Full opinion text
MEMORANDUM OPINION AND ORDER CONLON, District Judge. This consolidated class action and shareholder derivative suit was brought on behalf of disappointed investors in one or more of five real estate investment trusts and three real estate limited partnerships (collectively, “the Funds”). The Funds were allegedly sponsored by VMS Realty Partners, one of the defendants. The plaintiff class consists of all persons who purchased securities of the Funds during the period from the first public issuance of any securities of the Funds to February 13, 1990 (“the class period”). The consolidated complaint breaks the class down into eight subclasses. Each subclass is comprised of investors of a particular Fund. The subclass members sue on behalf of themselves as purchasers of a Fund’s securities, and also derivatively, on behalf of the particular Fund. The forty-nine defendants named in the complaint are: (a) the eight Funds: (1) VMS Mortgage Investment Fund; (2) VMS Hotel Investment Fund; (3) VMS Short Term Income Trust; (4) VMS Strategic Land Trust; (5) VMS Strategic Land Fund II; (6) VMS Mortgage Investors L.P.; (7) VMS Mortgage Investors L.P. II; (8) VMS Mortgage Investors L.P. Ill; (b) VMS Realty Partners, the alleged sponsor of the Funds and creator of a vast real estate empire; (c) the four general partners of VMS Realty Partners: (1) Brewster Realty, Inc. (“Brewster”); (2) Residential Equities, Ltd. (“Residential Equities”); (3) Van Kampen/Morris/Stone, Inc. (“V/M/S”); (4) XCC Investment Corporation (“XCC”); (d) The members of the VMS Realty Partners executive committee: (1) Robert D. Van Kampen (alleged co-owner of V/M/S and Brewster); (2) Peter R. Morris (alleged co-owner of V/M/S and Residential Equities); (3) Joel A. Stone (alleged co-owner of V/M/S and Brewster); (4) Melvin Howard (officer and director of Xerox Corporation and Xerox Credit Corporation); (e) real estate appraisers who allegedly issued opinion letters for the Funds’ investments: (1)Marshall & Stevens, Incorporated (“Marshall & Stevens”); (2)Joseph J. Blake & Associates (“Blake”); (f) companies who allegedly acted as guarantor of the Funds: (1) VMS Mortgage Investors II, Inc.; (2) VMS Mortgage Investors III, Inc.; (3) VMS Financial Guarantee, L.P.; (4) VMS Mortgage Company; (5) VMS Mortgage Company II; (g) underwriters and selling agents for the Funds: (1) VMS Securities, Inc.; (2) Prudential-Bache Securities; (h) certain alleged advisors and “controlling persons” of the Funds: (1) Prudential-Bache Properties; (2) VMS Realty, Inc.; (3) VMS Realty Investors; (i) general partners of the Funds, including: (1) VMS Mortgage Investors, Inc.;' (2) VMS Financial Services; (j) Officers, directors, trustees, and/or alleged “controlling persons” of the Funds, including, but not limited to, the following: (1) Albert Kopin; (2) Scott Lager; (3) Walter Auch, Sr.; (4) Robert Ungerleider; (5) Leonard Levine; (6) Norman Gold; (7) Marvin Sotoloff; (8) Gerald Nudo; (9) James Wisner; (10) David Blalock, Sr.; (11) Philip Brady; (12) Robert Wislow; (13) Gary A. Rosenberg; (14) William Sales; (15) Xerox Credit Corporation; (16) Xerox Financial Services; (17) Xerox Corporation; (k) Jeffrey J. Park, alleged former officer of VMS Realty Partners and Xerox Financial Services. The forty-count complaint charges the defendants with violations of the federal securities laws and the Racketeer Influenced and Corrupt Organizations Act (“RICO”)- In addition, plaintiffs allege pendent state claims of common law fraud, negligent misrepresentation, breach of contract, and derivative claims of breach of fiduciary duty, waste, mismanagement, and breach of contract. Defendants filed a joint motion to dismiss the consolidated complaint under Fed. R.Civ.P. 9(b) and 12(b)(6). Defendants also assert that the suit is barred by the statute of limitations. BACKGROUND In deciding a motion to dismiss, the court must accept as true all the well-pleaded factual allegations and inferences reasonably drawn from them. Gomez v. Illinois Bd. of Educ., 811 F.2d 1030, 1039 (7th Cir.1987). Dismissal is proper if it appears beyond doubt that the plaintiffs could prove no set of facts in support of their claims that would entitle them to the relief requested. Illinois Health Care Assoc. v. Illinois Dep’t of Public Health, 879 F.2d 286, 288 (7th Cir.1989), citing Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 101-102, 2 L.Ed.2d 80 (1957). A. VMS Realty Partners Defendant VMS Realty Partners is an Illinois general partnership engaged in real estate investment and development. Consolidated Complaint (“Complaint”) M 6, 13(i). Since 1979, VMS Realty Partners and its affiliates have sponsored approximately 115 real estate investment programs, raising more than $2.5 billion from more than 110,000 investors. Complaint H 25. These programs include the Funds, which make mortgage loans to affiliated entities. Id. VMS Realty Partners is comprised of four corporate general partners: (1) defendant V/M/S, owned by defendants Van Kampen, Morris, and Stone; (2) defendant Brewster, owned by Van Kampen and Stone; (3) defendant Residential Equities, owned by Morris; and (4) defendant XCC, an indirect subsidiary of defendant Xerox Corporation. Complaint HU 13(h, j, k, 1, qq, rr, ss). Van Kampen, Morris, and Stone serve on the four-member executive committee of VMS Realty Partners, along with defendant Melvin Howard, who was nominated to the executive committee by Xerox Corporation. Complaint ¶¶ 13(j, k, 1, m). B. The Funds Between November 14, 1984 and October 31, 1988, VMS Realty Partners created and sponsored the eight Funds that are the subject of this litigation. Complaint ¶¶ 6, 13(a-h). Each Fund purported to have a distinct primary purpose. Complaint ¶ 26. VMS Short Term Income Trust (“Income Trust”) The Income Trust is a real estate investment trust that made interim short-term loans primarily to affiliates of VMS Realty Partners. Complaint ¶¶ 26, 90. The affiliated borrowers used the loans to purchase income-producing properties and to finance other costs associated with these properties until the borrowers could find other investors to finance the properties. Complaint ¶ 90. The Income Trust’s loans were secured by the income-producing properties. Id. Between November 14, 1984 and December 26, 1984, the Income Trust sold its shares through an initial public offering in the principal amount of approximately $69 million, at $10 per share. Complaint ¶ 13(a). Four purchasers of Income Trust securities represent the plaintiff subclass of Income Trust investors: Lewis D. Rubin; Patrick Reed; Cook Brothers Profit Sharing and Retirement Trust (“Cook Bros. PSR”); and Cook Brothers Money Purchase Pension Trust (“Cook Bros. MPP”). Complaint ¶ 18(b). The complaint does not allege the dates of purchase for the subclass plaintiffs. VMS Mortgage Investors, L.P. (“MILP I”) MILP I was one of three limited partnerships formed to make mortgage loans to affiliated and non-affiliated entities. Complaint ¶ 26. The loans carried terms of three, five or seven years, and were secured by various types of improved real estate. Id. Between March 1, 1985 and August 7, 1985, MILP I raised approximately $75 million at $10 per unit during its initial public offering. Complaint ¶ 13(b). The following plaintiffs purchased units of MILP I and represent the MILP I subclass: Cook Bros. PSR; Cook Bros. MPP; Edward McDaid; Barbara Tepper-man. Complaint ¶ 18(c). The complaint fails