# Cefalu

> District Court, N.D. New York · September 15, 2026

URL: https://www.frixlaw.com/law-library/cases/11442475

## Case

- **Full name:** Golden Dream Hive, LLC, et al. v. Charles Cefalu, et al.
- **Court:** District Court, N.D. New York
- **Decided:** September 15, 2026
- **Opinion:** 100trialcourt
- **Cited by:** 0 later opinions in the Frix Law Library

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## Opinion text

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF NEW YORK

GOLDEN DREAM HIVE, LLC, et al.,

Plaintiffs,

v. 1:25-cv-931 (AMN/ML)

CHARLES CEFALU, et al.,

Defendants.

APPEARANCES: OF COUNSEL:

THE LINDEN LAW GROUP, PC JEFFREY BENJAMIN
250 Park Avenue, 7th Floor
New York, NY 10177
Attorneys for Plaintiffs

RUPP PFALZGRAF LLC JAMES J. GRABER
1600 Liberty Building
424 Main Street
Buffalo, NY 14202
Attorneys for Defendants
Hon. Anne M. Nardacci, United States District Judge:
MEMORANDUM-DECISION AND ORDER
I. INTRODUCTION
On July 16, 2025, plaintiffs Anna Kilian (“Kilian”) and Kilian Acquisitions, LLC initiated
this action against individual defendants Chales Cefalu (“Cefalu”) and Jennifer Comstock
(“Comstock”), and business entity defendants Ameristar Home Realty, LLC (“Ameristar”), REO
Home Services, LLC (“REO”), and Hustle & Heart Homes, Inc. (“Hustle & Heart”). Plaintiffs’
counsel subsequently filed a Second Amended Complaint (“Complaint”), which removed Kilian
and Kilian Acquisitions, LLC as plaintiffs, and substituted in Golden Dream Hive, LLC (“Golden
Dream Hive”) and Cherry Blossom Alley, LLC (“Cherry Blossom Alley”) (collectively,
“Plaintiffs”), now suing all of the original defendants in addition to business entity defendants
Ameristar Financial Corporation (“Ameristar Financial”) and Foreclosure Solutions Group, LLC
(“Foreclosure Solutions”) (collectively, “Defendants”), alleging violations of the Racketeer
Influenced and Corrupt Organizations Act of 1970, 18 U.S.C. § 1961 et seq., (“RICO”), in addition
to various state law claims.

On November 6, 2025, Defendants filed a partial motion to dismiss the complaint pursuant
to Rule 12(b)(6) (the “Motion”). Dkt. No. 27. Plaintiffs opposed the Motion on November 26,
2025, see Dkt. No. 30, and Defendants filed a reply in further support on December 3, 2025, see
Dkt. No. 31. Accordingly, Defendants’ Motion is ripe for adjudication.
For the reasons set forth below, the Court grants the Motion and dismisses the case.
II. BACKGROUND
Unless otherwise noted, the following facts are drawn from the Complaint, its attachments,
or materials it incorporates by reference, and are assumed to be true for purposes of ruling on the
motion, see Div. 1181 Amalgamated Transit Union-N.Y. Emps. Pension Fund v. N.Y.C. Dep’t of
Educ., 9 F.4th 91, 94 (2d Cir. 2021) (per curiam), or are otherwise matters of public record.

Williams v. N.Y.C. Hous. Auth., 816 F. App’x 532, 534 (2d Cir. 2020).
A. The Complaint
This case concerns two real estate investments projects between Kilian, co-investors Anna
Witowska (“Witowska”) and Jiyeon Kim (“Kim”), and Defendants. Plaintiffs allege that the two
projects were part of a racketeering scheme by Defendants, i.e., real estate salesperson Cefalu,
project manager Comstock, and several business entities they own or control.
In August of 2023, Kilian met Comstock via a group chat on WREIN, an online mentorship
forum for women interested in investing in real estate “regardless of their background or
experience level.” Dkt. No. 23 at ¶¶ 16-17, 21. Comstock offered Kilian and several co-investors,
including Witowska and Kim, an opportunity to invest in upstate New York properties. Dkt. No.
23 at ¶¶ 21-22. Comstock said she was working with a licensed realtor, Cefalu, who had purchased
several properties after they went into foreclosure. Dkt. No. 23 at ¶ 24. Through a series of online
messages, telephone calls, and a Zoom presentation given by Cefalu on October 12, 2023, he and
Comstock offered Kilian, Witowska, and Kim a “one stop shop” “Fix and Flip” deal—they would

finance Plaintiffs’ purchase of Cefalu’s foreclosed properties, manage the renovations and repairs,
and then assist in re-selling them at a profit. Dkt. No. 23 at ¶¶ 23, 27. Though Kilian, Witowska,
and Kim all lived more than four hours away from the sites, Cefalu told them it was his normal
practice to sell properties to buyers “on a sight-unseen basis.” Dkt. No. 23 at ¶¶ 33-34. Cefalu
and Comstock were aware Kilian and the other investors lacked real estate experience, and so
offered to “spoon feed” them through the process. Dkt. No. 23 at ¶ 28.
Plaintiffs allege that Cefalu and Comstock effectuated this proposal through several
business entities they owned or controlled. Cefalu is “a member and/or principal shareholder” of
defendant REO Home Services, which owned the properties at issue in this case and later sold

