# RamiroAviles v. S&P Global, Inc.

> District Court, S.D. Illinois · March 28, 2019 · 380 F. Supp. 3d 221

URL: https://www.frixlaw.com/law-library/cases/7253818

## Case

- **Full name:** Luis RAMIRO AVILES v. S & P GLOBAL, INC., Fernando Raul Benedetto v. ATC Realty Fifteen, Inc., Horacio Nestor Acebedo v. ATC Realty Fifteen, Inc., Frederico Alvarez v. ATC Realty Fifteen, Inc., Hector Jorge Areco v. ATC Realty Fifteen, Inc.
- **Court:** District Court, S.D. Illinois
- **Decided:** March 28, 2019
- **Citations:** 380 F. Supp. 3d 221
- **Precedential status:** Published
- **Opinion:** Opinion of the court
- **Cited by:** 60 later opinions in the Frix Law Library

## Citator (automated)

- No negative treatment found by the automated citator. That is not the same as a confirmation that the case is good law; read the citing cases.
- Full citator and citing cases: https://www.frixlaw.com/law-library/cases/7253818

## How later opinions describe it (automated extraction)

- finding choice-of-law provision that read “[t]his Agreement shall be governed by, and construed in accordance with, the laws of the State of New York . . . fits to a tee the sort of contractual language that courts applying New York law have held insufficient to cover tort cla…
- explaining that although damages became clear when refinancing efforts had failed, this did not speak to the timeliness of the plaintiff’s injury and accrual of claims, but rather simply when the plaintiffs became aware of the ability to bring such claims
- explaining that under New York’s choice-of-law rules, “conduct-regulating” torts like fraud are governed by “the law of the jurisdiction where the tort occurred” (quoting In re Thelen LLP, 736 F.3d 213, 220 (2d Cir. 2013))
- finding that plaintiff’s fraud claim was complete at the time of investment

## Opinion text

J. PAUL OETKEN, United States District Judge *246 In these five related cases, one of which is a putative derivative and class action, a collective total of over 500 offshore investors ("Plaintiffs") who acquired shares in the Lifetrade Fund, B.V. ("Lifetrade") and two related funds (collectively, the "Lifetrade Funds") seek relief for the evaporation of their investments. According to Plaintiffs, Defendant Roy G. Smith, Lifetrade's founder and chief executive officer ("CEO"); Defendant John Marcum, Lifetrade's chief marketing officer; and Defendant S & P Global, Inc. ("S & P"), a ratings agency, successfully courted investment in the Lifetrade Funds notwithstanding the fact that Lifetrade was secretly funneling investor cash into other Smith- and Marcum-linked enterprises such as Defendant Portsmouth Settlement Company I, LLC ("Portsmouth"). When this loose spending left Lifetrade cash-strapped, Plaintiffs allege, Lifetrade entered into a credit deal with a predecessor to Defendant Wells Fargo Bank, N.A. ("Wells Fargo"), which ultimately ended in the transfer of all of Lifetrade's assets to a Wells Fargo subsidiary for far less than they were worth-and without Plaintiffs seeing a dime.
Understandably miffed, Plaintiffs filed these suits against nineteen defendants-including Smith, Marcum, Portsmouth, S
*247 & P, and several Wells Fargo entities-alleging misrepresentation, fraudulent conveyance, violations of the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. §§ 1961 - 1968, and other assorted malfeasance. Portsmouth, Smith, Marcum, S & P, and the Wells Fargo entities now move to dismiss all claims against them. (Dkt. Nos. 86, 88, 91. 1 ) For the reasons that follow, the motions are granted in part and denied in part.
I. Background
Because the operative complaints in these related cases are largely identical, the Court draws its factual recitation from the Second Amended Complaint in Aviles v. S & P Global, Inc. , No. 17 Civ. 2987 (Dkt. No. 77 ("Compl.") )-along with any documents attached to or incorporated by reference into that complaint, see DiFolco v. MSNBC Cable L.L.C. , 622 F.3d 104 , 111 (2d Cir. 2010) -and does not refer to the other four cases except as necessary. For present purposes, the Court assumes the truth of Plaintiffs' allegations. See id. at 110-11 .
A. Factual Background
These cases center on the loss of millions of dollars Plaintiffs invested between 2006 and 2011 in three formally distinct funds alleged to have been "operated as a single enterprise" with Defendants Roy G. Smith and John Marcum at the helm. (Compl. ¶ 39; see also Compl. ¶¶ 2 & n.2, 33-34.) The Court first describes the Lifetrade Funds and their efforts to court investment. The Court next explains the alleged undisclosed factors that made investment in the Lifetrade Funds a losing proposition. Finally, the Court turns to the events that led to the transfer of Lifetrade's assets to Defendant ATC Realty Fifteen, Inc. ("ATC Realty"), a Wells Fargo subsidiary, and Lifetrade's subsequent efforts to conceal what had taken place.
1. The Lifetrade Funds
The Lifetrade Funds built their business model around a type of transaction known as the "life settlement." See generally Eli Martin Lazarus, Viatical and Life Settlement Securitization: Risks and Proposed Regulation , 29 Yale L. & Pol'y Rev. 253 (2010). Ordinarily, a life insurance policyholder pays premiums to an insurer in exchange for the insurer's promise to pay specified proceeds to a designated beneficiary after the policyholder's death. Sometimes, though, a policyholder's changing circumstances conspire to make immediate cash in hand more attractive than the promise of a postmortem payout to a chosen beneficiary. (Compl. ¶ 41.) Such scenarios have created a market for the "life settlement," a transaction in which a third party known as a "settlement provider" makes a lump-sum payment to a policyholder, i.e. , the "life insured"; takes responsibility thereafter for paying the policy premiums; and, in return, receives the policy proceeds upon the life insured's death. (Compl. ¶¶ 41-43.) If the value of the proceeds exceeds the amount the settlement provider has paid the life insured, plus the amount the settlement provider has paid in premiums and other administrative and overhead costs, then the settlement provider will turn a profit. (Compl. ¶ 43.)
Defendant Lifetrade, the so-called "master fund" here, was a Netherlands Antilles mutual fund that invested exclusively in life insurance policies initially issued to United States citizens but later taken up *248 by third-party settlement providers. (Compl. ¶¶ 38, 40.) The other two Lifetrade Funds, LTrade Plus Ltd. and LTrade Fixed Capital (BVI) Ltd. (together, the "Feeder Funds"), were British Virgin Islands funds that invested exclusively in securities issued by Lifetrade. (Compl. ¶¶ 38-39.) Investment in any of the Lifetrade Funds was by application only and was limited to "a select group" of non-United States investors recruited through investment advisors based in Argentina, Japan, and Korea. (Compl. ¶ 38; see also Compl. ¶ 39.)
2. The Lifetrade Funds Court Investment with S & P's Help
In the first few years after its 2004 launch, Lifetrade was only "moderately successful" in raising capital. (Compl. ¶ 75.) Thus, in 2006, in an effort to boost investment, Defendant Smith, Lifetrade's founder and CEO, retained Defendant S & P, the self-professed "world's leading provider of credit ratings" (Compl. ¶ 77), to provide Lifetrade with investment ratings in exchange for fees that ranged from $2,500 to $100,000 (Compl. ¶¶ 36, 72, 75, 96). 2
S & P obliged. From June 2006 to April 2011, S & P published monthly investor-facing statements out of its New York office that stamped Lifetrade with an investment-grade rating of "Af" (Compl. ¶¶ 72, 76), thereby indicating that the fund's "portfolio holdings provide[d] strong protection against losses from credit defaults" (Dkt. No. 77-8 at 4). Plaintiffs allege that these statements, which included charts and graphs painting a rosy picture of Lifetrade's past and future performance, "w[ere] intended to, and did, promote [Lifetrade] as a desirable investment, with limited risk." (Compl. ¶ 73.) And Lifetrade, in turn, was keen to foster that impression. On August 31, 2006, just months after the ratings had begun, Lifetrade represented to investors that S & P's ratings demonstrated Lifetrade's "certified quality" (Dkt. No. 77-23 at 5; see also Compl. ¶ 80), and that they had been derived from "an audit of all aspects of [Lifetrade's] operations and ... management, including physical visits and interviews," followed by "qualitative and quantitative analysis" (Dkt. No. 77-23 at 5; see also Compl. ¶ 74).
Thus, Plaintiffs maintain, the S & P ratings were "a tremendous marketing tool" for the Lifetrade Funds. (Compl. ¶ 82.) From August 31, 2006, just after S & P began to rate Lifetrade, to December 31, 2007, Lifetrade's assets doubled in value-and by December 31, 2010, they had doubled in value again, allegedly reflecting investors' confidence in S & P's ratings. (Compl. ¶ 81.) Thanks in part to S & P, then, the Lifetrade Funds ultimately managed to pull in a grand total of $685,835,000 from investors during its lifetime. (Compl. ¶¶ 95, 97.)
3. The Undisclosed Bugs in the System
Investors' confidence in the Lifetrade Funds was allegedly misplaced in light of at least three undisclosed considerations. First, the credentials of Lifetrade's leadership were less than sterling. Second, Lifetrade was overpaying for the life insurance policies it purchased. And third, conflicts of interest motivated Lifetrade to put investor money to dubious use.
a. Smith's Tarnished Past
From the outset, Plaintiffs allege, investment in Lifetrade was a risky proposition given the spotty track record of the man at the top, Defendant Smith.
*249 On paper, it appeared as though Lifetrade's management rested in capable hands. For example, Lifetrade's June 14, 2006 prospectus reported that Smith had worked as the CEO of a Malaysian investment bank until 2005, at which point the position "was relinquished ... to allow him to focus full time on developing [Lifetrade]." (Compl. ¶ 100.) The prospectus also emphasized Smith's prior experience with "found[ing] his own fund management group and personally develop[ing] and operat[ing] a currency-trading program" that managed over $400 million. (Compl. ¶ 101.)
Plaintiffs allege, though, that the prospectus omitted salient aspects of Smith's biography. For example, the prospectus did not mention that Smith had once been temporarily barred from acting as a company director in the United Kingdom, his country of citizenship, due to his earlier, unlawful decision to direct a company while in a state of undischarged bankruptcy. 3 (Compl. ¶¶ 33, 101.) And the prospectus noted neither that Smith had supposedly received his position at the Malaysian bank only because Lifetrade agreed to pay the bank around $20,000 per month to serve as its investment manager, nor that Smith was allegedly terminated only after the bank determined that the arrangement posed an unacceptable liability risk. (Compl. ¶ 100.)
b. Lifetrade's Overvalued Investments
A leader with a spotted past alone, of course, does not necessarily mean that a company will do wrong by its investors. Here, though, the complaint goes on to allege that Smith's poor judgment seeped into Lifetrade's business decisions-and, specifically, that Smith knowingly led Lifetrade to overpay for the life insurance policies in which it invested. ( See Compl. ¶¶ 55-56.)
Ultimately, the value of any given life settlement depends on both the amount of policy proceeds at issue-a number typically fixed by the underlying insurance policy-and the life expectancy of the life insured. (Compl. ¶ 44.) According to the complaint, the insured's life expectancy is "[t]he single most important factor" in pricing a life settlement (Compl. ¶ 46), because, put bluntly, the sooner the insured dies, the sooner the settlement provider reaps the policy proceeds-and the less it pays in premiums before doing so (Compl. ¶ 45). As a result, settlement providers typically retain underwriters to provide life expectancy projections, hopefully based on "sound, objective, and consistent professional judgment." (Compl. ¶ 47.)
Here, Lifetrade is alleged to have invested almost exclusively in life settlements arranged by a single Georgia-based provider, Defendant Portsmouth. (Compl. ¶¶ 29, 50.) Portsmouth's exclusive underwriter through August 2012, ITM Twentyfirst, LLC ("21st Services") (Compl. ¶¶ 50, 54), in turn, was allegedly "widely known among insiders in the life settlement industry as early as 2004 to have been accused" in an earlier, unrelated lawsuit "of systematically and significantly understating its [life expectancy] evaluations" (Compl. ¶ 51; see also Dkt. No. 77-5). For example, whereas 21st Services' model predicted that the policies Lifetrade bought from Portsmouth would pull in a total of almost $77 million in 2011, a model used by AVS, a competing underwriter, predicted returns of only around $42 million.
*250 (Compl. ¶¶ 59(a), 60.) Indeed, the complaint alleges, on a policy-by-policy basis, 21st Services' life expectancy predictions were shorter than AVS's in every known instance, "a consistent, wide-ranging and material discrepanc[y]" that "could not have been the product of chance." (Compl. ¶ 61.)
Because of this pattern of understatement, the complaint alleges, entities like Lifetrade that invested in life insurance policies that had been appraised by 21st Services stood at risk of major losses. (Compl. ¶¶ 52-53.) Although "it may be of small significance if a particular insured dies on a particular date," the complaint maintains, "life settlement funds, by their nature and design, rely upon the pooling of many insurance policies as a way of mitigating risk and assuring the relative stability of the fund," with the consequence that systematically inaccurate life expectancies distort a fund's expectations of profitability. (Compl. ¶ 63; see also Compl. ¶ 48.)
Far from suspecting that Lifetrade was putting their money at risk, though, Plaintiffs maintain that they were led to believe that all was well. S & P repeatedly gave Lifetrade positive investment ratings without suggesting that the life expectancy estimates upon which those ratings relied were too optimistic. (Compl. ¶¶ 83-84.) And S & P's monthly statements-as well as the Lifetrade Funds' own annual statements-contained performance charts depicting Lifetrade's historical net asset value ("NAV") price per share in favorable comparison to the returns investors could expect from other investment opportunities. (Compl. ¶¶ 83, 86, 106.)
But these glowing reports, Plaintiffs maintain, left much unsaid. For one thing, the NAV figures promoted by S & P and the Lifetrade Funds had allegedly been generated using a valuation method that Smith himself had devised and that relied on assumptions described by one former Lifetrade actuary as " 'absurd,' 'ridiculously bad' and 'not reasonable by any actuarial standard.' " (Compl. ¶ 85; see also Compl. ¶ 87.) For another thing, S & P itself allegedly had reason to doubt the figures it was parroting. In an October 13, 2009 report made available only to paying subscribers, S & P opined that investment in life settlement transactions carried numerous risks, including unsound actuarial assumptions, shaky life expectancy projections, and the potential for fraud. (Compl. ¶ 90; see also Compl. ¶ 92; Dkt. No. 77-4.) Despite these privately voiced concerns, however-none of which S & P shared with Lifetrade's investors-S & P would continue to rate Lifetrade favorably until it "silently ceas[ed]" its ratings in April 2011 "without explaining why." (Compl. ¶ 94; see also Compl. ¶¶ 90-91.)
