Filed: Jan. 07, 2016
Latest Update: Jan. 07, 2016
Summary: To state a claim for aiding and abetting fraud, a plaintiff must allege "the existence of the underlying fraud, actual knowledge, and substantial assistance" ( Oster v Kirschner, 77 A.D.3d 51 , 55 [1st Dept 2010]). Here, the existence of an underlying fraud is sufficiently stated in the complaint, which alleges, among other things, that defendants aided and abetted a fraudulent Ponzi scheme involving the purchase of Facebook shares ( id. ). Plaintiffs have sufficiently stated "substantial a
Summary: To state a claim for aiding and abetting fraud, a plaintiff must allege "the existence of the underlying fraud, actual knowledge, and substantial assistance" ( Oster v Kirschner, 77 A.D.3d 51 , 55 [1st Dept 2010]). Here, the existence of an underlying fraud is sufficiently stated in the complaint, which alleges, among other things, that defendants aided and abetted a fraudulent Ponzi scheme involving the purchase of Facebook shares ( id. ). Plaintiffs have sufficiently stated "substantial as..
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To state a claim for aiding and abetting fraud, a plaintiff must allege "the existence of the underlying fraud, actual knowledge, and substantial assistance" (Oster v Kirschner, 77 A.D.3d 51, 55 [1st Dept 2010]). Here, the existence of an underlying fraud is sufficiently stated in the complaint, which alleges, among other things, that defendants aided and abetted a fraudulent Ponzi scheme involving the purchase of Facebook shares (id.). Plaintiffs have sufficiently stated "substantial assistance," because the complaint alleges that defendants assisted in the fraud by assigning property to codefendants and by placing the proceeds of the fraud beyond the reach of plaintiffs, thereby causing plaintiffs harm (see e.g. Rostuca Holdings v Polo, 231 A.D.2d 402, 403 [1st Dept 1996]; see generally Stanfield Offshore Leveraged Assets, Ltd. v Metropolitan Life Ins. Co., 64 A.D.3d 472, 476 [2009], lv denied 13 N.Y.3d 709 [2009]). Plaintiffs have sufficiently pleaded "actual knowledge" of the underlying fraud, which "need only be pleaded generally" (Oster, 77 AD3d at 55).
The documentary evidence submitted to the motion court does not "flatly contradict[ ]" the allegations of the complaint (Scott v Bell Atl. Corp., 282 A.D.2d 180, 183 [1st Dept 2001], mod on other grounds 98 N.Y.2d 314 [2002]).
We have considered defendants' remaining contentions and find them unavailing.
