00-CV-0784 ——— ——— L.C.; WOODCHUCK HILL , LLP Michael Endler, Esq. LEXNER F

& CHILLER Defendants. S

, Case 1:00-cv-00784-NAM-RFT Document 482 Filed 03/31/06 Page 1 of 37 1 of Page 03/31/06 Filed 482 Document 1:00-cv-00784-NAM-RFT Case OIES ——————————————————————————————————————————————————————————————— APPEARANCES:B OF COUNSEL ROBERT J. CONGEL, individually and as General Partner of individually and as General ROBERT J. CONGEL, Madeira Associates, Riesling Associates, Woodchuck Hill PYRAMID COMPANY OF Associates, and Moselle Associates; ONONDAGA; EKLECCO L. MADEIRA ASSOCIATES, RIESLING ASSOCIATES, ASSOCIATES; JAMES A. ASSOCIATES, AND MOSELLE MARC A. MALFITANO; ROBERT BRVENIK; TUOZZOLO; and SCOTT R. CONGEL, UNITED STATES DISTRICT COURT STATES DISTRICT UNITED NEW YORK DISTRICT OF NORTHERN ——————————————————————————————————————————————————————————————— JOHN L. UNGERER; III; ROBERT LUGOSCH, J. DANIEL JOHN C. A. KELLOGG; EDWARD A. BERSANI; K. C. STEINGRABER; RICHARD CHARTERS; PETER TAPELLA, ASKIN; and WILLIAM Plaintiffs, 5: -v.- 100 State Street 100 State Street Albany, New York 12207 Jeffrey S. Shelly, Esq. and GREEN, SEIFTER LAW FIRM900 One Lincoln Center Syracuse, New York and OFFICE OF DONALD T. KINSELLA90 State Street, Suite 1440 Albany, New York, 12207 AttorneysPlaintiffs for GOODWIN, PROCTER LAW FIRM Exchange Place 53 State Street Daniel J. French, Esq. Boston, MA 02109-2881 and Donald T. Kinsella, Esq. ISEMAN, CUNNINGHAM LAW FIRM 9 Thurlow Terrace Albany, NY 12203 and Anthony S. Fiotto, Esq. Esq. J. Cunningham, Michael Paul Ware, Jr., Esq. Christopher D. Moore, Esq. Esq. Kai W. Lyman, NAM huck Hill Associates,huck Hill Madeira Riesling Associates, -2- James A. Tuozzolo and Marc A. Malfitano A. Tuozzolo James Case 1:00-cv-00784-NAM-RFT Document 482 Filed 03/31/06 Page 2 of 37 2 of Page 03/31/06 Filed 482 Document 1:00-cv-00784-NAM-RFT Case Associates, and Moselle Associates and Moselle Associates Associates, LAW FIRM WINSTON, STRAWN 1700 K Street N.W. Washington, DC 20006 LAW FIRM GOODWIN, PROCTER Exchange Place 53 State Street Boston, MA 02109-2881 ISEMAN, CUNNINGHAM LAW FIRM Gordon A. Coffee, Esq. 9 Thurlow Terrace Albany, NY 12203 and DADD, NELSON LAW FIRM Anthony S. Fiotto, Esq. 11 Exchange Street P.O. Box 238 Attica, NY 14011 David Sharp, Esq. Krista M. Enns, Esq. Attorneys Company for Defendants Pyramid L.L.C. of Onondaga and EklecCo Esq. Michael J. Cunningham, GOODWIN, PROCTER LAW FIRM Exchange Place Paul F. Ware, Jr., Esq. 53 State Street D. Moore, Esq. Christopher Boston, MA 02109-2881 and Esq. Kai W. Lyman, KING, SPAULDING LAW FIRM Eric T. Dadd, Esq. 1700 Pennsylvania Avenue, NW Washington, DC 20006-4706 and MACKENZIE, HUGHES LAW FIRM Anthony S. Fiotto, Esq. 101 South Salina Street PO Box 4967 Syracuse, NY 13221-4967 and ISEMAN, CUNNINGHAM LAW FIRM 9 Thurlow Terrace John M. Bray, Esq. Albany, NY 12203 Paul F. Ware, Jr., Esq. Attorneys for Defendants Robert Brvenik, Michael J. Ciatti, Esq. Nancy L. Pontius, Esq. D. Moore, Esq. Christopher COSTELLO, COONEY LAW FIRM Esq. Kai W. Lyman, 205 South Salina Street 4th Floor Syracuse, NY 13202 Esq. Michael J. Cunningham, and Esq. Stephen T. Helmer, Edward G. Melvin, Esq. Esq. Robert J. Smith, MACKENZIE, HUGHES LAW FIRM HUGHES MACKENZIE, Salina Street 101 South PO Box 4967 Syracuse, 13221-4967 NY Attorneys Congel, Woodc Robert J. for Defendants Nancy L. Pontius, Esq. Esq. Stephen T. Helmer, NAM . (“RICO”) and et seq Division of the Hearst Corporation, publisher of the Division of the Hearst Corporation, on by James A. Tuozzolo (Dkt. No. 324); motion on by James -3- EklecCo LLC and Pyramid Company of Onondaga Company EklecCo LLC and Pyramid INTRODUCTION MEMORANDUM-DECISION AND ORDER MEMORANDUM-DECISION This Memorandum-Decision and Order addresses eight motions in this action under eight motions and Order addresses This Memorandum-Decision Case 1:00-cv-00784-NAM-RFT Document 482 Filed 03/31/06 Page 3 of 37 3 of Page 03/31/06 Filed 482 Document 1:00-cv-00784-NAM-RFT Case by Robert Brvenik and Marc A. Malfitano (Dkt. No. 325); motion by Scott R. Congel (Dkt. No. by Scott R. Congel by Robert Brvenik and Marc A. Malfitano (Dkt. No. 325); motion by Madeira Associates, Moselle Associates, Riesling Associates, and Woodchuck 326); motion by Hill Associates (Dkt. No. 327); and motion for reconsideration by Moselle (Dkt. No. 328). The Court also addresses herein an appeal/motion A. Hill Associates, James Associates, Madeira Associates, Riesling Associates, Woodchuck the joint stipulation and to amend Tuozzolo and Robert J. Congel (Dkt. No. 268), and a motion New York common law. There are six motions for summary judgment by defendants as follows: judgment for summary are six motions law. There New York common moti by Robert J. Congel (Dkt. No. 323); motion Norman A. Mordue, Chief Judge: Organizations Act, 18 U.S.C. §§ 1961, Racketeer Influenced and Corrupt KIRKLAND, ELLIS LAW FIRM ELLIS LAW KIRKLAND, Street, NW655 Fifteenth Suite 1200 DC 20005 Washington, and FIRM PROCTER LAW GOODWIN, Exchange Place 53 State Street Boston, MA 02109-2881 and LAW FIRM ISEMAN, CUNNINGHAM Esq. P. Gillespie, James 9 Thurlow Terrace Albany, NY 12203 Attorneys R. Congel for Defendant Scott Anthony S. Fiotto, Esq. Rebecca R. Anzidei, Esq. Law Firm Lochner McNamee, 677 Broadway Albany, NY 12207-2503 Attorney for Proposed Intervenor Capital Newspapers Esq. Michael J. Cunningham, Paul F. Ware, Jr., Esq. Christopher D. Moore, Esq. Esq. W. Lyman, Kai Michael J. Grygiel, Esq. Albany Times Union and The Herald Company Albany Times NAM 1 -4- Factual Allegations THIRD AMENDED COMPLAINT THIRD AMENDED Defendant Robert J. Congel (“R.J. Congel”) and his various family entities conduct Congel”) and his various family Defendant Robert J. Congel (“R.J. general partners (“Partners”) in ten general partnerships Plaintiffs are minority all of which are substantially Each Partnership is governed by a Partnership Agreement, The factual allegations in the Third Amended Complaint are as follows. are as follows. Complaint the Third Amended allegations in The factual 1 Case 1:00-cv-00784-NAM-RFT Document 482 Filed 03/31/06 Page 4 of 37 4 of Page 03/31/06 Filed 482 Document 1:00-cv-00784-NAM-RFT Case The Court emphasizes that the section headed “Third Amended Complaint” sets forth plaintiffs’ Complaint” that the section headed “Third Amended The Court emphasizes allegations and does not represent factual findings by the Court. business under the business name “The Pyramid Companies” (“Pyramid”). Pyramid develops and Pyramid (“Pyramid”). Companies” “The Pyramid business under the business name 20 regional shopping malls than built up a portfolio of more operates shopping centers and has shopping centers (collectively the “Portfolio”). and community or community developed and owns a regional shopping mall (“Partnerships”); each Partnership by interest in each Partnership is held The majority shopping center (“Partnership Property”). partner in one of the following four partnerships, all of R.J. Congel individually and as general Riesling Associates, Hill Associates (“WHA”), Woodchuck which are controlled by R.J. Congel: Partnerships”). Madeira Associates and Moselle Associates (collectively, “Family to manage establishes a three-partner Executive Committee Each Partnership Agreement similar. any action of the the partners to overrule or modify the particular Partnership, but permits by a vote of at least 51% of the total Partnership percentages. According to Executive Committee Partnerships order regarding dispositive motion deadlines by Robert Brvenik, Robert J. Congel, Scott R. Robert J. Congel, by Robert Brvenik, deadlines motion dispositive order regarding Associates, Pyramid Moselle Marc A. Malfitano, Associates, EklecCo LLC, Madeira Congel, 382). (Dkt. No. A. Tuozzolo James Associates and Riesling of Onondaga, Company NAM ts require monthly distributions to all distributions monthly ts require me, Defendants have defrauded Plaintiffs, me, Partnerships. The Partnership e four Family -5- cert with the other defendants, has intentionally, cert with the other nerships or non-Partnership entities, and using The foundation of this action is the illegal and fraudulent scheme of Defendant illegal and fraudulent scheme The foundation of this action is the an otherwise profitable group of shopping Robert J. Congel to exploit and drain own private checking as his generated by those malls and to use the income malls, sche account. As a result of that corrupt and the other minority partners in those shopping malls, out of millions of dollars in out of millions partners in those shopping malls, and the other minority ¶ 1.) Compl. (Third Amended profits, assets and financial opportunity. Among other provisions, the Partnership Agreemen provisions, the other Among hire a provides that the Partnership may Each Partnership’s Partnership Agreement Case 1:00-cv-00784-NAM-RFT Document 482 Filed 03/31/06 Page 5 of 37 5 of Page 03/31/06 Filed 482 Document 1:00-cv-00784-NAM-RFT Case the Third Amended Complaint, the Executive Committees have been completely inactive and the inactive completely have been Committees the Executive Complaint, Amended the Third by R.J. Congel. exclusively have been managed Partnerships of Partnership funds, prohibit commingling in excess of expenses, income Partners of monthly to every Partner. and accounting be available full and accurate financial reporting and require that in con that R.J. Congel, acting Plaintiffs claim Complaint Third Amended The agreements. violated the Partnership repeatedly and illegally states: (“PMG”) Pyramid Management Group into the Partnership Property. Each Partnership has entered agent to lease and manage managing Group (“PMG”) whereby PMG manages Management with Pyramid Agreement a Management is owned by th the Partnership Properties. PMG to require consent by 70% of all percentage interests of partners for a Partnership Agreements such as PMG, but consent has never been company enter into a contract with an “affiliated” such as Agreements, provisions of the Management with many obtained. Nor has PMG complied maintaining basis, a monthly reporting the financial condition of the Partnership Properties on each commingling from separate bank accounts for each Partnership Property, refraining Partnership’s funds with funds of other Part NAM rtnerships. Other financial strains arose from non-Partnership uses. Plaintiffs further claim non-Partnership and intentionally providing misleading financial and intentionally providing misleading -6- to plaintiffs; intentionally provided – via mail provided – via intentionally to plaintiffs; reporting, which gave the appearance that the reporting, which gave the appearance ll handled by defendants and that the Partnership ll handled by defendants and that ll (“Carousel”), owned by defendant Pyramid by providing false and misleading information. information. by providing false and misleading operties, and has concealed its wrongdoing by operties, and has concealed its wrongdoing The Third Amended Complaint claims that PMG has regularly, intentionally, and regularly, intentionally, that PMG has claims Complaint Amended The Third that defendants perpetrated a fraudulent scheme avers Complaint The Third Amended Case 1:00-cv-00784-NAM-RFT Document 482 Filed 03/31/06 Page 6 of 37 6 of Page 03/31/06 Filed 482 Document 1:00-cv-00784-NAM-RFT Case and/or wire – false and misleading financial information to the Partners; intentionally, to the Partners; information financial