RamiroAviles v. S&P Global, Inc. (380 F. Supp. 3d 221, 2019)

J. PAUL OETKEN, United States District Judge In these five related cases, one of which is a putative derivative and class action, a collective total of over 500 offshore investors ("Plaintiffs") who acquired shares in the Lifetrade Fund, B.V. ("Lifetrade") and two related funds (collectively, the "Lifetrade Funds") seek relief for the evaporation of their investments. According to Plaintiffs, Defendant Roy G. Smith, Lifetrade's founder and chief executive officer ("CEO"); Defendant John Marcum, Lifetrade's chief marketing officer; and Defendant S & P Global, Inc. ("S & P"), a ratings agency, successfully courted investment in the Lifetrade Funds notwithstanding the fact that Lifetrade was secretly funneling investor cash into other Smith- and Marcum-linked enterprises such as Defendant Portsmouth Settlement Company I, LLC ("Portsmouth"). When this loose spending left Lifetrade cash-strapped, Plaintiffs allege, Lifetrade entered into a credit deal with a predecessor to Defendant Wells Fargo Bank, N.A. ("Wells Fargo"), which ultimately ended in the transfer of all of Lifetrade's assets to a Wells Fargo subsidiary for far less than they were worth-and without Plaintiffs seeing a dime.

Understandably miffed, Plaintiffs filed these suits against nineteen defendants-including Smith, Marcum, Portsmouth, S

& P, and several Wells Fargo entities-alleging misrepresentation, fraudulent conveyance, violations of the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. §§ 1961 - 1968, and other assorted malfeasance. Portsmouth, Smith, Marcum, S & P, and the Wells Fargo entities now move to dismiss all claims against them. (Dkt. Nos. 86, 88, 91. ) For the reasons that follow, the motions are granted in part and denied in part.

I. Background

Because the operative complaints in these related cases are largely identical, the Court draws its factual recitation from the Second Amended Complaint in Aviles v. S & P Global, Inc. , No. 17 Civ. 2987 (Dkt. No. 77 ("Compl.") )-along with any documents attached to or incorporated by reference into that complaint, see DiFolco v. MSNBC Cable L.L.C. , 622 F.3d 104, 111 (2d Cir. 2010) -and does not refer to the other four cases except as necessary. For present purposes, the Court assumes the truth of Plaintiffs' allegations. See id. at 110-11.

A. Factual Background

These cases center on the loss of millions of dollars Plaintiffs invested between 2006 and 2011 in three formally distinct funds alleged to have been "operated as a single enterprise" with Defendants Roy G. Smith and John Marcum at the helm. (Compl. ¶ 39; see also Compl. ¶¶ 2 & n.2, 33-34.) The Court first describes the Lifetrade Funds and their efforts to court investment. The Court next explains the alleged undisclosed factors that made investment in the Lifetrade Funds a losing proposition. Finally, the Court turns to the events that led to the transfer of Lifetrade's assets to Defendant ATC Realty Fifteen, Inc. ("ATC Realty"), a Wells Fargo subsidiary, and Lifetrade's subsequent efforts to conceal what had taken place.

1. The Lifetrade Funds

The Lifetrade Funds built their business model around a type of transaction known as the "life settlement." See generally Eli Martin Lazarus, Viatical and Life Settlement Securitization: Risks and Proposed Regulation , 29 Yale L. & Pol'y Rev. 253 (2010). Ordinarily, a life insurance policyholder pays premiums to an insurer in exchange for the insurer's promise to pay specified proceeds to a designated beneficiary after the policyholder's death. Sometimes, though, a policyholder's changing circumstances conspire to make immediate cash in hand more attractive than the promise of a postmortem payout to a chosen beneficiary. (Compl. ¶ 41.) Such scenarios have created a market for the "life settlement," a transaction in which a third party known as a "settlement provider" makes a lump-sum payment to a policyholder, i.e. , the "life insured"; takes responsibility thereafter for paying the policy premiums; and, in return, receives the policy proceeds upon the life insured's death. (Compl. ¶¶ 41-43.) If the value of the proceeds exceeds the amount the settlement provider has paid the life insured, plus the amount the settlement provider has paid in premiums and other administrative and overhead costs, then the settlement provider will turn a profit. (Compl. ¶ 43.)

Defendant Lifetrade, the so-called "master fund" here, was a Netherlands Antilles mutual fund that invested exclusively in life insurance policies initially issued to United States citizens but later taken up by third-party settlement providers. (Compl. ¶¶ 38, 40.) The other two Lifetrade Funds, LTrade Plus Ltd. and LTrade Fixed Capital (BVI) Ltd. (together, the "Feeder Funds"), were British Virgin Islands funds that invested exclusively in securities issued by Lifetrade. (Compl. ¶¶ 38-39.) Investment in any of the Lifetrade Funds was by application only and was limited to "a select group" of non-United States investors recruited through investment advisors based in Argentina, Japan, and Korea. (Compl. ¶ 38; see also Compl. ¶ 39.)

2. The Lifetrade Funds Court Investment with S & P's Help

In the first few years after its 2004 launch, Lifetrade was only "moderately successful" in raising capital. (Compl. ¶ 75.) Thus, in 2006, in an effort to boost investment, Defendant Smith, Lifetrade's founder and CEO, retained Defendant S & P, the self-professed "world's leading provider of credit ratings" (Compl. ¶ 77), to provide Lifetrade with investment ratings in exchange for fees that ranged from $2,500 to $100,000 (Compl. ¶¶ 36, 72, 75, 96).

S & P obliged. From June 2006 to April 2011, S & P published monthly investor-facing statements out of its New York office that stamped Lifetrade with an investment-grade rating of "Af" (Compl. ¶¶ 72, 76), thereby indicating that the fund's "portfolio holdings provide[d] strong protection against losses from credit defaults" (Dkt. No. 77-8 at 4). Plaintiffs allege that these statements, which included charts and graphs painting a rosy picture of Lifetrade's past and future performance, "w[ere] intended to, and did, promote [Lifetrade] as a desirable investment, with limited risk." (Compl. ¶ 73.) And Lifetrade, in turn, was keen to foster that impression. On August 31, 2006, just months after the ratings had begun, Lifetrade represented to investors that S & P's ratings demonstrated Lifetrade's "certified quality" (Dkt. No. 77-23 at 5; see also Compl. ¶ 80), and that they had been derived from "an audit of all aspects of [Lifetrade's] operations and ... management, including physical visits and interviews," followed by "qualitative and quantitative analysis" (Dkt. No. 77-23 at 5; see also Compl. ¶ 74).

Thus, Plaintiffs maintain, the S & P ratings were "a tremendous marketing tool" for the Lifetrade Funds. (Compl. ¶ 82.) From August 31, 2006, just after S & P began to rate Lifetrade, to December 31, 2007, Lifetrade's assets doubled in value-and by December 31, 2010, they had doubled in value again, allegedly reflecting investors' confidence in S & P's ratings. (Compl. ¶ 81.) Thanks in part to S & P, then, the Lifetrade Funds ultimately managed to pull in a grand total of $685,835,000 from investors during its lifetime. (Compl. ¶¶ 95, 97.)

3. The Undisclosed Bugs in the System

Investors' confidence in the Lifetrade Funds was allegedly misplaced in light of at least three undisclosed considerations. First, the credentials of Lifetrade's leadership were less than sterling. Second, Lifetrade was overpaying for the life insurance policies it purchased. And third, conflicts of interest motivated Lifetrade to put investor money to dubious use.

a. Smith's Tarnished Past

From the outset, Plaintiffs allege, investment in Lifetrade was a risky proposition given the spotty track record of the man at the top, Defendant Smith.