As a consequence, the complaint alleges, when the Lifetrade Funds told investors in May 2012 that Lifetrade's portfolio of life insurance policies was then valued at over $450 million, Plaintiffs would have had no reason to suspect that a third party's independent valuation had set the figure at a far more modest $302 million. (Compl. ¶ 56.)
c. Smith and Marcum's Self-Dealing
It was not mere ineptitude that led Lifetrade to invest almost exclusively in Portsmouth's overvalued insurance policies. Rather, the complaint alleges, this poor business decision arose out of Smith and Marcum's desire for self-enrichment. As it happened, Smith held indirect ownership over Portsmouth during the period in which he was acting as Lifetrade's primary investment manager. (Compl. ¶¶ 50, 56.) And Marcum was acting as the Chairman of Portsmouth's Board while simultaneously heading up Lifetrade's investor communications. (Compl. ¶¶ 34, 50.) Plaintiffs, though, were not told of these facts at the *251 time they opted to invest in the Lifetrade Funds. (Compl. ¶ 50.)
Thus, despite allegedly knowing as early as 2004 that Portsmouth was overvaluing its life insurance policies, Smith kept up the relationship between Lifetrade and Portsmouth. (Compl. ¶ 56.) In the process, Smith, personally and through his various companies, pocketed somewhere around 25% of the sums Lifetrade paid Portsmouth for the purchase of life settlements. (Compl. ¶ 56 & n.8.) For example, in connection with one transaction involving an insurance policy valued-indeed, likely over valued-by 21st Services at $770,000, Lifetrade paid Portsmouth fees, commissions, and overhead charges that totaled a cool $104,201.75. (Compl. ¶ 57.) What is worse, Plaintiffs go on, this self-dealing did not stop with Portsmouth; in connection with that same transaction, Lifetrade allegedly forked out an additional $90,000 in fees to another of Smith's enterprises-an enterprise that conveniently happened to serve as Lifetrade's investment manager from 2008 to 2010 and managing director from 2008 to 2017. (Compl. ¶¶ 25, 57.)
Meanwhile, the Lifetrade Funds' investors had no knowledge of these self-dealing arrangements. For example, Lifetrade's 2006 prospectus never divulged that Lifetrade would be incurring fees of 20-25% when purchasing life insurance policies from Portsmouth. (Compl. ¶ 103.) And although the prospectus mentioned some annual fees, it never disclosed certain additional currency-hedging fees that were being paid to a Smith-controlled company in connection with Lifetrade's Japanese assets. (Compl. ¶¶ 30, 35, 102.) Finally, while telling investors that Lifetrade would pay no undisclosed "commission or other payment ... in respect of application for Shares," the prospectus failed to mention that the Lifetrade Funds were in fact paying out a 10% commission on all sums invested. (Compl. ¶ 104; see also Compl. ¶ 30.)
All told, between the inflated amounts Lifetrade was paying to Portsmouth for insurance policies and the sums it was otherwise coughing up in "undisclosed fees, commissions and overhead charges," Smith and his entities are alleged to have appropriated at least $133 million, and perhaps as much as $239 million, when all was said and done. (Compl. ¶ 56 n.8.)
4. The Lifetrade Funds Meet Their Downfall
With investors' cash being squandered on overvalued assets and hidden fees, it was only a matter of time until the Lifetrade Funds ran into money trouble. As was the case with so many creative investment ventures, the 2007-2008 financial crisis marked the beginning of the end.
Outwardly, all was made to seem well. As the national economy fell into turmoil, Smith reassured investors that Lifetrade was "robust and strong enough to weather the storm" (Compl. ¶ 107; Dkt. No. 77-6 at 7) and that Lifetrade "continue[d] to be a stable performer" (Compl. ¶ 109 (emphasis omitted) ) as a result of its ability to "cherry pick ... the best [life insurance] policies at the best price" (Compl. ¶ 110 (omission in original) ). The reality, though, was less sanguine. Because the individuals insured under the life insurance policies that Lifetrade had acquired from Portsmouth were inconveniently outliving 21st Services' predictions, Lifetrade was not drawing in cash at the rate investors might have hoped. ( See Compl. ¶ 111.) And because Lifetrade was siphoning what liquid funds it did have into the pockets of Smith and his entities, Lifetrade needed to find another source of liquidity so that it could continue to satisfy investors' requests to redeem their shares for cash as those requests arose. ( See id. )
*252 Enter Wells Fargo. On June 25, 2008, Wells Fargo and Lifetrade entered into a loan and security agreement (the "Loan Agreement") that, as amended, assured Lifetrade a $500 million credit line, secured by Lifetrade's assets- i.e. , its portfolio of life insurance policies-with all advances to be repaid to Wells Fargo by June 15, 2012. 4 (Compl. ¶ 114.) Although this credit line was reduced to $225 million in 2009 and again to $200 million in 2011 (Compl. ¶ 115), the arrangement provided Lifetrade with the ready cash it needed to stay afloat for a time.
Despite affording a temporary reprieve, though, the Loan Agreement did nothing to shore up Lifetrade's underlying weaknesses. As the June 15, 2012 repayment date neared, Lifetrade needed to pull together the roughly $205 million it owed to Wells Fargo. ( See Compl. ¶ 143.) But although Lifetrade told its investors that the value of its insurance policy portfolio around this time was roughly $450 million-and although Wells Fargo's own valuation put the portfolio's value at around $302 million (Compl. ¶ 56)-the value of the portfolio could not be immediately translated into cash that could be used to pay off the loan ( see Compl. ¶ 131 & n.21). As a result, in March 2012, Lifetrade informed investors that it was suspending redemptions in light of the need to renegotiate the credit arrangement. (Compl. ¶ 127; Dkt. No. 77-9.)
Following the suspension of redemptions, Lifetrade called a May 17, 2012 shareholder meeting in the Dutch Antilles for purposes of voting on what to do about the expiring credit line. (Compl. ¶¶ 128-29; Dkt. No. 77-10.) Voters were given a choice of three options: surrendering Lifetrade's insurance policies to Wells Fargo to satisfy the debt, seeking a one-year extension of the credit line on unfavorable terms, or negotiating a long-term refinancing plan. (Compl. ¶ 128.) Smith and Marcum promoted the surrender option, falsely suggesting that investors could be personally liable to Wells Fargo if Lifetrade's debt ultimately went unsatisfied. (Compl. ¶ 128 & n.19.) Voters at the meeting, though, rejected Smith and Marcum's preferred surrender option in favor of pursuing long-term refinancing. (Compl. ¶ 129; Dkt. No. 77-11.)
But Wells Fargo had other plans. According to the complaint, Wells Fargo, despite claiming that it was "looking to exit the life settlement market" (Compl. ¶ 120), had long been hoping to capitalize on Lifetrade's liquidity woes, seize the life insurance policies Lifetrade had put up as collateral, and start its own life settlement business. (Compl. ¶¶ 116, 121 & n.15, 123.) Wells Fargo, in other words, believed that Lifetrade's portfolio was worth more than the amount that Lifetrade owed under the Loan Agreement and that an opportunity to take over the portfolio would present itself once Lifetrade inevitably proved unable to pay off its debt. (Compl. ¶¶ 124-25.) As evidence of this scheme, Plaintiffs note that in 2010 Wells Fargo ignored a New York investment bank's offer to buy all of *253 its life settlement loans, including those that had been extended to Lifetrade, in exchange for the full value owed under the loans. (Compl. ¶¶ 122-23.)
Wells Fargo's plan worked brilliantly. After Lifetrade proved unable to secure funding from other lenders prior to the June 15, 2012 maturity date of its loans, Wells Fargo announced its intention to foreclose on Lifetrade's assets. (Compl. ¶¶ 131-32.) But rather than foreclosing under the Loan Agreement, which would have entitled Lifetrade to collect most of the difference between the value of its portfolio and the value of its unpaid debt, Wells Fargo exploited Smith and Marcum's fear that they could be personally liable for Lifetrade's debt under Curaçao law in order to negotiate a new, August 14, 2012 agreement (the "Settlement Agreement"), pursuant to which Lifetrade agreed to transfer its entire portfolio to ATC Realty, a Wells Fargo subsidiary. 5 (Compl. ¶¶ 19, 133-34, 140.) Under the Settlement Agreement, Lifetrade's investors were to have no "further interest or claim in and to the Foreclosed Assets or to the proceeds and profits that may be derived therefrom" (Dkt. No. 77-2 at 35; see also Compl. ¶ 136), and with those magic words, Plaintiffs' investments in the Lifetrade Funds were fully wiped out (Compl. ¶ 134).
5. The Aftermath
At the time Lifetrade entered into the Settlement Agreement, Smith and Marcum gave investors no notice of the deal. (Compl. ¶ 139.) And the Settlement Agreement itself contained a confidentiality provision that barred Lifetrade from making "any statements to investors in the Lifetrade [Funds], or any other Persons, whether privately or publicly, relating to the settlement contemplated by th[e] Agreement," beyond "the mere fact ... that the settlement and foreclosure occurred." (Dkt. No. 77-2 at 48; see also Compl. ¶ 153.)
Consistent with the terms of the Settlement Agreement, Lifetrade did notify its investors that the settlement had occurred, updating its website with a link to a notice that one of its related entities had filed to inform the Irish Stock Exchange that "a consensual foreclosure process ha[d] been agreed in respect of the various rights and obligations arising under" the Loan Agreement. (Compl. ¶ 159; see also Compl. ¶ 160.) But, referring to a provision in the Settlement Agreement that granted Lifetrade a three-and-a-half-month window in which it could reacquire the portfolio upon repayment of the outstanding debt (Compl. ¶ 138), 6 Lifetrade's website represented that its directors hoped to "remove Wells Fargo from the position of collateral owner" and were "still working to achieve a satisfactory outcome for investors" (Compl. ¶ 160 (emphases omitted) ).
Even after that refinancing window closed on November 30, 2012, though, Lifetrade's management continued to suggest that all was not lost. ( See Compl. ¶¶ 160, 162.) For example, in letters dated February 20, 2013, and August 9, 2013, Smith told shareholders that refinancing efforts remained underway. (Dkt. No. 77-12; see also Compl. ¶ 162.) And on January 7, 2014, Smith wrote that he "expected that a final version" of a refinancing option *254 "w[ould] be circulated for final approval ... and signed by all parties by January 30th, 2014." (Dkt. No. 77-30 at 2; see also Compl. ¶ 165.) Meanwhile, Marcum was also telling investors that "efforts were being made to set up a new credit facility" with a French bank, and he managed to draw in fresh outlays of roughly $15 million from Lifetrade investors to finance those supposed efforts. (Compl. ¶ 167.) All the while, Lifetrade sent its investors no annual reports. (Compl. ¶ 172.)
It was not until November 21, 2016, that investors began to learn the truth. (Compl. ¶ 170.) On that day, several investors received undated letters from Lifetrade that indicated, among other things, that "[t]he Lifetrade Fund holds no assets" (Dkt. No. 77-14 at 3) and that investors had suffered "a total loss of the capital contributed to date" (Dkt. No. 77-14 at 4). With the cat now out of the bag, the director of one of Lifetrade's related entities circulated to investors a February 22, 2017 notice that, at long last, contained annual reports for the years 2012 through 2016. (Compl. ¶ 172.) These newly disclosed reports, much to investors' dismay, indicated that Lifetrade had suffered a $472 million loss in 2012 and that its investors' equity had thereafter disappeared completely as early as 2013. ( Id. )
Soon after those disclosures, this litigation began.
B. Procedural Background
On April 24, 2017, a group of more than fifty individuals and entities that had invested in the Lifetrade Funds filed an initial complaint in a suit captioned Aviles v. S & P Global, Inc. , No. 17 Civ. 2987. (Dkt. No. 5.) Four plaintiffs sought relief on their own behalves, on behalf of a putative class consisting of all offshore persons with unredeemed investments in the Lifetrade Funds, and derivatively on behalf of the Lifetrade Funds. (Dkt. No. 5 at 2.) The remaining plaintiffs asserted individual claims on their own behalves. ( Id. ) In the following months, additional class members joined the Aviles action to assert their individual claims ( see Dkt. No. 77 ¶ 18), and still more class members filed their individual claims in a total of four additional actions: Benedetto v. ATC Realty Fifteen, Inc. , No. 17 Civ. 6087, which was filed on August 11, 2017; Acebedo v. ATC Realty Fifteen, Inc. , No. 17 Civ. 7034, which was filed on September 15, 2017; Alvarez v. ATC Realty Fifteen, Inc. , No. 18 Civ. 128, which was filed on January 8, 2018; and Areco v. ATC Realty Fifteen, Inc. , No. 18 Civ. 2416, which was filed on March 19, 2018. Today, the number of plaintiffs seeking to press their individual claims across the five actions exceeds 500. ( See Aviles , No. 17 Civ. 2987, Dkt. No. 77-1 (listing the plaintiffs in the three first-filed actions); Alvarez , No. 18 Civ. 128, Dkt. No. 39-33; Areco , No. 18 Civ. 2416, Dkt. No. 8-1.)
As noted, the operative complaints in the five actions are identical in virtually all material respects. 7 These complaints name as defendants (1) ATC Realty, Wells Fargo, and two related entities-Wells Fargo Bank Northwest, N.A. ("Wells Fargo Utah"), and Wells Fargo Delaware Trust Company ("Wells Fargo Delaware")-that had been holding title to Lifetrade's policy portfolio as co-trustees at the time Lifetrade *255 entered into the Settlement Agreement (the "Wells Fargo Defendants") (Compl. ¶¶ 19-22); (2) Lifetrade, Portsmouth, Smith, Marcum, and nine additional Lifetrade- or Portsmouth-linked companies 8 (the "Lifetrade Defendants") (Compl. ¶¶ 23-35); and (3) S & P 9 (Compl. ¶ 36).
The Aviles, Acebedo, Alvarez , and Areco complaints each assert twenty-one presently live causes of action: constructively fraudulent (Count One) and fraudulent (Count Two) conveyance, as to the Wells Fargo and Lifetrade Defendants; knowing, reckless, or negligent misrepresentation, as to Wells Fargo (Counts Four and Five), the Lifetrade Defendants (Counts Nine and Ten), and S & P (Counts Sixteen, Seventeen, and Eighteen); fraudulent breach of fiduciary duty or aiding and abetting such a breach, as to the Wells Fargo Defendants (Counts Six and Thirteen) and Smith and Marcum (Count Eleven); unconscionability (Count Three), breach of contract (Count Seven), and unjust enrichment (Count Eight), as to the Wells Fargo Defendants; violations of Curaçao law, as to the Lifetrade Defendants (Count Twelve); RICO violations and conspiracy to violate RICO, as to Smith, Marcum, and the Wells Fargo Defendants (Counts Fourteen and Fifteen); conspiracy to commit fraud, as to the Lifetrade Defendants (Count Twenty); and negligence and consumer-protection violations under Argentine law, as to all defendants (Counts Twenty-Two and Twenty-Three). 10 The Benedetto complaint supplements these twenty-one causes of action with an additional claim under Japanese law, brought by all Japanese plaintiffs against all defendants (Count Twenty-Four).