and misleading and/or wire – false with monies and/or wire – Partnership mail – via and continuously commingled systematically in and R.J. Congel; and actively engaged business entities controlled by funds of unrelated funds for the conversion of Partnership permitted Partnership funds for Partnership purposes only. purposes funds for Partnership Partnership financial reports failed to provide continuously overcharged the Partnerships for and repeatedly that PMG has intentionally, systematically and leasing of Partnership Pr management Partnerships withholding financial reports from information. Fraudulent Scheme partners upon plaintiffs and other minority financial Defendants provided only superficial we affairs of the Partnerships were reasonably R.J. Congel incurred cost by PMG. In the 1990's, Properties were reasonably well managed overruns in the construction of Carousel Ma no relationship to the Partnerships. These problems of Onondaga (“PCO”), which has Company by debt relating to Palisades Center Mall (“Palisades”), owned by defendant were compounded EklecCo, which also has no relationship with the Pa son, defendant Scott Congel, a series of strip center projects developed by R.J. Congel and his through S&R Group, Inc. (“S&R”). NAM el, Palisades, Bonwit Teller and S&R. As a el, Palisades, Bonwit Teller and drain the Partnerships in order to fund R.J. drain the Partnerships in order to wner of Crossgates Mall, in which plaintiffs Crossgates Mall, wner of ) to fund the acquisition of the Bonwit Teller ) to fund the acquisition -7- Bonwit is Bontel Corporation, which is owned and Bonwit is Bontel a, in which plaintiffs Ungerer and Peter C. a, in which plaintiffs , Buffalo and PCO by defendant WHA, one of the WHA, , Buffalo and PCO by defendant Plaintiffs allege that R.J. Congel and the Family Partnerships used their majority interests used their majority Partnerships Family Congel and the allege that R.J. Plaintiffs PMG to Plaintiffs aver that defendants used Case 1:00-cv-00784-NAM-RFT Document 482 Filed 03/31/06 Page 7 of 37 7 of Page 03/31/06 Filed 482 Document 1:00-cv-00784-NAM-RFT Case in Pyramid Crossgates Company (“Crossgates”) (o (“Crossgates”) Company Crossgates in Pyramid of Company and Pyramid partners) III are minority Daniel Lugosch, Ungerer and J. Robert L. Galleri Walden (owner of (“Buffalo”) Buffalo a participate in forming Crossgates and Buffalo to partners) to compel Steingraber are minority L.P. (“Bonwit” partnership, Bonwit Teller limited partner in store chain. The general department partner of Bonwit is Retail Distribution The limited family. controlled by R.J. Congel and his Crossgates, Buffalo and PCO. Monies comprising Enterprises (“RDE”), a general partnership to Crossgates were provided to RDE as a loan costs of Bonwit Teller and its involved included the acquisition Partnerships. The monies Family onto Crossgates and that R.J. Congel shifted these losses operating losses. Plaintiffs claim financial reporting. Buffalo through misleading including Carous Congel’s non-Partnership projects, ceased. Partnership Property payables fell general partner distributions all but result, minority Defendants payments. instances real estate tax and mortgage into arrears, including in some paid by tenants to be held by the Partnerships funds, including monies allegedly misappropriated and costs and promotion area maintenance of real estate taxes, common in trust for the payment (referred to hereinafter as year-end financial statements expenses. The unaudited marketing “compiled record as “year-end statements,” also referred to in the “financial statements”; of referred to large sums received by plaintiffs in mid-1997 or “tax statements”) statements,” allege that these reflected “related entities”; plaintiffs due to the Partnerships from money NAM distributions of profits to the Partners, they distributions of r” to Pyramid, leading plaintiffs to believe that leading plaintiffs to believe r” to Pyramid, le of the Portfolio, at the expense of plaintiffs le of the Portfolio, at the expense e financial statements also reflected significant statements e financial receipts from each Partnership’s account – via receipts from ial statements showed Partnership Property cash ial statements -8- tion account,” which plaintiffs characterize as a characterize which plaintiffs tion account,” In late 1997 and early 1998, R.J. Congel and Pyramid announced that they would attempt announced early 1998, R.J. Congel and Pyramid In late 1997 and operating account into which Partnership Property rental an Each Partnership maintains Case 1:00-cv-00784-NAM-RFT Document 482 Filed 03/31/06 Page 8 of 37 8 of Page 03/31/06 Filed 482 Document 1:00-cv-00784-NAM-RFT Case unauthorized loans to non-Partnership projects. Th projects. loans to non-Partnership unauthorized “concentra a Partnerships from due to the sums with non-Partnership commingled improperly were monies various Partnerships’ fund in which that, although the financ Plaintiffs state monies. to pay operating expenses and make flows sufficient the concentration account. due from amounts by the unauthorized loans and than offset were more properties. Chase Manhattan Bank (“Chase”), the to sell the entire Portfolio of Pyramid loan to finance and anticipated sale, approved a $200 million banker for the marketing investment expenses directly related to expansion efforts to increase land acquisitions and to cover building According to plaintiffs, R.J. Congel quickly dissipated the the value of the existing Portfolio. such as Palisades and S&R. The costs of this loan, however, proceeds on unauthorized projects in the summer At a meeting of the Partnerships. statements were shown as debts on the financial was a “net lende of 1998, R.J. Congel stated that he and due to him parties” to inflate the amount due to related he would use the purported “amounts of the sa the proceeds Partnerships from the Family partners. and other minority Concentration Account and Management deposited. The Partnership Agreements and other receipts are income its operating account. require each Partnership’s bills and expenses to be paid from Agreements However, on a daily basis PMG has “swept” the mail and/or wire – and deposited them in one bank account, called a concentration account, in one bank them and/or wire – and deposited mail NAM Partnership Properties. PMG has paid itself for information and explanations have been for information nd reimbursed expenses to PMG itself. PMG’s to PMG itself. expenses nd reimbursed -9- and other defendants have used PMG in a “package” of financial information concerning “package” of financial information Plaintiff Lugosch states that his requests Plaintiff Lugosch states that his requests Plaintiffs further claim that R.J. Congel Plaintiffs further claim Case 1:00-cv-00784-NAM-RFT Document 482 Filed 03/31/06 Page 9 of 37 9 of Page 03/31/06 Filed 482 Document 1:00-cv-00784-NAM-RFT Case maintained by PMG, where they are commingled with funds of other Partnerships and other Partnerships and funds of other with they are commingled by PMG, where maintained disbursements of the Partnerships’ PMG pays all by R.J. Congel. entities controlled business fees a including management this account, from reported the Partnerships monthly, and/or wired to the were mailed reports, which cash summary were that tax escrow monies indicating cash balances as zero or nominal, real estate tax escrow to PMG and other Congel this account has been loaned diverted. Money from improperly legitimate and S&R, although there is no Palisades, Carousel, Bonwit Teller, projects such as on loans this account have also been used for debt service from explanation for such loans. Funds Chase loan. to the Palisades project and on the largely unsuccessful, although he did receive a largely unsuccessful, although he certain Partnership Properties. Lugosch claims that the information provided in the package was the information that claims certain Partnership Properties. Lugosch transactions, such as a $19 and included entries reflecting unauthorized false and misleading on Berkshire in payments Bonwit. He also states that PMG defaulted “payable” due to million Prudential Insurance Co. loan with mortgage Mall Group’s $60 million Self-dealing and Fee Overcharging repeated and intentional pattern of overcharging” the Partnerships for services “systematic, of provided in connection with PMG’s management millions of dollars in excess management fees beyond the 3% of gross project revenues fees of dollars in excess management millions Agreements each Partnership. The Management with Agreements authorized in the Management the Partnerships to PMG for the cost of on-site management by also provide for reimbursement and has that PMG has overcharged the Partnerships for these services personnel; plaintiffs claim NAM ports, they were falsified and misleading. R.J. falsified and misleading. ports, they were -10- Plaintiffs also claim that defendants have repeatedly failed to report to them and other to them have repeatedly failed to report that defendants Plaintiffs also claim its duties to discharged its duties, including improperly According to plaintiffs, PMG has Partnership Congel to misappropriate that R.J Congel conspired with Scott Plaintiffs claim and siphoning of funds, R.J. of monies According to plaintiffs, due to the commingling Case 1:00-cv-00784-NAM-RFT Document 482 Filed 03/31/06 Page 10 of 37 10 Page 03/31/06 Filed 482 Document 1:00-cv-00784-NAM-RFT Case included improper costs. R.J. Congel also allegedly used PMG to pass through to the to pass through to used PMG also allegedly costs. R.J. Congel improper included unrelated are “wholly expenses, which and living travel, entertainment his personal Partnerships business.” of the Partnerships’ to the conduct Scheme Acts in Furtherance of the Other Fraudulent the On each Partnership Agreement. Partnership affairs as required by partners on minority re defendants did provide financial occasions when such as Chase in reports to banks falsified or misleading have submitted Congel and/or Pyramid order to obtain loans. lenders. to pay project vendors and to pay mortgage lease space in the Partnership Properties, evident, PMG overcharges became disputes with tenants, tenant billing in the course of When, releasing tenants to the Partnerships, sometimes and detriment settled the cases at great expense their leases. from the acquisition of land adjacent to Partnership Properties and the business opportunities, including of the Partnerships. R.J. thereon of abutting strip center projects to the detriment development or transactions with S&R or Congel personally caused various Partnerships to enter into contracts with affiliated entities. an affiliate without the requisite 70% approval required for transactions calls in both Berkshire Mall Group (“Berkshire”), for capital unilateral demands Congel has made are partners, and in which plaintiffs Lugosch and John A. Bersani and defendant WHA Lugosch, Bersani, John C. Independence Mall Group (“Independence”), in which plaintiffs NAM of which has been repaid by Crossgates; and of which has been repaid by Crossgates; nd defendant Riesling Associates are partners. are partners. Riesling Associates nd defendant ated 18 U.S.C. § 1962(c), (d). Plaintiffs base ated 18 U.S.C. § 1962(c), (d). Plaintiffs me to defraud plaintiffs and others. Plaintiffs me mily Partnerships violated 18 U.S.C. § mily commingle funds in the concentration account funds in the commingle another Partnership or to a non-Partnership entity; another Partnership -11- nership Agreements. Similarly, plaintiff Peter C. Similarly, nership Agreements. defendants repeatedly, systematically and defendants repeatedly, systematically Causes of Action

