KYKO GLOBAL, INC. v. PRITHVI INFORMATION SOLUTIONS, LTD.

IN THE UNITED STATES DISTRICT COURT

FOR THE WESTERN DISTRICT OF PENNSYLVANNIA

KYKO GLOBAL, INC. et al.,

Plaintiffs, Civil Action No. 2:18-cv-01290-WSS

v. Hon. William S. Stickman IV

PRITHVI INFORMATION SOLUTIONS

LTD. et al.,

Defendants.

MEMORANDUM OPINION

WILLIAM S. STICKMAN IV, District Judge

This controversy arises from allegations of fraud involving coupon-bond funds. In 2016,

Plaintiffs Kyko Global, Inc. (KGI’) and Kyko Global GmbH (“KGG”) (collectively “Kyko”)

obtained a civil RICO judgment in the United States District Court for the Western District of

Washington for a fraud-factoring scheme committed by entities and employees affiliated with the

Prithvi family of businesses. As a result of litigation in Washington State, Kyko serves as the

collection agent for Plaintiff Prithvi Solutions, Inc. (‘PSI’). There is a criminal indictment pending

in that district related to the conduct of Prithvi entities and employees. Plaintiffs seek another

civil RICO judgment in this Court against Prithvi entities and employees for an unrelated

conspiracy to launder stolen bond funds.

Pending before the Court are two motions to dismiss on jurisdictional grounds. The first

was filed by Defendants Prithvi Information Solutions, Ltd. (““PISL”’), Prithvi Asia Solutions, Ltd.

(“PASL”), SSG Capital Management (Hong Kong), Ltd. (SSG Hong Kong”), SSG Capital

Partners I, L.P. (“SSG Capital Partners”), Madhavi Vuppalapati (“Madhavi”), Wong Ching Him

a/k/a Edwin Wong (“Him”), Shyam Maheshwari (“Maheshwari”), Ira Syavitri Noor a/k/a Ira Noor

Vourloumis (“Noor”), Andreas Vourloumis (“Vourloumis”), and Dinesh Goel (“Goel”)

(collectively “SSG Defendants”). The second was filed by Defendant Anandhan Jayaraman

(“Jayaraman”). SSG Defendants’ Motion to Dismiss Pursuant to Federal Rules of Civil Procedure

12(b)(1), 12(b)(2), and 12(b)(6) (ECF No. 25) (“SSG Def.’s Mot. to Dismiss”) at p. 1; Motion to

Dismiss on Behalf of Defendant Anandhan Jayaraman (ECF No. 103) (“Jayaraman’s Mot. to

Dismiss’) at p. 1.

Three discovery-related motions are intertwined with both motions to dismiss: SSG

Defendants’ motion to strike Plaintiffs’ jurisdictional discovery, Plaintiffs’ motion to strike

Jayaraman’s jurisdictional discovery, and Jayaraman’s motion to withdraw admissions. SSG

Defendants’ Motion to Strike Affidavits (ECF No. 111) (‘SSG Def.’s Mot. to Strike Aff”) at pp.

1-4; Plaintiffs’ Motion to Strike Defendant Anandhan Jayaraman’s Reply Brief in Support of

Motion to Dismiss (ECF No. 116) (“PI.’s Mot. to Strike Jayaraman’s Reply”) at p. 1; Jayaraman’s

Motion to Withdraw Admissions (ECF No. 119) (“Jayaraman’s Mot. to Withdraw Admissions’)

at p. 1.

For the reasons set forth in this opinion, Plaintiffs’ motion to strike jurisdictional discovery

proffered by Jayaraman will be granted and Jayaraman’s motion to withdraw admissions will be

denied. SSG Defendant’s motion to strike Plaintiffs’ jurisdictional discovery will be denied. The

jurisdictional discovery submitted shows that the Court can exercise subject matter jurisdiction,

and personal jurisdiction. This Court is the appropriate venue. As a result, SSG Defendants’ and

Jayaraman’s motions to dismiss will both be denied.

TABLE OF CONTENTS

T. Background 0000... ccee recess □□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□ □

TE. The Controversy 00.0.0... □□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□ □

A. The Bond-Circular Offering □□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□ □

B. Alleged Racketeering Activities □□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□ LO

1. PISL Transfers $35,000,000.00 to PISL’s Washington State Account... 13

2. PISL Transfers $35,000,000.00 to PSI’s Pittsburgh Account. □□□□□□□□□□□□□□□□□□□□□□□□□□□ 13

3. PSI Transfers $8,000,000.00 to Prithvi, LLC’s Washington State Account.............. 13

4. PSI Transfers $7,000.000.00 to PISL (Account Unknown). □□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□ LB

5. PSI Transfers $20,400,000.00 to PASL’s Hong Kong Account. ......ceesereeeees L4

6. PASL Transfers $4,000,000.00 to SSG Capital Partners’ Hong Kong Account........ 14

7. PASL Transfers $16,400,000.00 to VTC’s Singapore □□□□□□□□□□□□□□□□□□□□□□□□□□□□ 14

8. PISL Transfers $2,500,000.00 to PSI’s Pittsburgh Account. □□□□□□□□□□□□□□□□□□□□□ L4

9. PSI’s Transfers $2,500,000.00 to PSAL’s Hong Kong Account. 0.0.0... cece 14

i, PSI Initially Fails to Transfer $2,500, 000.00, □□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□ LS

ii. PSI Transfers $1,000,000.00 to PSAL’s Hong Kong ACCOUNT. □□□□□□□□□□□□□□□□□□□□□ LS

ili. PSI Transfers $1,500,000.00 to PSAL’s Hong Kong ACCOUNL. wees US

10. PSAL Transfers $2,500,000.00 to VTC’s ACCOUDL. □□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□ LD

11. PSAL Transfers $10,000.00 to VTC’s Account. oo... □□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□ 16

12. PASL Withdraws $28,000.00. 0... □□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□ 16

CL The Aftermath... □□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□ LO

TH. = Procedural History 20.0.0... □□□ □□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□ LT

A. Civil Litigation in Washington State and Hong KOng □□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□ LT

1. The Unconsolidated Washington Federal District Court Case... □□□ eeeeeeeeseeeeee 18

2. The Washington Superior Court and Federal Bankruptcy Court Cases... 19

3. The Consolidated Washington Federal District Court □□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□ 20

4. The Civil Case in Hong Kongo... □□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□ 2

B. Criminal Litigation in Washington State □□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□ 22

C. Litigation in this FOrUm □□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□ DO

Federal Rule 12(D)(1) □□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□ DO

TI. Federal Rule 12(D)(2) .....c cece □□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□ 2O

TIT. Federal Rule 12(D)(6) «000.0... □□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□ D7

I. Motions Raising Discovery-Related Issues 2.000.000... □□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□ 29

A. SSG Defendants’ Objections to Plaintiffs’ Supplemental DisCOVery □□□□□□□□□□□□□□□□□□□□□□□□□□□ 29

Timeliness... eee □□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□ 3O

2. Personal Knowledge □□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□ □□

3. Inconsistency with the Complaint oo... cece □□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□ OL

4. Improper Legal Argument .0..... □□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□ DO

B. Jayaraman’s Deemed AAMISSIONS □□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□ BO

1. Presentation of the Merits □□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□ □□

2. PLEJUCICE ee □□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□ □□

= Subject Matter Jurisdiction... □□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□ DO

A, Diversity Jur isCictions □□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□ DO

B. Federal Question Jurisdiction □□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□ □□

1. Overview of Plaintiffs’? RICO Claim... □□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□ AQ

2. Element 1: Existence of a RICO Enterprise Under Rule 12(b)(6) ........ ees 41

i. The Boyle Test □□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□ 42

di, The Turkette □□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□ 44

3. Element 3: Conduct of a RICO Enterprise Under Rule 12(b)(6) □□□□□□□□□□□□□□□□□□□□□□□□□ 46

4. Element 4: Predicate Offenses “Sounding in Fraud” Under Rule 9(b) ........ ee 47

THE. = Personal Jurisdiction... cc □□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□ DO

A. Personal Jurisdiction Under Pennsylvania’s Long-Arm Statute □□□□□□□□□□□□□□□□□□□□□□□□□□□□□ □

DL. Waiver voce □□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□ OOD

2. Gemreral Jurisdiction... ec □□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□ OT

3. Specific Jurisdiction 0... ec □□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□ DO

i. The Traditional Minimum Contacts Test □□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□ OO

a. The Contacts Prong □□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□ OO

b. The Reasonableness □□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□ O4

ii. Intentional Torts “Effects”? □□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□ OOD

Hi. Conspiracy Jurisdiction □□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□ OF

a. Overview of Conspiracy Jurisdiction □□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□ OF

b. The Substantial Acts Prong □□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□ OD

Cc. The Knowledge Prong □□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□ 10

B. Statutory Personal Jurisdiction □□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□ 12

1. Personal Jurisdiction under the MCLA □□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□ 13

~ 2. Personal Jurisdiction under RICO oo... □□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□ 14

TV. eee □□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□ DD

A. Forum Non Conveniiens □□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□ 18

B. Alternative FOrUi □□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□ 19

C. Presumption that Plaintiffs’ Choice is Proper □□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□ OO

D. Public and Private Interest FACtOPS □□□□□□□□□□□□□□□□□□□□□□□□□ cesses □□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□ OL

1. Private Interest Factors ...0... □□ □□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□ OD

2. Public Interest Factors □□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□ OD

EL CONCIUSION □□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□ OO

STATEMENT OF FACTS

I. Background

There are three Plaintiffs. Plaintiff KGI is a Canadian corporation. Plaintiffs’ Complaint

and Jury Demand (ECF No. 1) (“Pl.’s Compl.”) at p. 1, § 1. Plaintiff KGG, a Bahamian

corporation, is a wholly owned subsidiary of KGI. Pl.’s Compl. at p. 2, 4 2. Plaintiff PSI is a

Delaware corporation formed in 2007 with a principal place of business in Pittsburgh,

Pennsylvania. Pl.’s Compl. pp. 1, 10, □□ 1, 100; Plaintiffs’ Supplemental Brief in Opposition to

SSG Defendants’ Motion to Dismiss Pursuant to Fed. R. Civ. P. 12(b)(2) Ex. F (ECF No. 109-6)

(“Amorose Decl.”) at pp. 2-3, ff 4, 11. PSI is a subsidiary and sole shareholder of PISL; PISL

formed PSI to expand PISL’s business operations in the United States. Pl.’s Compl. pp. 1, 10, □□

1, 100; Amorose Decl. at pp. 1-2, {] 2, 4; Plaintiffs’ Supplemental Brief in Opposition to SSG

Defendants’ Motion to Dismiss Pursuant to Fed. R. Civ. P. 12(b)(2) Ex. | (ECF No. 109-9) (“PI.’s

Supp. Br. in Opp. to SSG Def.’s Mot. to Dismiss Ex. I’) at p. 3, 92. PISL and PSI conducted

business in the same office in Pittsburgh. Plaintiffs’ Supplemental Brief in Opposition to SSG

Defendants’ Motion to Dismiss Pursuant to Fed. R. Civ. P. 12(b)(2) Ex. M (ECF No. 109-13)

(“Pandyar Decl.”) at p. 2, 4/3. PNC’s branch in Pittsburgh maintained PSI’s sole bank account.

Amorose Decl. at p. 3, { 11; Pandyar Decl. at p. 2, § 5; Declaration of Kiran Kulkarni (ECF No.

40-1) (“Kulkarni Decl.”) at p. 3, 9 11.

There are five corporate Defendants. PISL is an Indian company in the information

technology sector with its principal place of business in Pittsburgh. PI.’s Compl. pp. 1-2, 5-6, 10,

44 1, 5-6, 100; SSG Defendants’ Supplemental Brief in Support of Plaintiffs’ Motion to Dismiss

Ex. C (ECF No. 108-3) (“Shyam Maheshwari Dep.”) at p. 104; Amorose Decl. at pp. 1-2, | 2—

3; Pandyar Decl. at p. 1, § 2; Kulkarni Decl. at p. 2,76. PSAL is a Hong Kong company. Pl.’s

Supp. Br. in Opp. to SSG Def.’s Mot. to Dismiss Ex. I at p. 16. Walue Team Corporation (“VTC”)

is a British Virgin Islands corporation. Pl.’s Compl. at p. 2, J 14. SSG Hong Kong is a Hong Kong

company and asset management fund. PI.’s Compl. at p. 3, § 15-20. SSG Capital Partners is a

Cayman Islands limited partnership and investment fund created in August 2009. Pl.’s Compl. at

p. 3, Jf 15-20. SSG Hong Kong is the general partner and director of operations for SSG Capital

Partners. SSG Defendants’ Supplemental Brief in Support of SSG Defendants’ Motion to Dismiss

Ex. A (ECF No. 108-1) (Cairns Dep.”) at p. 12.

There are eight individual Defendants. Madhavi is an Indian citizen, current resident of

Hyderabad, India, and Chairman of PISL. Pl.’s Compl. at p. 2, {| 7-9; Plaintiffs’ Supplemental

Brief in Opposition to SSG Defendants’ Motion to Dismiss Pursuant to Fed. R. Civ. P. 12(b)(2)

Ex. A (ECF No. 109-1) (“PIl.’s Supp. Br. in Opp. to SSG Def.’s Mot. to Dismiss Ex. A”) at p. 13;

Amorose Decl. at p. 2, § 8; Kulkarni Decl. at p. 3,910. She is said to have physically resided in

Pittsburgh and Washington State from 2010 through 2014, the timeframe when the alleged

actionable conduct occurred. Amorose Decl. at p. 2, ] 8; Kulkarni Decl. at p. 3,912. Jayaraman,

Madhavi’s husband, is an Indian citizen, and current resident of Hyderabad but allegedly lived

with his wife in Pittsburgh during part of the timeframe when the alleged actionable conduct

occurred. Pl.’s Compl. at p. 2, (§ 11-13; Shyam Maheshwari Dep. at p. 105; Kulkarni Decl. at p.

3, 12. Him is a Hong Kong citizen, Hong Kong resident, Director and shareholder of VTC, and

Director and Chief Executive Officer (“CEO”) of SSG Hong Kong. PI.’s Compl. at p. 3, {J 25-

26; Cairns Dep. at p.13; Kulkarni Decl. at p. 2, 4. Maheshwari is an Indian citizen, resident of

Singapore and Hong Kong, Director and shareholder of VTC, and partner, co-founder, and

manager of SSG Hong Kong. Pl.’s Compl. at p. 3, (§ 21-24; Kulkarni Decl. at p. 2, 44. Noor is

a resident of Hong Kong and Director of VTC. Pl.’s Compl. at p. 3, { 29-30; Kulkarni Decl. at

p. 2,4. Vourloumis, Noor’s husband, is an Indonesian citizen, resident of Singapore and Hong

Kong, Director and shareholder of VTC, and partner and member of SSG Hong Kong’s advisory

committee. Pl.’s Compl. at pp. 3-4, FJ 31-34; Cairns Dep. p.13; Kulkarni Decl. at p. 2,44. Goel

is an Indian citizen, Singapore resident, and Managing Director of SSG Hong Kong. PI.’s Compl.

at p. 4, § 36-37; SSG Defendants’ Supplemental Brief in Support of SSG Defendants’ Motion to

Dismiss Ex. B (ECF No. 108-2) (“Dinesh Goel Dep.”) at p. 17-18.

SSG Defendants are intertwined with three corporate entities: VTC, SSG Capital Partners,

and SSG Hong Kong. SSG Defendants are equity holders in PISL and PSI. Kulkarni Decl. at p.

2,94. Maheshwari, Noor, Vourloumis, and Wong control and operate VTC. PI.’s Compl. at pp.

3-4, 99 24-34; Kulkarni Decl. at p. 2,4. Goel, Maheshwari, Wong, and Vourloumis control and

operate SSG Hong Kong. SSG Hong Kong, Goel, Maheshwari, Wong, and Vourloumis control

and operate SSG Capital Partners. Pl.’s Compl. at pp. 3-4, 24-34; Kulkarni Decl. at p. 2, 4 4.”!

The filings reference several noteworthy third parties. The Complaint twice references

Prithvi Information Solutions, LLC (Prithvi, LLC”). There is no information about Prithvi, LLC

' On November 15, 2019, the Court struck VTC’s notice of appearance, therefore, VTC is not

included within the “SSG Defendants” designation for the purposes of this Opinion. Order of

Court (ECF No. 106) (“Order Striking V[T'C’s Appearance”) at p. 1.

in the record except that it received a wire transfer from PSI. Pl.’s Compl. at p. 12, □□ 121-22.

The Court deduces that it is an entity within the Prithvi family of businesses. Satish Kumar

Vuppalapati (“Satish”) is the brother of Madhavi and Managing Director of both PISL and PSI.

Supp. Br. in Opp. to SSG Def.’s Mot. to Dismiss Ex. A at p. 13; Plaintiffs’ Supplemental

Brief in Opposition to SSG Defendants’ Motion to Dismiss Pursuant to Fed. R. Civ. P. 12(b)(2)

Ex. E (ECF No. 109-5) (P1.’s Supp. Br. in Opp. to SSG Def.’s Mot. to Dismiss Ex. E”) at pp. 1-

2; Amorose Decl. at pp. 2-3, J 9. Satish is embroiled in the conspiracy allegations in this case

despite the fact that no allegation is specifically directed at him. Several other persons have

provided deposition testimony and declarations/affidavits attesting to facts relevant to the Court’s

jurisdictional determination. David Amorose (“Amorose”) served as Corporate Controller and

court-appointed Chief Financial Officer (“CFO”) for PISL and PSI from May 2005 to November

2013. Amorose Decl. at p. 2, 3. His duties involved finance, taxation, accounting, and payroll.

Amorose Decl. at p. 2, § 6. Guru Pandyar (“Pandyar’’) was a Pennsylvania resident who moved

to Washington State when the alleged actionable conduct occurred. He served as PISL’s Assistant

Vice President of Finance and Accounts and as a member of PSI’s management team. Amorose

Decl. at p. 3, 10; Pandyar Decl. at p. 1, 2. Mathur Narayanan (“Narayanan”) was Vice President

of PISL during the timeframe when the alleged actionable conduct occurred. Kulkarni Decl. at p.

6, 4 33. Kiran Kulkarni (“Kulkarni”) is Plaintiffs’ Director and CEO. Kulkarni Decl. at p. 1, 2.

And Peter Caims (“Cairns”) is the Chief Operating Officer (“COO”) of SSG Hong Kong. SSG

Defendants’ Supplemental Brief in Support of Motion to Dismiss Pursuant to Federal Rules of

Civil Procedure 12(b)(1), 12(b)(2), and 12(b)(3) (ECF No. 108) (“SSG Def.’s Supp. Br. in Supp.

of Pl.’s Mot. to Dismiss”) at p. 3 & n.4.

I. The Controversy

The timeline of events prompting this action can be broken down into three sequences: A)

the bond-circular offering by PISL, B) the timeframe when Defendants allegedly engaged in

racketeering and laundered the bond funds, and C) the aftermath leading to the filing of this

lawsuit.

