Mohebbi v. Khazen (50 F. Supp. 3d 1234, 2014)

[Re: ECF Nos. 34, 48]

ORDER (1) GRANTING IN PART AND DENYING IN PART DEFENDANTS’ MOTION TO DISMISS; (2) GRANTING PLAINTIFF’S MOTION TO FILE A SECOND AMENDED COMPLAINT

BETH LABSON FREEMAN, United States District Judge

Plaintiff Saeid Mohebbi (“Plaintiff’ or “Mohebbi”) brings this First Amended Complaint (“FAC”) against Defendants Mahnaz Khazen, Michael Shadman, Violet Parvarandeh, Pirooz Parvarandah, and Stacey Conti (collectively, “Individual Defendants”), as well as U.S. Immigration Investment Center LLC (“USIIC”), USI-IC LLP, and USIIC 1 LP (collectively, “USIIC Defendants”), for twenty-three causes of action, including claimed violations of federal and state securities laws, fraud, false advertising, conversion, unjust enrichment, and common law torts. These claims arise out of a contractual investment relationship entered into between the parties. Plaintiff alleges that, in exchange for Defendants’ assistance in applying for a federal EB-5 immigration visa, he invested over $1 million in a partnership. Plaintiff alleges that Defendants fraudulently induced this investment and failed to comply with their obligations pursuant to the contract, and seeks rescission of the agreement, damages, including punitive damages, and attorneys’ fees.

Defendants move to dismiss the FAC on two grounds: (1) that the claims alleged in the Complaint are subject to an arbitration agreement, and thus not appropriately adjudicated by the district court, and (2) that each of Plaintiffs causes of action fails to state a claim for relief pursuant to Federal Rule of Civil Procedure 12(b)(6). In response, Plaintiff both opposes the' Motion to Dismiss and seeks leave of Court to file a Second Amended Complaint (“SAC”). In Plaintiffs motion, he requests leave of court to withdraw five causes of action from his FAC, allege four new causes of action, and allege new facts regarding the causes of action that remain. (ECF 50) Defendants opposed this request. (ECF 53) Pursuant to Civil Local Rule 7-1, the Court finds the Motion to Amend to be appropriate for determination without oral argument. Civil L-R 7-l(b).

Having reviewed the briefing and oral argument of the parties, as well as the relevant case law, the Court GRANTS IN PART AND DENIES IN PART Defendant’s Motion to Dismiss. The Court GRANTS Plaintiffs Motion for Leave to Amend the Pleadings, pursuant to the terms of this Order.

I. BACKGROUND

A. Procedural History

Plaintiff filed its Complaint on July 2, 2013. (ECF 1) Defendants filed a Motion to Dismiss on August 7, 2013. (ECF 19) Plaintiff elected to file a First Amended Complaint on August 28, 2013, naming the same Defendants. (ECF 29) Defendants filed a second Motion to Dismiss (“Motion”) on September 11, 2013. (ECF 34) Plaintiff filed an Opposition on September 25, 2013 (ECF 37) Defendants replied on October 2, 2013. (ECF 39)

Plaintiff further filed a Motion to Amend/Correct the Pleadings, seeking to file a Second Amended Complaint, on April 23, 2014. (ECF 50) Defendants responded on May 7, 2014. ( ECF 53) That same day, Plaintiff filed a Motion to Shorten Time in which to hear the Motion for Leave to Amend. (ECF 54) After briefing, the Court denied this Motion. (ECF 61) Plaintiff filed his Reply to Defendants’ Opposition on May 14, 2014. (ECF 62)

B. Factual Allegations in the FAC

Plaintiff is a Farsi-speaking Iranian citizen who resides in California. (FAC, ECF 29 ¶ 8) Defendants Khazen, Shadman, Violet Parvarandeh, and Pirooz Parvarandah are individuals who reside in California. (Id. ¶¶ 12-15) Defendant Conti is an individual who resides in Montana. (Id. ¶ 16) Defendant USIIC LLC is a Delaware corporation with its principal place of business in California. (Id. ¶ 9) Defendants USIIC LLP and USIIC 1 LP are partnerships organized under Delaware law with principal places of business in California. (Id. ¶¶ 10-11)

Plaintiffs FAC arises out of a series of interactions with the Individual Defendants, and two contractual agreements entered into with USIIC LLC. Plaintiff alleges that Defendants, through fraud and misrepresentations, induced Plaintiff into making investments worth over $1 million in two partnership entities, in exchange for Defendants’ assistance in navigating federal visa procedures in order to obtain permanent residency and citizenship in the United States. (FAC, ECF 29 ¶¶ 19-22). In order to best understand the Plaintiffs Complaint, a chronological description of his interactions with the Defendants is most illustrative.

In 2012, Plaintiff, who was interested in seeking permanent residency in the United States, learned about the EB-5 Immigrant. Investor Visa Program via Farsi language satellite advertisements. (Id. ¶ 27) This program is designed for foreign citizen investors, and permits a foreign national to qualify for a green card, provided that individual invests a certain amount of money (either $500,000 or $1,000,000, depending on certain factors) in the United States. Plaintiff was thereafter shown a video produced by Defendant USIIC, in which it described the ways in which USI-IC could assist foreign nationals in applying for the EB-5 program and investing in the United States. (Id.) Plaintiff contacted USIIC in March 2012, (id.), and met in person with the CEO of USIIC, Defendant Khazen, during a trip to the United States in April 2012. (Id. ¶¶ 28-29) During this meeting, Plaintiff was given USIIC promotional materials and was told about various “low-risk” investment opportunities, (id. ¶ 29), and alleges that Defendant Khazen informed him that USIIC was a United States Customs and Immigration Services (“USCIS”) approved “EB-5 Regional Center.” (Id. ¶ 29) It was during this meeting that Plaintiff initially expressed interest in investing with USIIC so as to qualify for an EB-5 Visa. (Id.) In June of 2012, Plaintiff received correspondence from Khazen that encouraged him to transfer funds to USIIC. (Id. ¶ 30) Then, in July of 2012, Plaintiff met with Khazen and Shadman in Dubai, a meeting in which Plaintiff alleges he was presented with information again stating that USIIC was an approved EB-5 regional center “with its foundation in banking.” (Id. ¶ 32)

On July 22, 2012, Plaintiff was presented with an “Engagement Agreement,” (ECF 29-3 at 13-18) (hereinafter “July 22 Agreement”), which outlined the terms of the relationship between Defendants and Plaintiff, including, among other things, that Defendants would seek out investment opportunities for Plaintiff that were compliant with the requirements of the EB-5 Visa Program. (FAC, ECF 29 ¶ 32) Plaintiff acknowledges that he signed this agreement, (id.), despite it being in English and Plaintiff being a native Farsi speaker who understood and spoke little English himself. (Id. ¶ 36) Plaintiff alleges that he asked Defendant Khazen to explain the contents of the document, which Khazen did in “five minutes in Farsi.” (Id.) Plaintiff further alleges that Khazen did not inform Plaintiff that the contract contained an arbitration provision. (Id.)

