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ZANDFORD v. NASD

March 16, 1998

CHARLES ZANDFORD, Plaintiff,
v.
NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC., et al., Defendants.



The opinion of the court was delivered by: KESSLER

MEMORANDUM OPINION

 This matter is before the Court upon Defendants' Motion to Dismiss [ # 28] pursuant to Fed. R. Civ. P. 12(b)(6), 12(b)(1), and 12(h)(3). The case arises from a 1991 and 1992 investigation by the National Association of Securities Dealers, Inc. ("NASD") of Plaintiff Charles Zandford and his former employer, a securities-brokerage firm, for theft and conversion of customer funds. Zandford alleges Defamation (Count I), False Light Invasion of Privacy (Count II), and Continuing Interference with Business Relations (Count III).

 Upon consideration of Defendants' Motion, Plaintiff's Opposition, Defendants' Reply, and the entire record herein, Defendants' Motion is hereby granted.

 I. BACKGROUND1

 Zandford was employed as a registered representative by Dominick and Dominick, Inc. ("Dominick") in its Bethesda, Maryland retail sales office from May 1987 until February 1991. In 1991, the NASD initiated an investigation of Dominick for theft and conversion of customer funds. In May 1991, Defendant Brian A. Hobbs, the Assistant Director of NASD's Business District 9, dispatched Defendant Steven Bender, a NASD District Examiner, to the Woodbine Nursing Home in Alexandria, Virginia.

 At the Woodbine Nursing Home, Bender interviewed William Raymond Wood, one of Zandford's former clients. During the course of that interview, Zandford alleges that Bender accused him of embezzlement and theft of monies belonging to Wood. These statements were allegedly made in the presence of Wood, his personal attendant, and a nursing home social worker.

 Zandford also alleges that Hobbs and Bender contacted the Fairfax County District Attorney's Office and repeated the accusations to them. He further alleges that Hobbs contacted the Securities and Exchange Commission ("SEC") and renewed his accusations against Zandford, prompting the SEC to begin an investigation.

 In April 1994, Zandford was indicted on thirteen counts of wire fraud. (Defs.' Mot. to Dismiss at 6; see also Pl.'s Opp'n to Mot. at 12.) The indictment charged that Zandford had schemed to defraud Wood of approximately $ 400,000. Zandford was convicted on all counts by a jury in Baltimore, Maryland in July 1995, and his conviction was affirmed by the Fourth Circuit Court of Appeals. See United States v. Zandford, 110 F.3d 62 (4th Cir. 1997); see also Defs.' Mot. to Dismiss at 6; Pl.'s Opp'n to Mot. at 12-13.

 According to Zandford, the accusations of theft and embezzlement, and the ensuing investigations and legal actions against him, have caused him severe humiliation, emotional and physical distress, and have rendered him completely unemployable. (Compl. P 42, 43.) He seeks compensatory and punitive damages.

 II. STANDARD OF REVIEW

 "[A] complaint should not be dismissed for failure to state a claim unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Conley v. Gibson, 355 U.S. 41, 45-46, 2 L. Ed. 2d 80, 78 S. Ct. 99 (1957). The factual allegations of the complaint must be presumed true and liberally construed in favor of the plaintiff. Shear v. National Rifle Ass'n of Am., 196 U.S. App. D.C. 344, 606 F.2d 1251, 1253 (D.C. Cir. 1979).

 III. ANALYSIS

 A. Defamation and False Light Invasion of Privacy (Counts I and II)

 Zandford alleges that Defendants' statements accusing him of criminal conduct were false and malicious, have injured his business character and reputation, and have rendered him unemployable. He also claims that Defendants knew or should have known that their ...


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