them to Plaintiffs. Dkt. No. 23 at ¶¶ 11-12, 39, 83. Defendant Ameristar, in which both Cefalu
and Comstock were either members or employees, fully financed the purchases of both properties
and their subsequent renovations. Dkt. No. 23 at ¶¶ 8-10, 41, 83. And Comstock’s company
Hustle & Heart was supposed to carry the projects from cradle to grave, with a broad set of
contractual responsibilities including inspecting the properties, managing renovation and
development work, hiring and overseeing contractors, maintaining financial records, and then
either performing or assisting in the properties leasing or sale. Dkt. No. 23 at ¶¶ 15, 46, 86. In
exchange, Comstock charged 20% of the rehabilitation costs as a fee for her project management
services.1 Dkt. No. 23 at ¶ 32.
Kilian decided to pursue two of the projects offered by Cefalu and Comstock. She entered
into an evenly-split partnership with Witowska to purchase, rehabilitate, and sell a single-family
home in Sidney, New York (the “Sidney property”), through the then-newly formed business

entity—and now-plaintiff—Golden Dream Hive. See Dkt. No. 23 at ¶¶ 37-39. Separately, Kilian
partnered with Kim in now-plaintiff Cherry Blossom Alley to fix and flip a property in Troy, New
York (the “Troy property”). See Dkt. No. 23 at ¶¶ 79, 81-82
Plaintiffs allege that both projects were plagued by Defendants’ mismanagement and
repeated misrepresentations. Starting with the Sidney property, in February of 2024 Comstock
visited it and reported that a $25,000 budget would be sufficient for renovations. Dkt. No. 23 at
¶¶ 39, 42. Golden Dream Hive purchased the Sidney property for $85,000, and Cefalu told
Plaintiffs they could expect a profit of $30,000 on a post-renovation sale. See Dkt. No. 23 at ¶¶
37, 41. But in April, Comstock told Kilian that a contractor had discovered that electrical re-wiring

was necessary—contrary to Cefalu’s prior representation that only cosmetic work would be
required, see Dkt. No. 23 at ¶ 37—forestalling any other renovations. Dkt. No. 23 at ¶ 50. And

1 Two other business entity defendants, Ameristar Financial and Foreclosure Solutions, are
identified as defendants in the caption of the Complaint. See Dkt. No. 23 at 1. But both are
mentioned only once in the Complaint itself, in a conclusory allegation that they were members of
the alleged RICO association-in-fact. See Dkt. No. 23 at ¶ 119. No statements of fact support
their involvement in this case. See generally Dkt. No. 23. When Defendants pointed out this
discrepancy, Plaintiffs replied that the Complaint “is rife with allegations, among other things, as
to [Ameristar Financial’s] withholding of funds at critical points in time.” Dkt. No. 30 at 26 n.4.
But while there are factual statements about withheld funds in the Complaint, these are all imputed
to Ameristar, a distinct business entity and defendant from Ameristar Financial. See Dkt. No. 23
at ¶¶ 8-10, 62, 65, 77, 83, 110, 119. Whether this suggests Plaintiffs confused Ameristar and
Ameristar Financial, or failed to differentiate between the two when referring to an ‘Ameristar,’ is
immaterial—the Court is bound not to “invent factual allegations that [Plaintiffs have] not pled.”
Chavis v. Chappius, 618 F.3d 162, 170 (2d Cir. 2010).
by the end of May, despite the completion of some of the required electrical work, Kilian learned
the house still needed further electrical re-wiring and plumbing repair. Dkt. No. 23 at ¶¶ 52, 54.
On November 10, 2024, Kilian visited the property in person and discovered that not only had the
electrical work still not been properly completed, but that Comstock had failed to review it prior
to paying the electrician in full. Dkt. No. 23 at ¶ 72. To that point, Comstock had also allegedly

violated other contractual obligations by, among other things, failing to update an online web
application tracking the project, Dkt. No. 23 at ¶ 48, failing to consistently visit the Sidney
property, Dkt. No. 23 at ¶ 57, and failing to maintain accurate records regarding payments to
contractors and the use of Kilian’s credit card to purchase materials, see Dkt. No. 23 at ¶¶ 59, 63,
67, 73, 77. Further, Cefalu and Comstock had failed to properly pay out both the original financing
earmarked for the renovation and an additional loan Ameristar extended to cover the unexpectedly
high cost of work on the Sidney property—and, ultimately, Kilian and Witowska had to self-fund
the remainder of the work. See Dkt. No. 23 at ¶¶ 62-63, 65-67, 69. In total, renovation work cost
“well above” the $25,000 originally projected for the project, and the Sidney property was only

ready for sale in December of 2024. Dkt. No. 23 at ¶¶ 75, 78. Kilian also learned that Defendants
had failed to report the Sidney property was in a flood zone, and as such flood insurance would
not be available. Dkt. No. 23 at ¶ 73.
Plaintiffs allege a similar pattern of mismanagement and misrepresentation with respect to
the Troy property. Cherry Blossom Alley purchased the Troy property on April 1, 2024, for
$110,000, and at that time Cefalu assessed that $40,000 would be sufficient to cover refurbishment,
with an expected profit of $60,000. See Dkt. No. 23 at ¶ 82. But, as with the Sidney property,
Comstock failed to either monitor the contractor’s work or account for expenditures—and by early
October of 2024, a roof repair required before any other renovations could begin was still
incomplete, and Comstock had abandoned her position as project manager. Dkt. No. 23 at ¶¶ 96-
99, 107, 109. Further, unlike the Sidney property, the Troy property faced an issue with occupants.
While the purchase contract had stated that the property was occupied, Cefalu had reported it
would not be a problem to remove the occupants. Dkt. No. 23 at ¶ 83. But Cefalu did not disclose
that the occupants were squatters, see Dkt. No. 23 at ¶ 112, and from May through late September

