Facts

Plaintiff Jonathan D. Rose, M.D., Ph.D., an investor, was presented with due diligence, a prospectus, and significant false documentation backing up an online business, and was led to believe that he was investing in a legitimate Internet start-up venture. Within a short period of time, the defendants had $3.6 million of the investor's money, but the funds were not used for said start-up Internet venture. In reality, and unbeknownst to the investor, discovery supported the conclusion that the plaintiff's funds, along with the funds of other victims, were used by the defendants to operate an international operation wherein "escorts" were transported domestically and internationally to European and Middle-East Countries, and the defendants collected commissions from the escorts. Defendant Michael Enriquez utilized the funds to project wealth, and to support a lavish lifestyle.

Following aggressive litigation, which included extensive forensics, multi-state discovery, and the deposition of an ex-FBI Special Agent as a material witness, and a cross-complaint against the plaintiff and the plaintiff's counsel that was quickly dismissed, defendant Michael Enriquez agreed to repay the investor in a settlement in which there was an admission of the fraud, and which was secured with a stipulated judgment. The defendants made the first payment on the settlement. However, when the defendants failed to pay the next portion of the settlement, and judgment was to be entered on an ex parte basis, the defendants relied Green Tree Financial Group, Inc. v. Execute Sports, Inc. and statutory law to argue that the settlement was impermissible and contained an illegal liquidated damage provision, notwithstanding a provision in the settlement expressly distinguishing this case from Green Tree. In the end, the United States District Court ruled for the plaintiff, and entered judgment in his favor for $3.445 million, which represents the total balance due from the defendants to the investor, plus attorney fees in having the judgment entered.

PLAINTIFF'S CONTENTIONS:
The plaintiff sought to recover over $3 million he lost as a result of a "confidence scheme" he fell victim to at the hands of the defendants, who, in 2008, induced the plaintiff to become an investor in what was purported to be a start-up internet company. Plaintiff contended the "business opportunity" was a ruse and nothing more than a part of a scam perpetrated by a convicted felon, who, after the plaintiff's initial investment, further induced the plaintiff to give the defendants significant sums of money, preying on the plaintiff's compassion, honesty, and credulity. Plaintiff claimed the defendants perpetrated the fraud by ingratiating themselves to the plaintiff, by making promises to use their purported business and political connections to further his intellectual pursuits, and by intimidating the plaintiff with implied threats of violence, relating stories to him of what had happened, or would happen, to people who cross them. Plaintiff alleged the scam included the use of interstate commerce, mail fraud, and wire fraud. Plaintiff argued the defendants' acts and conduct encompassed violations of 18 USC sections 471, 472, and 473 (relating to counterfeiting), sections 891-894 (extortionate credit transactions), section 1028 (fraud and related activity in connection with identification documents}, section1341 (mail fraud}, section 1343 (wire fraud}, section 1344 (financial institution fraud), section 1951 (interference with commerce, robbery, or extortion}, section 1952 (racketeering), section 1957 (engaging in monetary transactions in property derived from specified unlawful activity), and violations of section 1960 (relating to illegal money transmitters), among other violations of the law.

DEFENDANT'S CONTENTIONS:
Defendants initially argued that the money was taken with the plaintiff's full knowledge that it was to be used in connection with a legitimate escort operation, and subsequently admitted to getting the money by false pretenses.

Result

Plaintiff's verdict for $3.4 million.

Other Information

MEDIATOR: Hon. Dickram M. Tevrizian, retired. FILING DATE: Sept. 22, 2011.