doc. 209 -- pla reply reynolds motion to dismiss doc. 203

UNITED STATES DISTRICT COURTfor the

NORTHERN DISTRICT OF TEXAS

DALLAS DIVISION

9

R. Lance Flores,Vicki Clarkson,

Plaintiffs,

v.

Scott Anthony Koster, et al.Defendants.A 9

— Civil —

¹ 3:11-cv-00726-M -BH

In the Matter of:William Chandler Reynolds, RICO Defendant A

REPLICATION TO DEFENDANT’S PLEA TO THE JURISDICTION —REPLY TO DEFENDANT’S DEMURRER (Fed. R. Civ. P. 12(b)(6)) —

OBJECTION TO MOTION FOR MORE DEFINITE STATEMENT (Fed. R. Civ. P. 12(a)(4)(B))and

MEMORANDUM OF LAW

Plaintiffs mutually file their replies, and objection to RICO Defendant William Chandler

Reynolds’ “Defense One: Lack of Personal Jurisdiction” – “Defenses Two: Failure to State a1

Claim upon Which Relief Can Be Granted” and object to Defendant’s “Motion for More

Definite Statement” (Doc. 203) pursuant to the Court’s Order of September 21, 2012, (Doc.

208).

Wherefore in support thereof, Plaintiffs’ respond and show the following:

The "Defendant" - the "RICO Defendant" - "Reynolds"1

20120924083701 Pla Rplctn' - Reply & Obj to Def. Afmtv Defenses & Mtn fr More Dfnt Stmt - REYNOLDS.wpd

Case 3:11-cv-00726-M-BH Document 209 Filed 09/30/12 Page 1 of 43 PageID 3271

§ I. PROCEDURAL HISTORY

1.1 On April 8, 2011 Plaintiffs filed their Original Complaint, petition for injunctive

relief and other equitable relief in this matter. (Doc. 1, 1-1, 1-2)

1.2 On February 17, 2011, RICO Defendant Reynolds was served a Summons and a copy

of the Original Complaint at 26 Marlwood Lane, Palm Beach Gardens, Florida 33418 by

Michael Rocco, CPS # 1378, a licensed service processor in the State of Florida. (Agency for

Civil Enforcement Corporation D.B.A., A.C.E., Inc., 8130 Glades Road # 352, Boca Raton, FL

33434, (561) 447-7638 — Job Serial Number: 2012003463.

1.3 On February 25, 2012, the Proof of Service for Defendant was filed in the Record of

the Court. Attached thereto is the sworn affidavit of Michael Rocco, given under pain of

perjury. (Doc. 23)

1.4 On March 9, 2012, Reynolds’ appearance and answer were due.

1.5 On March 9, 2012, Reynolds failed to make an appearance and answer the

Complaint.

1.6 On March 19, 2012, Plaintiffs amended their Original Complaint with their First

Amended Complaint (“FAC” Doc. 36) in behalf of the Plaintiffs, and in the national economic

and general public interests. Plaintiffs amended, adding additional RICO Defendants, and

Nominal Defendants and removing others into statuses in delayed discovery. Plaintiffs

petition for compensatory damages including a plea of damages, an amount directly related

to Defendant’s acts in violation of 18 U.S.C. 1962, et seq., (“RICO” violations) exceeding not

less than Two-hundred Twenty Million Dollars (Doc. 36 at 187) subject to mandatory

treble award, notwithstanding other compensatory, exemplary, and injunctive relief, or2

further calculation of damages in prove-up motions or damages affidavit.

Section 1964(c), title 18, provides that “[a]ny person injured in his business or property by reason of a2

violation of section 1962 of this chapter may sue therefor in any appropriate United States district court andshall recover threefold the damages he sustains and the cost of the suit, including reasonable attorney’s fees.”18 U.S.C. § 1964(c).



1.7 Plaintiffs additionally support their claims pled in conformance of Fed. R. Civ.

P. 9(b), with two-hundred seventy-five (275) verified exhibits, or exhibits entered as

manifest fact by judicial notice, to evidence their claims.

1.8 Plaintiffs’ FAC pleads RICO Defendant is jointly and severally liable for damages.

1.9 This matter is brought pursuant to, inter alia, Section 901(a) of the Organized Crime

Control Act of 1970 (Pub.L. 91-452, 84 Stat. 922, enacted October 15, 1970), and codified as

Chapter 96 of Title 18 of the United States Code as 18 U.S.C. § 1961–1968;

1.10 On April 15, Plaintiffs filed Application for Clerk’s Entry of Default Verified

Motion for Default Judgment Against RICO Defendant Reynolds. (Doc. 76)

1.11 On April 16, 2012, the Clerk of the Court entered Reynolds into default. (Doc. 87)

1.12 On August 13, 2012, Hon. Irma Carrillo Ramirez, USMJ, Referring, issued an

order for scheduling proposals due on September 4, 2012 no later than 5:00 PM CST.

1.13 On August 20, 2012, Plaintiffs filed a joint Scheduling Proposal and attached a

proposed Scheduling Order.

1.14 On August 29, 2012, one-hundred seventy-three days into default, Reynolds filed

his untimely answer claiming he wasn’t served a summons. (Doc. 185)

1.15 On September 4, 2012, RICO Defendant William Chandler Reynolds failed to file

a scheduling proposal.

1.16 On September 19, 2012, Defendant re-filed a number of previous filed

affirmative defenses in response to the FAC (“Defense One:” Lack of Personal Jurisdiction –

“Defenses Two:” Failure to State a Claim upon Which Relief Can Be Granted and object to

Defendant’s “Motion for More Definite Statement;” Doc. 203).



§ II. STATEMENT OF FACTS

2.1 William Chandler Reynolds ("Reynolds"), circa 40, at times material to this

Complaint, Reynolds was a Managing Member (one of two; Mark A. Gelazela and William

Reynolds) of Idlyc Holdings Trust LLC, USA (“IDLYC”); 01/07/2010, FL; FEI/EIN #

271651047, 3677 Jasmine Ave, # 10., Los Angeles CA 90034, USA whose last known

address is 26 Marlwood Lane, Palm Beach Gardens, FL 334185. At times material to this

Complaint Reynolds was the registered agent of iBalance LLC (“iBalance”) and managing3

member (one of two; Mark A. Gelazela and William Reynolds), located at 26 Marlwood

Lane, Palm Beach Gardens, FL 33418. The principals of both companies, IDLYC and4

iBalance, Gelazela and Reynolds, have claimed that they operate in the greater Los Angeles

area and Florida.

2.2 On February 25, 2012, the Proof of Service for Defendant was filed in the Record of

the Court. Attached thereto is the sworn affidavits of Michael Rocco, given under pain of

perjury showing the service of five sets of the Complaint and five summons, one of which is

the proof-of-service affidavit for the personal service of William C. Reynolds:

Doc. ¹ Table of Affidavit of Service Filings by the Clerk (Reynolds)

19 AFFIDAVIT of Service for Summons & Original Complaint (iBalance LLC) served on William

Chandler Reynolds on 2/17/2012. (Flores, R) (Entered: 02/25/2012)

20

AFFIDAVIT of Service for Summons & Original Complaint (IDLYC Holdings Trust LLC - IDLYC

New Zealand) served on William C. Reynolds as Co-Resident w/ Mark Gelazela on 2/17/2012.

(Flores, R) (Entered: 02/25/2012)

21

AFFIDAVIT of Service for Summons & Original Complaint (IDLYC Holdings Trust LLC - IDLLYC

USA) served on William C. Reynolds as Co-Resident c/o Mark Gelazela on 2/17/2012. (Flores,

R) (Entered: 02/25/2012)

22

AFFIDAVIT of Service for Summons & Original Complaint (Mark Alan Gelazela) served on

William C. Reynolds as Co-Resident w/ Mark Gelazela on 2/17/2012. (Flores, R) (Entered:

02/25/2012)

23 AFFIDAVIT of Service for Summons & Original Complaint (William Chandler Reynolds) served

iBalance LLC, State of Florida Secretary of State Company Filings (Plaintiffs’ Exhibit 125, Doc. 1-9)3

See, Idlyc Holdings Trust LLC, State of Florida Secretary of State Company Filings (Plaintiffs’ Exhibit 124,4

Doc. 1-9)



https://ecf.txnd.uscourts.gov/cgi-bin/show_doc.pl?add_padlock=0&caseid=204955&de_





on William C. Reynolds as Co-Resident c/o Mark Gelazela on 2/17/2012. (Flores, R) (Entered:

02/25/2012)

2.3 Plaintiffs incorporate by reference Plaintiffs’ Exhibit 275, the testimony of Mark

Alan Gelazela in the Securities and Exchange Commission (SEC v. Wilde, et al. ) deposition5

of May 13, 2010, as though fully set forth, each and every, all and singular, generally and

specifically, the facts and statements made by Mark Alan Gelazela by oath under penalty of

perjury. (Doc. 205) The incorporated testimony of Gelazela and Plaintiffs’ allegations

follow in relevant part:

2.3.1 Doc 29-6 SEC Exhibit 6 Deposition of Mark A Gelazela Thursday May 14,

2010 - PLAINTIFFS' EXHIBIT 275 — Gelazela Deposition SEC v. Wilde, et al. — Doc 29-6

(Depo. page 40-41)

Q (SEC) And does iBalance maintain offices?A (Gelazela) Not physical offices, noQ What is the relationship between iBalance and IDYLC?A Other than their being co-owners, we just – you know, two differentvessels, two different vehicles. To be honest, I was a little bit more on tryingto form IDYLC, because I wanted something that I had formed, as opposed tosomething that Dr. Reynolds had formed. It was just a personal desire. Iwanted a vehicle that I felt like I had, you know, opened from the ground up,per se. I thought it was, you know, more prudent to follow the advise ofhaving an overseas entity based in the overseas business, and Dr. Reynoldswasn't as excited about that idea. So I was kind of the bull leading the hornson that charge. So I was the one who, you know, really pushed for havinganother entity with which to work under. And I explained to Dr. Reynolds,I said, "All the legal advice I've been given is that it's better for business,it's safer from a business standpoint to—and it's also more lucrative, interm of the fact that all of business is moving overseas, to have anoverseas entity to work under." And he agreed.Q Did Dr. Reynolds work with you on the contracts that you've produced

United States Securities and Exchange Commission vs. Francis E. Wilde, et al., 8:11-cv-00315-DOC -AJW,5

U.S. Dist. Ct. CD Cal. 05/13/11 (Doc. 1, the “SEC Complaint”; cited herein as SEC v. Wilde, et al.; all proceedingsthereto related, cumulatively, the “SEC Action.”

The “Mark A. Gelazela Deposition” or “Gelazela Deposition” (SEC v. Wilde, et al. Doc. 29-6); also Plaintiffs’Exhibit 275 (Doc. 205)

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in response to the subpoena? A Work on them. What do you mean, "Work on them"?Q Well, was he working on this funding program that investors weresending in money for? Was he finding investors, talking to you, workingwith-A Yeah. We were full business partners.

