The opinion
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF OREGON
KARRA CRAWFORD, Case No. 3:25-cv-02242-SB
Plaintiff, OPINION AND ORDER
v.
ADVISER COMPLIANCE ASSOCIATES,
LLC dba ACA GROUP, a District of
Columbia limited liability company, FARIBA
RONNASI, an individual, ELITE WEALTH
MANAGEMENT, INC., a Washington profit
corporation, LATTICE CAPITAL
MANAGEMENT, LLC, a Washington
limited liability company, ALI REZA
MEMARAN-DADGAR aka ALLAN
DADGAR, an individual, and ROBERT VAL
LYBBERT, an individual,
Defendants.
_____________________________
BECKERMAN, U.S. Magistrate Judge:
Plaintiff Karra Crawford (“Crawford”) filed this action against Defendant Adviser
Compliance Associates, LLC (“ACA”), alleging claims for breach of fiduciary duty, negligent
misrepresentation, negligence, fraud, and violations of Oregon’s Unfair Trade Practices Act
(“UTPA”) and Securities Law. (Compl., ECF No. 1-1.) ACA provided outsourced chief
compliance officer (“CCO”) services to two registered investment advisers, Defendants Elite
Wealth Management, Inc. (“Elite”) and Lattice Capital Management, LLC (“Lattice”), together
with three of their “supervised person” employees, Defendants Fariba Ronnasi (“Ronnasi”), Ali
Reza Memaran-Dadgar (“Dadgar”), and Robert Val Lybbert (“Lybbert”) (together, the “Elite
Defendants”), for approximately four months in 2023. (Id.) The Court has jurisdiction over
Crawford’s claims pursuant to 28 U.S.C. §§ 1332 and 1367. Crawford’s claims against the Elite
Defendants are currently in arbitration.
Now before the Court is ACA’s motion to dismiss Crawford’s complaint for failure to
state a claim pursuant to Federal Rule of Civil Procedure (“Rule”) 12(b)(6). (Def.’s Mot. Dismiss
(“Def.’s Mot.”), ECF No. 7.) For the following reasons, the Court GRANTS IN PART and
DENIES IN PART ACA’s motion.
BACKGROUND
Crawford invested $1.635 million with the Elite Defendants in the “Dynamic Alpha
Fund” (the “Alpha Fund”) in November 2021 following Ronnasi’s solicitation. (Compl. ¶¶ 2-5,
48; see also id. ¶ 64, noting that Crawford moved an additional $28,880 into the Alpha Fund in
December 2021.) Unbeknownst to Crawford, Ronnasi was later charged with theft in June 2023,
after she engaged in a scheme to order clothes online from TJ Maxx, report that she did not
receive the clothes to obtain credit, and then return the clothes to a store. (Id. ¶¶ 70-76.1)
1 The Court takes judicial notice of the relevant King County (Washington) Superior
Court records, which reflect that Ronnasi was eventually convicted of third degree malicious
mischief, a gross misdemeanor, on May 9, 2025 and ordered to pay $18,552 in restitution and a
$500 fine. (See 5/9/25 Judgment, Washington v. Ronnasi, No. 23-1-O4492-1 SEA (King Cnty.
Thereafter, Ronnasi and Dadgar contacted ACA to obtain outsourced CCO services for Elite and
Lattice. (Id. ¶ 92; see also id. ¶ 86, noting that an outsourced CCO’s role includes “[o]verse[ing]
and coordinat[ing] regulatory filings, including Form ADV and any necessary updates or
amendments”). ACA employee Mark Hansen initially served as Elite and Lattice’s CCO and was
later replaced by ACA employee John Douglas MacKinnon in August 2023. (Id. ¶¶ 106, 151.)
In a July 27, 2023, email from Lattice to Alpha Fund investors about a management fee
increase, Lattice did not disclose Ronnasi’s pending theft charge. (Id. ¶¶ 125, 129-30.) The email
included a “Confidential Offering Circular” private placement memorandum (“PPM”) for the
Alpha Fund dated August 1, 2023 (the “August 2023 PPM”). (Id. ¶ 130.) The August 2023 PPM
disclosed that Dadgar would become Elite’s chief executive officer (“CEO”) and president on
October 1, 2023 and that Ronnasi would serve as Elite’s chief operating officer and the CEO of
“D&R Family Office.” (Id. ¶ 131.) The PPM referenced Lattice’s “Form ADV,” a required
Securities and Exchange Commission (“SEC”) disclosure form (see 17 C.F.R. § 275.204-1), but
did not attach the document.2 (Compl. ¶¶ 142-45.) Crawford alleges that the omission was part of
a “cover-up” of Ronnasi’s pending theft charge. (Id. ¶ 145.) Crawford further alleges, on
information and belief, that ACA was involved in concealing Ronnasi’s pending theft charge
because Hansen “drafted, assisted in drafting, and/or reviewed” the August 2023 PPM and was
copied on Lattice’s July 27, 2023 email. (Id. ¶¶ 125, 133.)
///
Superior Ct.), https://kingcounty.gov/en/dept/dja/courts-jails-legal-system/case-records/records-
access (last accessed Aug. 25, 2026).)
2 Crawford does not allege whether the Elite Defendants filed an amended Form ADV
with the Investment Adviser Registration Depository (see 17 C.F.R. § 275.204-1) disclosing
Ronnasi’s pending theft charge. (See generally Compl.)
Crawford acknowledges that ACA has represented that the Elite Defendants “actively
hid” Ronnasi’s pending theft charge from ACA and that ACA terminated its role with Elite and
Lattice “in the autumn of 2023” upon discovering the undisclosed theft charge. (Id. ¶¶ 160-61.)