In August 2012, Plaintiff was sent an email, in Farsi, from Defendant Shadman, stating that Plaintiff needed to transfer $1,000,000 to USIIC in order to be eligible for the EB-5 Visa program. (ECF 29 ¶ 34) Plaintiff states that Shadman’s email claimed an August 15 deadline for the transfer of funds so that Plaintiff could be processed in the “first group” of green card applicants. (Id. ¶ 34) Plaintiff, acting on the information provided in Shadman’s email, transferred $600,000 to Defendants on August 16, 2012. (Id.)

On August 27, 2012, Plaintiff received an email from Khazen, written in English, which stated that USIIC’s Regional Center status was “pending.” (Id. ¶ 36) Plaintiff received a second version of this email, which was translated into Farsi by a USIIC employee, Maryam Karimaneh. (Id.) That same day, Plaintiff received an email, also in Farsi, from Khazen, which stated that Plaintiff could not be provided with information about the pending Regional Center approval or the bank in which his money had been invested. (Id.) Plaintiffs concerns about these facts caused him to travel to the United States on a six-month tourist visa beginning in September 2012. (Id. ¶ 37) During this visit, Plaintiff met with Defendants Violet and Pirooz Parvarandah, who he alleges personally reassured Plaintiff that his funds had been properly invested. (Id.) After this meeting, on September 24, 2012, Plaintiff transferred an additional $480,000 to USIIC’s escrow account, bringing his total investment to $1.08 million. (FAC, ECF 29 ¶ 37)

On September 27 2012, Plaintiff, along with Khazen and Karimaneh, met with attorneys at Fragomen, Del Ray, Bernsen & Loewy, LLP (“Fragomen”), an immigration law firm, to discuss his EB-5 application. (Id.) After that meeting, Plaintiff again spoke with Violet Parvarandah, who informed Plaintiff that an investment contract was being drafted, and that, were to Plaintiff sign that contract, “he would receive a 50% stake in the banks that USIIC had invested in.” (Id. ¶ 39)

On October 3, 2012, Plaintiff signed a second agreement, an “Investment Questionnaire and Subscription Agreement,” which granted him a “50% stake in USI-IC’s regional center.” (ECF 29 ¶ 40; ECF 29-4 Exh. 17) (hereinafter “October 3 Agreement”). Plaintiff alleges that he believed, at the time of signing the October 3 Agreement, that he was being given a fifty percent interest in every bank in which USIIC had invested, such that the investment, would qualify him for the EB-5 Visa. (ECF 29 ¶ 40) Plaintiff alleges that Khazen and others told him this was the case, in Farsi, despite the contract, in English, saying otherwise, (id. ¶¶ 40, 42), and that he “felt pressured” to sign the document, though he could not read it, as it was written in English.' (Id. ¶ 40) Plaintiff alleges he was not provided a translated version of the document. (Id. ¶ 42)

In December 2012, Plaintiff alleges that he was concerned about his application status for an EB-5 Visa, and that his inquiries with USIIC were going unanswered. (Id. ¶ 45) At this time, and for the first time since he began interactions with Defendants, Plaintiff employed his own bilingual translator, in order to speak directly with his immigration attorney at Fragomen. (Id.) Plaintiff alleges that it was only after this conversation that he for the first time realized that USIIC was not an approved EB-5 Regional Center, and instead only had a pending application for such a designation, that he had not directly invested in regional banks as required under the EB-5 program, and that his application for a visa had not yet been submitted to USCIS. (Id.) At this time, he instructed his attorney to cease his application for an EB-5 visa, (id.) and soon thereafter commenced the instant action.

Based on the facts above, Plaintiff asserts twenty-two causes of action related to various alleged violations of federal and state securities laws, fraud, civil RICO, conversion, unfair business practices, and civil tort claims. In Plaintiffs Motion for Leave to Amend, he states that he will “voluntarily withdraw” five of the claims brought in the First Amended Complaint if provided the opportunity to amend. (ECF 50)

Plaintiff seeks relief in the form of damages, including punitive damages, an injunction pursuant to California Business & Professions Code § 17200, pre-judgment interest, and attorneys’ fees. (FAC, ECF 29 at 42-43)

II. LEGAL STANDARDS

A. Rule 12(b)(6)

1. General Requirements

A motion to dismiss under Rule 12(b)(6) concerns what facts a plaintiff must plead on the face of his complaint. Under Rule 8(a)(2) of the Federal Rules of Civil Procedure, a complaint must include “a short and plain statement of the claim showing that the pleader is entitled to relief.” Any complaint that does not meet this requirement can be dismissed pursuant to Rule 12(b)(6). In interpreting Rule 8(a)’s “short and plain statement” requirement, the Supreme Court has held that a plaintiff must plead “enough facts to state a claim to relief that is plausible on its face,” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007), which requires that “the plaintiff plead factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). This standard does not ask the Plaintiff to plead facts that suggest he will probably prevail, but rather “it asks for more than a sheer possibility that a defendant has acted unlawfully.” Id. (internal quotation marks omitted). The Court must “accept factual allegations in the complaint as true and construe the pleadings in the light most favorable to the nonmoving party.” Manzarek v. St. Paul Fire & Marine Ins. Co., 519 F.3d 1025, 1031 (9th Cir.2008). The Court is not, however, forced to “assume the truth of legal conclusions merely because they are cast in the form of factual allegations.” Kane v. Chobani, Inc., 973 F.Supp.2d 1120 (N.D.Cal.2014) (citing Fayer v. Vaughn, 649 F.3d 1061, 1064 (9th Cir.2011)).

2. Fraud Pleadings Under Rule 9(b)

When a party pleads a cause of action for fraud or mistake, he is subject to the heightened pleading requirements of Rule 9(b). “In alleging fraud or mistake, a party must state with particularity the circumstances constituting fraud or mistake.” Fed.R.Civ.P. 9(b) (“Malice, intent, knowledge, and other conditions of a person’s mind may be alleged generally.”). Rule 9(b) demands that the circumstances constituting any alleged fraud be plead “speeific[ally] enough to give defendants notice of the particular misconduct ... so that they can defend against the charge and not just deny that they have done anything wrong.” Kearns v. Ford Motor Co., 567 F.3d 1120 (9th Cir.2009) (citing Bly-Magee v. California, 236 F.3d 1014, 1019 (9th Cir.2001)) (emphasis added). Claims of fraud must be “accompanied by the who, what, when, where, and how of the misconduct alleged.” Cooper v. Pickett, 137 F.3d 616, 627 (9th Cir.1997).