to allege these plaintiffs’ dates of purchase. VMS Hotel Investment Fund (“Hotel Fund”) The Hotel Fund was formed as a real estate investment trust for the purpose of making mortgage loans secured by hotel and resort properties owned or acquired by affiliates of VMS Realty Partners. Complaint 1ÍTÍ 26, 173. Between July 12, 1985 and January 6, 1986, the Hotel Fund made its initial public offering and raised approximately $98 million at $20 per unit, each unit consisting of two shares of common stock and one warrant. Complaint II 13(c). Eight plaintiffs sue on behalf of the subclass of investors in the Hotel Fund. Complaint 1118(f). Two plaintiffs, Marie Mat-son and David E. Robbins, purchased their Hotel Fund units during the initial public offering. Complaint 1111 12(v, bb). The complaint does not specify when the remaining representatives of the Hotel Fund subclass purchased their units. VMS Mortgage Investors L.P. II (“MILP II”) MILP II is the second limited partnership in the VMS Mortgage Investors series. Complaint 1126. As with MILP I, this limited partnership made mortgage loans with terms of three, five or seven years to affiliated and non-affiliated entities. Id. The loans were secured by various types of improved real estate. Id. MILP II commenced its initial public offering on January 2, 1986. Complaint 1113(d). At the close of the initial public offering, July 3, 1986, MILP II had raised approximately $124 million at $10 per unit. Id. Plaintiffs llana and John Falco and Atlantic Electric Supply Corporation Pension Plan (“Atlantic Electric”) purchased units of MILP II during the initial public offering. Complaint 111112(c, k, l). These plaintiffs represent the MILP II subclass. Complaint 1118(d). VMS Strategic Land Trust (the “Land Trust”) The Land Trust was formed as a real estate investment trust with the purpose of making short term junior mortgage loans to affiliated borrowers. Complaint ¶ 26. These affiliated borrowers sought to acquire and develop “strategically located properties not at their highest and best use.” Id. The initial public offering, held between September 9, 1986 and December 31, 1986, sold shares for a total of $119 million at $10 per share. Complaint 1113(e). Plaintiff Alan H. Hess represents the subclass of Land Trust investors. Complaint ¶ 18(g).' The complaint does not state the date Hess purchased his shares. VMS Mortgage Investors L.P. Ill (“MILP III”) MILP III, the third limited partnership in the VMS Mortgage Investors series, was formed to make junior mortgage loans, wraparound mortgage loans and first mortgage loans on income-producing properties owned or acquired by affiliates of VMS Realty Partners. Complaint 11152. Between December 10, 1986 and June 30, 1987, MILP III offered and sold its units through an initial public offering in the amount of approximately $110 million at $10 per unit. Complaint 1113(f). Plaintiffs John A. Falco and Joseph G. Iantuono Profit Sharing Plan and Trust, Joseph G. lan-tuono, Trustee (“Iantuono”), purchased MILP III units during the initial public offering. Complaint ¶¶ 12(i, r). These two plaintiffs sue on behalf of the subclass of MILP III investors. Complaint ¶ 18(e). VMS Strategic Land Fund II (“Land Fund II”) Land fund II was formed with the same purpose as the Land Trust, and made loans similar in type to those of the Land Trust. Complaint ¶ 26. Land Fund II initially offered its shares to the public between August 25, 1987 and January 31, 1988. Complaint ¶ 13(g). The following four plaintiffs purchased shares of Land Fund II during the initial public offering: John and liana Falco; George Barcik; and Margot Duxler. Complaint ¶¶ 12(d, h, k, l). These plaintiffs sue defendants on behalf of the subclass of Land Fund II investors. Complaint ¶ 18(h). VMS Mortgage Investment Fund (“MIF”) MIF was a corporation formed with the intent of qualifying as a real estate investment trust. Complaint ¶ 26. MIF purported to invest primarily in short term loans, junior mortgage loans, wraparound mortgage loans and first mortgage loans on income-producing properties owned or acquired by affiliated borrowers. Id. MIF also invested in construction loans, pre-de-velopment loans and land loans on such properties. Id. The initial public offering raised approximately $395 million at $10 per share. Complaint II 13(h). Nine plaintiffs purchased shares of MIF during the initial public offering, from March 30, 1988 to October 31, 1988. Complaint ¶¶ 12(a, e, i, p, s, v, x, ee). These plaintiffs, David and llene Albert, Norman Berman, Ruth Ann Dykeman, Lavinia Holzhauser, Sol Klu-ghaupt, Marie Matson, M. Budd Mittleman and Stanley Schwarz, represent the subclass of MIF investors. Complaint ¶ 18(a). The complaint alleges three other plaintiffs, Jeffrey Alexander, Holly Parmenter and Stewart Eisenberg, as representatives of the MIF subclass, but these plaintiffs have not alleged the dates they purchased MIF securities. Id. C. Allegations Concerning the Funds Plaintiffs, in no less than forty counts, bring charges against each Fund and the defendants associated therewith. Although each count shall be treated separately on this motion, a description of the general nature of the allegations is instructive. In essence, the plaintiffs claim that the Funds suffered from gross mismanagement and that the defendants committed securities fraud by misstating the nature of the Funds’ business operations and financial condition. Complaint 111115, 28. The defendants allegedly managed the Funds for the benefit of VMS Realty, its principals and affiliates, and to the detriment of the Funds. Complaint ¶1115, 28. For example, the Funds made loans to affiliates of VMS Realty Partners that were allegedly secured by overleveraged properties with inflated appraisal values. Complaint H 30. According to plaintiffs, the Funds issued misleading financial documents failing to apprise investors that overleveraged properties secured the Funds’ loans. Id. Plaintiffs claim that VMS Realty Partners routinely advanced money to the Funds’ borrowers to enable those borrowers to meet their loan obligations to the Funds. Complaint ¶ 31. The foregoing practices were allegedly concealed from investors until November 14, 1989, when each Fund announced in its third quarter 10-Q report that VMS Realty would no longer advance money to the Funds’ borrowers. Complaint 1111 31, 40, 47. The market price of the Funds’ shares and units dropped sharply in the wake of this news. Complaint 1148. Plaintiffs assert that, given these undisclosed practices, the Funds’ projected yields at the initial public offering were unrealistically high, and that the prices of the securities were therefore materially inflated. Complaint ¶1¶ 15, 30. Plaintiffs also claim that, given these undisclosed practices, the Funds’ financial statements during the class period were materially misleading because they failed to include adequate reserves for losses on loans and receivables. Complaint 1133. Plaintiffs further maintain that defendants falsely represented the Funds as conservative investments. Complaint H 36. Plaintiffs additionally assert that in order to conceal pervasive liquidity problems confronting VMS Realty Partners and its affiliates, VMS Realty Partners used the Funds to engage in loan churning. Complaint 1140. The alleged loan churning scheme required a Fund to make a loan to a limited partnership to enable it to pay off earlier advances from VMS Realty Partners or to