Crawford does not allege that she purchased any securities from the Elite Defendants
while ACA was providing outsourced CCO services, but Crawford later invested more money
with Lattice in February 2024 and again in May 2024. (Id. ¶¶ 168-69, 175.) Crawford alleges
that the August 2023 PPM was the last PPM that she received for the Alpha Fund before making
these additional investments. (Id. ¶¶ 170, 176.)
In August 2024, Lattice informed Crawford that the Alpha Fund had lost “approximately
37.6% of its value as of August 6, 2024.” (Id. ¶ 181.) After Lattice restructured the fund into the
“Dynamic Absolute Return Fund” and provided assurances, Crawford remained invested.
(Id. ¶¶ 190, 203.) In April 2025, Lattice notified Crawford it had decided to close the
restructured fund in the wake of “unprecedented volatility in April 2025” that resulted in a
“roughly -85.3% loss” in April 2025. (Id. ¶ 205.)
Crawford now alleges that ACA failed to fulfill its duties as CCO for Elite and Lattice in
2023. (Id. ¶ 159.) Crawford’s primary theory of liability is that ACA knew or should have known
but failed to disclose Ronnasi’s pending theft charge and the resulting organizational changes at
Elite and Lattice. (Id. ¶ 153; see also id. ¶ 203, “Not knowing about Ronnasi’s criminal conduct
or the sustained efforts to cover it up, and thus not having reason to believe that she was being
taken advantage of, Crawford again fell victim to the false and misleading statements and stayed
invested in the [restructured] [Dynamic] Absolute Return Fund.”). Crawford also alleges that
ACA did not investigate Ronnasi’s investment recommendations and failed to alert Crawford
that her investments in the Alpha Fund were a mismatch with her conservative investment
objectives as a retiree. (Id. ¶¶ 109-10.)
LEGAL STANDARDS
“To survive a motion to dismiss, a complaint must contain sufficient factual matter,
accepted as true, to ‘state a claim to relief that is plausible on its face.’” Ashcroft v. Iqbal, 556
U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). The
Supreme Court has explained that “[a] claim has facial plausibility when the plaintiff pleads
factual content that allows the court to draw the reasonable inference that the defendant is liable
for the misconduct alleged.” Id. (citing Twombly, 550 U.S. at 556). Although “[t]he plausibility
standard is not akin to a ‘probability requirement,’ . . . it asks for more than a sheer possibility
that a defendant has acted unlawfully.” Id. (quoting Twombly, 550 U.S. at 556). Thus, “where a
complaint pleads facts that are ‘merely consistent with’ a defendant’s liability, it ‘stops short of
the line between possibility and plausibility of entitlement to relief.’” Id. (quoting Twombly, 550
U.S. at 557).
When evaluating a motion to dismiss, the court must accept all allegations of material
fact as true and construe those facts in the light most favorable to the non-movant. See Burgert v.
Lokelani Bernice Pauahi Bishop Tr., 200 F.3d 661, 663 (9th Cir. 2000); but see Twombly, 550
U.S. at 555 (holding that courts are “not bound to accept as true a legal conclusion couched as a
factual allegation”). “In dismissing for failure to state a claim under Rule 12(b)(6), a district
court should grant leave to amend . . . unless it determines that the pleading could not possibly be
cured by the allegation of other facts.” Schmitt v. Kaiser Found. Health Plan of Wash., 965 F.3d
945, 960 (9th Cir. 2020) (simplified).
///
DISCUSSION
ACA moves to dismiss Crawford’s claims for breach of fiduciary duty, negligence,
negligent misrepresentation, common law fraud, and violations of the UTPA and Oregon’s
Securities Law. (Def.’s Mot. at 10-40; see also Pl.’s Resp. Def.’s Mot. Dismiss (“Pl.’s Resp.”),
ECF No. 17; Def.’s Reply Supp. Mot. Dismiss (“Def.’s Reply”).)
I. BREACH OF FIDUCIARY DUTY (FOURTH CLAIM, COUNT TWO)
Crawford alleges that ACA owed her fiduciary duties and breached those duties by, inter
alia, failing to disclose Ronnasi’s theft charge. (Compl. ¶¶ 347-50, 353-54, 356-57.)
To state a breach of fiduciary duty claim under Oregon law, a plaintiff must first allege
“the existence of a fiduciary relationship between the parties[.]” Giuliano v. Anchorage Advisors,
LLC, 19 F. Supp. 3d 1087, 1103 (D. Or. 2014). The Oregon Supreme Court has held that no
fiduciary “duties are implied unless the parties are in a ‘special relationship[.]’” Bennett v.
Farmers Ins. Co. of Or., 26 P.3d 785, 798 (Or. 2001) (quoting Conway v. Pac. Univ., 924 P.2d
818, 822 (Or. 1996)); see also Conway, 924 P.2d at 822 (“[T]he parties must be in a ‘special
relationship,’ in which the party sought to be held liable had some obligation to pursue the
interests of the other party.”). “Accordingly, unless [the] plaintiff’s relationship with [the]
defendant qualifies as the type of ‘special relationship’ that gives rise to either duty alleged, no
breach of duty can have occurred.” Bennett, 26 P.3d at 798.