3. Pleading Violations of § 10b of the Securities Exchange Act

Any claim brought under Section 10b of the Securities Exchange Act of 1934 must, in addition to the general heightened pleading requirements for fraud, also meet the pleading requirements of the Private Securities Litigation Reform Act (“PLSRA”). To survive a Rule 12(b)(6) motion to dismiss, a claim under Section 10b must “plead with particularity both falsity and scienter.” Ronconi v. Larkin, 253 F.3d 423, 429 (9th Cir.2001) (emphasis added). Plaintiff must “specify each statement alleged to have been misleading, the reasons why the statement is misleading, and, if an allegation regarding the statement is made on information and belief, ... state with particularity all facts on which that belief is formed.” 15 U.S.C. § 78u-4(b)(l). Such facts must give rise to a “strong inference that the defendant acted with the required state of mind.” 15 U.S.C. § 78u-4(b)(2).

In Tellabs v. Makor Issues & Rights, the Supreme Court defined “strong inference” to mean that “a reasonable person would deem the inference of scienter cogent and at least as compelling as any opposing inference one could draw from the facts alleged.” Tellabs, 551 U.S. 308, 324, 127 S.Ct. 2499, 168 L.Ed.2d 179 (2007). This requires the district court to “consider the complaint in its entirety,” in addition to engaging in an allegation-by-allegation analysis. Id. at 323-24, 127 S.Ct. 2499. The court may “only allow the complaint to survive a motion to dismiss if the malicious inference is at least as compelling as any opposing innocent inference. Zucco Partners, LLC v. Digimarc Corp., 552 F.3d 981, 991 (9th Cir.2009).

B. Leave to Amend

Pursuant to Federal Rule of Civil Procedure 15(a), a court should grant leave to amend a complaint “when justice so requires,” because “the purpose of Rule 15 ... [is] to facilitate decision on the merits, rather than on the pleadings or technicalities.” Lopez v. Smith, 203 F.3d 1122, 1127 (9th Cir.2000) (en banc) (emphasis in original). The Court may deny leave to amend, however, for a number of reasons, including “undue delay, bad faith or dilatory motive on the part of the movant, repeated failure to cure deficiencies by amendments previously allowed, undue prejudice to the opposing party by virtue of allowance of the amendment, [and] futility of amendment.” Eminence Capital, LLC v. Aspeon, Inc., 316 F.3d 1048, 1052 (2003) (citing Foman v. Davis, 371 U.S. 178, 182, 83 S.Ct. 227, 9 L.Ed.2d 222 (1962)).

III. DISCUSSION

Defendants bring this Motion to Dismiss on two grounds: (1) that the claims in the FAC are subject to a binding arbitration agreement, and must be dismissed because this Court lacks jurisdiction to hear said claims, and (2) failure to state a claim for which relief can be granted under Federal Rule of Civil Procedure 12(b)(6).

For the reasons outlined below, the Court DENIES without prejudice the Motion to Dismiss the FAC on the grounds that the claims are subject to an arbitration agreement, because the validity of the arbitration clause cannot be determined without an evidentiary hearing as required by the Federal Arbitration Act, 9 U.S.C. § 4. Defendants may file a motion to compel arbitration in order to determine the validity of the arbitration clause. The Court further GRANTS IN PART AND DENIES IN PART Defendants’ Motion to Dismiss pursuant to Rule 12(b)(6).

A. Motion to Dismiss Due to the Arbitration Clause in the July 22 Agreement

Defendants ask the Court to dismiss the FAC because Plaintiffs claims are subject to an arbitration clause. (Mot. to Dismiss, ECF 34 at 5-8) Defendants allege that the arbitration clause governs any of Plaintiffs allegations concerning “disputes [that] relate to any purported obligation concerning the EB-5 process,” but not Plaintiffs claims regarding “his investment.” (Mot. at 7) Defendants, however, make no attempt to disaggregate which claims fall within each of these two baskets, instead arguing that all claims should be dismissed because Plaintiff has failed to identify exactly which of his claims arise out of the July 22 Agreement and which of his claims arise from his investments. (Mot. at 5:22-23) Defendants state that they could not bring a motion to compel arbitration under the FAA because Plaintiff chose to intertwine all of his claims arising out of the July 22 Agreement with his other claims. Defendants do not explain why it would be Plaintiffs obligation to separate his claims.

Plaintiff argues in his opposition papers and alleges in his FAC that the Court should find the arbitration agreement invalid because Plaintiffs consent to submit claims to arbitration was procured by fraud and misrepresentation. (See, e.g., ECF 29 at 40-41) Plaintiff alleges that the contract was written in English and he only'reads and speaks Farsi. He further alleges that Defendant Khazen undertook to translate the July 22 Agreement immediately prior to Plaintiff signing the Agreement but during the five-minute summary of the terms of the Agreement, Defendant Khazen omitted any reference to the arbitration clause and denied him the opportunity to review the contract. (FAC ¶¶ 33, 222-225)

Based on these arguments, it is incumbent upon this court to determine whether the matter can be resolved by a motion to dismiss. Enforceability of the arbitration clause and determination of the scope of that clause is governed by the terms of the Federal Arbitration Act (“FAA”), 9 U.S.C. §§ 1-14. Under the FAA arbitration agreements are “a matter of contract,” and “shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.” 9 U.S.C. § 2. A party seeking to invoke an arbitration agreement, pursuant to the FAA, must “petition any United States district court which, save for such agreement, would have jurisdiction [to hear the matter], for an order directing that such arbitration proceed in the manner provided for in such agreement.” 9 U.S.C. § 4. Once a party does so, the district court engages in an inquiry only to determine whether the arbitration agreement is valid, and whether the agreement encompasses the claims at issue. See, e.g., Mitsubishi Motors Co. v. Soler Chrysler-Plymouth, 473 U.S. 614, 627-28, 105 S.Ct. 3346, 87 L.Ed.2d 444 (1985) (“[T]he first task of a court asked to compel arbitration of a dispute is to determine whether the parties agreed to arbitrate that dispute.”) The FAA provides for a summary proceeding, including trial by jury, to resolve factual disputes. 9 U.S.C. § 4.

Here, although Defendants urge this court to decide the issue of enforceability of the arbitration clause through this motion to dismiss, they have not cited any authority for bypassing an evidentiary hearing to resolve disputed issues of fact regarding the validity of the arbitration clause.

Defendants cite Thinket Info. Resources v. Sun Microsystems 368 F.3d 1053, 1060 (9th Cir.2004) for the proposition that claims subject to arbitration can be appropriately dismissed pursuant to a Rule 12(b)(6) motion to dismiss, in lieu of a motion to compel arbitration under the FAA. Although generally, that proposition is true, none of the cases cited by Defendants establish that the court may resolve a factual dispute regarding the validity of an arbitration clause absent an evidentiary hearing as provided for in the FAA.

The Court therefore DENIES Defendants’ Motion to Dismiss due to the existence of an arbitration agreement. Defendant must comply with the FAA’s procedure for petitioning the court for such relief. See 9 U.S.C. § 4. Defendants may, if they so choose, bring a motion to compel arbitration, which delineates which claims they believe are subject to arbitration and which claims fall outside the scope of the arbitration agreement.