retire outstanding loans coming due to another Fund. Id. The Funds also engaged in a variation of loan churning, whereby the Funds would sell or purchase their loans to or from each other. Complaint 1140(e). As an additional example of defendants’ mismanagement of the Funds, plaintiffs cite the “extraordinarily high” fees that VMS Realty Partners reaped from the Funds and the Funds’ borrowers. Complaint H1138, 45. D. Procedural History On December 22, 1989, plaintiffs David and llene Albert filed a class action on behalf of all investors in MIF against some, but not all, defendants in the present case. Over eleven other class actions suits were subsequently initiated. The first class action to sue all the Funds on behalf of investors in all the Funds was filed on January 11, 1990, and named twenty-seven defendants. On April 30, 1990, all pending cases were consolidated into this single class action on behalf of investors in all eight Funds against the forty-nine defendants. Plaintiffs filed their consolidated class action."complaint on April 30, 1990. Plaintiffs bring counts one through nine under §§ 10(b) and 20(a) of the Securities Exchange Act of 1934, 15 U.S.C. §§ 78j(b) and 78t(a), and Rule 10b-5 promulgated thereunder, 17 C.F.R. § 240.10b-5. Counts ten and eleven allege violations of §§ 11 and 15 of the Securities Act of 1933, 15 U.S.C. §§ 77k and 77o. Counts twelve through fourteen are brought pursuant to §§ 12(2) and 15 of the Securities Act of 1933, 15 U.S.C. §§ 171(2) and 77o. Of the state law claims, counts fifteen through twenty-two allege common law fraud, counts twenty-three through thirty are for negligent misrepresentation, and counts thirty-one through thirty-eight state derivative claims for breach of fiduciary duty, waste, mismanagement and breach of contract. Plaintiffs bring count thirty-nine on behalf of MIF against VMS Financial Guarantee, L.P. for breach of contract. Count forty alleges violations of RICO, 18 U.S.C. § 1962(a), (b) and (c). Defendants move to dismiss all counts on three grounds: (1) the statute of limitations has run on all claims; (2) plaintiffs have failed to plead allegations of fraud with particularity as required by Fed.R.Civ.P. 9(b); and (3) the complaint fails to state a claim for which relief may be granted. Fed.R.Civ.P. 12(b)(6). DISCUSSION I. The Statute of Limitations Defendants contend that all plaintiffs’ claims are timebarred. The court considers each claim separately in order to determine whether plaintiffs’ claims comply with the statute of limitations. A. Claims Under the Securities Act of 1933 Section 11 of the 1933 Securities Act prohibits the issuance of false or misleading securities registration statements, including the portion of the registration statement that circulates as the prospectus. 15 U.S.C. § 77k; Short v. Belleville Shoe Mfg. Co., 908 F.2d 1385, 1390 (7th Cir.1990). Section 12(2) of the Securities Act imposes civil liability on any person who makes a false 'or misleading statement in the offer or sale of a security, whether in an oral communication or prospectus. 15 U.S.C. § 111(2); Ambling v. Blackstone Cattle Co., Inc., 658 F.Supp. 1459, 1462 (N.D.Ill.1987). Section 13 of the 1933 Securities Act sets forth the statute of limitations for actions brought under §§ 11 and 12(2) as one year after the discovery of the untrue statement or the omission, or after such discovery should have been made by the exercise of reasonable diligence .... In no event shall any such action be brought to enforce a liability created under section 11 ... more than three years after the security was bona fide offered to the public, or under section 12(2) more than three years after the sale. 15 U.S.C. § 77m. 1. The Three-Year Limit Section 13 clearly bars all actions not commenced within three years after the sale of the security or the first bona fide public offering of the security. Id. Equitable tolling doctrines do not extend the period of limitations for §§ 11 and 12(2) actions beyond this absolute limit of three years. Short, 908 F.2d at 1391. Counts ten through thirteen claim violations of §§ 11 and 12(2) on behalf of the MIF and Land Fund II subclasses. Count fourteen, brought on behalf of the MILP III investors, charges defendants with violating § 12(2). With respect to the MIF and Land Fund II subclasses, plaintiffs filed suit within the three-year outer boundary mandated by § 13. The four plaintiffs representing the Land Fund II subclass allegedly purchased their shares during the initial public offering, between August 25, 1987 and January 31, 1988. The entire period of the initial public offering falls within three years of the latest possible date this action could be considered filed, April 30, 1990. Similarly, the nine MIF subclass plaintiffs who purchased their shares during MIF’s initial public offering, between March 30, 1988 and October 31, 1988, filed their claims well within three years of these alleged purchases. The same is not true, however, for the § 12(2) claim of the MILP III subclass. The complaint alleges that plaintiffs John Falco and Joseph Iantuono purchased their units of MILP III during the initial public offering, between December 10, 1986 and June 30, 1987. The complaint fails to state the exact dates on which these plaintiffs made their purchases. Thus, according to the complaint, Falco and Iantuono might have purchased their units on the first day of the offering period, December 10, 1986. The first individual complaint against any defendant in this action was filed on December 22, 1989, over three years after December 10, 1986. Therefore, the MILP III subclass has failed to plead facts showing compliance with the three year limitation period as required under § 13. See Fisher v. Samuels, 691 F.Supp. 63, 71 (N.D.Ill.1988) (plaintiff asserting claims under §§ 11 or 12(2) of the 1933 Act must plead facts showing compliance with statute of limitations); Ambrosino v. Rodman & Renshaw, Inc., 635 F.Supp. 968, 972 (N.D.Ill.1986) (plaintiffs do not meet the pleading requirement by merely reciting in the complaint that the action was commenced within the limitations period). Accordingly, count fourteen is dismissed. 2. The One-Year Limit Having determined that the MIF and Land Fund II subclasses filed suit within the maximum three-year limit, the court must still determine whether these plaintiffs have complied with the one-year limitations period mandated by § 13. The one-year period begins to run when the investor either knows or in the exercise of reasonable diligence should have discovered the facts on which the suit is based. Fisher, 691 F.Supp. at 71, citing Norris v. Wirtz, 818 F.2d 1329, 1334 (7th Cir.), cert. denied, 484 U.S. 943, 108 S.Ct. 329, 98 L.Ed.2d 356 (1987). When the defendant lies and the plaintiff does not reasonably investigate, the time starts to run immediately. Norris, 818 F.2d at 1334. In order to comply with the statute of limitations, the complaint must set forth the time and circumstances of discovery of the untrue statement or omission, state the reasons why discovery was delayed if more than one year has elapsed since the statement or omission was made, and describe plaintiffs diligent efforts to seek discovery. Ambrosino, 635 F.Supp. at 972. Plaintiffs in the MIF and Land Fund II subclasses base their securities fraud claims on various documents, releases and financial statements allegedly issued by MIF and Land Fund II during the class period. Under § 11, however, the only documents that bear any legal relevance are the registration statement and the prospectus included in the registration statement. In addition, § 12(2) punishes false or misleading statements made in connection with the offer or sale of securities. The complaint fails to supply dates of purchase for any plaintiffs except those who bought securities from the Funds during the initial public offerings. The court therefore must limit its analysis of the § 12(2) claims to statements made in the prospectuses circulated with the initial public offerings. The complaint alleges that the Land Fund II prospectus, dated August 25,1987, and the MIF prospectus, dated March 30, 1988, contained a number of materially misleading statements. Complaint 1111 65-66, 68-69, 72, 212-15. The Land Fund II and MIF plaintiffs first discovered the misleading nature of the prospectuses on November 14, 1989, when Land Fund II and MIF revealed in their 1989 third quarter Form 10-Q reports the “critical role that VMS Realty Partners’ financial condition played in [Land Fund II and MIF]s’ success.” Complaint Ml 73, 218. Because discovery occurred more than one year after the prospectuses were issued, the Land Fund II and MIF plaintiffs must state why their discovery was delayed. Ambrosino, 635 F.Supp. at 972. In addition, the Land Fund II and MIF plaintiffs must allege that they exercised reasonable diligence in seeking discovery of the fraud. Id. Defendants argue that plaintiffs have not met this requirement. Plaintiffs insist that they need not describe their efforts to discover the fraud, because, they contend, they have alleged that the defendants actively concealed their fraud. a. Fraudulent Concealment Under the doctrine of fraudulent concealment, if defendants took additional affirmative steps after committing the fraud to conceal their conduct, the statute of limitations is tolled until plaintiffs actually discover the fraud. Davenport v. A.C. Davenport & Son Co., 903 F.2d 1139, 1142 (7th Cir.1990); Robin v. Doctors Officenters Corp., 686 F.Supp. 199, 207 (N.D.Ill.1988). This doctrine relieves plaintiffs of the obligation to use due diligence to discover the fraud. Davenport, 903 F.2d at 1142. However, to invoke the doctrine of fraudulent concealment, “plaintiff[s] cannot ignore the obvious danger signals ... and there is no license to ignore events giving rise to strong suspicion.” Fisher, at 72 (emphasis in original) (citations omitted). In addition, federal equitable tolling requires defendants to take additional affirmative steps of concealment after committing the fraud; mere silence by a defendant who is under a fiduciary duty to disclose fraud is not sufficient to trigger the fraudulent concealment tolling rule. Davenport, 903 F.2d at 1142. Plaintiffs argue that the complaint states with particularity affirmative acts of fraudulent concealment. Plaintiffs cite several paragraphs in the complaint as examples. However, the majority of those paragraphs do not contain allegations of fraudulent concealment directed at the MIF or Land Fund II plaintiffs. Instead, paragraphs 94, 131, 132, 155, 159, 175, 177 and 198 allege that the Income Trust, MILP II, MILP III, Hotel Fund and Land Trust issued fraudulent financial reports during the class period in an effort to conceal the misleading nature of their investment portfolios. In addition, paragraphs 32, 34 and 36 contain general allegations that the “prospectuses and other documents issued by the Funds” were materially misleading. These general accusations do not identify specific documents or specify when these purportedly misleading documents were issued, as required by Fed.R.Civ.P. 9(b). Thus, they do not support plaintiffs’ claims of fraudulent concealment. Plaintiffs point to the allegations of loan churning as examples of defendants’ efforts to mask the existence of troubled borrowers. However, none of the loan churning allegations in the complaint involve MIF or Land Fund II. Plaintiffs also refer to a letter sent to all investors dated June 2, 1989, in which Joel Stone denied any problems with the Funds and stressed the purportedly safe and secure nature of the Funds’ activities. Complaint ¶166(f). While this letter may constitute a cover-up attempt by defendants, the letter was sent too late to have any tolling effect on the one-year statute of limitations period. By June 2, 1989, the one-year period for discovery of the misleading MIF and Land Fund II prospectuses had already run. Thus, plaintiffs cannot use the Stone letter as a reason they did not discover the fraud within one year of the misleading prospectuses’ issuance. Plaintiffs argue that the documents referred to in ¶¶ 70 and 212 of the complaint constitute fraudulent concealment. Paragraph 70 of the complaint states ... during the Class Period, [MIF] disseminated documents, including its 1988 Annual Report to Shareholders, Form 10-K for the year ended December 31, 1988, and Forms 10-Q for the periods ending March 1988 through September 1989, which ... failed to disclose that [MIF] was dependent upon the financial condition of VMS Realty Partners. As an example of the statements contained in these reports, plaintiffs quote MIF’s Form 10-Q for the quarter ended June 30, 1989. Complaint 1170. As with the June 2, 1989 letter from Joel Stone, this document was circulated to MIF investors too late to have any tolling effect on the one-year limitation period. Paragraph 70 omits quotations from the earlier documents alleged to contain misleading statements. These earlier documents therefore cannot support plaintiffs’ fraudulent concealment claims. Fed.R.Civ.P. 9(b). In any event, a fiduciary’s failure to disclose, without more, does not amount to an affirmative act of fraudulent concealment. Davenport, 903 F.2d at 1142 (fraudulent concealment doctrine not triggered by plaintiff’s claims that fiduciary’s ongoing failure to disclose facts material to the sale of securities “lulled” the plaintiff so as to prevent her from uncovering the defendant’s fraudulent acts). Nor can plaintiffs rely on paragraph 212 of the complaint to support allegations of fraudulent concealment. Paragraph 212(a) states that Land Fund II’s prospectus implicitly represented that its loans would approximate arm’s-length transactions, notwithstanding Land Fund II’s practice of lending to affiliates of VMS Realty Partners. Plaintiffs allege that this implied representation was misleading, because Land Fund II made loans to affiliated borrowers that were secured by overcollateral-ized properties. Complaint 11212(a). The paragraph then states: [a]ll subsequent documents circulated to the investing public during the Class Period, including [annual reports to shareholders and Forms 10-K for the years ended December 31, 1987 through 1988, and Forms 10-Q for the periods ending September 30, 1987 through September 30, 1989], were materially misleading in failing to reveal that [Land Fund II] was engaging in such a practice, despite the defendants’ duty to make such a disclosure. Id. Paragraph 212(a) fails to quote any misleading language from these subsequent documents. Nor have plaintiffs provided copies of these documents indicating to defendants and the court their misleading nature. Furthermore, plaintiffs cannot trigger the fraudulent concealment doctrine by merely alleging that defendants remained silent while under a duty to disclose. Davenport, supra. Therefore, the references to