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Accounting Firm Seeks Dismissal of Conservation Easement Suit

AUG. 7, 2020

Andrew Lechter et al. v. Aprio LLC et al.

DATED AUG. 7, 2020
DOCUMENT ATTRIBUTES

Andrew Lechter et al. v. Aprio LLC et al.

ANDREW LECHTER; SYLVIA THOMPSON; LAWSON F. THOMPSON; RUSSELL DALBA; and KATHRYN DALBA, on behalf of themselves and all other similarly situated,
Plaintiffs,
v.
APRIO, LLP f/k/a HABIF, AROGETI & WYNNE, LLP; ROBERT GREENBERGER; SIROTE & PERMUTT, P.C.; BAKER, DONELSON, BEARMAN, CALDWELL & BERKOWITZ, P.C.; SMITH, LEWIS & HALEY, LLP; DAVID C. SMITH; FOREVER FORESTS LLC; NANCY ZAK; JAMES JOWERS; LARGE & GILBERT, INC.; CLOWER KIRSCH & ASSOCIATES, LLC; JIM R. CLOWER, SR.; TENNILLE & ASSOCIATES, INC.; ATLANTIC COAST CONSERVANCY, INC.; ROBERT D. KELLER; and GEORGIA ALABAMA LAND TRUST, INC. f/k/a GEORGIA LAND TRUST, INC.,
Defendants.

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF GEORGIA
ATLANTA DIVISION

DEFENDANTS APRIO, LLP AND ROBERT GREENBERGER'S MOTION TO DISMISS PLAINTIFFS' COMPLAINT

Under Rules 12(b)(6), 8(a)(2), and 9(b) of the Federal Rules of Civil Procedure, and for the reasons set forth in the accompanying and contemporaneously filed Brief in Support of Motion to Dismiss Plaintiffs' Complaint, Defendants Aprio, LLP f/k/a Habif, Arogeti & Wynne, LLP and Robert Greenberger respectfully move this Court for dismissal with prejudice of all claims against them in Plaintiffs' Complaint [Dkt. 1].

Accountants at the Aprio firm, including Mr. Greenberger, prepared tax returns for LLCs that own land subject to a tax-deductible conservation easement. Based on that professional service, an email, a letter, and little more — buried under 175 pages of formulaic recitations, disconnected allegations, and vague hyperbole — Plaintiffs seek treble damages for a nationwide class of investors who are not and have never been clients of the Aprio firm. Once Plaintiffs' deceptively lengthy Complaint is passed through the filter of Federal Rules of Civil Procedure 8, 9, and 12, nothing remains to support a claim against Aprio or Mr. Greenberger.

The Complaint fails to state any claim upon which relief may be granted against Aprio or Mr. Greenberger. It fails to allege even a single RICO predicate act, or any act of fraud or misrepresentation, with the particularity required. It pleads a federal RICO claim that fails as a matter of law, and state law claims that are time-barred and otherwise contrary to black-letter Georgia law. Aprio and Mr. Greenberger therefore respectfully request that the Court grant their motion and dismiss the claims against them with prejudice.

Respectfully submitted this 7th day of August, 2020.

John E. Floyd
Georgia Bar No. 266413
floyd@bmelaw.com
John H. Rains IV
Georgia Bar No. 556052
rains@bmelaw.com
Jennifer L. Peterson
Georgia Bar No. 601355
peterson@bmelaw.com

BONDURANT, MIXSON & ELMORE, LLP
3900 One Atlantic Center
1201 West Peachtree Street, N.W.
Atlanta, Georgia 30309
(404) 881-4100 (telephone)
(404) 881-4111 (facsimile)

Attorneys for Defendants
Aprio, LLP and Robert Greenberger


ANDREW LECHTER; SYLVIA THOMPSON; LAWSON F. THOMPSON; RUSSELL DALBA; and KATHRYN DALBA, on behalf of themselves and all other similarly situated,
Plaintiffs,
v.
APRIO, LLP f/k/a HABIF, AROGETI & WYNNE, LLP; ROBERT GREENBERGER; SIROTE & PERMUTT, P.C.; BAKER, DONELSON, BEARMAN, CALDWELL & BERKOWITZ, P.C.; SMITH, LEWIS & HALEY, LLP; DAVID C. SMITH; FOREVER FORESTS LLC; NANCY ZAK; JAMES JOWERS; LARGE & GILBERT, INC.; CLOWER KIRSCH & ASSOCIATES, LLC; JIM R. CLOWER, SR.; TENNILLE & ASSOCIATES, INC.; ATLANTIC COAST CONSERVANCY, INC.; ROBERT D. KELLER; and GEORGIA ALABAMA LAND TRUST, INC. f/k/a GEORGIA LAND TRUST, INC.,
Defendants.

IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF GEORGIA ATLANTA DIVISION

BRIEF IN SUPPORT OF DEFENDANTS APRIO, LLP AND ROBERT GREENBERGER'S MOTION TO DISMISS PLAINTIFFS' COMPLAINT

John E. Floyd
Georgia Bar No. 266413
floyd@bmelaw.com
John H. Rains IV
Georgia Bar No. 556052
rains@bmelaw.com
Jennifer L. Peterson
Georgia Bar No. 601355
peterson@bmelaw.com

BONDURANT, MIXSON & ELMORE, LLP
3900 One Atlantic Center
1201 West Peachtree Street, N.W.
Atlanta, Georgia 30309
(404) 881-4100 (telephone)
(404) 881-4111 (facsimile)

Attorneys for Defendants
Aprio, LLP and Robert Greenberger


TABLE OF CONTENTS

ARGUMENT AND CITATION OF AUTHORITIES

I. Plaintiffs' Fraud-Based Claims Must Be Dismissed for Failure to Plead Fraud with Particularity

A. The Rule 9(b) Heightened Pleading Standard for Fraud

B. Rule 9(b) Applies to Most of Plaintiffs' Claims

C. Plaintiffs' Rule 9(b) Failure Is Pervasive

D. Plaintiffs' Pleading Failures Doom Their RICO Claims

II. Plaintiffs' RICO Claims Must Be Dismissed as a Matter of Law

A. Plaintiffs' Federal RICO Claims Are Barred Because They Are Actionable as Securities Fraud

B. The Federal RICO Claims against Mr. Greenberger and Aprio Fail Because They Do Not Allege Operation or Management

C. The Federal RICO Claims Are Time-Barred

D. All RICO Claims against Mr. Greenberger and Aprio Fail to State a Claim Because Plaintiffs Lack Standing

III. Plaintiffs' Common-Law Claims Must Be Dismissed for Failure to State a Claim

A. Absent an Accountant-Client Relationship, Plaintiffs Have No Claims for Professional Negligence or Breach of Fiduciary Duty Against Aprio or Mr. Greenberger

B. Plaintiffs' Reliance-Based Claims Are Barred by the Contents of the Promotional Materials

C. Plaintiffs' Common Law Claims Are Time-Barred

CONCLUSION

TABLE OF AUTHORITIES

Case

AFFCO Invs., LLC v. KPMG, LLP No. CIV.A. H-07-3379, 2008 WL 5070053, at *5 (S.D. Tex. Nov. 20, 2008), aff'd, 625 F.3d 185 (5th Cir. 2010)

Affiliated Ute Citizens of Utah v. United States 406 U.S. 128 (1972)

Agency Holding Corp. v. Malley-Duff & Assocs. 483 U.S. 143 (1987)

Allmond v. Young 314 Ga. App. 230 (2012)

Almanza v. United Airlines, Inc. 851 F.3d 1060 (11th Cir. 2017)

Am. Dental Ass'n v. Cigna Corp. 605 F.3d 1283 (11th Cir. 2010)

Am. United Life Ins. Co. v. Martinez 480 F.3d 1043 (11th Cir. 2007)

Ambrosia Coal & Constr. Co. v. Morales 482 F.3d 1309 (11th Cir. 2007)

Ashcroft v. Iqbal 556 U.S. 662 (2009)

Awad v. Omar No. 18 CIV. 10810 (NRB), 2019 WL 5727327, at *5 (S.D.N.Y. Nov. 5, 2019)

Bald Eagle Area Sch. Dist. v. Keystone Fin., Inc. 189 F.3d 321 (3d Cir. 1999)