B. Motion to Dismiss Pursuant to Rule 12(b)(6)

The Court now considers, in turn, Defendants’ Motion to Dismiss each cause of action pursuant to Rule 12(b)(6).

1. Claims Voluntarily Dismissed by Plaintiff Through the Motion for Leave to Amend (2nd, 4th, 9th, 10th, and 11th Causes of Action)

Plaintiff has agreed, pursuant to the Motion for Leave to Amend, to withdraw the following claims: “violation of section 17(a) of the Securities Act” (second cause of action); “violation of the broker-dealer registration provisions” (fourth cause of action); “violation of section 15(a) of the Exchange Act” (also the fourth cause of action); “civil conspiracy” (ninth and tenth causes of action); and “aiding and abetting” (eleventh cause of action). The Motion for Leave to Amend is discussed, and granted, in Part III.C, infra.

For purposes of ruling on the operative complaint, the FAC, the Court hereby DISMISSES the above five claims pursuant to the decision of Plaintiff voluntarily to withdraw the claims from the litigation. The second, fourth, ninth, tenth, and eleventh causes of action are therefore DISMISSED.

2. Other Claims in the FAC

Plaintiff includes seventeen (17) other causes of action in his FAC. The Court addresses the Rule 12(b)(6) motion against each in turn. For purposes of clarity, claims will be grouped according to their legal and factual similarity rather than by their initial numbering in the Complaint,

i. Claims for Violations of Federal and State Securities Laws (1st, 3rd, 5th, 6th, and 7th Causes of Action)

Plaintiff brings five claims for violations of federal and state securities laws. These are: “Unregistered Sale of Securities Under Securities Act §§ 5(a), 5(c)” (first cause of action); “Fraud in Connection with Sale of Securities Under Securities Act § 10b-5” (third cause of action); “Unregistered Investment Advisor Under Advisers Act § 203(a)” (fifth cause of action); “Violations of California Securities Law § 25401” (sixth cause of action); and “Offer/Sale of Unregistered Securities Under California Corporations Code § 25110” (seventh cause of action). For the following reasons, the Court GRANTS Defendants’ Motion to Dismiss these five claims, but gives Plaintiff leave to amend in order to cure the deficiencies outlined by the Court.

a. Violations of State and Federal Registration Requirements (1st and 7th Causes of Action)

Plaintiff brings two claims for violations of securities registration requirements: his first cause of action, for violations of the federal registration requirements pursuant to §§ 5(a) and 5(c) of the Securities Act, and his seventh cause of action, for violations of California’s laws regulating the sale of unregistered securities under Corporations Code § 25110. For the reasons below, the Court DISMISSES both claims, ■with leave to amend.

i. Violations of §§ 5(a) and 5(c) of the Securities Act (1st Cause of Action)

Section 5(a) of the Securities Act makes it a violation of federal law to “make use of any means or instruments of transportation or communication in interstate commerce or the mails to sell [an unregistered] security,” or “to carry or cause to be carried through the mails or in interstate commerce, by any means or instruments of transportation, any such security for the purpose of sale or for delivery after sale.” 15 U.S.C. § 77e(a). Section 5(c), similarly, “prohibits unregistered offers to sell and buy unregistered securities.” SEC v. M & A West, Inc., 538 F.3d 1043, 1050 (9th Cir.2008) (citing 15 U.S.C. § 77e(c)) (emphasis in original).

To plead a violation of these statutes, a party must allege (1) the offer or sale of securities, (2) in interstate commerce, (3) without prior registration with the SEC. See, e.g., SEC v. Loomis, 969 F.Supp.2d 1226 (E.D.Cal.2013). However, a security does not fall within the protections of Sections 5(a) and 5(c) if it is subject to one of several exemptions to the registration requirement, codified under Regulation D, 17 C.F.R. § 230.506, and in section 4(2) of the Securities Act. See, e.g., Apollo Capital Fund LLC v. Roth Capital Partners, LLC, 158 Cal.App.4th 226, 250-51, 70 Cal.Rptr.3d 199 (2007).

Plaintiff claims that Defendants have violated Sections 5(a) and 5(c) because they have used the “instrumentalities of transportation or communication ... to offer to sell or to sell securities,” (ECF 29 ¶ 71), and that “[n]o registration statement had been filed with the Securities and Exchange Commission.” (Id. ¶72)

Defendants move to dismiss, arguing that the securities up for sale were exempt under Rule 506 of Regulation D and Section 4(2) of the Securities Act.

Rule 506 is a “safe harbor” provision, which permits a private company to sell securities without having to register with the SEC or file reports with the SEC, provided certain conditions are met. The company cannot “use general solicitation or advertising to market the securities.” Further, the company can sell securities to an unlimited number of sophisticated “accredited investors,” as defined under Rule 501 of Regulation D, but only a maximum of thirty-five “unaccredited investors.” Finally, the company cannot violate antifraud provisions of the federal securities laws in the information it provides to investors. If these conditions are met, the security in question is considered a “covered security” for purposes of the exemption, and registration is not required. Section 4(2) exempts “transactions by an issuer not involving any public offering,” but does not apply when “a particular class of persons affected need the protection of the [Securities] Act.” SEC v. Platforms Wireless Int’l Corp., 617 F.3d 1072, 1090 (9th Cir.2010) (“A . limited distribution to highly sophisticated investors, rather than a general distribution to the public, is not a public offering within the meaning of the section of the Securities Act ....”); see also 15 U.S.C. § 77d(2) (emphasis added).

The Court agrees with Defendants that Plaintiff has not pleaded a violation of either Section 5(a) or 5(c). Here, Plaintiff has not alleged facts demonstrating that Defendants were required to register the securities in question. Plaintiff has not alleged facts showing that the securities themselves were made generally available, via solicitation or advertising. Instead, Plaintiff has claimed, that Defendants used the Internet to market USIIC’s business in helping foreign investors secure EB-5 Visas. (See, e.g., ECF 29 ¶ 24) Plaintiff has not alleged that the security he purchased was made generally available to any other purchaser, nor that it was made available via general solicitation or advertisement. Simply alleging that the business itself advertised its services to the general public is not enough to trigger liability for Defendants under the language of Regulation D.

In order to state this claim, Plaintiff must allege facts to show that Defendants utilized a general solicitation in order to market the securities themselves. Moreover, Plaintiff has only alleged that the securities were offered to him individually, and not any other investor, which would show Defendants’ compliance with the limitations on the number of investors to which it could offer securities under Regulation D. Finally, Plaintiff has not specifically alleged facts showing that Defendants have violated antifraud provisions of the securities laws in the information provided to Plaintiff.