Facing this formidable bevy of claims, Smith, Marcum, and Portsmouth (the "Lifetrade Movants"), the Wells Fargo Defendants, and S & P have now moved to dismiss them all. 11
II. Legal Standard
The instant motions to dismiss argue that the operative complaints, or portions thereof, must be dismissed, variously, for lack of subject-matter jurisdiction pursuant to Federal Rule of Civil Procedure 12(b)(1), lack of personal jurisdiction pursuant to Rule 12(b)(2), and failure to state a cognizable legal claim pursuant to Rule 12(b)(6).
A. Rule 12(b)(1)
Where, as here, a motion to dismiss for lack of subject-matter jurisdiction pursuant to Rule 12(b)(1) is grounded in an *256 argument that a plaintiff lacks standing to sue, it is the plaintiff's burden to demonstrate that it "had the requisite stake in the [case's] outcome when the suit was filed." Carter v. HealthPort Techs., LLC , 822 F.3d 47 , 56 (2d Cir. 2016) (quoting Davis v. Fed. Election Comm'n , 554 U.S. 724 , 734, 128 S.Ct. 2759 , 171 L.Ed.2d 737 (2008) ). Should the defendant proffer evidence beyond the complaint in support of its Rule 12(b)(1) motion, "the plaintiff[ ] will need to come forward with evidence of [its] own to controvert that presented by the defendant 'if the affidavits submitted on a 12(b)(1) motion ... reveal the existence of factual problems' in the assertion of jurisdiction." Id. at 57 (omission in original) (quoting Exchange Nat'l Bank of Chi. v. Touche Ross & Co. , 544 F.2d 1126 , 1131 (2d Cir. 1976) ). And "[i]f the extrinsic evidence presented by the defendant is [both] material and controverted," then the issue of standing presents a factual question that must ultimately be resolved in the form of factual findings. Id.
B. Rule 12(b)(2)
On a motion to dismiss for lack of personal jurisdiction pursuant to Rule 12(b)(2), "the plaintiff bears the burden of establishing that the court has jurisdiction over the defendant." Grand River Enters. Six Nations, Ltd. v. Pryor , 425 F.3d 158 , 165 (2d Cir. 2005) (quoting Bank Brussels Lambert v. Fiddler Gonzalez & Rodriguez , 171 F.3d 779 , 784 (2d Cir. 1999) ). Where, as here, there has been no "full-blown evidentiary hearing on the motion, the plaintiff need make only a prima facie showing of jurisdiction." Id. (quoting Bank Brussels , 171 F.3d at 784 ). At this "preliminary stage," a prima facie showing sufficient to defeat a Rule 12(b)(2) motion "may be established solely by allegations" pleaded in good faith. Dorchester Fin. Sec., Inc. v. Banco BRJ, S.A. , 722 F.3d 81 , 85 (2d Cir. 2013) (per curiam) (quoting Ball v. Metallurgie Hoboken-Overpelt, S.A. , 902 F.2d 194 , 197 (2d Cir. 1990) ). The allegations, though, must be more than "conclusory statement[s]"; rather, they must state specific "facts supporting th[e] conclusion" that jurisdiction is proper. Jazini v. Nissan Motor Co. , 148 F.3d 181 , 184 (2d Cir. 1998).
C. Rule 12(b)(6)
Under Rule 12(b)(6), a party may move to dismiss a claim for failure to state a cause of action "upon which relief can be granted." Fed. R. Civ. P. 12(b)(6). To survive a Rule 12(b)(6) motion, a plaintiff's complaint "must provide 'enough facts to state a claim to relief that is plausible on its face' " when the complaint's factual allegations are taken as true and all reasonable inferences are drawn in plaintiff's favor. Mayor & City Council of Baltimore v. Citigroup, Inc. , 709 F.3d 129 , 135 (2d Cir. 2013) (quoting Bell Atl. Corp. v. Twombly , 550 U.S. 544 , 570, 127 S.Ct. 1955 , 167 L.Ed.2d 929 (2007) ). Under this standard, the complaint need only provide "enough fact to raise a reasonable expectation that discovery will reveal evidence of illegal [conduct]." Id. (alteration in original) (quoting Twombly , 550 U.S. at 556 , 127 S.Ct. 1955 ).
When the complaint alleges fraud, however, Rule 9(b) imposes the added requirement that the complaint "state with particularity the circumstances constituting fraud." Fed. R. Civ. P. 9(b). Under this standard, a complaint alleging fraud must typically "(1) specify the statements that the plaintiff contends were fraudulent, (2) identify the speaker, (3) state where and when the statements were made, and (4) explain why the statements were fraudulent." United States ex rel. Chorches v. Am. Med. Response, Inc. , 865 F.3d 71 , 81 (2d Cir. 2017) (quoting *257 United States ex rel. Ladas v. Exelis, Inc. , 824 F.3d 16 , 25 (2d Cir. 2016) ). But although this standard "demands specificity, ... it does not elevate the standard of certainty that a pleading must attain beyond the ordinary level of plausibility" required of civil complaints. Id. at 88 .
III. Discussion
The Court appropriately begins its review of the many issues presented by the instant motions by addressing the jurisdictional issues that have been raised under Rules 12(b)(1) and 12(b)(2). Thereafter, the Court turns to the merits of the Rule 12(b)(6) motions.
A. Rule 12(b)(1)
To start with, the Wells Fargo Defendants contend that one of the plaintiffs, the Japanese company Plaza Asset Management ("Plaza"), lacks standing to bring its claims. (Dkt. No. 89 at 38-39.) Plaza is not alleged to have invested in any of the Lifetrade Funds but instead is alleged only to be the "assignee of all rights, claims and causes of action" of investor Nomura Trust and Banking Co., Ltd. ("Nomura"). ( Benedetto , No. 17 Civ. 6087, Dkt. No. 48 ¶ 18(d).) While it would seem that, as assignee, Plaza could invoke Nomura's claims here, the Wells Fargo Defendants maintain that Japanese law allows an assignee to assert a claim against a defendant " only if the assignor has given notice to the defendant or the defendant ... has acknowledged the assignment." (Dkt. No. 90-26 ¶ 17.) Because Plaza has not alleged such notice or acknowledgment, the Wells Fargo Defendants contend, it has not shown that it has standing to raise the claims that Nomura has allegedly assigned it. (Dkt. No. 89 at 38-39.) And even had Plaza properly alleged an assignment, the Wells Fargo Defendants further argue, Plaza has failed to adequately allege that the instant claims fall within the assignment's scope. (Dkt. No. 110 at 20.)
The Court is unpersuaded. Plaintiffs have represented that the notice of assignment required under Japanese law "can be sent at any time after the assignment" (Dkt. No. 103-1 ¶ 7), including in the midst of a pending lawsuit (Dkt. No. 103-1 ¶ 8). Given that Defendants here are now on notice of the purported assignment, Plaintiffs have, at a minimum, established a dispute as to the validity of the assignment under Japanese law.
Nor is the Court convinced by the Wells Fargo Defendants' attempt to rely on Cortlandt Street Recovery Corp. v. Deutsche Bank AG, London Branch , No. 12 Civ. 9351, 2013 WL 3762882 (S.D.N.Y. July 18, 2013), to suggest that the complaint is insufficiently specific about the scope of the assignment. (Dkt. No. 110 at 20.) Cortlandt Street addressed a situation in which a plaintiff had entirely failed to allege " what [had been] assigned," Cortlandt Street , 2013 WL 3762882 , at *2, whereas the complaint here unambiguously alleges that Nomura assigned Plaza "all [its] rights, claims and causes of action" ( Benedetto , No. 17 Civ. 6087, Dkt. No. 48 ¶ 18(d) ), which clearly encompasses the causes of action asserted here. Given that the Wells Fargo Defendants have presented no evidence controverting Plaintiffs' allegation, the Court must accept it as true at this early stage of the litigation. See Carter , 822 F.3d at 56 -57 .
The Court, then, concludes that Plaintiffs have made a sufficient showing of Plaza's standing at the pleading stage to withstand the Wells Fargo Defendants' 12(b)(1) motion.
B. Rule 12(b)(2)
Next, the Lifetrade Movants-Smith, Marcum, and Portsmouth-argue that this Court lacks personal jurisdiction over *258 them with respect to the bulk of Plaintiffs' claims. (Dkt. No. 95 at 16-24.) Although they concede that this Court has jurisdiction to adjudicate Plaintiffs' RICO claims against Smith and Marcum, see 18 U.S.C. § 1965 (b), (d) (authorizing nationwide service of process for RICO claims), they argue that all other claims against them must be dismissed on jurisdictional grounds, see Charles Schwab Corp. v. Bank of Am. Corp. , 883 F.3d 68 , 83 (2d Cir. 2018) ("A plaintiff 'must establish the court's jurisdiction with respect to each claim asserted[.]' " (quoting Sunward Elecs., Inc. v. McDonald , 362 F.3d 17 , 24 (2d Cir. 2004) ) ). ( Id. ) Alternatively, they argue that even if jurisdiction is proper, the Court should stay or dismiss Plaintiffs' claims against Smith and Marcum in light of a related action that is currently pending in Curaçao. (Dkt. No. 95 at 39-40.)
Plaintiffs respond that jurisdiction is proper for two reasons. First, they argue that the Lifetrade Movants have consented to submit to this Court's jurisdiction by virtue of forum-selection clauses in the Loan and Settlement Agreements. (Dkt. No. 106 at 12-19.) Alternately, Plaintiffs argue, New York's long-arm statute, N.Y. C.P.L.R. § 302 , authorizes this Court to exercise personal jurisdiction over the Lifetrade Movants here because those defendants "transact[ ] ... business within [New York]," id. § 302(a)(1). (Dkt. No. 106 at 19-24.) Finally, Plaintiffs argue that the Curaçao lawsuit provides no basis for dismissal or a stay. (Dkt. No. 106 at 37-40.)
1. Consent to Jurisdiction
This Court may exercise jurisdiction over the Lifetrade Movants to the extent that they have consented to allow the Court to do so. See Brown v. Lockheed Martin Corp. , 814 F.3d 619 , 625 (2d Cir. 2016). And, relevant here, "[p]arties can consent to personal jurisdiction through forum-selection clauses in contracts." Days Inn Worldwide, Inc. v. Hazard Mgmt. Grp., Inc. , No. 10 Civ. 7545, 2012 WL 5519356 , at *3 (S.D.N.Y. Nov. 13, 2012).
In arguing that the Lifetrade Movants have consented to jurisdiction here, Plaintiffs point out that the parties to the Loan Agreement "agree[d] to the exclusive jurisdiction of any state or federal court located within the state of New York" (Dkt. No. 107-1 at 85 (formatting omitted) ) and that the parties to the Settlement Agreement "agree[d] to the exclusive jurisdiction of any state or federal court located within the City of New York" (Dkt. No. 90-4 at 43 (formatting omitted) ). Although none of the Lifetrade Movants were themselves party to these contracts, Plaintiffs point out that each movant was closely affiliated with a Lifetrade party and that each movant signed the Loan Agreement, an amendment to the Loan Agreement, or the Settlement Agreement in a representative capacity on such a party's behalf. (Dkt. No. 106 at 14-17.)
While the Second Circuit has not yet weighed in on the question, see Magi XXI, Inc. v. Stato della Città del Vaticano , 714 F.3d 714 , 723 n.10 (2d Cir. 2013), courts in this Circuit have held that parties to a contract that includes a forum-selection clause may invoke that clause to establish personal jurisdiction over a defendant that is not party to the contract but that is closely aligned with a party, see, e.g., LaRoss Partners, LLC v. Contact 911 Inc. , 874 F.Supp.2d 147 , 159-61 (E.D.N.Y. 2012) ; Recurrent Capital Bridge Fund I, LLC v. ISR Sys. & Sensors Corp. , 875 F.Supp.2d 297 , 310-11 (S.D.N.Y. 2012) ; Firefly Equities, LLC v. Ultimate Combustion Co. , 736 F.Supp.2d 797 , 799-801 (S.D.N.Y. 2010) ; Metro-Goldwyn-Mayer Studios Inc. v. Canal+ Distrib. S.A.S. , No. 07 Civ. 2918, 2010 WL 537583 , at *4-5 (S.D.N.Y. Feb. 9, 2010) ;
*259 Nanopierce Techs., Inc. v. Southridge Capital Mgmt. LLC , No. 02 Civ. 0767, 2003 WL 22882137 , at *5-6 (S.D.N.Y. Dec. 4, 2003). Plaintiffs urge the Court to adopt that practice here.
The Court, however, need not decide whether to follow the courts that have concluded that a party to a contract may enforce a forum-selection clause against a non-party that is closely related to a party. But cf. Arcadia Biosciences, Inc. v. Vilmorin & Cie , 356 F.Supp.3d 379 , 395 (S.D.N.Y. 2019) (noting that the "constitutional requirements" that govern personal jurisdiction "caution against a liberal application of forum selection clauses to non-signatory defendants"). Nor need the Court decide whether the Lifetrade Movants would be bound by the forum-selection clauses at issue here even if such a rule were to apply. After all, whatever the extent to which Wells Fargo could enforce the clauses against Lifetrade-aligned entities such as the Lifetrade Movants, Plaintiffs-who are party to neither the Loan nor the Settlement Agreement-have not demonstrated that they may invoke the clauses.
To be sure, "a non-signatory to a contract containing a forum selection clause may enforce the forum selection clause against a signatory when the non-signatory is 'closely related' to another signatory." Magi XXI , 714 F.3d at 723 (quoting Holland Am. Line Inc. v. Wärtsilä N. Am., Inc. , 485 F.3d 450 , 456 (9th Cir. 2007) ). But even if the Court assumes, as Plaintiffs urge, that the Lifetrade Movants should be treated as stand-ins for Lifetrade and that Plaintiffs, too, are closely related to Lifetrade, the complaint has not alleged that Plaintiffs are closely related to " another signatory," id. (emphasis added), i.e. , to the Wells Fargo parties.
This distinction matters. Enforcement of a forum-selection clause by a non-signatory is limited to circumstances in which "the non-signatory's enforcement of the forum selection clause is 'foreseeable' to the signatory against whom the non-signatory wishes to enforce the forum selection clause." Id. In consenting to resolve its disputes with Wells Fargo in New York's courts, Lifetrade may have foreseen that it could be called to answer to non-signatory Wells Fargo entities in those same courts. But Lifetrade could hardly have foreseen being haled into court in New York by its own investors on the basis of its agreement with Wells Fargo .
The forum-selection clauses upon which Plaintiffs rely, then, offer no basis for this Court to take personal jurisdiction over the Lifetrade Movants in connection with Plaintiffs' claims.