2.3.2 Here, Gelazela affirms that Reynolds was a full business partner and jointly

solicited and participated through the iBalance LLC and Idlyc Holdings LLC enterprises

which they used in perpetrating their fraud activities and those of the association-in-

fact enterprises. Thus, the predicate crimes were directly committed by Gelazela and

Reynolds. Though in some instances only one of them participated or was involved in

the direction of the criminal activities, under the RICO statutes, Reynolds is equally

culpable for racketeering, racketeering conspiracy, and each and every predicate crime

committed by Gelazela as well as by each and every RICO actor.6

See, e.g., United States v. Oreto, 37 F.3d 739, 752 (1st Cir. 1994) at 751-53 (finding that Congress intended6

to reach all who participated in the conduct of the enterprise, whether they were “generals or foot soldiers”and holding that the “Reves test” (Reves v. Ernst & Young, 507 U.S. 170 (1993) was satisfied by evidence thatthe defendant collected extortion payments under the direction of leaders of an extortion collectionenterprise); Napoli v. United States, 32 F.3d 31, 36 (2d Cir. 1994) (overwhelming evidence that attorneys,although “of counsel” to the law firm enterprise, were not merely providing peripheral advice, butparticipated in the core activities that constituted the affairs of the firm), cert. denied, 513 U.S. 1110, reh'ggranted, 45 F.3d 680, 683 (2d Cir.) (upholding convictions of law firm investigators who were “lower-rungparticipants” whose racketeering activities were conducted “under the direction of upper management”), cert.denied, 514 U.S. 1084 (1995); United States v. Urban, 404 F.3d 754 (3d Cir. 2005) at 769-70 (stating that “the‘operation or management’ test does not limit RICO liability to upper management because ‘an enterprise isoperated not just by upper management but also by lower-rung participants in the enterprise who are underthe direction of upper management’”; and holding that Reves liability encompassed city employees whoperformed plumbing inspections and related work for the city’s Construction Services Department, thealleged enterprise) (internal quotation marks and citations omitted); United States v. Delgado, 401 F.3d 290(5th Cir. 2005) at 297-98 (same); First Capital Asset Mgmt. v. Satinwood, Inc., 385 F.3d 159, 176 (2d Cir. 2004)(“‘RICO liability is not limited to those with primary responsibility for the enterprise’s affairs’” (citationomitted)); Baisch v. Gallina, 346 F.3d 366, 376 (2d Cir. 2003) (same and adding that “[o]ne is liable underRICO if he or she has ‘discretionary authority in carrying out the instructions of the [enterprises’] principals’”)(citations omitted); DeFalco v. Bernas, 244 F.3d (2d Cir. 2001) at 309 (ruling that RICO liability “is not limitedto those with primary responsibility” or “to those with a formal position in the enterprise,” and finding thatthere was sufficient evidence to satisfy the Reves test where the defendant instructed others to facilitatecommission of racketeering activity) (internal quotation marks and citations omitted); United States v.Posada-Rios, 158 F.3d 832, 857 (5th Cir. 1998) (finding that Reves does not require that the defendant havedecision-making power, only that defendant “take part in” the operation of the enterprise, and holding thatthe defendant was liable under Reves since he bought multi-kilogram amounts of cocaine from the drug

(continued...)



Q How did you decide to – the contracts were signed under IDYLC.A Um-hum.Q How did you decide to use IDLYC rather than iBalance? Was there anythought that went into that? A Because the programs that were set to pay out on the investments weremostly based overseas, so that's why it made sense to use IDYLC.

Doc 29-6 (page 46)Q How would you term these investment opportunities generally? I mean,this is a private placement program? A trading program? How do you refer toit?A I refer to it as a private placement. I avoid the moniker "trade program"because people have different definitions and I'm not a trader. I don't dotrades. And it's very important to make the distinction, because I'm not atrader and I don't have a license. So I very specifically refer to it as a privateplacement program. And in reviewing the e-mails that I was getting together for this process,there was a couple of times where the word "trade" was used liberallyby, specifically, Mr. Christou or Dr. Reynolds. And that's out of ignorance,you know.And I explained very clearly to them that, you know, you have to be carefulwith the terminology you use. Because when you say "trade," you may bethinking one thing and thinking that they think the same thing, but theymight not be. And the word "trade" has a very specific meaning. So be surethat they know what it is they're doing. They not purchasing anyinstruments here, okay?

Doc 29-6 Page 10 (page 75-76)Q And when you say "shutting down," what do you mean by that?A In all of the contracts the investors have – all of our contracts areopen-ended. There's no time frame for performance nowhere in ourpaperwork, nor do we represent to any of the investors that "By this dateyou're going to get paid." There was a couple of e-mails that Reynolds sent out that said, "In 7 to10 days, you know, this will be trading," which is a misnomer, and I toldhim, "You shouldn't be saying that, A. And B, you shouldn't be using the word"trade," because that's not accurate." But that's ignorance on his part. So –

(...continued)6

enterprise on a regular basis); United States v. To, 144 F.3d 737, 747 (11th Cir. 1998) (holding that Reves testwas satisfied by evidence that the defendant planned and carried out a robbery with other members of anAsian crime gang that committed a series of robberies targeting Asian-American business owners andmanagers).

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2.3.3 Gelazela clearly establishes that Reynolds was actively participating in the

frequent, if not daily, routine operations and direction of the formal enterprises and

association-in-fact enterprises of the Syndicate and the elements of the aggregate

criminal enterprise just as in First Capital Asset Mgmt., 385 F.3d 159, 176 where the

defendants’ RICO liability was not limited to their own activity. Reynolds’ civil and

criminal liability include the acts of those who took primary responsibility for the

enterprise’s affairs such as, inter alios, Francis Wilde, Bruce Haglund, Steven Woods, Jon

Divens, James Linder, Scott Koster, John Childs, and Kerim Emre. Reynolds is also jointly

liable for the crimes instituted by the other RICO actors, as was the defendant in Baisch,

346 F.3d 366, 376, where “[o]ne is liable under RICO if he or she has ‘discretionary

authority in carrying out the instructions of the [enterprises’] principals’”)

Doc 29-6 Page 21 (page 155-156)Q You mentioned "we" and "my business partners" in a couple of youranswers?A Yeah, Dr. Reynolds.Q Dr. Reynolds? I mean, what involvement did Dr. Reynolds have in theBMW program?A Him and I are ubiquitous. We're business partners. All of thesediscussions, aside from Frank, we discuss.Q Has he [Reynolds] had any discussions with both you and Frank[Francis Wilde]?A You know, yeah, all three of us have been on the phone together acouple times. But mostly it's Doc and I talk, and then I talk to Frank. Docand Frank don't really care for each other's business practices. They're bothbulls. And when they get on the phone, they tend to have a bit of an egoclash. So at some point, Frank said, "Mark, if you don't mind, I know youguys are business partners, but I'd rather just talk to you." So I said,"That's not a problem"Q Has Dr. Reynolds been involved with any communications with theinvestors?A Yes, but just the same as myself. In fact, Doc sent out most of theinitial drafts of the contracts.Q Directly to investors?A No. Same thing.Q Through—



A Through other people or just through their associates or affiliates.

2.3.4 The foregoing testimony of Mark Gelazela implicates Reynolds in the

substantive part of the fraud solicitation and operations of the Syndicate. Therefore, for

the purposes of a more definite statement it advanced by the Plaintiffs that by Reynolds

extensive evolvement in the activities of the enterprises and associations-in-fact, that

each and every act by any member thereof, but particularly those related to the

criminal acts of Wilde, Haglund, Woods, Gelazela, Koster, Childs, and Emre. Reynolds

participation can be said to be, inter alia, his individual acts or solicitation and the

contract processes of the criminal enterprises.

Extracts from First Amended Complaint

2.4 Extracts from First Amended Complaint (“FAC”) Showing statements, facts and

allegations directed toward and relating to Reynolds:

2.4.1 FAC ¶1.2.12:

“William Chandler Reynolds (“Reynolds”), 39, at times material to thisComplaint, Reynolds was a Managing Member of Idlyc HoldingsTrust LLC, USA (IDLYC); 01/07/2010, FL; FEI/EIN # 271651047, 3677Jasmine Ave, # 10., Los Angeles CA 90034, USA whose last knownaddress is 26 Marlwood Lane, Palm Beach Gardens, FL 334185. At timesmaterial to this Complaint Reynolds was the registered agent ofIBalance LLC, located at 26 Marlwood Lane, Palm Beach Gardens, FL33418.” [emphasis added]

2.4.2 FAC ¶4.1.3:

“Prior to the collaboration of the Gelazela-Reynolds-IDLYC andWoods-BMW Majestic enterprises with the Koster’s Alicorn Enterprise,both Reynolds and Gelazela had created a number of companiesand networks of their own. Koster forming the Milaca Gang withindividuals he had previously associated in other business transactions,collaborated with IDLYC and BMW using his attorney to handle theGang’s or Koster’s ‘issues’. Nevertheless, all the RICO Defendants,including those that later joined the founding membership,



including the identified RICO actors, lied to investors and potentialinvestors through false and misleading telephone conversationsand conferences and e-mail communications, and fraudulent andforged documents throughout the course of their financialtransactions. Most investors lost their entire investment in theschemes.” [emphasis added]

2.4.3 FAC ¶4.1.4:

“The international private placement program incorporated financialtransactional funding with an estimated twenty or more principalsaccording to Koster. The said transactional funding platform and relatedfinancial instruments were created within an association-in-factbusiness enterprises in which Defendants Woods, Linder, Gelazela,Reynolds, Koster, Childs, Emre and others including Melissa Shapiropresented security for investment funds based on a stated written bankguarantee on a Deutsche Bank SBLC instrument and monetization of thatSBLC through HSBC Hong Kong. Koster’s Alicorn Capital ManagementLLC company was used as a funneling tool overseen by Koster to movefunds into the IDLYC/BMW investment platform. The Defendants useda complex network of their companies and other indirect networkresources to accomplish their theft of money, frauds and criminalactivities” [footnote omitted; emphasis and notation added].

7

Reynolds was a full business partner with Mark Gelazela and authored documents for the fraud scheme7

and solicited investors for the Syndicate’s fraud-theft scheme through their enterprises iBalance LLC and IdlycHoldings Trust LLC, and Gelazela’s foreign enterprise, Idlyc Holdings Trust (New Zealand). Reynolds engagedin racketeering and the RICO conspiracy: Reynolds/Gelazela/F. Wilde conspiring within the Syndicate bydirecting, organizing, planning, and execution of racketeering operations:

Q [SEC] Did Dr. Reynolds work with you on the contracts that you've produced in response to thesubpoena?

A [Gelazela] Work on them. What do you mean, "Work on them"?Q Well, was he working on this funding program that investors were sending in money for? Was he

finding investors, talking to you, working with-A Yeah. We were full business partners. (¶2.3.1 at 6, supra.)

Q How would you term these investment opportunities generally? I mean, this is a private placementprogram? A trading program? How do you refer to it?

A I refer to it as a private placement … And in reviewing the e-mails that I was getting together for thisprocess, there was a couple of times where the word "trade" was used liberally by, specifically, Mr. Christou orDr. Reynolds. And that's out of ignorance, you know. (¶2.3.2 at 7, supra.)

Q And when you say "shutting down," what do you mean by that?A In all of the contracts the investors have – all of our contracts are open-ended. There's no time frame

for performance nowhere in our paperwork, nor do we represent to any of the investors that "By this dateyou're going to get paid."