On paper, it appeared as though Lifetrade's management rested in capable hands. For example, Lifetrade's June 14, 2006 prospectus reported that Smith had worked as the CEO of a Malaysian investment bank until 2005, at which point the position "was relinquished ... to allow him to focus full time on developing [Lifetrade]." (Compl. ¶ 100.) The prospectus also emphasized Smith's prior experience with "found[ing] his own fund management group and personally develop[ing] and operat[ing] a currency-trading program" that managed over $400 million. (Compl. ¶ 101.)

Plaintiffs allege, though, that the prospectus omitted salient aspects of Smith's biography. For example, the prospectus did not mention that Smith had once been temporarily barred from acting as a company director in the United Kingdom, his country of citizenship, due to his earlier, unlawful decision to direct a company while in a state of undischarged bankruptcy. (Compl. ¶¶ 33, 101.) And the prospectus noted neither that Smith had supposedly received his position at the Malaysian bank only because Lifetrade agreed to pay the bank around $20,000 per month to serve as its investment manager, nor that Smith was allegedly terminated only after the bank determined that the arrangement posed an unacceptable liability risk. (Compl. ¶ 100.)

b. Lifetrade's Overvalued Investments

A leader with a spotted past alone, of course, does not necessarily mean that a company will do wrong by its investors. Here, though, the complaint goes on to allege that Smith's poor judgment seeped into Lifetrade's business decisions-and, specifically, that Smith knowingly led Lifetrade to overpay for the life insurance policies in which it invested. (See Compl. ¶¶ 55-56.)

Ultimately, the value of any given life settlement depends on both the amount of policy proceeds at issue-a number typically fixed by the underlying insurance policy-and the life expectancy of the life insured. (Compl. ¶ 44.) According to the complaint, the insured's life expectancy is "[t]he single most important factor" in pricing a life settlement (Compl. ¶ 46), because, put bluntly, the sooner the insured dies, the sooner the settlement provider reaps the policy proceeds-and the less it pays in premiums before doing so (Compl. ¶ 45). As a result, settlement providers typically retain underwriters to provide life expectancy projections, hopefully based on "sound, objective, and consistent professional judgment." (Compl. ¶ 47.)

Here, Lifetrade is alleged to have invested almost exclusively in life settlements arranged by a single Georgia-based provider, Defendant Portsmouth. (Compl. ¶¶ 29, 50.) Portsmouth's exclusive underwriter through August 2012, ITM Twentyfirst, LLC ("21st Services") (Compl. ¶¶ 50, 54), in turn, was allegedly "widely known among insiders in the life settlement industry as early as 2004 to have been accused" in an earlier, unrelated lawsuit "of systematically and significantly understating its [life expectancy] evaluations" (Compl. ¶ 51; see also Dkt. No. 77-5). For example, whereas 21st Services' model predicted that the policies Lifetrade bought from Portsmouth would pull in a total of almost $77 million in 2011, a model used by AVS, a competing underwriter, predicted returns of only around $42 million.

(Compl. ¶¶ 59(a), 60.) Indeed, the complaint alleges, on a policy-by-policy basis, 21st Services' life expectancy predictions were shorter than AVS's in every known instance, "a consistent, wide-ranging and material discrepanc[y]" that "could not have been the product of chance." (Compl. ¶ 61.)

Because of this pattern of understatement, the complaint alleges, entities like Lifetrade that invested in life insurance policies that had been appraised by 21st Services stood at risk of major losses. (Compl. ¶¶ 52-53.) Although "it may be of small significance if a particular insured dies on a particular date," the complaint maintains, "life settlement funds, by their nature and design, rely upon the pooling of many insurance policies as a way of mitigating risk and assuring the relative stability of the fund," with the consequence that systematically inaccurate life expectancies distort a fund's expectations of profitability. (Compl. ¶ 63; see also Compl. ¶ 48.)

Far from suspecting that Lifetrade was putting their money at risk, though, Plaintiffs maintain that they were led to believe that all was well. S & P repeatedly gave Lifetrade positive investment ratings without suggesting that the life expectancy estimates upon which those ratings relied were too optimistic. (Compl. ¶¶ 83-84.) And S & P's monthly statements-as well as the Lifetrade Funds' own annual statements-contained performance charts depicting Lifetrade's historical net asset value ("NAV") price per share in favorable comparison to the returns investors could expect from other investment opportunities. (Compl. ¶¶ 83, 86, 106.)

But these glowing reports, Plaintiffs maintain, left much unsaid. For one thing, the NAV figures promoted by S & P and the Lifetrade Funds had allegedly been generated using a valuation method that Smith himself had devised and that relied on assumptions described by one former Lifetrade actuary as " 'absurd,' 'ridiculously bad' and 'not reasonable by any actuarial standard.' " (Compl. ¶ 85; see also Compl. ¶ 87.) For another thing, S & P itself allegedly had reason to doubt the figures it was parroting. In an October 13, 2009 report made available only to paying subscribers, S & P opined that investment in life settlement transactions carried numerous risks, including unsound actuarial assumptions, shaky life expectancy projections, and the potential for fraud. (Compl. ¶ 90; see also Compl. ¶ 92; Dkt. No. 77-4.) Despite these privately voiced concerns, however-none of which S & P shared with Lifetrade's investors-S & P would continue to rate Lifetrade favorably until it "silently ceas[ed]" its ratings in April 2011 "without explaining why." (Compl. ¶ 94; see also Compl. ¶¶ 90-91.)

As a consequence, the complaint alleges, when the Lifetrade Funds told investors in May 2012 that Lifetrade's portfolio of life insurance policies was then valued at over $450 million, Plaintiffs would have had no reason to suspect that a third party's independent valuation had set the figure at a far more modest $302 million. (Compl. ¶ 56.)

c. Smith and Marcum's Self-Dealing

It was not mere ineptitude that led Lifetrade to invest almost exclusively in Portsmouth's overvalued insurance policies. Rather, the complaint alleges, this poor business decision arose out of Smith and Marcum's desire for self-enrichment. As it happened, Smith held indirect ownership over Portsmouth during the period in which he was acting as Lifetrade's primary investment manager. (Compl. ¶¶ 50, 56.) And Marcum was acting as the Chairman of Portsmouth's Board while simultaneously heading up Lifetrade's investor communications. (Compl. ¶¶ 34, 50.) Plaintiffs, though, were not told of these facts at the time they opted to invest in the Lifetrade Funds. (Compl. ¶ 50.)

Thus, despite allegedly knowing as early as 2004 that Portsmouth was overvaluing its life insurance policies, Smith kept up the relationship between Lifetrade and Portsmouth. (Compl. ¶ 56.) In the process, Smith, personally and through his various companies, pocketed somewhere around 25% of the sums Lifetrade paid Portsmouth for the purchase of life settlements. (Compl. ¶ 56 & n.8.) For example, in connection with one transaction involving an insurance policy valued-indeed, likely over valued-by 21st Services at $770,000, Lifetrade paid Portsmouth fees, commissions, and overhead charges that totaled a cool $104,201.75. (Compl. ¶ 57.) What is worse, Plaintiffs go on, this self-dealing did not stop with Portsmouth; in connection with that same transaction, Lifetrade allegedly forked out an additional $90,000 in fees to another of Smith's enterprises-an enterprise that conveniently happened to serve as Lifetrade's investment manager from 2008 to 2010 and managing director from 2008 to 2017. (Compl. ¶¶ 25, 57.)