of 2024 there were repeated break-ins at the Troy property, see Dkt. No. 23 at ¶¶ 89, 92, 97, 102,
105-06, 108. Comstock promised to install lights and decoy cameras outside the house to
discourage the break-ins, but not only did she never do so, see Dkt. No. 23 at ¶ 97, Kilian later
learned that the back gate of the Troy property had been left unlocked for months, Dkt. No. 23 at
¶ 108. The break-ins caused a buyer of the Troy property to withdraw their interest. Dkt. No. 23
at ¶ 105. Kilian later learned from consultations with local contractors and investors that the Troy
property required more than $100,000 of repair work, and it would not sell for more than $90,000
without those renovations. Dkt. No. 23 at ¶ 109.
Defendants sold the Troy property on February 6, 2025, resulting in a loss to Plaintiffs of

more than $53,000. Dkt. No. 23 at ¶ 114. As of October of 2025, Defendants were attempting to
sell the Sidney property without Plaintiffs’ approval, and Plaintiffs anticipated a loss on the
property in excess of $89,000. See Dkt. No. 23 at ¶ 115. Further, Plaintiffs allege that “Defendants
have engaged in substantially similar behavior with other members of the WREIN Community
related to properties in Saratoga and nearby New York counties,” identifying in particular “two
other victims” and the addresses of their properties. Dkt. No. 23 at ¶ 117.
B. Procedural History
This action was initiated by a complaint on July 16, 2025, which identified the plaintiffs as
Kilian and Kilian Acquisitions, LLC, and the defendants as Cefalu, Comstock, Ameristar, REO
Home Services, and Hustle & Heart. See Dkt. No. 1. In the complaint, the plaintiffs contended
that the Court had diversity subject matter jurisdiction. See Dkt. No. 1 at ¶ 2; see 28 U.S.C. § 1332.
Kilian and Kilian Acquisitions, LLC filed a First Amended Complaint on August 6, 2025 with
minimal changes. See Dkt. No. 6. The defendants identified in those first two complaints filed a
motion to dismiss, principally contending that Golden Dream Hive and Cherry Blossom Alley
were not named plaintiffs, that the complaint failed to adequately plead Kilian and Kilian

Acquisitions, LLC were parties to the relevant contracts, and that accordingly the case should be
dismissed for lack of standing. Dkt. No. 13-6 at 5-10; see Premium Mortg. Corp. v. Equifax, Inc.,
583 F.3d 103, 108 (2d Cir. 2009) (“A non-party to a contract governed by New York law lacks
standing to enforce the agreement in the absence of terms that clearly evidence[] an intent to permit
enforcement by the third party in question.”) (internal quotation omitted).
In response, on October 24, 2025, Plaintiffs’ counsel filed the instant Complaint, “primarily
to correct the named plaintiffs, among the other issues in the motion.” Dkt. No. 20; see Dkt. No.
23. The Complaint removes Kilian and Kilian Acquisitions, LLC, as plaintiffs, and substitutes in
Golden Dream Hive and Cherry Blossom Alley. See Dkt. No. 23. It also adds Ameristar Financial

and Foreclosure Solutions as defendants. See Dkt. No. 23. And, in addition to these other changes,
it repleads this case as arising from the Court’s federal question jurisdiction because of Plaintiffs’
RICO claim, contending the Court has supplemental jurisdiction over various state law claims.
Dkt. No. 23 at ¶ 2; see 28 U.S.C. §§ 1331, 1367(a).
On November 26, 2025, Defendants filed a partial motion to dismiss the Complaint. See
Dkt. No. 27. In their motion, Defendants contend that Plaintiffs have not stated a RICO claim
because they fail to plead distinctness as required for a substantive RICO claim and because they
fail to plead a pattern of racketeering activity. See Dkt. No. 27-2 at 5-11. Defendants also contend
that Plaintiffs fail to adequately plead relevant factual allegations against defendants Ameristar
Financial and Foreclosure Solutions, see supra note 1, and against defendant REO Home Services.
See Dkt. No. 27-2 at 11-13. Finally, Defendants contend that the Court should dismiss one of
Plaintiffs’ claims under state law for failure to state a claim for breach of fiduciary duty against
defendants Cefalu and Comstock. See Dkt. No. 27-12 at 13-15.
III. STANDARD OF REVIEW

A motion to dismiss for failure to state a claim pursuant to Rule 12(b)(6) tests the legal
sufficiency of a party’s claim for relief. See Patane v. Clark, 508 F.3d 106, 111-12 (2d Cir. 2007).
In considering legal sufficiency, a court must accept as true all well-pled facts in the complaint
and draw all reasonable inferences in the pleader’s favor. See ATSI Commc’ns, Inc. v. Shaar Fund,
Ltd., 493 F.3d 87, 98 (2d Cir. 2007). This presumption, however, does not extend to legal
conclusions. See Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). Although a court’s review of a
motion to dismiss is generally limited to the facts presented in the pleadings, the court may
consider documents that are “integral” to the pleadings even if they are neither physically attached
to, nor incorporated by reference into, the pleadings. See Mangiafico v. Blumenthal, 471 F.3d 391,
398 (2d Cir. 2006) (quoting Chambers v. Time Warner, Inc., 282 F.3d 147, 152-53 (2d Cir. 2002)).