Bauer v. Weeks 267 Ga. App. 617 (2004)

Bell Atl. Corp. v. Twombly 550 U.S. 544 (2007)

Boyle v. United States 556 U.S. 938 (2009)

Brennan v. Ferreira 251 F. Supp. 3d 338 (D. Mass. 2017)

Brooks v. Blue Cross & Blue Shield of Fla., Inc. 116 F.3d 1364 (11th Cir. 1997)

Brooks v. Freeport Kaolin Co. 253 Ga. 678 (1985)

Cochran Mill Assocs. v. Stephens 286 Ga. App. 241 (2007)

Cohen v. Feiner No. 18 C 7328, 2019 WL 1787527, at *4 (N.D. Ill. Apr. 24, 2019)

De Wit v. Firstar Corp. 879 F. Supp. 947 (N.D. Iowa 1995)

Dental Ass'n v. Cigna Corp. 605 F.3d 1283 (11th Cir. 2010)

Dep't of Econ. Dev. v. Arthur Andersen & Co. 924 F. Supp. 449 (S.D.N.Y. 1996)

Domico v. Kontas No. 3:12CV1449, 2013 WL 1248638 at *8 n. 11 (M.D. Pa. Mar. 26, 2013)

Duke Galish, L.L.C. v. Arnall Golden Gregory, L.L.P. 288 Ga. App. 75 (2007)

Dusek v. JPMorgan Chase & Co. 832 F.3d 1243 (11th Cir. 2016)

EIG Energy Fund XIV, L.P. v. Keppel Offshore & Marine Ltd. No. 18 CIV. 1047 (PGG), 2020 WL 231912, at *9 (S.D.N.Y. May 11, 2020)

Fagan v. Fischer No. 14-7013 (FLW) (TJB), 2019 WL 5587286, at *8-*10 (D.N.J. Oct. 30, 2019)

Feldman v. Am. Dawn, Inc. 849 F.3d 1333 (11th Cir. 2017)

Fin. Sec. Assur., Inc. v. Stephens, Inc. 500 F.3d 1276 (11th Cir. 2007)

Garfield v. NDC Health Corp. 466 F.3d 1255 (11th Cir. 2006)

Gatz v. Ponsoldt 297 F. Supp. 2d 719 (D. Del. 2003)

Gerald v. Doran 169 Ga. App. 22 (1983)

Gilmore v. Berg 820 F. Supp. 179 (D.N.J. 1993)

Gilmore v. Gilmore No. 09 CIV. 6230 WHP, 2011 WL 3874880, at *5 (S.D.N.Y. Sept. 1, 2011), aff'd, 503 F. App'x 97, 99 (2d Cir. 2012)

Greenfield Plaza Inv'rs LLC v. Stearns Bank N.A. No. CV 12-389-PHX-SRB, 2012 WL 13024089, at *6 (D. Ariz. Aug. 14, 2012)

Handeen v. Lemaire 112 F.3d 1339 (8th Cir. 1997)

Hardaway Co. v. Parsons, Brinckerhoff, Quade & Douglas, Inc. 267 Ga. 424 (1997)

Hayden v. Paul, Weiss, Rifkind, Wharton & Garrison 955 F. Supp. 248 (S.D.N.Y. 1997)

Hays v. Page Perry, LLC 26 F. Supp. 3d 1311 (N.D. Ga. 2014)

Hendry v. Wells 286 Ga. App. 774 (2007)

Hunter, Maclean, Exley & Dunn, P.C. v. Frame 269 Ga. 844 (1998)

In re Enron Corp. Secs., Derivative & ERISA Litig. 284 F. Supp. 2d 511 (S.D. Tex. 2003)

In re LIBOR-Based Fin. Instruments Antitrust Litig. 935 F. Supp. 2d 666 (S.D.N.Y. 2013)

Intelligent Inv. Int'l LLC v. Fu No. 1:17-CV-05296-RWS, 2019 WL 1281204, at *5-*7 (N.D. Ga. Mar. 20, 2019)

J & M Assocs. v. Callahan 753 F. Supp. 2d 1183 (S.D. Ala. 2010)

Kothari v. Patel 262 Ga. App. 168 (2003)