The Court thereby GRANTS Defendants’ Motion to Dismiss with regard to Plaintiff’s first cause of action for violations of Sections 5(a) and 5(c) of the Securities Act. The court gives Plaintiff leave to amend to allege that the securities in question are subject to the registration provisions of the Act, consistent with the deficiencies outlined above,

ii. Violations of California Securities Law Under Corporations Code § 25110 (7th Cause of Action)

Plaintiffs seventh cause of action alleges a violation of Section 25110 of the California Corporations Code, regarding the offer and sale of unqualified securities. Section 25110 “makes it illegal to sell an unqualified security unless the security itself’ is exempt from state registration and qualification requirements. People v. Simon, 9 Cal.4th 493, 499, 37 Cal.Rptr.2d 278, 886 P.2d 1271 (1995). Plaintiff argues that “[a]t the time the Defendants sold these securities [to Plaintiff], the securities were subject to qualification and were not exempt from qualification,” (ECF 29 ¶ 97)

Defendants move to dismiss because the claims under the California Corporations Code are preempted by the National Securities Markets Improvement Act (“NSMIA”), which prohibits states from requiring registration of a “covered security” including securities exempt from registration pursuant to SEC rules or regulations. 15 U.S.C. § 77r; see Apollo Capital Fund LLC v. Roth Capital Partners, LLC, 158 Cal.App.4th 226, 249-50, 70 Cal.Rptr.3d 199 (2007). Defendants argue that since the securities in question were, exempt under Regulation D, Plaintiffs state law registration claims are preempted. Cf. Brown v. Earthboard Sports USA, Inc., 481 F.3d 901, 910-12 (6th Cir.2007) (“[Offerings that] actually qualify for a federal securities registration exemption ... enjoy NSMIA preemption.”).

Plaintiff, although acknowledging federal preemption of a claim for violation of Corporations Code § 25110 for covered securities under federal law, argues that the securities in question are not “covered securities.” (PI. Opp. at 18) However, Plaintiff has not pled sufficient facts to support his conclusion that the securities are not “covered securities” that were subject to registration requirements or exemptions under the Securities Act. See Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (“A pleading that offers ‘labels and conclusions’ or a ‘formulaic recitation of the elements of a cause of action will not do.’ ” (citations omitted)) Thus, as pleaded, the seventh cause of action is preempted by federal law.

The Court therefore GRANTS Defendants’ Motion to Dismiss with regard to Plaintiffs seventh cause of action for claims under Section 25110 of the California Corporations Code. The Court grants Plaintiff leave to amend in order to plead facts sufficient to show that the offered securities were not covered securities and thus subject to the requirements of state registration requirements as provided in Corporations Code § 25110.

b. State and Federal Securities Fraud Claims (3rd and 6th Causes of Action)

Plaintiff brings two claims for securities fraud: his third cause of action, for violations of Section 10b-5 of the Securities Act, and his sixth cause of action, for violations of California Corporations Code § 25401. For the reasons outlined below, the Court DISMISSES both causes of action, with leave to amend.

1. Section 10b-5 Claims (3rd Cause of Action)

Section 10b-5 bars any person from “us[ing] or employing], in connection with the purchase or sale of any security, ... any manipulative or deceptive device or contrivance.” 15 U.S.C. § 78j(b). To state a claim under Section 10b-5, a Plaintiff must plead six elements: “(1) material misrepresentation or omission by the defendant; (2) scienter; (3) a connection between the misrepresentation or omission and the purchase or sale of a security; (4) reliance upon the misrepresentation or omission; (5) economic loss; and (6) loss causation.” Janus Capital Group, Inc. v. First Derivative Traders, — U.S. -, 131 S.Ct. 2296, 2301, 180 L.Ed.2d 166 (2011). A Plaintiff stating a claim under Section 10b must “plead with particularity both falsity and scienter.” Ronconi v. Larkin, 253 F.3d 423, 429 (9th Cir.2001). Plaintiff must “specify each statement alleged to haye been misleading, the reasons why the statement is misleading, and, if an allegation regarding the statement is made on information and belief, ... state with particularity all facts on which that belief is formed.” 15 U.S.C. § 78u-4(b)(l) (emphasis added).

Plaintiffs fraud allegations are laid out most explicitly in paragraphs 54 through 56 of the FAC. Plaintiff alleges eight specific “oral and written misrepresentations [made] with the intent to defraud plaintiff.” (ECF 29 ¶ 54) These allegations are: (a) that USIIC was an EB-5 Regional Center, approved by the USCIS; (b) that USIIC claimed it made low-risk investments in community banks, whereby Plaintiff could not lose the principal he invested; (c) that USIIC had a “skilled team of business finance and legal professionals”; (d) that USIIC had a strong management team with “years of high-level managerial experience ... focusing on banking, management and finance;” (e) that Defendant Conti had sixteen years of experience on Wall Street; (f) that Defendant Shadman had managed a successful real estate company; (g) that Plaintiff, through USIIC, could acquire other investment opportunities; and (h) that Plaintiffs investments “would obtain[] a high rate of capital growth.” (ECF 29 ¶ 54) Plaintiff contends that each of these statements was false. (Id. ¶55) Finally, Plaintiff alleges three material omissions: (a) that the investments offered to Plaintiff were not properly registered, in violation of state and federal law;, (b) that the shares in USIIC issued to Plaintiff were unregistered and were not freely tradable common shares; and (c) that USIIC were “participants in money laundering, OFAC regulations evasion, forging government documents and numerous other illegal activities.” (Id. ¶56)

Defendants argue that this claim should be dismissed for failure to adequately plead five elements of a 10-b claim — material misrepresentations, scienter, economic loss, and loss causation. The Court agrees with Defendant that Plaintiff has failed to plead adequate facts to allege material misrepresentations (b) through (h), a causal relationship between material misrepresentation (a) and the purchase or sale of a security, and scienter.

The Court finds, with regard to Plaintiffs alleged misrepresentations (b) through (h), that Plaintiff has failed to meet its Rule 9(b) burden of pleading the “who, what, when, where, and how” of each allegedly false statement. See, e.g., In re Advanta Corp. Sec. Litig., 180 F.3d 525, 534 (3d Cir.1999) (stating that the pleading language of “with particularity” in the PLSRA “echoes precisely” Rule 9(b)’s fraud pleading language). The Court is unsure who said each of these statements, what the content of these statements were, when and where they were made, and even how they were delivered to the Plaintiff— whether orally or in written form, and whether in English or in Farsi. Plaintiff includes quoted statements in several of his allegations, but does not identify the source of these quotations. (See, e.g., ECF 29 ¶ 54(e) (“That Stacey Conti had sixteen years of ‘successful Wall Street experience.’ ”))

Even were the Court able to parse the exact context in which each of these statements was made, Plaintiff has not sufficiently pled facts to demonstrate that they were false: for example, Plaintiff has not pled facts establishing why USIIC’s employees were not skilled professionals, or skilled in the financial or banking industry. Plaintiff has not alleged any facts as to why Stacey Conti lacked Wall Street experience, nor a basis on which this allegation could be made upon information or belief. Plaintiff alleges that Michael Shadman has filed for bankruptcy, but does not allege why this is material to his alleged experience as owner of a successful real estate company. Plaintiff fails to allege why he could not acquire loans or mortgages through USIIC. Finally, Plaintiff fails to allege what the capital growth of USIIC’s investment was, such that he could allege that it was “very low.” (ECF 29 ¶ 54(h))