To survive a motion to dismiss, a party need only plead “a short and plain statement of the
claim,” Fed. R. Civ. P. 8(a)(2), with sufficient factual “heft to sho[w] that the pleader is entitled to
relief.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 557 (2007) (alteration in original) (internal
quotation marks omitted). Under this standard, a pleading’s “[f]actual allegations must be enough
to raise a right to relief above the speculative level,” id. at 555 (citation omitted), and present
claims that are “plausible on [their] face.” Id. at 570. “The plausibility standard is not akin to a
‘probability requirement,’ but it asks for more than a sheer possibility that a defendant has acted
unlawfully.” Iqbal, 556 U.S. at 678 (citation omitted). “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). Ultimately, “when
the allegations in a complaint, however true, could not raise a claim of entitlement to relief,”
Twombly, 550 U.S. at 558, or where a plaintiff has “not nudged [his or her] claims across the line
from conceivable to plausible, [the] complaint must be dismissed.” Id. at 570.
IV. DISCUSSION

A. RICO
Plaintiffs assert a substantive civil RICO claim against Defendants pursuant to Section
1962(c) of RICO. See Dkt. No. 23 at ¶¶ 118-127. “Section 1964 establishes a private right of
action for individuals who are harmed by racketeering activity,” which “permits a plaintiff to bring
a RICO claim for sustaining injuries in his business or property by reason of a violation of [S]ection
1962.” Israel v. City of Syracuse, No. 21-cv-915, 2021 WL 4777256, at *4 (N.D.N.Y. Sept. 16,
2021) (citing 18 U.S.C. § 1964), report and recommendation adopted, 2021 WL 4773232
(N.D.N.Y. Oct. 13, 2021). To state a RICO claim under Section 1962(c), a plaintiff must allege
that “(1) the defendant has violated the substantive RICO statute, and (2) the plaintiff was injured
in his business or property by reason of a violation of [S]ection 1962.” Id. (internal quotation
marks and citation omitted). Specifically, a plaintiff must allege four elements: “(1) conduct, (2)

of an enterprise, (3) through a pattern, (4) of racketeering activity.” DeFalco v. Bernas, 244 F.3d
286, 306 (2d Cir. 2001) (quoting Sedima, S.P.R.L. v. Imrex Co., Inc., 473 U.S. 479, 496 (1985)).
This showing must be made as to each individual defendant. See United States v. Persico, 832
F.2d 705, 714 (2d Cir. 1987) (“The focus of [S]ection 1962(c) is on the individual patterns of
racketeering engaged in by a defendant, rather than the collective activities of the members of the
enterprise.”).
1. Distinctness of the RICO Enterprise
Defendants’ first challenge is to the distinctness of the alleged RICO enterprise. RICO
liability under Section 1962(c) attaches to “any person employed by or associated with any
enterprise engaged in . . . the conduct of such enterprise’s affairs.” 18 U.S.C. § 1962(c). A
“person” includes “any individual or entity capable of holding a legal or beneficial interest in

property,” 18 U.S.C. § 1961(3), and an enterprise is any “ongoing organization, formal or
informal,” in which “the various associates function as a continuing unit,” United States v.
Turkette, 452 U.S. 576, 583 (1981). Because the statute requires both, a plaintiff must allege the
existence of both a “person” (or “person[s]”), within the meaning of the statute, and an “enterprise”
that is “not simply the same ‘person’ referred to by a different name.” Cedric Kushner Promotions,
Ltd. v. King, 533 U.S. 158, 161 (2001); see Riverwoods Chappaqua Corp. v. Marine Midland
Bank, N.A., 30 F.3d 339, 344 (2d Cir. 1994) (“[T]he person and the enterprise referred to must be
distinct . . . . [because] the plain language of [S]ection 1962 clearly envisions separate entities.”).
“It thus follows that a corporate person cannot violate the statute by corrupting itself.” Cruz v.

FXDirectDealer, LLC, 720 F.3d 115, 120 (2d Cir. 2013). Moreover, a RICO enterprise cannot
consist “merely of a corporate defendant associated with its own employees or agents carrying on
the regular affairs of the defendant,” Id. at 122 (quoting Riverwoods Chappaqua Corp., 30 F.3d at
344), even if those agents are incorporated as distinct and separate legal entities, because then
RICO liability could “attach to any act of corporate wrong-doing and the statute’s distinctness
requirement [would] be rendered meaningless,” U1it4less, Inc. v. Fedex Corp., 871 F.3d 199, 206
(2d Cir. 2017) (quoting In re ClassicStar Mare Lease Litig., 727 F.3d 473, 492 (6th Cir. 2013)).
Defendants contend that Plaintiffs fail to plead distinctness because the Complaint
“describe[s] a single business operation owned and controlled by the same two individuals acting
through commonly owned entities, rather than a distinct enterprise.” Dkt. No. 31 at 5. On this
account, by pleading that “Cefalu and Comstock own, manage, or control” REO Home Services,
Ameristar, and Hustle & Heart, “and that all perform real estate related functions for the same
businesses,” Dkt. No. 27-2 at 7-8, the RICO enterprise here “amounts to nothing more than the
corporate defendants and their owners functioning within the same business operation, not a