A. The Bond-Circular Offering

In February 2007, PISL executed an agreement under Indian law with its subsidiary, PSI,

to raise funds by issuing bonds so that PSI could conduct business in the United States. By doing

so, PISL intended to expand its business in the United States as well. Pl.’s Compl. at p. 10, § 101;

Pl.’s Supp. Br. in Opp. to SSG Def.’s Mot. to Dismiss Ex. | at p. 3, 2; Plaintiffs’ RICO Case

Statement (ECF No. 5) (“Pl.’s RICO Case Statement”) at p. 1. PISL issued a bond offering

circular? for $50,000,000.00 worth of coupon bonds? due in February 2012 that were convertible

to PISL shares. PI.’s Compl. at p. 10, { 98; Pl.’s Supp. Br. in Opp. to SSG Def.’s Mot. to Dismiss

Ex. Lat p. 3, 2; Kulkarni Decl. at p. 1, § 4; Pl.’s RICO Case Statement at p. 1

Lehman Brothers invested in the bonds through Kingfisher Capital CLO Ltd. and placed

$50,000,000.00 in an escrow account at UCO Bank in Hong Kong for that investment. PI.’s

2 “An offering circular is a prospectus for a new security listing. It is delivered to individuals and

brokerage houses who are interested in potentially purchasing the newly issued mutual fund or

stock.” Will Kenton, Offering Circular, INVESTOPEDIA (Feb. 20, 2018), https://www.investopedi

a.com/terms/o/offeringcircular.asp.

3A coupon bond, also referred to as a bearer bond or bond coupon, is a debt obligation with

coupons attached that represent semiannual interest payments. With coupon bonds, there are no

records of the purchaser kept by the issuer; the purchaser's name is also not printed on any kind of

certificate. Bondholders receive these coupons during the period between the issuance of the bond

and the maturity of the bond.” James Chen, Coupon Bond, INVESTOPEDIA (Sept. 18, 2019),

https://www.investopedia.com/terms/c/couponbond.asp.

Compl. at p. 10, □□ 102-03; Pl.’s Supp. Br. in Opp. to SSG Def.’s Mot. to Dismiss Ex. I at p. 3, 7

2. UCO Bank transferred approximately $15,000,000.00 of those bond funds to PISL. PISL, in

turn, transferred those funds to PSI so that PSI could conduct business operations in the United

States. P].’s Compl. at p. 10, § 104; Pl.’s Supp. Br. in Opp. to SSG Def.’s Mot. to Dismiss Ex. I

at p. 3, J 2.

The locus of bond fund management was Pittsburgh. All communications among PISL

and PSI executives and Defendants about the bond funds were directed to and received from

Pennsylvania. Amorose Decl. at pp. 3, § 11. Madhavi and Jayaraman managed operations related

to the bond funds while physically residing in Pittsburgh and through electronic communications,

such as emails and telephone calls. Amorose Decl. at p. 2, § 8; Pl.’s Supp. Br. in Opp. to SSG

Def.’s Mot. to Dismiss Ex. I at p. 6, | 6. Satish assisted in the management of the bond funds in

Pittsburgh by traveling from India to Pittsburgh and through electronic communications by email

and telephone. Amorose Decl. at pp. 2—3, 9. Pandyar also helped manage the bond funds while

physically residing in Pittsburgh and through electronic communications (email and telephone).

Amorose Decl. at p. 3, | 10.

B. Alleged Racketeering Activities

In 2008, PISL conducted business and retained employees in Pittsburgh. Plaintiffs’

Supplemental Brief in Opposition to SSG Defendants’ Motion to Dismiss Pursuant to Fed. R. Civ.

P. 12(b)(2) Ex. C (ECF No. 109-3) (“PI.’s Supp. Br. in Opp. to SSG Def.’s Mot. to Dismiss Ex.

C”) at p. 2. In June 2008, Goel went on a business trip to the United States on behalf of PISL that

included a stop in Pittsburgh. Pl.’s Supp. Br. in Opp. to SSG Def.’s Mot. to Dismiss Ex. A at pp.

10

5—6, 11-12, 14.4 Plaintiffs allege that a racketeering conspiracy formed, at least in part, as a result

of that trip.

On September 15, 2008, Lehman Brothers filed petitions for bankruptcy in the United

States and overseas. Pl.’s Compl. at p. 10, § 105. On or about August 3, 2010, Lehman Brothers

sold its interest in its PISL bonds to VTC and SSG Capital Partners for approximately

$15,500,000.00. Pl.’s Compl. at p. 10, § 106; Pl.’s Supp. Br. in Opp. to SSG Def.’s Mot. to Dismiss

Ex. I at pp. 2—3, § 2; Pl.’s RICO Case Statement at p. 2. The allegations here arise from SSG

Defendants’ alleged conspiracy to launder the bond funds between 2010 and 2014 through UCO

Bank and Hang Seng Bank in Hong Kong, Key Bank in Washington State, and PNC Bank in

Pittsburgh. PI.’s Supp. Br. in Opp. to SSG Def.’s Mot. to Dismiss Ex. I at p. 3, J 2; Pl.’s RICO

Case Statement at p. 2.

Plaintiffs assert that the conspiracy was facilitated by two sham Memorandums of

Understanding (“MOUs”): one between PISL and SSG Capital Partners, the other between PISL

and VTC. These MOUs purported to restructure PISL coupon bonds, conditional on SSG Capital

Partners and VTC paying non-refundable deposits to PISL as gestures of good faith. Pl.’s Supp.

Br. in Opp. to SSG Def.’s Mot. to Dismiss Ex. I at p. 3, § 2; Pl.’s RICO Case Statement at p. 2.

On September 6, 2010, PISL entered into agreements with SSG Capital Partners and VTC (“SSG

Capital Partners Agreement #1” and “VTC Agreement #1,” respectively). Pl.’s Compl. at pp. 10—

11, {§ 107, 111. On September 8, 2010, SSG Capital Partners and PISL executed an addendum to

SSG Capital Partners Agreement #1 requiring SSG Capital Partners to pay a $4,000,000.00 non-

refundable deposit to PISL as confirmation of SSG Capital Partners’ commitment to the

The exhibits to Plaintiffs’ Supplemental Brief in Opposition to SSG Defendants’ Motion to

Dismiss are not consecutively paginated and violate L.R. 5.1(E), therefore, the Court’s pagination

reflects the page numbers for each exhibit as applied by EM/ECF.

11

restructuring process. Pl.’s Compl. at pp. 10-11, 108-09. VTC and PISL entered an addendum

to VTC Agreement #1 requiring VTC to pay a $16,200,000.00 deposit with PISL that same day

for the same reason. PI.’s Compl. at p. 11, | 112. These non-refundable deposits allegedly violated

Indian law. Pl.’s Supp. Br. in Opp. to SSG Def.’s Mot. to Dismiss Ex. I at p. 3, § 2; PI.’s RICO

Case Statement at p. 1.

At the time of the “restructuring,” SSG Capital Partners and SSG Hong Kong owed

$4,000,000.00 to PISL under SSG Capital Partners Agreement #1, the same sum as the non-

refundable deposit stipulated in the addendum to that agreement. Pl.’s Compl. at p. 13, ¥ 128.

PASL transferred $4,000,000.00 at SSG Defendants’ behest to SSG Capital Partners’ bank account

with DBS Bank Ltd. in Hong Kong. PIl.’s Compl. at p. 13, § 129; Pl.’s Supp. Br. in Opp. to SSG

_ Def.’s Mot. to Dismiss Ex. I at p. 19. SSG Capital Partners then allegedly distributed that sum

among all SSG Defendants. PI.’s Compl. at p. 13, 9 130. Similarly, VTC owed $18,900,000.00 to

PSI under VTC Agreement #1. PI.’s Compl. at p. 13, | 131. VTC entered a second restructuring

agreement with PISL on December 20, 2010 (‘VTC Agreement #2”) and then allegedly used a

similar scheme as SSG Capital Partners to launder the bond funds. By June 17, 2011, VTC had

allegedly distributed $18,900,000.00 of bond funds among Defendants. PI.’s Compl. at pp. 13-

14, 4] 131-141.

Plaintiffs accuse Madhavi of being the mastermind behind these illicit distributions. As

Chairman of PISL and the sole shareholder of PSI at the time, Madhavi was in control of all funds

PISL received from PSI. She is alleged to have abused her position to defraud Plaintiffs of the

bond funds through a series of wire transfers. These transfers are described in Plaintiffs’ RICO

Case Statement and are described below. PIl.’s Supp. Br. in Opp. to SSG Def.’s Mot. to Dismiss

Ex. [at p. 6, § 6; Kulkarni Decl. at p. 3, 49.

12

1. PISL Transfers $35,000,000.00 to PISL’s Washington State Account.

On or about October 29, 2010, Bank of New York Mellon, at PISL’s behest, transferred

approximately $35,000,000.00 of bond funds from PISL’s UCO Bank escrow account in Hong

Kong to PISL’s Key Bank account in Washington State. Pl.’s Compl. at pp. 11-12, 4 117;

Plaintiffs’ Supplemental Brief in Opposition to SSG Defendants’ Motion to Dismiss Pursuant to

Fed. R. Civ. P. 12(b)(2) Ex. J (ECF No. 109-10) (“PI.’s Supp. Br. in Opp. to SSG Def.’s Mot. to

Dismiss Ex. at p. 5, Jb; Pl.’s RICO Case Statement at p. 1.

2. PISL Transfers $35,000,000.00 to PSI’s Pittsburgh Account.

On November 2, 2010, PISL wired approximately $35,000,000.00 in bond funds from its

Key Bank account in Washington State to PSI’s PNC Bank account in Pittsburgh. PI.’s Compl. at

pp. 11-12, | 118; Pl.’s Supp. Br. in Opp. to SSG Def.’s Mot. to Dismiss Ex. J at p. 5, 4 b; Pl.’s

RICO Case Statement at p. 3.

3. PSI Transfers $8,000,000.00 to Prithvi, LLC’s Washington State Account.

On or about November 3, 2010, PSI wired approximately $8,000,000.00 to Prithvi, LLC

in Washington State. Pl.’s Compl. at p. 12, § 121; Pl.’s Supp. Br. in Opp. to SSG Def.’s Mot. to

Dismiss Ex. J at p. 5, § b; Pl.’s RICO Case Statement at p. 3.

4. PSI Transfers $7,000.000.00 to PISL (Account Unknown).

On or about November 3, 2010, PSI transferred approximately $7,000,000.00 back to

PISL. Pl.’s Compl. at p. 12, § 123; PL.’s Supp. Br. in Opp. to SSG Def.’s Mot. to Dismiss Ex. J at

p. 5, Pl.’s RICO Case Statement at p. 3.°

> Neither Plaintiffs’ Complaint nor Plaintiffs’ RICO Statement specifies which PISL bank account

received the $7,000,000.00 in bond funds (i.e., PISL’s Hong Kong bank account, PISL’s

Washington State account, or some other PISL account). Compare PL.’s Compl. at p. 12, J 123,

with Pl.’s Supp. Br. in Opp. to SSG Def.’s Mot. to Dismiss Ex. J at p. 5, 4 b.

13

5. PSI Transfers $20,400,000.00 to PASL’s Hong Kong Account.

On or about November 3, 2010, PSI transferred approximately $20,400,000.00 to PASL’s

Hang Seng Bank account in Hong Kong. Pl.’s Compl. at p. 12, § 124; Pl.’s Supp. Br. in Opp. to

SSG Def.’s Mot. to Dismiss Ex. J at p. 5, 4 b; Pl.’s RICO Case Statement at p. 3.

6. PASL Transfers $4,000,000.00 to SSG Capital Partners’ Hong Kong Account.

On November 12, 2010, PASL transferred $4,000,000.00 of the $20,400,000.00 worth of

bond funds in its Hang Seng Bank account in Hong Kong to SSG Capital Partners’ DBS Bank

account in Hong Kong. PIl.’s Supp. Br. in Opp. to SSG Def.’s Mot. to Dismiss Ex. J at p. 5, § b;

Kulkarni Decl. at p. 7, § 37; Pl.’s RICO Case Statement at p. 3.

7. PASL Transfers $16,400,000.00 to VTC’s Singapore Account.

On or about November 12, 2010 and November 23, 2010, PASL transferred

$16,400,000.00 of the $20,400,000.00 in bond funds it originally received from PSI from its Hang

Seng Bank account in Hong Kong to VTC’s UBS AG Bank account in Singapore. Pl.’s Supp. Br.

in Opp. to SSG Def.’s Mot. to Dismiss Ex. J at p. 5, § b; Kulkarni Decl. at p. 7, § 38; Pl.’s RICO

Case Statement at p. 3.

8. PISL Transfers $2,500,000.00 to PSI’s Pittsburgh Account.

On or about May 27, 2011 and June 15, 2011, PISL transferred $2,500,000.00 of the

$7,000,000.00 in bond funds it originally received from PSI back again to PSI’s PNC Bank account

in Pittsburgh. Pi.’s Supp. Br. in Opp. to SSG Def.’s Mot. to Dismiss Ex. J at p. 5, § b; Pl.’s RICO

Case Statement at p. 3.

9. PSI’s Transfers $2,500,000.00 to PSAL’s Hong Kong Account.

PSI ultimately transferred $2,500,000.00 in bond funds from its PNC Bank account in

Pittsburgh to PSAL’s Hang Seng Bank account in Hong Kong. Pandyar Decl. at p. 3, § 12; Pl.’s

14

Supp. Br. in Opp. to SSG Def.’s Mot. to Dismiss Ex. J at p. 5, § b; Pl.’s RICO Case Statement at

p. 3. This wire transfer was initially thwarted, however, by an investigation by PNC Bank in

Pittsburgh. °

i. PSI Initially Fails to Transfer $2,500,000.00.

On May 25, 2011, PSI tried to wire $2,500,000.00 in bond funds from its PNC Bank

account in Pittsburgh to PSAL’s Hang Sen Bank account in Hong Kong at Goel’s request. Pandyar

Decl. at p. 2, 7. On May 27, 2011, Pandyar informed Goel that the transfer failed because it was

under investigation by PNC Bank. Pandyar Decl. at p. 3, ¥ 10.

il. PSI Transfers $1,000,000.00 to PSAL’s Hong Kong Account.

That same day, Pandyar successfully executed a $1,000,000.00 wire transfer of bond funds

from PSI’s PNC Bank account in Pittsburgh to PSAL’s Hang Seng Bank account in Hong Kong.

Pandyar Decl. at p. 3, § 10.

iii. PSI Transfers $1,500,000.00 to PSAL’s Hong Kong Account.

On June 15, 2011, Pandyar informed Goel by email that he successfully wired an additional

$1,500,000.00 from PSI’s PNC Bank account in Pittsburgh to PSAL’s Hang Seng Bank account

in Hong Kong. Pandyar Decl. at p. 3, ¥ 11.

10. PSAL Transfers $2,500,000.00 to VIC’s Account.

On or about June 17, 2011, PSAL transferred $2,500,000.00 in its Hang Seng Bank account

in Hong Kong that it had just received from PSI to VIC’s UBS AG Bank account in Singapore.

6 Plaintiffs’ RICO Statement and the Kulkarni Declaration state that the transfers occurred on May

28, 2011 and June 16, 2011, while the Pandyar Declaration states that the transfers occurred on

May 27, 2011 and June 15, 2011. Given Pandyar’s intimate knowledge of PISL and PSI’s daily

operations, the Court will defer to his dates. Compare P1.’s RICO Case Statement at p. 3, and Pl.’s

Supp. Br. in Opp. to SSG Def.’s Mot. to Dismiss Ex. J at p. 5, § b, and Kulkarni Decl. at p. 6, J

30, with Pandyar Decl. at pp. 2-3, Jf] 7-10.

15

PI.’s Supp. Br. in Opp. to SSG Def.’s Mot. to Dismiss Ex. J at p. 5, § b; Kulkarni Decl. at pp. 6-7,

30, 38; Pl.’s RICO Case Statement at p. 3.

11. PSAL Transfers $10,000.00 to VIC’s Account.

On or about January 23, 2013, PASL wired $10,000.00 from its Hang Seng Bank account

in Hong Kong to VIC’s UBS AG Bank account in Singapore. Pl.’s Supp. Br. in Opp. to SSG

Def.’s Mot. to Dismiss Ex. J at p. 5, 4b; Pl.’s RICO Case Statement at p. 3.

12. PASL Withdraws $28,000.00.

On or about October 9, 2014, PASL withdrew $28,000.00 from its Hang Seng Bank

account in Hong Kong. Pl.’s Supp. Br. in Opp. to SSG Def.’s Mot. to Dismiss Ex. J at p. 5, J b;

RICO Case Statement at p. 3.

C. The Aftermath

During a series of emails exchanged on January 16 and 17, 2012, Pandyar confirmed to

Narayanan that of the original $35,000,000.00 in bond funds that were distributed, $4,000,000.00

were wired to SSG Capital Partners, $18,900,000.00 were sent to VTC, and the remainder were

sent to other entities or used as PISL’s working capital. Kulkarni Decl. at pp. 6-7, §§ 33-36. The

$4,000,000.00 in bond funds received by SSG Capital Partners and the $18,900,000.00 in bond

funds received by VTC were listed as accounts receivable on PSI’s books. Kulkarni Decl. at p.

7, 7 39.

Defendants allegedly disguised their racketeering conspiracy in several ways. P1.’s Compl.

at pp. 13-14, 13141. They used MOUs and related addenda to create the appearance that SSG

Capital Partners, VTC, and PISL restructured PISL bonds, when in fact they were stealing and

laundering them. Kulkarni Decl. at p. 8, [ 40. They tried to hide their scheme by creating bogus

accounts receivable in PSI’s books, and in doing so mischaracterized the wire transfers as loans

16

from PSI to SSG Capital Partners, SSG Hong Kong, and VTC. PI.’s Supp. Br. in Opp. to SSG

Def.’s Mot. to Dismiss Ex. I at pp. 3, 6, ff] 2, 6; Pl.’s RICO Case Statement at p. 2. They also

created PSAL to serve as a sham pass-through entity for laundering the stolen bond funds. PI1.’s

Supp. Br. in Opp. to SSG Def.’s Mot. to Dismiss Ex. I at p. 3, 2. On or about October 27, 2016,

Kyko sent SSG Capital Partners, SSG Hong Kong, VTC, and Maheshwari demand letters

requesting payments of amounts owed according to PSI’s books and records. Defendants denied

that any amounts were owed. Plaintiffs uncovered Defendants’ alleged illicit conduct in

November 2016 and sued. Pl.’s Supp. Br. in Opp. to SSG Def.’s Mot. to Dismiss Ex. I at p. 3, J

2; Pl.’s RICO Case Statement at p. 2.

UE. Procedural History

Before this action began, prior civil and bankruptcy litigation involving both parties took

place in Washington State. A federal criminal indictment against one of SSG Defendants—

Madhavi—was also issued in the Western District of Washington. Those other matters provide

some perspective on this case.

A. Civil Litigation in Washington State and Hong Kong

The parties previously litigated fraud factoring allegations in the Superior Court for King

County, Washington, as well as in the United States Bankruptcy and District Courts for the

Western District of Washington.’ PI.’s Compl. at p. 2, §] 10. The parties also litigated letters of

7 A factoring agreement is a financial transaction where a business sells its accounts receivable—

the balance of money due to a firm for goods or services delivered or used but not yet paid for—

to a third party at a discounted price. Adam Barone, Factor, INVESTOPEDIA (Apr. 14, 2019),

https://www.investopedia.com/terms/f/factor.asp; Will Kenton, Accounts Receivable (AR),

INVESTOPEDIA (Oct. 4, 2019), https://www.investopedia.com/terms/a/accountsreceivable.asp; see

also Factor, BLACK’S LAW DICTIONARY (11th ed. 2019) (“4. Someone who buys accounts

receivable at a discount <the company sold its receivables to a factor at only 5% of their stated

value[>].”); Factoring, BLACK’S LAW DICTIONARY (11th ed. 2019) (“The buying of accounts

17

request issued by the United States District Court for the Western District of Washington in Hong

Kong.

1. The Unconsolidated Washington Federal District Court Case

On June 17, 2013, KGJ and KGG (collectively, as in this case, “Kyko”) filed a complaint

in the United States District Court for the Western District of Washington, alleging a fraud

factoring scheme against PISL; Prithvi Catalytic, Inc. (‘PCI’); PSI; Prithvi, LLC; Inalytix, Inc.