2. In-State Transaction of Business
Absent consent, this Court may exercise jurisdiction over the Lifetrade Movants only to the extent that "a court of general jurisdiction" in New York could do the same. Fed. R. Civ. P. 4(k)(1)(A). A New York court's ability to take jurisdiction over non-domiciliaries like the Lifetrade Movants, in turn, is limited by two sources of law. Specifically, any such exercise of jurisdiction must (1) fall within the scope of New York's long-arm statute and (2) comport with the U.S. Constitution's Due Process Clause. See Chloé v. Queen Bee of Beverly Hills, LLC , 616 F.3d 158 , 163-64 (2d Cir. 2010). Here, Plaintiffs contend that the Lifetrade Movants have "transact[ed] ... business within the state," N.Y. C.P.L.R. § 302 (a)(1), and so are subject to this Court's jurisdiction under New York's long-arm statute (Dkt. No. 106 at 19-24). To assess this argument, the Court performs a "two-step analysis," Chloé , 616 F.3d at 163 , first asking whether "the long-arm statute permits personal jurisdiction" and then "analyz[ing] whether personal jurisdiction comports *260 with the Due Process Clause of the United States Constitution," id. at 164 .
a. Long-Arm Statute
Under the long-arm statute, New York courts may take jurisdiction over non-domiciliary defendants in connection with claims that "aris[e] from" the defendants' transaction of business within the state. N.Y. C.P.L.R. § 302 (a)(1). The " 'overriding criterion' in determining whether an entity 'transacts any business' in New York within the meaning of the statute is whether the entity 'purposefully avails itself of the privilege of conducting activities within New York.' " Rosenblatt v. Coutts & Co. AG , 750 F. App'x 7 , 9-10 (2d Cir. 2018) (summary order) (quoting Paterno v. Laser Spine Inst. , 24 N.Y.3d 370 , 377, 998 N.Y.S.2d 720 , 23 N.E.3d 988 (2014) ). And "New York courts have held that a claim 'aris[es] from' a particular transaction when there is 'some articulable nexus between the business transacted and the cause of action sued upon,' " Solé Resort, S.A. de C.V. v. Allure Resorts Mgmt., LLC , 450 F.3d 100 , 103 (2d Cir. 2006) (alteration in original) (quoting McGowan v. Smith , 52 N.Y.2d 268 , 272, 437 N.Y.S.2d 643 , 419 N.E.2d 321 (1981) ), or when there is "a substantial relationship between the transaction and the claim asserted," id. (quoting Kreutter v. McFadden Oil Corp. , 71 N.Y.2d 460 , 467, 527 N.Y.S.2d 195 , 522 N.E.2d 40 (1988) ).
Applying these principles, the Court considers whether it has a basis for exercising personal jurisdiction over the Lifetrade Movants in connection with the claims asserted here.
i. Smith
Smith avers that he owns no property, business, or assets in New York (Dkt. No. 92 ¶ 4), and Plaintiffs never argue that Smith personally transacted any relevant business in New York. Instead, Plaintiffs argue that Lifetrade's own New York contacts may be imputed to Smith on an agency or alter ego theory and that Lifetrade, for its part, conducted business through New York banks. (Compl. ¶ 14; Dkt. No. 106 at 19-21.) For example, Lifetrade relied on a New York bank to verify the insurance policies it hoped to buy (Compl. ¶ 14(4); Dkt. No. 107-8) and to hold the policies in escrow after purchase (Compl. ¶ 14(5); Dkt. Nos. 107-10, 107-11). And Lifetrade used New York banks to channel investors' funds into its own offshore bank account and then to channel funds from that bank account into the offshore bank accounts of other Lifetrade and Portsmouth entities, sometimes in the form of purportedly improper commissions and fees. (Compl. ¶ 14(9); Dkt. Nos. 107-13 through 107-20; see also Dkt. No. 107 ¶ 22.)
Smith does not dispute that Lifetrade's reliance on New York banks to manage its assets and transfer investor funds constitutes the in-state transaction of business. Nor, likely, could he. As the New York Court of Appeals has confirmed, "the use of a New York correspondent bank account, standing alone, may be considered a 'transaction of business' under the long-arm statute if the defendant's use of the correspondent account was purposeful." Licci ex rel. Licci v. Lebanese Canadian Bank, SAL , 732 F.3d 161 , 168 (2d Cir. 2013) (quoting Licci v. Lebanese Canadian Bank, SAL , 20 N.Y.3d 327 , 338, 960 N.Y.S.2d 695 , 984 N.E.2d 893 (2012) ). And Plaintiffs have clearly alleged that Lifetrade's use of New York-based banking services was "frequen[t] and deliberate." Id.
Nonetheless, Smith argues, Plaintiff's efforts to rely on Lifetrade's banking activity to support this Court's jurisdiction over him in connection with the instant claims must fail for two reasons. First, he contends, *261 Plaintiffs have not alleged sufficient facts to permit the plausible inference that Lifetrade's New York contacts can be imputed to him on an agency or alter-ego theory. (Dkt. No. 95 at 19-21; Dkt. No. 111 at 6-7.) Second, he goes on, Plaintiffs' claims do not "aris[e] from," N.Y. C.P.L.R. § 302 (a)(1), those New York contacts. (Dkt. No. 111 at 7-8.)
The Court disagrees. As for the first point, under New York law, if a corporation has sufficient in-state contacts to fall subject to personal jurisdiction, then a corporate officer who has "played a part in the [corporate] activities that gave rise to the action" is likewise subject to jurisdiction, to the extent that due process permits, due to the agency relationship between the corporation and the officer. Arch Specialty Ins. Co. v. Entm't Specialty Ins. Servs., Inc. , No. 04 Civ. 1852, 2005 WL 696897 , at *4 (S.D.N.Y. Mar. 24, 2005) ; see also Kreutter , 71 N.Y.2d at 466 -72 , 527 N.Y.S.2d 195 , 522 N.E.2d 40 . To be sure, "a general allegation that an officer controls a corporation is not sufficient to establish personal jurisdiction" on an agency theory. Pilates, Inc. v. Current Concepts , No. 96 Civ. 0043, 1996 WL 599654 , at *3 (S.D.N.Y. Oct. 18, 1996). Rather, to establish an agency relationship under the long-arm statute, "New York law requires a Plaintiff to 'convince the court that [the corporation] engaged in purposeful activities in this State in relation to [Plaintiff's] transaction for the benefit of and with the knowledge and consent of the [individual defendant] and that [the individual defendant] exercised some control over [the corporation] in the matter.' " Arma v. Buyseasons, Inc. , 591 F.Supp.2d 637 , 647 (S.D.N.Y. 2008) (alterations in original) (quoting Kreutter , 71 N.Y.2d at 467 , 527 N.Y.S.2d 195 , 522 N.E.2d 40 ).
Plaintiffs' allegations here meet this test with respect to Smith. In particular, Lifetrade is alleged to have engaged in all its New York activities "under the direction and control of Smith" (Compl. ¶ 14), Lifetrade's founder, CEO, and sole voting shareholder (Compl. ¶¶ 23, 33). 12 And while this allegation alone might be too conclusory to make out a prima facie showing of jurisdiction, the complaint as a whole paints Smith as intimately involved in Lifetrade's day-to-day operations, whether by "initiat[ing] and continu[ing]" Lifetrade's business with Portsmouth (Compl. ¶ 56), establishing the method of NAV calculation used in S & P's monthly reports (Compl. ¶¶ 85, 87), or, critically here, directing outflows of investor capital into his own and his companies' pockets ( e.g. , Compl. ¶ 140). Given that New York banks formed a critical conduit for these outflows ( see Dkt. No. 107 ¶ 22), it is at least plausible to infer that Smith "exercised some control" over Lifetrade in establishing these New York connections, Arma , 591 F.Supp.2d at 647 (quoting Kreutter , 71 N.Y.2d at 467 , 527 N.Y.S.2d 195 , 522 N.E.2d 40 ). 13
Smith's second argument-that Plaintiffs' claims do not arise from Lifetrade's New York contacts-fares little better. New York's long-arm statute requires only some "relatedness between the [in-state] transaction and the legal claim[,] such that the latter is not completely unmoored *262 from the former." D & R Glob. Selections, S.L. v. Bodega Olegario Falcon Pineiro , 29 N.Y.3d 292 , 299, 56 N.Y.S.3d 488 , 78 N.E.3d 1172 (2017) (quoting Licci , 20 N.Y.3d at 339 , 960 N.Y.S.2d 695 , 984 N.E.2d 893 ). This "relatively permissive" standard is satisfied "where at least one element [of a plaintiff's claim] arises from the [defendant's] New York contacts." Id. (quoting Licci , 20 N.Y.3d at 339 , 341 , 960 N.Y.S.2d 695 , 984 N.E.2d 893 ). Personal jurisdiction under the long-arm statute, in other words, is appropriate where a plaintiff's claims are "in some way arguably connected" to the in-state transaction of business. Licci , 20 N.Y.3d at 340 , 960 N.Y.S.2d 695 , 984 N.E.2d 893 .
Here, Lifetrade allegedly used New York's banking channels to acquire investor cash (Dkt. No. 107 ¶¶ 16-21) and to route those funds to Smith and his entities under the guise of commissions and fees (Dkt. No. 107 ¶¶ 22-23). These New York channels, in other words, formed an integral part of the architecture of the self-enrichment scheme that left Lifetrade with insufficient liquidity to save its investors' money by paying off its debts rather than surrendering its assets. Plaintiffs' claims, then, are hardly "completely unmoored" from Lifetrade's New York activities. D & R Glob. Selections , 29 N.Y.3d at 299 , 56 N.Y.S.3d 488 , 78 N.E.3d 1172 (quoting Licci , 20 N.Y.3d at 339 , 960 N.Y.S.2d 695 , 984 N.E.2d 893 ); see also Licci , 20 N.Y.3d at 340 -41 , 960 N.Y.S.2d 695 , 984 N.E.2d 893 (holding that New York courts could exercise personal jurisdiction over a Lebanese bank in connection with claims arising out of a rocket attack committed in Israel by a Lebanese terrorist group because the bank had routed wire transfers to the group through a New York bank).
At this early stage in the litigation, then, the Court concludes that Plaintiffs' allegations suffice to make out a prima facie showing that this Court may exercise personal jurisdiction over Smith under New York's long-arm statute on an agency theory.
ii. Marcum
Plaintiffs make out an even stronger prima facie showing of this Court's jurisdiction over Marcum under the long-arm statute. Marcum is alleged to have visited New York on several occasions in connection with the Lifetrade Funds. (Compl. ¶ 14.) On two of the visits, Marcum allegedly met with an investor's representatives to give them false reassurances about Lifetrade's supposed refinancing efforts following the execution of the Settlement Agreement, and on at least one of these visits, Marcum allegedly met with an investment advisor to court investment in the Lifetrade Funds. ( Id. ) On several further occasions, Marcum allegedly attended meetings at the New York offices of Wells Fargo's predecessor to negotiate the Loan Agreement. ( Id. )
These meetings-in which Marcum was "physically present in New York" and during some of which Marcum purposefully cultivated "a continuing relationship" with Wells Fargo's New York-based predecessor-clearly constitute the transaction of business within the meaning of New York's long-arm statute. D & R Glob. Selections , 29 N.Y.3d at 298 , 56 N.Y.S.3d 488 , 78 N.E.3d 1172 (second quoting Fischbarg v. Doucet , 9 N.Y.3d 375 , 381, 849 N.Y.S.2d 501 , 880 N.E.2d 22 (2007) ). And Marcum's alleged in-state efforts to secure investment, negotiate the Loan Agreement, and mislead investors as to the Settlement Agreement's import clearly bear "some articulable nexus" to Plaintiffs' claims, Solé Resort , 450 F.3d at 103 (quoting McGowan , 52 N.Y.2d at 272 , 437 N.Y.S.2d 643 , 419 N.E.2d 321 ), even if, as Marcum maintains, none of these efforts *263 put him face-to-face with any of the named plaintiffs in this suit (Dkt. No. 93 ¶ 7).
The Court therefore concludes that Plaintiffs have made out a sufficient prima facie showing at the pleading stage that Marcum's in-state transaction of business subjects him to personal jurisdiction in this action under New York's long-arm statute. 14
iii. Portsmouth
Portsmouth, however, is another story. Although Portsmouth is alleged to have engaged in "extensive life settlement business in the State of New York" and to have filed a lawsuit in New York (Compl. ¶ 29), the complaint fails to allege that any of Portsmouth's New York activities bear a direct relationship with the specific events that have given rise to the instant suit. Significantly, Plaintiffs have neither alleged ( see Compl. ¶ 14) nor produced evidence ( see Dkt. No. 107 ¶¶ 22-23) that Portsmouth (as distinct from Portsmouth Securities Limited, a Malaysian company (Compl. ¶ 30) ) was involved in the banking activity that supports jurisdiction over Smith. Thus, even if Portsmouth can be said to transact business in New York as a general matter, Plaintiffs have not carried their burden of making out a prima facie showing that the particular claims they assert here "aris[e] from" that business. N.Y. C.P.L.R. § 302 (a)(1).
Plaintiffs nonetheless suggest that this Court may take personal jurisdiction over Portsmouth because Portsmouth was allegedly "controlled by Defendant Smith" and allegedly "acted in concert with and conspired with the other Lifetrade Defendants." (Dkt. No. 106 at 24.) According to Plaintiffs, these allegations are sufficient to establish this Court's jurisdiction over Portsmouth on an alter ego or agency theory. ( Id. )
As for the alter ego theory, the complaint lacks the "specific averment of facts that, if credited," could create a plausible inference that Portsmouth and the other Lifetrade Defendants "operate[d] as a single economic unit." S. New Eng. Tele. Co. v. Glob. NAPs Inc. , 624 F.3d 123 , 138 (2d Cir. 2010). While Plaintiffs allege that Smith, as Portsmouth's indirect owner, received self-dealing fees as a result of Portsmouth's business with Lifetrade ( see, e.g. , Compl. ¶ 57), the complaint nowhere suggests that Portsmouth, even if mismanaged, was "undercapitalized or otherwise used as [Smith's] 'shell' compan[y]" rather than being operated as a "legitimate profit-seeking entit[y]," Am. Lecithin Co. v. Rebmann , No. 12 Civ. 929, 2017 WL 4402535 , at *9 (S.D.N.Y. Sept. 30, 2017) ; see also Alterseekers, Inc. v. BrandForce SF, LLC , No. 12 Civ. 5392, 2015 WL 5719759 , at *6 (E.D.N.Y. Sept. 29, 2015) (requiring that a plaintiff asserting personal jurisdiction on an alter ego theory "establish ... that one entity was a shell for the other, i.e. , that one entity was subject to the complete domination of the other" (quoting Bank of Am. v. Apollo Enter. Solutions, LLC , No. 10 Civ. 5707, 2010 WL 4323273 , at *4 (S.D.N.Y. Nov. 1, 2010) ) ).