distinct association-in-fact enterprise.” Dkt. No. 27-2 at 8. But, as an initial matter, while a
“corporate entity may not be simultaneously the ‘enterprise’ and the ‘person’ who conducts the
affairs of the enterprise,” Anatian v. Coutts Bank (Switzerland) Ltd., 193 F.3d 85, 89 (2d Cir. 1999)
(quotation omitted), where a complaint instead alleges the corporation itself is the RICO
“enterprise,” and its owners and employees the RICO “persons” conducting the affairs of the
corporation through a pattern of racketeering activities, it can satisfy the distinctness requirement.
See United States v. Kelly, 128 F.4th 387, 412 (2d Cir. 2025) (“[T]he RICO provision . . . applies
when a corporate employee unlawfully conducts the affairs of the corporation of which he is the
. . . owner.”) (quoting Cedric Kushner Promotions, Ltd., 533 U.S. at 166); 4 K & D Corp. v.

Concierge Auctions, LLC, 2 F. Supp. 3d 525, 536 (S.D.N.Y. 2014). So a corporation can be a
RICO enterprise distinct from its president and owner, see Cedric Kushner Promotions, Ltd., 533
U.S. at 160, as can a sole proprietorship from its individual defendant owner, see City of New York
v. Smokes–Spirits.com, Inc., 541 F.3d 425, 448-49 (2d Cir.2008), rev’d and remanded on other
grounds sub nom. Hemi Grp., LLC v. City of New York, 559 U.S. 1 (2010), as can a corporation
from the combination of other individuals and corporations that own it, see 4 K & D Corp., 2 F.
Supp. 3d at 536. Further, the distinctness requirement “does not foreclose the possibility of a
corporate entity being held liable as a defendant under [S]ection 1962(c) where it associates with
others to form an enterprise that is sufficiently distinct from itself.” Riverwoods Chappaqua Corp.,
30 F.3d at 344.
That is precisely the case here, because the Plaintiffs do not plead that any particular legal
entity was the enterprise, but rather that the individual defendants and their various business
entities collectively operated as an association in fact. See Dkt. No. 23 at ¶ 119. A RICO enterprise

can be “any union or group of individuals associated in fact although not a legal entity.” 18 U.S.C.
§ 1961(5). “The term ‘any’ ensures that the definition has a wide reach, and the very concept of
an association in fact is expansive.” Boyle v. United States, 556 U.S. 938, 944 (2009) (internal
citation omitted). So any informal association in fact may qualify as a RICO Enterprise if the
members “share a common purpose to engage in a particular fraudulent course of conduct and
work together to achieve such purposes.” First Cap. Asset Mgmt., Inc. v. Satinwood, Inc., 385
F.3d 159, 174 (2d Cir. 2004) (quoting First Nationwide Bank v. Gelt Funding Corp., 820 F.Supp.
89, 98 (S.D.N.Y.1993)). This can include business entities and a shared owner, because even if
that owner had complete ownership those businesses would still “be separately existing legal

entities capable of constituting an association-in-fact enterprise.” Securitron Magnalock Corp. v.
Schnabolk, 65 F.3d 256, 263 (2d Cir. 1995). Here, Plaintiffs allege that two individual defendants
owned and operated three businesses, and made fraudulent representations about the quality and
profitability of several fix-and-flip investments to draw Plaintiffs into business. Each business
“was an independent entity that could benefit from” the individual defendants’ fraudulent
representations—one owned and sold the properties to Plaintiffs, the second financed the sale and
renovations, and the third managed the project of fixing and flipping the properties, see Dkt. No.
23 at ¶¶ 8-12, 39, 41, 43, 46, 83, 86. Securitron Magnalock Corp., 65 F.3d at 263 (“In short, these
corporations were active, operating businesses rather than [three] stacks of stationery.”); U1it4less,
Inc., 871 F.3d at 206 (looking for whether business entities with shared ownership “operate
independently in different lines of business, receive independent benefits from the illegal acts of
the enterprise, and affirmatively use their separate corporate status to further the illegal goals of
the enterprise”). As such, the Complaint sufficiently pleads distinctness between the RICO
persons and their alleged association-in-fact enterprise.

2. Pattern of Racketeering Activity
Defendants find far more purchase with their second challenge to the Complaint. The third
and fourth elements of a substantive RICO claim require a plaintiff to sufficiently allege a “pattern
of racketeering activity,” including at least two acts of “racketeering activity” that occur within ten
years of each other, 18 U.S.C. § 1961(5), and which “amount to, or pose a threat of, continuing
criminal activity.” Schlaifer Nance & Co. v. Est. of Warhol, 119 F.3d 91, 97 (2d Cir. 1997).
Predicate “racketeering activity” specifically refers only to acts “indictable under various specified
federal statutes” listed in Section 1961(1) of the RICO statute. 1567 56th St., LLC v. Spitzer, 774
F. Supp. 3d 476, 492 (E.D.N.Y. 2025). The only two such acts mentioned in the Complaint, mail