The Third Amended Complaint sets forth ten causes of action. Complaint The Third Amended Congel and the Fa that R.J Plaintiffs claim Plaintiffs state that defendants continue to Plaintiffs state that Case 1:00-cv-00784-NAM-RFT Document 482 Filed 03/31/06 Page 11 of 37 11 Page 03/31/06 Filed 482 Document 1:00-cv-00784-NAM-RFT Case Count I - RICO defendants viol 1962(a)-(d), and that the remaining multiple of engaged in racketeering activity consisting on allegations that defendants these claims fraud in furtherance of a sche and wire acts of mail that through PMG, a RICO enterprise, claim intentionally overcharged the Partnerships for the management and leasing of the Partnership intentionally overcharged the Partnerships for the management with funds of unrelated business entities controlled Partnership monies Properties, commingled uses, misappropriated by R.J. Congel, converted Partnership funds for non-Partnership by failing to provide Partnership opportunities, and concealed and perpetuated the scheme to the Partners. financial information and providing false and misleading financial information continue to overcharge the Partnerships for management fees. for management continue to overcharge the Partnerships continue to make claims for repayment of improper intercompany borrowings including the borrowings intercompany of improper repayment for claims continue to make some of RDE for the Bonwit Teller loan, repayment Charters, Richard K. Askin, and William Tapella, a and William Richard K. Askin, Charters, to not available that cash flow was the position R.J. Congel took of 2001, summer During the the plaintiffs from ouster of these resulted in the The disputes have capital calls. service the in violation of the Part Partnerships, allegedly Buffalo. ousted from been improperly Steingraber has one Partnership to funds from in order to divert NAM , PMG’s inter alia of action based on defendants’ alleged conduct based on defendants’ of action nd willfully aided and abetted the scheme to scheme nd willfully aided and abetted the l, the Family Partnerships, Tuozzolo, and Partnerships, Tuozzolo, l, the Family and Partnerships, Tuozzolo, l, the Family lly own the funds misappropriated by defendants misappropriated lly own the funds -12- conspired and engaged in a common scheme to scheme conspired and engaged in a common unds which rightfully belong to plaintiffs, and that unds which rightfully belong to plaintiffs, e funds which rightfully belong to plaintiffs. e funds which rightfully belong to l information to plaintiffs concerning, to plaintiffs concerning, l information Plaintiffs claim that defendants R.J. Conge that defendants Plaintiffs claim Plaintiffs claim that defendants R.J. Conge that defendants Plaintiffs claim Plaintiffs aver that defendants knowingly a Plaintiffs aver that defendants knowingly Plaintiffs claim that the Partnerships lega Plaintiffs claim or agreement the allegation of a common Based on the above allegations and Plaintiffs assert a common-law fraud cause assert a common-law Plaintiffs Case 1:00-cv-00784-NAM-RFT Document 482 Filed 03/31/06 Page 12 of 37 12 Page 03/31/06 Filed 482 Document 1:00-cv-00784-NAM-RFT Case Malfitano breached the Partnership Agreements. Count VII - Breach of Fiduciary Duty defraud plaintiffs and to convert for their use f defraud plaintiffs and to convert plaintiffs’ Partnerships for his own of enabled R.J. Congel to use the income the scheme assets and financial dollars in profits, of millions of purposes, resulting in the loss to plaintiffs opportunities. Count VI - Breach of Contract Count V - Aiding and abetting defraud plaintiffs and to convert for their us defraud plaintiffs and to convert management of the Partnership Properties, payment of real estate taxes on the Properties, and the taxes on the Properties, and of real estate of the Partnership Properties, payment management entities. assets to non-Partnership transfer of Partnerships’ Count III - Conversion these funds to their own use. and that defendants have converted Count IV - Conspiracy that defendants understanding, plaintiffs claim Count II - Fraud Count II financia false and misleading in providing NAM ce; and the interest of plaintiff Steingraber in ce; and the interest Tuozzolo, WHA, and Riesling breached their Tuozzolo, WHA, Tuozzolo, WHA, and Riesling breached the Riesling breached and WHA, Tuozzolo, are not in default of their Partnership obligations are not in default and Tapella in Independence; and the interest of and Tapella in Independence; and -13- Berkshire; the interests of plaintiffs Lugosch, Berkshire; the interests Plaintiffs claim that defendants R.J. Congel, defendants R.J. that claim Plaintiffs Congel, Plaintiffs assert that defendants R.J. Partnerships, PCO and Plaintiffs aver that by the actions alleged above, the Family under RICO. They seek a including treble damages damages, Plaintiffs seek money Case 1:00-cv-00784-NAM-RFT Document 482 Filed 03/31/06 Page 13 of 37 13 Page 03/31/06 Filed 482 Document 1:00-cv-00784-NAM-RFT Case Malfitano breached their fiduciary duty to plaintiffs. fiduciary duty to breached their Malfitano Contract - Breach of Count VIII purchasing the and Buffalo by improperly for Berkshire, Independence Partnership Agreements Lugosch and Bersani in interests of plaintiffs Askin and Tapella in Independen Bersani, Charters, that they plaintiffs further claim Buffalo. These their capital of repayment for and illegal demands improper made and that these defendants in their favor. resolving these matters accounts. Plaintiffs seek a declaration Duty Count IX - Breach of Fiduciary the Berkshire, Independence and Buffalo partnerships by fiduciary duties in connection with and Bersani in Berkshire; the interests purchasing the interests of plaintiffs Lugosch improperly Askin of plaintiffs Lugosch, Bersani, Charters, of repayment for and illegal demands improper and by making in Buffalo; Steingraber plaintiff their capital accounts. Count X - Constructive Trust properly belonging to monies EklecCo knowingly and willfully received and retained assets and plaintiffs. Relief demanded is null and void, as is their declaration that the purchase of certain plaintiffs’ Partnership interests NAM 477 Celotex,

See , 865 F.2d 460, 465 (2d Cir. 1989). If Code creates a private right of action for -14- , 477 U.S. 317, 323 (1986). If the Court, viewing the , 477 U.S. 317, 323 (1986). If the DISCUSSION – RICO CAUSE OF ACTION THE MOTIONS FOR SUMMARY JUDGMENT THE MOTIONS See Ramseur v. Chase Manhattan Bank see Celotex Corp. v. Catrett Section 1964(c) of Title 18 of the United States A party moving for summary judgment bears the initial burden of demonstrating that there burden of demonstrating bears the initial judgment for summary A party moving There are six motions for summary judgment by defendants as follows: motion by R.J. defendants as follows: motion by judgment for summary There are six motions Case 1:00-cv-00784-NAM-RFT Document 482 Filed 03/31/06 Page 14 of 37 14 Page 03/31/06 Filed 482 Document 1:00-cv-00784-NAM-RFT Case evidence in the light most favorable to the nonmovant and drawing all reasonable inferences in favorable to the nonmovant evidence in the light most then shifts to has satisfied this burden, the burden that the movant favor, determines nonmovant’s fact existence of a disputed issue of material to adduce evidence establishing the the nonmovant requiring a trial. is appropriate. judgment fails to carry this burden, summary the nonmovant U.S. at 323. RICO Cause of Action - Generally Congel (Dkt. No. 323); motion by James A. Tuozzolo (Dkt. No. 324); motion by Robert Brvenik No. 324); motion A. Tuozzolo (Dkt. James by 323); motion Congel (Dkt. No. by (Dkt. No. 326); motion by Scott R. Congel (Dkt. No. 325); motion and Marc A. Malfitano Hill Associates Riesling Associates, and Woodchuck Madeira Associates, Moselle Associates, (Dkt. No. of Onondaga Company LLC, and Pyramid by EklecCo (Dkt. No. 327); and motion 328). of law. Fed. R. matter as a that it is entitled to judgment fact and is no genuine issue of material Civ. P. 56 (c); obligation to repay capital accounts. They seek termination of the Management Agreement of the Management seek termination accounts. They to repay capital obligation trust in favor of a constructive of they seek imposition and PMG. And the Partnerships between EklecCo. PCO and Partnerships, against the Family plaintiffs NAM

2 3 ists of at least two acts of racketeering activity acts of at least two ists of mplaint, plaintiffs claim that defendants that plaintiffs claim mplaint, any interest in or control of any enterprise e conduct of such enterprise's affairs through a e conduct of such enterprise's -15- (a) It shall be unlawful for any person who has received any income derived, directly or who has received any income (a) It shall be unlawful for any person to use or invest, directly or a pattern of racketeering activity ... indirectly, from in acquisition of or the proceeds of such income, indirectly, any part of such income, any enterprise which is engaged in, or operation of, any interest in, or the establishment *** commerce. interstate or foreign affect, which or the activities of activity ... to (b) It shall be unlawful for any person through a pattern of racketeering directly or indirectly, acquire or maintain, commerce. foreign interstate or which affect, which is engaged in, or the activities of by or associated with any enterprise (c) It shall be unlawful for any person employed to conduct commerce, engaged in, or the activities of which affect, interstate or foreign or participate, directly or indirectly, in th pattern of racketeering activity[.] of the provisions of (d) It shall be unlawful for any person to conspire to violate any subsection (a), (b), or (c) of this section. Any person injured in his business or property by reason of a violation of section 1962 Any person injured in his business district court and shall sue therefor in any appropriate United States of this chapter may including a reasonable he sustains and the cost of the suit, recover threefold the damages fee[.] attorney's In the first count of the Third Amended Co of the Third Amended In the first count 3 2 Case 1:00-cv-00784-NAM-RFT Document 482 Filed 03/31/06 Page 15 of 37 15 Page 03/31/06 Filed 482 Document 1:00-cv-00784-NAM-RFT Case 18 U.S.C. § 1962 provides: engaged in a pattern of racketeering activity consisting of multiple acts of mail and wire fraud. mail acts of multiple consisting of racketeering activity of engaged in a pattern activity cons Under RICO, a pattern of racketeering part: 18 U.S.C. § 1964(c) provides in To establish a violation of section 1962, a plaintiff must show that, through the commission of commission that, through the show a plaintiff must section 1962, a violation of To establish or indirectly directly activity, the defendant racketeering of a pattern acts constituting two or more which the activities of or participated in an enterprise, an interest in, invested in, or maintained to do so. or that he conspired or foreign commerce, affected interstate anyone injured in his business or property as a result of a violation of section 1962 of Title 18. 