Meanwhile, the Lifetrade Funds' investors had no knowledge of these self-dealing arrangements. For example, Lifetrade's 2006 prospectus never divulged that Lifetrade would be incurring fees of 20-25% when purchasing life insurance policies from Portsmouth. (Compl. ¶ 103.) And although the prospectus mentioned some annual fees, it never disclosed certain additional currency-hedging fees that were being paid to a Smith-controlled company in connection with Lifetrade's Japanese assets. (Compl. ¶¶ 30, 35, 102.) Finally, while telling investors that Lifetrade would pay no undisclosed "commission or other payment ... in respect of application for Shares," the prospectus failed to mention that the Lifetrade Funds were in fact paying out a 10% commission on all sums invested. (Compl. ¶ 104; see also Compl. ¶ 30.)

All told, between the inflated amounts Lifetrade was paying to Portsmouth for insurance policies and the sums it was otherwise coughing up in "undisclosed fees, commissions and overhead charges," Smith and his entities are alleged to have appropriated at least $133 million, and perhaps as much as $239 million, when all was said and done. (Compl. ¶ 56 n.8.)

4. The Lifetrade Funds Meet Their Downfall

With investors' cash being squandered on overvalued assets and hidden fees, it was only a matter of time until the Lifetrade Funds ran into money trouble. As was the case with so many creative investment ventures, the 2007-2008 financial crisis marked the beginning of the end.

Outwardly, all was made to seem well. As the national economy fell into turmoil, Smith reassured investors that Lifetrade was "robust and strong enough to weather the storm" (Compl. ¶ 107; Dkt. No. 77-6 at 7) and that Lifetrade "continue[d] to be a stable performer" (Compl. ¶ 109 (emphasis omitted) ) as a result of its ability to "cherry pick ... the best [life insurance] policies at the best price" (Compl. ¶ 110 (omission in original) ). The reality, though, was less sanguine. Because the individuals insured under the life insurance policies that Lifetrade had acquired from Portsmouth were inconveniently outliving 21st Services' predictions, Lifetrade was not drawing in cash at the rate investors might have hoped. (See Compl. ¶ 111.) And because Lifetrade was siphoning what liquid funds it did have into the pockets of Smith and his entities, Lifetrade needed to find another source of liquidity so that it could continue to satisfy investors' requests to redeem their shares for cash as those requests arose. (See id. )

Enter Wells Fargo. On June 25, 2008, Wells Fargo and Lifetrade entered into a loan and security agreement (the "Loan Agreement") that, as amended, assured Lifetrade a $500 million credit line, secured by Lifetrade's assets-i.e. , its portfolio of life insurance policies-with all advances to be repaid to Wells Fargo by June 15, 2012. (Compl. ¶ 114.) Although this credit line was reduced to $225 million in 2009 and again to $200 million in 2011 (Compl. ¶ 115), the arrangement provided Lifetrade with the ready cash it needed to stay afloat for a time.

Despite affording a temporary reprieve, though, the Loan Agreement did nothing to shore up Lifetrade's underlying weaknesses. As the June 15, 2012 repayment date neared, Lifetrade needed to pull together the roughly $205 million it owed to Wells Fargo. (See Compl. ¶ 143.) But although Lifetrade told its investors that the value of its insurance policy portfolio around this time was roughly $450 million-and although Wells Fargo's own valuation put the portfolio's value at around $302 million (Compl. ¶ 56)-the value of the portfolio could not be immediately translated into cash that could be used to pay off the loan (see Compl. ¶ 131 & n.21). As a result, in March 2012, Lifetrade informed investors that it was suspending redemptions in light of the need to renegotiate the credit arrangement. (Compl. ¶ 127; Dkt. No. 77-9.)

Following the suspension of redemptions, Lifetrade called a May 17, 2012 shareholder meeting in the Dutch Antilles for purposes of voting on what to do about the expiring credit line. (Compl. ¶¶ 128-29; Dkt. No. 77-10.) Voters were given a choice of three options: surrendering Lifetrade's insurance policies to Wells Fargo to satisfy the debt, seeking a one-year extension of the credit line on unfavorable terms, or negotiating a long-term refinancing plan. (Compl. ¶ 128.) Smith and Marcum promoted the surrender option, falsely suggesting that investors could be personally liable to Wells Fargo if Lifetrade's debt ultimately went unsatisfied. (Compl. ¶ 128 & n.19.) Voters at the meeting, though, rejected Smith and Marcum's preferred surrender option in favor of pursuing long-term refinancing. (Compl. ¶ 129; Dkt. No. 77-11.)

But Wells Fargo had other plans. According to the complaint, Wells Fargo, despite claiming that it was "looking to exit the life settlement market" (Compl. ¶ 120), had long been hoping to capitalize on Lifetrade's liquidity woes, seize the life insurance policies Lifetrade had put up as collateral, and start its own life settlement business. (Compl. ¶¶ 116, 121 & n.15, 123.) Wells Fargo, in other words, believed that Lifetrade's portfolio was worth more than the amount that Lifetrade owed under the Loan Agreement and that an opportunity to take over the portfolio would present itself once Lifetrade inevitably proved unable to pay off its debt. (Compl. ¶¶ 124-25.) As evidence of this scheme, Plaintiffs note that in 2010 Wells Fargo ignored a New York investment bank's offer to buy all of its life settlement loans, including those that had been extended to Lifetrade, in exchange for the full value owed under the loans. (Compl. ¶¶ 122-23.)

Wells Fargo's plan worked brilliantly. After Lifetrade proved unable to secure funding from other lenders prior to the June 15, 2012 maturity date of its loans, Wells Fargo announced its intention to foreclose on Lifetrade's assets. (Compl. ¶¶ 131-32.) But rather than foreclosing under the Loan Agreement, which would have entitled Lifetrade to collect most of the difference between the value of its portfolio and the value of its unpaid debt, Wells Fargo exploited Smith and Marcum's fear that they could be personally liable for Lifetrade's debt under Curaçao law in order to negotiate a new, August 14, 2012 agreement (the "Settlement Agreement"), pursuant to which Lifetrade agreed to transfer its entire portfolio to ATC Realty, a Wells Fargo subsidiary. (Compl. ¶¶ 19, 133-34, 140.) Under the Settlement Agreement, Lifetrade's investors were to have no "further interest or claim in and to the Foreclosed Assets or to the proceeds and profits that may be derived therefrom" (Dkt. No. 77-2 at 35; see also Compl. ¶ 136), and with those magic words, Plaintiffs' investments in the Lifetrade Funds were fully wiped out (Compl. ¶ 134).

5. The Aftermath

At the time Lifetrade entered into the Settlement Agreement, Smith and Marcum gave investors no notice of the deal. (Compl. ¶ 139.) And the Settlement Agreement itself contained a confidentiality provision that barred Lifetrade from making "any statements to investors in the Lifetrade [Funds], or any other Persons, whether privately or publicly, relating to the settlement contemplated by th[e] Agreement," beyond "the mere fact ... that the settlement and foreclosure occurred." (Dkt. No. 77-2 at 48; see also Compl. ¶ 153.)