There was a couple of e-mails that Reynolds sent out that said, "In 7 to 10 days, you know, this will be(continued...)



2.4.4 FAC ¶5.9.6:

“Koster and Emre articulated they would place the Plaintiffs’ money inthe PSP and Flores, would in turn, own a proportional interest in theIDLYC PPP platform which was guaranteed in writing by a securedfinancial instrument. Flores asked Koster to provide the due diligencereport to him, and Koster pledged that “my friend Mark”, MarkGelazela, had a successful financial trading company which Koster had53

substantial knowledge, experience and had previously obtainedsuccessful results with Mark Gelazela’s transactions for other clients.”

[FN 53] “Idlyc Holdings Trust LLC (IDLYC); 01/07/2010, FL; FEI/EIN# 271651047: Address: a. Mark A. Gelazela, Title MGRM (RegisteredAgent), b. William Chandler Reynolds, Title MGRM, 26 MarlwoodLane, Palm Breach Gardens, FL 33418 USA; Idlyc Holdings Trust,Head Office, Melody Lane 9, Ruakura Road, 3216 Hamilton, NewZealand” [fr Florida Office of the Secretary of State, emphasis added](See, FN 4 at 4)

2.4.5 FAC ¶5.31.1:

“4/22/2010 – On 4/22/2010 1:10 PM CST, Kerim Emre wrote throughan e-mail over the Internet by use of interstate wire communications infurtherance of a scheme with specific intent to defraud †4, restatingKoster’s telephone conversation that Koster was told by an SECinvestigator that the IDLYC transaction was legitimate, and that he was99

advised that the PSP funding was imminent …”[FN 99] “Koster had mentioned in several telephone conversations

(...continued)7

trading," which is a misnomer, and I told him, "You shouldn't be saying that, A. And B, you shouldn't be usingthe word "trade," because that's not accurate." But that's ignorance on his part. (¶2.3.2 at 7, supra.)

Q You mentioned "we" and "my business partners" in a couple of your answers?A Yeah, Dr. Reynolds.Q Dr. Reynolds? I mean, what involvement did Dr. Reynolds have in the BMW program?A Him and I are ubiquitous. We're business partners. All of these discussions, aside from Frank, we

discuss.Q Has he [Reynolds] had any discussions with both you and Frank [Francis Wilde]?A You know, yeah, all three of us have been on the phone together a couple times … (¶2.3.3 at 8, supra.)

Q Has Dr. Reynolds been involved with any communications with the investors?A Yes, but just the same as myself. In fact, Doc sent out most of the initial drafts of the contracts.Q Directly to investors?A No. Same thing.Q Through—A Through other people or just through their associates or affiliates. (¶2.3.3 at 8, supra.)



with Flores that he was contacted on a number of occasions by aninvestigator from the Securities and Exchange Commission lookinginto IDLYC, each time reporting that there appeared no wrongdoingby Mark Gelazela and William Chandler Reynolds.” ChandlerReynolds.” [emphasis added]

2.4.6 FAC ¶6.1:

“The members and associates of the Wilde Mob, the Milaca Gang,178 179

the Contra Costa Family, and the Atlanta Family, include: the Alicorn180 181

Capital Management LLC (the “Alicorn Enterprise” also “Alicorn”), BereaInc. (the “Berea Enterprise” also “Berea”), BMW Majestic LLC (the “BMWEnterprise” also “BMW”), Bush Law Center LLC (“BLC Enterprise”),Colker-Childs IGM Enterprise (also “IGM”), Law Offices of Jon Divens &Assoc. LLC (also “JDA”), Matrix Holdings LLC (the “Matrix Enterprise” or“Matrix”), Success Bullion LLC (the “Success Bullion Enterprise” also“Success Bullion”), Cook Business Services LLC (“CBS Enterprise” or“CBS”) and the Wiseguy’s Investments LLC (the “Wiseguy’s Enterprise”or “Wiseguy’s” or “WGI” ) or otherwise the organized “crime families”constituted "enterprise[s]," as defined in Title 18, U.S.C. § 1961(4) Theaggregate Syndicate enterprise constituted an ongoing organizationwhose members functioned as a continuing unit for a common purposeof achieving the objectives of the separate enterprises and the Syndicate.The Syndicate or the crime families engaged in, and their activitiesaffected, interstate and foreign commerce. The Syndicate and associatedcrime families is an organized criminal group that operates in theinterstate commerce of the several Federal Districts including theNorthern Eastern District of Texas and also operates in internationalcommerce.”

[FN 178] Francis E. Wilde, Jon Divens, Steven E. Woods, Bruce H.Haglund, Mark A. Gelazela, William Chandler Reynolds, JamesLinder and Maureen O’Flanagan Wilde and other John Does.[emphasis added]

2.4.7 FAC ¶6.4:

“… the Syndicate grew out of Wilde’s independent activities [and]were borne out of the association formed by Francis Wilde and JonDivens who engaged in elaborate thefts and schemes which isreferred to as the Wilde Mob that later engaged the associations ofSteven Woods, James Linder, Mark Gelazela - William ChandlerReynolds and their IDLYC, iBalance and their other enterprises …”[emphasis added]



2.4.8 FAC ¶8.9.4.5

“… the money purportedly invested by the Plaintiffs in theALICORN/IDLYC/BMW PSP Fund was simply being transferred to MarkAlan Gelazela, William Chandler Reynolds, Steven E. Woods, AlicornCapital Management LLC, Idlyc Holdings Trust LLC (USA), Idlyc HoldingsTrust (New Zealand), BMW Majestic LLC …” [emphasis added]

2.4.9 FAC ¶9.1.4

“… Koster, and Emre had apparent authority to act on behalf of Wilde,Linder, Woods, Gelazela, and Reynolds at all relevant times material tothis lawsuit. More specifically, Wilde, Woods, Gelazela, and Reynoldsknowingly permitted Koster, Childs and Emre to hold themselves out ashaving authority or acted with such lack of ordinary care as to clotheKoster and Emre with the indicia of authority.”

2.4.10 FAC ¶9.3.2:

“Upon information and belief Koster, Childs, Emre, Wilde, Woods,Gelazela, Reynolds, ALICORN CAPITAL MANAGEMENT LLC, IDLYCHOLDINGS TRUST LLC (USA), IDLYC HOLDINGS TRUST LLC (NewZealand), and BMW MAJESTIC LLC, were mere tools or business conduitsof one-another, or were operated as a single business enterprise; thus,each should be liable for the liability of the other as alter egos bypiercing the corporate veil.”

First Amended Complaint §VIII Causes of Action

2.5 Plaintiffs incorporate by reference the allegations purported within the First

Amended Complaint Causes of Action “COUNT 1” thru “COUNT 12” (Doc. 36 at 177 thru

201) and re-averred, and re-alleged, for all purposes, with the same force and effect as if

set forth verbatim herein.8

FAC §VIII Causes of Action: Count 1 (Doc. 36 at 183), Count 2 (id. at 188), Count 3 (id. at 190), Count 4 (id.8

at 192), Count 5 (id. at 193), Count 6 (id. at 194), Count 7 (id. at 195), Count 8 (id. at 196), Count 9 (id. at 197),Count 10 (id. at 202), Count 11 (id. at 204), Count 12 (id. at 206).



§ III. REPLICATION TO DEFENDANT’S PLEA TO THE JURISDICTION

3.1 Point 1:

¶ 1. “REYNOLDS was never personally served with a Summons in thismatter. All of the Summons that were delivered to me are attachedhereto as Composite Exhibit ‘A’. It should be noted most of the summonsI received are not even directed to me.” (Doc. 203 ¶1 at 1)

3.1.1 Reynolds advances his fraud upon the Court in second attempt pleading

fraudulence and dupery of the Court in yet another claim he was not served a summons.

The evidence shows that Reynolds was served by Michael Rocco, CPS # 1378, a licensed

service processor in the State of Florida with five separate sets (copies) of the

Complaint and five Summons (¶ 1.2, supra.). The five proof-of-service affidavits are

determinative proof that Reynolds was personally served Summons and Complaint at

his home and the Florida Secretary of State registered business addresses (domiciliary

addresses) for IDLYC Holdings Trust LLC, and iBalance LLC, William C. Reynolds and9 10

Mark Gelazela who, along with Reynolds is a co-owner and co-managing member of

those aforementioned companies located at 26 Marlwood Lane, Palm Beach Gardens,

Florida 33418. (See, Table of Affidavit of Service Filings by the Clerk, supra, ¶ 2.2 at 4.)

3.1.1.1 Plaintiffs note that Reynolds previously hedged his allegation stating:

“To the best of my knowledge and belief I have never receivedservice of process directed to me individually.” (Doc. 185, ¶ 7at 2)

3.1.1.2 RICO Defendant Reynolds now repeats in altered form:

“REYNOLDS was never personally served with a Summons in thismatter. All of the Summons that were delivered to me areattached hereto as Composite Exhibit ‘A’. It should be noted mostof the summons I received are not even directed to me.”

See, Idlyc Holdings Trust LLC Company Filings (Plaintiffs’ Exhibit 124, Doc. 1-9)9

iBalance LLC, Company Filings (Plaintiffs’ Exhibit 125, Doc. 1-9)10



(Doc. 203, ¶1 at 1)

3.1.2 Reynolds’ previous and present claims of insufficient service are unsworn

while the Proof of Service Affidavit, upon its face, is sworn under pain of perjury by a

service processor without interest in the case, and licensed to practice in the State of

Florida, attests to Reynolds’ service of summons. (¶ 1.3, supra.) Thusly, the

determination of fact and truth lies in the weighing of prima facie evidence, other

direct and circumstantial evidence, against Reynolds’ self-serving unsupported claim

and his credibility.

3.1.3 Reynolds does not dispute being served five sets of the complaint and admits

to receiving the other four summons. Because he is a managing member of both

companies being contemporaneously served (both only having two members, Gelazela

and Reynolds) had a duty to read the complaints for iBalance LLC and Idlyc Holdings

Trust LLC, and each time reading his identification as a RICO Defendant, and his relative

position, status and standing pertaining to the other RICO Defendants, Nominal

Defendants, un-named co-conspirators, legal enterprises, association-in-fact

enterprises and the twelve Causes of Action, all inscribed in and throughout the

Complaint, it cannot be said Reynolds did not know he was a defendant in this action.

3.1.4 The fact is, the prima facie evidence of the affidavit of service, proves he was

served. Reynolds was handed the box containing five two-hundred sixteen page copies

of the complaint and served five summons when he arrived at the address of service.

Whether after that service of the summons was made upon him, he enter the

domiciliary of his residence and companies’ headquarters, he lost, misplaced or the dog

ate the particular instrument that was the summons of Reynolds, such loss after service

cannot be held to the determent of the Plaintiffs as reason for failure to answer the

Complaint or respond to subsequent actions of the Court. The dog’s appetite quenched



by the delight of Reynolds’ summons and the remaining summons saved by Fido’s

assuaged hunger, the afore begs us to question, why did Reynolds’ two companies for

which he affirmed service for iBalance LLC and Idlyc Holdings Trust LLC, fail to answer?

In support of Plaintiffs’ contentions they further show:

Argument and Memoranda of Law

3.1.5 Service of Process Under the Federal Rules of Civil Procedure Rule 4(c)

provides that service upon an individual defendant shall effect service: (c)(1) In

General … “A summons must be served with a copy of the complaint. The plaintiff is

responsible for having the summons and complaint served within the time allowed by

Rule 4(m) and must furnish the necessary copies to the person who makes service.”