these documents do not adequately allege fraudulent concealment. Subsection (b) is the only other portion of paragraph 212 that refers to documents other than the Land Fund II prospectus. Paragraph 212(b) alleges that Land Fund II’s prospectus stated its primary investment objectives were to “preserve and protect [Land Fund IIJ’s capital” and “provide for quarterly cash distributions.” Complaint ¶ 212(b). According to this paragraph of the complaint, “other documents disseminated during the Class Period, including reports to shareholders ... and Land Fund IPs Forms 10-K for 1987 and 1988” reiterated the Fund’s primary investment objectives. Complaint ¶ 212(b). Plaintiffs do not indicate why these statements were misleading; even if they did, these general statements of Land Fund IPs objectives do not amount to fraudulent concealment. Plaintiffs’ final argument with respect to fraudulent concealment is that VMS Realty Partners and its affiliates constantly sought to raise funds through public offerings shortly after completing prior financing. Plaintiffs contend that the purpose of this almost constant state of registration was to mask the serious liquidity problems of the Funds and their affiliated borrowers. Complaint 1144. Even if the court accepts this inference, defendants’ alleged fund-raising could not operate to conceal any misleading statements in MIF’s or Land Fund IPs prospectuses. In other words, disguising the liquidity problems of the Funds and their borrowers has little to do with concealing defendants’ alleged failure to disclose that the Funds and borrowers depended heavily on VMS Realty Partners. Thus, defendants’ constant fund-raising does not constitute fraudulent concealment, b. Equitable Tolling in the Absence of Fraudulent Concealment In situations where defendants did not actively conceal fraud, the statute of limitations still may be equitably tolled until the date the plaintiffs discovered the fraud. To succeed on this second theory of equitable tolling, plaintiffs must allege and prove that they remained unaware of the fraud and exercised due diligence in attempting to discover it. Teamsters Local 282 Pension Trust Fund v. Angelos, 815 F.2d 452, 456 (7th Cir.1987); McCool v. Strata Oil Co., 724 F.Supp. 1232, 1235-36 (N.D.Ill.1989). Plaintiffs admit that they have not alleged due diligence. Plaintiffs’ Response at 37. Because the MIF and Land Fund II plaintiffs have not complied with the one-year limitation period, their claims under the 1933 Securities Act are time-barred. Accordingly, the court dismisses counts ten through thirteen. B. Claims Under the Securities Exchange Act of 1934 The Seventh Circuit recently adopted § 13 of the 1933 Securities Act as the applicable limitations rule for claims arising under § 10(b) of the 1934 Securities Exchange Act. Short v. Belleville Shoe Mfg. Co., 908 F.2d 1385 (7th Cir.1990). Under Short, § 10(b) claims must be filed within one year of the date that a reasonable investor knew or should have known of the claim, but in no event later than three years after the date of sale. Id. at 1390. Equitable tolling doctrines do not extend the period of limitations past the three-year absolute limit. Id. at 1391, citing Norris, 818 F.2d at 1332. 1. Retroactive Application of § 13 to § 10(b) Claims Defendants argue that Short governs plaintiffs’ § 10(b) claims; plaintiffs maintain that the new limitations rule should not be applied retroactively. Although the Short court applied the new limitations rule to the plaintiff’s § 10(b) claims, it expressly reserved for the future a ruling on the issue of retroactive application of the new rule for all § 10(b) claims. Short, 908 F.2d at 1389-90. Plaintiffs rely on Chevron Oil Co. v. Huson, 404 U.S. 97, 92 S.Ct. 349, 30 L.Ed.2d 296 (1971) to support their position. In Chevron, the Supreme Court articulated three factors germane to determining whether to apply a rule retroactively. Under Chevron, this court must consider (1) whether the new rule overrules clear past precedent on which litigants may have relied; (2) whether retroactive application of the new rule will further or retard its operation; and (3) whether retroactive application would impose injustice or hardship. Id. at 106-07, 92 S.Ct. at 355. Plaintiffs point to Kayne v. PaineWebber Inc., 703 F.Supp. 1334 (N.D.Ill.1989), to support their opposition to retroactive application of the new limitations rule. In Kayne, Judge Duff concluded that the first and third Chevron factors weighed heavily against retroactive application of the proposed new limitations rule to § 10(b) claims. Id. at 1344. Kayne was decided before the Seventh Circuit adopted the new limitations rule for § 10(b) claims. The issue in Kayne, therefore, was not simply whether to apply the new limitations rule retroactively, but whether to adopt a new limitations rule at all. Without a clear directive from the Seventh Circuit, the Kayne court declined to adopt the new limitations rule because, among other things, it “would create an injustice for those litigants who have relied on the Seventh Circuit’s repeated application of [state courts’] limitations period[s] in § 10(b) and Rule 10b-5 cases.” Id. In so holding, the court noted that PaineWebber had not argued any special facts that might warrant retroactive application despite the court’s broad ruling that the new limitations period should not be so applied. Id. at 1344 n. 4. Defendants in the present case argue persuasively that the particular facts here merit application of the new rule retroactively. Plaintiffs first became aware of their claims on November 14, 1989, when defendants publicly announced VMS Realty Partners’ problems. Response at 41; Complaint ¶¶ 47-58. Because plaintiffs were unaware of their claims, they could not have delayed filing suit in reliance on Illinois law. Indeed, the first individual suit was filed just over one month after the November 14, 1989 announcement. Plaintiffs have not shown the court how they have relied on the state limitations period, or that they would suffer undue hardship or injustice if the new rule was applied. Thus, the first and third factors of Chevron favor retroactive application. Indeed, the Seventh Circuit applied the new limitations rule to the litigants in Short, noting that “[the plaintiff] cannot have relied on Illinois law, because she claims to have been unaware of the basis for litigation until a short time before filing suit.” Id. at 1390. See also Gatto v. Meridian Medical Assocs., Inc., 882 F.2d 840, 843-44 (3d Cir.1989), cert. denied, — U.S. -, 110 S.Ct. 1136, 107 L.Ed.2d 1041 (1990) (first and third Chevron criteria not established where appellants could not have relied on a longer period of limitations); Hill v. Equitable Trust Co., 851 F.2d 691 (3d Cir.1988) (retroactively applying § 13’s period of limitations to § 10(b) claims). As to the second Chevron criteria, retroactive application would further the purposes of the new limitations rule by removing the “daunting" tasks of determining which state statute applies and whether federal or state tolling rules govern. Short, 908 F.2d at 1388; see also Norris, 818 F.2d at 1332 (“[d]eciding which features of state periods of limitations to adopt for which federal statutes wastes untold hours”). In sum, all three Chevron considerations militate in favor of applying the rule announced in Short to the present case. Therefore, plaintiffs’ § 10(b) claims are governed by the statute