United States District Court, S.D. Florida, Miami Division
ORDER DENYING DEFENDANTS' MOTION TO
FEDERIC A. MORENO UNITED STA TES DISTRICT JUDGE.
United States Securities and Exchange Commission filed this
action alleging that Fort Marketing Group, LLC and Pedro Fort
Berbel violated anti-fraud and registration provisions of the
federal securities laws. Defendants subsequently moved to
dismiss the Complaint for lack of subject matter jurisdiction
and failure to state a valid claim for relief. For the
reasons discussed below, Defendants' motion to dismiss is
Statement of Facts
Marketing Group is a defunct Florida limited liability
company that maintained its principal place of business in
Sunrise, Florida. Pedro Fort Berbel-a citizen of Spain-was
the sole member of Fort Marketing Group. He maintained
residences in Florida and Spain during the relevant time
Complaint states that Fort Marketing Group and Berbel
operated at least three separate online businesses-MLM
Shop, The Business Shop, and Fort Ad
Pays-purporting to provide legitimate
advertising services. Defendants used these businesses and
their corresponding websites to sell certain investment
products collectively referred to as "Ad Packs."
Defendants solicited investors to purchase Ad Packs through
promotional materials and videos on the businesses'
websites, and touted the businesses as successful online
advertising and marketing companies.
marketed the Ad Packs as profit-sharing investment vehicles
designed to "share real advertising profits [with]
everyday folk." To purchase an Ad Pack, an individual
had to first become a member and pay the membership fee. The
website materials stated that purchasers of each of these Ad
Packs would share in the purported advertising
businesses' profits and would begin accruing promised
returns almost immediately.
and promotional videos for two of the businesses-The Business
Shop and MLM Shop-referred to Ad Packs as "guaranteed
plans" and listed them at various prices from $100 to
$50, 000. For example, The Business Shop and MLM Shop offered
"Bronze" plans for $1, 000 and "Gold"
plans for $4, 000. Defendants promised purchasers of either
plan a 25% return in 30 days. The websites instructed Ad Pack
purchasers to email firstname.lastname@example.org for wire
instructions, which directed purchasers to wire funds to a
specific bank account held in the name of The Business Shop
LLC. The Business Shop LLC had only one managing member:
third business-Fort Ad Pays-offered a similar Ad Packs for as
little as $1 with stated returns as high as 120%. Unlike the
Ad Packs sold by The Business Shop and MLM Shop, the Ad Packs
on Fort Ad Pays' website lacked a specified maturity
date; rather, Fort Ad Pays claimed that its Ad Pack
maturities depended on the business's daily profits.
Pays claimed to have "a traditional business model"
and stated that Ad Pack purchasers "get paid from
profits and not from money that will be received from future
payments." The website materials noted that the company
was "set up to share real advertising profits [with]
everyday folk and businesses" and they informed
purchasers that greater daily profits for the company
resulted in a larger proportional share for investors.
According to the website, "[t]h more sales for ad
services the more everyone can receive." Finally, the
website provided tutorial videos showing investors how to
purchase Ad Packs using bank transfers and third-party
Commission alleges that between July 2014 and February 2016,
Defendants raised approximately $38 million from Ad Pack
purchasers located in the United States and elsewhere. Each
of the almost 12, 000 individual deposits and wire transfers
received during that period routed funds into one of seven
bank accounts held at five domestic banks. All seven
bank accounts were held in the name of, or controlled by,
Fort Marketing Group or Berbel.
to Defendants' representations, not one of the three
businesses had a viable source of revenue. It received income
solely from investor membership fees and the sale of Ad
Packs. Defendants diverted approximately $4.3 million of
these investor funds into personal bank accounts held in the
name of Berbel and members of his family. Berbel used at
least $1.25 million to purchase his Florida home and $22, 000
more to pay taxes on that property. Defendants also used
investor funds for the following expenses: (i) $737, 000 for
private jet charters; (ii) $401, 000 for jewelry (recorded as
a "business investment"); (iii) $78, 000 for
automobile expenses; (iv) $10, 000 for personal care and
cosmetic surgery; (v) $300, 000 for residential construction
in Colombia; and (vi) $177, 000 for online gambling. Berbel
liquidated all seven bank accounts associated with the
allegedly fraudulent advertising businesses by March 2016 and
sold his Florida home by March 2017.
Motion to Dismiss Standard
survive a motion to dismiss, plaintiffs must do more than
merely state legal conclusions, " instead plaintiffs
must "allege some specific factual basis for those
conclusions or face dismissal of their claims."
Jackson v. BellSouth Telecomm., 372 F.3d 1250, 1263
(11th Cir. 2004). When ruling on a motion to dismiss, a court
must view the complaint in the light most favorable to the
plaintiff and accept the plaintiffs well-pleaded facts as
true. See St. Joseph's Hosp., Inc. v. Hosp. Corp. of
Am., 795 F.2d 948, 953 (11th Cir. 1986). This tenet,
however, does not apply to legal conclusions. See
Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949 (2009).
Moreover, "[w]hile legal conclusions can provide the
framework of a complaint, they must be supported by factual
allegations." Id. at 1950. Those
"[f]actual allegations must be enough to raise a right
to relief above the speculative level on the assumption that
all of the complaint's allegations are true."
Bell Art. Corp. v. Twombly, 550 U.S. 544, 545
(2007). In short, the complaint must not merely allege
misconduct, but must demonstrate that the pleader is entitled
to relief. See Iqbal, 129S.Q. at 1950.
Federal Rule of Civil Procedure 9(b), a plaintiff must plead
the circumstances constituting fraud with particularity. In
considering a motion to dismiss for failure to plead fraud
with particularity, however, courts must also keep in mind
the notice pleading standard set forth in Rule 8(a). Courts
"must be careful to harmonize the directives of
Fed.R.Civ.P. 9(b) with the broader policy of notice
pleading." SEC v. Physicians Guardian Unit Inv.
Trust ex rel. Physicians Guardian, Inc., 72 F.Supp.2d
1342, 1352 (M.D. Fla. 1999) (citing Friedlander v.
Nims,755 F.2d 810, 810 (11th Cir. 1985)). According to
the Eleventh Circuit, "Rule 9(b) is satisfied if the
complaint sets forth '(1) precisely what statements were
made in what documents or oral representations or what
omissions were made, and (2) the time and place of each such
statement and the person responsible for making (or, in the
case of omissions, not making) same, and (3) the content of
such statements and the manner in which they misled the
plaintiff, and (4) what the defendants obtained as a
consequence of the fraud."' Ziemba v. Cascade
Int'l, Inc.,256 F.3d 1194, 1202 ...