Landreth Timber Co. v. Landreth 471 U.S. 681 (1985)

Larson v. Northrop Corp. 21 F.3d 1164 (D.C. Cir. 1994)

Lawrie v. Ginn Dev. Co., LLC 656 F. App'x 464 (11th Cir. 2016)

Legacy Acad., Inc. v. Mamilove, LLC 297 Ga. 15 (2015)

Lehman v. Lucom 727 F.3d 1326 (11th Cir. 2013)

Licht v. Watson 567 F. App'x 689 (11th Cir. 2014)

Longino v. Bank of Ellijay 228 Ga. App. 37 (1997)

Madanes v. Madanes 981 F. Supp. 241 (S.D.N.Y. 1997)

Manson v. Stacescu 11 F.3d 1127 (2d Cir. 1993)

Marquis Towers, Inc. v. Highland Grp. 265 Ga. App. 343 (2004)

Martinek v. Diaz No. 11 C 7190, 2012 WL 2953183, at *13 (N.D. Ill. July 18, 2012)

McClung Surveying, Inc. v. Worl 247 Ga. App. 322 (2000)

Metro Atlanta Task Force for the Homeless, Inc. v. Ichthus Cmty. Tr. 298 Ga. 221 (2015)

Nat'l Group for Commc'ns & Computers Ltd. v. Lucent Techs. Inc. 420 F. Supp. 2d 253 (S.D.N.Y. 2006)

Nettleton v. Stogsdill 899 N.E.2d 1252 (Ill. App. Ct. 2008)

Oehlerich v. Llewellyn 285 Ga. App. 738 (2007)

Pack v. Stanley No. 1:10-cv-2200-AT, 2012 WL 13001918, at *8 (N.D. Ga. May 18, 2012)

Pedraza v. United Guar. Corp. 114 F. Supp. 2d 1347 (S.D. Ga. 2000)

Perkumpulan Inv'r Crisis Ctr. Dressel-WBG v. Wong No. C09-1786-JCC, 2014 WL 1047946, at *7 (W.D. Wash. Mar. 14, 2014)

Ray v. Spirit Airlines, Inc. 836 F.3d 1340 (11th Cir. 2016)

Reves v. Ernst & Young 494 U.S. 56 (1990)

Rezner v. Bayerische Hypo-Und Vereinsbank AG 630 F.3d 866 (9th Cir. 2010)

Rosemann v. Sigillito 956 F. Supp. 2d 1082 (E.D. Mo. 2013)

Rowe v. Gary, Williams, Parenti, Watson & Gary, P.L.L.C. 181 F. Supp. 3d 1161 (N.D. Ga. 2016)

Schutz v. Kagan Lubic Lepper Finkelstein & Gold LLP 552 F. App'x 79 (2d Cir. 2014)

SEC v. Edwards 540 U.S. 389 (2004)

SEC v. W.J. Howey Co. 328 U.S. 293 (1946)

SEC v. Zandford 535 U.S. 813 (2002)

Shneydershteyn-Kuvykin v. iPayment Holdings, Inc. No. 14-CV-4728, 2015 WL 6507451, at *4 (E.D.N.Y. Oct. 27, 2015)

Shores v. Troglin 260 Ga. App. 696 (2003)

Smith v. Alimenta Processing Corp. 197 Ga. App. 57 (1990)

Stubbs v. Hall 840 S.E.2d 407 (Ga. 2020)

Summit Auto. Grp., LLC v. Clark 298 Ga. App. 875 (2009)

Terrell v. Childers 920 F. Supp. 854 (N.D. Ill. 1996)

Transatlantic, LLC v. Humana, Inc. 666 F. App'x 788 (11th Cir. 2016)

United Food & Comm'l Workers Unions & Empl'rs Midwest Health Benefits Fund v. Walgreen Co. 719 F.3d 849 (7th Cir. 2013)

Unite Fed. R. Civ. P. 9d States ex rel. Atkins v. McInteer 470 F.3d 1350 (11th Cir. 2006)

United States v. Kovel 296 F.2d 918 (2d Cir. 1961)

Univ. of Md. at Balt. v. Peat, Marwick, Main & Co. 996 F.2d 1534 (3rd Cir. 1993)