To evaluate the relationship in question, “[t]he focus is not on the subject matter of the
relationship . . . [but] instead is on whether the nature of the parties’ relationship itself allowed
one party to exercise control in the first party’s best interests.” Bennett, 26 P.3d at 799. “[T]he
law implies a tort duty only when th[e] relationship is of the type that, by its nature, allows one
party to exercise judgment on the other party’s behalf.” Id.; see also Dailey v. Univ. of Portland,
569 P.3d 1027, 1035 (Or. Ct. App. 2025) (“In Conway, the [Oregon Supreme C]ourt noted that
an attribute of a special relationship is that ‘one party has relinquished control over the subject
matter of the relationship to the other party and has placed its potential monetary liability in the
other’s hands’” (quoting Conway, 924 P.2d at 824)); Spada Props., Inc. v. Unified Grocers, Inc.,
121 F. Supp. 3d 1070, 1090-91 (D. Or. 2015) (“The Oregon Supreme Court’s opinions in both
Conway and Bennett establish that a special relationship giving rise to a fiduciary duty exists
only ‘when one party is acting, at least in part, to further the economic interests of the other
party.’” (quoting Conway, 924 P.2d at 822)).
Such relationships include “certain professional relationships in which one party has a
professional obligation to protect the interests of the other party,” Conway, 924 P.2d at 822
(citing Onita Pac. Corp. v. Trs. of Bronson, 843 P.2d 890, 896-97 (Or. 1992) (en banc)), or
contractual relationships that create a “status upon which the general law predicates a duty
independent of the terms of the contract.” Id. (quoting Georgetown Realty v. Home Ins. Co., 831
P.2d 7, 11 (Or. 1992)). Applicable statutory or regulatory materials may inform the existence of
a duty. Cf. Dailey, 569 P.3d at 1032-33 (evaluating the plaintiff’s argument that state regulations
“establish[ed] a standard of care that is separate from and higher than the standard of care that
ordinarily applies in negligence actions”). “Whether the relationship is one that gives rise to an
enhanced duty is a question of law.” Lewis-Williamson v. Grange Mut. Ins. Co., 39 P.3d 947,
949 (Or. Ct. App. 2002) (citations omitted).
Crawford alleges that ACA “was part of Elite and Lattice and owed the same fiduciary
duties to Crawford that Elite and Lattice owed to Crawford.” (Compl. ¶¶ 348-49.) Despite this
allegation, Crawford acknowledges in her complaint that ACA is, in fact, a “securities
compliance firm”—separate from Elite and Lattice—“that provided outsourced chief compliance
officer services to Elite and Lattice.” (Id. ¶¶ 3, 9.)
That factual distinction is important because the Supreme Court has recognized that it is
the Investment Advisers Act of 1940 (the “Investment Advisers Act”) that imposes a fiduciary
relationship between a registered investment adviser and its clients. See Sec. & Exch. Comm’n v.
Cap. Gains Rsch. Bureau, Inc., 375 U.S. 180, 190, 194 (1963) (“The Investment Advisers Act of
1940 [] reflects a congressional recognition of the delicate fiduciary nature of an investment
advisory relationship[.]”) (simplified). There is no dispute here that Elite and Lattice are
registered investment advisers (Compl. ¶¶ 2, 12-13) and that ACA, as a standalone entity, is not.
See 15 U.S.C. § 80b-2 (“‘Investment adviser’ means any person who, for compensation, engages
in the business of advising others, either directly or through publications or writings, as to the
value of securities or as to the advisability of investing in, purchasing, or selling securities, or
who, for compensation and as part of a regular business, issues or promulgates analyses or
reports concerning securities[.]”). Thus, because ACA is neither an investment adviser nor “part
of” an investment adviser, the Investment Advisers Act does not create a fiduciary or special
relationship between ACA and its clients’ investors.
Crawford instead points the Court to the combination of the SEC’s “Compliance Rule”
(see 17 C.F.R. § 275.206(4)-7) and “Ethics Rule” (17 C.F.R. § 275.204A-1) promulgated
pursuant to the Investment Advisers Act as the source of ACA’s duties here. (Pl.’s Resp. at 7,
10.) However, these rules merely require investment advisers to designate a CCO and define the
CCO’s obligations to investment advisers and funds. See 17 C.F.R. § 275.206(4)-7 (“If you are
an investment adviser registered [under] the Investment Advisers Act of 1940, it shall be
unlawful . . . for you to provide investment advice to clients unless you: (a) Adopt and
implement written policies and procedures reasonably designed to prevent violation, by you and
your supervised persons, of the Act and the rules that the Commission has adopted under the
Act; . . . (c) Designate an individual (who is a supervised person) responsible for administering
the policies and procedures that you adopt under paragraph (a) of this section.”) (simplified);
17 C.F.R. § 275.204A-1 (requiring that registered investment advisers adopt a code of ethics
requiring that supervised persons report any ethics code violations to the CCO); see also
Compliance Programs of Investment Companies and Investment Advisers, 68 Fed. Reg. 74714-
01, 74714 (Dec. 24, 2003) (noting at the time of rule adoption that “[t]hese rules are designed to
protect investors” within the context of “ensuring that all funds and advisers have internal
programs to enhance compliance with the federal securities laws”); Commission Interpretation
Regarding Standard of Conduct for Investment Advisers, Release No. IA-5248, 84 Fed. Reg.
33669-01, 33679-81 (June 5, 2019) (interpreting the standard of conduct for investment advisers
under the Investment Advisers Act and noting that “[t]he Advisers Act establishes a federal
fiduciary duty for investment advisers” and “[t]his fiduciary duty is based on equitable common
law principles and is fundamental to advisers’ relationships with their clients under the Advisers
Act”). Neither the SEC’s rules, nor its related guidance, prohibit investment advisers from hiring
a vendor to fulfill the CCO’s duties or reference a CCO’s fiduciary duties to investors.