of limitations set forth in § 13 of the 1933 Securities Act. 2. Claims Under §§ 10(b) and 20(a) and Rule 10b-5 Counts one through ten allege violations of §§ 10(b) and 20(a) of the 1934 Securities Exchange Act, and Rule 10b-5 promulgated thereunder. For the reasons discussed under heading “A” above, the 1934 Securities Exchange Act claims of the MILP III, MIF an Land Fund II subclasses are precluded by the statute of limitations. Accordingly, counts one, five and eight are dismissed. Failure to comply with the statute of limitations is but one of several reasons for dismissing the 1934 Act claims of the Income Trust, MILP I an Land Trust subclasses. The plaintiffs representing these subclasses failed to allege the dates they purchased their securities. This omission is fatal to the claims of these plaintiffs, for plaintiffs are obliged to plead affirmative facts showing compliance with the statute of limitations. Fisher, 691 F.Supp. at 71; Ambling, 658 F.Supp. at 1462. The three-year maximum limitations period under § 13 of the 1933 Act begins to run on the date of sale. Plaintiffs cannot show that they filed suit within three years of the date of sale if they have not alleged these dates. Therefore, counts two, three and seven must be dismissed. Plaintiffs representing the Hotel Fund subclass, Marie Matson and David E. Robbins, allege that they purchased Hotel Fund securities during the initial public offering, between July 12, 1985 and January 6, 1986. Complaint ¶¶ 12(v, bb). Even assuming that both Matson and Robbins purchased securities on the last day of the initial public offering, more than three years elapsed before the January 11, 1990 class action was filed. Thus, the Hotel Fund plaintiffs have not met their burden of pleading facts to show compliance with the three-year period of limitations under § 13. Count six is dismissed. Plaintiffs John and llana Falco, and Atlantic Electric Supply Corporation Pension Plan invested in MILP II between January 2, 1986 and July 3, 1986. Complaint ¶¶ 12(c, k, l). As with the Hotel Fund subclass, the MILP II plaintiffs cannot escape the mandate of § 13’s absolute three-year limitation period. That period expired on July 3, 1989, before any claim against any defendant was filed. The court must therefore dismiss count four with prejudice. Plaintiffs bring their remaining 1934 Securities Exchange Act claim on behalf of the entire class against all defendants for violations of §§ 10(b), 20(a) and Rule 10b-5. As none of the subclasses have complied with the statute of limitations, the claims on behalf of all eight subclasses collectively are also time-barred. Accordingly, count nine is dismissed. C. RICO Claims Plaintiffs’ RICO claims are governed by a four-year limitations period. Agency Holding Corp. v. Malley-Duff & Assocs., Inc., 483 U.S. 143, 107 S.Ct. 2759, 97 L.Ed.2d 121 (1987); Davenport, 903 F.2d at 1143. The Seventh Circuit has yet to determine when a RICO cause of action accrues for limitations period purposes. Other judges of this court and courts in other circuits have adopted one of two standards for RICO accrual. Under the first standard—the “last predicate act” rule—the limitations period begins to run when a defendant commits the last predicate act of the racketeering pattern. Norris v. Wirtz, 703 F.Supp. 1322, 1326 (N.D.Ill.1989) (Marovich, J.). Several judges of this court adhere to this standard. See id.; Citicorp Savings of Illinois v. Streit, No. 84 C 7471, 1987 WL 9318 (N.D.Ill. April 3, 1987) (1987 WL 9318) (McGarr, J.); County of Cook v. Berger, 648 F.Supp. 433, 433-35 (N.D.Ill.1986) (Kocoras, J.); Newman v. Wanland, 651 F.Supp. 20, 22 (N.D.Ill.1986) (Williams, J.). Under the second standard, the RICO claim accrues at the time the plaintiff discovers or should have discovered that she sustained an injury from a RICO violation. McCool v. Strata Oil Co., 724 F.Supp. 1232, 1237 (N.D.Ill.1989) (Bua, J.); Bowling v. Founders Title Co., 773 F.2d 1175, 1178 (11th Cir.1985), cert. denied, 475 U.S. 1109, 106 S.Ct. 1516, 89 L.Ed.2d 915 (1986). The “discovery” rule enjoys widespread support among other circuits. See, e.g., id.; Riddell v. Riddell Washington Corp., 866 F.2d 1480, 1489-90 (D.C.Cir.1989); Pocahontas Supreme Coal Co., Inc. v. Bethlehem Steel Corp., 828 F.2d 211, 230 (4th Cir.1987); Compton v. Ide, 732 F.2d 1429, 1433 (9th Cir.1984); Alexander v. Perkin Elmer Corp., 729 F.2d 576, 577 (8th Cir.1984). In addition, at least two other judges in this district follow the discovery rule. See McCool, 724 F.Supp. at 1237 (Bua, J.); Abernathy v. Erickson, 657 F.Supp. 504, 507-08 (N.D.Ill.1987) (Bua, J.); Electronic Relays (India) Pvt., Ltd. v. Pascente, 610 F.Supp. 648, 653 (N.D.Ill.1985) (Hart, J.). In the present case, the task of determining the appropriate rule is made easier by the parties, who agree that the discovery rule should govern. Response at 42; Reply at 10. Therefore, the statute of limitations for plaintiffs’ RICO claims began to run when plaintiffs either discovered or should have discovered that they sustained an injury from defendants’ alleged acts of racketeering activity. We must first determine when these alleged racketeering acts occurred. The alleged pattern of racketeering activity consists of defendants’ acts of securities fraud, in violation of § 10(b) of the 1934 Securities Exchange Act, mail fraud, in violation of 18 U.S.C. § 1341, and wire fraud, in violation of 18 U.S.C. § 1343. The securities fraud allegations center around defendants’ sale of the Funds’ securities. Complaint H 358. The wire fraud allegations are based on defendants’ alleged use of telephones in connection with the sale of the Funds’ securities. Id. Plaintiffs base their mail fraud claims on defendants’ alleged use of the mails to disseminate information relating to the Funds “in order to induce persons to purchase the Funds’ securities.” Id. Therefore, all of the alleged predicate racketeering acts occurred either on the dates the prospectuses were issued, or on the dates plaintiffs purchased their securities. Since none of the plaintiffs who purchased securities during the initial public offering allege their precise date of purchase, the court assumes, for the purposes of the statute of limitations, that the plaintiffs purchased their securities on the first day of the initial public offering for each of the Funds. The prospectuses for each Fund were also issued on the first day of the Funds’ public offerings. Thus, the court considers the first date of the initial public offering for each Fund as the date defendants allegedly committed a predicate racketeering act. The initial public offerings for the Land Trust, Land Fund II, MIF and MILP III all took place less than four years before January 11,1990, when all Funds were named as defendants for the first time. Thus, the RICO claims with respect to these Funds do not run afoul of the statute of limitations. As for the remaining four Funds, the court need not decide at this time whether any equitable tolling doctrines forestall the statute of limitations. Plaintiffs’ RICO claims suffer from numerous deficiencies that require dismissal under Fed.R.Civ.P. 9(b) and 12(b)(6). D. Common Law Fraud Claims The common law claims in counts fifteen through thirty-nine are governed by a five-year period of limitations. Ill.Stat.Ann. ch. 110, para. 13-205 (Smith-Hurd 1984). Except for the Income Trust and MILP I securities, all of the Funds’ securities were sold