committee of

either House or both Houses of Congress, or any agency,

commission, or officer authorized by the laws of the United

States to hear evidence or take testimony, or with intent to

influence such person to absent himself therefrom[.]

18 U.S.C. § 201(b)(3). Section 201(c)(2) imposes criminal penalties on a

person who:

directly or indirectly, gives, offers, or promises anything of

value to any person, for or because of the testimony under oath

or affirmation given or to be given by such person as a witness

upon a trial, hearing, or other proceeding, before any court, any

committee of either House or both Houses of Congress, or any

agency, commission, or officer authorized by the laws of the

United States to hear evidence or take testimony, or for or

because of such person’s absence therefrom[.]

18 U.S.C.A. § 201(c)(2).

59

payments to Rudra reasonably reflects the cost of his expenses

and time is a question of fact that cannot be decided at this

stage. (Opp. 21.) The court disagrees. The Second Circuit

does not appear to have spoken as to what constitutes

appropriate payments to fact witnesses, but district courts in

this Circuit and elsewhere that have considered the issue hold

that “[a] witness may be compensated for the time spent

preparing to testify or otherwise consulting on a litigation

matter in addition to the time spent providing testimony in a

deposition or at trial.” Prasad v. MML Inv'rs Servs., Inc., No.

04 CIV. 380 (RWS), 2004 WL 1151735, at *5–6 (S.D.N.Y. May 24,

2004); New York v. Solvent Chemical Co., 166 F.R.D. 284, 289

(W.D.N.Y. 1996) (“Of course, the court finds nothing improper in

the reimbursement of expenses incurred by [the witness] in

travelling to New York to provide [a party] factual information,

or in the payment of a reasonable hourly fee for [his] time.”)

(internal quotation marks and citations omitted); Centennial

Mgmt. Servs., Inc. v. Axa Re Vie, 193 F.R.D. 671, 679–80 (D.

Kan. 2000) (concluding that a fact witness was properly and

reasonably compensated “for the time he lost in order to give

testimony in the litigation, review documents produced in the

litigation, and otherwise consult with [a party] and its counsel

on matters related to the litigation”); cf. Biovail Labs. Int'l

SRL v. Abrika, LLLP, No. 04-61704-CIV, 2007 WL 788849, at *2

60

(S.D. Fla. Mar. 14, 2007) (“Abrika presents no evidence to

demonstrate that the retention of Mr. Maes was designed to

secure his cooperation at trial. Indeed, the fact that Mr. Maes

consults for a Biovail Corporation subsidiary, Biovail Ireland,

demonstrates that he is not likely to be a witness hostile to

Biovail. Thus, Mr. Maes’ previous employment relationship does

not raise any significant concerns.”).

The complaint alleges that Rudra is “believed

currently to be a resident of Sri Lanka.” (Compl. ¶ 22.)

Plaintiff further portrays Rudra as playing an integral role in

Motley Rice’s continued prosecution of the NJ Action. For

example, plaintiff alleges that from 2009 to 2018, Rudra was

intricately involved in obtaining and transmitting key documents

to Motley Rice for use in the NJ Action. (Id. ¶¶ 73-77, 94-95,

101-103, 105-107.) The complaint also does not allege that

Rudra demanded, asked for, or otherwise required compensation as

a condition to provide evidence or testimony against plaintiff.

To the contrary, the Vanity Fair Article, on which the complaint

relies, notes that Rudra was committed to “bring[ing] [LTTE]

down.” (Article 2.)21 Plaintiff also notes that, in July of

2018, Rudra was deposed over a period of four days. (Compl. ¶

21 Plaintiff disputes Vanity Fair’s description of the November 2002 Event

but does not dispute those parts of the Article that detail Rudra’s work to

undermine LTTE, which date as far back as 1999, ten years before the NJ

Action was filed. (Article 2.)

61

95.) Though plaintiff notes that Rudra received the entire sum

of $75,000 from Motley Rice prior to his deposition, (see Opp.