(“Inalytix’”); International Business Solutions, Inc. (“IBS”); Avani Investments, Inc. (“Avani”);

Ananya Capital Inc. (“Ananya”); Madhavi; Jayaraman;® Pandyar; Jane Doe Pandyar (Pandyar’s

wife); Srinivas Sista (“Srinivas”); Lalita Sista (“Lalita”—Srinivas’ wife);? DCGS, Inc. (“(DCGS”);

EPP, Inc. (“EPP”); Financial Oxygen, Inc. (‘FOI’); Huawei Latin American Solutions, Inc.

(“HLAS”); and L3C, Inc. (““L3C”). Compl. at pp. 1-2, Kyko Global, Inc. v. Prithvi Info. Solutions

Ltd. (W.D. Wash. June 17, 2013) (Case No. 2:13-cv-01034-MJP). This will be referred to as the

“unconsolidated Washington federal district court case.”

The eight-count complaint specifically alleged fraud (Count J, negligent or intentional

misrepresentation (Count I[), conversion (Count IID, breach of guarantees (Count IV), temporary

and preliminary injunctive relief (Count V), civil RICO—wire and mail fraud (Count VJ), civil

RICO—financial institution fraud (Count VID, and unjust enrichment (Count VIII). Jd. at pp. 19-

26, 57-103. The court later granted partial summary judgment in favor of Jayaraman and

dismissed both Pandyar and his wife. Order Granting Part Defendant Anandhan Jayaraman’s

receivable at a discount. The price is discounted because the factor (who buys them) assumes the

risk of delay in collection and loss on the accounts receivable.”).

8 Jayaraman’s name was spelled “Jagaraman” in that complaint.

At that time, Lalita Sista was identified as John Doe Sista.

18

Motion for Summary Judgment at p. 1, Kyko Global, Inc. v. Prithvi Information Solutions Ltd.

(W.D. Wash. June 4, 2014) (Case No. 2:13-cv-1034-MJP); Stipulated Judgment of Dismissal of

Guru Pandyar and Jane Doe Pandyar Pursuant to Fed. R. Civ. P. 41(a)(2) at p. 1, Kyko Global,

Inc. v. Prithvi Info. Solutions Ltd. (W.D. Wash. Nov. 5, 2014) (Case No. 2:13-cv-1034-MJP).

Following a bench trial, the district court entered judgment against PISL; Prithvi, LLC; PCI; PSI;

Inalytix; Avani; Ananya; Madhavi; DCGS; EPP; FOI; HLAS; and L3C in the amount of

$17,568,854.00. Judgment in a Civil Case at p. 1, Kyko Global, Inc. v. Prithvi Info. Solutions Ltd.

(W.D. Wash. September 6, 2013) (Case No. 2:13-cv-01034-MJP).

2. The Washington Superior Court and Federal Bankruptcy Court Cases

On December 6, 2013, Kyko filed a Notice of Filing of Foreign Judgment against PISL

and other defendants in the Superior Court for King County, Washington. Notice of Foreign

Judgment at p. 1, Kyko Global Inc. v. Prithvi Information Solutions Ltd. (Sup. Ct. King Cnty.,

Wash., December 6, 2013) (Case No. 13-2-41165-2-SEA). This will be referred to as the

“Washington Superior Court case.” On June 17, 2014, Srinivas and Lalita filed for Chapter 7

bankruptcy. Petition at p. 1, In Re Sistas, (W.D. Wash. June 17, 2014) (Case No. 14-14670). On

July 30, 2014, Kyko filed an Adversary Complaint to the Sistas’ Chapter 7 bankruptcy proceeding

in the United States Bankruptcy Court for the Western District of Washington against PISL, PSI,

and other entities not named in this action. Adversary Complaint at p. 1, In re Sista (W.D. Wash.

July 30, 2014) (Case No. 14-01316). This will be referred to as the “adversary Washington federal

bankruptcy court case.” The adversary Washington federal bankruptcy court case was later

consolidated with the Washington federal district court case. Order Granting Plaintiffs’ Motion

for Withdrawal of Reference at pp. 1-2, Kyko Global Inc. v. Srinivas Sista (W.D. Wash. Feb. 9,

19

2015) (Case No. 2:18-13-cv-01034). From that point, they will be referred to collectively as the

“consolidated Washington federal district court case.”

3. The Consolidated Washington Federal District Court Case

On September 16, 2015, Plaintiffs amended their complaint in the consolidated

Washington federal district court case to assert the same six counts as before. First Amend. Compl.

at pp. 1-26, {F 1-103, Kyko Global, Inc. v. Prithvi Info. Solutions, Ltd. (W.D. Wash. Sept. 16,

2015) (Case No. 2:13-cv-01034). The only distinction between the original complaint in the

unconsolidated Washington federal district court case and the first amended complaint in the

consolidated Washington federal district court case was that the latter clarified that PISL is an

Indian corporation, not a Pennsylvania corporation. Jd. at p.2 & n.3.

On February 8, 2016, the King County Superior Court appointed Kyko as collection agent

for receivables owed to PSI, its subsidiaries, and its affiliates. As a result of the litigation before □

the King County Superior Court, Kyko is now a controlling shareholder of PSI. Pl.’s Compl. at p.

2, 9 4; Order Permitting Kyko Global Inc. and Kyko Global GmbH to Act as Collection Agent for

Prithvi Solutions Inc. at pp. 1-2, Kyko Global Inc. v. Prithvi Information Solutions Ltd. (Sup. Ct.

King Cnty., Wash., Feb. 8, 2016) (Case No. 13-2-41165-2-SEA). From May 31, 2016 to June 1,

2016, the district court conducted a bench trial. On June 30, 2016, the district court entered final

civil judgment in favor of Kyko’s first claim for fraud, second claim for negligent

misrepresentation, and third claim for conversion against Madhavi; Srinivas; Lalita; PISL;

Ananya; Avani; DCGS; EPP; FOI; HLAS; IBS; Prithvi, LLC; PISI; and Inalytix in the amount of

$33,579,660.00. Civil Judgment at pp. 1-3, Kyko Global, Inc. v. Prithvi Info. Solutions, Ltd.

(W.D. Wash., June 30, 2016) (Case No. 2:13-cv-01034). The district court also entered final civil

judgment in favor of Kyko’s fourth claim for civil RICO against Madhavi; Srinivas; Lalita; PISL;

20

Ananya; Avani; DCGS; EPP; FOI; HLAS; IBS; L3C; Prithvi, LLC; PISI; and Inalytix for treble

damages in the amount of $100,738,980.00. Jd. at p. 4. The allegations as to the fraud factoring

scheme litigated in the consolidated Washington federal district court case and related judgments

garnished in the King County Superior Court case are unrelated to the racketeering allegations

here. Pl.’s Supp. Br. in Opp. to SSG Def.’s Mot. to Dismiss Ex. I at p. 9, { 20; Pl.’s RICO Case

Statement at pp. 4, 7 (“No civil judgments have been entered regarding Defendants’ conduct at

issue in this case.”).

4. The Civil Case in Hong Kong

On February 16, 2017, the United States District Court for the Western District of

Washington issued a Letter of Request (“LOR”) to the Hong Kong Special Administrative Region.

The LOR described the litigation in Washington State and noted that Kyko was appointed as

collection agent for PSI, thereby entitling it to obtain funds to satisfy the judgment in the

consolidated Washington federal district court case. The LOR requested that the High Court of

the Hong Kong Special Administrative Region compel Maheshwari, Vourloumis, and Him to

appear as witnesses in their personal capacities in Hong Kong to provide deposition testimony

regarding the receivables of SSG Capital Partners and VTC. Request for Judicial Assistance to

the High Court of the Hong Kong Special Administrative Region, Court of First Instance at pp. 1-

10, Kyko Global, Inc. v. Prithvi Info. Solutions, Ltd. (W.D. Wash., Feb. 16, 2017) (Case No. 2:13-

cv-01034). On May 10, 2017, Kyko filed an originating summons as applicants in the High Court

of the Hong Kong Special Administrative Region’s Court of First Instance. On January 30, 2018,

the Western District of Washington issued a renewed LOR. Request for Judicial Assistance to the

High Court of the Hong Kong Special Administrative Region, Court of First Instance at pp. 1-10,

21

Kyko Global, Inc. v. Prithvi Info. Solutions, Ltd. (W.D. Wash., Jan. 30, 2018) (Case No. 2:13-cv-

01034).

On July 24, 2018, Master Reuden Lai Tat-Cheung issued an ex parte examination order

requiring Maheshwari, Vourloumis, and Him to give oral testimony in response to the LORs. On

October 31, 2018, respondents Maheshwari, Vourloumis, and Him applied for the examination

order to be set aside. They also applied for the originating summons to be struck, arguing that the

High Court of the Hong Kong Special Administrative Region did not have jurisdiction, that the

Western District of Washington did not have jurisdiction, that the order contravened the Protection

of Trading Interests Ordinance of 1980, Cap. 471, §§ 6, 8 (H.K.), that the order was an abuse of

process, and that there was.a material non-disclosure in Kyko’s application. Miscellaneous

Proceedings No 1082 of 2017, [2019] HKCFI 1-16. On July 16, 2019, Madam Recorder Yvonne

Cheng SC granted respondents request, struck the originating summons, and set the examination

order aside. Jd. at 90.

B. Criminal Litigation in Washington State

On December 13, 2017, a grand jury in the Western District of Washington issued a twenty-

one-count indictment against Madhavi, Satish, Srinivas, and Pandyar for crimes arising from the

factoring fraud scheme. PI.’s Compl. at p. 2, { 10; Indictment at p. 1, United States v. Vuppalapati

(W.D. Wash. Dec. 13, 2017) (Case No. 2:17-cr-00317).!° They were specifically indicted for wire

fraud, willfully failing to pay over employment taxes, and a money laundering conspiracy.

Indictment at pp. 4-15, 19-58, United States v. Vuppalapati (W.D. Wash. Dec. 13, 2017) (Case

'0 Another indicted defendant not referenced in this case whatsoever was Gyry Orasad Rai

Oabdtar. Indictment at p. 2, 1-5, United States v. Vuppalapati (W.D. Wash. Dec. 13, 2017)

(Case No. 2:17-cr-00317).

22

No. 2:17-cr-00317). On February 19, 2019, the district court accepted Pandyar’s guilty plea as to

counts fifteen and twenty-one of the indictment. Acceptance of Plea of Guilty, Adjudication of

Guilt and Notice of Sentencing at p. 1, United States v. Vuppalapati (W.D. Wash. Feb. 19, 2019)

(Case No. 2:17-cr-00317). To the best of the Court’s knowledge, none of the other defendants are

in custody. It is unclear whether the criminal case in the Western District of Washington is relevant

to civil allegations asserted in this case.'!

C. Litigation in this Forum

On September 26, 2018, Plaintiffs filed their ten-count Complaint and Jury Demand in this

Court. PI.’s Compl. at 1. They claimed breach of fiduciary duty, aiding and abetting breach of

fiduciary duty, concert of action, conversion, conspiracy, and racketeering against all Defendants.

Pls Compl. at pp. 15—29, | 148-288. They claimed breach of contract, promissory estoppel,

and unjust enrichment against SSG Capital Partners, SSG Hong Kong, and VTC. Pl.’s Compl. at

pp. 29-32, 9 289-318. Finally, they claimed breach of contract against PISL. Pl.’s Compl. at

pp. 32, 4 318-23. For the purpose of jurisdiction, Plaintiffs alleged that PISL, VTC, SSG Capital

Partners, SSG Hong Kong, PASL, Jayaraman, Maheshwari, Him, Noor, Goel, and Vourloumis

formed a criminal conspiracy involving fraudulent activities that took place in Pittsburgh. PIl.’s

Compl. at pp. 4-9, {J 42-43, 51, 54-55, 59-60, 64-65, 69-70, 73-74, 77-78, 81-82, 85-86, 89-—

90. In the alternative that there was no criminal conspiracy, Plaintiffs alleged that PISL, VTC,

SSG Capital Partners, SSG Hong Kong, PASL, Jayaraman, Maheshwari, Him, Goel, Noor, and

Vourloumis nevertheless engaged in fraudulent loan transactions putting them within the

jurisdiction of this Court. Pl.’s Compl. at pp. 49, 4] 44, 48-49, 53, 56-58, 61-63, 66-68, 71-72,

' Plaintiffs’ RICO Case Statement filed on September 27, 2018 states that there have been no

criminal convictions for violations of any predicate act to the RICO statute. Pl.’s RICO Case

Statement at p. 3.

23

75—76, 79-80, 83-84, 87-88, 91-93. Plaintiffs asserted that this Court has personal jurisdiction

and subject matter jurisdiction over their claims. Pl.’s Compl. at p. 9, {J 94-95.

On January 15, 2019, SSG Defendants filed a motion to dismiss. SSG Def.’s Mot. to

Dismiss at p. 1. On February 28, 2019, Plaintiffs filed their response. Plaintiffs’ Brief in

Opposition to SSG Defendants’ Motion to Dismiss Pursuant to Federal Rules of Civil Procedure

12(b)(1), 12(b)(2), and 12(b)(6) (ECF No. 39) (“PI.’s Br. in Opp. to SSG Def.’s Mot. to Dismiss”)

at p. 1. On March 12, 2019, Plaintiffs filed their reply. SSG Defendants’ Reply in Support of

Motion to Dismiss Pursuant to Federal Rules of Civil Procedure 12(b)(1), 12(b)(2), and 12(b)(6)

(ECF No. 43) (SSG Def.’s Reply to Pl.’s Opp. to SSG Def.’s Mot. to Dismiss”) at p. 1.

On November 11, 2019, Jayaraman filed a motion to dismiss. Jayaraman’s Mot. to Dismiss

at p. 1. On December 16, 2019, Plaintiffs filed their response. Plaintiffs’ Brief in Opposition to

Defendant Anandhan Jayaraman’s Motion to Dismiss Pursuant to Federal Rules of Civil Procedure

12(b)(1), 12(b)(2), and 12(b)(6) CECF No. 110) (“PI.’s Br. in Opp. to Jayaraman’s Mot. to

Dismiss”) at p. 1. Jayaraman filed his reply on December 23, 2019. Reply Brief in Support of

Motion to Dismiss by Anandhan Jayaraman (ECF No. 112) (“Jayaraman’s Reply”) at p. 1. On

December 29, 2019, Plaintiffs filed a motion to strike Jayaraman’s reply. Pl.’s Mot. to Strike

Jayaraman’s Reply at p. 1. Jayaraman’s response was filed on January 12, 2020. Response in

Opposition to Plaintiffs [sic] Motion to Strike Jayaraman Reply Brief in Support of Motion to

Dismiss (ECF No. 118) (“Jayaraman’s Br. in Opp. to PI.’s Mot. to Strike Jayaraman’s Reply”) at

p. 1. On January 15, 2020, Jayaraman filed a motion to withdraw admissions. Jayaraman’s Mot.

to Withdraw Admissions at p. 1. Plaintiffs filed a response on January 29, 2020. Plaintiffs’

Response to Defendant Anandhan Jayaraman’s Motion to Withdraw Admissions (ECF No. 120)

(“PL.’s Br. in Opp. to Jayaraman’s Mot. to Withdraw Admissions”) at p. 1.

24

In December 2019, the parties supplemented their filings and concluded jurisdictional

discovery. SSG Def.’s Supp. Br. in Supp. of Pl.’s Mot. to Dismiss at p. 1; Plaintiffs’ Supplemental

Brief in Supposition to SSG Defendants’ Motion to Dismiss Pursuant to Fed. R. Civ. P. 12(b)(2)

(ECF No. 109) (“PI.’s Supp. Br. in Opp. to SSG Def.’s Mot. to Dismiss”) at p. 1; Order at pp. i-

2, Kyko Global, Inc. v. Prithvi Info. Solutions Ltd. (W.D. Pa. Oct. 22, 2019) (Case No. 2:18-cv- □

1290-WSS). The issues presented by all of the outstanding motions are now ripe for determination.

STANDARD OF REVIEW

There are three relevant standards of review at issue in Defendants’ motions to dismiss:

Federal Rule of Civil Procedure (“Rule”) 12, subsections (b)(1), (b)(2), and (b)(6).

I. Federal Rule 12(b)(1)

Under Rule 12(b)(1), a court must grant a motion to dismiss if there is a lack of subject

matter jurisdiction. FED. R. CIv. P. 12(6)(1). A plaintiff bears the burden of persuasion that federal

jurisdiction is present. Saint Vincent Health Ctr. v. Shalala, 937 F. Supp. 496, 501 (W.D. Pa.

1995) (citing Kehr Packages, Inc. v. Fidelcor, Inc., 926 F.2d 1406, 1409 (Gd Cir. 1991)). The

threshold to survive a motion to dismiss under Rule 12(b)(1) is lower than under Rule 12(b)(6).

Lunderstadt v. Colafella, 886 F.2d 66, 70 (3d Cir. 1989). This is because dismissal for lack of

jurisdiction cannot be predicated on the mere probability that a plaintiff's legal theories are false;

a court will only dismiss for a lack of jurisdiction if a plaintiff's legal theories 1) are solely

proffered to obtain federal jurisdiction but otherwise are immaterial, or 2) are “insubstantial on

their face.” Growth Horizons, Inc. v. Del. Cnty., Pa., 983 F.2d 1277, 1280 (3d Cir. 1993) (quoting

Bell v. Hood, 327 U.S. 678, 773, 776 (1946)).

25

IL. Federal Rule 12(b)(2)

Rule 12(b)(2) requires a court to dismiss a case when a court lacks personal jurisdiction

over a defendant. FED. R. CIv. P. 12(b)(2). A court must analyze jurisdictional contacts on a

claim-by-claim basis. Miller Yacht Sales, Inc. v. Smith, 384 F.3d 93, 104 (3d Cir. 2004). A

defendant bears the initial burden of raising personal jurisdiction as a defense. See FED. R. CIv. P.

12(h)(1). When a defendant raises that defense, the burden shifts to a plaintiff to establish personal

jurisdiction. O’Connor v. Sandy Lane Hotel Co., Ltd., 496 F.3d 312, 316 (d Cir. 2007). If there

is no evidentiary hearing, a plaintiff must make a prima facie case by furnishing facts that establish

with reasonable particularity that personal jurisdiction exists. Provident Nat’]l Bank v. Cal. Fed.

Sav. & Loan Ass’n, 819 F.2d 434, 437 Gd Cir. 1987) (citing Gehling v. St. George’s Sch. of Med.,

Ltd., 773 F.2d 539, 542 (Gd Cir. 1985)). If a court holds an evidentiary hearing, the standard of

proof elevates to a preponderance of the evidence standard. LaRose v. Sponco Mfg., Inc., 712 F.

Supp. 455, 458-59 (D.N.J. 1989) (citing Data Dise, Inc. v. Sys. Tech. Assocs., Inc., 557 F.2d 1280,

1285 (9th Cir. 1977)); Hufnagel v. Ciamacco, 281 F.R.D. 238, 244 (W.D. Pa. 2012) (citing cases).

If a plaintiff meets his burden, then the burden shifts back to a defendant to present a compelling

case that personal jurisdiction is unreasonable. Carteret Sav. Bank, FA v. Shushan, 954 F.2d 141,

142 & n.1 (Gd Cir. 1992) (citing Burger King Corp. v. Rudzewicz, 471 U.S. 462, 477 (1985)).