Although Crawford is correct that the SEC necessarily adopted these rules to protect
investors like her, she cites no support for her argument that the SEC’s intent to protect investors,
standing alone, creates a fiduciary duty or special relationship between an outsourced CCO and
the investment adviser’s clients as a matter of law. Cf. Conway, 924 P.2d at 825 (“[The plaintiff]
contends that the handbook provisions that required [the defendant university] to provide its
employees with information related to their job security demonstrate that the university was
required to act to further [the plaintiff]’s economic interests, thereby giving rise to a duty of care
under Onita. Even if we agreed that those handbook provisions, in some way, obligated the
university to act in [the plaintiff]’s economic interest, we disagree that those provisions create
the type of relationship that gives rise to a duty[.] As we already have concluded, nothing in
those provisions demonstrates that the university had a special responsibility to exercise
independent judgment in [the plaintiff]’s behalf.”).
Indeed, neither Congress nor the SEC has articulated any such duty or special
relationship but instead have established a regulatory scheme wherein the CCO’s role is
independent from the influence of the investment adviser’s or funds’ officers and employees and
the CCO reports directly to a fund’s board of directors—not to clients. See, e.g., 17 C.F.R. §
270.38a-1(a)(4) (requiring funds to employ a CCO, acting independently of officers, directors,
and employees, to administer policies and procedures and monitor compliance with SEC rules);
id. at § 270.38a-1(a)(4)(iv) (requiring the CCO to meet separately with the fund’s independent
directors); id. at § 270.38a-1(c) (“No officer, director, or employee of the fund, its investment
adviser, or principal underwriter, or any person acting under such person’s direction may directly
or indirectly take any action to coerce, manipulate, mislead, or fraudulently influence the fund’s
[CCO] in the performance of his or her duties under this section.”). Crawford provides no
authority—from the SEC or otherwise—that an outsourced CCO owes the same fiduciary duties
to investors as a registered investment adviser. On this record, the Court finds that neither the
Investment Advisers Act nor SEC regulations created a fiduciary relationship between ACA and
Crawford.3 See Onita, 843 P.2d at 896-97, 899; Moyer v. Columbia St. Bank, 505 P.3d 26, 38-39
3 In light of the lack of a fiduciary relationship with an outsourced CCO, investors have
opted to bring shareholder derivative actions against outsourced CCOs on behalf of the
investment adviser or fund. See, e.g., In re Regions Morgan Keegan Sec., Derivative, ERISA
(Or. Ct. App. 2021) (holding that to the extent a defendant owes a duty to a non-client third-party
plaintiff, the defendant must have made a “sufficiently specific” promise “beyond a general
promise by defendant to use [the defendant’s] professional skills to carry out the assigned
project” to assist the client in delivering a “specific result” to the plaintiff); cf. Lutz v. Chitwood,
337 B.R. 160, 172-73 (S.D. Ohio 2005) (declining to find a “fiduciary duty on the part of a
brokerage firm’s [c]ompliance [p]rincipal to the firm’s customers with whom the [c]ompliance
[p]rincipal had no direct dealings . . . . based on [the employee’s] obligation to ensure
compliance by members of his firm with applicable securities rules and regulations and other
procedures”).4
Furthermore, Crawford has not otherwise established that ACA’s role as an outsourced
CCO “allowed [it] to exercise control” over Crawford’s investments nor “exercise judgment” on
Crawford’s behalf to give rise to a special relationship under Oregon common law. Bennett, 26
P.3d at 799; see also Spada Props., 121 F. Supp. 3d at 1093 (finding “as a matter of law that [the
d]efendant did not have a fiduciary or special relationship with [the plaintiff]” where the plaintiff
Litig., 742 F. Supp. 2d 917, 919-20 (W.D. Tenn. 2010) (bringing breach of fiduciary duty,
negligence, and other claims on behalf of investment funds against officers, directors, auditing
firm, and outside firm that “provided an employee to serve as the Funds’ chief compliance
officer” and alleging that the funds made risky investments contrary to its published investment
strategies). Of course, the SEC may also bring civil enforcement actions against outsourced
CCOs. See, e.g., In the Matter of David I. Osunkwo, SEC Docket (CCH) 11050195 (Aug. 15,
2017) (imposing remedial sanctions and a cease-and-desist order against outsourced CCO after
he caused registered investment advisers to file an inaccurate Form ADV). In other words,
outsourced CCOs are held accountable by other means.
4 The Court need not reach the question of whether or when an investment adviser’s in-
house CCO owes a fiduciary duty to investors. The out-of-district case on which Crawford
primarily relies in its response—Stanley v. Schmidt, 369 F. Supp. 3d 297, 304 (D. Mass. 2019)—
addressed an investment adviser’s in-house CCO, not an outsourced firm as here.
“fail[ed] to show that the relationship between [the d]efendant and [the plaintiff] was such that
Defendant agreed to act ‘for the benefit’ of [the plaintiff]”).
Crawford points to no other source of a fiduciary duty and the Court concludes that ACA
did not owe fiduciary duties to Crawford as a client of ACA’s clients. Accordingly, the Court
finds that Crawford fails to state a claim for breach of fiduciary duty against ACA. Nevertheless,
ACA did not move to dismiss Crawford’s allegations of joint liability for acting in concert with
the Elite Defendants’ alleged breach of fiduciary duty (Compl. ¶ 354) and therefore Crawford’s
breach of fiduciary claim premised on joint liability may proceed. (See Def.’s Reply at 6 n.6,
“The Response is correct that ACA did not move against Crawford’s claim against ACA for joint
liability for breach of duty[.]”)