21), the length of the deposition itself is indicative of

Rudra’s centrality to the NJ Action, and his pivotal role in the

case would warrant frequent travel to the United States from Sri

Lanka, and back, and any related expense reimbursements. A

total of $75,000 in payments over the course of nine years,

including thousands of miles travelled, equates to less than

$8,500 per year. This figure hardly strikes the court as an

unreasonable amount of expenses to reimburse, given the

importance of Rudra to Motley Rice’s case. Finally, Motley Rice

disclosed Rudra’s expense reimbursements to Rajaratnam in the NJ

Action, producing over 160 pages of expense records in 2016 and

2018. (NJ ECF No. 382, p. 2.) Motley Rice’s fulsome disclosure

of its expense reimbursements, which exposed in plain sight its

payments to Rudra, is not consonant with the often-covert nature

of bribes.22 And despite having possession of these voluminous

records, plaintiff fails to provide any examples of suspect

reimbursements that would warrant the plausible inference of a

bribe to secure or influence Rudra’s testimony.23

22 Cf. Alexander Avery, Foreign Corrupt Practices Act: Pleading Parent-

Subsidiary Liability, 35 J. Nat'l Ass'n Admin. L. Judiciary 131, 157 (2015)

(“[E]mployees who knowingly bribe will also attempt to conceal their bribes .

. . .”).

23 Plaintiff avers that he has been hamstrung from providing documents to

support his pleading by the DCO governing the confidentiality of documents

62

Moreover, even if plaintiff had adequately alleged

that the reimbursements of Rudra’s expenses were in fact bribes,

this lone predicate would not constitute a “pattern of

racketeering activity.” The purported bribes to Rudra involved

a single scheme with a limited goal, namely, to procure or

influence Rudra’s testimony against Rajaratnam in the NJ Action.

Though plaintiff insists that “[e]ach payment Motley Rice and

the [JTTF Defendants] directly or indirectly made to Rudra was a

separate violation of 18 U.S.C. § 201,” the Second Circuit has

admonished district courts to “take care to ensure that the

plaintiff is not artificially fragmenting a singular act into

multiple acts simply to invoke RICO.”24 Schlaifer Nance & Co.

v. Estate of Andy Warhol, 119 F.3d 91 (2d Cir. 1997). The

Schlaifer principle has been applied with particular force where

a plaintiff alleges “a single scheme promulgated for the limited

produced in the NJ Action. (See, e.g., Opp. 8 (“Mr. Rajaratnam has alleged

that many of the documents Defendants have designated directly support the

allegations herein, and evidence additional wrongdoing by Defendants.

Unfortunately, the terms of the DCO prevent Mr. Rajaratnam from making more

specific allegations—even on ‘information and belief’—concerning that

wrongdoing.”) (citing Compl. 1 n.1).) Plaintiff essentially employs the DCO

as a sword, rather than a shield, by urging the court to overlook his

pleading deficiencies as a by-product of circumstances beyond his control.

This is perplexing, given the representation of plaintiff’s counsel in a

September 2018 conference before this court that he was “in the process” of

seeking a modification from the District Court in New Jersey to permit co-

extensive usage of NJ Action documents in this case. (Krantz Decl. at Ex. C,

pp. 83-117 (Tr. 6:4-17).) A review of the NJ Action docket shows no

indication that plaintiff has indeed moved for such relief, and plaintiff has

not otherwise claimed that such action has been taken.

24 Despite having possession of defendants’ expense records, plaintiff

does not allege how many payments defendants made to Rudra.

63

purpose of defrauding a single victim.” Dempsey v. Sanders, 132

F. Supp. 2d 222, 228 (S.D.N.Y. 2001). Under such circumstances,

courts hold that “continuity cannot be established.” Id.; see,

e.g., Cote v. Tennant, No. 6:09–CV–1273, 2010 WL 1930572, at *4

(N.D.N.Y. May 10, 2010) (complaint failed to state a plausible

claim for relief under RICO, where it “allege[d] only a single

isolated act with a single victim,” and where allegations of

additional meetings and mailings “simply reflect[ed] plaintiff's

attempt to fragment the single isolated act into a pattern of

separate acts”); Stein v. N.Y. Stair Cushion Co., Inc., No. 04–

CV–4741, 2006 WL 319300, at *8 (E.D.N.Y. Feb. 10, 2006) (finding

that “the racketeering activity alleged here does not constitute

the sort of ‘long-term criminal conduct’ that Congress sought to

target in RICO,” where plaintiffs alleged only “a single scheme

of narrow scope, including one victim and a limited number of

related participants”); FD Prop. Holding, Inc. v. U.S. Traffic

Corp., 206 F. Supp. 2d 362, 372 (E.D.N.Y. 2002) (“Courts in the

Second Circuit have generally held that where the conduct at

issue involves a limited number of perpetrators and victims and

a limited goal, the conduct is lacking in closed-ended

continuity. This is the case even when the scheme’s duration

exceeds one year.”).