A plaintiff's case cannot merely rely on the pleadings but must be supported by sworn

affidavits or other competent evidence. Time Share Vacation Club y. Atl. Resorts, Ltd., 735 F.2d

61, 66 &n.9 Bd Cir. 1984). All allegations made by a plaintiff are accepted as true and all disputed

facts are construed in a plaintiff’s favor. Carteret, 954 F.2d at 142 & n.1. To that end, any

conflicts between the evidence submitted by a plaintiff and a defendant are construed in a

plaintiff's favor. In re Enter. Rent-A-Car Wage & Hour Empl.’t Practices Litig., 735 F. Supp. 2d

26

277, 307 (W.D. Pa. 2010). If a plaintiff initially fails to meet his burden but makes factual

allegations suggesting that the requisite contacts exist, a court can order jurisdictional discovery

to ameliorate the jurisdictional inquiry. Toys “R” Us, Inc. v. Step Two, S.A., 318 F.3d 446, 456

(3d Cir. 2003).

Il. Federal Rule 12(b)(6)

A motion to dismiss filed pursuant to Rule 12(b)(6) tests the legal sufficiency of the

complaint. Kost v. Kozakiewicz, | F.3d 176, 183 Gd Cir. 1993). A plaintiff must allege sufficient

facts that, if accepted as true, state a claim for relief that is plausible on its face. See Bell Atl. Corp.

v. Twombly, 550 U.S. 544, 555 (2007); see also Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). A

court must accept all well-pleaded factual allegations as true and view them in the light most

favorable to a plaintiff. See Fowler v. UPMC Shadyside, 578 F.3d 203, 210 (3d Cir. 2009); see

also DiCarlo vy. St. Marcy Hosp., 530 F.3d 255, 262-63 (3d Cir. 2008). Although this Court must

accept the allegations in the Complaint as true, it is “not compelled to accept unsupported

conclusions and unwarranted inferences, or a legal conclusion couched as a factual allegation.”

Baraka v. McGreevey, 481 F.3d 187, 195 (3d Cir. 2007) (citations omitted).

The “plausibility” standard required for a complaint to survive a motion to dismiss is not

akin to a “probability” requirement, but asks for more than sheer “possibility.” Iqbal, 556 U.S. at

678 (citing Twombly, 550 U.S. at 556). In other words, a complaint’s factual allegations must be

enough to raise a right to relief above the speculative level, on the assumption that all the

allegations are true even if doubtful in fact. Twombly, 550 U.S. at 555. Facial plausibility is

present when a plaintiff pleads factual content that allows the court to draw the reasonable

inference that a defendant is liable for the misconduct alleged. Iqbal, 556 U.S. at 678. Even if the

complaint’s well-pleaded facts give rise to a plausible inference, that inference alone will not

27

entitle a plaintiff to relief. Jd. at 682. A complaint must support the inference with facts to

plausibly justify that inferential leap. Id.

Generally, a court may not consider extraneous documents when reviewing a motion to

dismiss. In re Burlington Coat Factory Sec. Litig., 114 F.3d 1410, 1426 Gd Cir. 1997). If matters

outside the pleadings are presented to, and not excluded by, the court, a motion to dismiss must

be converted to a motion for summary judgment. See FED. R. CIv. P. 12(d). When reviewing the

sufficiency of a complaint, however, a court may consider attachments to it without converting the

motion into one for summary judgment as long as they are integral to the allegations in the

complaint and are indisputably authentic. See In re Burlington, 114 F.3d at 1426 (holding that a

court may consider a “document integral to or explicitly relied upon in the complaint.” (citations

omitted)); ALA, Inc. v. CCAIR, Inc., 29 F.3d 855, 859 (3d Cir. 1994) (same); Fallon v. Mercy

Catholic Med. Ctr. of Se. Penn., 877 F.3d 487, 493 (3d Cir. 2017) (same); FED. R. Civ. P. 10(c)

(“A copy of a written instrument that is an exhibit to a pleading is a part of the pleading for all

purposes.”); see also Pension Ben. Guar. Corp. v. White Consol. Indus., Inc., 998 F.2d 1192, 1196

(3d Cir. 1993) (holding that a court may consider an “undisputedly authentic document that a

defendant attaches as an exhibit to a motion to dismiss if the plaintiff's claims are based on the

document.”’).

ANALYSIS

Pending here are three discovery motions and two motions to dismiss. Jayaraman moves

to withdraw admissions made relating to issues of personal jurisdiction. SSG Defendants move to

strike Plaintiffs’ jurisdictional discovery. Plaintiffs move to strike Jayaraman’s reply and

jurisdictional discovery submitted in the form of affidavits in support of his motion to dismiss.

More substantively, the parties dispute subject matter jurisdiction under Rule 12(b)(1), personal

28

jurisdiction under Rule 12(b)(2), venue under Rule 12(b)(3), and the sufficiency of the allegations

under Rule 12(b)(6). For the reasons given below, the Court will deny SSG Defendants’ motion

to strike Plaintiffs’ jurisdictional discovery. The Court will grant Plaintiffs’ motion to strike

Jayaraman’s reply as to jurisdictional discovery in support of his motion to dismiss. It will deny

Jayaraman’s motion to withdraw admissions. The Court will decline to strike SSG Defendants’

and Jayaraman’s reply briefs as to arguments addressing forum non conveniens. Finally, the Court

will deny both SSG Defendants’ and Jayaraman’s motions to dismiss for lack of subject matter

jurisdiction, personal jurisdiction, forum non conveniens, and failure to state a claim.

I. Motions Raising Discovery-Related Issues

The Court may order jurisdictional discovery to assist its resolution of motions to dismiss.

Toys “R” Us, Inc., 318 F.3d at 456. The Court having done so here, SSG Defendants now dispute

the propriety of two affidavits attached to Plaintiffs’ supplemental brief in opposition to SSG

Defendants’ motion to dismiss: Exhibit F and Exhibit G. Amorose Decl. at p. 1-4; Pandyar Decl.

at p. 1. Exhibit F is the Amorose Declaration. Amorose Decl. at p. 1. Exhibit G is the Pandyar

Declaration. Pandyar Decl. at 1. Plaintiffs, on the other hand, dispute the propriety of the affidavits

attached to Jayaraman’s reply brief in support of his motion to dismiss. Because these discovery

issues bear on the issues of subject matter jurisdiction and personal jurisdiction, the Court will

consider them first.

A, SSG Defendants’ Objections to Plaintiffs’ Supplemental Discovery

SSG Defendants raise four objections to Exhibits F and G to Plaintiffs’ supplemental brief:

1) they were filed after the Court-ordered deadline, 2) the Amorose Declaration is not based on

personal knowledge, 3) the Pandyar Declaration is inconsistent with Plaintiffs’ Complaint, and 4)

29

the Pandyar Declaration makes improper legal arguments. SSG Def.’s Mot. to Strike Aff. at pp.

The Court will address each objection in turn.

1. Timeliness

As to the first objection, the Court holds that the declarations were timely submitted. The

Court’s order of October 22, 2019 stated that “jurisdictional discovery shall be completed on or

before 12/2/19 and that jurisdictional supplemental briefs shall be filed on or before 12/16/19.”

Order at p. 2, Kyko Global, Inc. v. Prithvi Info. Solutions Ltd. (W.D. Pa. Oct. 22, 2019) (Case No.

2:18-cv-1290-WSS). Plaintiffs’ objection is misguided. The jurisdictional discovery deadline is

the last date when discovery between the parties can take place, not when materials can be

submitted to the Court. Moreover, declarations in support of a filing are not discovery. Indeed,

declarations are routinely submitted in support of motions and other applications. That is what

happened here. There is no merit to the contention that the declarations at issue were untimely.

2. Personal Knowledge

As to the second objection, the Court holds that the Amorose Declaration is based on

personal knowledge. SSG Defendants challenge Paragraph 12, which states that “to the extent

that these loans are properly due and owing, they would have been created by SSG Capital and

Value Team Corporation contacting PSI in Pittsburgh to negotiate and finalize the loans.”

Amorose Decl. at p. 3, § 12. According to SSG Defendants, the conditional phraseology of this

quote automatically renders it speculative and conjectural. SSG Def.’s Mot. to Strike Aff. at p. 2,

qq 3-4. The Court disagrees. A condition is not necessarily a conjecture. Taking the language

in the context of Plaintiffs’ alternative breach of contract and quasi-contract claims, the Court

holds that the declaration is within Amorose’s personal knowledge given his familiarity with PSI

operations.

30

3. Inconsistency with the Complaint

As to the third objection, the Court holds that the Pandyar Declaration is not materially

inconsistent with the Complaint. Paragraph 98 of the Complaint states that “[iJn February, 2007,

PISL issued a Bond Offering Circular for $50,000,000 USD Zero Coupon Convertible Bonds due

February 2012 that were convertible to shares of PISL (“Bonds”).” PI.’s Compl. at p. 10, 98.

Paragraph 10 of the Pandyar Declaration states:

On May 27, 2011, I informed Mr. Goel that the $2,500,000 wire

transfer did not go through because it was put under investigation at

PSI’s PNC Bank. However, while the $2,500,000 wire transfer

remained under investigation, on May 27, 2011, J initiated a

$1,000,000 wire transfer of PSI’s Bonds Funds from PNC Bank to

Hang Seng Bank. As before, I provided Mr. Goel with an attachment

known as a ‘Customer Full Detail Wire Activity Report’ which

states that the wire transfer was initiated from PSI’s PNC Bank and

sent to Prithvi Asia.

Pandyar Decl. at p. 3, 10 (emphasis added). SSG Defendants assert that there is an inconsistency

between the Complaint and the Pandyar Declaration about whether PISL or PSI issued the bonds,

therefore, the declaration should be struck. SSG Def.’s Mot. to Strike Aff. at p. 3, J] 5-6. This

objection is baseless.

The alleged tension between Paragraph 98 of the Complaint and Paragraph 10 of the

Pandyar Declaration is resolved by Paragraph 101 of the Complaint—“Consistent with the Bond

Offer Circular, PISL and PSI entered into an agreement wherein the Bonds were issued for the

benefit of PSI and the Bonds funds were to be used solely by PSI to execute business operations

in the United States.” Pl.’s Compl. at p. 10, 101. PISL issued bond funds for PSI to conduct

business in the United States, therefore, the bond funds can be fairly characterized as “belonging

to PSI.” There is no inconsistency between the Complaint and the Pandyar Declaration.

31

4. Improper Legal Argument

As to the fourth objection, the Court holds that the Pandyar Declaration does not make

improper legal argument about documents in the record. Paragraph 7 of the Pandyar Declaration

States,

As reflected on SSG00007-SSG00008, Mr. Goel requested PSI to

wire $2,500,000 of Bonds Funds from its PNC Pittsburgh Bank to

Prithvi Solutions Asia Limited’s (“Prithvi Asia”) Hang Seng Bank

located in Hong Kong. On May 25, 2011, I attached a confirmation

of this wire transfer. The attachment referenced in my email is

known as a ‘Customer Full Detail Wire Activity Report’ which

states that the wire transfer was initiated from PSI’s PNC Bank and

sent to Prithvi Asia’s Hang Seng Bank.

Pandyar Decl. at p. 2, 7. SSG Defendants characterize Paragraph 7 as improper legal argument

that should be struck. Def.’s Mot. to Strike Aff. at pp. 3-4, 7-9.. This argument is not

persuasive. Paragraph 7 states that two documents evidence Goel’s request for a wire transfer of

$2,500,000.00 in bond funds from PSI’s Pittsburgh bank account to PSAL’s Hong Kong bank

account. This is a statement of fact, not a conclusion of law. Nothing about this statement can be

fairly characterized as misleading. Exhibit A to the Pandyar Declaration contains an email

signifying that Madhavi’s husband, Satish, instructed Pandyar to confirm the wire transfer for

Goel. Pandyar Decl. Ex. A at p. 2. Although Exhibit A does not in-and-of-itself corroborate the

notion that Goel requested a wire transfer from PSI, Plaintiffs point to deposition evidence, that,

when cross-referenced with Paragraph 7, supports Pandyar’s narrative. Plaintiffs’ Response to

SSG Defendants’ Motion to Strike Affidavits (ECF No. 117) (‘PL.’s Response to SSG Def.’s Mot.

to Strike’) at p. 9.

For all of these reasons, SSG Defendants’ motion to strike the affidavits submitted by

Plaintiffs will be denied. The Court’s personal jurisdiction analysis below will consider and

32

incorporate all jurisdictional discovery submitted by Plaintiffs thus far, including the Amorose and

Pandyar declarations.

B. Jayaraman’s Deemed Admissions

Plaintiffs served requests for admissions upon Jayaraman, specifically seeking admissions

to facts directly pertinent to Jayaraman’s contacts with this forum. Jayaraman did not respond to

the requests within the timeframe required by Rule 36. Only after the Court issued an entry of

default and default judgment against him did Jayaraman retain counsel. Jayaraman’s counsel

entered his appearance on November 5, 2019. Jayaraman filed a motion to dismiss on November

11, 2019 that challenged the Court’s exercise of personal jurisdiction and responded to Plaintiffs’

requests for admissions. The facts that Plaintiffs sought in their requests for admissions were

deemed admitted by the Court at this point in time, however, as Plaintiffs point out in their

opposition brief. Jayaraman’s reply filed on December 23, 2019 attached two affidavits

contradicting the deemed admissions regarding jurisdictional facts. On January 15, 2020—over

two months after Jayaraman’s counsel entered his appearance in this case and weeks after the

briefing deadlines on the motions to dismiss closed—Jayaraman filed a motion to withdraw

admissions.

Rule 36(a) authorizes a party to serve on an opponent a request for admissions. FED. R.

Civ. P. 36(a). A matter is deemed admitted unless it is denied within thirty days of being served.

R. Civ. P. 36(a)(3). Rule 36(b) provides that a matter is admitted and conclusively established

unless the court permits the admission to be withdrawn. FED. R. Civ. P. 36(b). A court can permit

withdrawal of an admission if 1) it promotes the presentation of the merits of the action, and 2) is

not unduly prejudicial. FED. R. Civ. P. 36(b). A party who made an admission has the burden to

show that withdrawal promotes presentation of the merits, while a party opposing a motion to

33

withdraw has the burden to show prejudice. Coca-Cola Bottling Co. of Shreveport, Inc. v. Coca-

Cola Co., 123 F.R.D. 97, 102 (D. Del. 1988).

A court’s discretion to grant or deny a motion to withdraw admissions is very broad.

Kleckner v. Glover Trucking Corp., 103 F.R.D. 553, 557 (M.D. Pa. 1984) (“While the Rule

establishes two prerequisites to permitting withdrawal of an admission, it says nothing about

disallowing withdrawal of an admission. “Because the language of the Rule is permissive, the

Court is not required to make an exception to Rule 36 even if both the merits and prejudice issues

cut in favor of the party seeking exception to the Rule.’” (quoting Donovan v. Carls Drug Co.,

Inc., 703 F.2d 650, 652 (2d Cir. 1983), rev’d on other grounds by McLaughlin v. Richland Shoe

Co., 486 U.S. 128 (1988))). Interest in substantial justice cannot counteract the restrictiveness of

the rule. See Brook Village N. Assocs. v. Gen. Elec. Co., 686 F.2d 66, 72—73 (1st Cir. 1982).

Plaintiffs argue that Jayaraman’s motion to withdraw his admission should be denied under

Rule 36(b) and, on a related note, that the affidavits attached to his reply that are factually

irreconcilable with the deemed admissions be struck. Pl.’s Mot. to Strike Jayaraman’s Reply at p.

1; Pl.’s Br. in Opp. to Jayaraman’s Mot. to Withdraw Admissions at p. 1. The Court will address

each of Rule 36(b)’s prongs in turn.

1. Presentation of the Merits

Jayaraman contends in his motion that permitting withdrawal of his deemed admissions

will promote the presentation of the merits because the record demonstrates that the admitted facts

are contrary to the actual facts. See Jayaraman’s Mot. to Withdraw Admissions at p. 5, { 6 (citing

Fed. Dep. Ins. Corp. v. Prusia, 18 F.3d 637 (8th Cir. 1994)). That contention is sufficient. The

Court holds that Jayaraman meets his burden on this prong of the Rule 36(b) analysis.

34

2. Prejudice

Plaintiffs argue that the affidavits should be struck because allowing Jayaraman’s

admissions to be withdrawn would lead to severe prejudice. Pl.’s Mot. to Strike Jayaraman’s

Reply at p. 3, § 11; Pl.’s Br. in Opp. to Jayaraman’s Mot. to Withdraw Admissions at pp. 7-10.

Prejudice “relates to the difficulty a party may face in proving its case, e.g., caused by the

unavailability of key witnesses, because of the sudden need to obtain evidence with respect to the

questions previously answered by the admissions.” Brook Village N. Assocs., 686 F.2d at 70. The

Court holds that Plaintiffs have met their burden to show prejudice by demonstrating that they

repeatedly relied upon Jayaraman’s admissions up until Defendants’ motions to dismiss were filed.

See PI.’s Br. in Opp. to Jayaraman’s Mot. to Withdraw Admission at p. 9. Jayaraman’s admissions

affected their discovery strategy. Indeed, it was the reason why they opted to depose Cairns, Goel,

and Maheshwari rather than Jayaraman—a critical tactical choice that cost time, money, and

opportunity.” See Pl.’s Br. in Opp. to Jayaraman’s Mot. to Withdraw Admissions at pp. 7-8.

Jayaraman has failed to show good cause for why he did not timely respond to Plaintiffs’ request

for admissions in the first place. See Gwynn v. City of Phila., 719 F.3d 295, 298 (3d Cir. 2013)

(“Courts may consider other factors as well, such as whether the moving party can show good

cause for the delay, see Conlon v. United States, 474 F.3d 616, 625 (9th Cir. 2007), but they are

not required to do so, see FED. R. CIv. P. 36(b).”). Jayaraman was served with Plaintiffs’ requests

Specifically, Plaintiffs argue that in conducting their limited jurisdictional discovery, they used

their three allotted depositions to focus on jurisdiction over SSG Defendants. They state that they

did not notice a deposition of Jayaraman because facts underlying personal jurisdiction were

established through the deemed admissions. Further, they credibly argue that Jayaraman’s counsel

led them to believe that he would file an answer, rather than a motion to dismiss. They believed

that Jayaraman acknowledged that he was bound by his admissions and that it was unnecessary to

focus on him in conducting jurisdictional discovery.

35

for admissions in September 2019, his counsel entered his appearance on November 5, 2019, and

his motion to dismiss raising jurisdictional issues was filed on November 11, 2019. Despite the

fact that his admissions loomed large over the arguments regarding dismissal, Jayaraman did not

actually move to withdraw them until January 15, 2020.

The Court is persuaded that Plaintiffs relied on Jayaraman’s admissions over the past three

months and that they would be prejudiced if he were allowed to withdraw them. See Pl.’s Br. in

Opp. to Jayaraman’s Mot. to Withdraw Admissions at pp. 7-10. Additionally, Jayaraman failed

to show good cause for his delay. Plaintiffs’ met their burden to show prejudice under the second

prong of Rule 36(b). The Court will deny Jayaraman’s motion to withdraw admissions and grant

Plaintiffs’ motion to strike the contradictory affidavits attached to Jayaraman’s reply brief. □□

I. Subject Matter Jurisdiction

Federal Rule 12(b)(1) allows a federal court to dismiss a case for lack of subject matter

jurisdiction. The parties dispute whether the Court can exercise subject matter jurisdiction here.