Consistent with the terms of the Settlement Agreement, Lifetrade did notify its investors that the settlement had occurred, updating its website with a link to a notice that one of its related entities had filed to inform the Irish Stock Exchange that "a consensual foreclosure process ha[d] been agreed in respect of the various rights and obligations arising under" the Loan Agreement. (Compl. ¶ 159; see also Compl. ¶ 160.) But, referring to a provision in the Settlement Agreement that granted Lifetrade a three-and-a-half-month window in which it could reacquire the portfolio upon repayment of the outstanding debt (Compl. ¶ 138), Lifetrade's website represented that its directors hoped to "remove Wells Fargo from the position of collateral owner" and were "still working to achieve a satisfactory outcome for investors" (Compl. ¶ 160 (emphases omitted) ).

Even after that refinancing window closed on November 30, 2012, though, Lifetrade's management continued to suggest that all was not lost. (See Compl. ¶¶ 160, 162.) For example, in letters dated February 20, 2013, and August 9, 2013, Smith told shareholders that refinancing efforts remained underway. (Dkt. No. 77-12; see also Compl. ¶ 162.) And on January 7, 2014, Smith wrote that he "expected that a final version" of a refinancing option "w[ould] be circulated for final approval ... and signed by all parties by January 30th, 2014." (Dkt. No. 77-30 at 2; see also Compl. ¶ 165.) Meanwhile, Marcum was also telling investors that "efforts were being made to set up a new credit facility" with a French bank, and he managed to draw in fresh outlays of roughly $15 million from Lifetrade investors to finance those supposed efforts. (Compl. ¶ 167.) All the while, Lifetrade sent its investors no annual reports. (Compl. ¶ 172.)

It was not until November 21, 2016, that investors began to learn the truth. (Compl. ¶ 170.) On that day, several investors received undated letters from Lifetrade that indicated, among other things, that "[t]he Lifetrade Fund holds no assets" (Dkt. No. 77-14 at 3) and that investors had suffered "a total loss of the capital contributed to date" (Dkt. No. 77-14 at 4). With the cat now out of the bag, the director of one of Lifetrade's related entities circulated to investors a February 22, 2017 notice that, at long last, contained annual reports for the years 2012 through 2016. (Compl. ¶ 172.) These newly disclosed reports, much to investors' dismay, indicated that Lifetrade had suffered a $472 million loss in 2012 and that its investors' equity had thereafter disappeared completely as early as 2013. (Id. )

Soon after those disclosures, this litigation began.

B. Procedural Background

On April 24, 2017, a group of more than fifty individuals and entities that had invested in the Lifetrade Funds filed an initial complaint in a suit captioned Aviles v. S & P Global, Inc. , No. 17 Civ. 2987. (Dkt. No. 5.) Four plaintiffs sought relief on their own behalves, on behalf of a putative class consisting of all offshore persons with unredeemed investments in the Lifetrade Funds, and derivatively on behalf of the Lifetrade Funds. (Dkt. No. 5 at 2.) The remaining plaintiffs asserted individual claims on their own behalves. (Id. ) In the following months, additional class members joined the Aviles action to assert their individual claims (see Dkt. No. 77 ¶ 18), and still more class members filed their individual claims in a total of four additional actions: Benedetto v. ATC Realty Fifteen, Inc. , No. 17 Civ. 6087, which was filed on August 11, 2017; Acebedo v. ATC Realty Fifteen, Inc. , No. 17 Civ. 7034, which was filed on September 15, 2017; Alvarez v. ATC Realty Fifteen, Inc. , No. 18 Civ. 128, which was filed on January 8, 2018; and Areco v. ATC Realty Fifteen, Inc. , No. 18 Civ. 2416, which was filed on March 19, 2018. Today, the number of plaintiffs seeking to press their individual claims across the five actions exceeds 500. (See Aviles , No. 17 Civ. 2987, Dkt. No. 77-1 (listing the plaintiffs in the three first-filed actions); Alvarez , No. 18 Civ. 128, Dkt. No. 39-33; Areco , No. 18 Civ. 2416, Dkt. No. 8-1.)

As noted, the operative complaints in the five actions are identical in virtually all material respects. These complaints name as defendants (1) ATC Realty, Wells Fargo, and two related entities-Wells Fargo Bank Northwest, N.A. ("Wells Fargo Utah"), and Wells Fargo Delaware Trust Company ("Wells Fargo Delaware")-that had been holding title to Lifetrade's policy portfolio as co-trustees at the time Lifetrade entered into the Settlement Agreement (the "Wells Fargo Defendants") (Compl. ¶¶ 19-22); (2) Lifetrade, Portsmouth, Smith, Marcum, and nine additional Lifetrade- or Portsmouth-linked companies (the "Lifetrade Defendants") (Compl. ¶¶ 23-35); and (3) S & P (Compl. ¶ 36).

The Aviles, Acebedo, Alvarez , and Areco complaints each assert twenty-one presently live causes of action: constructively fraudulent (Count One) and fraudulent (Count Two) conveyance, as to the Wells Fargo and Lifetrade Defendants; knowing, reckless, or negligent misrepresentation, as to Wells Fargo (Counts Four and Five), the Lifetrade Defendants (Counts Nine and Ten), and S & P (Counts Sixteen, Seventeen, and Eighteen); fraudulent breach of fiduciary duty or aiding and abetting such a breach, as to the Wells Fargo Defendants (Counts Six and Thirteen) and Smith and Marcum (Count Eleven); unconscionability (Count Three), breach of contract (Count Seven), and unjust enrichment (Count Eight), as to the Wells Fargo Defendants; violations of Curaçao law, as to the Lifetrade Defendants (Count Twelve); RICO violations and conspiracy to violate RICO, as to Smith, Marcum, and the Wells Fargo Defendants (Counts Fourteen and Fifteen); conspiracy to commit fraud, as to the Lifetrade Defendants (Count Twenty); and negligence and consumer-protection violations under Argentine law, as to all defendants (Counts Twenty-Two and Twenty-Three). The Benedetto complaint supplements these twenty-one causes of action with an additional claim under Japanese law, brought by all Japanese plaintiffs against all defendants (Count Twenty-Four).

Facing this formidable bevy of claims, Smith, Marcum, and Portsmouth (the "Lifetrade Movants"), the Wells Fargo Defendants, and S & P have now moved to dismiss them all.

II. Legal Standard

The instant motions to dismiss argue that the operative complaints, or portions thereof, must be dismissed, variously, for lack of subject-matter jurisdiction pursuant to Federal Rule of Civil Procedure 12(b)(1), lack of personal jurisdiction pursuant to Rule 12(b)(2), and failure to state a cognizable legal claim pursuant to Rule 12(b)(6).

A. Rule 12(b)(1)

Where, as here, a motion to dismiss for lack of subject-matter jurisdiction pursuant to Rule 12(b)(1) is grounded in an argument that a plaintiff lacks standing to sue, it is the plaintiff's burden to demonstrate that it "had the requisite stake in the [case's] outcome when the suit was filed." Carter v. HealthPort Techs., LLC , 822 F.3d 47, 56 (2d Cir. 2016) (quoting Davis v. Fed. Election Comm'n , 554 U.S. 724, 734, 128 S.Ct. 2759, 171 L.Ed.2d 737 (2008) ). Should the defendant proffer evidence beyond the complaint in support of its Rule 12(b)(1) motion, "the plaintiff[ ] will need to come forward with evidence of [its] own to controvert that presented by the defendant 'if the affidavits submitted on a 12(b)(1) motion ... reveal the existence of factual problems' in the assertion of jurisdiction." Id. at 57 (omission in original) (quoting Exchange Nat'l Bank of Chi. v. Touche Ross & Co. , 544 F.2d 1126, 1131 (2d Cir. 1976) ). And "[i]f the extrinsic evidence presented by the defendant is [both] material and controverted," then the issue of standing presents a factual question that must ultimately be resolved in the form of factual findings. Id.

