SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK THE PEOPLE OF THE STATE OF NEW YORK ex rel. Qui tam The Bayrock Qui tam Litigation Partnership, Plaintiff, (Part 45 Hon. Anil Singh) Index No. 101478/15 Motion Sequence No. 004 v. BAYROCK GROUP LLC; TEVFIK ARIF; JULIUS SCHWARZ; FELIX SATER; BRIAN HALBERG; ALEX SALOMON; JERRY WEINRICH, SALOMON & COMPANY P.C.; AKERMAN SENTERFITT LLP; DUVAL & STACHENFELD LLP; KRAMER LEVIN NAFTALIS AND FRANKEL LLP; BRUCE STACHENFELD; NIXON PEABODY LLP; ADAM GILBERT; ROBERTS & HOLLAND LLP; ELLIOT PISEM; BAYROCK SPRING STREET LLC; BAYROCK WHITESTONE LLC; BAYROCK CAMELBACK LLC; BAYROCK MERRIMAC LLC; and BAYROCK GROUP INC., Defendants. DEFENDANTS ADAM GILBERT, ELLIOT PISEM, AND ISRAEL J.WEINREICH (s/h/a JERRY WEINREICH) S SUPPLEMENTAL MEMORANDUM OF LAW IN SUPPORT OF THEIR MOTION TO DISMISS THE COMPLAINT AGAINST THEM 1 of 6
TABLE OF AUTHORITIES CASES: PAGES: Biondi v. Beekman Hill House Apartment Corp., 257 AD2d 76 [1st Dept 1999], aff d, 94 NY2d 659 [2000]... 2 Simkin v. Blank, 19 NY3d 46, [2012]... 2 Sokoloff v. Harriman Estates Dev. Corp., 96 NY2d 409]2001]... 1 Taylor v. Pulvers, Pulvers, Thompson & Kuttner, P.C., 1 AD3d 128 [1st Dept 2003]... 2 STATUTES: 31 USC 3729... 2 CPLR 3211... 1 McKinney s Session Law News of NY, Ch. 379 (August 2010)... 2 New York State Finance Law 187 et seq.... 1, 2 2 of 6
In addition to joining Defendants Joint Memorandum of Law in Support of their Motion to Dismiss the Complaint and for Other Relief because (a) this qui tam action is barred by the New York State False Claims Act s (State Finance Law 187 et seq.) (the NYFCA ) public disclosure bar, and (b) Mr. Oberlander s use of stolen, privileged and confidential information warrants dismissal and other relief, Defendants Adam Gilbert ( Gilbert ), Elliot Pisem ( Pisem ), and Israel J. Weinreich (s/h/a Jerry Weinrich) ( Weinreich ) respectfully submit this supplemental memorandum of law in support of their motion to dismiss the Qui Tam Complaint (Docket entry No. 3) against them pursuant to CPLR 3211(a) and/or CPLR 3211(c), on the additional ground that Plaintiff Bayrock Qui Tam Litigation Partnership cannot maintain a claim for a violation of the NYFCA against them based on a purported conspiracy to commit tax fraud. Specifically, Plaintiff has failed to allege any factual basis to support its speculative allegation that the net income of these defendants satisfies the statutory threshold set forth in NYFCA 189(4)(a)(i). In fact, neither Gilbert s, Pisem s, nor Weinreich s net income met or exceeded the $1,000,000 threshold in any of the years that are the subject of the Qui Tam Complaint. 1 Accordingly, the claims against them must be dismissed. ARGUMENT On a motion to dismiss pursuant to CPLR 3211, [the court] must accept as true the facts as alleged in the complaint and submissions in opposition to the motion, accord plaintiffs the benefit of every possible favorable inference and determine only whether the facts as alleged fit within any cognizable legal theory. Sokoloff v. Harriman Estates Dev. Corp., 96 NY2d 409, 414 [2001]. Nevertheless, bare legal conclusions as well as factual claims flatly contradicted by 1 Gilbert, Pisem and Weinreich, together with certain other defendants, have contemporaneously filed a joint motion to seal for the purpose of submitting relevant tax returns in further support of this motion. 3 of 6
documentary evidence are not entitled to any such consideration. Simkin v. Blank, 19 NY3d 46, 52 [2012] (citation and internal quotation marks omitted). Affidavits may be properly considered [where] they conclusively [establish] that plaintiff [has] no cause of action. Taylor v. Pulvers, Pulvers, Thompson & Kuttner, P.C., 1 AD3d 128 (1st Dept 2003). See Biondi v. Beekman Hill House Apartment Corp., 257 AD2d 76, 81 (1st Dept 1999), aff d, 94 NY2d 659 (2000) (CPLR 3211 motion should be granted where the essential facts have been negated beyond substantial question by the affidavits and evidentiary matter submitted ). Plaintiff s Qui Tam Complaint alleges that Gilbert, Pisem, and Weinreich (the Individual Outside Professionals ) and 18 other entities