within five years of the latest possible date this suit could be considered filed, April 30,1990. As to the Income Trust and MILP I, plaintiffs fail to allege any purchase dates. Thus, it is impossible to determine whether the statute of limitations bars plaintiffs’ common law claims with respect to their purchase of the Income Trust and MILP I securities. II. Motion to Dismiss Based on Rule 9(b) Defendants move to dismiss all counts sounding in fraud for failure to comply with Fed.R.Civ.P. 9(b). Rule 9(b) requires that In all averments of fraud or mistake, the circumstances constituting fraud or mistake shall be stated with particularity. Malice, intent, knowledge, and other condition of mind of a person may be averred generally. Rule 9(b)’s particularity requirement furthers two basic purposes: (1) to reasonably notify defendants of their roles in the alleged scheme so that they may prepare a responsive pleading; and (2) to “safeguard potential defendants from lightly made claims charging commission of acts that involve some degree of moral turpitude.” Bankers Trust Co. v. Old Republic Ins. Co., 697 F.Supp. 1483, 1484-85 (N.D.Ill.1988) (citations omitted). See also O’Brien v. Nat’l Property Analysts Partners, 719 F.Supp. 222, 225 (S.D.N.Y.1989). These purposes are usually satisfied if the complaint sets forth the time, place, and substance of the alleged misrepresentations, as well as who made the statements and the method by which the misrepresentation was communicated to the plaintiff. Sears v. Likens, 912 F.2d 889 (7th Cir.1990); Flournoy v. Peyson, 701 F.Supp. 1370, 1374 (N.D.Ill.1988). However, conclusory allegations of fraud and averments of state of mind are insufficient to satisfy Rule 9(b). Flynn v. Merrick, 881 F.2d 446, 449 (7th Cir.1989). In addition, a complaint does not satisfy Rule 9(b) if it makes blanket allegations that fail to specifically identify the defendants who made each misrepresentation or omission. Likens, at p. 893 (complaint deficient because it “lump[ed] all the defendants together and d[id] not specify who was involved in what activity”); Coronet Ins. Co. v. Seyfarth, 665 F.Supp. 661, 666 (N.D.Ill.1987) (“[plaintiffs may not ‘lump’ defendants together in general allegations of fraudulent activity, implying that each defendant is responsible for the statements and actions of others”). Defendants contend that the complaint defies Rule 9(b)’s mandate for particularity in four ways: (1) the complaint fails to differentiate the roles of each defendant; (2) the complaint does not identify the source of alleged misrepresentations; (3) the complaint does not properly plead fraud upon information and belief; and (4) the complaint fails to state when the alleged violations occurred. Contrary to defendants’ assertion, the complaint for the most part does not lump all defendants together without alleging each defendant’s fraudulent conduct. The complaint lists, in painstaking detail, all forty-nine defendants and their alleged roles in the fraudulent scheme. In addition, plaintiffs allege the dates of the public offering of each Fund’s securities, and the date each Fund issued its prospectus in connection with the public offering. Furthermore, plaintiffs quote extensively from the offering prospectus of each Fund and explain why they believe the statements were misleading. Complaint ¶¶ 65-66, 68-69, 72, 92-93, 109-10, 113, 130, 132-33, 137, 154-57, 175, 177, 179, 196-97, 212-15. Therefore, plaintiffs have set forth the requisite “who, what, when, where and how” with respect to the securities fraud charges against each defendant. DiLeo v. Ernst & Young, 901 F.2d 624, 627 (7th Cir.) reh’g denied, 1990 WL 57464, 1990 U.S.App. LEXIS 9787 (1990). See also Flournoy, 701 F.Supp. at 1374-75 (finding plaintiffs’ allegations of fraud sufficient); Ambling, 658 F.Supp. at 1467 (plaintiffs adequately alleged defendants’ fraudulent scheme of obtaining investors in limited partnership by issuing misleading prospectus). Similarly, defendants’ objection to allegations based on information and belief are without merit as to many of plaintiffs’ allegations. Plaintiffs aptly point out that in securities fraud cases where matters are particularly within the knowledge of the defendants, Rule 9(b) does not preclude pleadings of fraud on information and belief, so long as the complaint includes facts upon which the belief is based. Duane v. Altenburg, 297 F.2d 515, 518 (7th Cir.1962); Bruss Co. v. Allnet Communication Services, Inc., 606 F.Supp. 401, 405 (N.D.Ill.1985). Plaintiffs’ 184-page complaint includes a number of facts to support their allegations of fraud. However, some of plaintiffs’ fraud claims are not based on factual allegations. Because application of Rule 9(b) to these information and belief pleadings overlaps with the considerations attendant to a Rule 12(b)(6) motion, the 9(b) concerns are addressed in the Rule 12(b)(6) discussion. In addition, the Rule 9(b) deficiencies regarding the RICO allegations are taken up in the Rule 12(b)(6) discussion of the RICO claims. Defendants’ contention that count nine fails to comply with Rule 9(b)’s mandate has merit. In count nine, plaintiffs assert §§ 10(b) and 20(a) claims on behalf of all plaintiffs against all defendants for alleged misrepresentations and omissions in “public statements [made] during the Class Period.” Count nine effectively charges each defendant with fraud in connection with all eight Funds, despite the fact that many defendants remained uninvolved with VMS Realty Partners or the Funds until quite late in the alleged fraudulent scheme. For example, the Xerox defendants did not become involved with the Funds until February 1987, when XCC became a 25 percent owner of VMS Realty Partners. Thus, the Xerox defendants cannot share liability in connection with any of the six offering prospectuses issued before February 1987. Similarly, count nine charges Prudential-Bache Securities and Prudential-Bache Properties with liability for fraud in connection with all the Funds, even though plaintiffs allege that Prudential-Bache Securities was involved with the offerings of only four of the eight Funds, and Prudential-Bache Properties in only two. In addition, many of the defendants served on the board of directors for some, but not all, of the Funds. Nevertheless, count nine charges these defendants with fraud in connection with all eight Funds. As the foregoing examples show, count nine impermissibly lumps all defendants together and makes blanket allegations against them without alleging the place, time or substance of the fraud, much less the individual role each defendant played. Plaintiffs contend that count nine should be considered in the context of counts one through eight, which provide detailed allegations about each defendant’s role in connection with a particular Fund. “Count nine,” say plaintiffs, “build[s] on the details previously set forth in the fraud counts brought on behalf of each of the eight subclasses, [and] charges all defendants with having participated in a single overall fraudulent scheme.” Response at 22. While this may be true, the court cannot accept the vague allegations in count nine, especially because count nine seeks to hold all defendants responsible for all alleged misrepresentations, regardless of the extent of each defendant’s involvement in the misrepresentation. The court recognizes that in a fraud claim against a group of corporate insiders who acted