II. NEGLIGENT MISPREPRESENTATION (THIRD CLAIM, COUNT TWO) AND
NEGLIGENCE (SIXTH CLAIM, COUNT TWO)
Crawford alleges that ACA negligently failed to disclose Ronnasi’s theft charge
(Compl. ¶¶ 299-311) and failed to exercise reasonable care in connection with its failure to
disclose Ronnasi’s theft charge. (Id. ¶¶ 418-35.)
To state a negligent misrepresentation claim under Oregon law, Crawford must plead the
existence of a “special relationship” with ACA. See Conway, 924 P.2d at 822 (“In other words,
for the duty to avoid making negligent misrepresentations to arise, the parties must be in a
‘special relationship,” in which the party sought to be held liable had some obligation to pursue
the interests of the other party.”). Further, the “economic loss rule” requires that to recover a
purely economic loss on a negligence claim, the plaintiff must establish that the defendant had a
special relationship with the plaintiff beyond the common law of negligence. See Harris v.
Suniga, 180 P.3d 12, 15-16 (Or. 2008) (“‘[O]ne ordinarily is not liable for negligently causing a
stranger’s purely economic loss without injuring his person or property.’ For a plaintiff to
recover in those circumstances, the plaintiff would have to show ‘[s]ome source of duty outside
the common law of negligence,’ such as a special relationship or status that imposed a duty on
the defendant beyond the common-law negligence standard.” (first quoting Hale v. Groce, 744
P.2d 1289, 1290 (Or. 1987); and then quoting Onita, 843 P.2d at 896)); Dailey, 569 P.3d at 1036
(“We conclude that neither the regulations on which plaintiff relies nor the common law cases he
cites give rise to a special relationship in this case that would permit plaintiff to recover
economic or emotional distress damages [on a negligence claim].”).
For the same reasons discussed above, Crawford has not plausibly alleged that ACA had
a special relationship with Crawford and therefore Crawford fails to state a negligent
representation or negligence claim against ACA. See Eldred v. Or. Anesthesiology Grp., P. C.,
587 P.3d 364, 370 (Or. Ct. App. 2026) (holding that “the trial court did not err in applying the
economic loss doctrine . . . and then granting defendant’s motion to dismiss plaintiff’s
negligence and negligence per se claims”).
III. FRAUD (SECOND CLAIM COUNT TWO)
Crawford alleges that ACA, Hansen, and MacKinnon knew about, had a duty to inform
Crawford of, and knowingly failed to disclose Ronnasi’s theft charge and the resulting role
changes at Elite and Lattice. (Compl. ¶¶ 252-54.) ACA moves to dismiss Crawford’s fraud claim
on the ground that she did not plead fraud with particularity as Rule 9(b) requires, did not allege
any actionable misrepresentations or omissions, did not establish ACA’s duty to disclose, and
did not plead facts to support joint liability. (Def.’s Mot. at 14-21.)
Under Oregon law, a fraud claim has five “essential elements.” Strawn v. Farmers Ins.
Co. of Or., 258 P.3d 1199, 1209 (Or.), adhered to on reconsideration, 256 P.3d 100 (Or. 2011);
see also Knepper v. Brown, 195 P.3d 383, 387 & n.5 (Or. 2008) (recognizing that the Oregon
Supreme Court’s “past cases have referred to . . . nine elements of a claim for tortious fraud” but
its “more recent cases have employed a more abbreviated list of [five] elements” (first citing U.S.
Nat’l Bank of Or. v. Fought, 630 P.2d 337, 348 (Or. 1981); and then citing Riley Hill Gen.
Contractor v. Tandy Corp., 737 P.2d 595 (Or. 1987))). Those five elements are: (1) “the
defendant made a material misrepresentation that was false;” (2) “the defendant did so knowing
that the representation was false;” (3) “the defendant intended the plaintiff to rely on the
misrepresentation;” (4) “the plaintiff justifiably relied on the misrepresentation;” and (5) “the
plaintiff was damaged as a result of that reliance.” Strawn, 258 P.3d at 1209 (citing Handy v.
Beck, 581 P.2d 68, 71 (Or. 1978)).
Whether or not ACA had a duty to disclose or acted in concert with the other defendants
here, the Court finds that Crawford has failed to plead a plausible theory of loss causation to state
a fraud claim. Specifically, Crawford has not alleged facts to tie ACA’s failure to disclose
Ronnasi’s theft charge in 2023 and the resulting organizational changes with the investment
losses Crawford suffered due to market volatility in 2024 and 2025.
The Oregon Supreme Court evaluates the “proximate cause” element of a common law
fraud claim by applying its foreseeability test articulated in Fazzolari and Buchler. See Knepper,
195 P.3d at 387 (“The question, then, is whether th[e] notion of proximate cause or proximate
injury is equivalent to the concept of ‘reasonable foreseeability,’ as we have used that phrase in
cases like Fazzolari and Buchler. We are persuaded that it is.”); see also Fazzolari By &
Through Fazzolari v. Portland Sch. Dist. No. 1J, 734 P.2d 1326, 1337 (Or. 1987) (“The scope of
[negligence] does not exclude precautions against risks of crime or torts merely because a third
person inflicts the injury. Another person’s crime was once thought to lie beyond a defendant’s
responsibility on grounds of ‘proximate cause,’ but more recent decisions have dealt with the
behavior of others, lawful or otherwise, as part of the general analysis of foreseeable risks.”)
(citations omitted); Buchler v. State By & Through Or. Corr. Div., 853 P.2d 798, 804-05 (Or.