Plaintiffs allegation regarding misrepresentation (a), that the USIIC was a US-CIS-approved EB-5 Regional Center, is a different matter. Plaintiff alleges in the FAC that he was told by Defendant Khazen in April 2012 that USIIC was an EB-5 Regional Center. (ECF 29 ¶ 29) He further alleges that Khazen and Shadman provided Plaintiff with documents during a July 22, 2012 meeting, which stated that USIIC “was running an EB-5 green card program.” (Id. ¶32)

Defendants further argue that Plaintiff has not met his pleadings burden because he has not “establish[ed] a connection between this alleged misrepresentation and the actual purchase of a security,” (ECF 34 at 10). Defendants point out that Plaintiff signed an Engagement Agreement which clearly stated that USIIC’s Regional Center status was pending, which would abrogate any reliance on the alleged prior statements. (Id.)

The Court agrees with Defendants that Plaintiff has not pled how the material misrepresentation of USIIC’s Regional Center status caused him to purchase the security. He alleges that he initially became involved with USIIC and its leadership team due to their insistence that USI-IC was a qualified EB-5 Regional Center. (ECF 29 ¶¶ 27-30) Further, Plaintiff states that, when the document was translated for him by Khazen, he was not informed that the regional status application was pending. (Id. ¶33) This, however, is not sufficient to plead that the material misrepresentation caused him to purchase the securities, when the text of the contract itself states specifically that USIIC’s Regional Center status was pending. (ECF 29-3 at 1)

Additionally, the Court finds that Plaintiff has not adequately pled scienter. To determine scienter, the Court must “conduct a dual inquiry: first, ... determine whether any of the plaintiffs allegations, standing alone ... create a strong inference of scienter; second, if no individual allegations are sufficient, we will conduct a ‘holistic’ review of the same allegations to determine whether the insufficient allegations combine to create a strong inference” of scienter. Zucco Partners, LLC v. Digimarc Corp., 552 F.3d 981, 991-92 (9th Cir.2009).

The Court finds that none of the allegations standing alone creates a strong inference of scienter. First, the FAC lacks sufficient factual allegations to support Plaintiffs conclusion that he statements were false. Second, there is a paucity of factual allegations to support scienter. Plaintiff provides little more than a series of cursorily pleaded statements, none of which show that any of the Defendants made any statements with the intent to defraud Plaintiff — though Plaintiff repeatedly uses the words “fraud” and “defrauded” to described the conduct allegedly engaged in by Defendants, the only facts he has pleaded with specificity that could raise a possible inference of intent to defraud is Defendants’ alleged mistranslation of the Engagement Agreement, which included statements that USIIC did not yet have official status as an EB-5 Regional Center but which Plaintiff alleges were not included in the “five minute” translation of the document from English to Farsi. (ECF 29 ¶ 33) However, Plaintiff does not claim that this fact was left out of the translation intentionally and for the purpose of misleading Plaintiff. (Id.) Conclusory statements about Defendants’ scienter, without corroborating factual allegations, “are usually insufficient, standing alone, to adequately allege scienter.” Zucco Partners, 552 F.3d 981, 998.

The court has also reviewed all of the factual allegations supporting scienter as a whole to determine whether the insufficient individual allegations in combination create a strong inference of scienter. Unfortunately, Plaintiffs pleading fares no better under a holistic review. The allegations are simply too general, unsupported by factual statements and simply not plausible to support the necessary inference.

Finding that Plaintiff has inadequately met the heightened pleading burdens under Rule 9(b) and the PLSRA to plead falsity and scienter with particularity, see Ronconi, 253 F.3d 423, 429, the Court DISMISSES Plaintiffs third cause of action for violations of Section 10b-5 of the Securities Act, but grants leave to amend in order to cure the deficiencies outlined above.

2. Cal. Corp.Code § 25401 Claims (6th Cause of Action)

Plaintiffs sixth cause of .action is for violations of California Corporations Code section 25401, which makes it illegal to “offer or sell a security in this state or buy or offer to buy a security in this state by means of any written or oral communication which includes an untrue statement of a material fact or omits to state a material fact necessary in order to make the statements made ... not misleading.”

Defendants move to dismiss on the same basis as Plaintiffs claims under Section 10b-5 of the Securities Act. (See Reply, ECF 39 at 8 (“The sixth cause of action ... fails for the same reasons that Plaintiffs anti-fraud claims under the federal securities laws fail.”))

The Court agrees with Defendants that Plaintiffs inability to state a claim for fraud under Section 10b-5 is also fatal to his § 25401 claims. See Jackson v. Fischer, 931 F.Supp.2d 1049, 1063 (N.D.Cal.2013) (finding that a Plaintiff unable to state a claim under 10b-5 was also unable to state a claim under § 25401, because both statutes required the Court to engage in the same factual inquiry). Plaintiff has not pleaded sufficient facts to show any material misrepresentation, as discussed in greater detail above. Having failed to do so, he cannot state a claim for a violation of section 25401.

The Court DISMISSES Plaintiffs sixth cause of action for violations of California Corporations Code § 25401, but grants leave to amend for Plaintiff to cure the deficiencies outlined by the Court.

c. Investment Advisor Act Claims (5th Cause of Action)

Plaintiffs fifth cause of action is for violations of Section 203(a) of the Investment Advisers Act, 15 U.S.C. § 80b-. 2(a)(ll). Plaintiff alleges that Defendants acted as “investment advisers” as defined by the Act, but had not registered as investment advisers with the Securities and Exchange Commission. (ECF 29 ¶¶ 87-88)

The Investment Advisers Act defines “investment adviser” as “any person who, for compensation, engages in the business of advising others ... as to the value of securities or as to the advisability of investing in, purchasing, or selling securities.” 15 U.S.C. § 80b-2(a)(ll). Any person meeting this definition, and who has not registered with the SEC as an investment adviser, runs afoul of the act. The remedy for violations of the Advisers Act is rescission of the underlying advising agreement. See, e.g., Transamerica Mortg. Advisors (TAMA) v. Lewis, 444 U.S. 11, 24, 100 S.Ct. 242, 62 L.Ed.2d 146 (1979).

Defendants argue that this claim fails because Plaintiff has not identified an investment advisor agreemént, (Mot. to Dismiss, ECF 34 at 13), and that Plaintiff has not requested rescission as his remedy. (Reply, ECF 39 at 8)

Although asserting the opposite, Plaintiff apparently concedes that this claim is not adequately pled. (PL Opp. at 18) He acknowledges that his remedy would be limited to rescission of the Engagement Agreement ' and he requests leave to amend to correct this error.