Plaintiff alleges that defendants engaged in an “open-

ended pattern of racketeering activity.” (Compl. ¶ 161, 173.)

64

But plaintiff cannot establish open-ended continuity because the

payments to Rudra, even if construed as bribes, were single-

victim acts carried out by a handful of participants for the

singular purpose of procuring or influencing Rudra’s testimony

in a specific litigation, and therefore, were not the “multi-

faceted scheme” required to establish continuity. GICC Capital

Corp. v. Tech. Fin. Grp., Inc., 67 F.3d 463, 467 (2d Cir. 1995)

(“[A] plaintiff must provide some basis for a court to conclude

that defendants' activities were ‘neither isolated nor

sporadic.’”); see also CPF Premium Funding, Inc. v. Ferrarini,

No. 95 Civ. 4621, 1997 WL 158361, at *9 (S.D.N.Y. April 3, 1997)

(finding thirty-five specific acts of misconduct carried out

against the same victim did not constitute continuity as

required under RICO); China Tr. Bank of N.Y. v. Standard

Chartered Bank, PLC, 981 F. Supp. 282, 287–88 (S.D.N.Y. 1997)

(finding that although a number of acts of misconduct were

alleged, they were all carried out by a single defendant against

one victim, pursuant to a single scheme, and thereby failed both

open and close-ended continuity requirement); Dempsey, 132 F.

Supp. 2d at 228 (“There was no open-ended continuity here. The

alleged fraud involved was designed to extract money from the

Plaintiff. Given this limited goal, the scheme was inherently

terminable.”).25 Therefore, even if this court were to find

25 Courts in the Second Circuit have routinely held that a plaintiff fails

65

that plaintiff adequately alleged that defendants had bribed

Rudra for his testimony in the NJ Action, plaintiff cannot

fragment that single bribery scheme into more than one predicate

act.

* * *

The complaint fails to plead at least two acts of

racketeering activity, and thus, fails to allege a pattern of

to plead a pattern of racketeering activity where the complaint alleges a

single-victim scheme with a singular end. Morris v. Zimmer, No. 10 CV 4146

VB, 2011 WL 5533339, at *11 (S.D.N.Y. Nov. 10, 2011) (“There is one main

fraudulent act: Zimmer's alleged fraudulent retention of the NASD settlement

proceeds for use in his business. The other acts complained of all flow from

that main fraud against plaintiffs. Zimmer’s continued misrepresentations to

plaintiff and alleged misrepresentations to this Court are all ‘subparts of

the singular act, and not a ‘pattern’ of separate acts with an underlying

purpose.’”); Andrea Doreen Ltd. v. Bldg. Material Local Union 282, 299 F.

Supp. 2d 129, 153 (E.D.N.Y. 2004) (“Here, there is allegedly one act

attempted by the same officials against the same victims on two occasions.

Doreen implicitly admits that these acts are actually only one attempt to

extort money by claiming that after no money was provided to Local 282

Officials in response to the first shakedown, these officials made a

‘[r]evised [d]emand for a bribe [raised to almost $500,000].’ Thus, this

Court holds that Doreen's classification of this ‘shakedown’ as two predicate

acts ‘is an attempt . . . to go beyond Congress's intent and fragment an act

that plainly is unitary into multiple acts.”) (case and record citations

omitted); Shamis v. Ambassador Factors Corp., No. 95 CIV. 9818 (RWS), 1997 WL

473577, at *16–17 (S.D.N.Y. Aug. 18, 1997) (plaintiff failed to plead a

continuous pattern of racketeering where alleged wrongdoing revolved around a

single act, a limited number of perpetrators were involved, there was only

one target of the scheme, and a discreet, limited goal); Polycast Tech. Corp.

v. Uniroyal, Inc., 728 F. Supp. 926, 945 (S.D.N.Y. 1989) (“Although these

statutory violations directly result from two separate actions—the sale of

Plastics’ shares and Polycast’s issuance of debt securities to finance the

purchase—both actions were undertaken in reliance on the same set of

misrepresentations concerning Plastics' earnings. The defendants are alleged

to have committed a single illegal act that, because of the plaintiffs’ own

actions, happened to have produced two statutory violations. Defendants’

single set of fraudulent statements cannot be split into two separate acts of

racketeering activity in this manner.”); cf. Marini v. Adamo, 812 F. Supp. 2d

243, 264–65 (E.D.N.Y. 2011) (plaintiffs did not “artificially fragment a

singular act” to invoke RICO based on evidence of, inter alia, 144 distinct

coin transactions, numerous allegedly fraudulent communications, and

targeting of victims other than plaintiffs) (citations and brackets omitted).