(c)(2) By Whom. “Any person who is at least 18 years old and not a party may serve

a summons and complaint.” (emphasis added)

3.1.6 Service of Process Under the Federal Rules of Civil Procedure Rule 4(h)

provides that service upon a corporation shall be effected . . . (1) in a judicial district of

the United States in the manner prescribed for individuals by subdivision (e)(1), or by

delivering a copy of the summons and of the complaint to an officer, a managing

or general agent, or to any other agent authorized by appointment or by law to

receive service of process and, if the agent is one authorized by statute to receive

service and the statute so requires, by also mailing a copy to the defendant. Fed. R. Civ.

P. 4(h)(1) (emphasis added).

3.1.7 Accordingly, it must be determined whether a copy of the summons and of

the complaint was, in fact, delivered to one of Defendant’s officers or authorized agents.

Plaintiff bears the burden of establishing a basis for an inference that Defendants

iBalance LLC and Idlyc Holdings Trust LLC, authorized a particular person—William



Chandler Reynolds, in this case—to accept service of process on its behalf. Affinity11

Card, 8 F. Supp. 2d at 376 (citing Scot Lubricants of Pa., Inc. v. YPF, S.A., No. 95 Civ.. 9602,

1996 U.S. Dist. LEXIS 7106, 1996 WL 278082 (S.D.N.Y. May 24, 1996), in turn citing

Santos v. State Farm Fire and Cas. Co., 902 F.2d 1092, 1094 (2d Cir. 1990)).

3.1.8 Affidavits of service establish a prima facie case that service was effected or

attempted in the manner described therein. Old Republic Ins. Co. v. Pac. Fin. Servs. of Am.,

See, footnotes 11

3 and 4, supra; also, Florida Rules of Civil Procedure 48.061 Service on partnerships and limited partnerships: Process against a partnership shall be served on any partner and is as valid as if served on each individualpartner. If a partner is not available during regular business hours to accept service on behalf of thepartnership, he or she may designate an employee to accept such service. After one attempt to serve a partneror designated employee has been made, process may be served on the person in charge of the partnershipduring regular business hours. After service on any partner, plaintiff may proceed to judgment and executionagainst that partner and the assets of the partnership. After service on a designated employee or other personin charge, plaintiff may proceed to judgment and execution against the partnership assets but not against theindividual assets of any partner. Process against a domestic limited partnership may be served on any general partner or on the agent forservice of process specified in its certificate of limited partnership or in its certificate as amended or restatedand is as valid as if served on each individual member of the partnership. After service on a general partner orthe agent, the plaintiff may proceed to judgment and execution against the limited partnership and all of thegeneral partners individually. If a general partner cannot be found in this state and service cannot be made onan agent because of failure to maintain such an agent or because the agent cannot be found or served with theexercise of reasonable diligence, service of process may be effected by service upon the Secretary of State asagent of the limited partnership as provided for in s. 48.181. Service of process may be made under ss. 48.071and 48.21 on limited partnerships. Process against a foreign limited partnership may be served on any general partner found in the state or onany agent for service of process specified in its application for registration and is as valid as if served on eachindividual member of the partnership. If a general partner cannot be found in this state and an agent forservice of process has not been appointed or, if appointed, the agent’s authority has been revoked or the agentcannot be found or served with the exercise of reasonable diligence, service of process may be effected byservice upon the Secretary of State as agent of the limited partnership as provided for in s. 48.181, or processmay be served as provided in ss. 48.071 and 48.21. History. – s. 13, Nov. 23, 1828; RS 1017; GS 1404; RGS2601; CGL 4248; s. 4, ch. 67-254; s. 74, ch. 86-263; s. 3, ch. 87-405; s. 272, ch. 95-147. Note. – Former s. 47.15.

Florida Rules of Civil Procedure 48.071 Service on agents of nonresidents doing business in the state:When any natural person or partnership not residing or having a principal place of business in this state

engages in business in this state, process may be served on the person who is in charge of any business inwhich the defendant is engaged within this state at the time of service, including agents soliciting orders forgoods, wares, merchandise or services. Any process so served is as valid as if served personally on thenonresident person or partnership engaging in business in this state in any action against the person orpartnership arising out of such business. A copy of such process with a notice of service on the person incharge of such business shall be sent forthwith to the nonresident person or partnership by registered orcertified mail, return receipt requested. An affidavit of compliance with this section shall be filed before thereturn day or within such further time as the court may allow. History. – s. 1, ch. 59-280; s. 4, ch. 67-254; s.273, ch. 95-147. Note. – Former s. 47.161.



Inc., 301 F.3d 54, 57 (2d Cir. 2002); Howard Johnson Int’l v. Wang, 7 F. Supp. 2d 336, 339

(S.D.N.Y. 1998). Plaintiff has filed the Affidavit of Michael Rocco, CPS # 1378 (See, ¶ 1.2,

supra.), asserting that the information reflected in the “Proof of Service of Summons” is

true and correct by sworn affidavit under penalty of perjury. (Doc. 23) Accordingly,

Plaintiffs have established a prima facie case that service was effected properly upon

RICO Defendant William Chandler Reynolds. The unsworn unsupported claims

submitted by Defendant, however, deny that service was made, but do not deny

knowledge of the instant action before or after Plaintiffs had filed their motion for

default judgment in their favor against him. To the extent that Defendant had actual

notice or knowledge of the instant action since February 17, 2011, and after Plaintiffs

had already filed for a default judgment, the burden is on Plaintiff to establish that

Defendant was properly served. Cf. Burda Media, Inc. v. Viertel, 417 F.3d 292, 298-99

(2d Cir. 2005) (holding, on a motion to vacate a default judgment based on improper

service of process where a defaulting defendant had actual notice of the original

proceeding but delayed in bringing the motion, that the defaulting defendant bore the

burden of proof to establish that the purported service did not occur). The Plaintiffs

have clearly proven Defendant was properly served in light of the holdings of the vast

majority of courts.

3.1.9 Many courts have held that even affidavits, which when presented, merely

deny service, are insufficient and do not meet muster on such a claim. (N.B., Plaintiffs

noting that Reynolds made no affidavit disputing service, only made an unsupported

claim.) See, e.g., Nolan v. City of Yonkers, 168 F.R.D. 140, 144 (S.D.N.Y. 1995) (“The mere

denial of receipt of service . . . is insufficient to overcome the presumption of validity of

the process server’s affidavit.”) (citing Sassower v. City of White Plains, 1993 U.S. Dist.

LEXIS 13475 at *24, 89 Civ. 1267 (S.D.N.Y. Sept. 24, 1993)); Greater St. Louis Constr.



Laborers Welfare Fund v. Little, 182 F.R.D. 592, 595-596 (D. Mo. 1998) (citing In re

Cappuccilli, 193 B.R. 483 (Bankr. N.D. Ill. 1996)); Trustees of Local Union No. 727 Pension

Fund v. Perfect Parking, Inc., 126 F.R.D. 48, 52 (D. Ill. 1989). In one case, a motion to

vacate was denied because the evidence showed that the defendants’ conduct was

“grossly negligent or even willful,” as the defendants “refused to accept service by

certified mail, ignored personal service, ignored an unambiguous notice of a status

hearing set by the court, claimed that they never received notice of a motion for default

mailed to an address supplied by defendants and at which they had previously received

mail, and failed to appear at a citation to discover assets.” Trustees of Local Union No.

727, 126 F.R.D. at 53-54. Nolan involved a motion to dismiss for failure to properly

serve, see 168 F.R.D. 140, and Little involved only a motion to set aside entry of default;

trial was held on the issue of damages, see 182 F.R.D. 592.

3.1.10 Additionally, in Insurance Company of North America v. S/S Hellenic

Challenger, 88 F.R.D. 545 (S.D.N.Y. 1980), the court held that although the person served

was not properly authorized to receive service and had misplaced and lost the

summons and complaint, service had been properly effected since the person served

was “a representative of defendant ‘well-integrated’ into the organization and quite

familiar with the formalities associated with the receipt of service of summonses and

complaints.” Id. at 548.

3.1.11 In this case, the evidence on record shows that Defendant Reynolds was

clearly aware that an action had been filed against him and Mark Gelazela, his co-

managing member of their three companies, and their three companies iBalance LLC,

Idlyc Holdings Trust LLC, and Idlyc Holdings Trust in New Zealand as nominal



defendants. Moreover, Mr. Reynolds contends that he was personally aware of the12

service of Gelazela and the three entities and that they were served with the summons

and complaint in this action. Moreover, in the face of the uncontradicted affidavit of

service, the evidence conclusively establishes that Reynolds was actually served.

3.1.12 Further, RICO Defendant’s failure to timely answer is not excusable by

inadvertence, ignorance of the applicable rules, or mistake in construing the rules, and

does not constitute excusable neglect, nor intentional negligence or disregard, as in this

instance. Here, Defendant advances a fraudulent claim that Defendant was not served,

when in fact, the proof of service was attested to by oath under pain of perjury.

Defendant’s mere contrivance where Reynolds states, “[t]o the best of my knowledge

and belief I have never received service of process directed to me individually” falls far

short of impeaching the proof of service affidavit reflected in the Record of the Court.

Clearly, the Defendant’s purposeful neglect and indifference fall nowhere near

excusable neglect. T:

Pioneer Inv. Servs Co. v. Brunswick Assocs. Ltd. P’ship, 507 U.S. 380, 392(1993).3 In Pioneer, the Supreme Court held that in order to determinewhether the actions of a party constitute “excusable neglect,” a courtmust take into account all relevant circumstances. Id. at 395. Specifically,the Supreme Court has held that four factors must be considered. Id.These factors include: (1) the danger of prejudice to the non-movingparty or parties; (2) the length of the delay and the potential impact onjudicial proceedings; (3) the reason for the delay, including whether thedelay was within the control of the movant; and (4) whether the movantacted in good faith. Id. The Third Circuit has instructed that “[a]ll factorsmust be considered and balanced; no one factor trumps the others.” Inre Am. Classic Voyages Co., 405 F.3d 127, 133 (3d Cir. 2005) (citingGeorge Harms Constr. Co. v. Chao, 371 F.3d 156, 164 (3d Cir. 2004)).

3.1.13 Federal Rule of Civil Procedure 11 provides in relevant part:

(b) Representations to Court. By presenting to the court (whether bysigning, filing, submitting, or later advocating) a pleading, written motion, or

See, Plaintiffs’ Exhibit 275, Doc. 205 at 3; (SEC v. Wilde, et al. Deposition of Mark Gelazela {Doc. 29-6 at12

3} Depo. p.18-20).



other paper, an attorney or unrepresented party is certifying that to the bestof the person’s knowledge, information, and belief, formed after an inquiryreasonable under the circumstances, –

(1) it is not being presented for any improper purpose, such as to harassor to cause unnecessary delay or needless increase in the cost oflitigation;

(2) the claims, defenses, and other legal contentions therein are warranted by existing law or by a nonfrivolous argument for theextension, modification, or reversal of existing law or the establishmentof new law;

(3) the allegations and other factual contentions have evidentiarysupport or, if specifically so identified, are likely to have evidentiarysupport after a reasonable opportunity for further investigation ordiscovery; and

(4) the denials of factual contentions are warranted on the evidence or, ifspecifically so identified, are reasonably based on a lack of information orbelief.