fraud and wire fraud, are subject to the heightened pleading requirements of Federal Rule of Civil
Procedure 9(b). See Spool v. World Child Int’l Adoption Agency, 520 F.3d 178, 185 (2d Cir. 2008)
(citing, inter alia, Fed. R. Civ. P. 9(b)). Thus, the elements of mail fraud and wire fraud—“(i) a
scheme to defraud (ii) to get money or property (iii) furthered by the use of interstate mail or
wires,” see Williams v. Affinion Grp., LLC, 889 F.3d 116, 124 (2d Cir. 2018) (citations omitted)—
must be pled with particularity. See Bayshore Cap. Advisors, LLC v. Creative Wealth Media Fin.
Corp., 667 F. Supp. 3d 83, 125 (S.D.N.Y. 2023). A scheme to defraud requires the defendant to
make a material misrepresentation. Edmondson v. Raniere, 751 F. Supp. 3d 136, 168 (E.D.N.Y.
2024) (citing Williams, 889 F.3d at 124). And a misrepresentation is only material if it is “likely
to be deemed significant to a reasonable person considering whether to enter into the transaction
—that is, if it misstates the economic value of the bargain.” Id. (internal quotation marks and
citation omitted).
Plaintiffs have failed to adequately plead the predicate acts required for a RICO claim under
Rule 9(b). While the Complaint states generally that “the vast majority of communications”

between Kilian, Witwoska, Kim, and the Defendants “were by phone, email or messenger,” Dkt.
No. 23 at ¶ 23, only once does the Complaint specifically identify the date, speaker, method of
communication, and potentially material misrepresentations made in a statement by a Defendant—
an October 12, 2023 Zoom call where Cefalu spoke to WREIN members including Kilian, Dkt.
No. 23 at ¶¶ 27-30. See Campos v. Lavinsky, No. 22-cv-1278, 2022 WL 16950054, at *3
(E.D.N.Y. Nov. 14, 2022) (finding that a plaintiff must “specify the statements he claims were
false or misleading, give particulars as to the respect in which the statements were fraudulent, state
when and where the statements were made, and identify those responsible for the statements”
(alterations omitted)); United States v. Strock, 982 F.3d 51, 66 (2d Cir. 2020) (noting that a plaintiff

must plead fraudulent intent as to each defendant “either (a) by alleging facts to show that
defendants had both motive and opportunity to commit fraud, or (b) by alleging facts that constitute
strong circumstantial evidence of conscious misbehavior or recklessness.”); see also Crawford v.
Franklin Credit Mgmt. Corp., 758 F.3d 473, 489 (2d Cir. 2014) (“RICO claims premised on mail
or wire fraud must be particularly scrutinized because of the relative ease with which a plaintiff
may mold a RICO pattern from allegations that, upon closer scrutiny, do not support it.”) (internal
quotation omitted).2 But even assuming that this statement sufficed to plead an instance of wire

2 Surveying some of the other alleged statements by Defendants demonstrates Plaintiffs’ failure to
plead the predicate racketeering acts with the specificity required by Rule 9(b). See, e.g., Dkt. No.
23 at ¶ 21 (noting a group chat occurred “[i]n or about August of 2023,” but not specifying any
fraud, a “pattern of racketeering activity” under RICO requires at least two acts. See 18 U.S.C.
§ 1961(5); Albunio v. Int’l Safety Grp., Inc., No. 15-CV-152, 2016 WL 1267795, at *6 (S.D.N.Y.
Mar. 30, 2016) (“[I]t is beyond cavil that a single incident of racketeering activity does not
constitute a ‘pattern’ for RICO purposes.”). This alone defeats the substantive RICO claim.
But even if Plaintiffs had identified more than one predicate instance of racketeering

activity, they have not made sufficient factual allegations to plead that Defendants’ conduct
“amount[s] to, or pose[s] a threat of, continuing criminal activity.” Schlaifer, 119 F.3d at 97. A
plaintiff can meet this continuity requirement by showing either a “close-ended” pattern
constituting “a series of related predicate acts extending over a substantial period of time,” or an
“open-ended” pattern “pos[ing] a threat of continuing criminal conduct beyond the period during
which the predicate acts were performed.” Spool, 520 F.3d at 183 (citations omitted). Closed-
ended continuity is “primarily a temporal concept,” and the Second Circuit has “never held a period
of less than two years” to be a substantial period of time. Id. at 184 (quoting Cofacredit, S.A. v.

person in that group chat other than Comstock, and not pleading any facts supporting an inference
that Comstock’s statements that she had previously “successfully completed a ‘Fix and Flip’
transaction” with Cefalu or that “WREIN members could increase their savings or retirement funds
by investing” were false and made with fraudulent intent); Dkt. No. 23 at ¶ 37 (alleging that Cefalu
“represented that the [Sidney] property would only require quick cosmetic work and that it would
be ready for sale within 4 months,” but not identifying a medium of communication, when that
representation was made, or facts suggesting fraudulent intent); Dkt. No. 23 at ¶ 73 (alleging that
when confronted with information the Sidney property was in a flood zone, “Cefalu told Kilian it
did not matter and, falsely, that most of the town was in the flood zone,” but not identifying when
the statement was made or through which medium of communication); Dkt. No. 23 at ¶ 75 (stating
“Cefalu . . . made [a] false and inaccurate representation[] that the [Sidney] property would sell
for $175,000.00” without identifying when, to whom, through which medium, or facts suggesting
this evaluation was made with fraudulent intent); Dkt. No. 23 at ¶¶ 83, 89, 91, 112 (stating that at
the time of the sale, despite the occupants being squatters, “Cefalu represented to Kilian and Kim
that occupancy of the [Troy property] would not be an issue for the rehabilitation and that it would
not be a problem causing the occupants to leave,” but not identifying when, through which
medium, or fraudulent intent—and later pleading facts suggesting that Defendants only learned
about the squatters after the sale).
Windsor Plumbing Supply Co., 187 F.3d 229, 242 (2d Cir. 1999)). For open-ended continuity,
while the threat is assumed where “the enterprise’s business is primarily or inherently unlawful,”
if, as here, “the enterprise primarily conducts a legitimate business,” a plaintiff must allege “that
the predicate acts were the regular way of operating that business, or that the nature of the predicate
acts themselves implies a threat of continued criminal activity.” Id. at 185 (quoting Cofacredit,