66

racketeering activity. This dooms each of plaintiff’s RICO

causes of action asserted in Claims One through Four, and those

claims are thus dismissed. GICC, 67 F.3d at 465 (“Under any

prong of § 1962 a plaintiff in a civil RICO suit must establish

a pattern of racketeering activity.”); Schlesinger v.

Schlesinger, No. 05-CV-5016-ADS-WDW, 2007 WL 9706975, at *15

(E.D.N.Y. Nov. 15, 2007) (“[T]here can be no RICO conspiracy

without a substantive RICO violation.”) (citation omitted);

Knoll v. Schectman, No. 02 cv 692, 2006 WL 839428, at *6

(W.D.N.Y. Sept. 25, 2003) (“Inasmuch as the plaintiff has failed

to state a claim under § 1962(c), the RICO conspiracy claim must

fail as well.”). Based on the foregoing, the court need not

address defendants’ other contentions in support of dismissing

the RICO claims, and will now address plaintiff’s defamation

claim under New York state law.

II. DEFAMATION

Defendants urge the court to dismiss plaintiff’s

defamation claim as time-barred. As an initial matter, the

court must decide whether or not to exercise supplemental

jurisdiction over plaintiff’s state law defamation claim.

A. Supplemental Jurisdiction

A district court “may decline to exercise supplemental

jurisdiction” over a claim arising under state law if the court

67

“has dismissed all claims over which it has original

jurisdiction.” 28 U.S.C. § 1367(c). The court’s dismissal of

plaintiff’s RICO claims removes 28 U.S.C. § 1331 and 18 U.S.C. §

1964 as bases for jurisdiction, (see Compl. ¶ 25), because there

are no other federal claims pending before the court.26

“The exercise of supplemental jurisdiction is left to

the discretion of the district court . . . .” Ametex Fabrics,

Inc. v. Just In Materials, Inc., 140 F.3d 101, 105 (2d Cir.

1998) (internal quotation marks omitted). “[I]f the federal

claims are dismissed before trial, even though not insubstantial

in a jurisdictional sense, the state claims should be dismissed

as well.” First Capital Asset Mgmt., 385 F.3d at 182–83

(quoting Castellano v. Bd. of Trustees, 937 F.2d 752, 758 (2d

Cir. 1991)) (internal quotation marks omitted, brackets in

original). “Moreover, the discretion implicit in the word ‘may’

in subdivision (c) of [28 U.S.C.] § 1367 permits the district

court to weigh and balance several factors, including

considerations of judicial economy, convenience, and fairness to

litigants.” Purgess v. Sharrock, 33 F.3d 134, 138 (2d Cir.

1994).

Though the RICO claims have been dismissed at an early

stage of the litigation, the court finds that its discretion is

26 The complaint does not allege that the court has diversity jurisdiction

pursuant to 28 U.S.C. § 1332.

68

properly exercised by adjudicating the remaining state law

defamation claim. As discussed immediately below, the

defamation claim may be readily disposed of on timeliness

grounds, does not involve the application of novel or complex

state law, and does not raise concerns of unfairness to

plaintiff, given his selection of the instant forum.

B. Timeliness

Plaintiff alleges that Motley Rice, Kanetkar, and

Rudra defamed him by making false and misleading statements to

Vanity Fair about, inter alia, Rajaratnam’s remarks at the

November 2002 Event. (Compl. ¶¶ 103, 104.) Vanity Fair

published the Article disseminating these “defamatory

statements”, “Crouching Tiger, Hidden Raj,” on September 30,

2011. (Id. ¶ 100.)27

An action alleging defamation under New York law must

be commenced within one year. CPLR § 215(3). “The limitations

period begins accruing when ‘the libelous material first was

published, that is, displayed to a third party.’” Mirage

27 A plaintiff asserting defamation under New York law must establish five

elements: (1) a written defamatory statement of and concerning the plaintiff,

(2) publication to a third party, (3) fault, (4) falsity of the defamatory

statement, and (5) special damages or per se actionability. Mestecky v. New

York City Dep’t of Educ., No. 18-3186, 2019 WL 5783302, at *2 (2d Cir. Nov.