Replication to Defendant’s Plea to the Jurisdiction Point 1 Conclusion

3.1.14 The evidence filed by the proof-of-service affidavit remains unimpeached by

Defandant. Accordingly, the Court should strike Reynolds’ answer and proceed to the

entry of a Default Judgment as proposed by the Plaintiffs.

3.2 Point 2:

¶ 2. “Notwithstanding the above, Plaintiffs have failed to allege thatREYNOLDS has had any contact whatsoever with either the Plaintiffs orthe State of Texas nor attached any documents that suggest such contact.(Doc. 203 ¶2 at 1)

¶3. “It is well settled law that at the very least minimum contacts withthe jurisdiction are necessary to establish personal jurisdiction.International Shoe Co. v. Washington, 326 U.S. 310 (1945).

¶4. “In Vichi v. Koninklijke Philips Electronics N.V., Civil Action No.2578-Vcp, 2009 WL 4345724 (Del. Ch. Dec. 1, 2009). Vichi made a loanto a Delaware LLC which was a subsidiary of a joint venture betweentwo foreign companies. The LLC went bankrupt and defaulted on the



loan to Vichi. Vichi then sued various parties. Among other claims, Vichibrought breach of fiduciary duty claims against an individual citizen ofSingapore who resided in China and was an officer of the joint ventureand …”

¶5. “The Securities and Exchange Commission filed suit regardingsome of the allegations contained herein, copy attached hereto asExhibit E. The case can also be found athttp://www.sec.gov/litigation/complaints/2011/comp21866.pdf.REYNOLDS was not named a party in that action.”

3.2.1 Because Reynolds has moved the Court pursuant to Fed. R. Civ. P. 12(b)(1),

(presumably to dismiss though it is claimed as a defense) as a preliminary matter

Plaintiffs must show whether this Court has subject matter jurisdiction. See 15 Charles

Alan Wright & Arthur R. Miller, Federal Practice and Procedure § 3827 (2d ed. 1986)

(“A court may not order a transfer under § 1406(a) unless the court has jurisdiction of

the subject matter of the action.”); see also Leroy v. Great Western United Corp., 443

U.S. 173, 180 (1979) (“[N]either personal jurisdiction nor venue is fundamentally

preliminary in the sense that subject-matter jurisdiction is, for both are personal

privileges of the defendant, rather than absolute strictures on the court, and both may

be waived by the parties.”).

3.2.2 A motion under Rule 12(b)(1) may be treated as either a facial attack on the

complaint as in the present case or a factual challenge to the court's subject matter

jurisdiction. Gould Electronics Inc. v. United States, 220 F.3d 169, 176 (3d Cir. 2000). A13

court reviewing a facial attack may consider only the allegations of the complaint and

any documents referenced therein or attached thereto in the light most favorable to the

The RICO Defendant does not appear to challenge to the existence of an underlying fact which would13

confer subject matter jurisdiction upon this Court, such as an insufficient amount of damages in controversyas in a diversity suit. See Carpet Group Intern. v. Oriental Rug Importers Ass'n, Inc., 227 F.3d 62, 69 (3d Cir.2000) (noting that an attack on subject matter jurisdiction "in fact" means defendants dispute existence ofcertain jurisdictional facts alleged by the plaintiffs.) Thus, Plaintiffs need only address the issue of personaljurisdiction here.



plaintiff. Id. Although Plaintiffs bear the burden of persuasion when subject matter

jurisdiction is challenged, the legal standard for surviving a Rule 12(b)(1) motion is a

low one. Kehr Packages , 926 F.2d at 1409. The Court of Appeals has recognized that: “A

claim may be dismissed under Rule 12(b)(1) only if it ‘clearly appears to be immaterial

and made solely for the purpose of obtaining jurisdiction’ or is ‘wholly insubstantial

and frivolous.’” Id. at 178. “Moreover, dismissal for lack of jurisdiction is not

appropriate merely because the legal theory alleged is probably false, but only because

the right claimed is ‘so insubstantial, implausible, foreclosed by prior decisions of this

Court, or otherwise completely devoid of merit as not to involve a federal controversy.’”

Kulick v. Pocono Downs Racing Ass'n, 816 F.2d 895, 899 (3d Cir.1987), quoting Oneida

Indian Nation v. County of Oneida, 414 U.S. 661, 666 (1974).

3.2.3 It is apparent at this stage of litigation, the Court cannot conclude that any of

Plaintiffs’ claims are devoid of merit as to rob this Court of subject matter jurisdiction

nor personal jurisdiction. Plaintiffs assert that this Court has federal question before it,

thus has aquired jurisdiction under 28 U.S.C. § 1331, which provides that “district

courts shall have original jurisdiction of all civil actions arising under the Constitution,

laws, or treaties of the United States.” The federal statute that Plaintiffs invoke in their

complaint is 18 U.S.C. § 1964(c):

Any person injured in his business or property by reason of aviolation of section 1962 of this chapter may sue therefor in anyappropriate United States district court and shall recoverthreefold the damages he sustains and the cost of the suit,including a reasonable attorney's fee, except that no person mayrely upon any conduct that would have been actionable as fraudin the purchase or sale of securities to establish a violation ofsection 1962.

Reply to Defendant’s Claim of Failure to Allege Contact with Forum State

3.2.4 In Defendant Reynolds’ plea to the jurisdiction ¶¶ 2 thru 4, challenges the



Court’s in personam jurisdiction. Reynolds’ disconnected and digressive gainsay

purports that Plaintiffs have failed to allege that RICO Defendant has had any contact

whatsoever with either the Plaintiffs or the State of Texas nor attached any documents

that suggest such contact. Reynolds’ statement to the Court is singularly fallacious

considering his participation in the operations of the Syndicate which are substantively

elucidated in the Plaintiffs’ First Amended Complaint; therein, Plaintiffs show that:

3.2.4.1 Plaintiffs alleged in FAC ¶1.2.12, Reynolds’ position and authority in the14

operation, control, direction, of Idlyc Holding Trust LLC and iBalance LLC. Both

companies are owned, operated and managed by Reynolds and Gelazela, and are

two of the enterprises identified as vehicles used for the perpetration of the fraud-

theft, conspiracy and other racketeering activities of the Syndicate and Wilde Mob.

3.2.4.2 Plaintiffs alleged in FAC ¶4.1.3 Reynolds’ criminal association, and15

associated conduct, collaboration, mechanisms and methods with other RICO actors

through various company and/or corporate enterprises and association-in-fact

enterprises. Plaintiffs note that their allegations are proved by Mark Gelazela’s

deposition to the SEC, he testifies that Reynolds was involved in the

communications with the investors and sent out most of the initial drafts of the

contracts.16

3.2.4.3 Plaintiffs alleged in FAC ¶4.1.4 that the funding platform and related17

financial instruments were created within an association-in-fact business

enterprises in which Defendants Woods, Linder, Gelazela, Reynolds … used a

complex network of their companies and other indirect network resources to

See, FAC ¶1.2.12 citation text at ¶14

2.4.1 at 9, supra.

FAC ¶4.1.3 citation text at ¶15

2.4.2 at 9.

See SEC Deposition extract ¶16

2.3.3 at 8, supra.


2.4.3 at 10.



accomplish their theft of money, frauds and criminal activities.

3.2.4.4 Plaintiffs alleged in FAC ¶5.9.6 that the Reynolds’ and Gelazela’s Idlyc18

companies were the enterprise vehicles which were used by Gelazela, Reynolds, and

Koster to initiate in part, the deceptive and fraudulent financial instruments to

advance their fraudulent inducements and other episodes of their fraud-in-fact.

3.2.4.5 Plaintiffs alleged in FAC ¶6.1 that Reynolds was a member of the19

aggregate Syndicate and equally responsible for each act of each and every RICO

actor engaged in, and their activities that affected, interstate and foreign commerce;

and that the Syndicate and associated crime families is an organized criminal group

that operates in the interstate commerce of the several Federal Districts including

the Northern Eastern District of Texas and also operates in international commerce.

3.2.4.6 Plaintiffs alleged in FAC ¶6.4 that Reynolds was a member of the20

Syndicate which grew out of Wilde's independent activities [and] were borne out of

the association formed by Francis Wilde and Jon Divens who engaged in elaborate

thefts and schemes which is referred to as the Wilde Mob that later engaged the

associations of Steven Woods, James Linder, Mark Gelazela - William Chandler

Reynolds and their IDLYC, iBalance and their other enterprises …

3.2.4.7 Plaintiffs alleged in FAC ¶8.9.4.5 that Reynolds participated in the21

taking of funds from the Plaintiffs; and that … the money purportedly invested by

the Plaintiffs in the ALICORN/IDLYC/BMW PSP Fund was simply being transferred

to Mark Alan Gelazela, William Chandler Reynolds, Steven E. Woods, Alicorn

Capital Management LLC, Idlyc Holdings Trust LLC (USA), Idlyc Holdings Trust (New


2.4.4 at 11.

FAC ¶6.1 citation text at ¶19

2.4.6 at 12.

FAC ¶6.4 citation text at ¶20

2.4.7 at 12.

FAC ¶8.9.4.5 citation text at ¶21

2.4.8 at 13.



Zealand), BMW Majestic LLC …

3.2.4.8 Plaintiffs alleged in FAC ¶9.1.4 that Reynolds, inter alios, afforded Scott

Koster and Kerim Emre authority to act on behalf of Wilde, Linder, Woods, Gelazela,

and himself (Reynolds) at all relevant times material to this lawsuit; specifically,

Wilde, Woods, Gelazela, and Reynolds knowingly permitted Koster, Childs and Emre

to hold themselves out as having authority or acted with such lack of ordinary care

as to clothe Koster and Emre with the indicia of authority [conferring authority to

commit criminal acts in their behalf to benefit of the Syndicate].

3.2.4.9 Plaintiffs alleged in FAC ¶9.3.2 that Reynolds, inter alios, ALICORN

CAPITAL MANAGEMENT LLC, IDLYC HOLDINGS TRUST LLC (USA), IDLYC

HOLDINGS TRUST LLC (New Zealand), and BMW MAJESTIC LLC, were business

conduits of one-another, or were operated as a single business enterprise; thus,

each should be liable for the liability of the other as alter egos …

3.2.4.10 Plaintiffs alleged in FAC §VIII Causes of Action twelve causes of22

action for which Reynolds is one of among all RICO Defendants, charged with those

listed therein.

3.2.5 Reynolds cites International Shoe Co. . and Vichi as authority for his23 24

argument. Defendant’s dependance on these cases as substantiating authority are

misplaced. As to the context which Reynolds relates, those context are immaterial

because he does not relate the cases as they relate under the racketeering statutes

(Chapter 96 of Title 18 of the United States Code as 18 U.S.C. § 1961–1968) and

therefore the context related by Reynolds does not reach to the expansive RICO

(Doc. 36 at 177 thru 201)22

International Shoe Co. v. Washington, 326 U.S. 310 (1945).23

Vichi v. Koninklijke Philips Electronics N.V., Civil Action No. 2578-Vcp, 2009 WL 4345724 (Del. Ch. Dec. 1,24

2009).



jurisdiction of § 1965(b) which confers nationwide jurisdiction over nonresident

defendants.