1993) (“[M]ere ‘facilitation’ of an unintended adverse result, where intervening intentional
criminality of another person is the harm-producing force, does not cause the harm so as to
support liability for it.”). Even construing the alleged facts in the light most favorable to
Crawford, the causal chain Crawford alleges in support of her fraud claim is too attenuated to
establish reasonable foreseeability here.
Crawford’s alleged loss causation theory is that if ACA had disclosed Ronnasi’s theft
charge to investors in 2023, Crawford would have viewed Ronnasi as untrustworthy, would have
withdrawn her money from the Alpha Fund at some point before August 2024, and would have
avoided the market losses she incurred thereafter. (See Compl. ¶¶ 203, 257; Pl.’s Resp. at 17-18,
23.) Crawford’s factual allegations do not sufficiently connect the investment losses she suffered
to ACA’s failure to disclose to overcome the lack of foreseeability of the intervening events that
actually caused Crawford’s losses—specifically, the market volatility spikes in August 2024 and
April 2025. (See Compl. ¶¶ 5-6.)
It is important to discuss what Crawford does not allege here. Crawford does not allege
that ACA’s failure to disclose Ronnasi’s theft charge or resulting reorganization caused Ronnasi
to solicit Crawford to invest in the funds or to adopt the trading strategy that rendered the funds
vulnerable to the later volatility events. (See Def.’s Mot. at 13.) Nor does Crawford allege that
Ronnasi’s dishonesty, theft charge, or lack of disclosures relating thereto caused the funds to lose
value. As ACA correctly points out, there is “an essential difference in type between a loss
caused by market movements (as alleged here), and one caused by an adviser running a Ponzi
scheme or embezzling client funds (not alleged here).” (Id. at 10.) Neither the pending theft
charge itself nor the lack of disclosure was the harm-producing force here.
Rather, Crawford’s fraud theory relies on her allegations that had ACA disclosed the
pending theft charge in 2023, she would have avoided the eventual market volatility losses in
2024 and 2025 because she would have made an intervening decision to exit the Alpha Fund.5
(Compl. ¶¶ 166-67.) However, Crawford’s allegations—which the Court accepts as true—
underscore that her eventual investment losses bear no direct causal connection to ACA’s failure
to uncover or disclose Ronnasi’s alleged misconduct. Crawford’s allegations at best plausibly
support that ACA’s failure to disclose caused Crawford to remain invested in the fund, not that it
caused the drop in fund value the following year, which Crawford acknowledges was caused by
market volatility. As a result, the Court finds that the risk of investment losses in 2024 and 2025
due to market volatility was not a reasonably foreseeable consequence of ACA’s failure to
disclose Ronnasi’s pending theft charge in 2023. See Or. Steel Mills, Inc. v. Coopers & Lybrand,
LLP, 83 P.3d 322, 330 (Or. 2004) (“[D]efendant’s conduct caused the delay in the offering that
led to an ‘unintended adverse result.’ However, the intervening action of market forces on the
price of plaintiff’s stock was the ‘harm-producing force,’ and [the] defendant’s actions did not
‘cause’ the decline in the stock price so as to support liability for that decline. As a matter of law,
the risk of a decline in plaintiff’s stock price in June 1996 was not a reasonably foreseeable
consequence of [the] defendant’s [accounting errors] in 1994 and early 1995.”).
Crawford argues that the foreseeability “question is simply whether it is foreseeable that
negligently carrying out CCO duties could result in securities law violations and clients losing
5 Crawford acknowledges that she chose not to exit the Alpha Fund after Ronnasi notified
her in August 2024 that the fund had lost 37.8% of its value. (Compl. ¶¶ 181, 190, 203.)
money.” (Pl.’s Resp. at 18.) But Crawford’s foreseeability theory relies on an overly generalized
risk description. The Oregon Supreme Court has instructed that “describing the type of harm at
risk too generally—such as stating that criminals commit crimes or that escaped prisoners may
commit crimes while at large—makes criminal acts the legal responsibility of everyone who may
have contributed in some way to the criminal opportunity.” Chapman v. Mayfield, 361 P.3d 566,
575 (Or. 2015) (en banc) (simplified). “Such a conception would sweep too broadly because
mere facilitation of an unintended adverse result, . . . does not cause the harm so as to support
liability for it.” See id. (simplified); see also Buchler, 853 P.2d at 806 (“Whatever may be the
utility of a generalized foreseeability principle—or its alter ego, the general duty principle—in
preventing harm to society’s members by modifying conduct so that harm is avoided, the current
state of tort law does not reach so far as plaintiffs would have it reach in this case. As a matter of
law, the harm that actually occurred did not result from any risk of harm to others that was
unreasonably created by [the defendant].”).
Indeed, the risk of financial loss is inherent in every investment and Crawford points to
no authority that Oregon law recognizes so general a view of foreseeability to hold ACA liable
here. See Buchler, 853 P.2d at 804-05; see also Cook v. Sch. Dist. UH3J, 731 P.2d 443, 444-45
(Or. Ct. App. 1987) (“General conclusory allegations that defendants knew or should have
known that there was a substantial risk [], in the absence of ultimate facts upon which the
allegation is based, are insufficient to withstand a motion to dismiss. The trial court properly
dismissed the complaint for failure to state a claim.”) (citation omitted).
For these reasons, Crawford has not alleged facts to establish a viable theory of loss
causation and she fails to state a fraud claim against ACA.
///
IV. UTPA (FIFTH CLAIM, COUNT ONE)
Crawford alleges a claim under the Oregon UTPA based on four of its subsections.
(Compl. ¶¶ 365-80, alleging violations of OR. REV. STAT. § 646.608(1)(b), (c), (k), (s).)
