The opinion of the court was delivered by: AMY ST. EVE, District Judge
MEMORANDUM OPINION AND ORDER
Plaintiffs have filed a Third Amended Complaint ("TAC") against
multiple Defendants alleging a fraudulent investment scheme in
connection with the purchase of shares of M.J. Select Global,
Ltd. ("M.J. Select"), a Bahamian mutual fund. Plaintiffs have
sued Defendants Southridge Capital Management, LLC
("Southridge"), Stephen M. Hicks and Daniel S. Pickett
(collectively, the "Southridge Defendants"), and others for
losses resulting from their investments in M.J. Select. The
Southridge Defendants move to dismiss all of the federal and
state claims against them for lack of personal jurisdiction and
failure to state a claim.*fn1 The Court grants their motion
and dismisses Plaintiffs' claims against the Southridge
Defendants with prejudice.
This case is related to Zurich Capital Markets Inc. v.
Coglianese, No. 03 C 7960, (the "ZCM Case"), also pending before the Court. The Court has
addressed similar motions in that case. See Zurich Capital
Markets Inc. v. Coglianese, 332 F. Supp. 2d 1087 (N.D. Ill.
2004) (the "August 2, 2004 Opinion"); Zurich Capital Markets
Inc. v. Coglianese, No. 03 C 7960, 2004 WL 2191596 (N.D. Ill.
Sept. 22, 2004) (the "September 22, 2004 Opinion"); and Zurich
Capital Markets Inc. v. Coglianese, No. 03 C 7960, 2005 WL
1950653 (N.D. Ill. August 12, 2005) (the "August 12, 2005
Opinion"). Although the ZCM case involves different plaintiffs
and a different complaint, because many of the allegations are
similar to the ones in this case and because both cases are based
on investments in the same allegedly fraudulent scheme, the
Court's reasoning in its August 2, 2004, September 22, 2004 and
August 12, 2005 opinions applies equally to many of the issues in
The Plaintiffs in this case all invested in M.J. Select and
lost all or substantial portions of their investments. Plaintiffs
include: John H. Waldock, solely as Trustee of the John H.
Waldock Trust; Mary Jane S. Hill and John E. Rosino, solely as
Trustees of the Andrew W. Waldock Trust, John H. Waldock, Jr.
Trust, Julia Wright Waldock Trust, Cameron Douglas Waldock Trust,
Gary Phillip Liebenthal, II Trust, Samuel Louis Waldock Trust,
Benjamin Nicholas Waldock Trust, Dustin J. Houck Trust, Daniel R.
Houck Trust, Erik J. VanDootingh Trust, Ian A. VanDootingh Trust,
John H. Waldock, III Trust, Andrew W. Waldock, Jr. Trust,
Christopher J. Waldock Trust; 766347 Ontario Ltd., a Canadian
Corporation; the James Boughner Foundation, a Canadian
corporation; Ed Pettegrew, Sr., a citizen of Florida; David
Miller, a citizen of California; John A. Copeland, as Trustee
under a trust agreement dated April 18, 1988; Jack C. Kenning and
Barbara Straka-Kenning, citizens of Ohio; Robert M. Warner, Sr. individually and as beneficiary of Independent Trust Corporation
Trust, for Adam Scott Warner and for Andrew Robert Warner,
Account No. 180 in the name of Robert Warner, Account No. 263 in
the name of Adam S. Warner and Account No. 264 in the name of
Andrew Robert Warner; and George Lukas, a citizen of New Jersey.
Collectively, these individuals are referred to as "Plaintiffs."
(R. 251-1; Third Am. Compl. at ¶¶ 16-45.)
II. The Southridge Defendants
Plaintiffs have sued multiple Defendants, including the
Southridge Defendants. Southridge is a Connecticut corporation
with its principal place of business in Connecticut. Southridge
is or was the organizer and sub-advisor of Dominion Capital Fund
Limited ("Dominion"). (Id. at ¶ 88.)
Steven M. Hicks, a Connecticut resident, is one of the
principals of Southridge and operates and administers Southridge
and Dominion. (Id. at ¶ 89.) Daniel S. Pickett, a Wisconsin
resident, was one of the principals of Southridge, and operated
and administered Southridge and Dominion. (Id. at ¶ 90.)
III. The Coglianese Defendants
Michael Coglianese ("Coglianese"), a citizen of Illinois, is an
Illinois certified public accountant. (Id. at ¶ 62.) Michael
Coglianese, C.P.A., P.C. is an Illinois professional corporation
of which Coglianese is the president, officer, director and sole
shareholder. (Id. at ¶ 63.) Gina Coglianese, a citizen of
Illinois, is Coglianese's wife. (Id. at ¶ 64.)
Commodity Compliance Services, Inc. is an Illinois Corporation
that acted through its individual agents, Coglianese and Gina
Coglianese, and through its corporate agents, CCS, Inc. and GLC
Services, Inc. (Id. at ¶ 65.) CCS, Inc. is an Illinois
corporation that acted through its individual agents, Coglianese and Gina Coglianese, and through
its corporate agents, CCS, Inc. and GLC Services, Inc. (Id. at
GLC Services, Corp. is an Illinois corporation that acted
through its individual agents, Coglianese and Gina Coglianese,
and through its corporate agents, CCS, Inc. and Commodity
Compliance Services, Inc. (Id. at ¶ 67.)
IV. The Alleged Scheme*fn2
Plaintiffs allege that Defendants participated in a complex
scheme to defraud M.J. Select's investors. They contend that
Defendants used false and misleading offering materials to induce
Plaintiffs to invest in M.J. Select. (Id. at ¶ 9.) Plaintiffs
allege that Defendants falsely represented that Plaintiffs'
"investments would be invested in liquid investments and would be
redeemable on fifteen days notice." (Id. at ¶ 10.) Plaintiffs
further allege that M.J. Select transferred Plaintiffs' money to
Global Arbitrage Development Ltd. ("GAD"), an illiquid investment
fund. (Id. at ¶ 152.) GAD, in turn, allegedly used Plaintiffs'
money to invest in Dominion, a fund that purchased illiquid
securities. (Id. at ¶ 165(a).) Plaintiffs allege that
Coglianese "was one of the primary organizers and operators of
this fraudulent scheme" and that he acted as an agent for the
Southridge Defendants when he was defrauding ...