White v. BDO Seidman, LLP 249 Ga. App. 668 (2001)

Williams v. Fortson, Bentley & Griffin 212 Ga. App. 222 (1994)

Williamson v. Tucker 645 F.2d 404 (5th Cir. May 1981)

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Federal Rules, Statues and Other Authorities:

Fed. R. Civ. P. 9(b)

Federal Rules 8, 9, or 12

15 U.S.C. §§ 77b(a)(1), 78c(a)(10)

15 U.S.C. § 78j(b)

18 U.S.C. § 1962(c)

18 U.S.C. § 1964(c)

17 C.F.R. § 240.10b-5(c)

O.C.G.A. § 9-3-31

O.C.G.A. § 16-14-6(c)


Defendant Aprio, LLP, an independent, full-service accounting firm, prepared tax returns (including Schedule K-1s) for several limited liability companies (“LLCs”) that own land subject to a tax-deductible conservation easement.1 According to the Complaint, Aprio partner Robert Greenberger emailed one Plaintiff, Compl. ¶ 234(a), “advised” two others, id. ¶ 78, and signed one LLC's tax return, id. ¶ 117. On these slender hooks hang the entirety of the Complaint against them. Plaintiffs' Complaint is long and full of inflammatory allegations, but once it has been passed through the filter of Federal Rules of Civil Procedure 8, 9, and 12, nothing remains to support a claim against Aprio or Mr. Greenberger.

The Complaint relies on length and verbosity to create a superficial impression of detail. It relies on affront and aspersion to tarnish the reputation of hundreds of professionals across the Southeast. But Plaintiffs' denunciations utterly fail to state any claim upon which relief may be granted. It fails to allege that any named Plaintiff or putative Class Member in this matter is or was a client of Aprio or Mr. Greenberger. It fails to allege even a single RICO predicate act, or any act of fraud, with the particularity required. It fails to allege how this assortment of Defendants agreed to form a distinct enterprise. And it fails to allege, contrary to its proffered class definition, that any named Plaintiff has been harmed by having his or her personal tax liability increased.2 Compounding these errors, the Complaint's common law claims are foreclosed by clear Georgia law and time-barred. Accordingly, the Complaint must be dismissed in its entirety.

ARGUMENT AND CITATION OF AUTHORITIES

I. Plaintiffs' Fraud-Based Claims Must Be Dismissed for Failure to Plead Fraud with Particularity.

Rule 9(b) of the Federal Rules of Civil Procedure requires, “In all averments of fraud or mistake, the circumstance constituting fraud or mistake shall be stated with particularity.” This heightened pleading standard applies to all of Plaintiffs' fraud-based claims, but Plaintiffs have made no attempt to comply with that standard. As a result, Counts 1, 2, 3, 4, 6, 9, and 12 must be dismissed.

A. The Rule 9(b) Heightened Pleading Standard for Fraud

To plead fraud with particularity, “[a] plaintiff must allege: (1) the precise statements, documents, or misrepresentations made; (2) the time, place, and person responsible for the statement; (3) the content and manner in which these statements misled the Plaintiffs; and (4) what the defendants gained by the alleged fraud.” Am. Dental Ass'n v. Cigna Corp., 605 F.3d 1283, 1291 (11th Cir. 2010). “This means the who, what, when, where, and how” of the circumstances of the fraud. Garfield v. NDC Health Corp., 466 F.3d 1255, 1262 (11th Cir. 2006).

As regards the “who,” “in a case involving multiple defendants, the complaint should inform each defendant of the nature of his alleged participation in the fraud,” rather than lumping defendants together. Brooks v. Blue Cross & Blue Shield of Fla., Inc., 116 F.3d 1364, 1381 (11th Cir. 1997). “This Rule serves an important purpose in fraud actions by alerting defendants to the precise misconduct with which they are charged and protecting defendants against spurious charges of immoral and fraudulent behavior.” Id. at 1370-71. Plaintiffs' failure to plead fraud with particularity here is especially damaging to Aprio and Mr. Greenberger, whose professional and personal integrity and reputation have been called into question by these widely publicized, broad-brush, false allegations.