B. Rule 12(b)(2)

On a motion to dismiss for lack of personal jurisdiction pursuant to Rule 12(b)(2), "the plaintiff bears the burden of establishing that the court has jurisdiction over the defendant." Grand River Enters. Six Nations, Ltd. v. Pryor , 425 F.3d 158, 165 (2d Cir. 2005) (quoting Bank Brussels Lambert v. Fiddler Gonzalez & Rodriguez , 171 F.3d 779, 784 (2d Cir. 1999) ). Where, as here, there has been no "full-blown evidentiary hearing on the motion, the plaintiff need make only a prima facie showing of jurisdiction." Id. (quoting Bank Brussels , 171 F.3d at 784 ). At this "preliminary stage," a prima facie showing sufficient to defeat a Rule 12(b)(2) motion "may be established solely by allegations" pleaded in good faith. Dorchester Fin. Sec., Inc. v. Banco BRJ, S.A. , 722 F.3d 81, 85 (2d Cir. 2013) (per curiam) (quoting Ball v. Metallurgie Hoboken-Overpelt, S.A. , 902 F.2d 194, 197 (2d Cir. 1990) ). The allegations, though, must be more than "conclusory statement[s]"; rather, they must state specific "facts supporting th[e] conclusion" that jurisdiction is proper. Jazini v. Nissan Motor Co. , 148 F.3d 181, 184 (2d Cir. 1998).

C. Rule 12(b)(6)

Under Rule 12(b)(6), a party may move to dismiss a claim for failure to state a cause of action "upon which relief can be granted." Fed. R. Civ. P. 12(b)(6). To survive a Rule 12(b)(6) motion, a plaintiff's complaint "must provide 'enough facts to state a claim to relief that is plausible on its face' " when the complaint's factual allegations are taken as true and all reasonable inferences are drawn in plaintiff's favor. Mayor & City Council of Baltimore v. Citigroup, Inc. , 709 F.3d 129, 135 (2d Cir. 2013) (quoting Bell Atl. Corp. v. Twombly , 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ). Under this standard, the complaint need only provide "enough fact to raise a reasonable expectation that discovery will reveal evidence of illegal [conduct]." Id. (alteration in original) (quoting Twombly , 550 U.S. at 556, 127 S.Ct. 1955 ).

When the complaint alleges fraud, however, Rule 9(b) imposes the added requirement that the complaint "state with particularity the circumstances constituting fraud." Fed. R. Civ. P. 9(b). Under this standard, a complaint alleging fraud must typically "(1) specify the statements that the plaintiff contends were fraudulent, (2) identify the speaker, (3) state where and when the statements were made, and (4) explain why the statements were fraudulent." United States ex rel. Chorches v. Am. Med. Response, Inc. , 865 F.3d 71, 81 (2d Cir. 2017) (quoting United States ex rel. Ladas v. Exelis, Inc. , 824 F.3d 16, 25 (2d Cir. 2016) ). But although this standard "demands specificity, ... it does not elevate the standard of certainty that a pleading must attain beyond the ordinary level of plausibility" required of civil complaints. Id. at 88.

III. Discussion

The Court appropriately begins its review of the many issues presented by the instant motions by addressing the jurisdictional issues that have been raised under Rules 12(b)(1) and 12(b)(2). Thereafter, the Court turns to the merits of the Rule 12(b)(6) motions.

A. Rule 12(b)(1)

To start with, the Wells Fargo Defendants contend that one of the plaintiffs, the Japanese company Plaza Asset Management ("Plaza"), lacks standing to bring its claims. (Dkt. No. 89 at 38-39.) Plaza is not alleged to have invested in any of the Lifetrade Funds but instead is alleged only to be the "assignee of all rights, claims and causes of action" of investor Nomura Trust and Banking Co., Ltd. ("Nomura"). (Benedetto , No. 17 Civ. 6087, Dkt. No. 48 ¶ 18(d).) While it would seem that, as assignee, Plaza could invoke Nomura's claims here, the Wells Fargo Defendants maintain that Japanese law allows an assignee to assert a claim against a defendant "only if the assignor has given notice to the defendant or the defendant ... has acknowledged the assignment." (Dkt. No. 90-26 ¶ 17.) Because Plaza has not alleged such notice or acknowledgment, the Wells Fargo Defendants contend, it has not shown that it has standing to raise the claims that Nomura has allegedly assigned it. (Dkt. No. 89 at 38-39.) And even had Plaza properly alleged an assignment, the Wells Fargo Defendants further argue, Plaza has failed to adequately allege that the instant claims fall within the assignment's scope. (Dkt. No. 110 at 20.)

The Court is unpersuaded. Plaintiffs have represented that the notice of assignment required under Japanese law "can be sent at any time after the assignment" (Dkt. No. 103-1 ¶ 7), including in the midst of a pending lawsuit (Dkt. No. 103-1 ¶ 8). Given that Defendants here are now on notice of the purported assignment, Plaintiffs have, at a minimum, established a dispute as to the validity of the assignment under Japanese law.

Nor is the Court convinced by the Wells Fargo Defendants' attempt to rely on Cortlandt Street Recovery Corp. v. Deutsche Bank AG, London Branch , No. 12 Civ. 9351, 2013 WL 3762882 (S.D.N.Y. July 18, 2013), to suggest that the complaint is insufficiently specific about the scope of the assignment. (Dkt. No. 110 at 20.) Cortlandt Street addressed a situation in which a plaintiff had entirely failed to allege "what [had been] assigned," Cortlandt Street , 2013 WL 3762882, at *2, whereas the complaint here unambiguously alleges that Nomura assigned Plaza "all [its] rights, claims and causes of action" (Benedetto , No. 17 Civ. 6087, Dkt. No. 48 ¶ 18(d) ), which clearly encompasses the causes of action asserted here. Given that the Wells Fargo Defendants have presented no evidence controverting Plaintiffs' allegation, the Court must accept it as true at this early stage of the litigation. See Carter , 822 F.3d at 56-57.

The Court, then, concludes that Plaintiffs have made a sufficient showing of Plaza's standing at the pleading stage to withstand the Wells Fargo Defendants' 12(b)(1) motion.

B. Rule 12(b)(2)

Next, the Lifetrade Movants-Smith, Marcum, and Portsmouth-argue that this Court lacks personal jurisdiction over them with respect to the bulk of Plaintiffs' claims. (Dkt. No. 95 at 16-24.) Although they concede that this Court has jurisdiction to adjudicate Plaintiffs' RICO claims against Smith and Marcum, see 18 U.S.C. § 1965(b), (d) (authorizing nationwide service of process for RICO claims), they argue that all other claims against them must be dismissed on jurisdictional grounds, see Charles Schwab Corp. v. Bank of Am. Corp. , 883 F.3d 68, 83 (2d Cir. 2018) ("A plaintiff 'must establish the court's jurisdiction with respect to each claim asserted[.]' " (quoting Sunward Elecs., Inc. v. McDonald , 362 F.3d 17, 24 (2d Cir. 2004) ) ). (Id. ) Alternatively, they argue that even if jurisdiction is proper, the Court should stay or dismiss Plaintiffs' claims against Smith and Marcum in light of a related action that is currently pending in Curaçao. (Dkt. No. 95 at 39-40.)

