One World, LLC v. Onoufriadis

ONE WORLD, LLC & GABRIEL CHALEPLIS, Plaintiffs, v. NIKOLAOS ONOUFRIADIS, et al., Defendants.

No. 20 Civ. 5802 (CM)

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK

January 19, 2021

MEMORANDUM ORDER AND DECISION

McMahon, C.J.:

Plaintiffs, One World, LLC, and Gabriel Chaleplis, the sole member of One World, bring this action against Defendants Nikolaos Onoufriadis, James M. Rodgers, Esq., Michael Karloutsos, and Canncore, Inc. Plaintiffs allege that Defendants induced Chaleplis to invest €10,750,000 (approximately $12,000,000) of One World's funds in Greek companies controlled by associates of Defendants, who then rerouted the funds back into themselves in the United States and used them for personal purposes. The First Amended Complaint, filed on October 16, 2020 (Dkt. No. 33, "Compl."), includes thirteen counts brought under state common law and two counts arising under the Racketeering and Corrupt Organizations Act (RICO), 18 U.S.C. §§ 1961-1968.

Defendant Karloutsos now moves to dismiss all claims brought against him. Defendants Canncore and Onoufriadis move to dismiss only the two counts alleging violations of RICO. And Plaintiffs, in opposing both motions, seek leave to amend their complaint a second time.

For the reasons discussed below, the motions to dismiss Plaintiffs' RICO claims are GRANTED, and the court sua sponte dismisses the RICO claim against non-moving defendant James Rodgers as well. The motion for leave to replead those claims is denied as futile.

The RICO claims are the only basis for invoking federal jurisdiction. There does not exist complete diversity among the parties - a fact that was originally misrepresented to the court, and was not corrected until last week, three months after Plaintiffs filed their amended complaint and while the fully-briefed motions to dismiss were sub judice. A New York federal court, located in a jurisdiction where no party resides or does business and which has no particular interest in this controversy, is disinclined to exercise supplemental jurisdiction over the thirteen common law counts, especially as this case is far from ready for dispositive motions or trial. I thus dismiss them as against all defendants without prejudice. Karloutsos's motion to dismiss the state law claims on substantive grounds is denied as moot in light of the Court's decision not to exercise supplemental jurisdiction.

As further amendment of Plaintiffs' claims in this action cannot cure the jurisdictional defect, Plaintiffs' motion for leave to amend their common law claims is DENIED, albeit without prejudice to whatever changes Plaintiffs may wish to make to their pleading in a court of competent jurisdiction.

BACKGROUND

A. Parties

Plaintiffs. Gabriel Chaleplis is a wealthy Greek national and a citizen of the United Kingdom residing in London. (Compl. ¶ 5; Dkt. No. 37 at 1.) Chaleplis formed One World, a limited liability company, to serve as his investment vehicle in May 2017. (Id. ¶ 33.) One World is registered in Wilmington, Delaware. (Id. ¶ 5.) At the time this lawsuit was filed, Chaleplis was the sole member of One World.

Defendants. As the court learned only last week, Nikolaos Onoufriadis is a citizen of Greece and a lawful permanent resident of the United States, who lives and works in Massachusetts. He is the former Manager of One World and former 20% member of One World. (Id. ¶ 6; Dkt. No. 67 at 1.)

James Rodgers is a licensed attorney and a resident of the State of Pennsylvania. Rodgers is the former Secretary and Chief Legal Officer of One World. (Id. ¶ 7.)

Michael Karloutsos resides in Virginia. He never held any formal position at One World. Karloutsos, who ran a high-end restaurant in Philadelphia called Water Works, was the Deputy Chief of Protocol at the State Department from July 23, 2017 until December 17, 2017, making him responsible for planning foreign trips for the President and Vice President. According to press reports, he filled a similar role for a patriarch of the Greek Orthodox Church.¹ (Id. ¶¶ 8, 29, 62.)

Canncore, Inc. is incorporated in the State of Massachusetts, where it also has its principal place of business. (Id. ¶ 9.) According to Canncore's website, it has additional offices in New York and Greece. (Id. ¶ 163.) Onoufriadis formed Canncore on October 14, 2019. (Id. ¶ 166.)

B. Formation of One World

In May 2017, Chaleplis sought to form a company to serve as a vehicle through which he could invest in American businesses. (Id. ¶ 33.) He consulted with Nikolaos Onoufriadis, a businessman with whom Chaleplis shared a mutual friend in Greece. (Id. ¶ 11.)