3.2.6 RICO Defendant Reynolds should have been well aware of the jurisdictional

issues before he filed his answer as the Plaintiffs pled jurisdiction in their First

Amended Complaint at footnote 7 (Doc. 36 at 29) citing this Court’s position in Allstate

Ins. Co. v. Plambeck:

“Most courts interpret § 1965(b) as conferring nationwide

jurisdiction over nonresident defendants if the plaintiff can

establish personal jurisdiction over at least one defendant under §

1965(a). “This Court [Northern District of Texas] in Allstate Ins. Co. v.

Plambeck, 2009 U.S. Dist. LEXIS 10302 (N.D. Tex. Jan. 30, 2009) asserted

personal jurisdiction over a single resident defendant, and held that “In

a RICO action, the ‘ends of justice’ require nationwide service of process

to further the Congressional intent of allowing ‘plaintiffs to bring all

members of a nationwide conspiracy before a court in a single trial.’” The

Allstate Court asserted personal jurisdiction over a single resident

defendant, and held that “In a RICO action, the ‘ends of justice’ require

nationwide service of process to further the Congressional intent of

allowing ‘plaintiffs to bring all members of a nationwide conspiracy

before a court in a single trial.’” (emphasis added)

3.2.7 Here, the Plaintiffs replication to Reynolds’ plea to the Court’s jurisdiction

conforms to the Northern District’s jurisdictional findings in Allstate, and in fact, this25

Court has already acquired personal jurisdiction over the RICO Defendant Francis E.

Wilde (“Wilde”) and Nominal Defendant Maureen O. Wilde by virtue of their proven

domicile. Francis Wilde is the kingpin and inferred “Godfather” of the “Amenpenofer26

Syndicate” (hereinafter the “Syndicate”) involved in domestic and international fraud,

United States District Court for the Northern District of Texas.25

Francis E. Wilde is a resident of Richardson, Texas, a city boarding Dallas, well within the jurisdiction of26

the United States District Court for the Northern District of Texas. Wilde has been the target of a number offederal criminal and civil investigations and suits, as well as other civil suits from around the country forfraud and theft; see, Exs. Vol. 9, Exs. 174, 175.



theft and other crimes and torts acted and solicited extensively through direct, active

and non-passive means by e-mail, or telephonic facsimile, or telephone voice

communication, so described in the Plaintiffs’ First Amended Complaint. Clearly,

Plaintiffs have met the District’s precedent in the Wildes’ Northern District residency

alone.

3.3 Likewise, the Allstate Plaintiffs brought a civil RICO action as well. In their case

brought against chiropractors who allegedly submitted fraudulent bills and attorneys were

allegedly involved in the fraudulent scheme, only one defendant resided in the district,

whereas in the instant cause action, there are two defendants that reside in the district. See,

¶ 3.10 “Service of the Wildes” at 30.

3.4 As stated above, most of the courts as well, have interpreted 18 U.S.C. § 1965(b) to

confer nationwide jurisdiction in a RICO actions over nonresident defendants if the

plaintiff can establish personal jurisdiction over at least one defendant under section

1965(a). Two Dallas Division Courts in the Northern District have also ruled to confer

Nationwide jurisdiction over nonresident defendants in Rolls-Royce Corp. v. Heros, Inc., 576

F.Supp.2d 765, 778-79 (N.D. Tex. 2008) (citing cases); Oblio Telecom, Inc. v. Patel, No.

3-08-CV-0279-L, 2008 WL 4936488 at *4 (N.D. Tex. Nov. 18, 2008) (citing cases).

3.5 Essentially, if the RICO Plaintiffs of the instant case can show that at least one

defendant "resides, is found, has an agent, or transacts his affairs" in the forum, as the

Wildes are, then the Court’s subject matter and personal jurisdiction is proper as to all

other defendants if “the ends of justice require” as they do in the instant case. Due27

process in such cases is satisfied if the nonresident defendant has sufficient minimum

Rolls-Royce, 576 F.Supp.2d at 779; Paolino v. Argyll Equities, L.L.C., 401 F.Supp.2d 712, 718 (W.D. Tex.27

2005).



contacts with the United States. 28

3.6 Reynolds was one of, if not the primary, author of the deceptive contract

instruments, thus he was responsible for the construction of the tools, or otherwise forged

the weapons for the Syndicate’s evil deeds, conjured with malice and scienter. Because

Reynolds intentionally constructed many of the documents used in the fraud, he knew and

planned their use by Gelazela and others in nationwide and international commerce. (See,

Calder v. Jones, 465 U.S. 783, 789-91 (1984) (holding California jurisdiction over

defendants was proper because their intentional, and allegedly tortious, conduct in Florida

was calculated to cause injury to plaintiff in California, and they must have "reasonably

anticipate[d] being haled into court there").

3.7 Plaintiffs further elaborate on their replication to Reynolds’ plea to the Court’s

Jurisdiction:

3.8 Though a differently convened Fifth Circuit panel has criticized the “Busch test” for

exercising personal jurisdiction over a nonresident defendant in a nationwide service of

process case, Busch has never been overruled and has been consistently followed by29 30

district courts within the Fifth Circuit, and without. Plaintiffs elaborate more fully below.31

3.9 In Texas, the majority of the federal courts, including not less than two judges in

cases from the Northern District and Eastern District, have conformed to the majority’s

position. The Second, Seventh, Ninth, and Tenth Circuits have as well, determined that32

See, Eldon A. Busch v. Buchman, Buchman & O'brien, Law Firm, et al., 11 F.3d at 1258; Rolls-Royce at 782.28

See, Bellaire General Hospital v. Blue Cross Blue Shield of Michigan, 97 F.3d 822, 826 (5th Cir. 1996).29

As of Thursday, March 29, 2012 01:27:36 EST, there are no Fifth Circuit or Supreme Court cases30

overruling Busch, according to SHEPARD'S® reported by LexisNexis®. See, Exs. Vol. 9, Ex. 176. Nor have thePlaintiffs found any cases before the 5 Circuit or the Supreme Court scheduled to be heard anytime in theTH

near future that would affect the prevailing precedence of Busch.

Rolls-Royce, 576 F.Supp.2d at 782.31

Rolls-Royce at 779; Oblio at *4; Hawkins v. The Upjohn Co., 890 F.Supp. 601, 605-06 (E.D.Tex. 1994).32



subsection § 1965(b) confers nationwide service of process in RICO cases and the Fourth33

and Eleventh Circuits held that § 1965(d) relevant.34

3.10 Service of the Wildes. The United States Security and Exchange Commission,

filed suit against, and serving Francis E. Wilde and Maureen O’flanagan Wilde serving

process at their respective domiciliary addresses in Richardson, Texas, within the35

Northern District of Texas (the Plaintiffs’ incorporating same and requesting the Court take

judicial notice of same). It is undisputed that, the alleged Syndicate mastermind of the RICO

conspiracy, Francis Wilde, resides in the Northern District of Texas. Thus, the Court may

exercise personal jurisdiction over all the Defendants named in the Complaint under

section 1965(b) if "the ends of justice require."

3.11 The Plaintiffs urge the Court to also follow the majorities’ decision in Busch. The

Plaintiffs would point out that although Busch was criticized by a subsequent panel of the

court in Bellaire Gen. Hosp. v. Blue Cross Blue Shield of Mich., 97 F.3d 822 (5th Cir. 1996), the

Bellaire court nonetheless "dutifully appl[ied]" that prior panel decision, as the court rules

required. The Bellaire panel concluded: "[W]e find that the instant case falls squarely36

within our Busch holding, and hold that the district court properly exercised personal

jurisdiction over Blue Cross based on its contacts with the United States." Id.

3.12 Similarly, Plaintiffs urge the Court to apply Busch and conclude that this Court

has properly exercised personal jurisdiction over the RICO Defendants under 18 U.S.C. §

1962 et seq. based on their sufficient contacts with the State of Texas and Canada, as well as

PT United Can Co. v. Crown Cork & Seal Co., 138 F.3d 65, 71 (2d Cir. 1998); Lisak v. Mercantile Bancorp,33

Inc., 834 F.2d 668, 671 (7th Cir. 1987), cert. denied, 108 S.Ct. 1472 (1988); Butcher's Union Local No. 498 v.SDC Investments, Inc., 788 F.2d 535, 539-39 (9th Cir. 1986); Cory v. Aztec Steel Building, Inc., 468 F.3d 1226,1230 (10th Cir. 2006), cert. denied, 127 S.Ct. 2134 (2007).

ESAB Group, Inc. v. Centricut, Inc., 126 F.3d 617, 626-27 (4th Cir. 1997), cert. denied, 118 S.Ct. 136434

(1998); Republic of Panama v. BCCI Holdings, 119 F.3d 935, 942 (11th Cir. 1997).

See, SEC Proof of Service for Francis E. Wilde and Maureen Wilde. Exs. Vol. 9, Exs. 174, 175.35

Bellaire Gen. Hosp., at 826.36



the well-documented RICO Predicate Crimes committed by the RICO Defendants identified

in the Plaintiffs First Amended Complaint, passim, and in the sworn Records of the Court.

Conclusion of Replication to Defendant’s Plea to the Jurisdiction Point 2

3.13 Plaintiffs have shown that Reynolds was substantively informed of the issues of

the complaint and that RICO statutes confer nationwide jurisdiction over each and every

RICO defendant whether residing or operating in or out of the District because there exists

one RICO Defendant that resides and operates in the District, and further, that because the

RICO Defendants are disbursed across the continental United States, the ends of justice

clearly warrant the venue of this action belongs in the Northern District of Texas.

§ IV. REPLY TO DEFENDANT'S DEMURRER (Fed. R. Civ. P. 12(b)(6))

4.1 Reynolds raises his “DEFENSE TWO: FAILURE TO STATE A CLAIM UPON WHICH

RELIEF CAN BE GRANTED” stating that Plaintiffs failed “State a Claim Upon Which Relief

Can Be Granted pursuant to Rule 12 (b)(e) FRCP, &c.” RICO Defendant Reynolds further

states “Plaintiff [sic] has totally failed to allege any specific or general act or omission of

REYNOLDS which would support any claim against REYNOLDS.”

4.2 Plaintiffs incorporate by reference the facts and allegations in ¶¶ 2.1 thru 2.5 and

¶¶ 3.1.14 thru 3.13, restating, re-averring, and re-alleging each for all purposes, with the

same force and effect as if set forth verbatim thence.37

Given the incorporated facts and allegations above, Plaintiffs argue:

FAC §VIII Causes of Action: Count 1 (Doc. 36 at 183), Count 2 (id. at 188), Count 3 (id. at 190), Count 437

(id. at 192), Count 5 (id. at 193), Count 6 (id. at 194), Count 7 (id. at 195), Count 8 (id. at 196), Count 9 (id. at197), Count 10 (id. at 202), Count 11 (id. at 204), Count 12 (id. at 206).