First, the Court finds that Crawford cannot state a UTPA claim based on subsections (b)
or (s) because those subsections expressly apply only to “real estate, goods or services.” OR.
REV. STAT. § 646.608(1)(b), (s) (“A person engages in an unlawful practice if in the course of
the person’s business, vocation or occupation the person does any of the following: (b) Causes
likelihood of confusion or of misunderstanding as to the source, sponsorship, approval, or
certification of real estate, goods or services. . . . [or] (s) Makes false or misleading
representations of fact concerning the offering price of, or the person’s cost for real estate, goods
or services.”).
Crawford alleges that the UTPA applies to investment advisory services because people
“customarily” invest money “for personal, family, or household purposes” and she invested her
money in the funds for those purposes. (Compl. ¶¶ 367-78.) Although investment returns can
certainly be used for “personal, family or household purposes,” Oregon courts have consistently
held that an investment, even for personal purposes, is not the equivalent of the purchase of a
good, service, or real estate for personal use under the UTPA. See, e.g., Cullen v. Inv. Strategies,
Inc., 911 P.2d 936, 940-41 (Or. Ct. App. 1996) (emphasizing that “money is a medium, not an
article, of commerce” and therefore not “goods or services” under the UTPA) (citation omitted);6
see also Goren on Behalf of Est. of Goren v. SMA Hub, Inc., No. 3:24-cv-00580-JR, 2025 WL
3485722, at *19 (D. Or. Dec. 4, 2025) (explaining that “as a matter of law,” the UTPA does not
6 The Oregon legislature has since added loan services to the UPTA (see OR. REV. STAT.
§ 646.607(6)(a)), but notably has not added investment services.
apply to investment property or business banking services); cf. Roach v. Mead, 722 P.2d 1229,
1235 (Or. 1986) (“The legal services plaintiff received concerned the investment of money and
were not manifestly for personal use.”).
Crawford’s invocation of a “common-sense understanding” that “ordinary Oregonians
engage financial advisors to help them protect their financial future for personal—not
commercial—purposes” (Pl.’s Resp. at 30) is not consistent with Oregon courts’ interpretation of
the UTPA. See Searle v. Exley Exp., Inc., 564 P.2d 1054, 1056 (Or. 1977) (“Certainly it was not
intended that the [UTPA] was to be applied solely on a subjective basis by inquiring in each case
as to whether the purchaser was motivated in making the purchase by a desire to satisfy some
personal, family or household objective. Rather, the statute purports to describe transactions
involving the purchase of goods and services which customarily are entered into with the
objective of satisfying some personal, family or household purpose. Obviously included would
be the purchase of a sack of potatoes, furniture for a home, a wedding gown, an engagement ring
or a set of golf clubs. In all of these the purpose of the purchase is to serve some personal, family
or household need.”).
Crawford insists that the remaining two UTPA provisions on which she relies are not
restricted to real estate, goods or services. (See Pl.’s Resp. at 29-30, citing § 646.608(1)(c), (k)).
These subsections apply to “credit availability or the nature of the transaction or obligation
incurred” (§ 646.608(1)(k)) and “affiliation, connection, or association with, or certification by,
another” (§ 646.608(1)(c)). However, courts in this district have consistently—and
persuasively—held to the contrary, finding that it is improper to read sections of the UTPA that
do not expressly mention goods or services “in isolation” to support the “impression that a
person may bring an action under the UTPA that does not involve goods or services.” F.D.S.
Marine, LLC v. Shaver Transp. Co., No. 00-1245-ST, 2001 WL 34045718, at *1 (D. Or. May 25,
2001); see also Immigr. Sols., Inc. v. Stiffler, No. 2:21-cv-01186-HL, 2022 WL 462083, at *4 &
n.2 (D. Or. Feb. 15, 2022) (granting the defendant’s motion to dismiss UTPA claim regardless of
which UTPA provisions the plaintiff relied on where “the characterization of the property as an
‘investment’ property eliminates the possibility of a claim under the UTPA”), aff’d, No. 22-
35163, 2023 WL 5567151 (9th Cir. Aug. 29, 2023); Hernandez v. BAC Home Loan Servicing,
LP, No. 3:12-cv-00106-MO, 2012 WL 1941745, at *3 & n.2 (D. Or. May 23, 2012) (recognizing
that the UTPA applies only to “real estate, goods, or services” and the addition of “loans and
extensions of credit” by amendment) (citation omitted). Crawford does not cite any cases in
which Oregon courts have applied the UTPA to investments in securities.7 (See generally Pl.’s
Resp. at 29-34.)
For these reasons, Crawford fails to state a UTPA claim against ACA.
V. OREGON SECURITIES LAW (FIRST CLAIM, COUNT TWO)
Crawford also asserts a claim against ACA under the Oregon Securities Law, OR. REV.
STAT. § 59.115(1)(b) & (3), in connection with the Elite Defendants’ solicitation and sale of
Alpha Fund securities to Crawford in 2024. (Compl. ¶¶ 226-42.)
ACA moves to dismiss Crawford’s claim because her “allegations regarding the
underlying sale of securities . . . are based upon information and belief.” (Def.’s Mot. at 22.)
Courts “need not accept” as true “[f]actual allegations on information and belief that are not
7 See Pearson v. Philip Morris, Inc., 306 P.3d 665, 688 n.14 (Or. Ct. App. 2013) (en
banc) (“As plaintiffs acknowledge, securities actions are governed by Oregon and federal
statutes other than the UTPA.”), rev’d on other grounds, 361 P.3d 3 (2015); see also Rogers v.