As for the agency theory, Plaintiffs have not alleged that Portsmouth, as distinct from Smith, exercised control over Lifetrade's New York contacts. In an effort to get around this defect, Plaintiffs point to their allegation that Portsmouth was Smith's alter ego (Compl. ¶ 29) and *264 urge this Court to employ transitive reasoning: because Lifetrade's in-state contacts can be imputed to Smith on an agency theory, and because Smith's contacts can be imputed to Portsmouth on an alter ego theory, the argument runs, Lifetrade's contacts can be imputed to Portsmouth (Dkt. No. 106 at 24). This proposed syllogism, though, fails at the second step. Just as the complaint fails to plausibly allege that Portsmouth was Lifetrade's alter ego, it also-for essentially the same reasons-fails to plausibly allege that Portsmouth was Smith's alter ego.
Because Plaintiffs have failed to make out a prima facie showing that New York's long-arm statute provides authority for this Court to exercise personal jurisdiction over Portsmouth here, Portsmouth's motion to dismiss all claims against it pursuant to Rule 12(b)(2) is granted.
b. Due Process
Although the Court has concluded that Plaintiffs have made out a prima facie showing that New York's long-arm statute authorizes it to take jurisdiction over Smith and Marcum for purposes of this suit, any exercise of personal jurisdiction must also comport with due process. See Chloé , 616 F.3d at 164 . The exercise of claim-specific personal jurisdiction-as opposed to general, all-purpose jurisdiction-over an out-of-state defendant satisfies due process if: (1) the defendant has "purposefully availed itself of the privilege of conducting activities within the forum State"; (2) the claim at issue "arise[s] out of or relate[s] to the defendant's forum conduct"; and (3) the exercise of jurisdiction is "reasonable under the circumstances." U.S. Bank Nat'l Ass'n v. Bank of Am. N.A. , 916 F.3d 143 , 150 (2d Cir. 2019) (quoting Bristol-Myers Squibb Co. v. Superior Court of Cal. , --- U.S. ----, 137 S.Ct. 1773 , 1785-86, 198 L.Ed.2d 395 (2017) ). 15
Where, as here, a court takes jurisdiction over a defendant under New York's long-arm statute on the basis of the defendant's in-state transaction of business, the requirements of due process are typically satisfied. See HSH Nordbank AG N.Y. Branch v. Street , No. 11 Civ. 9405, 2012 WL 2921875 , at *4 n.3 (S.D.N.Y. July 18, 2012) ("[T]he personal jurisdiction analysis under [N.Y. C.P.L.R.] § 302(a)(1) and the Due Process Clause is in most instances essentially coterminous...."). And Smith and Marcum make no argument that the Court's constitutional analysis here should differ from its statutory analysis. Indeed, the only distinct point Smith and Marcum raise in connection with the Due Process Clause is that much of the conduct at issue occurred outside the United States, suggesting, perhaps, that an exercise of personal jurisdiction here would be unreasonable. (Dkt. No. 95 at 24.) But the extraterritorial aspects of Plaintiffs' claims would not bar, for example, Marcum's home state of Connecticut from taking personal jurisdiction over him ( see Dkt. No. 93 ¶ 2), so there is no reason that they would bar New York from doing the same in a case, like this one, where personal jurisdiction is otherwise proper.
For the same reasons that Plaintiffs have made out a sufficient prima facie showing of this Court's ability to exercise jurisdiction over Smith and Marcum here under New York's long-arm statute, then, Plaintiffs have adequately alleged that this exercise comports with due process.
3. Motion to Dismiss or Stay in Light of a Prior Pending Action
Smith and Marcum finally contend that even if, as this Court has concluded, personal *265 jurisdiction over them is proper here, the claims against them should nonetheless be dismissed or stayed in light of a lawsuit currently pending against them in Curaçao. (Dkt. No. 95 at 39-40.)
In determining whether to exercise its "inherent power to dismiss or stay an action based on the pendency of a related proceeding in a foreign jurisdiction," this Court takes a holistic view of the circumstances, considering factors such as "(1) similarity of the parties and issues, (2) interests of judicial economy, (3) the order in which the actions were filed, (4) adequacy of the alternative forum, and (5) general considerations of fairness and prejudice to the parties." Thornton Tomasetti, Inc. v. Anguillan Dev. Corp. , No. 14 Civ. 7040, 2015 WL 7078656 , at *3 (S.D.N.Y. Nov. 13, 2015) (first quoting Ole Media Mgmt., L.P. v. EMI Apr. Music, Inc. , No. 12 Civ. 7249, 2013 WL 2531277 , at *2 (S.D.N.Y. June 10, 2013) ). Mindful of its "virtually unflagging obligation ... to exercise the jurisdiction given" it, however, id. (alteration in original) (quoting Royal & Sun All. Ins. Co. of Can. v. Century Int'l Arms, Inc. , 466 F.3d 88 , 92 (2d Cir. 2006) ), the Court's task "is not to articulate a justification for the exercise of jurisdiction, but rather to determine whether exceptional circumstances exist that justify the surrender of that jurisdiction," id. (quoting Royal & Sun , 466 F.3d at 93 ).
Smith and Marcum have not carried their burden of demonstrating the sort of exceptional circumstances that might warrant dismissal or a stay. Indeed, Smith and Marcum have done little more than represent that there is a lawsuit against them in Curaçao and that this lawsuit was filed by a Lifetrade investor. ( See Dkt. No. 92 ¶¶ 7-9; Dkt. No. 93 ¶¶ 8-9.) Although the Curaçao lawsuit does involve issues that are similar to those raised in the instant suit ( see Dkt. No. 94-2 ¶¶ 15-21), Smith and Marcum have provided no information about the current status of the Curaçao suit, no indication that any of the more than 500 plaintiffs here would be able to assert their own rights as part of that suit, and no information about what remedies would be available even if Plaintiffs were able to participate. If the mere existence of a fraud suit brought by a single plaintiff somewhere in the world were enough to bar a different set of plaintiffs from pursuing a lawsuit in the United States on the basis of the same fraud, those accused of transnational fraud would virtually never face suit here. That is not the law.
The Court concludes, then, that Smith and Marcum have failed to demonstrate that the pending Curaçao action warrants a stay or dismissal of the claims asserted against them here.
C. Rule 12(b)(6)
Having dealt with the jurisdictional preliminaries, the Court now turns to the question of whether Plaintiffs' complaint states a viable cause of action against S & P, the Lifetrade Movants, or the Wells Fargo Defendants. Plaintiffs' claims fall into four categories: (1) claims under the federal RICO statute; (2) claims under New York's fraudulent conveyance statute; (3) New York common-law claims; and (4) foreign-law claims. The Court addresses each category in turn.
1. RICO Claims (Counts Fourteen and Fifteen)
In their sole federal claims, Plaintiffs charge Smith, Marcum, and the Wells Fargo Defendants (the "RICO Defendants") with violating RICO (Count Fourteen) and conspiring to violate RICO (Count Fifteen). (Compl. ¶¶ 264-89.) RICO prohibits "any person employed by or associated with any enterprise engaged in ... interstate *266 or foreign commerce" from "conduct[ing] or participat[ing], directly or indirectly, in the conduct of such enterprise's affairs through a pattern of racketeering activity," 18 U.S.C. § 1962 (c), or from conspiring to do so, id. § 1962(d). Under RICO, an actionable "pattern of racketeering activity" must at a minimum be made up of two or more predicate racketeering acts-defined to include certain acts of mail and wire fraud-committed within a ten-year span. See id. §§ 1961(1), (5).
Here, Plaintiffs contend, the RICO Defendants allegedly carried out the transfer of Lifetrade's assets to ATC Realty through "multiple related acts of mail fraud and wire fraud." (Compl. ¶ 271.) These acts, Plaintiffs maintain, include emails and phone calls in which the terms of the Settlement Agreement were negotiated and finalized (Compl. ¶ 268), mailings and electronic transmissions through which the agreement was executed (Compl. ¶ 271), and various investor communications from Smith and Marcum that were allegedly aimed at concealing that Lifetrade's assets had been irretrievably surrendered (Compl. ¶¶ 272-73). Thus, Plaintiffs conclude, the RICO Defendants conspired to conduct-and in fact did conduct-their business together as an enterprise through a pattern of racketeering activity. (Compl. ¶¶ 279, 284.)
The RICO Defendants respond that Plaintiffs' RICO claims are fatally flawed for multiple reasons. First, they argue that RICO does not provide Plaintiffs a cause of action to seek redress for their injuries because those injuries occurred abroad. (Dkt. No. 89 at 10; Dkt. No. 95 at 12-14.) Next, they argue that Plaintiffs have failed to plausibly allege a course of conduct that violated RICO. (Dkt. No. 89 at 11-15; Dkt. No. 95 at 14-16.) Finally, they argue that any RICO claims are time-barred. (Dkt. No. 89 at 15-16; Dkt. No. 95 at 9-12.)
The Court need only address the first two of these arguments.
a. Domestic Injury
A plaintiff's power to bring a civil RICO claim derives from 18 U.S.C. § 1964 (c), which creates a private right of action for "[a]ny person injured in his business or property by reason of a violation" of RICO's substantive provisions. 18 U.S.C. § 1964 (c). As the Supreme Court has made clear, though, this remedial provision "requires a civil RICO plaintiff to allege and prove a domestic injury to business or property and does not allow recovery for foreign injuries." RJR Nabisco, Inc. v. European Cmty. , --- U.S. ----, 136 S.Ct. 2090 , 2111, 195 L.Ed.2d 476 (2016) (emphasis added).
While the Supreme Court has not yet provided a framework for resolving "disputes [that] arise as to whether a particular alleged injury is 'foreign' or 'domestic,' " id. , the Second Circuit has offered some guidance. As a starting point, "when a foreign plaintiff maintains tangible property in the United States, the misappropriation of that property constitutes a domestic injury." Bascuñán v. Elsaca , 874 F.3d 806 , 814 (2d Cir. 2017). So, for example, the Second Circuit has held that the theft of funds from a United States bank account causes a domestic injury, id. at 820 , as does the theft of bearer shares stored in the United States, if the shares have been " physically stolen" and have not just suffered "a drop in the[ir] economic value," id. at 824 .
Where it is intangible property that forms the basis for a civil RICO claim, in contrast, courts have typically "focus[ed] on where the plaintiff felt the effects of the injury-inducing predicate acts." Humphrey v. GlaxoSmithKline PLC , 905 F.3d 694 , 704 (3d Cir. 2018) ; see also *267 Armada (Sing.) PTE Ltd. v. Amcol Int'l Corp. , 885 F.3d 1090 , 1094 (7th Cir. 2018) ("It is well understood that a party experiences or sustains injuries to its intangible property at its residence...."); Elsevier Inc. v. Pierre Grossmann, IBIS Corp. , No. 12 Civ. 5121, 2017 WL 5135992 , at *4 (S.D.N.Y. Nov. 2, 2017) (noting that "courts in this District have adopted a 'locus-of-effects approach,' which 'focus[es] on where the plaintiff felt the effects of the injury' " (alteration in original) (quoting Dandong Old N.-E. Agric. & Animal Husbandry Co. v. Hu , No. 15 Civ. 10015, 2017 WL 3328239 , at *11 (S.D.N.Y. Aug. 3, 2017) ) ). Thus, the Second Circuit has held, where a shareholder's "ownership interest in a company" suffers a drop in value, the "clear locational nexus" is "the shareholder's place of residence." Bascuñán , 874 F.3d at 823 .
Here, Plaintiffs have alleged "diminished value" of their investments in the Lifetrade Funds, Bascuñán , 874 F.3d at 823 , and not "the misappropriation of specifically identifiable [tangible] property," id. at 810 . Accordingly, Plaintiffs' individual injuries occurred in the countries "where [they] felt the effects" of the RICO Defendants' alleged actions. Humphrey , 905 F.3d at 704 . And the United States is not among those countries. Plaintiffs are all non-United States investors who suffered economic injury when the shares they held in three non-United States funds lost their value. Plaintiffs have identified no authority that would support the counterintuitive proposition that such circumstances give rise to an injury in the United States.
Plaintiffs respond that they have alleged an injury to tangible property located in the United States because the life insurance policies alleged to have been fraudulently transferred to ATC Realty were located in Minnesota at the time of the transfer. (Compl. ¶ 134 n.22; Dkt. No. 102 at 37-38.) This argument, however, overlooks that these insurance policies, which belonged to Lifetrade prior to the transfer, did not constitute Plaintiffs' "business or property." 18 U.S.C. § 1964 (c). The injury that Plaintiffs suffered was a diminution of the value of their shares in the Lifetrade Funds-an injury to intangible property that, as discussed above, occurred abroad.
RICO therefore provides Plaintiffs no cause of action to seek relief for the extraterritorial loss of their individual investments in the Lifetrade Funds. By that same reasoning, though, RICO might provide Plaintiffs a cause of action insofar as they seek to proceed derivatively on Lifetrade's behalf. After all, Lifetrade may well have suffered a domestic "injur[y] in [its] business or property" when its life insurance policy portfolio-located in Minnesota-was allegedly transferred to ATC Realty for a fraction of its value. 18 U.S.C. § 1964 (c). Ultimately, however, the Court need not conclusively determine whether Lifetrade itself is plausibly alleged to have suffered a domestic injury because, as explained below, Plaintiffs have not plausibly alleged that any such injury occurred "by reason of" of a substantive RICO violation. Id.
b. RICO Violation
To properly allege a substantive RICO violation, Plaintiffs must allege "(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. , 473 U.S. 479 , 496, 105 S.Ct. 3275 , 87 L.Ed.2d 346 (1985) ). Here, the RICO Defendants argue that Plaintiffs have failed to adequately allege (1) that the RICO Defendants worked together as an enterprise 16 *268 (Dkt. No. 89 at 11-12); (2) that the alleged enterprise committed any predicate acts of racketeering (Dkt. No. 95 at 14-15); or (3) that the alleged predicate acts formed a pattern (Dkt. No. 89 at 12-14; Dkt. No. 95 at 15-16). The Court need only address the last of these arguments.
While a pattern of racketeering activity under RICO must involve at least two predicate racketeering acts within a ten-year span, see 18 U.S.C. § 1961 (5), "two acts alone will not always suffice to form a pattern," DeFalco , 244 F.3d at 306 . Rather, a RICO plaintiff must show that the acts, beyond being minimally numerous, "are 'related, and that they amount to or pose a threat of continued criminal activity.' " Id. at 320 (quoting H.J. Inc. v. Nw. Bell Tel. Co. , 492 U.S. 229 , 239, 109 S.Ct. 2893 , 106 L.Ed.2d 195 (1989) ). To establish such continuity, the plaintiff may show either "a 'closed-ended' pattern-a series of related predicate acts extending over a substantial period of time-or ... an 'open-ended' pattern of racketeering activity that poses a threat of continuing criminal conduct beyond the period during which the predicate acts were performed." Spool v. World Child Int'l Adoption Agency , 520 F.3d 178 , 183 (2d Cir. 2008) (citing H.J. Inc. , 492 U.S. at 241 , 109 S.Ct. 2893 ).