1962 of Title violation of section as a result of a or property in his business anyone injured NAM , , 161 U.S. and section 1343 (wire and section 4 United States v. Altman United States v. 18 U.S.C. § 1961(1), (5). § 1961(1), (5). 18 U.S.C. See Durland v. United States to the past or present, or suggestions and to the past or present, or suggestions se any scheme or artifice to defraud, or se any scheme or artifice to defraud, or se any scheme -16- , 130 F.3d 547, 551 (2d Cir. 1997); , 130 F.3d 547, 551 , 48 F.3d at101 (quoting Altman See United States v. Trapilo See United States The elements of a claim of mail or wire fraud are (1) the existence of a scheme to (1) the existence of a scheme or wire fraud are of mail of a claim The elements for obtaining money or property by means of false or fraudulent pretenses, property by means or for obtaining money or artifice ... for the purpose of executing such scheme representations, or promises, for mail so to do, places in any post office or authorized depository or attempting to be sent or delivered by the Postal Service, or or thing whatever any matter matter, to be sent or or thing whatever any matter deposits or causes to be deposited interstate carrier, or takes or receives delivered by any private or commercial or by mail or thing, or knowingly causes to be delivered any such matter therefrom, which it is directed such carrier according to the direction thereon, or at the place at or thing, shall it is addressed, any such matter to be delivered by the person to whom than 20 years, or both. not more be fined under this title or imprisoned having devised or intending to devi Whoever, or fraudulent pretenses, of false or property by means for obtaining money wire, of by means or causes to be transmitted transmits representations, or promises, any writings, in interstate or foreign commerce, radio, or television communication or scheme signs, signals, pictures, or sounds for the purpose of executing such or both. than 20 years, not more artifice, shall be fined under this title or imprisoned Whoever, having devised or intending to devi having devised Whoever, 5 5 4 Case 1:00-cv-00784-NAM-RFT Document 482 Filed 03/31/06 Page 16 of 37 16 Page 03/31/06 Filed 482 Document 1:00-cv-00784-NAM-RFT Case 18 U.S.C. § 1343, provides in relevant part: 306, 313 (1896)). 18 U.S.C. § 1341, “Frauds and swindles,” provides in part: 18 U.S.C. § 1341, “Frauds and swindles,” fraud). of the or wires in furtherance of the mails or property; and (2) the use money defraud involving scheme. to include is broadly interpreted to defraud element (2d Cir. 1995). The scheme 48 F.3d 96, 101 by representations as “‘everything designed to defraud as to the future.’” promises (often referred to as the “predicate acts”) within a ten year period. within a ten year acts”) to as the “predicate (often referred under” is indictable as “any act which § 1961(1)(B) defined in 18 U.S.C. activity is Racketeering fraud) (mail section 1341 18, which include provisions of Title specified NAM , inter alia atus of the Partnerships (including, but not s any individual, partnership, corporation, partnership, s any individual, created, authorized, and/or provided false and the receipts, expenses and charges of the the receipts, expenses and charges group of individuals associated in fact although individuals associated group of -17- in acts directed toward promoting defendants’ promoting in acts directed toward and other minority partners out of millions of millions partners out of and other minority 18 U.S.C. § 1961(4) (“‘enterprise’ include § 1961(4) (“‘enterprise’ 18 U.S.C. limited to, the balance of the concentration account and the amounts due to and from to, the balance of the concentration account and the amounts limited loans); (b) PMG’s due on unauthorized intra-Pyramid “related parties” and the amounts of real estate taxes on Partnership of the Partnership Properties; (c) payment management of the to be held in trust for the benefit of the tenants or customers Properties; (d) monies non-Partnership Partnership Properties; and (e) the transfer of Partnership assets to properties. by, defendants injured them Plaintiffs allege that through this scheme With respect to the scheme, the Third Amended Complaint alleges: Complaint the Third Amended respect to the scheme, With at the heart of this action includes mailings 167. Defendants’ fraudulent misconduct of statements and/or wirings of: (1) monthly deposits of the receipts collected for the Partnership Partnership Properties; (2) daily budget updates funds; (4) monthly daily transfers of Partnerships’ Properties; (3) almost weekly leasing status reports; (6) weekly tenant for the Partnership Properties; (5) reports of budget variances; (8) annual budgets and coordination status reports; (7) weekly other financial reports and memoranda. quarterly updates; and (9) various and/or wired mailed that PMG has occurred in each month 168. Defendants’ misconduct the Partnership set forth in ¶ 167 above to and/or from or documents items the improper other Partners. *** Properties or to Plaintiffs and the the inception from 178. Pursuant to that pattern of racketeering activity, at various times of Carousel to the present, Defendants have to the Partnerships, the Plaintiffs and the other Partners financial information misleading st to, (a) the financial including, but not limited Plaintiffs allege that PMG constitutes the RICO “enterprise” within the meaning of section of within the meaning RICO “enterprise” constitutes the allege that PMG Plaintiffs See Case 1:00-cv-00784-NAM-RFT Document 482 Filed 03/31/06 Page 17 of 37 17 Page 03/31/06 Filed 482 Document 1:00-cv-00784-NAM-RFT Case association, or other legal entity, and any union or entity, and any or other legal association, the managing aspects of out legitimate They allege that PMG carries not a legal entity.”). but that it also engages Partnership Properties the and subverting the interests of the assets plaintiffs by commingling to defraud illegal scheme plaintiffs and defrauding various Partnerships opportunities. dollars in profits, assets and financial further asserts: Complaint The Third Amended 1962. NAM

6 enterprise, in violation of 18 U.S.C. § enterprise, in violation of 18 U.S.C. olations of the subdivisions of section 1962 as olations of the subdivisions of section use and benefit, thereby depriving plaintiffs of depriving plaintiffs benefit, thereby use and ng false and misleading information. Defendants information. ng false and misleading nd the Family Partnerships violated 18 U.S.C. § Partnerships nd the Family -18- fendants perpetrated a fraudulent scheme upon scheme fendants perpetrated a fraudulent 181. This income that Defendants Robert J. Congel, Woodchuck Hill Associates, Woodchuck that Defendants Robert J. Congel, 181. This income and Moselle Associates, received as a direct Riesling Associates, Madeira Associates activity was, and is, used and/or invested in the result of this pattern of racketeering described continuation and operation of their 1962(a). Hill Associates, that Defendants Robert J. Congel, Woodchuck 182. This income received as a direct Riesling Associates, Madeira Associates and Moselle Associates, in the continuation result of this pattern of racketeering was, and is, used and/or invested of their interest and/or control of their described enterprise in violation and maintenance of 18 U.S.C. § 1962(b). participated, 183. All of the Defendants knowingly and willfully conducted and/or of their described through a pattern of racketeering activity, in the conduct of the affairs enterprise in violation of 18 U.S.C. § 1962(c). and agreed to engage 184. All of the Defendants knowingly and willfully conspired to conspired to do in those acts which they in the conduct described above, and performed violation of 18 U.S.C. § 1962(d). The Court first considers whether, on this record, summary judgment is appropriate on the judgment on this record, summary The Court first considers whether, 6 Case 1:00-cv-00784-NAM-RFT Document 482 Filed 03/31/06 Page 18 of 37 18 Page 03/31/06 Filed 482 Document 1:00-cv-00784-NAM-RFT Case follows: The Third Amended Complaint alleges specific vi Complaint The Third Amended RICO Cause of Action - Misrepresentation and Reliance Action - Misrepresentation and RICO Cause of that de ground that plaintiffs cannot prove by providi partners plaintiffs and other minority Rather, they information. they provided false and misleading argue that there is no evidence that converting plaintiffs’ income to defendants’ own to defendants’ plaintiffs’ income converting plaintiffs; belonging to opportunities assets and business retaining that money; the use of goal” of the “as the ultimate Partnerships; and, interest in the value of plaintiffs’ the diminishing interests in the less than the true value of their coercing plaintiffs to accept far scheme, that R.J Congel a claim Partnerships. Plaintiffs U.S.C. § 1962(c), (d). defendants violated 18 that the remaining 1962(a)-(d), and NAM ss practices in issue, defendants point to the ss practices in issue, tiffs knew of, approved and benefitted from the benefitted from of, approved and tiffs knew ; disclosed the exact amount of net loss to of ; disclosed the exact amount 7 part of the fraudulent scheme. Defendants further Defendants fraudulent scheme. part of the -19- ning Related Party Transactions and amounts due ning Related Party Transactions and amounts As evidence that plaintiffs knew of the busine As evidence that 7 a concentration bank account for the various maintains Company The Management for these projects are processed through this All disbursements projects it manages. concentration account. the from held excess funds company During [the specified year], the Management of [year-end], excess Partnership in this account to fund other entities’ expenditures. As and are presented as “Due from were [specified dollar amount] funds maintained concentration account” on the balance sheet. Case 1:00-cv-00784-NAM-RFT Document 482 Filed 03/31/06 Page 19 of 37 19 Page 03/31/06 Filed 482 Document 1:00-cv-00784-NAM-RFT Case Crossgates and Buffalo from RDE in connection with Bonwit Teller, including both acquisition RDE in connection with Bonwit Teller, from Crossgates and Buffalo contend, the undisputed evidence proves that plain evidence proves the undisputed contend, as characterize practices that plaintiffs business than to no more in any event, amount proper, and, were in all respects those practices argue that breaches of contract. statements They urge that the financial for each Partnership. statements year-end financial were loaned account and the fact that monies existence of the concentration disclosed both the to related entities the concentration account from With respect to the existence of the concentration account and its use for intercompany loans and existence of the concentration account and its use for intercompany respect to the With the concentration account with respect to each partnership, due to and due from the amounts defendants point to the following “note concer from the Concentration Account” which was included in the financial statements: the Concentration Account” which from NAM ; and 9 Defendants also rely on other also rely on Defendants 10 % partnership interest in Retail a to plaintiffs which reflected such charges. to plaintiffs which p’s investment in [RDE] as of [year-end] is p’s investment hip). Retail Distribution