Plaintiffs respond that jurisdiction is proper for two reasons. First, they argue that the Lifetrade Movants have consented to submit to this Court's jurisdiction by virtue of forum-selection clauses in the Loan and Settlement Agreements. (Dkt. No. 106 at 12-19.) Alternately, Plaintiffs argue, New York's long-arm statute, N.Y. C.P.L.R. § 302, authorizes this Court to exercise personal jurisdiction over the Lifetrade Movants here because those defendants "transact[ ] ... business within [New York]," id. § 302(a)(1). (Dkt. No. 106 at 19-24.) Finally, Plaintiffs argue that the Curaçao lawsuit provides no basis for dismissal or a stay. (Dkt. No. 106 at 37-40.)

1. Consent to Jurisdiction

This Court may exercise jurisdiction over the Lifetrade Movants to the extent that they have consented to allow the Court to do so. See Brown v. Lockheed Martin Corp. , 814 F.3d 619, 625 (2d Cir. 2016). And, relevant here, "[p]arties can consent to personal jurisdiction through forum-selection clauses in contracts." Days Inn Worldwide, Inc. v. Hazard Mgmt. Grp., Inc. , No. 10 Civ. 7545, 2012 WL 5519356, at *3 (S.D.N.Y. Nov. 13, 2012).

In arguing that the Lifetrade Movants have consented to jurisdiction here, Plaintiffs point out that the parties to the Loan Agreement "agree[d] to the exclusive jurisdiction of any state or federal court located within the state of New York" (Dkt. No. 107-1 at 85 (formatting omitted) ) and that the parties to the Settlement Agreement "agree[d] to the exclusive jurisdiction of any state or federal court located within the City of New York" (Dkt. No. 90-4 at 43 (formatting omitted) ). Although none of the Lifetrade Movants were themselves party to these contracts, Plaintiffs point out that each movant was closely affiliated with a Lifetrade party and that each movant signed the Loan Agreement, an amendment to the Loan Agreement, or the Settlement Agreement in a representative capacity on such a party's behalf. (Dkt. No. 106 at 14-17.)

While the Second Circuit has not yet weighed in on the question, see Magi XXI, Inc. v. Stato della Città del Vaticano , 714 F.3d 714, 723 n.10 (2d Cir. 2013), courts in this Circuit have held that parties to a contract that includes a forum-selection clause may invoke that clause to establish personal jurisdiction over a defendant that is not party to the contract but that is closely aligned with a party, see, e.g., LaRoss Partners, LLC v. Contact 911 Inc. , 874 F.Supp.2d 147, 159-61 (E.D.N.Y. 2012) ; Recurrent Capital Bridge Fund I, LLC v. ISR Sys. & Sensors Corp. , 875 F.Supp.2d 297, 310-11 (S.D.N.Y. 2012) ; Firefly Equities, LLC v. Ultimate Combustion Co. , 736 F.Supp.2d 797, 799-801 (S.D.N.Y. 2010) ; Metro-Goldwyn-Mayer Studios Inc. v. Canal+ Distrib. S.A.S. , No. 07 Civ. 2918, 2010 WL 537583, at *4-5 (S.D.N.Y. Feb. 9, 2010) ;

Nanopierce Techs., Inc. v. Southridge Capital Mgmt. LLC , No. 02 Civ. 0767, 2003 WL 22882137, at *5-6 (S.D.N.Y. Dec. 4, 2003). Plaintiffs urge the Court to adopt that practice here.

The Court, however, need not decide whether to follow the courts that have concluded that a party to a contract may enforce a forum-selection clause against a non-party that is closely related to a party. But cf. Arcadia Biosciences, Inc. v. Vilmorin & Cie , 356 F.Supp.3d 379, 395 (S.D.N.Y. 2019) (noting that the "constitutional requirements" that govern personal jurisdiction "caution against a liberal application of forum selection clauses to non-signatory defendants"). Nor need the Court decide whether the Lifetrade Movants would be bound by the forum-selection clauses at issue here even if such a rule were to apply. After all, whatever the extent to which Wells Fargo could enforce the clauses against Lifetrade-aligned entities such as the Lifetrade Movants, Plaintiffs-who are party to neither the Loan nor the Settlement Agreement-have not demonstrated that they may invoke the clauses.

To be sure, "a non-signatory to a contract containing a forum selection clause may enforce the forum selection clause against a signatory when the non-signatory is 'closely related' to another signatory." Magi XXI , 714 F.3d at 723 (quoting Holland Am. Line Inc. v. Wärtsilä N. Am., Inc. , 485 F.3d 450, 456 (9th Cir. 2007) ). But even if the Court assumes, as Plaintiffs urge, that the Lifetrade Movants should be treated as stand-ins for Lifetrade and that Plaintiffs, too, are closely related to Lifetrade, the complaint has not alleged that Plaintiffs are closely related to "another signatory," id. (emphasis added), i.e. , to the Wells Fargo parties.

This distinction matters. Enforcement of a forum-selection clause by a non-signatory is limited to circumstances in which "the non-signatory's enforcement of the forum selection clause is 'foreseeable' to the signatory against whom the non-signatory wishes to enforce the forum selection clause." Id. In consenting to resolve its disputes with Wells Fargo in New York's courts, Lifetrade may have foreseen that it could be called to answer to non-signatory Wells Fargo entities in those same courts. But Lifetrade could hardly have foreseen being haled into court in New York by its own investors on the basis of its agreement with Wells Fargo .

The forum-selection clauses upon which Plaintiffs rely, then, offer no basis for this Court to take personal jurisdiction over the Lifetrade Movants in connection with Plaintiffs' claims.

2. In-State Transaction of Business

Absent consent, this Court may exercise jurisdiction over the Lifetrade Movants only to the extent that "a court of general jurisdiction" in New York could do the same. Fed. R. Civ. P. 4(k)(1)(A). A New York court's ability to take jurisdiction over non-domiciliaries like the Lifetrade Movants, in turn, is limited by two sources of law. Specifically, any such exercise of jurisdiction must (1) fall within the scope of New York's long-arm statute and (2) comport with the U.S. Constitution's Due Process Clause. See Chloé v. Queen Bee of Beverly Hills, LLC , 616 F.3d 158, 163-64 (2d Cir. 2010). Here, Plaintiffs contend that the Lifetrade Movants have "transact[ed] ... business within the state," N.Y. C.P.L.R. § 302(a)(1), and so are subject to this Court's jurisdiction under New York's long-arm statute (Dkt. No. 106 at 19-24). To assess this argument, the Court performs a "two-step analysis," Chloé , 616 F.3d at 163, first asking whether "the long-arm statute permits personal jurisdiction" and then "analyz[ing] whether personal jurisdiction comports with the Due Process Clause of the United States Constitution," id. at 164.

a. Long-Arm Statute

Under the long-arm statute, New York courts may take jurisdiction over non-domiciliary defendants in connection with claims that "aris[e] from" the defendants' transaction of business within the state. N.Y. C.P.L.R. § 302(a)(1). The " 'overriding criterion' in determining whether an entity 'transacts any business' in New York within the meaning of the statute is whether the entity 'purposefully avails itself of the privilege of conducting activities within New York.' " Rosenblatt v. Coutts & Co. AG , 750 F. App'x 7, 9-10 (2d Cir. 2018) (summary order) (quoting Paterno v. Laser Spine Inst. , 24 N.Y.3d 370, 377, 998 N.Y.S.2d 720, 23 N.E.3d 988 (2014) ). And "New York courts have held that a claim 'aris[es] from' a particular transaction when there is 'some articulable nexus between the business transacted and the cause of action sued upon,' " Solé Resort, S.A. de C.V. v. Allure Resorts Mgmt., LLC , 450 F.3d 100, 103 (2d Cir. 2006) (alteration in original) (quoting McGowan v. Smith , 52 N.Y.2d 268, 272, 437 N.Y.S.2d 643, 419 N.E.2d 321 (1981) ), or when there is "a substantial relationship between the transaction and the claim asserted," id. (quoting Kreutter v. McFadden Oil Corp. , 71 N.Y.2d 460, 467, 527 N.Y.S.2d 195, 522 N.E.2d 40 (1988) ).