6, 2019) (quoting Palin v. New York Times Co., 940 F.3d 804, 809 (2d Cir.

2019)). Plaintiff asserts that defendants’ remarks “charg[ing] Rajaratnam

with a serious crime (to wit, funding terrorists), are of the sort that tend

to injure a plaintiff in his or her business, trade, or profession,” and

therefore constitute defamation per se. (Compl. ¶ 195.)

69

Entm't, Inc. v. FEG Entretenimientos S.A., 326 F. Supp. 3d 26,

35 (S.D.N.Y. 2018) (quoting Tucker v. Wyckoff Heights Med. Ctr.,

52 F.Supp.3d 583, 596–97 (S.D.N.Y. 2014)). Vanity Fair

published the Article on September 30, 2011. The statute of

limitations thus expired on September 30, 2012. Plaintiff did

not file his defamation claim until November 14, 2017, when he

commenced suit in New York Supreme Court.28 Absent tolling,

plaintiff’s defamation claim is plainly time-barred and must be

dismissed.

1. Equitable Tolling

Plaintiff asserts that the applicable limitations

period should be equitably tolled, and should not accrue from

the date of publication of the Article, because Motley Rice

fraudulently concealed the fact that it was coordinating with

Kanetkar and Rudra when the latter two peddled falsehoods to

Vanity Fair. According to plaintiff, he did not learn that

Rudra and Kanetkar were working on Motley Rice’s behalf until

November 17, 2016. (Opp. 44.)

Defamation claims are subject to equitable tolling

under certain circumstances. The Second Circuit has

characterized the doctrine of equitable tolling as applicable

28 Plaintiff agreed to voluntarily dismiss his state court action without

prejudice, and defendants agreed to toll the limitations period from November

14, 2017 until the filing of this federal action on June 1, 2018. (See

Motley Mot. 27-28; id. 28 n.18.)

70

“‘as a matter of fairness’ where a plaintiff has been ‘prevented

in some extraordinary way from exercising his rights . . . .’”

Johnson v. Nyack Hospital, 86 F.3d 8, 12 (2d Cir. 1996)

(citation omitted). Fraudulent concealment, such that a

defendant prevents a putative claimant from discovering a

defamation claim, is a paradigmatic basis for equitable tolling.

Wellesley v. Debevoise & Plimpton LLP, No. 06 CV 3518 (ARR),

2007 WL 9710545, at *4 (E.D.N.Y. Jan. 11, 2007) (“The doctrine

was developed in large part ‘to address situations in which

fraudulent or other conduct concealed the existence of a

claim.’”) (quoting Bowers v. Transportacion Maritima Mexicana,

S.A., 901 F.2d 258, 264 (2d Cir. 1990)). In considering claims

for equitable tolling, district courts are to consider “whether

the person seeking application of the equitable tolling doctrine

(1) has acted with reasonable diligence during the time period

she seeks to have tolled, and (2) has proved that the

circumstances are so extraordinary that the doctrine should

apply.” Zerilli-Edelglass v. New York City Transit Authority,

333 F.3d 74, 80 (2d Cir. 2003).

Plaintiff confuses the fraudulent concealment of

Motley Rice’s relationship with Kanetkar and Rudra, with

concealment of the publication itself. Here, only the latter

form of concealment would trigger equitable tolling. Plaintiff

surely knew the statements attributed to him in the Vanity Fair

71

Article were false at the time they were published on September

30, 2011. The Article disclosed that Rudra was the source of

the purported falsehoods because the author, David Rose, made it

clear that Rudra was reciting Rajaratnam’s remarks at the

November 2002 Event from memory. (Article 2.) Vanity Fair also

identified Kanetkar as Rudra’s main FBI handler. (Id.; Compl. ¶

101.) Yet, plaintiff nowhere alleges or claims that he made any

efforts to contact Vanity Fair about the Article, or to

ascertain Rudra or Kanetkar’s whereabouts. Plaintiff justifies

his delay as a by-product of the late discovery that Motley Rice

“was behind” Rudra and Kanetkar’s defamatory statements, (Opp.