Enterprises owns a hip). Retail Distribution Enterprises -20- ps of the costs funded by the Chase line of credit ps of the costs funded ; disclosed the existence of the Management Agreements with PMG with PMG Agreements of the Management the existence ; disclosed 8 On March 19, 1990 the Partnership acquired a 33 On March 19, 1990 the Partnership partners Distribution Enterprises (a general partnership interest in Bonwit Teller, L.P. 99% limited The aggregate transactions of the Partnershi [a loss of a specified dollar amount]. Defendants further rely on evidence of daily morning meetings and other contacts at meetings rely on evidence of daily morning Defendants further 10 9 8 Case 1:00-cv-00784-NAM-RFT Document 482 Filed 03/31/06 Page 20 of 37 20 Page 03/31/06 Filed 482 Document 1:00-cv-00784-NAM-RFT Case The financial statements for these entities contained the following note: following these entities contained the for statements The financial The financial statements stated: “The Partnership has a management agreement with a related agreement has a management stated: “The Partnership The financial statements is PMG. Company The Management Company’).” entity (‘the Management under the heading, under “Expenses.” One such items listed numerous The financial statements fee was in which the 3% management sum area,” which disclosed a lump was “common item listed separately, were “leasing” and “marketing expenses. Other items, with other combined and promotion.” were also recorded in each Partnerships’s financial records. in each Partnerships’s financial were also recorded to the with respect example, were discussed. For matters which the Partnerships’ financial that plaintiffs were evidence Teller, defendants submit acquisition and operation of Bonwit at which the meetings it and participated in daily morning involved in the decision to purchase gave rise to the frequently discussed. Likewise, the Portfolio sales effort, which was matter to the Partnerships, was conducted with plaintiffs’ knowledge Chase-related expenses allocated and participation. documents, such as Supplemental Services Agreements authorizing charges above the 3% above the authorizing charges Services Agreements as Supplemental such documents, and periodic cash flow reports sent fee, management allocations to the Partnershi They state that the and operations losses and operations disclosed the fees charged by PMG for management services. services. by PMG for management the fees charged disclosed NAM the Chase line of credit were appropriate. For the Chase line of -21- act, since the early 1990's, Pyramid has been unable Pyramid act, since the early 1990's, performed by PMG were correct and appropriate, by PMG were performed point to the findings by William D. O’Connell, CPA, point to the findings by William In addition, defendants rely on their expert reports to support their contentions that the their contentions reports to support on their expert defendants rely In addition, In response, plaintiffs contend that, viewed in its entirety, defendants’ conduct served to In response, plaintiffs contend that, Case 1:00-cv-00784-NAM-RFT Document 482 Filed 03/31/06 Page 21 of 37 21 Page 03/31/06 Filed 482 Document 1:00-cv-00784-NAM-RFT Case financial statements and other documents accurately and appropriately reflected the Partnerships’ and appropriately accurately other documents and statements financial other calculations the interest and that affairs, and that the allocations of costs associated with and that the allocations Ernst & Young Perla, CPA, from the conclusion by their expert Stanley they cite to example, all material the Partnerships present fairly, in for each of statements LLP, that “the financial Partnership at the end the for equity/deficit liabilities, and partners’/members’ respects, the assets, also of the year(s) presented[.]” Defendants in the field and use of a concentration account was common of Deloitte & Touche LLP, that the interest earned by and charged to each of the Partnerships by appropriate in this case; that the was beneficial to the Partnerships; that PMG appropriately PMG was correctly calculated and and records of RDE, Crossgates, PCO, and Buffalo with recorded the transactions in the books allocated by Bonwit Teller; and that the sales costs in and losses from respect to investments properties (the Chase line sale of Portfolio the contemplated PMG to the Partnerships regarding of credit) were appropriate. the true financial create an illusion of transparency and financial solvency, while concealing Plaintiffs state that in f condition of Pyramid. the allows defendants to manipulate its financial obligations. They allege that the scheme to meet that entities and, through PMG, “solve of the various Pyramid financial assets and manpower while leaving vibrant Pyramid” day’s crisis in order to create the illusion to the world of a strong, ongoing “a hollow shell.” According to plaintiffs, this continuous and of Pyramid the remainder to keep and expand an empire “provided Defendants with the only means fraudulent scheme NAM to plaintiffs, defendants represented that the -22- Plaintiffs rely on their expert report, dated April 16, 2003, prepared by William F. prepared by William April 16, 2003, report, dated rely on their expert Plaintiffs account, plaintiffs do not dispute that the concentration respect to the concentration With Case 1:00-cv-00784-NAM-RFT Document 482 Filed 03/31/06 Page 22 of 37 22 Page 03/31/06 Filed 482 Document 1:00-cv-00784-NAM-RFT Case which, if made transparent, would have met its destiny long ago.” its have met would transparent, made which, if Inc. Group, & Scientific Analysis Houck of Legal and John Marianne L. DeMario Chandler, intercompany records show “a pattern of states its opinion that the financial (“LSAG”). LSAG For owners.” interests of the minority do not respect the differing economic transactions that that Crossgates’ and Buffalo’s with supporting evidence, its opinion LSAG sets forth, example, was Agreement, under the Partnership Bonwit Teller was not permissible in investment to unlimited of reasons, and exposed Crossgates and Buffalo for a number entered into improperly the Chase line of credit were used for the construction from of the funds risk. It shows that most been transferred and in which funds have that “the manner of Palisades. It further demonstrates an opaque trail entities typically involves several intervening transactions leaving shared among consequences to to understand and trace the economic it difficult, if not impossible, and making each of the entities.” Rather, they correct.” were “mathematically financial statements reported in the account amounts of the concentration account was not plainly disclosed in the contend that the existence and use the that excess funds from and that the disclosure in the financial statements financial statements, to the true to alert them account were used “to fund other entities’ expenditures” was insufficient partners were unaware of the minority nature of its use. They introduce evidence that some concentration account or how it operated. According the Partnerships for in from coming to pool all monies a means concentration account was merely the next was returned to each Partnership’s account overnight bank deposit and that the money that the the concentration account, from day. LSAG avers that in fact PMG borrowed millions NAM state their opinion that plaintiffs were deprived state their opinion -23- for Crossgates and Buffalo did not reflect certain for Crossgates and Buffalo did not With respect to the acquisition and operation of Bonwit Teller, plaintiffs admit that they Teller, plaintiffs admit respect to the acquisition and operation of Bonwit With that, although the proceeds were respect to the Chase line of credit, plaintiffs allege With Case 1:00-cv-00784-NAM-RFT Document 482 Filed 03/31/06 Page 23 of 37 23 Page 03/31/06 Filed 482 Document 1:00-cv-00784-NAM-RFT Case account is overdrawn, and that PMG, along with WHA, transferred funds from this account to funds from transferred with WHA, that PMG, along is overdrawn, and account deposition testimony in affidavits and is evidence Bonwit Teller. There Carousel and Palisades, were in Partnerships pay vendors, that cash to Partnerships insufficient returned to the that PMG advertising, and that as a such as snowplowing and for essential services arrears in payments Real estate taxes and mortgage to vendors. had to pay premiums result they occasionally Plaintiffs’ experts also were delinquent. payments entitled. distributions to which they were cash of dollars of millions of evidence that was discussed, but submit where the subject of the acquisition attended meetings or ownership structure formation, ultimate regarding the they were never provided information that they with its acquisition and operation. They affirm financial responsibilities in connection And they take the position that the references to the Bonwit never received any tax benefits. statements Teller transactions in the financial LSAG’s report sets forth the operated to their detriment. aspects of the transactions which plaintiffs. damaged in which the Bonwit Teller transactions manner “a substantial portion of expended on unrelated Congel projects such as Carousel and Palisades, Partnership level and substantial the fees, expenses, principal and interest was pushed down to the the Partnerships.” Plaintiffs submit funds from from to Chase came of the repayment amounts of Partnerships in order to repay Chase, although evidence that R.J. Congel refinanced a number or the Partners, and not have been in the best interest of the Partnerships such refinancing may the true purpose of the refinancings. Moreover, Scott Congel that he concealed or misrepresented for the refinancings. As a result, the Partnerships of dollars as commissions received millions NAM and millions of dollars of fees and costs, with of fees and of dollars and millions . They point out that the 3% fee authorized by . They point out -24- when all fees and charges are included, PMG’s when all fees and charges are included, exist regarding whether defendants perpetrated a exist regarding whether defendants partners by providing false and misleading Upon a thorough review of the record, the Court finds that evidence presented by Upon a thorough review of the record, Plaintiffs also introduce evidence that the Management Agreement was not routinely Agreement evidence that the Management Plaintiffs also introduce Case 1:00-cv-00784-NAM-RFT Document 482 Filed 03/31/06 Page 24 of 37 24 Page 03/31/06 Filed 482 Document 1:00-cv-00784-NAM-RFT Case the Management Agreement was not disclosed as a distinct line in the financial statements but financial statements as a distinct line in the was not disclosed Agreement the Management testified plaintiffs Some area maintenance. common for within the line item rather was included generally fee was not charges above the 3% management that the fact that PMG imposed rely as upon which plaintiffs Services Agreement understood by plaintiffs. The Supplemental in the PMG documents. not mentioned fee was management authorizing charges above the 3% that And plaintiffs rely on LSAG’s conclusion above-market. fees were total management questions of fact that plaintiffs demonstrates were left with substantially greater amounts of debt of greater amounts with substantially were left dollars in of millions incurred that the Partnerships LSAG