In addition, every count of the Complaint must be supported by factual allegations that state a “plausible” claim for relief. Rowe v. Gary, Williams, Parenti, Watson & Gary, P.L.L.C., 181 F. Supp. 3d 1161, 1165-66 (N.D. Ga. 2016) (Totenberg, J.), denial of sanctions rev'd, 703 F. App'x 777 (11th Cir. 2017) (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555-56 (2007), and Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)). This “requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.” Rowe, 181 F. Supp. 3d at 1166 (quoting Twombly, 550 U.S. at 555). Plaintiffs' RICO claims particularly suffer from conclusory recitations of labels and elements and therefore must be dismissed.

B. Rule 9(b) Applies to Most of Plaintiffs' Claims

Rule 9(b)'s heightened pleading standard applies to fraud-based civil RICO claims (Counts 1, 2, 3, and 4). Am. Dental, 605 F.3d at 1291. It also applies to claims for negligent misrepresentation (Count 6). Feldman v. Am. Dawn, Inc., 849 F.3d 1333, 1340 (11th Cir. 2017). And it applies to common-law claims of fraud (Count 9) and civil conspiracy based on fraud (Count 12). Am. United Life Ins. Co. v. Martinez, 480 F.3d 1043, 1065, 1070 (11th Cir. 2007). With those counts dismissed, the only causes of action that would remain against Aprio and Mr. Greenberger are those premised upon breach of duty (Counts 5, 7, and 8), which we address in Section III below.

C. Plaintiffs' Rule 9(b) Failure Is Pervasive

The most striking failure of Plaintiffs' attempt to plead fraud is explicitly incorporated into all counts of the Complaint. Paragraph 234 identifies 37 communications or categories of communication that allegedly constitute mail or wire fraud. Many of the individual communications are identified by date, sender, recipient, and subject, suggesting a passing familiarity with the who, when, and where requirements of Rule 9(b). But in all 37 subparagraphs of ¶ 234, Plaintiffs utterly fail to allege what was misrepresented, how Plaintiffs were misled, or “what the Defendants gained by the alleged fraud.” Rowe, 181 F. Supp. 3d at 1185 (dismissing RICO complaint for failure to state a claim). This failure is fatal to all of Plaintiffs' fraud-based claims.

For example, consider the sole allegation of fraud against Mr. Greenberger.3 Plaintiffs suggest that Mr. Greenberger committed wire fraud when he emailed Mr. Dalba on November 16, 2010 “regarding participation in the Maple Landing Syndicate.” Compl. ¶ 234(a). That allegation falls well short of satisfying Rule 9(b) in at least two ways. First, it fails to allege the substance of the communication — what did Mr. Greenberger say about participation? whose participation was he addressing? Second, it fails to allege how this email defrauded Mr. Dalba. In other words, what misrepresentation did the email contain, and how did it mislead Mr. Dalba? See Lawrie v. Ginn Dev. Co., LLC, 656 F. App'x 464, 474 (11th Cir. 2016) (“Rule 9(b) requires more than an allegation that a misrepresentation was made; it requires a plaintiff to identify with precision what the misrepresentation actually was.”). Without any of these factual allegations, the Complaint contains no well-pleaded allegations of fraud against Mr. Greenberger.

The allegations against Aprio suffer from the same problem. The Complaint purports to identify only two specific acts of fraud by Aprio: sending a letter “in early 2017 regarding the status of the IRS summons enforcement proceeding against Aprio,” Compl. ¶ 234(u), and preparing K-1s for members of unspecified LLCs, id. ¶ 234(dd).4 Neither act of alleged mail fraud is pleaded with particularity and Aprio is not remotely alerted “to the precise misconduct with which [it is] charged.” Brooks, 116 F.3d at 1370. Who received these documents? More importantly, what exactly in the letter and the K-1s was false? How did these documents mislead any Plaintiff? “[P]ursuant to Rule 9(b), a plaintiff must allege . . . the content and manner in which these statements misled the Plaintiffs.” Am. Dental, 605 F.3d at 1291. Without these crucial details, “[t]hese allegations provide no basis in fact upon which the Court could conclude that any specific act of any specific Defendants is indictable for mail or wire fraud.” Brooks, 116 F.3d at 1381.5

