Magee v. Michael Merges

Background

Betsy Magee, proceeding without a lawyer, filed this action on November 15, 2023. Her original complaint included claims under the False Claims Act, a federal law that allows certain private individuals to bring fraud claims on behalf of the United States. The court directed Magee to retain counsel because a private person may not pursue such a claim without a lawyer when the United States is the real party in interest.

Magee later acknowledged that she could not pursue a False Claims Act claim without counsel and said that she had unsuccessfully tried to retain a lawyer. The court then dismissed the case for lack of subject-matter jurisdiction, meaning the federal court lacked legal authority to hear it, while allowing her to file an amended complaint identifying a federal cause of action.

Magee filed an amended complaint on March 11, 2024. She alleged that Michael Merges, Costos Merges, and Jerry Troianos, whom she identified as her landlords, forged her name on applications for New York State Emergency Rental Assistance Program funds and fraudulently obtained $22,000. She also alleged that they collected an unspecified amount of Section 8 housing-voucher funds from the federal government and New York City based on another falsified application in her name. Magee alleged that she never applied for public assistance and paid her rent in full. She further alleged that these actions led to an eviction case, severe emotional distress, difficulty applying for other apartments, and a 150-point decrease in her credit score.

Issues and analysis

The amended complaint asserted fraud, defamation, forgery, and identity-theft claims. The court said these allegations might support state-law claims, but it concluded that the parties were citizens of the same state, so diversity jurisdiction under 28 U.S.C. § 1332 was unavailable. The court also stated that it was not aware of a federal claim supported by the allegations apart from a possible False Claims Act claim.

The court explained that federal fraud and identity-theft statutes such as 18 U.S.C. §§ 1028 and 1341 concern criminal violations and do not create a private cause of action—a right for an individual to sue under those statutes. Because the amended complaint did not identify a federal cause of action that the court could hear, the court concluded that it lacked subject-matter jurisdiction.

Disposition

The court dismissed the action without prejudice to refiling in state court and without prejudice to refiling a False Claims Act claim in federal court with counsel. It directed the Clerk of Court to close the case and mail Magee a copy of the order. Judge J. Paul Oetken signed the order on May 21, 2024.