Plaintiffs plead federal question jurisdiction over their claim under Section 1962(c) of the

Racketeer Influenced and Corrupt Organizations Act of 1974, Pub. L. 91-452, 84 Stat. 922-3

(codified as amended at 18 U.S.C. §§ 1961-68). A civil RICO claim requires at least two predicate

offenses committed within ten years of each other. 18 U.S.C. § 1961(5). Plaintiffs predicate their

RICO claim on violations of three statutes: the National Stolen Property Act (“NSP”) of 1934,

Pub. L. 73-246, 48 Stat. 794 (codified as amended at 18 U.S.C. §§ 2311 et seq.), the International

'3 The practical effect of the Court’s denial of Jayaraman’s motion to withdraw admissions is that

Jayaraman is deemed to have admitted facts that will submit him to the personal jurisdiction of

this Court. This result is not unduly harsh. Indeed, it is well established that even summary

judgment can be predicated on deemed admissions under Rule 36. At any rate, even if facts

pertaining to personal jurisdiction were not deemed admitted, there are additional grounds upon

which the Court can exercise personal jurisdiction over Jayaraman that will be discussed below.

See infra Part UI.

36

Travel Act (“ITA”) of 1961, Pub. L. 87-63, 75 Stat. 129-2 (codified as amended at 18 U.S.C. §

1952), and the Money Laundering Control Act (““MLCA”) of 1986, Pub. L. 99-570, 100 Stat. 3207

(codified as amended at 18 U.S.C. §§ 1956-57). Pl.’s Compl. at pp. 24-29, J 231-88." Plaintiffs

also plead diversity jurisdiction and supplemental jurisdiction in the alternative over their nine

state law claims.

Subject matter jurisdiction can be challenged on facial or factual grounds. A facial

challenge contends that a plaintiff failed to properly plead subject matter jurisdiction. A factual

challenge, on the other hand, attacks subject matter jurisdiction based on facts outside the

pleadings. Whereas facial challenges presume the truthfulness of the allegations in a plaintiff's

complaint, factual challenges do not. Brock v. Thomas, 782 F. Supp. 2d 133, 138 (E.D. Pa. 2011)

(citing cases). SSG Defendants and Jayaraman assert facial challenges to the Court’s subject

matter jurisdiction over this matter under Rule 12(b)(1), therefore, the Court will presume the

truthfulness of the allegations in the Complaint. For the reasons set forth below, SSG Defendants’

and Jayaraman’s motions to dismiss for a lack of subject matter jurisdiction will be denied. The

Court holds that it can exercise diversity jurisdiction and federal question jurisdiction.!°

Plaintiffs specifically claim that SSG Defendants’ violations of NSP Sections 2314~2315, ITA

Section 1952, and MCLA Sections 1952, 1956, and 1957 constituted racketeering activities in

violation of RICO Section 1962(c)(d). Pl.’s Compl. at pp. 24-29, Jf] 244, 249-50, 256-57, 266,

268, 276-77, 280-81, 283; Pl.’s Br. in Opp. to SSG Def.’s Mot. to Dismiss at p. 5.

As Plaintiffs point out, SSG Defendants’ and Jayaraman’s arguments on subject matter

jurisdiction track each other. See Pl.’s Br. in Opp. to Jayaraman’s Mot. to Dismiss at pp. 2-3 &

n.6 (“Mr. Jayaraman’s Motion to Dismiss is a ‘me too’ filing that tracks virtually lockstep with the

SSG Defendants’ Motion to Dismiss.”). The Court’s analysis of both sets of arguments is therefore

collapsed.

37

A, Diversity Jurisdiction

Plaintiffs plead diversity jurisdiction over their claims. Pl.’s Compl. at p. 9, 7 94. SSG

Defendants and Jayaraman respond that the requirements for diversity jurisdiction are not satisfied.

SSG Def.’s Br. in Supp. of SSG Def.’s Mot. to Dismiss at p. 18; Brief in Support of Motion to

Dismiss on Behalf of Defendant Anandhan Jayaraman (ECF No. 104) (‘Jayaraman’s Br. in Supp.

of Jayaraman’s Mot. to Dismiss”) at p. 16. For the reasons set forth below, the Court holds that

the requirements for diversity jurisdiction are met.

When a citizen of a foreign state is a party, diversity jurisdiction can be based only on

Section 1332(a)(2) or Section 1332(a)(3). Marks & Sokolov, LLC v. Mireskandari, No. 2:\3-cv-

03152, 2016 WL 2771785, at **1, 2 (E.D. Pa. May 10, 2016). Complete diversity (also known as

maximum diversity) exists when no plaintiff is a citizen of the same state as any defendant, while

partial diversity (also known as minimum diversity) exists when at least one plaintiff is diverse to

every defendant. Bautista Cayman Asset Co. v. The Ferrer Grp., Inc., Civ. No. 15-2277 (GAG),

2016 WL 1642630, at **1,2 (D. P.R. Apr. 25, 2016). In Dresser Indus., Inc. v. Underwriters at

Lloyd’s of London, 106 F.3d 494, 498 (3d Cir. 1997), the United States Court of Appeals for the

Third Circuit held that Section 1332(a)(2) requires complete diversity but Section 1332(a)(3) only

requires partial diversity. Id. at 498—99.

The Court holds that it can exercise diversity jurisdiction under 28 U.S.C. § 1332(a).

Plaintiffs are seeking $35,000,000.00 along with interest, attorneys’ fees, and costs—a figure well

above the minimum amount-in-controversy requirement. See 28 U.S.C. § 1332(a); Pl’s Compl.

at p. 32. Plaintiffs KGI, KGG, and PSI are incorporated in, and citizens of, Canada, the Bahamas,

and Delaware respectively. See Pl.’s Compl. at pp. 1—2, J] 1-3. SSG Defendant PISL is a citizen

of Pennsylvania and India under 28 U.S.C. § 1332(c)(1). See Grunblatt vy. UnumProvident Corp.,

38

270 F. Supp. 2d 347, 351 (E.D.N.Y. 2003) (“However, the principal place of business prong does

not replace the citizenship of the state of incorporation; it merely adds another state of

citizenship—either of which could destroy diversity.”). None of the other Defendants are citizens

of Canada, the Bahamas, or Delaware. See Pl.’s Compl. at pp. 2-4, 4-38. There are aliens on

both sides of the controversy, therefore, Section 1332(a)(3) controls. Cf Dresser, 106 F.3d at 498

(“As the Seventh Circuit noted, when citizens of states are on both sides of the litigation and are

completely diverse, the presence of aliens on one or both sides of the controversy ‘fits section

1332(a)(3) to a t.’” (quoting Allendale Mut. Ins. Co. v. Bull Data Sys., Inc., 10 F.3d 425, 428 (7th

Cir. 1993))).

The parties are diverse under Section 1332(a)(3). The presence of aliens on both sides of

this controversy does not destroy federal jurisdiction. See id. at 499. Even if Section 1332(a)(2)

controlled, diversity jurisdiction would still survive because there is complete diversity between

the parties. The Court therefore has a proper and independent basis to review Plaintiffs’ claims

even if their RICO claim would fail and/or supplemental jurisdiction would be unavailable under

28 U.S.C. § 1367. SSG Defendants’ and Jayaraman’s motions to dismiss for a lack of subject

matter jurisdiction as to Plaintiffs’ state law claims under Rule 12(b)(1) will be denied. See FED.

R. Civ. P. 12(b)(1)."°

B. Federal Question Jurisdiction

Plaintiffs plead federal question subject matter jurisdiction through their RICO claim. PI.’s

Compl. at p. 9, 9 95. Because there is subject matter jurisdiction through diversity jurisdiction,

'6 Because the Court agrees with Plaintiffs that the requirements for diversity subject matter

jurisdiction are satisfied, Plaintiffs need not amend their Complaint to remove KGG and KGI under

Rule 15 as they suggested they might do in their brief in the alternative that the Court disagreed.

See Pl.’s Br. in Opp. to Jayaraman’s Mot. to Dismiss at pp. 17-18.

39

there is initially no independent need to determine whether this Court has federal question subject

matter jurisdiction under the RICO statute. SSG Defendants and Jayaraman contend, however,

that Plaintiffs’ RICO claim is implausible and should be dismissed under Rule 12(b)(6). □□

determining whether Plaintiffs’ RICO claims can proceed on a substantive basis under Rule

12(b)(6), the Court will also dispose of whether the RICO statute serves as an alternative or

additional basis for subject matter jurisdiction. In other words, if Plaintiffs’ RICO claim may

proceed on its merits, it will also confer federal question jurisdiction.

1. Overview of Plaintiffs’ RICO Claim

Plaintiffs allege that SSG Defendants violated Section 1962(c) of the RICO statute. “RICO

is a remedial statute which is to be liberally construed to effectuate its purposes.” United States v.

Mazzio, 501 F. Supp. 340, 342 (E.D. Pa. 1980) (citing United States v. Forsythe, 560 F.2d 1127,

1135-36 (3d Cir. 1977); and then citing United States v. Provenzano, 620 F.2d 985, 993 (3d Cir.

1980)). Section 1962(c) states that “[i]t shall be unlawful for any person employed by or associated

with any enterprise engaged in, or the activities of which affect, interstate or foreign commerce, to

conduct or participate, directly or indirectly, in the conduct of such enterprise's affairs through a

pattern of racketeering activity or collection of unlawful debt.” 18 U.S.C. § 1962(c). This

provision was specifically enacted to govern only those instances where RICO defendants

victimize an innocent or passive corporation and either drain it of its own money or use it as a

passive tool to take money from third parties. Moffatt Enter., Inc. v. Borden, Inc., 73 F. Supp. 143,

149 (W.D. Pa. 1990) (citing Pro—Tech., Inc. v. W. Co. of N. Am., 824 F.2d 1349, 1369 (3d Cir.

1987)).

A plaintiff has the burden to plead four elements when claiming a violation of Section

1962(c): 1) the existence of an enterprise affecting interstate commerce; 2) defendants were

40

employed or associated with the enterprise; 3) defendants participated, either directly or indirectly,

in the conduct or the affairs of the enterprise; and 4) through a pattern of racketeering activity that

includes at least two racketeering acts. Shearing v. E.F. Hutton Grp., Inc., 885 F.2d 1162, 1165

(3d Cir. 1989), abrog. on other grounds by Beck v. Prupis, 529 U.S. 494 (2000) (citing R.A.G.S.

Coulture, Inc. v. Hyatt, 774 F.2d 1350, 1352 (5th Cir. 1985)); Rose v. Bartle, 871 F.2d 331, 358

(3d Cir. 1989). SSG Defendants and Jayaraman contend that Plaintiffs failed to meet their burden

for the first, third, and fourth elements. Plaintiffs purportedly failed to allege 1) the existence of an

enterprise under Rule 12(b)(6), 2) the conduct of an enterprise under Rule 12(b)(6), and 3)

predicate offenses involving fraudulent activity under Rule 9(b). For the reasons set forth below,

the Court holds that Plaintiffs’ allegations for the first, third, and fourth elements of Section

1962(c) are sufficient under Rules 9(b) and 12(b)(6). Plaintiffs’ RICO claim may proceed.

2. Element 1: Existence of a RICO Enterprise Under Rule 12(b)(6)

Defendants contend that Plaintiffs failed to plead the first element of a RICO claim under

Section 1962(c}—the existence of an enterprise affecting interstate commerce. Plaintiffs respond

that they did adequately plead that SSG Defendants formed an enterprise—an association-in-fact

enterprise. SSG Def.’s Br. in Supp. of SSG Def.’s Mot. to Dismiss at pp. 20-21; Jayaraman’s Br.

in Supp. of Jayaraman’s Mot. to Dismiss at pp. 14-15. To properly plead the first element, a

plaintiff must satisfy requirements established by two Supreme Court cases: United States v.

Turkette, 452 U.S. 576, 583 (1981) and Boyle v. United States, 556 U.S. 938, 940 (2009). In

Turkette, the Supreme Court held that to prove the existence of an association-in-fact enterprise, a

plaintiff must show that 1) there is an ongoing organization that is either formal or informal; 2) the

associates of the organization function as a continuing unit (the continuity requirement); and 3)

the organization has an existence apart from the alleged pattern of racketeering activity (the

4]

distinctiveness requirement.). Turkette, 452 U.S. at 583. In Boyle, the Supreme Court expanded

on the Turkette test by requiring a plaintiff to prove the existence of an association-in-fact through

three structural features: 1) a purpose, 2) relationships among those associated with the enterprise,

and 3) longevity sufficient to permit these associates to pursue the enterprise’s purpose. Boyle,

556 US. at 940.

Although the Turkette and Boyle tests appear to overlap, neither the Supreme Court nor the

Third Circuit has articulated an updated formula that collapses them together. For the purposes of

this analysis, the Court will address them separately. For reasons set forth below, the Court holds

that Plaintiffs’ allegations for the first element of their Section 1962(c) claim are sufficient under

Rule 12(b)(6): both the Turkette and Boyle tests are satisfied.

i. The Boyle Test

First, the Court will address whether Plaintiffs properly pleaded the existence of an

association-in-fact enterprise under the Boyle test. RICO Section 1961(4) defines an “enterprise”

as “any individual, partnership, corporation, association, or other legal entity, and any union or

group of individuals associated in fact although not a legal entity.” 18 U.S.C. § 1961(4). An

association-in-fact enterprise may consist of a corporation along with non-employee individuals.

Schwartz v. Lawyers Title Ins. Co., 680 F. Supp. 2d 690, 703 (E.D. Pa. 2010) (citing Brittingham

v. Mobil Corp., 943 F.2d 297, 302 (3d Cir. 1991)). Boyle sets forth three sub-elements for proving

the existence of an association-in-fact enterprise: 1) a purpose for the enterprise, 2) relationships

among those associated with the enterprise, and 3) longevity permitting the associates to pursue

the enterprise’s purpose. Boyle, 556 U.S. at 946; see also United States v. Bergrin, 650 F.3d 257,

266 (3d Cir. 2011). Although evidence used to prove these elements may coalesce in particular

cases, proof of one does not necessarily establish another. Turkette, 452 U.S. at 583. The first

42

element does not require that every decision be made by the same group member, only that there

is some mechanism for directing the group’s affairs. United States v. Riccobene, 709 F.2d 214,

223 (3d Cir. 1983), abrog. on other grounds by Boyle, 556 U.S. at 938. A plaintiff need not prove,

however, that the group has a chain of command, name, regular meeting, dues, established

regulations, disciplinary procedures, initiation ceremonies, or communications between the

members. Boyle, 556 U.S. at 948; Schwartz v. Lawyers Title Ins. Co., 970 F. Supp. 2d 395, 404

(E.D. Pa. 2013).'7 The second element does not foreclose individuals from leaving the group or

new ones from joining the group later. Riccobene, 709 F.2d at 222. The function of coordinating

the commission of predicate offenses on an on-going basis will satisfy the third element. A

plaintiff need not show that the group has a function totally unrelated to racketeering activity. Id.

at 223-24.

Under Boyle, Plaintiffs adequately pleaded all three sub-elements for showing the existence

of an association-in-fact enterprise affecting interstate commerce. The purpose of an association-

in-fact enterprise was to steal and launder bond funds through fraudulent wire transfers and create

a sham pass-through entity: PSAL. The relationships between the individuals and entities forming

the association-in-fact enterprise is manifest in Plaintiffs’ detailed allegations about the

relationships between individual and corporate Defendants and their coordinated attempt to steal

and launder the bond funds. And the longevity of the association-in-fact enterprise is demonstrated

by SSG Defendants’ activities from 2009 until 2014, a sufficient timeframe for them to orchestrate

'7 To the extent that Riccobene’s commentary on the first sub-element for association-in-fact

enterprises required proof of a hierarchical structure, Riccobene was abrogated by the Supreme

Court’s decision in Boyle. Bergrin, 650 F.3d at 266 & n.5. No proof of a hierarchical structure is

required.

43

and execute their alleged scheme. See Pl.’s Compl. at pp. 2—3, 9-15, 21-28, Jf] 5-38, 97-145,

207-88; Pl.’s Br. in Opp. to SSG Def.’s Mot. to Dismiss at pp. 20-21.

Plaintiffs do not claim that Defendants merely conducted the normal affairs of a business

relationship, but rather that they engaged in a pattern of racketeering behavior by defrauding

Plaintiffs of bond funds in violation of several predicate criminal statutes. See Schwartz, 680 F.

Supp. 2d at 707. Defendants’ critique of Plaintiffs’ RICO claim is unpersuasive because it focuses

on Paragraphs 232-34, rather than cross-referencing those specific RICO allegations with general

allegations spread throughout the rest of the Complaint. See SSG Def.’s Br. in Supp. of SSG Def.’s

Mot. to Dismiss at p. 16; Jayaraman’s Br. in Supp. of Jayaraman’s Mot. to Dismiss at pp. 14-15.

In viewing the Complaint as a whole, Plaintiffs’ allegations satisfied the structural requirements

of the Boyle test. See FED. R. Civ. P. 12(b)(6); Schwartz, 970 F. Supp. 2d at 404; Am. Trade

Partners, L.P. y. A-1 Int’l Importing Enter., Ltd.,’757 F. Supp. 545, 549-51 (E.D. Pa. 1991).

ii. The Turkette Test

Second, the Court will address whether Plaintiffs properly pleaded the existence of an

association-in-fact enterprise under the Turkette test. While the parties do not explicitly dispute

any of the three prongs of the Turkette test, Court will address the third prong—the

distinctiveness requirement—on its own cognizance under Rule 12(b)(6), as it is a frequent point

of contention in RICO claims such as this one.

The third prong of the 7urkette test requires a plaintiff to allege that a person conducted a

pattern of racketeering through a separate and distinct enterprise. Gasoline Sales, Inc. y. Aero Oil

Co., 39 F.3d 70, 72 (3d Cir. 1994). The RICO statute defines a “person” as “any individual or

entity capable of holding a legal or beneficial interest in property....” 18 U.S.C. § 1961(3). An

“enterprise,” as noted above, is “any individual, partnership, corporation, association, or other

44

legal entity, and any union or group of individuals associated in fact although not a legal entity.”

18 U.S.C. § 1961(4). An enterprise can take many forms, for example, single-entity enterprises,

bilateral enterprises, etc. An association-in-fact enterprise may consist of a corporation along with

non-employee individuals. Schwartz, 680 F. Supp. 2d at 703 (citing Brittingham, 943 F.2d at 302).

The distinctiveness requirement limits the number of shapes an enterprise can take by

barring RICO claims that assert that a corporation and its officers engage in the same enterprise.

A plaintiff typically can only recover against defendant officers who use their corporation as an

enterprise. A corporation can only be liable if it is a distinct “person,” that is, if it engages in

racketeering activity that constitutes an enterprise that is distinct from the one formed by its

officers. See Jaguar Cars, Inc. v. Royal Oaks Motor Car Co., Inc., 46 F.3d 258, 268 (3d Cir.

1995); Brittingham, 943 F.2d at 300-03; Petro~Tech., Inc., 824 F.2d at 1359; B.F. Hirsch v.

Enright Refining Co., Inc., 751 F.2d 628, 634 (3d Cir. 1984). The upshot of this rule of law is that .

if a plaintiff seeks to hold a corporation and its officers liable under RICO Section 1962(c), it must

allege that two or more enterprises exist.

Plaintiffs plead that all SSG Defendants form one association-in-fact enterprise (singular),

and in the alternative, that they form association-in-fact enterprises (plural) through seven different

group combinations. Pl.’s Compl. at pp. 24—5, ff] 235-43. This is permissible, as a plaintiff may

“allege alternative enterprise theories in their complaint without limit.” Schwartz, 970 F. Supp. 2d

at 403 (citing United States v. Stratton, 649 F.2d 1066, 1075 (Sth Cir. 1981)). Neither the Supreme

Court nor the Third Circuit has clearly identified the circumstances where a corporation can form

a distinct enterprise. See Brittingham, 943 F.2d at 302-03 & n.3 (“It is theoretically possible for

a corporation to take a separate “active” role in RICO violations also committed by its employees.