Applying these principles, the Court considers whether it has a basis for exercising personal jurisdiction over the Lifetrade Movants in connection with the claims asserted here.

i. Smith

Smith avers that he owns no property, business, or assets in New York (Dkt. No. 92 ¶ 4), and Plaintiffs never argue that Smith personally transacted any relevant business in New York. Instead, Plaintiffs argue that Lifetrade's own New York contacts may be imputed to Smith on an agency or alter ego theory and that Lifetrade, for its part, conducted business through New York banks. (Compl. ¶ 14; Dkt. No. 106 at 19-21.) For example, Lifetrade relied on a New York bank to verify the insurance policies it hoped to buy (Compl. ¶ 14(4); Dkt. No. 107-8) and to hold the policies in escrow after purchase (Compl. ¶ 14(5); Dkt. Nos. 107-10, 107-11). And Lifetrade used New York banks to channel investors' funds into its own offshore bank account and then to channel funds from that bank account into the offshore bank accounts of other Lifetrade and Portsmouth entities, sometimes in the form of purportedly improper commissions and fees. (Compl. ¶ 14(9); Dkt. Nos. 107-13 through 107-20; see also Dkt. No. 107 ¶ 22.)

Smith does not dispute that Lifetrade's reliance on New York banks to manage its assets and transfer investor funds constitutes the in-state transaction of business. Nor, likely, could he. As the New York Court of Appeals has confirmed, "the use of a New York correspondent bank account, standing alone, may be considered a 'transaction of business' under the long-arm statute if the defendant's use of the correspondent account was purposeful." Licci ex rel. Licci v. Lebanese Canadian Bank, SAL , 732 F.3d 161, 168 (2d Cir. 2013) (quoting Licci v. Lebanese Canadian Bank, SAL , 20 N.Y.3d 327, 338, 960 N.Y.S.2d 695, 984 N.E.2d 893 (2012) ). And Plaintiffs have clearly alleged that Lifetrade's use of New York-based banking services was "frequen[t] and deliberate." Id.

Nonetheless, Smith argues, Plaintiff's efforts to rely on Lifetrade's banking activity to support this Court's jurisdiction over him in connection with the instant claims must fail for two reasons. First, he contends, Plaintiffs have not alleged sufficient facts to permit the plausible inference that Lifetrade's New York contacts can be imputed to him on an agency or alter-ego theory. (Dkt. No. 95 at 19-21; Dkt. No. 111 at 6-7.) Second, he goes on, Plaintiffs' claims do not "aris[e] from," N.Y. C.P.L.R. § 302(a)(1), those New York contacts. (Dkt. No. 111 at 7-8.)

The Court disagrees. As for the first point, under New York law, if a corporation has sufficient in-state contacts to fall subject to personal jurisdiction, then a corporate officer who has "played a part in the [corporate] activities that gave rise to the action" is likewise subject to jurisdiction, to the extent that due process permits, due to the agency relationship between the corporation and the officer. Arch Specialty Ins. Co. v. Entm't Specialty Ins. Servs., Inc. , No. 04 Civ. 1852, 2005 WL 696897, at *4 (S.D.N.Y. Mar. 24, 2005) ; see also Kreutter , 71 N.Y.2d at 466-72, 527 N.Y.S.2d 195, 522 N.E.2d 40. To be sure, "a general allegation that an officer controls a corporation is not sufficient to establish personal jurisdiction" on an agency theory. Pilates, Inc. v. Current Concepts , No. 96 Civ. 0043, 1996 WL 599654, at *3 (S.D.N.Y. Oct. 18, 1996). Rather, to establish an agency relationship under the long-arm statute, "New York law requires a Plaintiff to 'convince the court that [the corporation] engaged in purposeful activities in this State in relation to [Plaintiff's] transaction for the benefit of and with the knowledge and consent of the [individual defendant] and that [the individual defendant] exercised some control over [the corporation] in the matter.' " Arma v. Buyseasons, Inc. , 591 F.Supp.2d 637, 647 (S.D.N.Y. 2008) (alterations in original) (quoting Kreutter , 71 N.Y.2d at 467, 527 N.Y.S.2d 195, 522 N.E.2d 40 ).

Plaintiffs' allegations here meet this test with respect to Smith. In particular, Lifetrade is alleged to have engaged in all its New York activities "under the direction and control of Smith" (Compl. ¶ 14), Lifetrade's founder, CEO, and sole voting shareholder (Compl. ¶¶ 23, 33). And while this allegation alone might be too conclusory to make out a prima facie showing of jurisdiction, the complaint as a whole paints Smith as intimately involved in Lifetrade's day-to-day operations, whether by "initiat[ing] and continu[ing]" Lifetrade's business with Portsmouth (Compl. ¶ 56), establishing the method of NAV calculation used in S & P's monthly reports (Compl. ¶¶ 85, 87), or, critically here, directing outflows of investor capital into his own and his companies' pockets (e.g. , Compl. ¶ 140). Given that New York banks formed a critical conduit for these outflows (see Dkt. No. 107 ¶ 22), it is at least plausible to infer that Smith "exercised some control" over Lifetrade in establishing these New York connections, Arma , 591 F.Supp.2d at 647 (quoting Kreutter , 71 N.Y.2d at 467, 527 N.Y.S.2d 195, 522 N.E.2d 40 ).

Smith's second argument-that Plaintiffs' claims do not arise from Lifetrade's New York contacts-fares little better. New York's long-arm statute requires only some "relatedness between the [in-state] transaction and the legal claim[,] such that the latter is not completely unmoored from the former." D & R Glob. Selections, S.L. v. Bodega Olegario Falcon Pineiro , 29 N.Y.3d 292, 299, 56 N.Y.S.3d 488, 78 N.E.3d 1172 (2017) (quoting Licci , 20 N.Y.3d at 339, 960 N.Y.S.2d 695, 984 N.E.2d 893 ). This "relatively permissive" standard is satisfied "where at least one element [of a plaintiff's claim] arises from the [defendant's] New York contacts." Id. (quoting Licci , 20 N.Y.3d at 339, 341, 960 N.Y.S.2d 695, 984 N.E.2d 893 ). Personal jurisdiction under the long-arm statute, in other words, is appropriate where a plaintiff's claims are "in some way arguably connected" to the in-state transaction of business. Licci , 20 N.Y.3d at 340, 960 N.Y.S.2d 695, 984 N.E.2d 893.