45-46), but plaintiff fails to explain why uncovering Motley

Rice’s alleged involvement forestalled his investigation of the

defamatory remarks until well after the limitations period

accrued.

Plaintiff provides no legal basis to toll what he knew

was a claim for defamation against Rudra and Kanetkar at the

time the Article was published. There is no indication that

plaintiff acted with reasonable diligence to pursue a defamation

claim against Kanetkar and Rudra in the twelve months following

publication of the Article, thus, the equitable tolling doctrine

cannot, and does not, save his claim. See Chisolm v. City of

New York, No. 17-CV-5327 (MKB), 2018 WL 3336451, at *5 (E.D.N.Y.

July 6, 2018) (holding equitable tolling was not available where

72

“the Complaint alleges no facts” in support of these components)

(quoting Bolarinwa v. Williams, 593 F.3d 226, 231 (2d Cir.

2010)). Further, even if Motley Rice had coordinated the

dissemination of the purported falsehoods to Vanity Fair,

plaintiff’s failure to file a timely defamation suit against

Kanetkar and Rudra precludes a viable defamation claim against

Motley Rice. See LeBlanc v. Skinner, 103 A.D.3d 202, 209 (N.Y.

App. Div. 2d Dep’t 2012) (“Under the relation-back doctrine, a

plaintiff may interpose a cause of action against a person or

entity after the statute of limitations has expired, provided

that the plaintiff had timely commenced the action against

another defendant . . . .”) (citing CPLR § 203(b)) (emphasis

added).

Further, plaintiff fails to plausibly allege “that the

defendant[s] took affirmative steps to prevent the plaintiff's

discovery of his claim or injury or that the wrong itself was of

such a nature as to be self-concealing.” De Sole v. Knoedler

Gallery, LLC, 974 F. Supp. 2d 274, 318–19 (S.D.N.Y. 2013)

(quoting State of New York v. Hendrickson Bros., 840 F.2d 1065,

1083 (2d Cir. 1988)). Generalized or conclusory allegations of

fraudulent concealment are not sufficient to toll a statute of

limitations. See Armstrong v. McAlpin, 699 F.2d 79, 90 (2d Cir.

1983). Plaintiff alleges that he first learned of Motley Rice’s

coordination with Kanetkar and Rudra, “putting the Vanity Fair

73

article in a whole new light,” beginning in 2016, when Motley

Rice made certain disclosures in the NJ Action. (Compl. ¶¶ 116;

see also id. ¶¶ 112-15.) But Motley Rice’s purported connection

to Kanetkar and Rudra was not requisite to Rajaratnam’s

discovery of Kanetkar and Rudra’s roles in publishing the

defamatory statement, which, according to the complaint,

Rajaratnam had good cause to believe was false on its face.

Thus, equitable tolling does not save plaintiff’s time-barred

defamation claim.

2. Statutory Tolling

Finally, plaintiff asserts that the defamation claim

against Kanetkar remains timely under an obscure tolling

provision, CPLR § 207, because Kanetkar is a New Jersey resident

who was “not subject to long-arm jurisdiction in New York for

his defamatory statements against Mr. Rajaratnam.” (Opp. 46;

see also Compl. ¶ 23.) Section 207 provides, in pertinent part,

that “if, when a cause of action accrues against a person, he is

without the state, the time within which the action must be

commenced shall be computed from the time he comes into or

returns to the state.” CPLR § 207. Section 207 does not apply,

however, “while jurisdiction over the person of the defendant

can be obtained without personal delivery of the summons to the

defendant within the state.” Id. § 207(3). As relevant here,

74

CPLR § 313 authorizes service outside of New York State where a

person is subject to the jurisdiction of New York courts under

CPLR § 302.

In Yarusso v. Arbotowicz, the New York Court of

Appeals held that CPLR § 207(3) prohibits tolling under section

207 whenever an authorized method of service other than in-state

personal service is available. 41 N.Y.2d 516 (N.Y. 1977).