The Court agrees with Defendants. Plaintiff claims only that the Defendants “engaged in the business of advising clients, for compensation, as to the value of securities and as to the advisability of investing in, purchasing, or selling securities,” thereby alleging that Defendants are investment advisers under the terms of the Advisers Act. ( ECF 29 ¶ 87) No facts have been alleged to support this concluso-ry allegation, thus as pled, it is not plausible under Iqbal and Twombly. Moreover, Plaintiff fails to identify which contract identified in the FAC would be subject to this claim or to seek rescission of the allegedly offending investor advisor contract, which would be his sole remedy under the law.

In order successfully to plead this claim, Plaintiff must allege facts that demonstrate that Defendants acted as investment advisors, as defined by § 203(a) but had not registered with the SEC. Plaintiff must -also identify the allegedly unlawful contract and request rescission as the sole remedy for the alleged violation. The Court thus GRANTS Defendants’ Motion to Dismiss Plaintiffs fifth cause of action for violations of the Investment Advisers Act, but grant leave to amend for Plaintiff to allege facts to show Defendants were engaging in investment advising as defined by the Act.

ii. Claim for Civil RICO (Eighth Cause of Action)

Plaintiffs eighth cause of action is for violations of the Racketeer Influenced and Corrupt Organizations Act (RICO), under 18 U.S.C. §§ 1961-1968.

To state a claim for a civil violation of the RICO Act, Plaintiff must plead five elements: “(1) conduct (2) of an enterprise (3) through a pattern (4) of racketeering activity that [ (5) causes] injury to the plaintiffs business or property.” Chaset v. Fleer/Skybox Int’l LP, 300 F.3d 1083, 1086 (citing 18 U.S.C. §§ 1962(c), 1964(c)). In this Circuit, a plaintiff seeking to plead a RICO claim based on a predicate act of fraud must comply with the pleading requirements for fraud under Rule 9(b), which demands plaintiff pleads “with particularity the time, place, and manner of each act of fraud, plus the role of each defendant in each scheme.” Lancaster Cmty. Hosp. v. Antelope Valley Hosp. Dist., 940 F.2d 397, 405 (1991) (emphasis added) (finding that the fraud pleading requirement applies when the predicate act is mail fraud); see also id. (“The Ninth Circuit has repeatedly insisted that this [pleading] rule be followed in RICO actions.!.. ”).

Plaintiff alleges that “Defendants and their numerous related corporations are corporations which alone and together constitute one or more ascertainable structures separate and apart from the herein-alleged pattern of racketeering activity so as to constitute an enterprise,” (FAC, ECF 29 ¶ 101), which engaged in “illegal money laundering, OFAC regulations evasion, forging government documents, and numerous other illegal activities.” (Id. see also ¶ 108 (“defendants [engaged in] mail fraud, wire fraud, fraud in the offering and sales of securities, money laundering, [and] OFAC fraud”)) Plaintiff alleges that “all defendants conducted and participated directly and indirectly in the conduct of such enterprise’s affairs,” (id. ¶102, see also ¶ 104 (“each defendant illegally operated and conducted an integral part of the enterprise”)), that “all defendants benefitted from the operation of the enterprise,” (id. ¶103), and that Defendants “engaged in a continuing pattern of racketeering activity.” (Id. ¶107)

Defendants move to dismiss because “none of the [necessary RICO] elements have been alleged except in conclusory terms.” (Mot. to Dismiss, ECF 34 at 14) The Court agrees.

First, Plaintiff has not pled any facts that would allow the Court to ascertain the “enterprise” for purposes of the RICO violation. An enterprise must have an organizational, decision-making structure; however, that structure need not exist “beyond that necessary to carry out its racketeering activities.” Odom v. Microsoft Corp., 486 F.3d 541, 551 (2007) (en banc). A Plaintiff must plead only that there exists an “ongoing organization, [either] formal or informal,” which acts through the “coordinated nature of defendants’ activity,” and functions as a “continuing unit,” meaning that the association is ongoing, rather than engaged in isolated activity. Odom, 486 F.3d 541, 551-53 (citing United States v. Turkette, 452 U.S. 576, 101 S.Ct. 2524, 69 L.Ed.2d 246 (1981)).

Here, Plaintiff alleges no such structure. Plaintiff merely alleges that the Defendants and their corporations form an enterprise. Such a cursory allegation gives the Court no information as to the form or structure of that enterprise, the ways in which decisions are made in the enterprise, or even the hierarchy of the alleged actors in the enterprise. Plaintiff does not cite any facts about the alleged enterprise whatsoever — only that every Defendant sued in this matter is a part of the enterprise. Plaintiff does not allege how each individual Defendant is engaged in the enterprise, only making a cursory allegation that all “Individual Defendants and their numerous related corporations” constitute the structure of the enterprise. (FAC, ECF 29 ¶ 101) Such allegations are made without any supporting factual information.

Further, Plaintiff fails to sufficiently plead which activities in the FAC are “racketeering activities” ¡ as defined in the RICO Act. To plead racketeering activity, the Plaintiff must identify the “predicate acts” it is alleging form the basis for the racketeering claim. Such acts are defined in 18 U.S.C. § 1961. Plaintiff does include a list of such activities in paragraphs 101 and 108 of the FAC, including mail fraud, wire fraud, fraud in the offering and sale of securities, OFAC fraud, and “other illegal acts.” (FAC, ECF 29, ¶¶ 101, 108)

There are two problems with Plaintiffs pleadings! First, the PSLRA eliminated securities fraud as a predicate act for purposes of a RICO claim. See, e.g., Powers v. Wells Fargo Bank, N.A., 439 F.3d 1043, 1055 (9th Cir.2006) (“Basing our decision on the unambiguous text of the statute, we hold that § 1964(c) bars RICO actions alleging securities fraud.”). Second, Plaintiff has not pled with particularity the acts constituting wire fraud, mail fraud, or OFAC fraud as predicate acts. Plaintiffs mere listing of such alleged crimes, without supporting, particularized factual pleadings as required under Rule 9(b), is not enough to survive a motion to dismiss. Cf. Andrews Farms v. Calcot, Ltd., 527 F.Supp.2d 1239, 1255 (E.D.Cal.2007) (citing Odom, 486 F.3d 541, 554) (finding that a plaintiff may plead generally the defendants’ state of mind or intent to deceive or defraud, but must make “particularized allegations [regarding] the factual circumstances of the fraud itself’ when pleading mail or wire fraud as a predicate act).

Plaintiff has not met his burden to either plead the existence of a racketeering enterprise or plead with particularity the factual circumstances of the predicate acts giving rise to his claimed RICO violation. As such, the Court DISMISSES Plaintiffs eighth cause of action, but grants Plaintiff leave to amend to cure these pleading deficiencies.

iii. Claims for Common Law Fraud (12th, 13th, 14th, and 15th Causes of Action)

Plaintiff alleges four common law fraud causes of action: his' twelfth cause of action for fraudulent misrepresentation, his thirteenth cause of action for fraud in the inducement, his fourteenth cause of action for fraud in the execution or inception of the contract, and his fifteenth cause of action for fraudulent concealment.