estimates to them. no benefit the Chase financing. costs relative to fees and other avoidable partners and other minority disclosed to plaintiffs upon plaintiffs and other fraudulent scheme regarding what was actually relevant disputed questions of fact exist For example, information. partners agreed to the and other contacts; even if the minority meetings disclosed in the morning not have been informed of the Portfolio, they may acquisition of Bonwit Teller or the marketing it is true that the financial in which these were financed. Also, while of or agreed to the manner and agreement loans, management referred to the concentration account, intercompany statements and general terms in the most these references were made expenditures for leasing and marketing, concerning the handling of the of matters or misrepresentation do not rule out concealment were accurately reported in Partnerships’ finances. And even accepting that the year-end figures NAM that, even if plaintiffs could demonstrate that, even if plaintiffs on. Plaintiffs do not rely, however, on certain on. Plaintiffs do not rely, however, activity ... to use or invest, directly or they relied on those statements. Defendants point they relied on those statements. -25- inquiries to PMG or the DiMarco firm (the firm inquiries to PMG or the DiMarco e impression that PMG was properly managing the was properly managing that PMG e impression e continuation and expansion of the scheme. (a) It shall be unlawful for any person who has received any income derived, directly or (a) It shall be unlawful for any person who has received any income a pattern of racketeering indirectly, from in acquisition of any or the proceeds of such income, indirectly, any part of such income, or or operation of, any enterprise which is engaged in, interest in, or the establishment *** commerce. interstate or foreign affect, which the activities of The basic purpose of section 1962(a) is to prevent racketeers from using their ill-gotten The basic purpose of section 1962(a) is to prevent racketeers from 18 U.S.C. § 1962 (a) provides: The Court also rejects defendants’ contention The Court also rejects Case 1:00-cv-00784-NAM-RFT Document 482 Filed 03/31/06 Page 25 of 37 25 Page 03/31/06 Filed 482 Document 1:00-cv-00784-NAM-RFT Case RICO Cause of Action - Section 1962(a) Partnerships’ affairs, thus making possible th Partnerships’ affairs, thus making the financial statements, this does not obviate plaintiffs’ evidence that defendants charged evidence that defendants plaintiffs’ this does not obviate statements, the financial for necessary to the Partnerships funds available to make fees, failed management excessive rejects the defendants’ the Court opportunities. Further, Partnership and diverted maintenance, that than evidence to no more amounting of plaintiffs’ evidence of fraud as characterization Agreements. and Management to disclose breaches of the Partnership defendants failed and wired by defendants contained mailed and other items statements that the financial show that plaintiffs cannot misrepresentations, depositions that they did not read, or “just given by various plaintiffs in their to the testimony as (also referred to in the record to” the financial statements glanced at,” or “did not pay attention for the Partnerships. or “tax statements”) statements” or “compiled “year-end statements” plaintiff made Further, defendants contend, no in questi the times Partnership accountants) during were misrepresentations rather, it is their position that numerous particular misrepresentations; conduct, to effect of which was to conceal PMG’s fraudulent year, the cumulative every made and to create th further the fraudulent scheme, NAM , 2005 See Mark v. J.I. See Mark Wiltshire v. Dhanraj See, e.g., Ouaknine v. See, e.g., Ouaknine at a section 1962(a) violation is not ffs must allege that defendants engaged in allege that defendants engaged ffs must s. As this Court noted in its February 1, on defendants’ Rule 12(b)(6) motions, of racketeering; rather, a plaintiff must allege must of racketeering; rather, a plaintiff received income from a pattern of racketeering a from income received een distributed to Plaintiffs under the Partnership een distributed to Plaintiffs under of racketeering income distinct from any injury distinct from of racketeering income -26- S&R, there is evidence from plaintiffs’ expert, plaintiffs’ S&R, there is evidence from e income was derived; and (3) that plaintiffs was derived; e income a result of defendants’ diversion of potential , 897 F.2d 75, 82-83 (2d Cir. 1990) (stating th , 897 F.2d 75, 82-83 (2d Cir. 1990) ., 1997 WL 403179, *3 (E.D.N.Y.). Thus, in order to recover for a violation of section to recover for Thus, in order *3 (E.D.N.Y.). 403179, ., 1997 WL The essence of plaintiffs’ section 1962(a) claim is that R.J. Congel and the Family is that R.J. Congel and 1962(a) claim The essence of plaintiffs’ section Case 1:00-cv-00784-NAM-RFT Document 482 Filed 03/31/06 Page 26 of 37 26 Page 03/31/06 Filed 482 Document 1:00-cv-00784-NAM-RFT Case gains to operate, or purchase a controlling interest in, legitimate businesses. businesses. interest in, legitimate a controlling operate, or purchase gains to Inc Racing, (1) that defendants show plaintiffs must 1962(a), activity; (2) that they invested that income in the acquisition, establishment or operation of an or in the acquisition, establishment they invested that income activity; (2) that which th the one from from enterprise distinct suffered an injury flowing from this investment this investment flowing from suffered an injury acts of racketeering activity. the original predicate from stemming MacFarlane participation in predicate acts established by mere of the racketeering income); the defendants’ investment injury from WL 2239972, *2 (E.D.N.Y.) (“Put another way, plainti 2239972, *2 (E.D.N.Y.) WL in an enterprise, and, as a invested that income therefrom, racketeering activity, derived income caused injury to the plaintiffs.”). result of that investment, that should have b Partnerships “retained monies EklecCo and into other enterprises” such as PMG, PCO, that money and invested Agreements respect to S&R, thus injuring plaintiffs. With as LSAG, that plaintiffs have been damaged corporate opportunities, specifically, the diversion to S&R of the goodwill and infrastructure corporate opportunities, specifically, the diversion to S&R of the Partnerships by building adjacent shopping centers, and that developed by the existing mall with competed to the extent that stores in S&R centers also have been damaged plaintiffs may Partnership Properties and siphoned off their customer 2001 Memorandum-Decision and Order (Dkt. No. 51) and Order (Dkt. No. 2001 Memorandum-Decision NAM , 373 F.3d , 167 F.R.D. 649, 657 injury distinct from the predicate acts. It injury distinct from profits gained from RICO enterprise to fund RICO enterprise profits gained from or used for some other purpose. Defendants are or used for some ay from their proper uses, regardless of whether their proper uses, regardless ay from investment in PCO (Carousel Mall) or EklecCo investment -27- ment injury requirement of section 1962(a). of section requirement injury ment in S&R, and S&R’s alleged appropriation of appropriation and S&R’s alleged in S&R, , 126 S.Ct. 713 (2005) (plaintiffs stated section 1962(a) , 126 S.Ct. 713 (2005) See generally Ideal Steel Supply Corp. v. Anza See generally Ideal see, e.g., Katzman v. Victoria's Secret Catalogue see, e.g., Katzman v. Victoria's Secret cert. granted 113 F.3d 1229 (2d Cir. 1997), but rather, at most, constitutes injury from rather, at most, 113 F.3d 1229 (2d Cir. 1997), but aff’d 18 U.S.C. § 1962(b) provides: Plaintiffs do not articulate any other investment investment Plaintiffs do not articulate any other Case 1:00-cv-00784-NAM-RFT Document 482 Filed 03/31/06 Page 27 of 37 27 Page 03/31/06 Filed 482 Document 1:00-cv-00784-NAM-RFT Case (Palisades Center) constitute a distinct investment injury; in this respect, plaintiffs’ alleged injury; in this respect, plaintiffs’ (Palisades Center) constitute a distinct investment PMG’s diversion of funds aw injuries arose from those funds were invested into PCO and EklecCo respect to S&R. except with of the section 1962(a) claim entitled to dismissal RICO Cause of Action - Section 1962(b) the manner in which PMG’s affairs were conducted, that is, injury from the predicate acts. (See the conducted, that is, injury from in which PMG’s affairs were the manner discussion of section 1962(c), below.) Nor can 251, 264 (2d Cir. 2004) 251, 264 (2d Cir. retail outlet, thereby depriving with plaintiffs’ outlet which competed a retail the opening of plaintiff of business). is not satisfied by of § 1962(a) causation requirement is well established that the injury in its general operations, thereby the racketeering income allegations that the enterprise invested of injury. Reinvestment cause further racketeering and of it to continue its pattern permitting constitute a does not its fraudulent scheme, it to continue funds into PMG, thereby permitting injury, distinct investment (S.D.N.Y. 1996), Accordingly, defendants are not entitled to summary judgment dismissing plaintiffs’ section dismissing judgment to summary are not entitled defendants Accordingly, to S&R. with respect 1962(a) claim defendants used allegation that from stemming claim defendants’ “investment of Partnership funds “investment defendants’ satisfies the invest opportunities” Partnership NAM or that plaintiffs were 11 the plaintiff did not state a ., 93 F.3d 1055, 1063 (2d Cir. ., 93 F.3d 1055, establish a violation of section 1962(c). 18 ee discussion of section 1962(c), below.) ee discussion of section 1962(c), maintain, directly or indirectly, any interest directly or indirectly, maintain, -28- d by a defendant’s acquisition of an interest in an d by a defendant’s ] by [the defendant], only injuries resulting from ] by [the defendant], only injuries rtnerships acquired PMG through stock ownership. , 1997 WL 403179 at *3. To make out a section 1962(b) 403179 at *3. To make , 1997 WL , 525 U.S. 128 (1998) (finding that , 525 U.S. 128 (1998) (finding that See Discon, Inc. v. NYNEX Corp See Discon, Inc. See, e.g., Mark Plaintiffs here have presented no evidence that R.J. Congel and/or the Family Partnerships evidence that R.J. Congel and/or the Family Plaintiffs here have presented no Essentially, section 1962(b) prohibits the takeover of legitimate businesses through of legitimate 1962(b) prohibits the takeover Essentially, section Defendants further argue that plaintiffs cannot by or associated with any enterprise (c) It shall be unlawful for any person employed to conduct or commerce, engaged in, or the activities of which affect, interstate or foreign affairs through a participate, directly or indirectly, in the conduct of such enterprise’s pattern of racketeering activity[.] vacated on other grounds 11 in or control of any enterprise which is engaged in, or the activities of which affect, which of or the activities is engaged in, enterprise which any of in or control commerce. or foreign interstate It shall be unlawful for any person through a pattern of racketeering activity or through activity a pattern of racketeering person through unlawful for any It shall be or debt to acquire of an unlawful collection Case 1:00-cv-00784-NAM-RFT Document 482 Filed 03/31/06 Page 28 of 37 28 Page 03/31/06 Filed 482 Document 1:00-cv-00784-NAM-RFT Case enterprise, as distinct from an injury resulting from the pattern of racketeering activity, or the pattern of racketeering activity, resulting from an injury from enterprise, as distinct of predicate acts. commission 1996), the from the plaintiff “has not alleged any injury stemming under § 1962(b) because claim of [the enterprise ‘acquisition or maintenance’ acts”). of predicate the commission over PMG through racketeering conduct obtained acquisition and control Plaintiffs do not dispute that the Family Pa Plaintiffs do not dispute that the Family racketeering activity. racketeering activity. he was injure plead that plaintiff must a claim, injured by such acquisition or maintenance. Rather, plaintiffs complain of injury from the manner from of injury Rather, plaintiffs complain injured by such acquisition or maintenance. affairs. (S in which defendants conducted PMG’s 1962(c) RICO Cause of Action - Section U.S.C. § 1962(c) provides: NAM ., 1997 WL Sedima, S.P.R.L. v. Sedima, S.P.R.L. RICO, ¶ 5.01, p. 5-2 (1997)). 5.01, p. 5-2 (1997)). RICO, ¶ Holmes v. Securities Investor Holmes v. Securities IVIL C

