http://www.law360.com/articles/531148/...ook-for-racketeering-charges
Law360, New York (April 23, 2014, 9:40 PM ET) -- The former CEO of ValCom Inc. on Wednesday won a New Jersey federal judge's dismissal of racketeering charges in a suit, brought by the very entertainment company he founded, that accuses him and other top brass of scheming to defraud Valcom out of millions of shares.
U.S. District Court Judge William H. Walls said in his opinion that neither Vincent Vellardita nor his co-defendants, including his wife, Teresa Vellardita, could be held liable under the Racketeer Influenced and Corrupt Organizations Act, a federal statute used to fight organized crime.
“This is not a RICO enterprise,” Judge Walls wrote, dismissing the claim without prejudice. “Plaintiff has failed to ‘suggest plausibly the existence of an enterprise structure’ characterized by ‘some mechanism for controlling and directing the affairs of the group on an ongoing, rather than ad hoc, basis.”
The court, however, kept alive a number of other charges against the defendants, including common-law fraud claims facing Vellardita and his wife.
Vellardita resigned from ValCom in 2012 amid a power struggle between himself and members of the company's board. The Boonton, N.J.-based company, which owns the faith-based MyFamilyTV network along with film, television and music libraries, later sued him and others in New Jersey federal court over a litany of alleged misdeeds.
Those include Vellardita's purported self-dealing, use of ValCom funds to pay personal legal bills, and usurping of corporate opportunities. ValCom also accuses the former CEO of entering into a scheme with other defendants that would enable them to take over the company's board in violation of law in Delaware, where ValCom is incorporated.
Former ValCom employee Ingrid Clavijo and ex-Director Frank O’Donnell were among others named in the complaint.
Wednesday's ruling follows a motion to dismiss filed in September, in which the defendants blasted ValCom’s attempt to use the RICO statute against them.
“The operators seek a scapegoat for the company’s financial condition, and to hamper the moving defendants’ ability to earn a living through the stigma of being a named defendants in a RICO lawsuit,” the defendants wrote at the time.
Judge Walls also lopped off a few other charges against the defendants, including negligence claims and a charge that Clavijo breached her "duty of loyalty" to the company. “Defendants rightly point out that there is no such duty,” the ruling said.
But most of ValCom's other charges survived the defendants’ challenge, including common-law fraud claims against Clavijo and O’Donnell, and charges that O’Donnell, Vellardita and his wife breached their fiduciary duty to ValCom.
Judge Walls noted that ValCom presented enough evidence for its charges of civil conspiracy to defraud the company and divert its assets continue, and that ValCom adequately pled its case that Vellardita and his wife tortiously interfered with ValCom’s business prospects.
An attorney for ValCom and the company's current CEO, Anthony Barrett, did not immediately return messages seeking comment Wednesday.
Vellardita's attorney John Balestriere of Balestriere Fariello & Abrams LLP said in an email to Law360, “Vincent Vellardita and his colleagues are pleased that the court ruled that there is no RICO claim against them.”
“Mr. Vellardita and his colleagues look forward not only to showing that all of ValCom's Managers' claims have no merit, but also prosecuting their own claims against the managers for malicious prosecution and other misconduct,” Balestriere added.
ValCom is represented by Neal H. Flaster of Neal H. Flaster LLC.
The defendants are represented by Jacob Aronauer, John G. Balestriere and Roberto Cuan of Balestriere Fariello & Abrams LLP.
The case is ValCom Inc. v. Vellardita et al., case number 2:13-cv-03025, in the U.S. District Court for the District of New Jersey. |
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