To the extent Plaintiffs may argue that allegations of fraud by Mr. Greenberger or Aprio are encompassed by other allegations against “the Aprio Defendants” throughout the Complaint, this too fails to satisfy Rule 9(b). “In a case involving multiple defendants, the complaint must not lump together all of the defendants, as the complaint should inform each defendant of the nature of his alleged participation in the fraud.” Ambrosia Coal & Constr. Co. v. Morales, 482 F.3d 1309, 1317 (11th Cir. 2007). By “lumping together” Mr. Greenberger and the Aprio firm throughout its 175 pages, the Complaint fails to inform either Defendant of their particular alleged role in the fraud.

Plaintiffs' separate litany of “fraudulent statements and omissions” in ¶ 237 of the Complaint further underscores their failure to comply with Rule 9(b). The 27 subparagraphs of ¶ 237 each state a general allegation of fraud by “Defendants and their co-conspirators,” and all 27 lack particularity as to who, when, where, what precisely was said or omitted, and how the statement or omission harmed the Plaintiffs. In addition to impermissibly lumping together all Defendants, see Ambrosia Coal, 482 F.3d at 1317, the broad allegations of ¶ 237 are totally unconnected to the slightly more specific allegations of ¶ 234. Even if there is any link between a particular ¶ 234 communication and a particular ¶ 237 fraud, Rule 9(b) imposes the burden of identifying that link on Plaintiffs, not on Defendants or the Court. See Pelletier v. Zweifel, 921 F.2d 1465, 1518 (11th Cir. 1991) (Defendants and the Court should not have “to sift through the facts presented and decide for themselves which were material to the particular cause of action asserted, a difficult and laborious task indeed”); Bateman v. Countrywide Home Loans, No. CIV. 12-00033 SOM, 2012 WL 5593228, at *1 (D. Haw. Nov. 14, 2012) (dismissing complaint where “the court is asked to match allegations to claims and parties as if attempting to fit jigsaw puzzle pieces together to create a picture”).

Neither its overall bulk nor occasional flirtations with granularity give the Complaint the makings of a RICO claim. Cf. Rowe, 181 F. Supp. 3d at 1186 (“Although Plaintiffs' 67-page Complaint appears quite detailed, the factual allegations are not plausible and do not meet the heightened standard applied to RICO claims.”). Once the Complaint's “threadbare recitals of the elements of a cause of action, supported by mere conclusory statements” are stripped away, id. at 1166 (quoting Twombly, 550 U.S. at 555), all that remains is a jumble of isolated events, disconnected actors, and bad feelings. The factual remnant fails to particularly — much less plausibly — link the Plaintiffs' purchase of an LLC interest, their receipt of a K-1 from the LLC, and their claims of conservation easement tax deductions, to the speculative injury they suggest. “As a result, it is difficult to construe a framework in support of Plaintiffs' alleged RICO scheme.” Id. at 1185.

To be sure, Plaintiffs may feel genuinely anxious about the possibility of a future IRS audit. See Compl. ¶ 8 (alleging that Plaintiffs are “exposed” to IRS penalties). And they may have been surprised by the IRS's recent hardline position on conservation easement tax deductions. See id. ¶¶ 68-69. But they have not pleaded the requisite details to establish whether and how any Defendant misled or defrauded any Plaintiff when he or she purchased an LLC interest ten years ago. Moreover, as we next discuss, they have not established how a diverse collection of accountants, lawyers, LLC managers, and appraisers in multiple states agreed to create and undertake this alleged fraudulent scheme. Plaintiffs' efforts to convert purely speculative harms into treble damages not only threatens Aprio and Mr. Greenberger with wide-ranging and expensive discovery,6 but also risks needlessly harming their “goodwill and reputation”7 as respected professionals. In sum, Plaintiffs' failure to adequately plead fraud requires dismissal of all of their fraud-based claims with prejudice.