As noted, the predicate acts alleged by Plaintiffs consist of supposed incidents of wire or mail fraud connected to the negotiation and execution of the Settlement Agreement and to subsequent efforts to prevent investors from learning of the agreement. 17 (Compl. ¶¶ 268, 271-73.) In assessing these allegations, the Court is mindful of the Second Circuit's view that, "[g]iven the routine use of mail and wire communications in business operations, ... '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.' " Crawford v. Franklin Credit Mgmt. Corp. , 758 F.3d 473 , 489 (2d Cir. 2014) (quoting Efron v. Embassy Suites (P.R.), Inc. , 223 F.3d 12 , 20 (1st Cir. 2000) ). Here, even assuming that each of the communications the RICO Defendants made in connection with the Settlement Agreement represented a discrete predicate act of mail or wire fraud, Plaintiffs have failed to adequately allege that those various acts added up to a pattern capable of supporting RICO liability.
As for open-ended continuity, Plaintiffs have alleged that the RICO Defendants engaged in a fraudulent scheme of inherently finite scope: namely, the *269 transfer of Lifetrade's assets to ATC Realty. Once that transfer took place, "the scheme essentially came to its conclusion," First Capital Asset Mgmt., Inc. v. Satinwood, Inc. , 385 F.3d 159 , 181 (2d Cir. 2004), such that there was little ongoing "threat of continuing criminal activity," id. at 180 (quoting Cofacrèdit, S.A. v. Windsor Plumbing Supply Co. , 187 F.3d 229 , 242 (2d Cir. 1999) ). And although Plaintiffs allege that the RICO Defendants continued to commit predicate acts even after that transfer in an effort to cover up their fraud, "no predicate acts [are alleged to] have occurred," id. at 181, since Plaintiffs learned of the alleged fraud in November 2016 ( see Compl. ¶¶ 10, 273), "which suggests that the scheme has wound to a close," First Capital , 385 F.3d at 181 .
Plaintiffs' RICO claims fare no better under the rubric of closed-ended continuity. To be sure, the alleged predicate acts, which occurred over a four-year period starting with the Settlement Agreement's 2012 execution and ending with the alleged fraud's 2016 discovery, "extend[ed] over a ... period of time" longer than the two-year span the Second Circuit has deemed sufficiently "substantial" to establish closed-end continuity. Id. (quoting GICC Capital Corp. v. Tech. Fin. Grp., Inc. , 67 F.3d 463 , 466 (2d Cir. 1995) ). But although "two years may be the minimum duration necessary to find closed-ended continuity, the mere fact that predicate acts span two years is insufficient, without more, to support a finding of a closed-ended pattern." Id. Instead, the Court must take holistic account of the alleged pattern, considering "factors such as the number and variety of predicate acts, the number of both participants and victims, and the presence of separate schemes." Id. (quoting DeFalco , 244 F.3d at 321 ).
The predicate acts alleged here involve the execution of the Settlement Agreement and several subsequent statements made by the agreement's participants to a finite, if numerous, set of investors in order to minimize the agreement's import. ( See Compl. ¶¶ 267-78.) In other words, the supposed "pattern" here represents the efforts of a single group of actors to execute a one-time scheme against a single set of victims through a single means. Despite the four-year duration of these efforts, the Court concludes that Plaintiffs' attempt to characterize them as a pattern of racketeering activity "artificially fragment[s] a singular act into multiple acts simply to invoke RICO." Schlaifer Nance & Co. v. Estate of Warhol , 119 F.3d 91 , 98 (2d Cir. 1997) ; see also Crawford , 758 F.3d at 489 (urging scrutiny of alleged patterns based on predicate acts of mail and wire fraud). Plaintiffs have thus failed to plead the closed-ended continuity required to establish a pattern where open-ended continuity is lacking. See Gross v. Waywell , 628 F.Supp.2d 475 , 494 (S.D.N.Y. 2009) ("[C]ourts in this Circuit have held repeatedly that allegations of RICO violations involving solely mail and wire fraud or little other variety in the predicate acts, a limited number of participants or victims, [and] a discrete scheme with a narrow purpose or a single property ... are generally insufficient to demonstrate closed-ended continuity ....").
Because Plaintiffs have failed to plausibly allege that the RICO Defendants engaged in a pattern of racketeering activity capable of supporting civil RICO liability, they have failed to plead a substantive RICO violation (Count Fourteen). And because a RICO conspiracy requires an "inten[tion] to further an endeavor which, if completed, would satisfy all of the elements" of a RICO violation, First Capital , 385 F.3d at 178 (quoting Baisch v. Gallina , 346 F.3d 366 , 376 (2d Cir. 2003) ), they have likewise failed to plead a RICO conspiracy *270 (Count Fifteen). Accordingly, all of Plaintiffs' RICO claims-including their derivative claims-are dismissed. 18
2. Fraudulent Conveyance (Counts One and Two)
The Court turns next to New York's fraudulent-conveyance statute, N.Y. Debt. & Cred. Law §§ 270 - 281. Pointing to the transfer of Lifetrade's assets, Plaintiffs charge the Wells Fargo Defendants and Lifetrade Movants with constructively fraudulent (Count One) and fraudulent (Count Two) conveyance under this statute, see id. §§ 274, 276. (Compl. ¶¶ 177-89.) But while the Lifetrade Movants and Wells Fargo Defendants argue that Plaintiffs have not stated a claim under the statute (Dkt. No. 89 at 20-21; Dkt. No. 95 at 38-39), the Wells Fargo Defendants make the threshold argument that the statute has no application here in the first place because the substantive law of Delaware, not New York, governs these claims (Dkt. No. 89 at 16-19).
Plaintiffs offer two reasons why, in their view, New York law controls. First, they argue that the Settlement Agreement contains a choice-of-law provision that calls for the application of New York law to their fraudulent-conveyance claims. (Dkt. No. 102 at 10-12.) Second, they argue that the applicable conflict-of-laws principles should lead this Court to apply New York's substantive law over Delaware's. (Dkt. No. 102 at 12-15.) The Court considers both arguments.
a. Contractual Choice-of-Law Provision
Plaintiffs first argue that New York law applies to their fraudulent-conveyance claims because the Settlement Agreement and other documents that effectuated the challenged transfer contain choice-of-law provisions that call for New York law to govern. (Dkt. No. 102 at 10-12.)
As a federal court sitting in New York, this Court looks to New York's choice-of-law principles to determine "which state's substantive law should govern." Wall v. CSX Transp., Inc. , 471 F.3d 410 , 415 (2d Cir. 2006). As relevant here, New York typically honors contractual choice-of-law provisions. Terwilliger v. Terwilliger , 206 F.3d 240 , 245 (2d Cir. 2000). Because no party disputes the validity of the contractual provisions upon which Plaintiffs rely, the Court asks only whether, under New York law, Plaintiffs' claims fall within the provisions' scope. See Fin. One Pub. Co. v. Lehman Bros. Special Fin., Inc. , 414 F.3d 325 , 332-33 (2d Cir. 2005).
New York law provides that "tort claims are outside the scope of contractual choice-of-law provisions that specify what law governs construction of the terms of the contract," and New York courts have shown "reluctance to read choice-of-law clauses broadly." Id. at 335 . But where the "express language" of a choice-of-law provision is " 'sufficiently broad' as to encompass the entire relationship between the contracting parties," New York law will "apply [that provision] to claims for tort arising incident to the contract." Krock v. Lipsay , 97 F.3d 640 , 645 (2d Cir. 1996) (quoting Turtur v. Rothschild Registry Int'l, Inc. , 26 F.3d 304 , 310 (2d Cir. 1994) ). As a general rule of thumb, "provisions applying to disputes 'arising out of' or 'relating to' a contract are capacious enough to reach related tort claims, while provisions stating that a contract *271 will be 'governed by' or 'construed in accordance with' the law of a state are not." Chigirinskiy v. Panchenkova , No. 14 Civ. 4410, 2015 WL 1454646 , at *6 (S.D.N.Y. Mar. 31, 2015) (quoting Refco Grp. Ltd., LLC v. Cantor Fitzgerald, L.P. , No. 13 Civ. 1654, 2014 WL 2610608 , at *40 (S.D.N.Y. June 10, 2014) ).
Here, the Settlement Agreement's choice-of-law provision reads in relevant part: "This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York." (Dkt. No. 90-4 at 43 (formatting omitted).) This provision, then, fits to a tee the sort of contractual language that courts applying New York law have held insufficient to cover tort claims, such as Plaintiffs' fraudulent-conveyance claims, that arise in connection with the contract. See Chigirinskiy , 2015 WL 1454646 , at *6 ; Drenis v. Haligiannis , 452 F.Supp.2d 418 , 426 (S.D.N.Y. 2006) (holding that a fraudulent-conveyance claim arising in connection with transactions made under the terms of a contract was not governed by a contract term dictating that the contract "shall be governed by, and construed in accordance with," Delaware law).
Undaunted, Plaintiffs point to a provision in a foreclosure notice executed in connection with the Settlement Agreement. (Dkt. No. 102 at 10.) This provision states that Wells Fargo accepted Lifetrade's assets "in satisfaction of [Lifetrade's] Indebtedness pursuant to ... applicable New York law" (Dkt. No. 90-5 at 3) and that Lifetrade waived certain rights "under ... applicable New York law" (Dkt. No. 90-5 at 4). In Plaintiffs' eyes, this language indicates that "Wells Fargo intended for New York law to define whether [the challenged transfer] was a valid 'strict foreclosure' or ... an improper fraudulent conveyance." (Dkt. No. 102 at 10.)
Plaintiffs reach too far. Essentially, they identify contract language designed to foreclose certain claims under New York law and draw from that language the negative inference that the parties to the contract intended to open the door to precisely those claims. In other words, while it is clear from the foreclosure notice's language that the parties foresaw that New York law might be invoked in connection with the Settlement Agreement, nothing suggests a contractual agreement that such an invocation would be valid. Given New York courts' "reluctance to read choice-of-law clauses broadly," Fin. One Pub. Co. , 414 F.3d at 335 , this Court will not infer such an agreement in the absence of "express language," Krock , 97 F.3d at 645 .
Plaintiffs have thus failed to demonstrate that the choice-of-law provisions contained in the Settlement Agreement and related documents apply to their fraudulent-conveyance claims.
b. Conflict of Laws
Absent a contractual choice-of-law provision covering Plaintiffs' fraudulent-conveyance claims, this Court looks to New York's ordinary conflict-of-laws principles. See Wall , 471 F.3d at 415 . Typically, New York courts apply New York's substantive law to cases filed in New York. See id. at 422-23 . But where a party has identified a conflict between New York's tort law and the tort laws of another relevant jurisdiction, a New York court will apply "[t]he law of the jurisdiction having the greate[r] interest in the litigation." GlobalNet Financial.com, Inc. v. Frank Crystal & Co. , 449 F.3d 377 , 383 (2d Cir. 2006) (first alteration in original) (quoting Schultz v. Boy Scouts of Am., Inc. , 65 N.Y.2d 189 , 197, 491 N.Y.S.2d 90 , 480 N.E.2d 679 (1985) ); see also Fallman v. Hotel Insider Ltd. , No. 14 Civ. 10140, 2016 WL 316378 , at *4 (S.D.N.Y. Jan. 15, 2016)
*272 (noting that "[t]he party claiming that foreign law applies" carries the burden of showing a conflict).
The "first step in any case presenting a potential choice of law issue is to determine whether there is an actual conflict between the laws of the jurisdictions involved." GlobalNet , 449 F.3d at 382 (quoting In re Allstate Ins. Co. , 81 N.Y.2d 219 , 223, 597 N.Y.S.2d 904 , 613 N.E.2d 936 (1993) ). Here, the Wells Fargo Defendants argue that there is a material conflict between New York's and Delaware's fraudulent-conveyance laws. In particular, they argue that Delaware law contains a statute of repose that "extinguishe[s]" a fraudulent-conveyance claim if it is not brought "within [four] years after the transfer was made ... or, if later, within [one] year after the transfer ... was or could reasonably have been discovered," Del. Code Ann. tit. 6, § 1309 (1), whereas New York law imposes a more lenient six-year statute of limitations, see Bobash, Inc. v. Festinger , 57 A.D.3d 464 , 868 N.Y.S.2d 747 , 749 (2d Dep't 2008). 19 (Dkt. No. 89 at 19.) And, they continue, this distinction is clearly material to Plaintiffs' claims because the earliest of the five instant lawsuits was filed on April 24, 2017-within six years of the challenged transfer, which occurred and was publicly announced in 2012 ( see Compl. ¶ 159), but not within four.
Plaintiffs fail to respond to these points. They never argue, for example, that the Wells Fargo Defendants have failed to carry their burden of demonstrating a genuine conflict. Nor do they make any argument that their fraudulent-conveyance claims would be timely even if Delaware's substantive law were to apply. The Court therefore concludes that, for purposes of this litigation, the Wells Fargo Defendants have adequately shown that "there is indeed a conflict between New York and Delaware fraudulent conveyance law," Drenis , 452 F.Supp.2d at 427 , that Delaware's four-year timeline represents a statute of repose that New York courts would apply in cases governed by Delaware law, see Tanges v. Heidelberg N. Am., Inc. , 93 N.Y.2d 48 , 56, 687 N.Y.S.2d 604 , 710 N.E.2d 250 (1999) (characterizing statutes of repose as "substantive law" for conflict-of-laws purposes), and that this statute of repose would be fatal to Plaintiffs' fraudulence-conveyance claims. 20
Apparently accepting that New York and Delaware law are in material conflict, Plaintiffs argue only that New York's conflict-of-law principles favor applying New York law, rather than Delaware law, here (Dkt. No. 102 at 12-15) because New York has "the greate[r] interest in the litigation," GlobalNet , 449 F.3d at 384 (quoting Schultz , 65 N.Y.2d at 197 , 491 N.Y.S.2d 90 , 480 N.E.2d 679 ).
To determine which jurisdiction has the greater interest in a tort claim, New York courts assess whether the claim at issue arises under a "conduct-regulating rule[ ]" or a "loss-allocation rule[ ]."
*273 In re Thelen LLP , 736 F.3d 213 , 220 (2d Cir. 2013). Because the parties here agree that Plaintiffs' fraudulent-conveyance claims are conduct regulating (Dkt. No. 89 at 17; Dkt. No. 102 at 12), this Court looks to "the law of the jurisdiction where the tort occurred," In re Thelen , 736 F.3d at 220 (quoting Cooney v. Osgood Mach., Inc. , 81 N.Y.2d 66 , 72, 595 N.Y.S.2d 919 , 612 N.E.2d 277 (1993) ).