“Thus, all that § 207(3) requires is ‘merely the availability of

an authorized method of service by which personal jurisdiction

could be obtained.’” Plitman v. Leibowitz, 990 F. Supp. 336,

339 (S.D.N.Y. 1998) (quoting Yarusso, 41 N.Y.2d at 518). It

matters not whether the alternative means of service would have

been effective: “[t]he standard looks to what is possible, not

what is practicable.” Id. (citation omitted).

Plaintiff argues that the Yarusso principle is cabined

with respect to defamation claims against a non-domiciliary.

(Opp. 46-47.) Plaintiff’s contention relies on the Court of

Appeals’ decision in SPCA of Upstate New York v. American

Working Collie Association. 18 N.Y.3d 400 (N.Y. 2012). In

SPCA, the Court of Appeals confirmed that CPLR §§ 302(a)(2) and

(3), which typically permit long-arm jurisdiction “premised on

the commission of a tortious act—perpetrated either within the

state or outside the state, causing injury within the state,”

75

are inapplicable bases for long-arm jurisdiction for defamation

claims. Id. at 403. Instead, jurisdiction over a non-

domiciliary for defamation must satisfy CPLR § 302(a)(1), which

provides that a court may exercise personal jurisdiction over a

non-domiciliary that “transacts any business within the

state” so long as the cause of action arises from the in-state

activity. In order to demonstrate that an individual is

transacting business within the state under CPLR § 302(a)(1),

there must be a “substantial relationship” between the

defendant’s purposeful activities within New York State and “the

transaction out of which the cause of action arose.” Id. at 404

(internal quotation marks and citations omitted). Critically,

the Court of Appeals in SPCA did not address the tolling

provision at issue here, CPLR § 207, and it does not appear, in

the eight years since it was decided, that any court has cited

SPCA as a basis for tolling under section 207.

The crux of the defamation claim is that Kanetkar and

Rudra were in cahoots with Motley Rice; made false statements

about Rajaratnam to Vanity Fair; and Kanetkar knew these

statements were false because he had learned the extent of

Rajaratnam’s support (or lack thereof) for the Tamil Tigers

during a criminal investigation into LTTE in the Eastern

District of New York. (Compl. ¶¶ 100-08.) According to

Kanetkar’s counsel, the allegations that Kanetkar “handled”

76

Rudra and “procured much of the information misused by Motley

Rice against Mr. Rajaratnam in connection with investigations

(and prosecutions brought) in the Eastern District of New York,”

establish a substantial relationship between Kanetkar’s

purposeful New York State activities and the Vanity Fair

Article. (JTTF Mot. 28-29.) Plaintiff counters that these

allegations do not establish that Kanetkar actually handled

Rudra, or procured the information used against plaintiff,

within New York. (Opp. 47.) He concludes that while discovery

may yield evidence that establishes long-arm jurisdiction over

Kanetkar, “for now the record places him in New Jersey, working

for a South Carolina law firm, beyond the jurisdiction of New

York.” (Id. 47-48.)

Plaintiff’s argument is flawed because it wrongly

presumes the burden lies with defendants to rebut the

application of CPLR § 207 by demonstrating that Kanetkar was

subject to jurisdiction in New York State. (See Opp. 47 (“In

short, none of the allegations on which the JTTF Defendants rely

establishes any connection between Kanetkar’s activities and New

York—let alone the substantial relationship necessary to

establish long-arm jurisdiction.”).) Here, because plaintiff’s

“claims are time-barred on the face of [his] own complaint,

[plaintiff] has the burden of pleading facts sufficient to

establish that the statute[] of limitations should be tolled.”

77

Voiceone Commc'ns, LLC v. Google Inc., No. 12 Civ. 9433 (PGG),

2014 WL 10936546, at *7 (S.D.N.Y. Mar. 31, 2014) (quoting OBG

Technical Servs., Inc. v. Northrop Grumman Space & Mission Sys.