4.3 While the Plaintiffs’ complaint is attacked by Reynolds Rule 12(b)(6) motion to

dismiss, they need only to have met Rule 9(b) specification of details in their factual

allegations. Plaintiffs have extensively plead the who, what, when, where and how of each

allegation. Their complaint is not merely labels and conclusions, and a formulaic recitation

of the elements of the causes of action, but factual allegations that are more than sufficient

to raise their right to relief above the speculative level and demonstrates “plausible

grounds” if not trial level proof for Plaintiffs’ relief. See, Bell Atlantic Corp. v. Twombly, 127

S. Ct. 1955, 1964-65 (2007); Iqbal v. Hasty, 490 F.3d 143, 155-58 (2d Cir. 2007); Kuhns

Brothers, Inc. v. Fushi Int’l, Inc., 2007 WL 2071622 (D. Conn. July 16, 2007); Hyland v.

Homeservices of America, Inc., 2007 WL 2407233 (W.D. Ky. Aug. 17, 2007). Furthermore,

once Plaintiffs’ claims have been stated more than adequately, their claims may be

supported by showing any set of facts consistent with the allegations in the complaint as

Plaintiffs have done above; e.g., the testimony of Mark Alan Gelazela in the Securities and

Exchange Commission {SEC v. Wilde, et al. } deposition, ¶38

2.3.1 at 5, supra, and elsewhere.

See, Bell Atlantic Corp., 127 S. Ct. at 1969.

4.4 The court in considering a motion to dismiss a complaint for alleged failure to state

a claim, must view the Plaintiffs’ factual allegations in the complaint (FAC) in the light most

favorable to the Plaintiffs, and those allegations must be presumed to be true. Papasan v.

Allain, 478 U.S. 265, 283 (1986). See also Neitzke v. Williams, 490 U.S. 319, 327 (1989)

(“What Rule 12(b)(6) does not countenance are dismissals based on a judge’s disbelief of a

complaint’s factual allegations”); Scheuer v. Rhodes, 416 U.S. 232, 236 (1974), overruled on

other grounds by Davis v. Sherer, 468 U.S. 183, 191 (1984); Harris, 127 F.3d at 1123; Shear

United States Securities and Exchange Commission vs. Francis E. Wilde, et al., 8:11-cv-00315-DOC -AJW,38

U.S. Dist. Ct. CD Cal. 05/13/11 (Document 1, the “SEC Complaint”; cited herein as SEC v. Wilde, et al., allproceedings thereto related, cumulatively, the “SEC Action”), also (Doc. 29-6 09/14/12 4, the “Mark A.Gelazela Deposition” or “Gelazela Deposition”; Plaintiffs’ Exhibit 275).



v. National Rifle Ass’n of America, 606 F.2d 1251, 1253 (D.C. Cir. 1979) . As the Supreme

Court stated in Scheuer, 416 U.S. at 236:

When a federal court reviews the sufficiency of a complaint,before the reception of any evidence either by affidavit oradmissions, its task is necessarily a limited one. The issue isnot whether a plaintiff will ultimately prevail but whether theclaimant is entitled to offer evidence to support the claims.Indeed it may appear on the face of the pleadings that arecovery is very remote and unlikely but that is not the test.Moreover, it is well established that, in passing on a motion todismiss, whether on the ground of lack of jurisdiction over thesubject matter or for failure to state a cause of action, theallegations of the complaint should be construed favorably tothe pleader.

Caribbean Broad. Sys., 148 F.3d at 1086. In truth, the United States Court of Appeals for the

District of Columbia pointedly stated: "The rule that the allegations of the complaint must

be construed liberally and most favorably to the pleader is so well recognized that no

authority need be cited." Sinclair v. Kleindienst, 711 F.2d 291, 293 (D.C. Cir. 1983).

4.5 In addition, it is also well established that the Federal Rules of Civil Procedure do

not require a claimant to set out in extensive detail the facts upon which he bases his claim.

Plaintiffs’ claims surpass the requirements of Rule 9(b) and give the Defendant more than

fair notice of what the Plaintiffs’ claims are and the grounds upon which they rest. See,

Conley v. Gibson, 355 U.S. 41, 47 (1957)(quoting Rule 8(a) (2), FED. R. CIV. P.) Sinclair, 711

F.2d at 293 (“notice pleading’ is sufficient”) . “[U]nder Rule 8(a), [a] complaint need not

state facts or ultimate facts or facts sufficient to constitute a cause of action.” United States

v. Private Sanitation Indus. Ass’n, 793 F. Supp. 1114, 1124 (E.D.N.Y. 1992) (internal

quotations and citation deleted); Seville Indus. Mach. Corp. v. Southmost Mach. Corp., 742

F.2d 786, 790 (3d Cir. 1984).

4.6 All that is required of the Plaintiffs’ is that, notwithstanding Rule 9(b) consideration



for fraud claims, their complaint “provides enough factual information to make clear the

substance of that claim.” Caribbean Broad. Sys., 148 F.3d at 1086. “Plaintiffs . . .need only

‘adduce a set of facts’ supporting their legal claims in order to survive a motion to dismiss”

under Rule 12(b)(6) . Wells v. United States, 851 F.2d 1471, 1473 (D.C. Cir. 1988).

4.7 For more details and facts, the RICO Defendant must rely upon “the liberal

opportunity for discovery and other pretrial procedures established by the Rules to

disclose more precisely the basis of both claim and defense and to define more narrowly

the disputed facts and issues.” Conley, 355 U.S. at 47-48. Seville Indus. Mach. Corp., 742 F.2d

at 790. However, Reynolds showed a complete disinterest in discovery by this display of

indifference to the Court’s Order for the mandatory submissions of scheduling proposals.

Defendant chose not to present a proposal.

4.8 Motions to dismiss pursuant to Rule 12(b)(6) are “viewed with disfavor and [are]

rarely granted.” 5B Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure

§ 1357 at 321 (1990 ed.); Wilkerson v. United States, 839 F. Supp. 440, 442 (E.D. Tex. 1993).

Courts are reluctant to dismiss a case on technical grounds and, consistent with the federal

rules, prefer to decide cases on their merits. See, e.g., Kauffman v. Moss, 420 F. 2d 1270,

1276 (3d Cir.)(citing Foman v. Davis, 371 U.S. 178, 181 (1962)) (relying on Conley, court

stated “[i]t is too late in the day and entirely contrary to the spirit of the Federal Rules of

Civil Procedure for decisions on the merits to be avoided on the basis of . . . mere

technicalities.”); Texas v. Am. Tobacco Co., 14 F. Supp. 2d 956, 961 (E.D. Tex. 1997);

Yeitrakis v. Schering- Plough Corp., 804 F. Supp. 238, 240 (D.N.M. 1992).

4.9 In accordance with these principles, the courts have repeatedly denied defendants’

motions under Rule 12(b)(6) to dismiss RICO actions of substantial import such as the



instant case, as well as Government civil RICO complaints.39

4.10 The application of Fed. R. Civ. P. 9(b), provides:

Fraud or Mistake; Conditions of Mind. In alleging fraud ormistake, a party must state with particularity the circumstancesconstituting fraud or mistake. Malice, intent, knowledge, andother conditions of a person's mind may be alleged generally.

4.11 Rule 9(b) serves two primary interests: “Protecting a defendant from

reputational harm and ‘strike’ suits, and providing defendant sufficient information to

respond to plaintiff’s claims.” Firestone v. Firestone, 76 F.3d 1205, 1211 (D.C. Cir. 1996) .

Generally, Rule 9(b) is satisfied when the complaint “state[s] the ‘time, place and content of

the false misrepresentations, the fact misrepresented and what was retained or given up as

a consequence of the fraud,’” and the identity of the party making the representation.

Firestone, 76 F.3d at 1211 (citations deleted). Tuchman v. DSC Communications Corp., 14

F.3d 1061, 1068 (5th Cir. 1994). Although such allegations are sufficient to satisfy Rule

9(b), the Rule does not require such allegations. “Plaintiffs are free to use alternative

means of injecting precision and some measure of substantiation into their allegations of

fraud.” Seville Indus. Mach. Corp., 742 F.2d at 791. Mayer v. Dell, 1991 WL 21567 (D. D.C.

1991) The Plaintiffs have so done throughout their complaint.

4.12 In essence, the Plaintiffs’ complaint “must provide enough detail about the

underlying facts which illustrate that [the RICO Defendants’] statements were fraudulent to

allow a court to evaluate the claim in a meaningful way.” Arazie v. Mullane, 2 F.3d 1456,

1465 (7th Cir. 1993). “However, the “plaintiff need not allege specific evidentiary details

needed to prove his claim at trial in order to satisfy Rule 9(b) specificity.” Formax, Inc. v.

See, e.g., United States v. Philip Morris Inc., 116 F. Supp. 2d 131, 152-155 (D.D.C. 2000); United States v.39

Private Sanitation Indus. Ass’n, 793 F. Supp. 1114. 1123-49 (E.D.N.Y. 1992); United States v. Dist. Council of NewYork, 778 F. Supp. 738, 746-60 (S.D.N.Y. 1991);United States v. Int’l Bh’d. of Teamsters, 708 F. Supp. 1388,1395-1401 (S.D.N.Y. 1989); United States v. Bonanno Organized Crime Family of La Cosa Nostra, 683 F. Supp.1411, 1422-40 (E.D.N.Y. 1988), aff’d, 879 F. 2d 20 (2d Cir. 1989).



Hostert, 841 F.2d 388, 391 (Fed. Cir. 1988), (citing Seville Indus. Corp., 742 F.2d at 791-92).

Cf. Shahmirzadi v. Smith Barney, Harris Upham & Co., 636 F. Supp. 49, 53 (D.D.C. 1985)

(“Rule 9 should not be treated as requiring allegations of facts in the pleadings”) (citations

deleted). See also Brady v. Games, 128 F. 2d 754, 755 (D.C. Cir. 1942). Rather, “bare bones

averments of fraudulent schemes coupled with plaintiff’s allegations that defendant used

the mails” in furtherance of the scheme to defraud is sufficient to allege mail fraud and wire

fraud predicate acts. Formax, Inc., 841 F.2d at 391.

4.13 Plaintiffs note that although Rule 9(b) explicitly provides that intent and

knowledge “may be averred generally,” they are aware that courts have held that the

complaint must allege “specific facts that support an inference of fraud.” Tuchman, 14 F.3d

at 1068. See also, Greenstone v. Cambex Corp., 975 F.2d 22, 25 (1st Cir. 1992) (The

complaint must allege “specific facts that make it reasonable to believe that defendant

knew that a statement was materially false or misleading.”); DiLeo v. Ernest & Young, 901

F.2d 624, 629 (7th Cir. 1990) (“the complaint still must provide a basis for believing that

plaintiffs could prove scienter”); Powers v. British Vita, P.L.C., 57 F. 3d 176, 184 (2d Cir.

1995) (the plaintiff must “allege a motive for committing fraud and a clear opportunity for

doing so”). Close examination of Plaintiffs’ First Amended Complaint will affirm that they

have been particularly diligent to meet or exceed these requirements.