, , 1999 WL 1037866, *5-6 (S.D.N.Y.). , 1999 WL EED R

18 U.S.C. § 1964(c); G. of the receipts, expenses and charges of the of the receipts, expenses and charges see conduct, created the impression that PMG was that conduct, created the impression of operating PMG’s affairs furthered PMG’s possible the continuation and expansion of made -29- ly tenant coordination status reports; weekly ly tenant coordination status reports; See, e.g., Mark v. J.I. Racing, Inc Mark v. J.I. Racing, See, e.g., cate acts were the mailing and wiring by PMG of cate acts were the mailing a result of these mailings and wirings, plaintiffs a result of these mailings alleged conducting of PMG’s affairs through a alleged conducting of PMG’s affairs eceipts collected for the Partnership Properties; eceipts collected for the Partnership in his business or property “by reason of” the in his business or ERRANCE ERRANCE T

& MITH S

B. See, e.g., Mezzonen, S.A. v. Wright AVID ., 503 U.S. 258, 268 (1992). Here, then, plaintiffs must show a direct relation then, plaintiffs must ., 503 U.S. 258, 268 (1992). Here, ., 473 U.S. 479, 496-97 (1985), that is, he must establish “some direct relation establish “some 496-97 (1985), that is, he must ., 473 U.S. 479, Plaintiffs claim that the injurious predi that the injurious Plaintiffs claim Case 1:00-cv-00784-NAM-RFT Document 482 Filed 03/31/06 Page 29 of 37 29 Page 03/31/06 Filed 482 Document 1:00-cv-00784-NAM-RFT Case pattern of predicate acts. between the injury asserted and the injurious conduct alleged.” asserted and the injurious conduct between the injury defendants’ between the injuries asserted and Imrex Co., Inc Protection Corp statements monthly financial statements; misleading of the r Partnership Properties; daily deposits budget updates for the Partnership Partnerships’ funds; monthly daily transfers of almost reports; week Properties; weekly leasing status budgets and quarterly updates; and various other financial reports of budget variances; annual Plaintiffs have presented evidence that the allegedly misleading reports and memoranda. and wirings by defendants in the course mailings the Partnerships’ affairs, and properly managing Plaintiffs have also presented evidence that as fraudulent scheme, concealed PMG’s fraudulent fraudulent scheme, the fraudulent scheme. of the Partnerships’ affairs and to engage in additional allowed PMG to continue management As noted, a RICO plaintiff must show injury plaintiff must As noted, a RICO conduct constituting the alleged RICO violation, the alleged RICO violation, conduct constituting The purpose of section 1962(c), the most often charged RICO offense, is to prevent the operation is to prevent RICO offense, often charged the most of section 1962(c), The purpose through racketeering. business of a legitimate 403179 at *3 (citing D 403179 NAM , Vicon Fiber Optics Corp. v. Red Ball Interior Demolition Corp. v. ment fees to the Partnerships; by PMG’s ment -30- ities; and/or by PMG’s conduct in allocating to ities; and/or by PMG’s conduct in In re American Express Co. Shareholder Litigation In re American Express Co. Shareholder Marianne DeMario of LSAG that plaintiffs were Marianne DeMario of LSAG that 897 F.2d 21, 23-24 (2d Cir. 1990). For example, 897 F.2d 21, 23-24 , 874 F. Supp. 576, 587 (S.D.N.Y. 1995), relied on by defendants. Nor, on this , 874 F. Supp. 576, 587 (S.D.N.Y. 1995), relied on by defendants. Moreover, plaintiffs have adduced evidence of a direct relation between the injury have adduced evidence of a Moreover, plaintiffs alleged by plaintiffs, the record nature of the scheme Particularly in view of the complex , 201 F. Supp.2d 216, 219-20 (S.D.N.Y. 2002), and Case 1:00-cv-00784-NAM-RFT Document 482 Filed 03/31/06 Page 30 of 37 30 Page 03/31/06 Filed 482 Document 1:00-cv-00784-NAM-RFT Case them avoidable fees and costs relating to the Chase line of credit. The record also contains avoidable fees and costs relating to the Chase them preconceived purpose” and the “specifically-intended evidence that the injuries were “the and wirings. consequence” of those mailings siphoning of cash and positive cash flow from the Partnerships to fund Bonwit Teller and the flow from siphoning of cash and positive cash excessive value to the Partnerships due to PMG’s loss of entities; by the Pyramid other costs of fees and lost expansion opportun management transactions such as the Chase line of credit and the acquisition and operation of Bonwit Teller, of Bonwit and operation and the acquisition Chase line of credit such as the transactions to plaintiffs’ greater the scheme to pursue additional opportunities defendants thus affording detriment. and mailings is evidence to the effect that the injurious conduct alleged. There asserted and the injuries alleged. of responsible causation” of the factor in the sequence wirings “are a substantial Clearing House, Inc. Hecht v. Commerce their expert plaintiffs rely on the opinion of of excessive manage by PMG’s charging damaged 39 F.3d 395, 400 (2d Cir. 1994). furthered, and wirings merely of law that PMG’s mailings evidence does not establish as a matter injury which could have occurred independently of PMG’s or concealed an facilitated, permitted and wirings; thus, the case at bar is distinguishable from mailings Scrivo Palmadessa record, are defendants entitled to summary judgment on the ground that their losses stemmed judgment record, are defendants entitled to summary NAM , , PMG’s inter alia , 189 F.3d 165, , 189 F.3d for any person to conspire to violate any of for any person to Moore v. Painewebber, Inc. Moore v. judgment is denied regarding plaintiffs’ RICO judgment of action based on defendants’ alleged conduct lack standing. Where a partner in a partnership lack standing. Where -31- this section.” Defendants have not demonstrated this section.” Defendants l information to plaintiffs concerning, to plaintiffs concerning, l information See, e.g., Benedict v. Whitman Breed Abbott & Morgan See, e.g., Benedict v. Whitman DISCUSSION – STATE LAW CAUSES OF ACTION Defendants have not established their entitlement to summary judgment dismissing the dismissing judgment to summary their entitlement Defendants have not established fraud cause Plaintiffs assert a common-law Section 1962(d) provides: “It shall be unlawful Section 1962(d) plaintiffs’ RICO cause of action is granted dismissing judgment Accordingly, summary Case 1:00-cv-00784-NAM-RFT Document 482 Filed 03/31/06 Page 31 of 37 31 Page 03/31/06 Filed 482 Document 1:00-cv-00784-NAM-RFT Case in providing false and misleading financia in providing false and misleading their entitlement to summary judgment dismissing plaintiffs’ claim under this subdivision. claim plaintiffs’ dismissing judgment to summary their entitlement Action - Other Issues RICO Cause of that plaintiffs RICO cause of action on the ground sue in his individual with a third party, another partner may allegedly participates in wrongdoing capacity and recover his own damages. Count II - Fraud from “unlikely, extraneous, or intervening causes.” intervening causes.” extraneous, or “unlikely, from Cir. 1999). 172 (2d - Section 1962(d) of Action RICO Cause subsection (a), (b), or (c) of the provisions of on the RICO cause of action judgment Nor is summary 722 N.Y.S.2d 586 (2d Dept. 2001). grounds. warranted on statute of limitations RICO Cause of Action - Conclusion S&R. as concerns of that claim § 1962(a) except for so much insofar as it is based on 18 U.S.C. in its entirety plaintiffs’ RICO cause of action insofar as is granted dismissing judgment Summary it is based on 18 U.S.C. § 1962(b). And summary (d). cause of action insofar as it is based on 18 U.S.C. §§ 1962(c) and NAM

, 794 to rely on them, and that plaintiffs did in fact and that plaintiffs did in to rely on them, ssert that any such claims are barred by the ssert that any such claims p entities. Plaintiffs claim that defendants knew that Plaintiffs claim p entities. of limitations defense to the conversion claims. of limitations ed the absence of clearly identifiable funds of ed the absence of clearly identifiable -32- conspired and engaged in a common scheme to scheme conspired and engaged in a common unds which rightfully belong to plaintiffs. There em of Partnership profits which they claim were which they claim of Partnership profits em Dept. 2005). st Based on the above allegations and the allegation of a common agreement or agreement Based on the above allegations and the allegation of a common The Court denies summary judgment dismissing the conversion cause of action. dismissing judgment The Court denies summary Case 1:00-cv-00784-NAM-RFT Document 482 Filed 03/31/06 Page 32 of 37 32 Page 03/31/06 Filed 482 Document 1:00-cv-00784-NAM-RFT Case understanding, plaintiffs claim that defendants that defendants understanding, plaintiffs claim Count IV - Conspiracy defraud plaintiffs and to convert for their use f on this cause of action. judgment questions of fact barring summary are material management of the Partnership Properties, payment of real estate taxes on the Properties, and on the Properties, real estate taxes of payment Partnership Properties, of the management assets to non-Partnershi of Partnerships’ transfer the made that defendants were false, the representations have known that or should the purpose of inducing plaintiffs representations for connection with the for the reasons discussed above in Primarily their detriment. to rely on them is denied. on the fraud cause of action judgment under RICO, summary issue of misrepresentation Count III - Conversion the absence of a wrong which is independent of the alleged Defendants have not demonstrated not demonstrat breaches of contract. They have respect to defendants’ ownership, possession or control. With which plaintiffs had the right to not the plaintiffs, the Court notes that that the funds in issue belong to the Partnerships, argument to th plaintiffs seek to recover distributions Defendants a wrongfully diverted by defendants. to show that be able plaintiffs may on this record, however, three-year statute of limitations; asserting a statute defendants are estopped from See generally Transport Workers Union of America Local 100 AFL-CIO v. Schwartz See generally Transport Workers Union of America Local 100 AFL-CIO N.Y.S.2d 308, 309 (1 NAM and

