Opinion
157781/13 16579
01-07-2016
Gerald CHAMBERS, et al., Plaintiffs–Respondents, v. Eliyahu WEINSTEIN, et al., Defendants, 121 Park Realty LLC, et al., Defendants–Appellants.
Lipsius–BenHaim Law LLP, Kew Gardens (Ira S. Lipsius of counsel), for appellants. Law Office of Daniel H. Richland, PLLC, Lindenhurst (Daniel H. Richland of counsel), for respondents.
Lipsius–BenHaim Law LLP, Kew Gardens (Ira S. Lipsius of counsel), for appellants.
Law Office of Daniel H. Richland, PLLC, Lindenhurst (Daniel H. Richland of counsel), for respondents.
Opinion
Order, Supreme Court, New York County (O. Peter Sherwood, J.), entered August 22, 2014, which, to the extent appealed from as limited by the briefs, denied defendants-appellants' (defendants) motion to dismiss the aiding and abetting fraud claims against them, unanimously affirmed, without costs.
To state a claim for aiding and abetting fraud, a plaintiff must allege “the existence of the underlying fraud, actual knowledge, and substantial assistance” (Oster v. Kirschner, 77 A.D.3d 51, 55, 905 N.Y.S.2d 69 1st Dept.2010 ). Here, the existence of an underlying fraud is sufficiently stated in the complaint, which alleges, among other things, that defendants aided and abetted a fraudulent Ponzi scheme involving the purchase of Facebook shares (id.). Plaintiffs have sufficiently stated “substantial assistance,” because the complaint alleges that defendants assisted in the fraud by assigning property to codefendants and by placing the proceeds of the fraud beyond the reach of plaintiffs, thereby causing plaintiffs harm (see e.g. Rostuca Holdings v. Polo, 231 A.D.2d 402, 403, 646 N.Y.S.2d 812 1st Dept.1996; see generally Stanfield Offshore Leveraged Assets, Ltd. v. Metropolitan Life Ins. Co., 64 A.D.3d 472, 476, 883 N.Y.S.2d 486 2009, lv. denied 13 N.Y.3d 709, 2009 WL 3379028 2009 ). Plaintiffs have sufficiently pleaded “actual knowledge” of the underlying fraud, which “need only be pleaded generally” (Oster, 77 A.D.3d at 55, 905 N.Y.S.2d 69).
The documentary evidence submitted to the motion court does not “flatly contradict[ ]” the allegations of the complaint (Scott v. Bell Atl. Corp., 282 A.D.2d 180, 183, 726 N.Y.S.2d 60 1st Dept.2001, mod. on other grounds 98 N.Y.2d 314, 746 N.Y.S.2d 858, 774 N.E.2d 1190 2002 ).
We have considered defendants' remaining contentions and find them unavailing.
TOM, J.P., MAZZARELLI, RICHTER, GISCHE, JJ., concur.