All fraud actions must be pled with particularity pursuant to the requirements of Rule 9. See, e.g., Cmte. on Children’s Television, Inc. v. Gen. Foods Corp., 35 Cal.3d 197, 216, 197 Cal.Rptr. 783, 673 P.2d 660 (1983). Under California law, this requires that each false or fraudulent statement alleged in the pleadings include the “how, when, where, to whom, and by what means the representations” were made. Robinson Helicopter Co., Inc. v. Dana Corp., 34 Cal.4th 979, 993, 22 Cal.Rptr.3d 352, 102 P.3d 268 (2004).

Plaintiffs twelfth cause of action alleges that the five Individual Defendants “delivered the Defendants’ Inducement Misrepresentations to Plaintiff.” (FAC, ECF 29 ¶ 144) These misrepresentations, Plaintiff alleges, were designed to “induce Plaintiff to enter into an agreement with [USIIC]” to purchase securities, (id. ¶145), and that Plaintiff justifiably relied on these misrepresentations “because of all the advertising materials, promotional materials, statements on the website, statements and pitches which touted USIIC as an EB-5 Regional Center.” (Id. ¶148)

Plaintiffs thirteenth cause of action alleges that Defendants Shadman and Khazen made fraudulent “inducement representations to Plaintiff in Los Angeles and Dubai to induce plaintiff to enter into the Engagement Agreement dated July 22, 2012.” (Id. ¶155) Further, he alleges that Shadman and Khazen, along with Pirooz and Violet Parvarandeh, “[o]n the fraud and inducement dates, ... made the inducement representations to Plaintiff in San Jose to induce Plaintiff to enter into the [October 3 Investment Agreement].” (Id. ¶156)

Plaintiffs fourteenth cause of action alleges that Khazen “told Plaintiff that the documents Plaintiff was signing consisted of standard language expressing or embodying the inducement representations,” (id. ¶166), which Defendants “intended for Plaintiff to rely on ... instead of the onerous, contradictory, misleading, and fraudulent provisions of the individual Agreements.” (Id. ¶166) Plaintiff claims that he did not know the documents “contained onerous and fraudulent terms” and “did not know that the documents did not include, and were consistent with, the inducement misrepresentations.” {Id. ¶169) Finally, he alleges that Defendants “did not deliver the contracts until well after Plaintiff had relied on the inducement representations.” {Id. 11170)

Plaintiffs fifteenth cause of action alleges that Defendants “concealed or suppressed from Plaintiff material facts associated with the Collective Misrepresentations,” {id. 11177), which Defendants “were under a duty to disclose.” {Id. ¶178) He alleges that he “would not have invested in any of the USIIC corporations if Plaintiff had been apprised of the Concealed Facts.” {Id. 11180)

Defendants move to dismiss these four causes of action because Plaintiff has not met its burden to plead each false or fraudulent statement with specificity, pursuant to Rule 9(b), and because Plaintiff has not adequately pled his own justifiable reliance on any alleged fraudulent or intentional misrepresentation. (Mot. to Dismiss, ECF 34 at 18-19)

The Court agrees with Defendants with regard to all four common law fraud causes of action. First, Plaintiff does not attempt to disaggregate which statements made in his lengthy section of general allegations is being referred to when he cites to the “inducement misrepresentations” or “Collective Misrepresentations” that underlie each of the four causes of action. Cf. In re Hunnicutt 466 B.R. 797 (Bankr.D.S.C.2011) (“The particular facts which support each element of each cause of action should be set forth, and their relevance and applicability to the particular legal claim the plaintiff is attempting to plead should be expressly stated”) (emphasis added). Plaintiff does not define either of these terms in relation to the list of purported misrepresentations he includes earlier in the FAC. {See FAC, ECF 29 ¶¶ 54-56) Instead, he asks the Court piece together which misrepresentations he alleges pertain to each of his fraud causes of action. This is the job of the pleadings, however, and the Plaintiff fails to meet his burden to allege with particularity, and thus to put on notice each defendant charged with fraud of the alleged unlawful conduct. Cf. Iqbal, 556 U.S. 662, 687, 129 S.Ct. 1937, 173 L.Ed.2d 868 (“Rule 8 does not empower respondent to plead the bare elements of his cause of. action, affix the label “general allegation,” and expect his complaint to survive a motion to dismiss.”). In his Opposition to the Motion to Dismiss, Plaintiff states that “paragraphs 12, 17, 18, 23, and 24 of the ‘FAC’ set forth the time, place, and nature of defendants’ misrepresentations,” (Opp. to Mot. to Dismiss, ECF 37 at 20), but these paragraphs do not in fact include any such information.

If Plaintiff chooses to amend, and outline which alleged misrepresentations align with which causes of action, he still must comply with Rule 9(b)’s heightened pleading requirements to give notice to Defendants of the context of each alleged misrepresentation. This is the “who, when, what, where, and by what means” requirement outlined in Robinson above. Each cause of action must isolate each alleged false or fraudulent statement on which it relies, and each statement must include the factual details required under Robinson. Further, Plaintiff must include only those Defendants for whom he can plead sufficient facts to allege liability under each cause of action; simply including “all Defendants” in each cause of action, while not alleging which Defendants are engaged in which behaviors giving rise to such causes of action, is not sufficient to create liability for all Defendants. See Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (Plaintiff must plead “enough facts to state a claim to relief that is plausible on its face”).

The Court thus DISMISSES Plaintiffs twelfth, thirteenth, fourteenth, and fif-teénth causes of action, and grants Plaintiff leave to amend in order to cure the deficiencies outlined by the Court.

iv. Embezzlement and Conversion (16th and 17th Causes of Action)

Plaintiffs sixteenth cause of action is for civil embezzlement and diversion of funds, while Plaintiffs seventeenth cause of action is for conversion.

1. Embezzlement (16th Cause of Action)

Under California law, embezzlement is a criminal act. Cal. Pen.Code § 503 (“Embezzlement is the fraudulent appropriate of property by a person to whom it has been entrusted.”); see also Cal. Pen.Code § 484c (“A person who submits a false voucher to obtain construction loan funds and does not use the funds for the purpose for which the claim was submitted is guilty of embezzlement.”) However, there is no civil claim for embezzlement under California law; Plaintiff cites to no statute or case law in his Opposition to the Motion to Dismiss which suggests any civil cause of action for embezzlement or diversion of funds.

The Court construes Plaintiffs sixteenth cause of action is simply an alternative attempt to plead fraud and/or conversion, and as such the Court DISMISSES Plaintiffs sixteenth cause of action WITH PREJUDICE.

2. Conversion (17th Cause of Action)

To state a claim for conversion under California law, a party must allege three elements: (1) his ownership, or right to possession, of property at the time of the conversion, (2)