Here, the challenged Settlement Agreement represents a multinational transaction with no one obvious locus. But the Wells Fargo Defendants maintain that "[a] close reading of the complaint demonstrates that Delaware has the greatest connection to the transfer" because it is the home state of at least three of the various participants in the Settlement Agreement. (Dkt. No. 89 at 18.) Plaintiffs, for their part, while disparaging the strength of Delaware's connection to the underlying tort (Dkt. No. 102 at 14), never propose that some other jurisdiction-such as Georgia, for example, where Smith signed the Settlement Agreement (Dkt. No. 92 ¶ 6), or the foreign jurisdictions in which Plaintiffs suffered their injuries-bears a greater connection.
Were the Court tasked with deciding which of all the various jurisdictions involved in this alleged fraud laid the greatest claim to seeing its substantive law applied, the Court might well settle on some jurisdiction other than Delaware. For example, despite the Wells Fargo Defendants' suggestion that New York's "interest" analysis focuses principally on the location of an alleged fraud's perpetrator (Dkt. No. 110 at 6), the Second Circuit has recognized that "for claims based on fraud, the locus of the tort is generally deemed to be the place where the injury was inflicted," In re Thelen , 736 F.3d at 220 ; cf. Eclaire Advisor Ltd. ex rel. Daewoo Int'l (Am.) Corp. Creditor Tr. v. Daewoo Eng'g & Constr. Co. , 375 F.Supp.2d 257 , 268 (S.D.N.Y. 2005) ("New York has an 'especially strong' interest in applying its law when one of its domiciliaries alleges that it has been defrauded." (quoting Advanced Portfolio Techs., Inc. v. Advanced Portfolio Techs. Ltd. , No. 94 Civ. 5620, 1999 WL 64283 , at *6 (S.D.N.Y. Feb. 8, 1999) ) ).
In this case, though, the Court's question is not whether the victims' jurisdiction or the perpetrators' jurisdiction has the greater interest in seeing its law applied. Rather, the Court's comparison is between Delaware-a jurisdiction that is home to three of the alleged perpetrators ( see Compl. ¶¶ 22, 24, 28, 182, 188)-and New York, a jurisdiction that is home to none of the alleged perpetrators and none of the victims and in which none of the tortious conduct is alleged to have taken place. Under these circumstances, it is clear that Delaware, rather than New York, has "the greater interest in having its substantive law govern" here. In re Hellas Telecomms. (Lux.) II SCA , 535 B.R. 543 , 575 (Bankr. S.D.N.Y. 2015) ; see also Atsco Ltd. v. Swanson , 29 A.D.3d 465 , 816 N.Y.S.2d 31 , 32-33 (1st Dep't 2006) (applying Malaysian law to the allegedly fraudulent "transfer of assets by a Malaysian citizen out of Malaysia," where the victims seeking the application of New York law were domiciled in Japan and the Cayman Islands).
Plaintiffs beg to differ. Citing Taberna Preferred Funding II, Ltd. v. Advance Realty Group LLC , No. 2013 Civ. 652884, 45 Misc.3d 1204 (A), 2014 WL 4974959 (N.Y. Sup. Ct. Oct. 3, 2014), they contend that where "there is no single, identifiable location of the wrongful conduct," the Court must look to the reasonable expectations of the parties (Dkt. No. 102 at 13). And under this "reasonable expectations" rule, Plaintiffs go on, the choice-of-law provision in the Settlement Agreement clearly *274 betrays the parties' expectation that New York law would govern here. ( Id. )
Taberna , though, does not support Plaintiffs' position. In Taberna , a New York trial court applied New York law to a fraudulent-conveyance claim because no other jurisdiction had an "overwhelming" interest in the dispute and because the defendants could "reasonably expect to be held accountable" under New York law. Id. at *10 . But although Taberna 's rationale for applying New York law is somewhat opaque, the allegedly fraudulent instrument in that case had at least been "negotiated, in part, in New York State, where [one of the defendants] maintain[ed] its offices." Id. at *4 . And, indeed, the opinion explicitly rejected the argument that a choice-of-law provision in the transfer instrument should inform its analysis. See id. at *9 n.6. Whatever Taberna stands for, then, it hardly suggests that a court faced with several jurisdictions that hold a potential stake in a controversy must reject them all in favor of a jurisdiction whose sole connection is a choice-of-law provision that has already been deemed inapplicable.
In sum, while Delaware's interest in having its law applied to Plaintiffs' fraudulent-conveyance claims may not be "overwhelming," id. at *10 , its interest exceeds New York's own. New York's choice-of-law principles therefore direct this Court to apply Delaware's law of fraudulent conveyance to the extent that it conflicts with New York's. 21 And in light of the Wells Fargo Defendants' unrebutted showing that such a conflict exists and that Counts One and Two fail to state a claim under Delaware law, those counts are dismissed.
3. Common-Law Claims
Plaintiffs assert a barrage of common-law claims-including claims of fraud, breach of contract, and negligent misrepresentation-against all three sets of defendants. With respect to these claims, no party identifies a conflict between New York law and the law of any other relevant jurisdiction, so New York's substantive law applies. See Wall , 471 F.3d at 422 -23 .
The Court addresses the common-law claims against each set of defendants in turn.
a. S & P
Plaintiffs raise three common-law claims against S & P. Two of these claims charge S & P with fraud based on (1) knowingly making misrepresentations and (2) making false statements without sufficient knowledge of their truth or falsity. (Compl. ¶¶ 290-301.) The remaining claim charges S & P with negligent misrepresentation. (Compl. ¶¶ 302-307.) The Court first addresses the fraud claims before turning to the negligent misrepresentation claim.
i. Fraud (Counts Sixteen and Seventeen)
Plaintiffs assert two counts of fraud against S & P, alleging that S & P's 2006-2011 credit ratings and accompanying monthly reports attested to Lifetrade's strong past performance and future prospects even though S & P knew that (Count Sixteen) or failed to investigate whether (Count Seventeen) investment in Lifetrade was in fact highly risky. (Compl. ¶¶ 290-301.) S & P moves to dismiss these claims, arguing, first, that they are time-barred (Dkt. No. 87 at 3-10) and, second, that the complaint fails to plausibly allege fraud (Dkt. No. 87 at 10-21).
a. Timeliness
In assessing the timeliness of Plaintiffs' fraud claims, the parties agree *275 that the proper starting point is New York's "borrowing statute" (Dkt. No. 87 at 3; Dkt. No. 104 at 15), which provides as relevant that "[a]n action based upon a cause of action accruing without the state cannot be commenced after the expiration of the time limited by the laws of either the state or the place without the state where the cause of action accrued," N.Y. C.P.L.R. § 202 . In other words, Plaintiffs' claims are timely only if they are "timely under the limitation periods of both New York and the jurisdiction where the cause of action accrued." Portfolio Recovery Assocs., LLC v. King , 14 N.Y.3d 410 , 416, 901 N.Y.S.2d 575 , 927 N.E.2d 1059 (2010) (quoting Glob. Fin. Corp. v. Triarc Corp. , 93 N.Y.2d 525 , 528, 693 N.Y.S.2d 479 , 715 N.E.2d 482 (1999) ). Because S & P makes no argument that Plaintiffs' claims are untimely under the laws of the jurisdictions in which they accrued (Dkt. No. 87 at 4), the Court need consider only whether Plaintiffs have plausibly alleged facts that would render their claims timely under New York law.
New York law provides that a fraud action must be commenced within "the greater of six years from the date the cause of action accrued or two years from the time the plaintiff ... discovered the fraud, or could with reasonable diligence have discovered it." N.Y. C.P.L.R. § 213 (8). Because the first of the complaints in these five actions was filed on April 24, 2017, Plaintiffs' fraud claims against S & P are untimely if they both (1) accrued prior to April 24, 2011 and (2) could reasonably have been discovered prior to April 24, 2015. 22 The parties dispute both when Plaintiffs' claims accrued (Dkt. No. 87 at 5; Dkt. No. 104 at 17-20) and when they could reasonably have been discovered (Dkt. No. 87 at 6-10; Dkt. No. 104 at 17-20).
I. Accrual
Under New York law, a claim that a ratings agency "fraudulently misrepresented the creditworthiness" of certain investments "by assigning them artificially high ratings" typically accrues at the time of investment, Varga v. McGraw Hill Fin., Inc. , 147 A.D.3d 480 , 48 N.Y.S.3d 24 , 25-26 (1st Dep't 2017), because investment represents the "complet[ion] [of] the act that the alleged fraud[ ] ... induced," Prichard v. 164 Ludlow Corp. , 49 A.D.3d 408 , 854 N.Y.S.2d 53 , 54 (1st Dep't 2008) ; see also Hopkinson v. Estate of Siegal , No. 10 Civ. 1743, 2011 WL 1458633 , at *5 (S.D.N.Y. Apr. 11, 2011) (describing the accrual date of a plaintiff's fraud claim as the date she invested in two tax shelter partnerships that failed to generate promised revenues and tax deductions). Here, S & P argues, because it is alleged to have ceased rating Lifetrade in April 2011 (Compl. ¶ 72), the latest an investor could have invested in reliance on its ratings was April 2011, more than six years prior to the filing of the instant actions (Dkt. No. 87 at 5).
S & P's argument, however, contains an artful elision. Even though S & P's reports about Lifetrade ceased in April 2011, a fraud claim accrues-as S & P itself recognizes ( id. )-when a plaintiff takes detrimental action in reliance on a fraudulent statement, and not at the time the statement is made, see *276 Varga , 48 N.Y.S.3d at 26 . 23 Of course, the length of time that passes between an allegedly fraudulent statement and a plaintiff's act of supposed reliance may be probative of the reasonableness of that reliance or of whether the plaintiff's action was, as a factual matter, actually taken in reliance on the statement. But those issues go to the merits of a fraud claim and not to its timeliness. Given that, as S & P admits (Dkt. No. 87 at 5), numerous plaintiffs invested in the Lifetrade Funds within six years of the first-filed of the instant suits- i.e. , after April 24, 2011 ( see, e.g. , Dkt. No. 77-1)-those plaintiffs' fraud claims are timely.
Of course, Plaintiffs urge the Court to go further. In their view, every plaintiff's fraud claims fall within the six-year statutory window, regardless of investment date. According to Plaintiffs, because "a tort cause of action cannot accrue until an injury is sustained," Kronos, Inc. v. AVX Corp. , 81 N.Y.2d 90 , 94, 595 N.Y.S.2d 931 , 612 N.E.2d 289 (1993), their claims against S & P did not accrue until their investments caused them economic loss- i.e. , until, at the earliest, Lifetrade transferred its assets to ATC Realty in 2012 and thereby rendered Plaintiffs' shares worthless (Dkt. No. 104 at 17-20). Indeed, Plaintiffs further argue, because "a fraud action cannot be maintained where the damages attributable to the fraud are speculative or undeterminable," Abernathy-Thomas Eng'g Co. v. Pall Corp. , 103 F.Supp.2d 582 , 599 (E.D.N.Y. 2000), their claims might not even have accrued until 2016, when it finally became clear that refinancing efforts had failed (Dkt. No. 104 at 18).
Plaintiffs, though, misapply these principles of New York law. After all, Plaintiffs suffered ascertainable injury due to S & P's alleged fraud as soon as they invested in "securities [that] were worth less than their price at the time of purchase," Varga , 48 N.Y.S.3d at 26 , even if further damages lay in wait down the line. Put another way, a driver who is misled into buying a jalopy at a hotrod price need not wait until she is stranded by the side of the road to seek relief. To be sure, Plaintiffs point out that Lifetrade "appeared to be doing well" in its early years. (Dkt. No. 104 at 19.) But while that initial success might be relevant to the question of when Plaintiffs should have discovered that they had been fleeced, it does not change the fact that Plaintiffs' own theory of fraud is that S & P tricked them into investing in funds that were "too risky to rate" (Compl. ¶ 99)-an injury that was complete as soon as the money changed hands.
Thus, although those plaintiffs who invested in the Lifetrade Funds on or after April 24, 2011, have timely filed their fraud claims, the same cannot necessarily be said for those plaintiffs who invested earlier.
II. Discovery
That those plaintiffs who invested in the Lifetrade Funds prior to April 24, 2011, failed to bring suit within six years of the accrual of their fraud claims, however, does not by itself render those claims untimely. Rather, those claims remain viable *277 if they were brought within "two years from the time [Plaintiffs] ... discovered the fraud, or could with reasonable diligence have discovered it," N.Y. C.P.L.R. § 213 (8), or, in other words, if Plaintiffs would have been unable to discover S & P's alleged fraud through reasonable diligence prior to April 24, 2015.
Determining when discovery was reasonably possible turns on when Plaintiffs "w[ere] 'possessed of knowledge of facts from which [the fraud] could be reasonably inferred.' " Sargiss v. Magarelli , 12 N.Y.3d 527 , 532, 881 N.Y.S.2d 651 , 909 N.E.2d 573 (2009) (last alteration in original) (quoting Erbe v. Lincoln Rochester Tr. Co. , 3 N.Y.2d 321 , 326, 165 N.Y.S.2d 107 , 144 N.E.2d 78 (1957) ). Specifically, "[a] duty of inquiry arises when the facts would suggest fraud to a person of ordinary intelligence." United Teamster Fund v. MagnaCare Admin. Servs., LLC , 39 F.Supp.3d 461 , 477 (S.D.N.Y. 2014). And once a set of triggering facts has put a plaintiff on inquiry notice, "knowledge of a fraud" is imputed to the plaintiff unless she undertakes some "investigative efforts" in response. 24 Cohen v. S.A.C. Trading Corp. , 711 F.3d 353 , 361 (2d Cir. 2013).
On a motion to dismiss, it is "often inappropriate" to determine precisely when a plaintiff was first on inquiry notice, LC Capital Partners, LP v. Frontier Ins. Grp., Inc. , 318 F.3d 148 , 156 (2d Cir. 2003) (quoting Marks v. CDW Comput. Ctrs., Inc. , 122 F.3d 363 , 367 (7th Cir. 1997) ), but a court may do so if "the facts on the face of the complaint and related documents" are sufficient to establish a "duty of inquiry" as a matter of law, id. And although resolving the issue of inquiry notice at the pleading stage is said to be reserved for "extreme circumstances," In re Sumitomo Copper Litig. , 120 F.Supp.2d 328 , 347 (S.D.N.Y. 2000) (quoting In re Prudential Sec. Inc. Ltd. P'ships Litig. , 930 F.Supp. 68 , 76 (S.D.N.Y. 1996) ), the Second Circuit has done exactly that in "a vast number of cases," LC Capital Partners , 318 F.3d at 156 (quoting Dodds v. Cigna Sec., Inc. , 12 F.3d 346 , 352 n.3 (2d Cir. 1993) ).