S.A., 187 F.3d at 243); see Bayshore Cap. Advisors, LLC, 667 F. Supp. 3d at 136 (“[I]t is well
established law that fraud does not fall within the ‘inherently unlawful’ category of predicate acts
so as to imply a threat of continued criminal activity.”) (citations omitted). “In assessing whether
or not the plaintiff has shown open-ended continuity, the nature of the RICO enterprise and of the
predicate acts are relevant.” DeFalco, 244 F.3d at 323. But where a scheme is “inherently
terminable,” there is no implied threat of continued racketeering activity. Cofacredit, S.A., 187
F.3d at 244 (quoting GICC Cap. Corp. v. Tech. Fin. Grp., Inc., 67 F.3d 463, 466 (2d Cir. 1995)).
In the Complaint, Plaintiffs make a conclusory allegation that this is a case of open-ended
continuity. Dkt. No. 23 at ¶ 120. But Plaintiffs’ entire argument for continuity boils down to a

single sentence in their opposition to the Motion: “The fact that Defendants insinuated themselves
into the WREIN group, evidently looking for victims to exploit, and, as alleged in the SAC, found
not only the Plaintiffs but at least two other unsuspecting victims, belies Defendants’ argument
that this was a limited, and single purported scheme.” Dkt. No. 30 at 25. The two other
unsuspecting victims are presumably the two individuals named in the one paragraph “Other
Victims” section of the Complaint. See Dkt. No. 23 at ¶ 117. However, the sum total of the
allegations regarding those individuals is that “Defendants have engaged in substantially similar
behavior with other members of the WREIN Community related to properties in Saratoga and
nearby New York counties,” and that these “two other victims of Defendants’ pattern of practice
of their fix and flip scheme” are “willing to and will be subpoenaed to testify as to their damages
in this matter.” Dkt. No. 23 at ¶ 117. Bare allegations that Defendants engaged in “substantially
similar behavior” with two other named individuals are insufficient to support open-ended
continuity. “[O]pen-ended continuity must be evaluated based only on the predicate acts
adequately pled in the complaint.” Paul Hobbs Imports Inc. v. Verity Wines LLC, No. 21 CIV.

10597 (JPC), 2023 WL 374120, at *11 (S.D.N.Y. Jan. 24, 2023). Here, Plaintiffs do not allege
any particular statements made to the two other individuals purportedly subject to Defendants’
alleged scheme, identify how those statements were fraudulent, or give any details about how,
when, where, or who made them. See Campos v. Lavinsky, 2022 WL 16950054, at *3.
As such, what Plaintiffs allege is a “discrete and relatively short-lived scheme to defraud a
handful of victims,” which does not suffice to show open-ended continuity. Cofacredit, S.A., 187
F.3d at 244 (citing GICC Capital Corp., 67 F.3d at 468–69.); see Bayshore Cap. Advisors, LLC,
667 F. Supp. 3d at 137 (“The handful of wire fraud predicates Plaintiffs have alleged is insufficient
to allege that the predicate acts of wire fraud were ‘the regular way’ that Defendants operated their

business.”). Plaintiffs’ contention that Defendants inserted themselves into the WREIN group to
find victims, and therefore might do so again, is a “speculative claim[] regarding how long the
fraud would continue,” unsupported by well-pleaded allegations, that “do[es] not, on [its] own,
support a showing of open-ended continuity.” Grace Int’l Assembly of God v. Festa, 797 F. App’x
603, 606 (2d Cir. 2019); see MinedMap, Inc. v. Northway Mining, LLC, No. 21-1480-CV, 2022
WL 570082, at *2 (2d Cir. Feb. 25, 2022) (finding “largely conclusory” allegations “do not allege
with the requisite particularity how the fraud scheme would continue into the future”). As
Plaintiffs fail to plead the required pattern of racketeering activity, the Court grants Defendants’
Motion regarding Plaintiffs’ Section 1962(c) substantive RICO claim.3, 4
B. Jurisdiction Over Remaining State Law Claims
Though the Court dismisses Plaintiffs’ RICO claim, which is the sole basis for federal
jurisdiction in this case,5 it has the authority to hear the state law claims under its supplemental

jurisdiction pursuant to 28 U.S.C. § 1367(a). In considering whether to maintain supplemental
jurisdiction, the Court exercises its discretion to determine whether to adjudicate such claims. That