4.14 Furthermore, Plaintiffs’ inferences to the RICO Defendants’ fraud and the

requisite mental state “can be satisfied by alleging facts that show a defendant’s motive to

commit [the charged] fraud. Where a defendant’s motive is not apparent, a plaintiff may

adequately plead scienter by identifying circumstances that indicate conscious behavior on

the part of the defendant, though the strength of the circumstantial allegations must be

correspondingly greater.” Tuchman, 14 F.3d at 1068. Beck v. Manufacturers Hanover Trust

Co., 820 F.2d 46,50 (2d Cir. 1987), cert. denied, 484 U.S. 1005 (1988), overruled on other



grounds by United States v. Indelicato, 865 F.2d 1370 (2d Cir.) (en banc), cert. denied, 493

U.S. 811 (1989). Of particular mention regarding the Plaintiffs’ pleading requirements

pertaining to Rule 9(b), Plaintiffs aver that the Rule applies only to the RICO predicate

offenses supposing in fraud, and not to the other elements of their RICO claims.40

Conclusion of Reply to Defendant's (Fed. R. Civ. P. 12(b)(6)) Demurrer

4.15 The determining factors for claims upon which Plaintiffs’ relief can be granted,

are found in the numerous claims directed toward Reynolds in the First Amended

Complaint, argued above. Those claims are sufficiently concise and numerous as to give

Plaintiffs a fair measure of just reasoning and determination for their right to relief.

Further, because Reynolds had far more than a casual association with the operations,

direction, solicitation of the client base, interactive communications with other members of

the RICO conspiracy and was active in the construction of the instruments of the criminal

activities, his actions avail them selves to the RICO facility allowing for the joint liability of

all RICO actors involved in the racketeering activities. That statutory and facility supported

well-established authority gives rise to Defendant’s liability for claims made against other

actors engaged in the racketeering conspiracy, racketeering, and related predicate crimes.

The Plaintiffs’ claims upon which relief can be granted are inescapably apparent.

See, e.g., Hecht v. Commerce Clearing House, Inc., 897 F.2d 21, 26 n.4 (2d Cir. 1990); Rose v. Bartle, 87140

F.2d 331, 366 (3d Cir. 1989); United States v. Dist. Council of New York, 778 F. Supp. at 746-47 (collectingcases); Federal Ins. Co. v. Ayers, 741 F. Supp. 1179, 1185-86 (E.D. Pa. 1990); United States v. IBT, 708 F. Supp.



§ V. OBJECTION TO MOTION FOR MORE DEFINITE STATEMENT(Fed. R. Civ. P. 12(a)(4)(B))

5.1 Plaintiffs incorporate by reference the facts and allegations in ¶¶ 2.1 thru 2.5 and

¶¶ 3.1.14 thru 3.13, restating, re-averring, and re-alleging each for all purposes, with the

same force and effect as if set forth verbatim.41

Argument of Plaintiffs’ Objection and Memoranda of Law

5.2 Plaintiffs’ Twelve Causes of Action allegations comply with the liberal pleading

standards of Rule 8(a) and with Rule 9(b) pleading standards for allegations of fraud, and

is specific enough to apprise the Defendant of the substance of the claim being asserted.

5.3 It seems that Defendant moves for a more definite statement of the entirety of the

Plaintiffs’ complaint, complaining, inter alia, that:

• “one would be pressed to find a handful of the numerous numbered paragraphswhich represent a single allegation.” (Doc. 203 at 3)

5.4 Reynolds’ complains about his reading comprehension and vocabulary deficits as

well as the wearing of his dictionary; but no more than his troubling of the Plaintiffs’ two

page narrative relating to the racketeering conspiracy, racketeering activities and crimes of

the organization to which he and the Syndicate members belong. This he claims, is

insufficient, and requires a more definite statement, inferring that a more elaborate

statement be made:

• “Paragraph 3.1 contains a 2 page narrative which includes the ‘Russian Mafia’, the‘Italian Mafia’, and the ‘internet age gangster’. Included in this paragraph is anallegation that actually reads ‘This modern criminal gestalt takes full advantage ofthe ephemeral nature of the Internet and the commercial and social dependency ofthe World Wide Web’.” (Doc. 203 at 3)

• The Complaint reads like a story that requires a nearby dictionary and leaves the

FAC §VIII Causes of Action: Count 1 (Doc. 36 at 183), Count 2 (id. at 188), Count 3 (id. at 190), Count 441

(id. at 192), Count 5 (id. at 193), Count 6 (id. at 194), Count 7 (id. at 195), Count 8 (id. at 196), Count 9 (id. at197), Count 10 (id. at 202), Count 11 (id. at 204), Count 12 (id. at 206).



reader wondering what he just read. It does not however meet the requirements ofa Complaint in that a party cannot reasonably prepare a response to it. (Doc. 203at 4)

5.4.1 In the Defendant’s attempt to muddle through Plaintiffs’ RICO, and other

claims, Reynolds has understandably failed to grasp, given his apparent unfamiliarity

with complex litigation and 18 U.S.C. §1962(a), (d), and (c), that Plaintiffs’ allegations

and claims are more than a pretext for conferring subject matter and personal

jurisdiction upon this Court to hear the instant cause. Reynold would have the Court

believe that the two-hundred and one predicate crimes and the overt criminal acts in

furtherance of the racketeering conspiracy and racketeering allegations against the

Defendants essentially constitute a simple state law fraud claim. Defendant tries to

dramatize these allegations and infer statutes were enacted by Congress to prevent

‘Soprano-like’ interstate mob activity, and not garden variety disputes he affords this

instant action. Far be the Defendant’s suppositions from the truth, as such is not the

case here.

5.4.2 Verily, Reynolds recites an excerpt from the FAC § III BACKGROUNDnarrative. ¶5.3, supra. To what end is its purpose, we are left in the dark exceptfor the reference of “contains a 2 page narrative” which, because its infusion intothe Defendant’s MOTION FOR MORE DEFINITE STATEMENT, Plaintiffs mustinfer that Reynolds desires further elucidation.

5.4.2.1 Plaintiffs believe that their two page narrative is sufficient to describe the

background of the case relating to the construct of the RICO Defendants’

organization infrastructure and nature. Such, the Plaintiffs believe, is enough for the

background statement as the architecture and machinery of the association-in-fact

enterprises and operations are more fully described as the activities are revealed

later in the complaint. It is true that other racketeering actions give more tongue to

describing the complex background of the criminal activities in a case. For instance,



following Plaintiffs’ conferences with the Federal Attorney’s office of E.D. New York,

Brooklyn Office, concerning organized crime, they were forwarded copies of the

incitements of a case they were prosecuting shortly after they were unsealed.

Plaintiffs note, that indeed, the background “stories” of the related cases were as42

colorful as the Plaintiffs and ran about five pages in each instance. Nevertheless, the

Plaintiffs’ assert their claim of sufficiency.

5.4.3

The Supreme Court has recognized that RICO is to be interpretedbroadly:

This less restrictive reading is amply supported by our prior cases andthe general principles surrounding this statute. RICO is to be readbroadly. This is the lesson not only of Congress' self-consciouslyexpansive language and overall approach, but also of its expressadmonition that RICO is to “be liberally construed to effectuate itsremedial purposes,” Pub.L. 91-452, § 904(a), 84 Stat. 947. The statute's“remedial purposes” are nowhere more evident than in the provision ofa private action for those injured by racketeering activity. Sedima,S.P.R.L. v. Imrex Co., Inc. , 473 U.S. 479, 497-98 (1985); see also Annulli v.Panikkar, 200 F.3d 189, 195 (3d Cir.1999).

43

5.4.4 A complaint need not include every conceivable detail concerning the events

alleged so long as the defendant can frame a responsive pleading. "While defendant

may not have been able to ascertain all the details [though they are plentiful here] of

[P]laintiffs' case from the complaint, that is not the function of pleadings in the federal

courts." Boxall v. Sequoia Union High School District, 464 F. Supp. 1104, 1113-1114

(N.D. Cal. 1979). "A Rule 12(e) motion is not a substitute for discovery; such a motion

attacks unintelligibility in a pleading, not mere lack of detail." Wood v. Apodaea, 375 4

F. Supp. 2d 942, 949 (N.D. Cal. 2005). "If the detail sought by a motion for more

E.g., United States -against- Vincent Dragonetti, 1:11-cr-00003-DLI-JO “SEALED” (Doc. 1, 1/5/11).42

In Forbes v. Eagleson, 228 F.3d 471, 484 (3d Cir. 2000), the Court of Appeals recognized that Rotella v.43

Wood , 528 U.S. 549 (2000) rejected the “injury and pattern discovery” rule applied in Annulli.



definite statement is obtainable through discovery, the motion should be denied." Beery

v. Hitachi Home Electronics (America), Inc., 157 F.R.D. 477, 480 (C.D. Cal. 1993)

(citation omitted). "[A] motion for a more definite statement should not be granted

unless the defendant literally cannot frame a responsive pleading." Bureerong v.

Uvcnvas, 922 F. Supp. 1450,1461 (C.D. Cal. 1996).

Conclusion of Objection to Motion for More Definite Statement(Fed. R. Civ. P. 12(a)(4)(B))

5.4.5 Defendant's motion for more definite statement should be denied because

Plaintiffs Causes of Action all contain a short and plain statement and incorporate

relevant facts from the substantially detailed complaint from which Defendant can

formulate a response.

§ VI. CONCLUSION

6.1 It is clear from the intermediate conclusion of each issue and inferred motions by

the RICO Defendant, that the facts, record evidence, argument and authority clearly and

convincingly establishes that RICO Defendant’s claims are without merit and are wholly

incredible. There is no escaping that Reynolds was served the Summons and Complaint,

that Plaintiffs’ complaint meets or exceeds the heightened pleading standards of both

Fed. R. Civ. P. 9(b) and 18 U.S.C. §1961 et seq.

6.2 Plaintiffs aver that RICO Defendant’s motion was supported by false statements in a

deliberate and wanton attempt to obstruct the proceedings by making false and frivolous

claims.



Reynolds, as all of the RICO Defendants, should have taken heed andbeen forewarned by the words and lament of the villainousLord Marmion, who murmured to himself as his schemes unraveled,in Sir Walter Scott's poem … words the Defendants ought soon repeat.

§ VII. PRAYER

For the foregoing reasons, the Court should strike Reynolds’ answer and proceed to the

entry of a Default Judgment as proposed. Plaintiffs pray the Court DENY RICO Defendant’s

plea to the jurisdiction and implied motions labeled as defenses, and for any additional

relief that the Court may deem just and proper.

Respectfully Submitted on Sunday, September 30, 2012.

s/

R. LANCE FLORESLead Attorney

3314 Pleasant DriveDallas, Texas 75227 USATel. (Dallas): +1 (214) 272-0349Tel. (Fax): +1 (210) 519-6528ECF & Case Management E-mail:[email protected]

Attorney for the Plaintiff

s/

VICKI CLARKSON

2416 - 36 Street SWCalgary, AB T3E 2Z5

Tel. (Calgary): +1 403-244-9980Tel. (Fax:) +1 (403) 246-3331ECF & Case Management E-mail:[email protected]

Attorney for the Plaintiff



CERTIFICATE OF SERVICE

On Sunday, September 30, 2012, I electronically submitted the foregoing document with

the Clerk of Court for the U.S. District Court, Northern District of Texas, using the

electronic case filing system (CM/ECF) of the Court. I hereby certify that I have served all

counsel and/or pro se parties of record electronically or by another manner authorized by

Federal rule of Civil Procedure 5 (b)(2).

For the Plaintiffs:

s/

R. LANCE FLORES



doc. 209 -- pla reply reynolds motion to dismiss doc. 203

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