Turning to the case at hand, Plaintiffs could easily have discovered the basis for their fraud claims against S & P had they investigated prior to April 24, 2015. All that separated them from the 2009 report that revealed S & P's alleged duplicity was a $600 paywall fee. (Compl. ¶ 174.) Indeed, Plaintiffs found the report just months after realizing, allegedly for the first time, in November 2016 that the value of their investments had "irreversibly and entirely diminished." (Compl. ¶ 171; see also Compl. ¶ 174.) An investigation, too, would have revealed that-as S & P has represented without rebuttal-some financial news outlets, including the Financial Times , made contemporaneous reference to the 2009 report (Dkt. No. 87 at 6-7) and that S & P had ceased rating Lifetrade in 2011 (Compl. ¶ 94), a decision *278 that Lifetrade's own management publicly admitted in 2014 stemmed from "concern[ ] about the asset class" (Dkt. No. 77-13 at 3).
The critical question, then, is whether the facts of which Plaintiffs were or should have been aware by April 24, 2015, were sufficient as a matter of law to put Plaintiffs on notice of the need to undertake the investigation that would have revealed this evidence. They were. As early as 2012, Lifetrade suspended redemptions (Compl. ¶ 127), stopped sending annual reports to investors (Compl. ¶ 172), and updated its website with a link to a notice that Wells Fargo had effected foreclosure (Compl. ¶ 160). Armed with this information, at least one investor was moved to file a fraud suit in Curaçao in December 2012, alleging in part that Smith and Marcum had undersold Lifetrade's fiscal woes. (Dkt. No. 94-2 ¶ 16.) Plaintiffs too, then, might have been more curious as to whether Lifetrade in fact represented the safe, stable investment that S & P had supposedly marketed-just as they were years later, in 2016, when they realized that Lifetrade was not just in distress but entirely sunk. Of course, Plaintiffs allege that they had been warned at the time of investment that "they should not expect 'for their investment to be liquid' and that [Lifetrade] '[was] not suitable for persons who require[d] regular income from their investments.' " (Compl. ¶ 150 (quoting Dkt. No. 77-26 at 2, 9).) But even if reasonable investors might have believed that Lifetrade's variable liquidity would sometimes cause it to suspend redemptions in the ordinary course of business, it strains credulity to believe that reasonable investors would have been similarly nonplussed by a liquidity shortage so severe that it led Lifetrade to fall into default and foreclosure.
Nor does it change the analysis that Smith and Marcum allegedly took pains to downplay the suspicious developments of 2012, periodically promising investors that refinancing efforts were underway and that Lifetrade might be able to reclaim its assets. (Compl. ¶¶ 162, 165-67.) After all, "reassuring statements will prevent the emergence of a duty to inquire or dissipate such a duty only if an investor of ordinary intelligence would reasonably rely on the statements to allay the investor's concern." LC Capital Partners , 318 F.3d at 155 . And by April 24, 2015, Plaintiffs had been hearing Smith and Marcum's reassuring words for over two years without any indication that Lifetrade had actually locked down any new funding source or had come any nearer to reclaiming the assets upon which Wells Fargo had long ago foreclosed. Indeed, these very reassurances acknowledged that the foreclosure posed a "challenge[ ]" and that Lifetrade's leadership was "hard at work trying to find the best possible solution." (Dkt. No. 77-12 at 2.) This admission that all was not well reinforces the Court's conclusion that Plaintiffs had cause prior to April 24, 2015, to ask whether Lifetrade had been a good investment from the outset.
Ultimately, this is not a case in which Plaintiffs had no reason beyond publicly available press reports and court filings to inquire into S & P's ratings. See Staehr v. Hartford Fin. Servs. Grp., Inc. , 547 F.3d 406 , 426-36 (2d Cir. 2008). Nor is this a case in which investors put money into a fund they knew to be "particularly risky" and so had no reason to question their ensuing losses. CSAM Capital, Inc. v. Lauder , 67 A.D.3d 149 , 885 N.Y.S.2d 473 , 475 (1st Dep't 2009). Rather, this is a case in which Plaintiffs claim they were misled into believing that they were making a safe investment but then failed to make any inquiry once clear signs emerged of the *279 very risks they allege had not been disclosed. The 2012 foreclosure, in other words, "relate[d] ... directly to the ... omissions the Plaintiffs later allege[d] in their action against [S & P]" and so, taken in combination with the other circumstances alleged, was sufficient to put Plaintiffs on inquiry notice prior to April 24, 2015, as to the integrity of S & P's ratings. Staehr , 547 F.3d at 427 (quoting Newman v. Warnaco Grp., Inc. , 335 F.3d 187 , 193 (2d Cir. 2003) ).
The Court therefore dismisses Counts Sixteen and Seventeen as untimely with respect to all plaintiffs who invested in the Lifetrade Funds prior to April 24, 2011.
b. Merits
The Court next turns to S & P's argument that even those fraud claims that were timely filed must be dismissed for failure to state a cognizable legal claim. (Dkt. No. 87 at 10-21.)
To state a fraud claim under New York law, a plaintiff must allege "a misrepresentation or a material omission of fact which was false and known to be false by [the] defendant, made for the purpose of inducing the other party to rely upon it, justifiable reliance of the other party on the misrepresentation or material omission, and injury." Pasternack v. Lab. Corp. of Am. Holdings , 27 N.Y.3d 817 , 827, 37 N.Y.S.3d 750 , 59 N.E.3d 485 (2016) (alteration in original) (quoting Mandarin Trading Ltd. v. Wildenstein , 16 N.Y.3d 173 , 178, 919 N.Y.S.2d 465 , 944 N.E.2d 1104 (2011) ). Here, S & P argues that Plaintiffs have failed to plausibly allege that it made any actionable misrepresentations (Dkt. No. 87 at 10-15), that it acted with fraudulent intent (Dkt. No. 87 at 16-17), that Plaintiffs reasonably relied on any supposed misrepresentations (Dkt. No. 87 at 17-20), or that these misrepresentations caused Plaintiffs' injuries (Dkt. No. 87 at 20-21). The Court addresses each argument in turn.
I. Actionable Misrepresentations
To start, S & P contends that it cannot be liable for fraud because it is not plausibly alleged to have made any misrepresentations or material omissions in the first place. (Dkt. No. 87 at 10-15.) Plaintiffs, though, maintain that S & P's monthly reports were misleading both on their face and in light of S & P's failure to mention the concerns about life settlements that it disclosed in its non-public 2009 research report. (Dkt. No. 104 at 25-29.)
The Court first addresses the credit ratings themselves. While "courts in this circuit-and around the country-have consistently held that credit ratings are statements of opinion," such ratings may be actionable if "the holder of the opinion reflected in the rating did not believe the opinion at the time that it was made." Tolin v. Standard & Poor's Fin. Servs., LLC , 950 F.Supp.2d 714 , 722 (S.D.N.Y. 2013) ; see also Abu Dhabi Commercial Bank v. Morgan Stanley & Co. , 888 F.Supp.2d 431 , 455-56 (S.D.N.Y. 2012) (characterizing credit ratings as "fact-based opinions," id. at 455 (emphasis omitted), that may be actionable if they " both misstate[ ] the opinions or beliefs held by the [speaker] and [are] false or misleading with respect to the underlying subject matter they address," id. at 456 ).
Here, S & P argues that Plaintiffs have not alleged facts from which it is plausible to infer that it disbelieved the positive ratings it awarded Lifetrade. While acknowledging that the 2009 report doubts the safety of investing in bonds composed of "pool[ed] and repackag[ed] cash flows from a pool of life insurance policies" (Dkt. No. 77-4 at 2), S & P maintains that its rating of Lifetrade took no view on whether the fund represented a *280 good investment, but rather spoke only to "the strong credit quality of the [fund's] eligible investments and counterparties" (Dkt. No. 77-8 at 3) or, put another way, to "the likelihood that the insurance companies that issued the life insurance policies" Lifetrade purchased "would pay the policy benefits when they became due" (Dkt. No. 87 at 13). In other words, in S & P's view, the 2009 report simply "does not speak to the same subject as S & P's fund credit rating" and so offers no indication that S & P had doubts about its credit rating at the time it was issued. (Dkt. No. 109 at 12.)
Plaintiffs offer no real rebuttal. They do not, for example, offer an alternative reading of S & P's "Af" rating that would suggest that it was intended to assess Lifetrade's overall integrity, as opposed to the reliability of the insurers that issued the policies Lifetrade held as assets. ( See Dkt. No. 77-8 at 4 (describing the ratings as "assessments of the overall credit quality of a fund's portfolio" and noting that they are "not recommendations to purchase, sell, or hold a security").) Nor have Plaintiffs alleged that S & P doubted-or had reason to doubt-that these insurers could indeed be trusted to pay out policy proceeds as needed. Certainly, Plaintiffs allege that Lifetrade represented that S & P's ratings were suggestive of Lifetrade's overall investment quality ( see Compl. ¶¶ 74, 80), but Plaintiffs offer no basis for imputing these alleged misrepresentations to S & P. See Eurycleia Partners, LP v. Seward & Kissel, LLP , 46 A.D.3d 400 , 849 N.Y.S.2d 510 , 512-13 (1st Dep't 2007) ("[I]n the absence of a fiduciary relationship with plaintiffs, [a defendant] [is] not required to correct a misstatement that it did not make."). Plaintiffs, therefore, have failed to plausibly allege that the "Af" ratings themselves were false or misleading.
This conclusion, though, does not end the ballgame. S & P's ratings did not appear in a vacuum but, rather, were embedded in monthly reports alongside other information. And Plaintiffs allege that this other information-life expectancy projections provided by 21st Services and NAV figures concocted by Lifetrade-was deeply flawed. ( See Compl. ¶¶ 61, 85.) Unlike the "Af" rating itself, moreover, the life expectancy figures-which suggested the rate at which Lifetrade would be able to accumulate cash holdings-and the figures related to the value of Lifetrade's assets spoke to the fund's overall financial health and not to the narrow question of whether the insurers backing the policies Lifetrade held could be trusted to pay proceeds.
Critically, S & P never disputes that Plaintiffs have plausibly alleged that the NAV and life expectancy figures were misleading. Instead, S & P merely points out that "there is no allegation that S & P either knew or believed that any factual information in the reports was inaccurate." (Dkt. No. 87 at 14.) But that argument speaks to whether Plaintiffs have plausibly alleged that S & P acted with the requisite mental state-an issue to which the Court turns below, see infra Section III.C.3.a.i.b.II-and not to whether the information S & P chose to convey was in fact false or misleading. While an expression of opinion is considered to be true if the speaker believes the expression, see Tolin , 950 F.Supp.2d at 722 , S & P never disputes that the NAV and life expectancy figures it published in the reports that accompanied its ratings were fact-based representations. 25 S & P's mental state is *281 thus irrelevant to the truth or falsity of those figures.
So, while Plaintiffs have failed to adequately allege that S & P's credit ratings constituted actionable misrepresentations in and of themselves, Plaintiffs have made out a plausible case at the pleading stage that the monthly reports within which those ratings were embedded contained false data that sent the misleading impression that investment in Lifetrade was a sound prospect.
II. Scienter
S & P next argues that Plaintiffs have failed to allege facts that give rise to an inference that it acted with scienter, the requisite mental state. (Dkt. No. 87 at 16-17.)
Under New York law, a misrepresentation can typically form the basis for a fraud claim only if it was "known to be false" by the speaker. Mandarin Trading Ltd. , 16 N.Y.3d at 178 , 919 N.Y.S.2d 465 , 944 N.E.2d 1104 (quoting Lama Holding Co. v. Smith Barney Inc. , 88 N.Y.2d 413 , 421, 646 N.Y.S.2d 76 , 668 N.E.2d 1370 (1996) ). But Plaintiffs have not alleged that S & P knew the NAV and life expectancy figures it published were false. Although the complaint alleges that "insiders in the life settlement industry" knew "as early as 2004" that 21st Services "ha[d] been accused of systematically and significantly understanding its [life expectancy] evaluations" (Compl. ¶ 51), it never alleges that S & P was among those insiders. Nor does it allege that the unnamed insiders had any particular reason to know that the accusations against 21st Services had merit. The Court therefore concludes that Count Sixteen-which charges S & P with knowing misrepresentation-must be dismissed.
Plaintiffs, though, have also alleged that S & P issued its monthly reports with reckless disregard as to whether the information within was true or false. (Compl. ¶¶ 296-301.) Courts have occasionally suggested that such recklessness satisfies the scienter element of a fraud claim under New York law, and S & P never argues that the law is otherwise. See Loreley Fin. (Jersey) No. 3 Ltd. v. Wells Fargo Sec., LLC , 797 F.3d 160 , 177 (2d Cir. 2015) (describing scienter under New York law as requiring "conscious misbehavior or recklessness" (quoting Lerner v. Fleet Bank, N.A. , 459 F.3d 273 , 291 (2d Cir. 2006) ) ); Suez Equity Investors, L.P. v. Toronto-Dominion Bank , 250 F.3d 87 , 104 (2d Cir. 2001) (noting that a misrepresentation "either known by [the] defendant to be untrue or recklessly made" can support a fraud claim under New York law); Alio v. Saponaro , 133 A.D.2d 887 , 520 N.Y.S.2d 245 , 245 (3d Dep't 1987) (similar).
The Court therefore turns to the question of whether Plaintiffs have adequately alleged that S & P acted recklessly in issuing its monthly statements. In making this assessment, the Court recognizes that Plaintiffs' complaint is subject to the heightened pleading standards of Rule 9(b). And courts in this Circuit have regularly held that Rule 9(b) requires a complaint raising a common-law fraud claim to allege facts that create not just a plausible inference, but a " strong inference," of scienter. 380544 Can., Inc. v. Aspen Tech., Inc. , 633 F.Supp.2d 15 , 29 (S.D.N.Y. 2009) (emphasis added); see also Stephenson v. PricewaterhouseCoopers, LLP , 768 F.Supp.2d 562 , 571 n.1 (S.D.N.Y. 2011). But see Chorches , 865 F.3d at 88 (denying that Rule 9(b) "elevate[s] the standard of certainty that a pleading must attain beyond the ordinary level of plausibility" required of civil complaints). The parties, *282 too, agree that Rule 9(b) imposes this requirement ( see Dkt. No. 87 at 16; Dkt. No. 104 at 29), so the Court asks whether the complaint here raises a strong inference that S & P acted with recklessness, which in this context means "conscious recklessness- i.e. , a state of mind approximating actual intent, and not merely a heightened form of negligence," S. Cherry St., LLC v. Hennessee Grp. LLC , 573 F.3d 98 , 109 (2d Cir. 2009) (emphases omitted) (quoting Novak v. Kasaks , 216 F.3d 300 , 312 (2d Cir. 2000) ); see also Charles Schwab & Co. v. Retrophin, Inc. , No. 14 Civ. 4294, 2015 WL 5729498 , at *9

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/7253818. Public record. Not legal advice.