collectively, the requirements of particularity may be relaxed, particularly when the defendants control much of the information concerning the fraud. Carter v. Signode Industries, Inc., 694 F.Supp. 493, 500 (N.D.Ill.1988). However, in this case, plaintiffs already have information as to each defendant’s involvement in each of the Funds; such information is admittedly alleged in the complaint. The allegations of fraud against the various defendants in the first eight counts exhaust the extent of liability for each defendant under the 1934 Securities Exchange Act. Count nine adds nothing to the first eight counts; it merely attempts to impose liability on all defendants for all fraudulent acts. Count nine must be dismissed. As to the remaining counts sounding in fraud, the particular Rule 9(b) objections raised by defendants lack merit. Nevertheless, the court finds that plaintiffs have failed to comply with Rule 9(b) in alleging certain elements of their fraud and RICO claims. Because the failure to adequately allege the elements of a cause of action is the focus of a motion to dismiss under Rule 12(b)(6), the Rule 9(b) deficiencies in this respect are taken up in the discussion of the motion to dismiss for failure to state a claim. III. Rule 12(b)(6) Motion to Dismiss Dismissal on a Rule 12(b)(6) motion is proper where it is clear that no relief could be granted under any set of facts consistent with the allegations in the complaint. Robin v. Doctors Officenters Corp., 686 F.Supp. 199, 207 (N.D.Ill.1988), citing Hishon v. King & Spalding, 467 U.S. 69, 73, 104 S.Ct. 2229, 2232-2233, 81 L.Ed.2d 59 (1984). A. Securities Fraud Claims Under the 1934 Securities Exchange Act Counts one through nine allege primary and aiding and abetting liability under § 10(b) and Rule 10b-5, and controlling person liability pursuant to § 20(a) of the 1934 Securities Exchange Act. The second paragraph of each count lists the defendants charged with liability for conduct in connection with the particular Fund. The plaintiffs sue each particular Fund, all “controlling persons” of the Fund, the ad-visors and guarantors of the Fund, and the underwriters for the Fund’s securities, on theories of primary liability, aiding and abetting liability, and controlling person liability. 1. Primary Liability To establish a primary violation of § 10(b) and Rule 5(b), plaintiffs must demonstrate that the defendants (1) in connection with a securities transaction, (2) made an untrue statement of material fact or omitted a material fact that rendered the statements made misleading, (3) with the intent to mislead, and (4) which caused the plaintiffs’ loss. Schlifke v. Seafirst Corp., 866 F.2d 935, 943 (7th Cir.1989). The court addresses each of these four criteria separately. a. The Transaction Requirement It is well settled that only purchasers or sellers of securities may assert claims for securities fraud under the 1934 Act. Blue Chip Stamps v. Manor Drug Stores, 421 U.S. 723, 731, 95 S.Ct. 1917, 1923, 44 L.Ed.2d 539 (1975) (“plaintiff class for purposes of § 10(b) and Rule 10b-5 private damage actions is limited to purchasers and sellers of securities”); Norris v. Wirtz, 719 F.2d 256, 258 (7th Cir.1983), cert. denied, 466 U.S. 929, 104 S.Ct. 1713, 80 L.Ed.2d 185 (1984); Beck v. Cantor, Fitzgerald & Co., Inc., 621 F.Supp. 1547, 1555 (N.D.Ill.1985) (rejecting liability premised upon alleged misrepresentations and omissions that occurred after plaintiff purchased his stock). While the complaint alleges that each named plaintiff purchased securities from a particular Fund, defendants are correct in observing an “egregious” defect in the complaint: plaintiffs’ failure to allege specific purchase dates. Because liability under § 10(b) and Rule 10b-5 must be premised on plaintiffs’ reliance on misrepresentations in purchasing the Funds’ securities, the dates of purchase are essential to their claim. Without purchase dates, it is impossible to determine whether certain investors could have purchased their securities “in connection with” the alleged misrepresentations contained in the eight offering prospectuses, the Forms 10-K and 10-Q for each Fund, and the year-end shareholder reports for each Fund. It is also impossible to determine whether the 1934 Act claims are barred by the statute of limitations, which expires three years after the sale of the security, without exception. Thus, the court must dismiss the claims of all plaintiffs who failed to provide any references to when they made their investments in a particular Fund. The only indication of purchase dates for any plaintiff is found in the complaint’s allegations that some plaintiffs invested in a particular Fund during the Fund’s initial public offering. At that time, the only documents these plaintiffs could have relied on were the offering prospectuses. Thus, the court must limit its consideration of plaintiffs’ 1934 Act claims to the statements made in the prospectuses. Any misleading statements in subsequent documents, such as annual shareholder reports or Forms 10-k and 10-Q are not relevant to plaintiffs’ securities fraud claims because the statements were not made “in connection with” a purchase or sale of securities, b. Material Misrepresentations or Omissions For every defendant charged with primary liability under § 10(b) and Rule 10b-5, plaintiffs must establish that he or she made misrepresentations or omissions of material fact. Plaintiffs allege primary liability against the Funds, the Funds’ officers, directors, trustees, underwriters, guarantors, advisors and appraisers. In addition, plaintiffs charge various defendants with primary liability because of their association with VMS Realty Partners. Plaintiffs’ dragnet approach to establishing liability must be stopped short at this point, because the vast majority of the forty-nine defendants could not possibly be primary violators. All of the alleged misleading statements were issued by the eight Funds. The guarantors, underwriters, advisors and appraisers were not responsible for issuing the prospectuses or any other alleged misleading document. Thus, the only defendants who could conceivably be charged with primary liability are the Funds, and certain “controlling persons.” DiLeo, 901 F.2d at 626-28. The Seventh Circuit explained in Rowe v. Maremont Corp., 850 F.2d 1226, 1223 (7th Cir.1988) that “an omission or misstatement is material under Rule 10b-5 if it is substantially likely that a reasonable investor would have viewed the omitted or misstated fact as significantly altering the ‘total mix’ of information made available.” Id., quoting Basic Inc. v. Levinson, 485 U.S. 224, 231-32, 108 S.Ct. 978, 983, 99 L.Ed.2d 194 (1988). Plaintiffs’ allegations essentially fall into four different categories of misleading statements. First, plaintiffs claim that the prospectuses misled investors into believing that the Funds’ securities were a “safe” or “conservative” investment. Although a review of the prospectuses reveals no express assurances of conservatism, the prospectuses do contain various statements that plaintiffs contend imply a low-risk venture. For example, each of the prospectuses describes the Fund’s primary objectives as preserving the Fund’s capital and providing quarterly distributions to stockholders. Complaint ¶¶ 66, 93, 110, 132, 155, 177, 197, 212. In addition, the prospectuses assure investors that various entities will guarantee the Funds’ investments and cash flow. Compl