Here, Lifetrade allegedly used New York's banking channels to acquire investor cash (Dkt. No. 107 ¶¶ 16-21) and to route those funds to Smith and his entities under the guise of commissions and fees (Dkt. No. 107 ¶¶ 22-23). These New York channels, in other words, formed an integral part of the architecture of the self-enrichment scheme that left Lifetrade with insufficient liquidity to save its investors' money by paying off its debts rather than surrendering its assets. Plaintiffs' claims, then, are hardly "completely unmoored" from Lifetrade's New York activities. D & R Glob. Selections , 29 N.Y.3d at 299, 56 N.Y.S.3d 488, 78 N.E.3d 1172 (quoting Licci , 20 N.Y.3d at 339, 960 N.Y.S.2d 695, 984 N.E.2d 893 ); see also Licci , 20 N.Y.3d at 340-41, 960 N.Y.S.2d 695, 984 N.E.2d 893 (holding that New York courts could exercise personal jurisdiction over a Lebanese bank in connection with claims arising out of a rocket attack committed in Israel by a Lebanese terrorist group because the bank had routed wire transfers to the group through a New York bank).

At this early stage in the litigation, then, the Court concludes that Plaintiffs' allegations suffice to make out a prima facie showing that this Court may exercise personal jurisdiction over Smith under New York's long-arm statute on an agency theory.

ii. Marcum

Plaintiffs make out an even stronger prima facie showing of this Court's jurisdiction over Marcum under the long-arm statute. Marcum is alleged to have visited New York on several occasions in connection with the Lifetrade Funds. (Compl. ¶ 14.) On two of the visits, Marcum allegedly met with an investor's representatives to give them false reassurances about Lifetrade's supposed refinancing efforts following the execution of the Settlement Agreement, and on at least one of these visits, Marcum allegedly met with an investment advisor to court investment in the Lifetrade Funds. (Id. ) On several further occasions, Marcum allegedly attended meetings at the New York offices of Wells Fargo's predecessor to negotiate the Loan Agreement. (Id. )

These meetings-in which Marcum was "physically present in New York" and during some of which Marcum purposefully cultivated "a continuing relationship" with Wells Fargo's New York-based predecessor-clearly constitute the transaction of business within the meaning of New York's long-arm statute. D & R Glob. Selections , 29 N.Y.3d at 298, 56 N.Y.S.3d 488, 78 N.E.3d 1172 (second quoting Fischbarg v. Doucet , 9 N.Y.3d 375, 381, 849 N.Y.S.2d 501, 880 N.E.2d 22 (2007) ). And Marcum's alleged in-state efforts to secure investment, negotiate the Loan Agreement, and mislead investors as to the Settlement Agreement's import clearly bear "some articulable nexus" to Plaintiffs' claims, Solé Resort , 450 F.3d at 103 (quoting McGowan , 52 N.Y.2d at 272, 437 N.Y.S.2d 643, 419 N.E.2d 321 ), even if, as Marcum maintains, none of these efforts put him face-to-face with any of the named plaintiffs in this suit (Dkt. No. 93 ¶ 7).

The Court therefore concludes that Plaintiffs have made out a sufficient prima facie showing at the pleading stage that Marcum's in-state transaction of business subjects him to personal jurisdiction in this action under New York's long-arm statute.

iii. Portsmouth

Portsmouth, however, is another story. Although Portsmouth is alleged to have engaged in "extensive life settlement business in the State of New York" and to have filed a lawsuit in New York (Compl. ¶ 29), the complaint fails to allege that any of Portsmouth's New York activities bear a direct relationship with the specific events that have given rise to the instant suit. Significantly, Plaintiffs have neither alleged (see Compl. ¶ 14) nor produced evidence (see Dkt. No. 107 ¶¶ 22-23) that Portsmouth (as distinct from Portsmouth Securities Limited, a Malaysian company (Compl. ¶ 30) ) was involved in the banking activity that supports jurisdiction over Smith. Thus, even if Portsmouth can be said to transact business in New York as a general matter, Plaintiffs have not carried their burden of making out a prima facie showing that the particular claims they assert here "aris[e] from" that business. N.Y. C.P.L.R. § 302(a)(1).

Plaintiffs nonetheless suggest that this Court may take personal jurisdiction over Portsmouth because Portsmouth was allegedly "controlled by Defendant Smith" and allegedly "acted in concert with and conspired with the other Lifetrade Defendants." (Dkt. No. 106 at 24.) According to Plaintiffs, these allegations are sufficient to establish this Court's jurisdiction over Portsmouth on an alter ego or agency theory. (Id. )

As for the alter ego theory, the complaint lacks the "specific averment of facts that, if credited," could create a plausible inference that Portsmouth and the other Lifetrade Defendants "operate[d] as a single economic unit." S. New Eng. Tele. Co. v. Glob. NAPs Inc. , 624 F.3d 123, 138 (2d Cir. 2010). While Plaintiffs allege that Smith, as Portsmouth's indirect owner, received self-dealing fees as a result of Portsmouth's business with Lifetrade (see, e.g. , Compl. ¶ 57), the complaint nowhere suggests that Portsmouth, even if mismanaged, was "undercapitalized or otherwise used as [Smith's] 'shell' compan[y]" rather than being operated as a "legitimate profit-seeking entit[y]," Am. Lecithin Co. v. Rebmann , No. 12 Civ. 929, 2017 WL 4402535, at *9 (S.D.N.Y. Sept. 30, 2017) ; see also Alterseekers, Inc. v. BrandForce SF, LLC , No. 12 Civ. 5392, 2015 WL 5719759, at *6 (E.D.N.Y. Sept. 29, 2015) (requiring that a plaintiff asserting personal jurisdiction on an alter ego theory "establish ... that one entity was a shell for the other, i.e. , that one entity was subject to the complete domination of the other" (quoting Bank of Am. v. Apollo Enter. Solutions, LLC , No. 10 Civ. 5707, 2010 WL 4323273, at *4 (S.D.N.Y. Nov. 1, 2010) ) ).

As for the agency theory, Plaintiffs have not alleged that Portsmouth, as distinct from Smith, exercised control over Lifetrade's New York contacts. In an effort to get around this defect, Plaintiffs point to their allegation that Portsmouth was Smith's alter ego (Compl. ¶ 29) and urge this Court to employ transitive reasoning: because Lifetrade's in-state contacts can be imputed to Smith on an agency theory, and because Smith's contacts can be imputed to Portsmouth on an alter ego theory, the argument runs, Lifetrade's contacts can be imputed to Portsmouth (Dkt. No. 106 at 24). This proposed syllogism, though, fails at the second step. Just as the complaint fails to plausibly allege that Portsmouth was Lifetrade's alter ego, it also-for essentially the same reasons-fails to plausibly allege that Portsmouth was Smith's alter ego.

Because Plaintiffs have failed to make out a prima facie showing that New York's long-arm statute provides authority for this Court to exercise personal jurisdiction over Portsmouth here, Portsmouth's motion to dismiss all claims against it pursuant to Rule 12(b)(2) is granted.

b. Due Process

Although the Court has concluded that Plaintiffs have made out a prima facie showing that New York's long-arm statute authorizes it to take jurisdiction over Smith and Marcum for purposes of this suit, any exercise of personal jurisdiction must also comport with due process. See Chloé , 616 F.3d at 164. The exercise of claim-specific personal jurisdiction-as opposed to general, all-purpose jurisdiction-over an out-of-state defendant satisfies due process if: (1) the defendant has "purposefully availed itself of the privilege of conducting activities within the forum State"; (2) the claim at issue "arise[s] out of or relate[s] to the defendant's forum conduct"; and (3) the exercise of jurisdiction is "reasonable under the circumstances." U.S. Bank Nat'l Ass'n v. Bank of Am. N.A. , 916 F.3d 143, 150 (2d Cir. 2019) (quoting Bristol-Myers Squibb Co. v. Superior Court of Cal. , --- U.S.