Corp., 503 F. Supp. 2d 490, 504 (D. Conn. 2007)). Thus,

plaintiff bears the burden of pleading facts supporting the

tolling of the statute of limitations under Section 207. See

Plitman, 990 F. Supp. at 338; Weimer v. Lake, 268 A.D.2d 741,

741–42 (N.Y. App. Div. 3d Dep’t 2000) (“The burden is on the

plaintiff to demonstrate that the Statute of Limitations is

tolled by the defendant’s absence from the State.”). Further,

courts rarely grant tolling relief pursuant to Section 207

because CPLR § 308(5) “nearly always allows a plaintiff to

obtain jurisdiction over a defendant by obtaining a court order

proscribing [sic] the means of service where other attempts at

service have been unsuccessful.” See Plitman, 990 F. Supp. at

338 (“under governing New York case law, the tolling provision

in § 207 is almost never available to a plaintiff, even to a

plaintiff who can show that he unsuccessfully attempted to serve

a hard-to-locate defendant out of state”). Here, neither the

complaint nor opposition remotely suggest that plaintiff made

any effort whatsoever to effect service on Kanetkar since the

publication of the Vanity Fair Article, including by seeking a

court order pursuant to CPLR § 308(5).

At bottom, plaintiff seeks to benefit from his failure

78

to adequately plead that Kanetkar was subject to the long-arm

jurisdiction of New York State. It is plaintiff’s burden,

however, to demonstrate that the statute of limitations is

tolled, and this he does not do. Therefore, the court grants

defendants’ motion to dismiss plaintiff’s defamation claim.29

CONCLUSION

For the foregoing reasons, defendants’ motions to

dismiss the Amended Complaint are granted in their entirety.

Plaintiff’s RICO claims asserted in Claims One, Two, Three, and

Four of the Amended Complaint are dismissed for failure to plead

a “pattern of racketeering activity.” Plaintiff’s defamation

claim under New York law, asserted against defendants Motley

Rice, Jay Kanetkar, and “Rudra,” is dismissed as untimely.

The court also denies plaintiff a second opportunity

to amend his pleading. Although plaintiff has not requested

leave to replead, “[w]hen a motion to dismiss is granted, the

usual practice is to grant leave to amend the complaint.”

Hayden v. Cty. of Nassau, 180 F.3d 42, 53 (2d Cir. 1999),

overruled on other grounds by Gonzaga v. Doe, 536 U.S. 273

(2002). “However, a district court has the discretion to deny

leave to amend where there is no indication from a liberal

reading of the complaint that a valid claim might be stated.”

29 Plaintiff’s opposition does not assert that the same tolling provision

applies to Rudra.

79

Perri v. Bloomberg, No. 11–CV–2646, 2012 WL 3307013, at *4

(E.D.N.Y. Aug. 13, 2012) (citing Chavis v. Chappius, 618 F.3d

162, 170 (2d Cir. 2010)). Here, the court finds that any

further pleading amendments would be futile. See Lucente v.

Int'l Bus. Machs. Corp., 310 F.3d 243, 258 (2d Cir. 2003)

(“Where it appears that granting leave to amend is unlikely to

be productive, . . . it is not an abuse of discretion to deny

leave to amend”); see also Cuoco v. Moritsugu, 222 F.3d 99, 112

(2d Cir. 2000) (holding that leave to amend the pleadings is not

required where “the problem with [the litigant’s] causes of

action is substantive” such that “better pleading will not cure

it”). Plaintiff’s RICO claims rest on the flawed theory that

defendants’ litigation activities and alleged defamatory

statements, combined with scattershot allegations of unrelated

conduct spanning decades and bearing no relation to plaintiff,

can be spun into a coherent pattern of racketeering activity.

The court does not envision any factual supplementation that can

cure this deficiency in a subsequent pleading. Likewise,

plaintiff’s defamation claim is facially time-barred and his

equitable tolling argument rests of a meritless theory of

fraudulent concealment. With respect tolling under CPLR § 207,

plaintiff was well aware, or should have been, that he was

required to plead or offer additional facts in support of

tolling, and his counsel acknowledged as much to the court four

80

months before he filed the Amended Complaint. (See ECF No. 39,

Tr. 15:6-13 (“One of arguments that was advanced in favor of

tolling the statute with respect to the agents is that the

agents are non-domiciliaries of the United States -- in New

York, and as a result of that, while they're outside of the

jurisdiction, the statute doesn't run. And so it may become

necessary for me to put in supplemental papers in connection

with the fact that the agents are outside of New York . . .

.”).) Plaintiff presented no such facts in either the Amended

Complaint or his opposition. Therefore, additional leave to

amend is denied.

The Clerk shall enter judgment in favor of defendants

and close the case.

SO ORDERED.

Dated: Brooklyn, New York

March 26, 2020

/s/

KIYO A. MATSUMOTO

United States District Judge

Eastern District of New York

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