The corporation would not be the passive victim of racketeering activity, but the active

45

perpetrator. ... We decline at this time to speculate on the precise circumstances that might give

rise to such a claim.”). The Court does not perceive, at any rate, any facially implausible single-

entity enterprises in Plaintiffs’ Complaint. In re Aetna UCR Litig., MDL No. 2020. Civ. No. 07-

3541, 2015 WL 3970168, at **1, 25 (D. N.J. June 30, 2015). The liberal notice regimes for

pleading generally and RICO claims specifically warrant a conservative approach towards

dismissal for failure to plead the distinctiveness requirement.'® The Court will permit the parties

to engage in discovery to parse whatever distinctions there may be between SSG Defendants,

Jayaraman, and the alleged enterprise(s) they collectively formed for racketing activities. The

Court may revisit the issue later. At this stage of the litigation, the Court holds that Plaintiffs’

allegations adequately pleaded the distinctiveness requirement under the Turkette test. See FED.

R. Civ. P. 12(b)(6); Portland Gen. Elec. Co. v. Westinghouse Elec. Corp., 842 F. Supp. 161, 167

(W.D. Pa. 1993).

Having satisfied both the Boyle and Turkette tests, the Court holds, in turn, that Plaintiffs’

allegations for the first element of their Section 1962(c) claim—the existence of an association-in-

fact enterprise—are sufficient under Rule 12(b)(6).

3. Element 3: Conduct of a RICO Enterprise Under Rule 12(b)(6)

Defendants contend that Plaintiffs failed to plead the third element of a RICO claim under

Section 1962(c)}—that Defendants participated, either directly or indirectly, in the conduct or the

affairs of an association-in-fact enterprise. SSG Def.’s Br. in Supp. of SSG Def.’s Mot. to Dismiss

'8 The Court by no means implies that it is always appropriate for discovery to resolve the

distinctiveness issue. See In re Ins. Brokerage Antitrust Litig., 618 F.3d 300, 370 (“3d Cir. 2010)

(“RICO cases, like antitrust cases, are ‘big’ cases and the defendant should not be put to the

expense of big-case discovery on the basis of a threadbare claim.” (quoting Limestone Dev. Corp.

v. Vill. of Lemont, 520 F.3d 797, 803 (7th Cir. 2008))). Suffice it to say that the allegations here

cross the threshold necessary for the RICO claim to go forward. Plaintiffs’ allegations are neither

threadbare nor conclusory.

46

at pp. 17-18; Jayaraman’s Br. in Supp. of Jayaraman’s Mot. to Dismiss at pp. 15-16. Plaintiffs

respond that they adequately pleaded that Defendants formed an enterprise by fraudulently

obtaining and laundering bond funds. Pl.’s Br. in Opp. to SSG Def.’s Mot. to Dismiss at pp. 22—

23. The Court agrees. Plaintiffs’ allegations for the third element of a Section 1962(c) claim are

sufficient under Rule 12(b)(6).

To adequately plead the third element of a Section 1962(c) claim, a plaintiff must satisfy

the so-called “operation or management test.” The management test simply provides that a

defendant must participate in the operation or management of the enterprise itself in order be liable.

Reves v. Ernst & Young, 507 U.S. 170, 185 (1993); In re Ins. Brokerage Antitrust Litig., 618 F.3d

at 300. Defendants’ critique of Plaintiffs’ Complaint exclusively concerns the management test.

A lack of factual allegations for how each SSG Defendant participated in operating or managing

the association-in-fact enterprise is said to doom Plaintiffs’ RICO claim. This argument is

unpersuasive. Plaintiffs’ Complaint details the contribution of each Defendant in operating or

managing an enterprise(s) as a part of a conspiracy to steal and launder bond funds. See Pl.’s

Compl. at pp. 2—3, 9-15, 21-28, J] 5—38, 97-145, 207-288; PI.’s Br. in Opp. to SSG Def.’s Mot.

to Dismiss at pp. 21-23. The Court holds that Plaintiffs allegations for the third element of their

Section 1962(c) claim—conduct in the affairs of an association-in-fact enterprise—are sufficient

under Rule 12(b)(6). See FED. R. Crv. P. 12(b)(6).

4, Element 4: Predicate Offenses “Sounding in Fraud” Under Rule 9(b)

Defendants contend that Plaintiffs failed to plead the fourth element of a RICO claim under

Section 1962(c)—specifically by failing to meet the heightened pleading standard for fraud under

Rule 9(b). SSG Def.’s Br. in Supp. of SSG Def.’s Mot. to Dismiss at pp. 13-14; Jayaraman’s Br.

in Supp. of Jayaraman’s Mot. to Dismiss at pp. 11-14. Plaintiffs respond that Rule 9(b) does not

47

apply because they never pleaded a fraud claim as a predicate offense for their RICO claim. PI.’s

Br. in Opp. to SSG Def.’s Mot. to Dismiss at pp. 22—23; Pl.’s Br. in Opp. to Jayaraman’s Mot. to

Dismiss at pp. 12-14. Though the Court agrees with Defendants that Rule 9(b) applies, the Court

nevertheless holds that Plaintiffs’ Complaint satisfies Rule 9(b)’s heightened particularity

requirement.

Rule 9(b) states that “JiJn alleging fraud or mistake, a party must state with particularity

the circumstances constituting fraud or mistake. Malice, intent, knowledge, and other conditions

of a person’s mind may be alleged generally.” FED. R. Civ. P. 9(b). The elements of a common

law fraud claim (intentional misrepresentation claim) in Pennsylvania are 1) a misrepresentation,

2) material to a transaction, 3) made falsely, 4) intending to mislead another to rely on it, 5) so

justifiable reliance resulted, and 6) reliance proximately caused injury. Santana Prods. Inc. v.

Bobrick Washroom Equip., Inc., 401 F.3d 123, 136 Gd Cir. 2005) (citing Weinberg v. Sun Co.,

Inc., 777 A.2d 442, 446 (Pa. 2001)).!? Fraud claims can serve as predicate offenses for a RICO

claim. See, e.g., 18 U.S.C. § 1341 (mail fraud); 18 U.S.C. § 1343 (wire fraud); 18 U.S.C. § 19611)

(defining wire fraud and mail fraud as forms of racketeering activity). When a RICO claim is

predicated on a fraud claim, a plaintiff must satisfy the heightened pleading standard under Rule

9(b). See, e.g., Seville Indus. Machinery Corp. v. Southmost Mach. Corp., 742. F.2d 786, 791 (3d

Cir. 1984); Ramiro Aviles v. S & P Global, Inc., 380 F. Supp. 3d 221, 256 (S.D.N.Y. 2019)

(applying Rule 9(b) to wire fraud and mail fraud claims pleaded as predicate offenses to a RICO

claim).

Though reliance is not an element of mail fraud, most courts agree that reliance must be

established when mail fraud is pleaded as a predicate act for a civil RICO claim. Allen

Neurosurgical Assocs., Inc. v. Lehigh Valley Health Network, No CIV. A. 99-4653, 2001 WL

41143, at **1, 5 (ED. Pa. Jan. 18, 2001) (citing cases).

48

Though Plaintiffs refer to “fraudulent” activities committed by Defendants nineteen times

in the Complaint, they never actually plead a statutory or common law-based fraud claim

independently or as a predicate offense to their RICO claim. See PI.’s Compl. at pp. 2, 4-8, 10,

11, 13, 27-28, 99 42, 46, 51, 54, 59, 64, 69, 73, 77, 81, 85, 89, 106, 110, 114, 137, 263, 264, 287;

Pl.’s RICO Case Statement at p. 3 (“This case does not involve fraud in connection with the sale

of securities and Plaintiffs do not assert independent predicate offenses of wire fraud and mail

fraud.”). Instead, their RICO claim hinges on violations of the NSP, the ITA, and the MCLA.

Pl.’s Compl. at pp. 24-29, J] 231-88. None of those predicate offenses necessarily trigger the

heightened pleading standard under Rule 9(b). Despite that being the case, SSG Defendants and

Jayaraman insist that Plaintiffs’ claims trigger Rule 9(b) because they “sound in fraud.” SSG Def.’s

Br. in Supp. of SSG Def.’s Mot. to Dismiss at pp. 13-14; Jayaraman’s Br. in Supp. of Jayaraman’s

Mot. to Dismiss at pp. 11-14.

Several courts in this circuit have held that claims that do not have fraud as an element, but

nevertheless “sound in fraud,” can trigger Rule 9(b)’s heightened pleading standard. Examples of

these include claims under Section 12(2) of the Securities Act of 1933, Pub. L. 73-22, 48 Stat. 74

(codified as amended at 15 U.S.C. §§ 77a et seq.) and negligent misrepresentation claims under

state common law. In re Westinghouse Sec. Litig., 90 F.3d 696, 710, 717 (3d Cir. 1996) (applying

Rule 9(b) to claims under Sections 10(b) and 12(2) of the Securities Act); Travelers Indem. Co. v.

Cephalon, Inc., 32 F. Supp. 3d 538, 550 (E.D. Pa. 2014) (applying Rule 9(b) to Connecticut

common law negligent misrepresentation claims); see also Arthur Miller et al., 5A FED. PRAC. &

Proc. § 1298 (4th ed. 2019). But see Naporano Iron & Metal Co. v. Am. Crane Corp., 79 F. Supp.

2d 494, 510 (D.N.J. 1999) (noting that negligent misrepresentation claims are not subject to Rule

9(b)).

49

The Court holds that Plaintiffs’ allegations as to violations of NSP Sections 2314-15, ITA

Section 1952, and MCLA Sections 1956-57 do indeed “sound in fraud.” See Fed. Ins. Co. □□□

Ayers, 741 F. Supp. 11179, 1185 (E.D. Pa. 1990). The only court to have directly confronted the

applicability of Rule 9(b) to claims under the NSP and the MCLA found that Rule 9(b) did not

apply:

Plaintiff uses the phrases “fraudulently and deliberately converting”

and “conspiracy to defraud plaintiff’ in paragraphs 17 and 25 of its

complaint. Plaintiff is alleging acts of theft and conversion, not acts

of fraud. Plaintiff does not establish predicates of its RICO claim by

alleging mail or wire fraud under 18 U.S.C. §§ 1341 and 1343.

Rather, plaintiff sets forth predicates of its RICO claim by alleging

interstate transportation of stolen goods under 18 U.S.C. § 2314,

laundering of monetary instruments under 18 U.S.C. § 1956, and

engaging in monetary transactions in property derived from

specified unlawful activity under 18 U.S.C. § 1957.

‘ tk Ae

Particularity pursuant to Rule 9(b) is necessary when the predicate

acts are acts of fraud, but not otherwise. See Saporito v. Combustion

Engineering Inc., 843 F.2d 666, 673 (3d Cir.1988). It is apparent

from the face of the complaint that the “fraud” referred to by

plaintiff relates to defendants’ thefts and conversion of Marcy's

property. Therefore, defendants' argument that plaintiff has failed to

plead its allegations of fraud with sufficient particularity as required

by Rule 9(b) is entirely without merit.

Id. at 1185. That decision, however, did not reference, let alone engage, the “sound in fraud”

exception at all. The Court therefore finds the reasoning underlying its categorical holding

unpersuasive, and takes the opposite view, not only as to Plaintiffs’ NSP and MCLA claims, but

as to their ITA claims as well. The basic intuition behind this finding is that fraudulent activity can

facilitate property theft, money laundering, and travel for unlawful activity. See Ferguson v.

Moeller, Case No. 2:16-cv-41, 2016 WL 1106609, at **1, 3 (W.D. Pa. Mar. 22, 2016) (“Where,

as here, Plaintiffs assert fraud-related predicate acts to support a RICO claim, the pleading must

50

meet the particularity standard set forth in FED. R. CIv. P. 9(b).” (citing Zavala v. Wal-Mart Stores,

Inc., 393 F. Supp. 2d 295, 312 (D.N.J. 2005), affd, 691 F.3d 527 Gd Cir. 2012))). The

Complaint’s replete references to fraudulent activity make it clear that this is what Plaintiffs

contend is going on here. See Pl.’s Compl. at pp. 2,4, 5, 6, 7, 8, 10, 11, 13, 27-28, 49 42, 46, 51,

54, 59, 64, 69, 73, 77, 81, 85, 89, 106, 110, 114, 137, 263, 264, 287. The Court will therefore

apply Rule 9(b) to Plaintiffs’ NSP, ITA, and MCLA claims as predicate offenses to the RICO

statute.

Rule 9(b) is not fatal to Plaintiffs’ NSP, ITA, and MCLA claims. As the Third Circuit has

repeatedly stated, courts must be sensitive to the fact that applying Rule 9(b) before discovery

“may permit sophisticated defrauders to successfully conceal the details of their fraud.”

Crafimatic Sec. Litig. v. Kraftsow, 890 F.2d 628, 645 (3d Cir. 1989) (citing Christidis v. First Pa.

Mortgage Trust, 717 F.2d 96, 99-100 (3d Cir. 1983)). An approach that exclusively focuses on

the particularity requirement is too narrow and fails to follow the general flexibility and simplicity

of the rules. Jd. (citing Christidis, 717 F.2d at 100); Alen, 2001 WL 41143, at *3 (citing Seville,

742 F.2d at 791). As one treatise explains,

Allegations of the circumstances of a fraud based on information

and belief, which are commonplace and often a necessity in many

litigation contexts, usually do not satisfy the particularity

requirement of Rule 9(b), unless accompanied by a statement of the

facts upon which the pleader's belief is founded or by allegations

that the necessary information lies within the defendant's control.

Thus, Rule 9(b)'s fraud pleading requirement should not be

understood to require absolute particularity as to matters peculiarly

within the opposing party's knowledge that the pleader is not privy

to at the time of the pleading and that can only be developed through

discovery.

MILLER, supra, at §1298. Courts must relax the rule when factual information is within a

defendant’s knowledge or control. Craftsmatic, 890 F.2d at 645 (citing cases); Livingston v. Shore

51

Slurry Seal, Inc., 98 F. Supp. 2d 594, 597 (D.N.J. 2000); Mardini v. Viking Freight, Inc., 92 F.

Supp. 2d 378 (D.N.J. 1999) (citing Rolo v. City Investing Co. Liquidating Trust, 155 F.3d 644, 658

(3d Cir. 1998); and then citing Christidis, 717 F.2d at 99). The allegations set forth in the

Complaint are not exhaustive, but the Complaint need not be exhaustive. The Complaint needs to

present a sufficiently particular set of facts, and it does. “It is ‘reasonable to presume’ that the

corporate scheme to defraud was collectively devised by the director defendants.” See Blake v.

Dierdorff, 856 F.2d 1365, 1370 (9th Cir. 1988) (citing Wool v. Tandem Computers Inc., 8181 F.2d

1433, 1440 (9th Cir. 1987); and then citing Sun Sav. And Loan Ass’n vy. Dierdorff, 825 F.2d 187,

195 (9th Cir. 1987)).

The Complaint presents a descriptive chronology of events. It includes dates, times, and

locations where each SSG Defendant allegedly contributed to a fraudulent and illicit scheme to

steal and launder bond funds. It contains precision and some measure of substantiation for the

fraudulent activity of each individual Defendant on behalf of the corporate Defendants, activity

that violated the predicate offenses to the RICO statute. See Blake, 856 F.2d at 1370; Naporano,

79 F. Supp. 2d at 511 (citing cases).

As Plaintiffs rightly point out, SSG Defendants’ and Jayaraman’s statements that Plaintiffs’

“allegations do not indicate what conduct any individual Defendant is alleged to have committed”

rely on four paragraphs cherrypicked from the Complaint—specifically Paragraphs 118, 120, 123,

and 126. Compare P\.’s Compl. at p. 12, 9{ 118, 120, 123, 126, and Pl.’s Br. in Opp. to SSG

Def.’s Mot. to Dismiss at p. 19, with SSG Def.’s Br. in Supp. of SSG Def.’s Mot. to Dismiss at p.

15, and Jayaraman’s Br. in Supp. of Jayaraman’s Mot. to Dismiss at pp. 13-14. In viewing the

Complaint as a whole under a flexible application of Rule 9(b), the Court holds that Plaintiffs’

allegations for the fourth element of their RICO claim, specifically the predicate offenses under

52

the NSP, ITA, and MCLA, are sufficient at this stage of the litigation under Rule 9(b). See FED.

R. Civ. P. 9(b); cf. Gurfein v. Sovereign Grp., 826 F. Supp. 890, 906 (E.D. Pa. 1993) (finding

significance in a plaintiff's ability to furnish documents showing fraudulent activity).”°

The Court holds that Plaintiffs have asserted a plausible civil RICO claim. As such the

motions to dismiss under Rule 12(b)(6) will be denied. Because the civil RICO claim may proceed,

the Court can exercise federal question jurisdiction (along with supplemental jurisdiction over the

state law claims) even if, as explained above, the requirements of diversity jurisdiction were not

satisfied.

WI. Personal Jurisdiction

Personal jurisdiction is a genus that contains two species: general jurisdiction and specific

jurisdiction. Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915, 919 (2011) (citing

Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 414 & nn.8-9 (1984)). General

jurisdiction arises from a defendant’s non-forum related activities, while specific jurisdiction arises

from a defendant’s forum-related activities. Hall, 466 U.S. at 414 & nn.8—9; Vetrotex Certainteed

Corp. v. Consol. Fiber Glass Prods. Co., 75 F.3d 147, 151 3d Cir. 1996) (citing N. Penn Gas Co,

v. Corning Nat. Gas. Corp., 897 F.2d 687, 690 (3d Cir. 1990), cert. denied, 498 U.S. 847 (1990)).

Plaintiffs plead personal jurisdiction through specific jurisdiction under Pennsylvania’s

long-arm statute, specific jurisdiction under the federal long-arm statute, and statutory jurisdiction

under the MCLA and RICO. SSG Defendants and Jayaraman ask the Court to dismiss this case

for lack of personal jurisdiction under Rule 12(b)(2). SSG Def.’s Mot. to Dismiss at p. 1. For the

20 SSG Defendants assert in a footnote that there are “insurmountable statute of limitations issues

with Plaintiffs’ RICO claim,” but then decline to address them fully. SSG Def.’s Br. in Supp. of

SSG Def.’s Mot. to Dismiss at p. 18. As an affirmative defense, Defendants are free to raise the

statute of limitations after answering the Complaint.

53

reasons set forth below, SSG Defendants’ and Jayaraman’s motions to dismiss for a lack of

personal jurisdiction will be denied. The Court previously held that Jayaraman’s motion to

withdraw admissions would be denied; therefore, he is bound by the deemed admissions that

conclusively establish personal jurisdiction. In the alternative that nothing was deemed admitted,

however, the Court will consider Jayaraman’s substantive arguments on personal jurisdiction.”!

A. Personal Jurisdiction Under Pennsylvania’s Long-Arm Statute

If a court can exercise diversity jurisdiction under 28 U.S.C. § 1332, it can exercise

personal jurisdiction through a state long-arm statute under Rule 4(e). Under Rule 4(e), the law

of the forum in which a federal district court sits controls the analysis of personal jurisdiction under

its long-arm statute. This Court sits in Pennsylvania, therefore, Pennsylvania law controls. The

boundaries imposed by Pennsylvania’s long-arm statute on personal jurisdiction are coextensive

with those imposed by the Fourteenth Amendment. 42 PA. C.S.A. § 5322; Vetrotex, 75 F.3d at

150; Kenneth H. Oaks, Ltd. v. Josephson, 568 A.2d 215 (Pa. Super. 1989) (citing Continuous

Forms v. Island Bus. Forms, 513 A.2d 466 (Pa. Super. 1986)). A federal court sitting in diversity

in Pennsylvania must therefore look to federal jurisprudence to determine whether a defendant is

subject to personal jurisdiction. Vetrotex, 75 F.3d at 150.