3 Even if Plaintiffs had stated a RICO claim as to the scheme writ large, they would lack statutory
standing as to the Sidney property because those RICO injuries are not ripe. See Denney v.
Deutsche Bank AG, 443 F.3d 253, 266 (2d Cir. 2006) (“RICO standing is a more rigorous matter
than standing under Article III.”) (citation omitted). “A RICO plaintiff only has standing if, and
can only recover to the extent that, he has been injured in his business or property by the conduct
constituting the [RICO] violation[,] and only when his or her actual loss becomes clear and
definite.” Id. (internal quotation omitted). D’Addario v. D’Addario, 901 F.3d 80, 94 (2d Cir.
2018). And in the civil RICO setting a “fraud defendant is not liable for all losses that may occur,
but only for those actually suffered.” Motorola Credit Corp. v. Uzan, 322 F.3d 130, 136 (2d Cir.
2003); see D’Addario, 901 F.3d at 94. As pled, the Complaint does not allege clear and definite
losses that have already occurred as to the Sidney property. While the Troy property was finally
sold in February of 2025, resulting losses to Plaintiffs in excess of $53,000, the Sidney property
had not yet been sold at the time Plaintiffs filed the Complaint. See Dkt. No. 23 at ¶¶ 114-15.
Plaintiffs themselves plead that “the exact amount of the loss that Plaintiffs will suffer from that
sale is unknown,” though they “estimate” their loss on the property will be “in excess of $89,756”
when Defendants sell the property “without Plaintiffs’ authorization.” Dkt. No. 23 at ¶ 115. But
the Second Circuit instructs this Court that a RICO plaintiff may not, “through predictions of a
defendant’s future plans, artificially ripen a claim that is unripe under our jurisprudence.”
D’Addario, 901 F.3d at 94.
4 Because the Court concludes that Plaintiffs have failed to plead a pattern of racketeering activity,
it does not reach any of Defendants’ other arguments for dismissal. See supra note 1.
5 The Court may not exercise diversity jurisdiction because, among other things, the Plaintiffs do
not allege each of the members of any of the Plaintiff or Defendant limited liability corporations.
Dkt. No. 23 at ¶¶ 4-15; see Bayerische Landesbank, N. Y. Branch v. Aladdin Capital Mgmt. LLC,
692 F.3d 42, 49 (2d Cir. 2012) (“[A] limited liability company . . . takes the citizenship of each of
its members.”); 250 Lake Ave. Assocs., LLC v. Erie Ins. Co., 281 F. Supp. 3d 335, 341 (W.D.N.Y.
2017) (“Since Plaintiff is an LLC, the proper inquiry for determining the existence of complete
diversity is whether Defendant is diverse from all of Plaintiff’s members ‘because an LLC has the
citizenship of each of its members for diversity jurisdiction.’”) (quoting Alvarez & Marshal Glob.
Forensic & Dispute Servs., LLC, 14-CV-0290, 2014 WL 641440, at *2 (S.D.N.Y. Feb. 19, 2014)).
discretion is guided by the Supreme Court’s instruction that “when the federal-law claims have
dropped out of the lawsuit in its early stages and only state-law claims remain, the federal court
should decline the exercise of jurisdiction by dismissing the case without prejudice.” Carnegie-
Mellon Univ. v. Cohill, 484 U.S. 343, 350 (1988) (footnote omitted); see First Capital Asset Mgmt.,
Inc., 385 F.3d at 183 (“[I]f the federal claims are dismissed before trial, even though not

insubstantial in a jurisdictional sense, the state claims should be dismissed as well.”) (citation
omitted). However, before declining to exercise supplemental jurisdiction, “the Court must also
consider whether values of judicial economy, convenience, fairness, and comity would be
disserved by such a decision.” Principia Partners LLC v. Swap Fin. Grp., LLC, No. 18-cv-7998,
2019 WL 4688711, at *5 (S.D.N.Y. Sept. 26, 2019); see also Jones v. Ford Motor Credit Co., 358
F.3d 205, 214 (2d Cir. 2004). The Court concludes that they will not be disserved here. This case
is in its early stages and discovery has not yet begun, so any concerns about judicial economy,
convenience, and fairness are limited. See 24 Seven, LLC v. Martinez, No. 19-cv-7320, 2021 WL
276654, at *10 (S.D.N.Y. Jan. 26, 2021). Moreover, “[a]llowing Plaintiff[s] to pursue [their] state

law claims in state court would ‘avoid needless decisions of state law by this Court, which also
promotes the interests of comity and justice.’” Principia Partners, 2019 WL 4688711, at *6
(quoting Moran v. Tryax Realty Mgmt, Inc., No. 15-cv-8570, 2016 WL 3023326, at *4 (S.D.N.Y.
May 23, 2016)). Therefore, the balance of factors counsels in favor of declining to exercise
supplemental jurisdiction, and accordingly the Court dismisses the remaining state law claims
without prejudice.
CONCLUSION
Accordingly, the Court hereby
ORDERS that Defendants’ Motion to dismiss, Dkt. No. 27, is GRANTED;
and the Court further
ORDERS, that the Clerk shall enter judgment in Defendants’ favor and close this case;
and the Court further
ORDERS that the Clerk serve a copy of this Memorandum-Decision and Order on the
Parties in accordance with the Local Rules.
IT IS SO ORDERED.
Dated: September 15, 2026 Ouwet V). Arad eer
Albany, New York Anne M. Nardacci
U.S. District Judge

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/11442475. Public record. Not legal advice.