One World, LLC v. Onoufriadis

Background

One World, LLC and Gabriel Chaleplis sued Nikolaos Onoufriadis, James M. Rodgers, Michael Karloutsos, and Canncore, Inc. The First Amended Complaint asserted thirteen state common-law counts and two counts under the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. §§ 1961–1968. The RICO claims were the only stated basis for federal-question jurisdiction.

The plaintiffs alleged that the defendants induced Chaleplis to invest €10,750,000 of One World’s funds in Greek companies, including Conmave and BioProcann, and then diverted more than $9 million through purported loans, wire transfers, and related transactions. The plaintiffs alleged that the money was used for personal purposes and that One World did not receive the promised equity in Conmave. These were allegations in the complaint, not factual findings after trial.

Motions and RICO claims

Karloutsos moved under Federal Rule of Civil Procedure 12(b)(6) to dismiss all claims against him. Onoufriadis and Canncore moved to dismiss the RICO claims, although the court treated that motion as made only by Onoufriadis and Karloutsos because Canncore was not named as a RICO defendant. Rodgers answered instead of moving to dismiss. The plaintiffs sought leave to amend if the RICO claims were dismissed.

The court held that the plaintiffs failed to plead a RICO pattern of racketeering activity. The alleged wire-fraud acts covered approximately fifteen months, which was less than the two-year period the court described as the Second Circuit’s usual benchmark for closed-ended continuity. The court also concluded that the alleged scheme did not show open-ended continuity because the funds were limited, the plaintiffs had stopped investing, and the scheme ended when Onoufriadis left One World and lost access to its bank accounts.

The court separately held that the plaintiffs failed to allege the distinct injury required for RICO claims under Sections 1962(a) and (b). The only injury alleged was the loss of money through the underlying fraudulent transfers, which was not a separate injury from the alleged investment or maintenance of the enterprise. Because the substantive RICO claims failed, the RICO conspiracy claim under Section 1962(d) also failed.

Rulings

The court granted the motions to dismiss the RICO claims. It dismissed Counts XIV and XV against Onoufriadis and Karloutsos and also dismissed those counts against Rodgers, even though he had not moved, because the plaintiffs had notice and an opportunity to address the same defects. The court denied the plaintiffs’ request to amend the RICO claims, finding that amendment would be futile. The conclusion expressly states that Counts XIV and XV were dismissed with prejudice and without leave to replead as against all defendants.

The court then addressed jurisdiction over the thirteen state-law claims. It concluded that complete diversity was absent because Chaleplis was a citizen of the United Kingdom, One World was treated as an alien because Chaleplis was its sole member, and Onoufriadis was a citizen of Greece. The court explained that aliens on both sides of the case defeat diversity jurisdiction. Although the state-law claims arose from the same facts as the RICO claims, Judge Colleen McMahon declined to exercise supplemental jurisdiction because the federal claims had been dismissed, the case was at an early stage, and the Southern District of New York had little connection to the parties or alleged ventures.

The court dismissed Counts I through XIII against all defendants without prejudice. Karloutsos’s motion to dismiss those claims on substantive grounds was denied without prejudice as moot. The plaintiffs’ request to amend the common-law claims was denied, without prejudice to changes they might make in a court of competent jurisdiction. The court directed the clerk to close the case.