The Due Process Clause of the Fourteenth Amendment to the United States Constitution

only authorizes a court to exercise personal jurisdiction if a defendant purposefully established

minimum contacts that have a substantial connection with the forum. U.S. CONST. amend XIV;

Burger King Corp., 471 U.S. at 475 (citing cases); Int’) Shoe Co. v. State of Wash., Off. of Unemp’t

21 SSG Defendants’ and Jayaraman’s arguments on personal jurisdiction track each other. See

Pl.’s Br. in Opp. to Jayaraman’s Mot. to Dismiss at pp. 2-3 & n.6 (“Mr. Jayaraman’s Motion to

Dismiss is a ‘me too’ filing that tracks virtually lockstep with the SSG Defendants’ Motion to

Dismiss.”). The Court’s analysis of both sets of arguments, therefore, is collapsed.

54

Comp. & Placement, 326 U.S. 310, 319 (1945). Courts apply this rule of law using a two-prong

test: 1) whether a defendant has sufficient contacts with the forum (the contacts prong), and 2)

whether the exercise of jurisdiction would be reasonable under the circumstances (the

reasonableness prong). Daimler AG v. Bauman, 571 U.S. 117, 144 (2014). There are a few

exceptions to this general rule. Parties may consent to a forum. Nat’l Equip. Rental, Ltd. v.

Szukhent, 375 U.S. 311, 316 (1964); Pitt. Nat’l Bank v. Kassir, 153 F.R.D. 580, 583 (W.D. Pa.

1994). Defendants can also waive their lack of personal jurisdiction when they enter a general

appearance with a court. Lee v. Chesapeake & O. Ry. Co., 260 U.S. 653, 655 (1923).

The Court holds that it cannot exercise general jurisdiction over Defendants under

Pennsylvania’s long-arm statute. The Court can, however, exercise specific jurisdiction over

Defendants through Pennsylvania’s long-arm statute under the traditional minimum contacts test

and, in the alternative, under special tests for intentional torts and conspiracy claims as well.

1. Waiver

The Court will first consider whether SSG Defendants waived objections to personal

jurisdiction. Plaintiffs contend that SSG Defendants committed waiver by seeking affirmative

relief from the Court through filing five motions: a Motion for Initial Conference (ECF No. 10), a

Reply Brief in Support of their Motion for Initial Conference (ECF No. 17), a Motion to Vacate

Scheduling Conference (ECF No. 24), a Response to Plaintiffs’ Submission to Rule 26(f) Report

and ADR Stipulation (ECF No. 27), and a Response to Plaintiffs’ Motion to Strike the Motion to

Dismiss (ECF No. 32). They also contend that SSG Defendants’ representation to a court in Hong

Kong that they would file a motion to dismiss to bolster their position in the Hong Kong litigation

supports a finding of waiver. PIl.’s Br. in Opp. to SSG Def.’s Mot. to Dismiss at p. 3. SSG

Defendants counter that these motions cannot constitute waiver. SSG Def.’s Reply in Supp. of

55

SSG Def.’s Mot. to Dismiss at p. 7-9. The Court finds SSG Defendants’ argument more

persuasive.

A party can waive personal jurisdiction through actions that are voluntary or involuntary,

especially when it seeks affirmative relief. Bel-Ray Co., Inc. v. Chemrite (Pty) Ltd., 181 F.3d 435,

443 (3d Cir. 1999) (citing Ins. Corp. of Ireland, Ltd., et al. v. Compagnie des Bauxites de Guinee,

456 U.S. 694, 703-05 (1982); and then citing Adam v. Saenger, 303 U.S. 59 (1938)). Neither the

Supreme Court nor the Third Circuit has published an exhaustive list of the kinds of actions,

voluntary or involuntary, that cross the threshold and count as waiver. The test appears to be

whether the action requires the court to consider the merits or quasi-merits of the controversy.

Ciolli v. Iravani, 625 F. Supp. 2d 276, 291 (E.D. Pa. 2009) (citing Wyrough & Loser, Inc. v. Pelmor

Labs., Inc., 376 F.2d 543, 547 (3d Cir. 1967)). Under that test, a hearing on a motion for a

preliminary injunction causes waiver because it resolves factual disputes that will grant or deny

relief sought. A request for a stay, however, does not result in waiver because granting a stay

does not require analysis of the merits. Wyrough, 376 F.2d at 547 (preliminary injunction); Ciolli,

376 F. Supp. 2d at 291 (stay).

The Court finds especially persuasive the Third Circuit’s opinion in Bel-Ray, where the

panel held that although the appellants timely raised a personal jurisdiction defense, they still

waived personal jurisdiction by filing motions for summary judgment on a counterclaim that

requested an injunction. Jd. at 443. The motions Plaintiffs challenge here are in no way analogous

to the motions at issue in Bel-Ray. They are not dispositive motions, motions for equitable relief,

or countercomplaints. Indeed, SSG Defendants have not asserted counterclaims. The scheduling

conference motions did not request substantive, merits oriented affirmative relief, but rather what

can more accurately be described as administrative relief. The notion that SSG Defendants’

56

responses to Plaintiffs’ motions constituted requests for affirmative relief strikes against all

common sense: a party does not waive personal jurisdiction by engaging in the very medium

required to dispute it. The Court holds that SSG Defendants have not waived personal jurisdiction.

2. General Jurisdiction

The Court will next consider whether it should exercise general personal jurisdiction over

SSG Defendants and Jayaraman under Pennsylvania’s long-arm statute. In the context of general

jurisdiction, the contacts prong is satisfied when a plaintiff shows that a defendant maintains

“continuous and systematic contacts” with the forum such that they are “essentially at home in the

forum state.” See Goodyear Dunlop Tires, 564 U.S. at 919 (internal citations omitted); Vetrotex,

75 F.3d at 147 & n.3.”” Defendants argue that this Court cannot exercise general jurisdiction

because they are foreign corporations and individuals who neither reside nor have a principal place

of business in the United States. Moreover, they emphasize that Plaintiffs never alleged that there

are enough “continuous or systematic contacts” to establish general jurisdiction. SSG Defendants’

Brief in Support of Motion to Dismiss Pursuant to Federal Rules of Civil Procedure 12(b)(1),

12(b)(2), and 12(b)(6) (ECF No. 26) (‘SSG Def.’s Br. in Supp. of SSG.’s Mot. to Dismiss”) at pp.

SSG Def.’s Reply in Supp. of SSG’s Mot. to Dismiss at pp. 1-2; SSG Def.’s Supp. Br. in

Supp. of SSG’s Mot. to Dismiss at p. 1. These arguments are persuasive.

Construing the pleadings in a light most favorable to Plaintiffs, the Complaint can only

plausibly be read to suggest that the Court can exercise general personal jurisdiction over PISL.

22 Although the Supreme Court has applied both prongs to specific jurisdiction questions, it has

never explicitly decided whether the reasonableness prong applies to general jurisdiction

questions. Daimler, 571 U.S. at 145-46 & n.1. There is no authoritative Supreme Court precedent

on this issue. Most federal courts of appeals have applied the reasonableness prong to the general

jurisdiction analysis. Jd. at 146 & n.1. The Third Circuit, however, has not taken a position. As

explained herein, the requirements of the contacts prong are not satisfied, therefore, the Court will

not take a position.

57

See Compl. at p. 4, § 41 (“PISL has continuously conducted business in Pittsburgh, Pennsylvania

since 2000.”) (emphasis added). Plaintiffs’ briefs fail to make a substantive argument for general

jurisdiction. See generally Dollar Sav. Bank v. First Sec. Bank of Utah, N.A., 746 F.2d 208, 212

(3d Cir. 1984) (“The record as it currently stands is insufficient to support general jurisdiction”);

Fatouros v. Lambrakis, 627 Fed. App’x 84, 87 & n.5 (3d Cir. Sept. 23, 2015) (per curiam) (same)

(citing Kehm Oil Co. v. Texaco, Inc., 537 F.3d 290, 300 (3d Cir. 2008)); Sathianathan v. Pac.

Exch., Inc., 248 Fed. App’x 345, 347 (3d Cir. Sept. 14, 2007)) (same); Pl.’s Br. in Opp. to SSG

Def.’s Mot. to Dismiss at p. 12; Pl.’s Supp. Br. in Opp. to Def.’s Mot. to Dismiss at pp. 2-10. The

Court cannot find any basis to conclude that Defendants have continuous and systematic contacts

with the forum such that they are “practically” at home here. Because the requirements of the first

prong are not satisfied, it need not address the second. The Court declines to exercise general

personal jurisdiction. See Daimler, 571 U.S. at 139-140; Acorda Therapeutics, Inc. v. Mylan

Pharma., Inc., 78 F. Supp. 572, 583 (D. Del. 2015).

3. Specific Jurisdiction

The Court will next consider whether it should exercise specific personal jurisdiction over

SSG Defendants and Jayaraman under Pennsylvania’s long-arm statute. Plaintiffs raise three

independent grounds for specific jurisdiction: 1) the traditional minimum contacts test, 2) the

“effects” test for intentional torts, and 3) conspiracy jurisdiction. For the reasons set forth below,

the Court holds that both prongs of the traditional minimum contacts test are satisfied. In the

alternative, the Court holds that the requirements of the “effects” test and conspiracy jurisdiction

are both satisfied as well.

58

i. The Traditional Minimum Contacts Test

The traditional two-prong test for specific jurisdiction is 1) a defendant must have

minimum contacts with the forum state, and 2) exercising personal jurisdiction must accord with

traditional notions of fair play and substantial justice. As to the first prong, a defendant can be

said to have sufficient minimum contacts when he purposefully avails himself of the forum such

that he could reasonably anticipate being hailed into court. Goodyear Dunlop Tires, 564 U.S. at

919 (citing Arthur T. von Mehren & Donald T. Trautman, Jurisdiction to Adjudicate: A Suggested

Analysis, 79 HARV. L. REV. 1121, 1136 (1966)); World-Wide Volkswagen Corp. v. Woodson, 444

U.S. 286, 297 (1980); Vetrotex, 75 F.3d at 150-51 (quoting Jnt’] Shoe, 326 U.S. at 310; and then

citing Farino, 960 F.2d at 1222). “A single contact that creates a substantial connection with the

forum can be sufficient to support the exercise of personal jurisdiction over a defendant.” Miller

Yacht Sales, Inc., 384 F.3d at 96 (citing Burger King Corp., 471 U.S. at 475 & n.18). As to the

second prong, a court can consider the following factors when determining whether the exercise

of specific jurisdiction is reasonable: the forum state’s interest in adjudicating the dispute, a

plaintiff's interest in obtaining convenient and effective relief, the interstate judicial system’s

interest in obtaining the most efficient resolution of controversies, and the shared interest of several

states in furthering fundamental substantive social policies. See World-Wide Volkswagen Corp.,

A444 US. at 292 (citing cases); Elbeco Inc. y. Estrella de Plato, Corp., 989 F. Supp. 669, 677 (E.D.

Pa. 1997) (citing Mellon Bank (East) PSFS, Nat’! Ass’n v. Farino, 960 F.2d 1217, 1222 (3d Cir.

1992)).

Defendants contend that they did not purposefully avail themselves of this forum. The

only contacts they have with the forum, so they say, are four wire transfers initiated by Madhavi

from PSI’s PNC Bank account in Pittsburgh to PISL’s Key Bank account in Washington State and

59

PASL’s bank account in Hong Kong. See SSG Def.’s Br. in Supp. of SSG’s Mot. to Dismiss at

pp. 6-8; Jayaraman’s Br. in Supp. of Jayaraman’s Mot. to Dismiss at p. 6. These four wire transfers

cannot trigger specific personal jurisdiction, according to Defendants, because Defendants

apparently had no access to PISL’s bank account in Washington State and knew nothing about any

of the transfers. SSG Def.’s Supp. Br. in Supp. of Def.’s Mot. to Dismiss at p. 8 (“Nothing in the

record shows the SSG Defendants were involved in the wire transfers, and Plaintiffs’ depositions

did not show the witnesses took part in any of the three transfers.”); Jayaraman’s Br. in Supp. of

Jayaraman’s Mot. to Dismiss at 6 (“Plaintiffs do not allege that Jayaraman knew that the PNC

Bank transfers ever happened or took any specific actions to affect them.”). Defendants state that

even if these transfers cumulatively constituted a “connection” to the forum, that connection is too

de minimis to pass the minimum contacts test. SSG Def.’s Br. in Supp. of SSG’s Mot. to Dismiss

at pp. 7-8 & n.6; SSG Def.’s Reply in Supp. of SSG’s Mot. to Dismiss at pp. 2-3; Jayaraman’s

Br. in Supp. of Jayaraman’s Mot. to Dismiss at p. 7. Defendants also argue that there is no direct

causal connection between their activities and Plaintiffs’ claims. SSG Def.’s Br. in Supp. of SSG

Def.’s Mot. to Dismiss at p. 9; SSG Def.’s Reply in Supp. of SSG’s Mot. to Dismiss at p. 3;

Jayaraman’s Br. in Supp. of Jayaraman’s Mot. to Dismiss at p. 8. These arguments are not

persuasive.

a. The Contacts Prong

At the first prong, Plaintiffs have shown that Defendants bear the requisite minimum

contacts with the forum. Defendants purposefully availed themselves of this forum in at least three

ways. To begin with, the record makes it clear that Madhavi, with the assistance of her husband,

Jayaraman, allegedly managed all operations involving the bond funds at the core of the dispute

while physically residing in Pittsburgh. See Pl.’s Compl. at p. 12, {4 120-22; Pl.’s Supp. Br. in

60

Opp. to Def.’s Mot. to Dismiss at p. at 4; Amorose Decl. at p. 2, 8. These operations included

the alleged frauds perpetrated using PSI’s PNC bank account in Pittsburgh—PSI’s only bank

account. Madhavi’s and Jayaraman’s wire transfer operations while residing in Pittsburgh

constituted significant contacts with the forum and evidence a direct, causal connection between

Defendants’ conspiracy and harms alleged in Plaintiffs’ Complaint. Defendants’ blanket statement

that they did not know about the wire transfers complained of here, in view of jurisdictional

discovery produced, is demonstrably false. Compare SSG Def.’s Supp. Br. in Supp. of SSG Def.’s

Mot. to Dismiss at p. 8, and Jayaraman’s Br. in Supp. of Jayaraman’s Mot. to Dismiss at p.6, with

Amorose Dec. at pp. 2-3, 9] 8-12, and Pandyar Decl. at pp. 2~3, {J 6-13.

The Court agrees with Defendants that the significance of the wire transfers is decisive to

the issue of personal jurisdiction but disagrees with their analysis. The cases Defendants cite in

favor of their position are all easily distinguishable. The Third Circuit’s holding in Dollar Sav.

Bank, 746 F.2d at 214-15, for example, is inapposite because it involved the wire transfer of a loan

repayment to—not from—Pennsylvania.”> The United States Court of Appeals for the Eight

Circuit’s decision in 7.7. Raney & Sons, Inc. v. Sec. Sav. & Loan Assoc., 749 F.2d 523, 525 (8th

23 As the Third Circuit explained,

Before the default, the Utah bank had made payments on the loan to

Dollar by wire transfers to Pittsburgh but the supporting documents

were sent by the Utah bank to the United States Trust Company in

New York. The Utah bank is not licensed to do business in

Pennsylvania and has never maintained an office, telephone listing,

or bank account in that state. Moreover, it has never solicited

business there and has no employees in the state. The Utah bank has,

however, acted as a trustee for certain chattels located in

Pennsylvania, but that transaction is unrelated to the one sued on by

Dollar.

Dollar Sav. Bank, 746 F.2d at 210. The conspiracy alleged in this case, on the other hand, involves

Defendant entities conducting business in the forum and initiating wire transfers in the forum.

61

Cir. 1984) and the United States District Court for the Western District of Virginia’s decision in

Tatoian v. Andrews, 100 F. Supp. 3d 549, 554 (W.D. Va. 2015) are distinguishable for the same

reason—they both involve wire transfers to the forum, not from the forum. This case is more

analogous to Roanoke Cemente Co., LLC v. Chesapeake Products, Inc., Civil No. 2:07¢v97, 2007

WL 2071731, at **1, 7-8 (E.D. Va. July 13, 2017), where a district court determined that a

fraudulent wire transfer triggered specific personal jurisdiction under a state long-arm statute

because it was initiated from, and managed in, the forum state. As in Roanoke, the fraudulent wire

transfers here were initiated in, and managed from, this forum. The Court therefore determines

that the wire transfers facilitating Defendants’ conspiracy to defraud the Plaintiffs in this case are

alone sufficient to trigger specific personal jurisdiction under Pennsylvania’ long-arm statute. See

id.

Next, Goel physically visited Pittsburgh in June 2008 to meet with Madhavi to discuss the

operations of Prithvi family entities in the United States, including PSI. Pl.’s Supp. Br. in Opp. to

Def.’s Mot. to Dismiss at pp. 2-4. This visit was ostensibly for the purpose of obtaining

information about PISL and PSI so that Defendants could create a pass-through entity—PASL—

to launder stolen bond funds. See Pl.’s Compl. at p. 18, {§] 180-81; Pl.’s Supp. Br. in Opp. to

Def.’s Mot. to Dismiss at p. at 5. Goel’s business activity on behalf of Defendants constituted a

significant contact with the forum because it effectively tied the thread of the conspiracy

connecting the Prithvi family of businesses and the situs of where the bond funds would be stolen:

Pittsburgh.

Plaintiffs have made a prima facie showing that all Defendants conspired to steal bond

funds PISL wired to PSI’s Pittsburgh bank account, leading to, at the very least, $4,000,000.00

being wired to SSG Capital Partners bank account and $2,500,000.00 being wired to PASL’s bank

62

account. See PI.’s Compl. at p. 19, 184-86; PI.’s Supp. Br. in Opp. to Def.’s Mot. to Dismiss

at pp. 7-8. Defendants emphasize that they were not physically present and incorporated in

Pennsylvania during the timeframe when the alleged actionable conduct occurred. As the Third

Circuit has noted, however, when defendants conduct business activities with a forum, courts have

“consistently rejected the notion that an absence of physical contacts can defeat personal

jurisdiction. .. .” Mellon Bank, 960 F.2d at 1226 (quoting Burger King, 471 U.S. at 476) (internal

quotation omitted); see also Leonard A. Feinberg, Inc. v. Cent. Cap. Corp., Ltd., 936 F. Supp. 250,

257 (E.D. Pa. 1996) (“Central Asia’s physical presence in the forum, however, is neither a

‘jurisdictional litmus test’ nor a dispositive factor.” (citing Mellon Bank, 960 F.2d at 1223)).

Defendants received the benefits and protections of this forum’s laws by engaging in business

activities with its residents. Goel’s meeting with Madhavi is merely one illustration. See Pl.’s

Supp. Br. in Opp. to SSG Def.’s Mot. to Dismiss Ex. E at pp. 1-2; Pl.’s Supp. Br. in Opp. to SSG

Def.’s Mot. to Dismiss at pp. 1-15.

Finally, a significant quantum of contacts aggregating in favor of personal jurisdiction are

the electronic and telephone communications exchanged between Defendants for their business

activities. As the Third Circuited noted, “Mail and telephone communications sent by the

defendant into the forum may count toward the minimum contacts that support jurisdiction... .