Through his websites and in a series of conversations that took place "before May 27, 2017, before September 30, 2017 and after both of those dates," Onoufriadis offered Chaleplis consulting services through his company Power 2U. Onoufriadis represented that he was experienced ininternational business development and global government relations, and that he was familiar with various American industries and business sectors in which Chaleplis was interested in investing. (Id. ¶¶ 12-21.) In particular, Onoufriadis indicated that he had a business relationship with a Greek billionaire whose company, Intrasoft International, held business interests in the same industries in which Chaleplis wished to invest in the United States. (Id. ¶ 23.) The complaint alleges that Chaleplis relied on these representations when deciding to enlist Onoufriadis for the management of his bourgeoning company. (Id. ¶ 22-23.)

Onoufriadis recommended that Chaleplis bring on Michael Karloutsos, Onoufriadis's close friend, for his purported expertise in American and Greek business, public relations, governmental relations, and lobbying. (Id. ¶¶ 25-26.) Onoufriadis, Karloutsos, and Chaleplis then met in Greece to discuss what their respective roles in the company would be. (Id. ¶ 27.) In the communications that followed, Karloutsos recommended that Chaleplis engage James Rodgers, his friend and a lawyer, to handle the necessary legal work. (Id. ¶¶ 28, 31.)

Chaleplis formed One World on or around May 24, 2017. (Id. ¶ 33.) Four months later, on September 28, the four men met in Manhattan to discuss investment strategy and to negotiate contract terms and other matters concerning the roles that Onoufriadis, Rodgers, and Karloutsos were to play in this new business venture. (Id. ¶¶ 34-35.)

During that meeting, Onoufriadis, Karloutsos, and Rodgers assured Chaleplis that they had the requisite professional relationships, knowledge, and experience to successfully identify and pursue investments on behalf of Chaleplis and One World. (Id. ¶¶ 36-40.) On the basis of those representations, Chaleplis hired Onoufriadis as Manager and Rodgers as Secretary and Chief Legal Officer of One World. (Id. ¶ 41.) The appointments were memorialized in One World's Operating Agreement, which the parties executed on September 30, 2017. (Id. ¶¶ 51-56.) Onoufriadis wasgiven a twenty percent membership interest in One World (though Chaleplis was the "100% profit member"), which he ceded to Chaleplis upon his resignation from One World in April 2020. (Id. ¶¶ 46-49, 196-197.)

At the time, Karloutsos held a position with the U.S. Department of State and so could not formally participate in the management of One World. Instead, he became a silent contributor to the business; his participation was not mentioned in One World's Operating Agreement. (Id. ¶¶ 29-30, 32, 44.) The complaint alleges that Karloutsos "utilized his good friends Onoufriadis and Rodgers as 'front men' for Karloutsos to participate in the management, operations, and profitability of One World" and entered into an oral "side agreement" with Rodgers, pursuant to which Rodgers and Karloutsos would split Rodgers's three percent interest in One World 50-50. (Id. ¶¶ 59-61.) Karloutsos allegedly continued participating in the management and operations of One World after leaving his State Department position on December 17, 2017. (Id. ¶ 62.)

Beginning in November 2017, Chaleplis made numerous capital contributions to One World, which were held in Rodgers's attorney trust account until they could be transferred to one of One World's five bank accounts. (Id. ¶ 63.) Under One World's Operating Agreement, Onoufriadis had signatory authority over those bank accounts. (Id. ¶¶ 64-65.)

C. One World Invests in the Greek Medicinal Cannabis Market

In a series of discussions and meetings in New York City that took place around March 17, 2018, Karloutsos, Rodgers, and Onoufriadis proposed to Chaleplis that One World invest in the nascent Green medicinal cannabis market. Although Onoufriadis participated in some of the discussions by phone, he was not physically present at the March 17 meeting. (Id. ¶ 74.))

The plan was for One World to invest a handful of Greek entities, including Conmave Monoprosopi IKE ("Conmave"), which was controlled by Onoufriadis's brother Theophylos, and BioProcann. (Id. ¶¶ 95, 102, 103, 108.) One World was to advance the funds necessary for thecompanies to develop a medicinal cannabis business, including to (i) apply for the licenses and permits needed to create a medical cannabis business, (ii) pay lobbying, governmental, and other service fees for obtaining the necessary licenses, (iii) purchase land and cultivation equipment, and (iv) any other infrastructure and services that would be needed to operate a vertically integrated medicinal cannabis business under Greek law. (Id. ¶¶ 70-72.) Karloutsos, Rodgers, and Onoufriadis presented Chaleplis with a budget that ostensibly itemized the estimated cost (in millions) for establishing the business. (Id. ¶ 75.) In exchange for providing funding, One World was supposed to receive an equity interest in Conmave. (Id. ¶ 124.)

Additional meetings followed. Chaleplis and Onoufriadis met in New York City on March 21, 2018 to discuss further the details of One World's upcoming investment, and Chaleplis, Onoufriadis, and Rodgers met...