and individuals engaged in a purported conspiracy to commit tax fraud in violation of NYFCA 189 [see, generally, Qui Tam Complaint]. Unlike its federal counterpart, NYFCA 189 permits claims based on tax fraud. Compare 31 USC 3729 with NYFCA 189(4). However, when NYFCA 189 was amended in 2010 to permit actions based on tax fraud, the legislature also established an income threshold for imposing liability under the statute for tax fraud. See McKinney s Session Law News of NY, Ch. 379, at A-11568 (August 2010). Accordingly, Plaintiff must show that each of the Individual Outside Professionals net income equal[ed] or exceed[ed] one million dollars for any taxable year subject to any action brought pursuant to this article[.] NYFCA 189(4)(a)(1). Plaintiff alleges on information and belief, and insofar as the acts complained of occurred during the years 2004 through 2010 inclusive, that each defendant had net income equaling or exceeding $1,000,000 in at least one of those years [Qui Tam Complaint, 19]. Plaintiff goes on to allege, in a footnote, that, as to Gilbert and Pisem, this allegation is supported only by their positions as partners with Nixon Peabody LLP and Roberts & Holland LLP, respectively, given the average income of partners in such firms, and with respect to 2 4 of 6
Weinreich, only by his by now extensive experience in corporate accountancy. [Qui Tam Complaint, note 3]. Plaintiff s allegations are demonstrably false. None of the Individual Outside Professionals income equaled or exceeded the requisite income threshold in any of the years that Plaintiff alleges a conspiracy to commit tax fraud took place namely 2004 through 2010 [Gilbert Aff. at 5; Pisem Aff. at 4; Weinreich Aff. at 2]. 2 Further, it appears that Plaintiff s allegations against Gilbert and Pisem only relate to 2007. 3 Plaintiff s unsupported speculation is insufficient to overcome Gilbert s, Pisem s, and Weinreich s sworn statements that their net income in any of those years did not meet the statutory threshold. Accordingly, Plaintiff cannot maintain a cause of action pursuant to NYFCA 189 against any of the Individual Outside Professionals, and the Qui Tam Complaint must be dismissed against them. CONCLUSION For the reasons discussed herein, Plaintiff cannot state a claim for a violation of the New York False Claims Act against Gilbert, Pisem, or Weinreich because they are not proper defendants under the threshold income test in NYFCA 189(4)(a)(i). Accordingly, the Qui Tam Complaint must be dismissed against them. 2 Gilbert Aff. refers to the Affidavit of Adam Gilbert, Esq., sworn to on January 12, 2017; Pisem Aff. refers to the Affirmation of Elliot Pisem, sworn to on January 30, 2017; and Weinreich Aff. refers to the Affirmation of Israel J. Weinreich sworn to on January 30, 2017 submitted herewith. 3 To the extent it can be discerned, it appears from the Qui Tam Complaint and its lengthy and difficult-to-understand attachment that the alleged acts and omissions of Gilbert and Pisem occurred only in 2007. As set forth in Gilbert s Affidavit and Pisem s Affirmation, their net incomes were below $1 million in that year as well as the other years referenced in the Qui Tam Complaint. 3 5 of 6
THE WOLFORD LAW FIRM LLP Dated: January 30, 2017 By: s/ Michael R. Wolford Michael R. Wolford, Esq. Mary E. Shepard, Esq. Attorneys for Defendants Nixon Peabody LLP and Adam Gilbert, Esq. 600 Reynolds Arcade Building 16 East Main Street Rochester, New York 14614 Telephone: (585) 325-8000 e-mail:mwolford@wolfordfirm.com; mshepard@wolfordfirm.com STORCH AMINI P.C. Dated: January 30, 2017 By: s/ John W. Brewer John W. Brewer Attorneys for Defendants Roberts & Holland LLP and Elliot Pisem 2 Grand Central Tower 140 East 45th Street, 25th Floor New York, New York 10017 Telephone: (212) 490-4100 e-mail: jbrewer@storchamini.com LANDMAN CORSI BALLAINE & FORD P.C. Dated: January 30, 2017 By: s/ Stephen Jacobs Stephen Jacobs Attorneys for Defendants Alex Salomon, Israel J. Weinreich (s/h/a Jerry Weinrich), and Salomon & Company P.C. 120 Broadway New York, New York 10271 Telephone: (212) 238-4800 e-mail: sjacobs@lcbf.com 4 6 of 6