MIAMI – The U.S. District Court for the Southern District of Florida recently dismissed a securities fraud suit filed by an investment fund against two men who were accused of tricking the fund into making a $3 million investment.
In an Oct. 10 filing, U.S. District Judge Beth Bloom said Triton II LLC didn’t properly state its claims against the two men, John Randazzo and Caprice Turner.
Triton II claimed the two men tricked it into investing nearly $3 million in Comprehensive Virtual Healthcare Inc. Florida (CVH Florida) and allegedly misrepresented certain facts about the health care company. Triton sued for multiple counts, including securities fraud that allegedly violated the Securities Exchange Act of 1934, fraudulent misrepresentation, conversion, civil conspiracy, breach of fiduciary duty, aiding and abetting breach of fiduciary duty, unjust enrichment and negligent misrepresentation.
Randazzo and Turner claimed Triton II lacked standing, and the court agreed, dismissing all of the claims without prejudice, except conversion, which was dismissed with prejudice. It also denied Triton’s motion to lift stay considering the motion to dismiss was no longer pending.
For securities fraud, the court said Triton didn’t provide sufficient details like the time and place Randazzo made certain statements, how those statements specifically tricked Triton, and why those statements were misleading, as well as what Randazzo gained from it. While Triton said it wouldn’t have invested in CVH Florida and CVH Holdings if it had known the companies’ business address was Randazzo’s home, it still doesn’t prove Randazzo committed reckless actions.
The court had a similar response when it dismissed the fraudulent misrepresentation claim as well. “Triton alleges only in conclusory fashion that Randazzo intended for his statements of material fact and omissions of material fact to induce plaintiff to act by making the investment,’” the court pointed out. This alone isn’t enough to prove fraudulent misrepresentation. This was also the reason the negligent misrepresentation claim couldn’t hold up in court either.
The court agreed Triton had lack of standing for the remaining claims.
Regarding the conversion count, Triton never said Randazzo and Turner had to keep the money intact for Triton’s benefit,. While Triton did transfer nearly $3 million to CVH Florida, this isn’t enough to prove conversion. The court also pointed out since Triton didn’t properly state a claim for fraudulent misrepresentation, the argument for civil conspiracy failed as well.
For the breach and aiding and abetting breach of fiduciary duty claims, the court determined those were inadequate “because they do not evidence anything more than an arms-length transaction.” While Triton trusted Randazzo because of previous business with each other, this doesn’t prove that Randazzo had a fiduciary responsibility when it came to the business for CVH Florida. The court also there weren’t any claims that the information about Randazzo’s dealings with CVH Florida were concealed from Triton. Since the breach of fiduciary duty failed, the claim for aiding and abetting also fell short.
The unjust enrichment claim didn’t hold up for two reasons, the court ruled. While Triton said the defendants misused the funds for personal reasons, Triton never said the investment was one that was awarded to the defendants as individuals. Secondly, the court had already decided Triton lacked standing for post-investment claims.