The opinion of the court was delivered by: Rosemary M. Collyer United States District Judge
Plaintiffs Lawrence J. Eisenberg and his investment firm, FC Investment Group LC, bring this action against Defendants Larry B. Lichtenstein and his law firm, Larry B. Lichtenstein and Associates, to recover more than $5 million dollars they invested in a foreign currency trading scheme operated by Titan Global Strategies Ltd. ("Titan") - a now-defunct, third-party corporation in which Mr. Lichtenstein served as director. Arguing that Titan was a sham that placed no investments and existed only to shield its directors from personal liability, Plaintiffs seek to pierce Titan's corporate veil and hold Mr. Lichtenstein accountable for fraud, civil conspiracy, civil aiding and abetting, and negligent misrepresentation.
Defendants have filed a motion to dismiss Plaintiffs' Amended Complaint for lack of personal jurisdiction or, in the alternative, to transfer venue to the Northern District of Illinois ("Defs.' Mot.") [Dkt. #11]. For the reasons explained below, Defendants' motion will be denied, and this matter will be set for a scheduling conference.
The facts are taken from the allegations in the Amended Complaint. This dispute dates back to September 1998, when Titan employees allegedly contacted Mr. Eisenberg in his District of Columbia office about investing in a foreign currency trading account to be managed by Titan. Am. Compl. ¶ 8. At that time, Mr. Eisenberg was told that Milan Martinic owned and controlled Titan. Id. Mr. Eisenberg initially invested $10,000 with Titan and, by October 2003, he had personally invested more than $1 million. Id. ¶¶ 9-10. In April 2001, Mr. Eisenberg created FC Investment Group LC ("FCIG"), a Maryland limited liability company, to assist his friends and family members in making their own foreign currency investments with Titan. Id. ¶¶ 1, 12. It is alleged that by October 2003, Mr. Eisenberg, together with his friends and family members, had used FCIG to invest approximately $5 million with Titan. Id. ¶ 13.
Titan and its employees allegedly reassured Mr. Eisenberg that his investments through FCIG were legitimate and secure. In early 2001, Titan assigned one of its employees, Charles Knott, to be FCIG's "advisor and point-of-contact" for Titan. Id. ¶ 15. Mr. Knott apparently met with Mr. Eisenberg in his D.C. office several times in 2001 and 2002 to explain Titan's operations. Id. ¶¶ 15-16. He also showed Mr. Eisenberg a PowerPoint presentation that detailed the scope of Titan's alleged relationship with a currency trader, IFX Markets Ltd. ("IFX"); IFX purportedly performed certain management, investment, and brokerage services on Titan's behalf. Id. ¶¶ 16, 20. Titan sent monthly account statements to Mr. Eisenberg that showed significant returns on his investments. Id. ¶ 14; Eisenberg Aff. ¶ 5.
It is also alleged that Mr. Lichtenstein was another source of reassurance. Mr. Lichtenstein was Mr. Martinic's friend, business partner, and personal attorney, id. ¶ 22, and a principal in the law firm Larry B. Lichtenstein & Associates. Id. ¶ 4; Lichtenstein Decl. ¶ 2. The Amended Complaint alleges that in 2002, Mr. Lichtenstein began relaying information about Titan to Mr. Eisenberg. Am. Compl. ¶¶ 23-25. On at least four occasions in 2002, Messrs. Lichtenstein and Eisenberg allegedly spoke via telephone about a variety of compliance issues. Id. ¶ 26. On some of these occasions, Mr. Lichtenstein allegedly initiated the calls by phoning Mr. Eisenberg at his D.C. office. Id.
On November 12, 2002, Mr. Lichtenstein registered Titan as an Illinois corporation, with Mr. Martinic and Mr. Lichtenstein as its two directors and with $1,000 in initial capital. Id. ¶¶ 28-29. Mr. Eisenberg and the other FCIG investors continued to invest with Titan, to the tune of $2 million in November 2002 alone. See id. ¶¶ 30, 32. It was not until late 2003, when Titan rebuffed his request to close FCIG's account, that Mr. Eisenberg discovered that the Titan/IFX venture was a fraud. Id. ¶ 34.
The Amended Complaint recounts Mr. Eisenberg's efforts to recover FCIG's investments with Titan. During late 2003, he spoke with Mr. Lichtenstein via telephone on at least six different occasions to discuss return of the funds. Id. ¶ 37. Again, on some of these occasions, it was Mr. Lichtenstein who phoned Mr. Eisenberg at his D.C. office, rather than the reverse. Id. During these calls, Mr. Lichtenstein allegedly led Mr. Eisenberg to believe that a refund was forthcoming, at one point essentially stating that a $6 million certified check was "in the mail." See id. ¶ 38. On January 14, 2004, Mr. Lichtenstein allegedly faxed Mr. Eisenberg a deposit slip indicating that $4.3 million had been deposited in a Titan-controlled bank account, suggesting that Titan had funds to repay FCIG. Mr. Eisenberg asserts that he was thus induced to refrain from taking legal action. Id. ¶ 39.
According to the Amended Complaint, this strategy was successful until Mr. Eisenberg discovered that the deposit slip was counterfeit and that Titan had placed no investments whatsoever on FCIG's behalf. Id. ¶¶ 7, 11, 40. In March 2004, Mr. Eisenberg brought suit against Titan and Mr. Martinic in a Wisconsin state court and, in July 2004, obtained a $6.5 million judgment against them. Id. That judgment remains unsatisfied.
In a renewed effort to recover their investments, on September 1, 2005, Mr. Eisenberg and FCIG filed this action against Mr. Lichtenstein and his law firm, seeking to pierce Titan's corporate veil and hold Mr. Lichtenstein liable for fraud, civil conspiracy, civil aiding and abetting, and negligent misrepresentation. Id. ¶ 7.
Defendants' motion to dismiss or, in the alternative, transfer venue, raises three questions: (1) whether this Court has personal jurisdiction over Defendants; (2) whether venue is properly laid in this district; and (3) whether, if venue is proper here, transfer is nonetheless warranted. As explained below, the Court finds that has personal ...