‘[I]t is an inescapable fact of modern commercial life that a substantial amount of business is

transacted solely by mail and wire communications across state lines. ...’” Grand Ent. Grp., Ltd.

v. Star Media Sales, Inc., 988 F.2d 476, 482 (3d Cir. 1993) (quoting Burger King, 471 U.S. at 476)

(internal citations omitted). Maheshwari’s electronic and telephone communications with other

Defendants about obtaining corporate documents from PSI and PISL, documents ostensibly

needed to create a PASL bank account in Hong Kong to launder bond funds wired through

63

Pittsburgh, are critical to the Court’s analysis. Compare Shyam Maheshwari Dep. at pp. 43-45,

with Kulkarni Decl. at pp. 3-7, J] 13-39. Defendants could reasonably anticipate being hailed

into this Court for fraudulent activity associated with specific business contacts and accounts they

conspired to operate and control both electronically and telephonically from abroad and while

physically on Pennsylvania soil. See Goodyear Dunlop Tires, 564 U.S. at 919; World-Wide

Volkswagen Corp., 444 U.S. at 297; Vetrotex, 75 F.3d at 150-51; Amorose Decl. at pp. 2-3, □□□ 7—

12; Pandyar Decl. at pp. 2-3, {| 6-13; Kulkani Dec. at pp. 2—9, {§[ 4-45.

b. The Reasonableness Prong

The Court holds that the exercise of personal jurisdiction over this matter accords with

traditional notions of fair play and substantial justice. On the one hand, the interstate judicial

system’s interest in efficiency favors resolution of this dispute in Washington State because the

parties already litigated against each other in that forum multiple times. There is also a criminal

indictment pending in the Western District of Washington that may be relevant to civil allegations

levied against some or all the Defendants here. These factors are counterbalanced, however, by

the general interest of the states, including Pennsylvania, to punish harm where it occurs.

Pennsylvania has a significant interest in this dispute because Plaintiffs effectively plead that the

“nerve center” of the alleged racketeering activities was in Pittsburgh. The principal bank account

through which money was stolen was located at PNC Bank in Pittsburgh. The bond fund operations

were mainly managed in Pittsburgh. Because Pittsburgh appears to be ground zero for the harms

alleged, it is just and equitable for this matter be adjudicated in this Court. Cf World-Wide

Volkswagen Corp., 444 U.S. at 292 (citing cases); Elbeco Inc., 989 F. Supp. at 677. The traditional

minimum contacts test is satisfied. The Court can and will exercise specific personal jurisdiction

over SSG Defendants and Jayaraman.

64

il. Intentional Torts “Effects” Test

In the alternative that the traditional minimum contacts test is not satisfied, the Court can

still exercise specific personal jurisdiction as to the intentional tort claims. The Supreme Court

adopted the Second Restatement’s “effects” test for intentional business tort claims. Calder vy.

Jones, 465 U.S. 783, 789 (1984) (citing Woodson, 444 U.S. at 297-98; and then citing

RESTATEMENT (SECOND) OF CONFLICTS OF LAW § 37 (Am. Law Inst. 1971)). Under the effects

test, a court can exercise personal jurisdiction over a nonresident defendant who commits an

intentional tort through acts outside the forum if those acts have a particular type of effect on a

plaintiff within the forum. This test only applies if a defendant lacks sufficient minimum contacts

under a traditional specific jurisdiction analysis. IMO Indus, Inc. v. Kiekert AG, 155 F.3d 254,

258-61 (3d Cir. 1998). The Third Circuit breaks down the effects test into three elements:

(1) The defendant committed an intentional tort;

(2) The plaintiff felt the brunt of the harm in the forum such

that the forum can be said to be the focal point of the

harm suffered by the plaintiff as a result of that tort;

(3) The defendant expressly aimed his tortious conduct at

the forum such that the forum can be said to be the focal

point of the tortious activity;

Id. at 265-66. The Circuit interprets the effects test conservatively and focuses the analysis on the

relationship between the defendant, the forum, and the litigation. See id. at 265.

The unique relationship between Defendants, Pittsburgh, and the alleged intentional

tortious conduct they committed renders their contacts with the forum sufficient, even assuming

they otherwise would be too de minimis to satisfy the traditional minimum contacts test.

Defendants expressly aimed their alleged tortious conduct at Pittsburgh, rendering it the focal point

of their tortious activity. See IMO Indus, Inc., 155 F.3d at 265. Defendants’ contacts are enhanced

65

by Defendants’ relationship with Plaintiffs, particularly with PSI. See IMO Indus, Inc., 155 F.3d

at 265 (citing Keeton v. Hustler Mag., Inc., 465 U.S. 770, 780 (1984)). Madhavi had executive

positions with both PISL and PSI, therefore, she was uniquely poised to abuse her authority and

commit intentional business torts by manipulating PNC’s Pittsburgh bank account. At the behest

of the other Defendants, she and her husband allegedly managed fraudulent wire transfers, leading

to the theft of the bond funds from PNC Bank in Pittsburgh. See Pl.’s Compl. at pp. 4—5, {| 45-

48, 50-53; Pl.’s Br. in Opp. to Def.’s Mot. to Dismiss at p. 15; Pl.’s Supp. Br. in Opp. to SSG

Def.’s Mot. to Dismiss at pp. 3-6; Amorose Decl. at p. 2, § 8. Defendants’ contacts with the forum

through the business activities and correspondence between Goel, Madhavi, and Maheshwari also

show the unique relationship between the parties and Pittsburgh’s centrality to their conspiracy.

The purpose of Goel’s visit to Pittsburgh in June 2008 and Maheshwari’s communications with

Madhavi and Goel were, at least in part, to set up PASL’s bank account in Hong Kong to launder

stolen bond funds. See Pl.’s Compl. at pp. 7-8, 69-73, 81-84; PI.’s Supp. Br. in Opp. to Def.’s

Mot. to Dismiss at p. 5; Pandyar Decl. at p. 2, {] 6-13; Kulkarni Decl. at pp. 4-8, {4 14-40.

In the Court’s view, these factors present a compelling case for rendering Defendants’ out-

of-forum activities, especially the creation and operation of PSAL’s Hong Kong bank account,

“contacts” for the purposes of the personal jurisdiction analysis. See IMO Indus, Inc., 155 F.3d at

265. The Court therefore holds that Plaintiffs met their burden by pleading that Defendants

committed intentional torts, that Defendants expressly aimed their tortious conduct at the forum,

and that Plaintiffs felt the brunt of the harm in the forum such that the forum can be said to be the

focal point of the harm suffered by the Plaintiffs as a result of those torts. See IMO, 155 F.3d at

165-66. The Court holds that even if Plaintiffs’ case for personal jurisdiction fails the traditional

minimum contacts test, it still prevails under the effects test. The Court can and will exercise

66

personal jurisdiction over the intentional business torts allegedly committed by SSG Defendants

and Jayaraman.

iii. Conspiracy Jurisdiction

In the alternative that Plaintiffs’ case for specific jurisdiction fails under both the traditional

minimum contacts test and the effects test, the Court will consider whether their conspiracy

allegations themselves cross the jurisdictional threshold. Conspiracy jurisdiction is an issue of

state law. Miller Yacht Sales, Inc., 384 F.3d at 102 & n.8 (citing Stauffacher v. Bennett, 969 F.2d

455, 460 (7th Cir. 1992)). It is not a distinct species within the genus of personal jurisdiction.

Mass. Sch. of Law at Andover, Inc. v. Am. Bar Ass’n, 846, F. Supp. 374, 379 (E.D. Pa. 1994).

Rather, conspiracy jurisdiction simply expands the contacts prong of the analysis within the two

established species personal jurisdiction—general jurisdiction and specific jurisdiction—by

imputing the contacts of resident coconspirators to foreign coconspirators. Jd. For this reason,

courts often collapse their discussion of conspiracy jurisdiction into their traditional minimum

contacts analysis. The Court will address conspiracy jurisdiction separately here, however, for

two reasons: it is argued in the alternative and the Third Circuit’s position on conspiracy

jurisdiction is unclear.

a. Overview of Conspiracy Jurisdiction

The Supreme Court has not directly addressed the conspiracy theory of personal

jurisdiction. Istituto Bancario Italiano SpA v. Hunter Engineering Co., Inc., 449 A.2d 210 (Del.

1982). Although the Third Circuit has not taken a firm position on this theory either, other federal

courts of appeals and federal district courts have. See, e.g., Edmond v. United States Postal Serv.

Gen. Counsel, 949 F.2d 415, 425 & n.19 (D.C. Cir. 1991); Textor v. Bd. of Regents of N. Ill. Univ.,

711 F.2d 1387, 1392 (7th Cir. 1983); Arrington v. Colortyme, Inc., 972 F. Supp. 2d 733, 745 (W.D.

67

Pa. 2013); Am. Bar Ass’n, 846, F. Supp. at 379; Ethanol Partners Accredited v. Wiener,

Zuckerbrot, Weiss & Brecher, 635 F. Supp. 15, 18 (E.D. Pa. 1985); Vespe Contracting Co. v.

Anvan Corp., 433 F. Supp. 1226, 1233 & n.9 (E.D. Pa. 1977); see also Leasco Data Processing

Equip. Corp. v. Maxwell, 468 F.2d 1326, 1343 (2d Cir. 1972) (suggesting that the conspiracy

theory of jurisdiction may be a valid method of obtaining personal jurisdiction). But see

Kipperman vy. McCone, 422 F. Supp. 860, 879 (N.D. Cal. 1976) (rejecting the concept of

conspiracy jurisdiction on constitutional grounds). As noted above, conspiracy jurisdiction is an

issue of state law. Federal district courts in this forum have uniformly adopted conspiracy

jurisdiction because it appears to be commensurate with Pennsylvania law. See, e.g., Goodson v.

Maggi, 797 F. Supp. 2d 604, 621 (W.D. Pa. 2011) (citing Santana Prods, 14 F. Supp. 2d at 718);

Santana Prods., 14 F. Supp. 2d at 718 (“Under Pennsylvania law, personal jurisdiction of a non-

forum co-conspirator may be asserted only where a plaintiff demonstrates that substantial acts in

furtherance of the conspiracy occurred in Pennsylvania and that the non-forum co-conspirator was

aware or should have been aware of those acts.”); Raymark Indus, Inc. v. Baron, No. CIV. 96-

7625, 1997 WL 359333, at **1, 4 (E.D. Pa. June 23, 1997) (“Pennsylvania law requires proof that

the co-conspirator was or should have been aware of the conspiratorial acts within the forum

state... .”).

There appears to be no universally accepted formulation of the conspiracy jurisdiction

test.2* District courts in this circuit have imposed on plaintiffs the burden to prove that a resident

coconspirator 1) performed substantial acts in furtherance of the conspiracy within the forum, and

2) the foreign coconspirator was or should have been aware of those acts. See, e.g., Am. Bar Ass’n,

*4 Ann Althouse, The Use of Conspiracy Theory to Establish In Personam Jurisdiction: A Due

Process Analysis, 52 FORDHAM L. REV. 234, 243 & n.57 (1983).

68

846 F. Supp. at 379-80; Murray v. Nat’! Football League, No. CIV. A. 94-5971, 1996 WL 363911,

at **1, 16 (E.D. Pa. 1996) (citing Am. Bar Ass’n, 846 F. Supp. at 380). “Merely belonging to a

civil conspiracy does not make a member subject to the jurisdiction of every other member’s

forum.” Id. at 379 (citing In re Arthur Teacher’s Franchisee Litig., 92 F.R.D. 398, 411 (E.D. Pa.

1981)); see also Com. ex rel. Pappert v. TAP Pharma. Products, Inc., 868 A.2d 624, 632 (Pa.

Cmwlth. 2005) (“[Blare assertions of a conspiracy connection are insufficient to justify the

exercise of personal jurisdiction.”). The Court will apply this test.

Defendants’ position is that they neither committed substantial acts in furtherance of a

conspiracy for the wire transfers in Pittsburgh nor were they aware of them. SSG Def.’s Br. in

Supp. of SSG’s Mot. to Dismiss at pp. 10-11; Jayaraman’s Br. in Supp. of Jayaraman’s Mot. to

Dismiss at pp. 9-11. The Court finds this position to be untenable considering the jurisdictional

discovery that has been produced. This case is distinguishable from cases where no jurisdictional

discovery was produced due to a lack of any prima facie evidence of physical or electronic contacts

with the forum. See, e.g., Doe v. Hesketh, 15 F. Supp. 3d 586, 596-602 (E.D. Pa. 2014) (declining

to exercise personal jurisdiction over three persons charged with child pornography crimes because

they neither accessed nor exchanged child pornography in Pennsylvania); Baron, 1997 WL

359333, at *S5 (declining to order jurisdictional discovery because a plaintiff's conspiracy

allegations were poorly pleaded).

b. The Substantial Acts Prong

This case is a far cry from the circumstance where a plaintiff only brings forth bald

allegations without specific facts. See, e.g., Aardvark Event Logistics, Inc. v. Bobcar Media, LLC,

Civ. No. 16-5873, 2017 WL 59059, at **1, 7 (E.D. Pa. Jan. 5, 2017) (“In this case, plaintiff has

not identified a single act, let alone substantial acts, that took place in Pennsylvania in furtherance

69

of the alleged conspiracy.”). Plaintiffs plead with particularity that resident Defendant

coconspirators—PISL, Madhavi, and Jayaraman—committed substantial acts in furtherance of a

racketeering conspiracy in Pittsburgh by illicitly wiring bond funds from PSI’s PNC Bank account

to SSG Capital Partners and PSAL for illicit distribution among all Defendants. The Kulkarni and

Amorose declarations establish that Madhavi and Jayaraman—acting at the behest of PISL and the

rest of SSG Defendants—had operational control of the bond funds kept in PS?’s PNC Bank

account in Pittsburgh. See Pl.’s Br. in Opp. to Def.’s Mot. to Dismiss at p. 14; Kulkarni Decl. at

p. 3, § 12; Amorose Decl. at p. 2, { 8. Further, Plaintiffs adequately pleaded that the resident

Defendant coconspirators created bogus accounts receivable on PSI’s books and MOUs for a sham

“bond restructuring process” to hide their illicit conduct. See Pl.’s Compl. at p. 28-9, {| 282, 284;

- Pl.’s Br. in Opp. to Def.’s Mot. to Dismiss at p. 14. Defendants’ counterargument that Plaintiffs’

wire transfer allegations are insubstantial and de minimis have no serious support in any case law

submitted to this Court. The wire transfer allegations embody the very essence of what the word

“substantial” means in the context of racketeering, namely the illegal and fraudulent procurement

of money.

c. The Knowledge Prong

Plaintiffs have adequately pleaded that the foreign Defendant coconspirators—VTC, SSG

Capital Partners, SSG Hong Kong, PSAL, Maheshwari, Noor, Goel, Him, and Vourloumis,—

knew or should have known of substantial activity advancing the conspiracy. See Pl.’s Complaint

at pp. 5—9, §] 58, 63, 68, 72, 76, 80, 84, 88, 92; Pl.’s Br. in Opp. to Def.’s Mot. to Dismiss at pp.

14-15. Defendants’ initial statement that Plaintiffs failed to argue this prong is swept away by the

supplemental briefing and jurisdictional discovery submitted to the Court. See SSG Def.’s Supp.

Br. in Supp. of SSG Def.’s Mot. to Dismiss at p. 11; Jayaraman’s Br. in Supp. of Jayaraman’s Mot.

70

to Dismiss at p. 10. The jurisdictional discovery reveals that Defendants are seemingly intertwined

with one another through three corporate entities: VTC, SSG Capital Partners, and SSG Hong

Kong. They are also affiliated with, and equity holders in, PISL and PSI. Kulkarni Decl. at p. 2,

{1 4-5. The foreign entity Defendant coconspirators—SSG Capital Partners, PSAL, and VTC—

allegedly had knowledge because they received fraudulent wire transfers to their bank accounts.

Pl.’s Compl. Pandyar Decl. at p. 3, 12.

Plaintiffs have adequately pleaded that individual foreign Defendant coconspirators had

knowledge as well. Goel himself requested a $2,500,000.00 wire transfer from PNC Bank in

Pittsburgh to PSAL’s Hang Seng Bank account in Hong Kong and coordinated with Pandyar to

achieve that purpose. Pandyar Decl. at pp. 2-3, J 7-13. Maheshwari communicated with

Narayanan, Madhavi, Satish, and Goel to create PSAL and PSAL’s Bank account that received

fraudulent wire transfers. Amorose Decl. at pp. 3—9, Jf] 13-45. And Jayaraman, Him, Noor, and

Vourloumis presumably had knowledge: Him, Noor, and Vourloumis served in high leadership

positions in VTC and SSG Hong Kong. Jayaraman resided with his wife, Madhavi, in Pittsburgh

during the timeframe when the alleged actionable conduct occurred and helped her convert the

bond funds. See Pl.’s Compl. at pp. 3-5, 7-9, 4] 28-53, 73-88; Amorose Decl. at p. 2-3, 8, □□

11-12; Pl.’s RICO Case Statement at pp. 3-4. Based on these findings, the Court holds that

Plaintiffs’ conspiracy allegations justify the exercise of specific personal jurisdiction over all SSG

Defendants and Jayaraman. The Court will impute the contacts of resident Defendant

coconspirators to all foreign Defendant coconspirators. This imputation remedies whatever

defects exist in Plaintiffs’ traditional minimum contacts analysis.

71

B. Statutory Personal Jurisdiction

Plaintiffs plead statutory personal jurisdiction through the RICO statute and the MCLA.

Pl.’s Compl. at p. 27, § 267 (citing 18 U.S.C. § 1956(b)(2), (A); PI.’s Br. in Opp. to SSG Def.’s

Mot. to Dismiss at p. 8; Pl.’s Br. in Opp. to Jayaraman’s Mot. to Dismiss at p. 3. The Court holds

that statutory personal jurisdiction is present though the RICO statute, but not the MCLA.

Congressional legislation operates under a presumption against extraterritoriality. RJR

Nabisco, Inc. v. Euro. Community, 136 S. Ct. 2090, 2100 (2016) (citing Morrison v. Nat’l Austl.

Bank Ltd.,561 U.S. 247, 255 (2010)). In that vein, the United States Supreme Court has interpreted

the RICO statute to afford extraterritorial jurisdiction only to the extent that the predicate statutory

offenses underlying it are themselves extraterritorial. RJR, 136 S. Ct. at 2103. MCLA Section

1956 authorizes extraterritorial jurisdiction in certain circumstances:

(b) Penalties

2K oR OK

(2) Jurisdiction over foreign persons.—For purposes

of adjudicating an action filed or enforcing a penalty

under this section, district courts shall have

jurisdiction over any foreign person, including any

financial institution authorized under the laws of a

foreign country, against whom the action is brought,

if service of process upon the foreign person is made

under the Federal Rules of Civil Procedure or the

laws of the country in which the foreign person is

found, and—

(A) the foreign person commits an offense

under subsection 9(a) involving a

financial transaction that occurs in whole

or in parting the United States;

(B) the foreign person converts, to his or her

own use, property in which the United

States has an ownership interest by

virtue of the entry of an order of

72

forfeiture by a court of the United States;

or

(C) the foreign person is a_ financial

institution that maintains a bank account

at a financial institution in the United

States.

2B ok

(f) There is extraterritorial jurisdiction over the conduct prohibited

by this section if—

(1) the conduct is by a United States citizen or, in the

case of a non-United States citizen, the conduct

occurs in part in the United States; and

(2) the transaction or series of related transactions

involves funds of monetary instruments of a

value exceeding $10,000.

18 U.S.C. § 1956(b)(2), Defendants object that Plaintiffs cannot use the MCLA’s

jurisdictional hook to establish personal jurisdiction because the MCLA does not create a remedy

for a private cause of action. See SSG Def.’s Br. in Supp. of Def.’s Mot. to Dismiss at p. 6. SSG

Defendants also argue that Plaintiffs cannot establish personal jurisdiction under the RICO statute

itself. Although the Court agrees that personal jurisdiction is unavailable under the MCLA, the

Court holds that it is available under the RICO statute.

1.

This text is long and has been trimmed here. Open the source document for the complete record.