See id. , 1997 WL 9779, *2 (W.D.N.Y.) (W.D.N.Y.) 9779, *2 , 1997 WL in view of plaintiffs’ assertions of fiduciary in view of plaintiffs’ assertions of ons bars many of plaintiffs’ claims based on of plaintiffs’ claims ons bars many nd willfully aided and abetted the scheme to the scheme aided and abetted nd willfully l, the Family Partnerships, Tuozzolo, and l, the Family overy limitations period. N.Y.C.P.L.R. 203(g). period. N.Y.C.P.L.R. overy limitations -33- unds which rightfully belong to plaintiffs, and that to plaintiffs, rightfully belong unds which . Plaintiffs may, however, be able to establish that defendants are equitably . Plaintiffs may, Plaintiffs claim that defendants R.J. Conge Plaintiffs claim the six-year limitations Defendants also contend that the cause of action is barred by both Defendants assert that the statute of limitati Defendants assert that the statute Plaintiffs aver that defendants knowingly a knowingly aver that defendants Plaintiffs Case 1:00-cv-00784-NAM-RFT Document 482 Filed 03/31/06 Page 33 of 37 33 Page 03/31/06 Filed 482 Document 1:00-cv-00784-NAM-RFT Case Summary judgment on this ground is denied. judgment Summary Duty Count VII - Breach of Fiduciary does not establish that these Malfitano breached their fiduciary duties to plaintiffs. The record The merits. the cause of action on the dismissing judgment defendants are entitled to summary and Independence. Court notes that Tuozzolo and Malfitano are partners in Berkshire period, N.Y.C.P.L.R. 213, and the two-year disc See generally Provident Life and Cas. Ins. Co. v. Ginther cases cited therein defraud plaintiffs and to convert for their use f convert for their plaintiffs and to defraud for his own of plaintiffs’ Partnerships to use the income enabled R.J. Congel the scheme assets and financial dollars in profits, of millions of in the loss to plaintiffs purposes, resulting on this judgment to summary their entitlement have not demonstrated opportunities. Defendants cause of action. Count VI - Breach of Contract by defendants R.J. Congel, the Family Agreements alleged breaches of the Partnership Particularly Partnerships, Tuozzolo, and Malfitano. Count V - Aiding and Abetting Count V defendants are be able to establish that of the parties, plaintiffs may some relationships among defense to these claims. a statute of limitations asserting equitably estopped from NAM Buffalo, plaintiffs aver that by the actions fense. In view of the nature and extent of view of the nature fense. In in Independence; and the interest of plaintiff in Independence; and the interest Tuozzolo, WHA, and Riesling breached their Tuozzolo, WHA, Tuozzolo, WHA, and Riesling breached the and Riesling Tuozzolo, WHA, aintiffs. Defendants have not established their Tapella in Berkshire; the interests of plaintiffs Tapella in Berkshire; and the interest of plaintiff Steingraber in and the interest of are not in default of their Partnership obligations are not in default of their Partnership -34- Bersani, Askin and Tapella in Berkshire; the Bersani, Askin and Tapella in Berkshire; Plaintiffs claim that defendants R.J. Congel, that defendants Plaintiffs claim Congel, Plaintiffs assert that defendants R.J. Independence and respect to Berkshire, With Case 1:00-cv-00784-NAM-RFT Document 482 Filed 03/31/06 Page 34 of 37 34 Page 03/31/06 Filed 482 Document 1:00-cv-00784-NAM-RFT Case estopped from relying on the statute of limitations de the statute of limitations relying on from estopped on this ground. judgment Court denies summary herein, the the evidence Contract - Breach of Count VIII purchasing the and Buffalo by improperly for Berkshire, Independence Partnership Agreements Lugosch, Bersani, Askin and interests of plaintiffs and Charters in Independence; Lugosch, Bersani they that claim Buffalo. These plaintiffs further their capital of repayment for and illegal demands improper made and that these defendants in their favor. Questions of fact resolving these matters accounts. Plaintiffs seek a declaration on this claim. judgment bar summary Duty Count IX - Breach of Fiduciary Berkshire, Independence and Buffalo by improperly fiduciary duties in connection with Lugosch, purchasing the interests of plaintiffs and Charters interests of plaintiffs Lugosch, Bersani their of repayment for and illegal demands improper and by making Steingraber in Buffalo; on this cause of action. judgment capital accounts. Questions of fact bar summary Count X - Constructive Trust willfully received and Partnerships, PCO, and EklecCo knowingly and alleged above, the Family properly belonging to pl retained assets and monies cause of action. this dismissing judgment to summary entitlement NAM , 463 N.Y.S.2d Purposes for the See id. Schuler v. Birnbaum , and encouraging partners to “settle their , and encouraging partners to “settle e of limitations. On this record, the individual e of limitations. y-to-day partnership affairs, avoiding piecemeal y-to-day partnership affairs, avoiding -35- see id. REMAINING MOTIONS 463 N.Y.S.2d 523, 526 (2d Dept. 1983). The rule is not, however, 526 (2d Dept. 1983). The rule 463 N.Y.S.2d 523, Dept. 1978). In view of the number and types of issues in the case at bar, requiring Dept. 1978). In view of the number th Also pending is an appeal/motion for reconsideration by Moselle Associates, Madeira Also pending is an appeal/motion There is sufficient evidence to raise questions of fact regarding plaintiffs’ assertion that There is sufficient evidence to raise The Court rejects defendants’ contention that they are entitled to summary judgment on judgment to summary that they are entitled contention rejects defendants’ The Court Case 1:00-cv-00784-NAM-RFT Document 482 Filed 03/31/06 Page 35 of 37 35 Page 03/31/06 Filed 482 Document 1:00-cv-00784-NAM-RFT Case defendants have not established their entitlement to summary judgment. The other issues raised judgment. to summary defendants have not established their entitlement judgment. by defendants do not warrant summary Dkt. No. 268 A. Tuozzolo and Robert J. James Hill Associates, Associates, Riesling Associates, Woodchuck an accounting would not serve these or any other purposes. an accounting would not serve these are liable as alter egos of R.J. Congel. Defendants Partnerships, PCO and EklecCo the Family that plaintiffs lack on the grounds judgment to summary have not established their entitlement are barred by the statut standing or that the claims differences among themselves or else dissolve and go out of business settling their affairs at that or else dissolve themselves differences among with all partners joined.” by a final and full accounting time adjustments of the amount due each partner, of the amount adjustments State Law Causes of Action - Other Issues Action - Other Causes of State Law in its As this Court noted no accounting. there has been because law claims the state rule in New York that 18, 2002, it is the general and Order of September Memorandum-Decision full accounting. transactions except after a sue another concerning partnership one partner cannot v. Notey, See St. James Plaza purpose will not be served. applied where its underlying mechanically of da rule include avoiding judicial management 523, 526 (4 NAM , 900 F.2d , 210 F.Supp.2d 502 (S.D.N.Y. 2002), Law has been accepted and is part of the wed application for discovery of “Providence for discovery wed application ourt’s records should reflect that the motion is ourt’s records should reflect that the motion ly erroneous or contrary to law” standard. 28 ly erroneous or contrary -36- see Thomas E. Hoar, Inc. v. Sara Lee Corp. see Thomas E. Hoar, Inc. v. Sara and the order is approved and affirmed. and the order is approved and affirmed. See Surles v. Air France On review of the record, the Orders of January 15, 2002 and September 5, 2003, and of January 15, 2002 and September On review of the record, the Orders of the addressed herein (Dkt. No. 382), defendants seek amendment In the final motion A magistrate judge may issue orders regarding nondispositive pretrial matters, and the matters, regarding nondispositive pretrial issue orders judge may A magistrate Case 1:00-cv-00784-NAM-RFT Document 482 Filed 03/31/06 Page 36 of 37 36 Page 03/31/06 Filed 482 Document 1:00-cv-00784-NAM-RFT Case particularly where, as here, the magistrate judge has been deeply involved in discovery matters in judge has been deeply involved in discovery matters particularly where, as here, the magistrate the case for years. is no basis to find that Magistrate Judge the Court concludes that there defendants’ arguments, or contrary to law. Accordingly, the 5, 2003 ruling is clearly erroneous Treece’s September is denied objection/appeal (Dkt. No. 268) Dkt. No. 382 to deadlines to allow them joint stipulation and order (Dkt. No. 320) regarding dispositive motion 10 pages. by approximately reply brief that exceeds the current page limit serve an omnibus of Reply Memorandum Defendants’ 33-page Omnibus the C record (Dkt. No. 384). Accordingly, motion granted. Congel (Dkt. No. 268). They challenge the Order of Magistrate Judge Treece dated September 5, dated September Judge Treece the Order of Magistrate They challenge No. 268). Congel (Dkt. their rene as it denied No. 265), insofar 2003 (Dkt. Judge Treece Magistrate documents. Group” Management and “Commonwealth Place Mall” No. Order dated January 15, 2002 (Dkt. in an request for the documents initially denied their are relevant. that the documents 147). Movants contend such orders under the “clear district court reviews 72(a); U.S.C. § 636(b)(1)(A); Fed.R.Civ.P. disputes is resolution of discovery judge's a magistrate 522, 525 (2d Cir. 1990). Moreover, entitled to substantial deference. NAM (Dkt. No. 268) to so much of Magistrate (Dkt. No. 268) to so much their renewed application for “Providence claims based on 18 U.S.C. § 1962(a) except for claims -37- CONCLUSION It is therefore 323); J. Congel (Dkt. No. by Robert judgment summary for that the motions ORDERED ORDERED that defendants’ objection/appeal ORDERED that the motion by defendants (Dkt. No. 382) to amend the page limit in the the page limit by defendants (Dkt. No. 382) to amend ORDERED that the motion IT IS SO ORDERED. March 31, 2006 Syracuse, New York Case 1:00-cv-00784-NAM-RFT Document 482 Filed 03/31/06 Page 37 of 37 37 Page 03/31/06 Filed 482 Document 1:00-cv-00784-NAM-RFT Case by James A. Tuozzolo (Dkt. No. 324); by Robert Brvenik and Marc A. Malfitano (Dkt. No. 325); Brvenik and Marc A. Malfitano (Dkt. No. 324); by Robert A. Tuozzolo by James Moselle Associates, Riesling (Dkt. No. 326); by Madeira Associates, by Scott R. Congel and Pyramid No. 327); and by EklecCo LLC Hill Associates (Dkt. Woodchuck Associates, and denied in part as follows: summary No. 328), are granted in part and of Onondaga (Dkt. Company RICO plaintiffs’ is granted dismissing judgment in their dismissing is granted judgment as concern S&R; summary of those claims so much is otherwise judgment based on 18 U.S.C. § 1962(b); and summary entirety plaintiffs’ claims denied; and it is further 5, 2003 Order as denied Judge Treece’s September Place Mall” and “Commonwealth Management Group” documents is denied and the order is is denied and the Group” documents Management Place Mall” and “Commonwealth and it is further approved and affirmed; to file an omnibus them to permit Joint Stipulation and Order dated April 26, 2004 (Dkt. No. 320) 10 pages is granted. by approximately reply brief that exceeds the page limit NAM