Cisco Sys., Inc., 268 F. Supp. 2d 1305, 1315 & n.20 (N.D. Fla. 2003) (“Numerous other courts
have held that various state unfair trade practices acts do not apply to securities transactions.”)
(collecting several cases).
peculiarly within the possession and control of the defendant and are merely conclusory or are
‘naked assertions devoid of further factual enhancement.’” Covelli v. Avamere Home Health
Care LLC, No. 3:19-cv-486-JR, 2021 WL 1147144, at *4 (D. Or. Mar. 25, 2021) (citation
omitted).
Oregon’s Securities Law allows private actions against a seller of securities, as well as a
nonseller “who participates or materially aids in the sale.” OR. REV. STAT. § 59.115(3) (“[E]very
person who participates or materially aids in the sale is also liable jointly and severally with and
to the same extent as the seller[.]”). “Oregon courts interpret the Oregon Securities Law liberally
‘to afford the greatest possible protection to the public.’” Ciuffitelli for Tr. of Ciuffitelli
Revocable Tr. v. Deloitte & Touche LLP, No. 3:16-cv-580-AC, 2017 WL 2927481, at *8 (D. Or.
Apr. 10, 2017) (quoting Foelker v. Kwalke, 568 P.2d 1369, 1372 (Or. 1977) (en banc)), findings
and recommendation adopted, 2017 WL 2927150 (D. Or. July 5, 2017).
The Court finds that Crawford’s allegations in support of her Oregon Securities Law
claim against ACA are not conclusory. See Covelli, 2021 WL 1147144, at *4 (noting that
“information and belief” allegations are only problematic if they are conclusory). Crawford
alleges that ACA drafted or assisted with drafting the August 2023 PPM on which she relied to
invest an additional $13,500 in early 2024, and that the August 2023 PPM omitted material facts
about Ronnasi’s theft charge, materially misrepresented the reorganization of Elite and Lattice,
and failed to attach a current Form ADV. (Compl. ¶¶ 226-42.) These allegations are sufficient to
state a plausible secondary liability claim against ACA under the Oregon Securities Law.8 See
8 The Court notes that it is unclear if Crawford’s “information and belief” allegations
refer to whether she received and executed certain documents or whether she received and
executed those documents in Oregon. (See, e.g., Compl. ¶ 234, “Upon information and belief,
Crawford received the ‘Supplement to Subscription Agreement’ documents for each of the 2024
investments in Oregon and executed those documents in Oregon.” (emphasis added).) Crawford
Ciuffitelli, 2017 WL 2927481, at *10 (“A prima facie case of participant or material aider
liability does not require any allegation of wrongdoing by the non-seller, let alone allegations of
fraud. Even where the allegedly unlawful securities sale involves fraud, participation and
material aid merely entails a connection to the unlawful transaction.”) (citations omitted); Elston
v. Toma, No. CV 01-1124-BR, 2004 WL 1048132, at *8 (D. Or. Apr. 15, 2004) (finding that the
plaintiff “ha[d] alleged sufficient facts to support a claim that [the defendant] participated or
materially aided [a broker-dealer] in the sale of securities to Plaintiff” under the Oregon
Securities Law); White v. Itc Corp, No. 85-2004-FR, 1986 WL 31586, at *11 (D. Or. Aug. 5,
1986) (“Plaintiffs have alleged that the sales by [the defendant] failed to comply with the Oregon
Securities Law in that the registration was void because of a misrepresentation. The court finds
this adequate to state a claim.”); see also Esha Rsch., LLC v. RLH Assets, LLC, No. 3:25-cv-
00880-AB, 2026 WL 1121951, at *10 (D. Or. Apr. 24, 2026) (denying motion to dismiss despite
the plaintiff’s reliance in part on “information and belief” allegations (quoting Neubronner v.
Milken, 6 F.3d 666, 672 (9th Cir. 1993))).
The Court denies ACA’s motion to dismiss Crawford’s claim on this basis and ACA
advances no other arguments in support of dismissal.9
///
should clarify in any amended complaint which specific allegations she pleads on “information
and belief.” In addition, to the extent ACA has now produced discovery that clearly contradicts
any of Crawford’s “information and belief” allegations, as ACA suggests (Def.’s Reply at 19),
Crawford will have an opportunity to update any such allegations in her amended complaint.
9 ACA briefly argues in a footnote that Crawford has insufficiently alleged
“participation” for “secondary liability” of ACA or Hansen. (Def.’s Mot. at 22 n.15.) ACA’s
argument is largely undeveloped and the allegation it challenges as insufficient (see, e.g., Compl.
¶ 125) is but one allegation of ACA’s involvement among others in the complaint. The Court
likewise denies ACA’s motion to dismiss on this basis.
CONCLUSION
For the reasons stated, the Court GRANTS IN PART and DENIES IN PART ACA’s
motion to dismiss (ECF No. 7). The Court DISMISSES Crawford’s claims for negligence,
negligent misrepresentation, common law fraud, and violations of the Oregon Unfair Trade
Practices Act, and DISMISSES IN PART Crawford’s breach of fiduciary claim. Crawford may
file an amended complaint within fourteen days if Crawford is able to cure the pleading
deficiencies addressed herein. If Crawford does not file an amended complaint, she may proceed
against ACA on her breach of fiduciary duty claim based on joint liability and her Oregon
Securities Law claim.
IT IS SO ORDERED.
DATED this 25th day of August 2026.
Yo,
HON. STACIE F. BECKERMAN
United States Magistrate Judge
PAGE 23 — OPINION AND ORDER