D. Plaintiffs' Pleading Failures Doom Their RICO Claims

With respect to Plaintiffs' federal and Georgia RICO claims (Counts 1, 2, 3 and 4), the Complaint also fails to state a claim because it does not plead with particularity a single predicate act of wire or mail fraud. See Transatlantic, LLC v. Humana, Inc., 666 F. App'x 788, 790 (11th Cir. 2016); Metro Atlanta Task Force for the Homeless, Inc. v. Ichthus Cmty. Tr., 298 Ga. 221, 239-41 (2015). As noted above, none of the predicate acts of mail fraud or wire fraud listed in ¶ 234 of the Complaint provides enough factual detail for the Court to conclude that any Plaintiff was actually defrauded, much less by Aprio or Mr. Greenberger. Furthermore, because mail and wire fraud require participation in a scheme to defraud, and because Plaintiffs here have alleged a single fraudulent scheme, dismissal is also required because the Complaint fails to “plausibly and particularly allege facts showing . . . that a conspiracy created the alleged [single] scheme.” Am. Dental, 605 F.3d at 1290-91; cf. Compl. ¶ 1.

Plausibly pleading a conspiracy is essential because “RICO does not penalize parallel, uncoordinated fraud.” United Food & Comm'l Workers Unions & Empl'rs Midwest Health Benefits Fund v. Walgreen Co., 719 F.3d 849, 855-56 (7th Cir. 2013). Thus, “allegations of parallel conduct, accompanied by nothing more than a bare assertion of a conspiracy, do not plausibly suggest a conspiracy.” Am. Dental, 605 F.3d at 1294. Particularly with respect to the participation of Aprio and Mr. Greenberger, Plaintiffs have not plausibly alleged such a conspiracy.

Despite devoting an entire section to “Conspiracy Allegations” (¶¶ 185-192), the Complaint's allegations of a conspiracy are wholly conclusory. Plaintiffs baldly allege, with no factual support, a “meeting of the minds that [the co-conspirators] would work together as a team.” Compl. ¶ 187. But “a conclusory allegation of agreement at some unidentified point does not supply facts adequate to show illegality.” Twombly, 550 U.S. at 557. Thus, this Court is required to disregard these allegations that merely state legal conclusions. Am. Dental, 605 F.3d at 1293; see also Almanza v. United Airlines, Inc., 851 F.3d 1060, 1068 (11th Cir. 2017) (without “alleg[ing] facts show[ing] that this alleged agreement actually exists, their allegations simply recite a legal conclusion”). “In other words, the plaintiffs had to assert allegations explaining how exactly the defendants went about entering into an agreement with each other. It wasn't enough that the defendants all ended up doing the same fraudulent thing. That's precisely the problem that burdens Plaintiffs here.” Almanza, 851 F.3d at 1068-69 (describing the facts and holding of Am. Dental).

Plaintiffs' allegations of a RICO association-in-fact enterprise also merely state legal conclusions. See Compl. ¶ 217 (“The Enterprise had an ascertainable structure separate and apart from the pattern of racketeering activity in which the Defendants engaged.”).8 Without more than these incantations, the Complaint “does not allege that Defendants existed as an association-in-fact separate and apart from the alleged RICO activity, but rather that came together strictly for the purpose of creating these allegedly fraudulent tax shelters.” Eaves v. Designs for Fin., Inc., 785 F. Supp. 2d 229, 263 (S.D.N.Y. 2011) (dismissing RICO claim with prejudice); see also Almanza, 851 F.3d at 1068 (a RICO complaint must allege “that Defendants acted as a continuing unit, and not merely independently”).

Once Plaintiffs' conclusory allegations are discarded, all that remains of the Complaint are allegations that supply “'obvious alternative explanation[s],' which suggest lawful conduct rather than the unlawful conduct the plaintiff would ask the court to infer.” Am. Dental, 605 F.3d at 1290 (quoting Twombly, 550 U.S. at 567). For example, Plaintiffs' allegation that all the conspirators were motivated by “fees” and a “financial, business and property interest,” Compl. ¶¶ 185, 186, establishes only that the Defendants' behavior may be “consistent with conspiracy, but just as much in line with a wide swath of rational and competitive business strategy.” Twombly, 550 U.S. at 554. The Complaint offers no allegation to explain how Aprio's fees for preparing the LLC tax returns here differed from their usual fees for such services (after all, they are accountants and accountants do prepare tax returns).9 Nor do its cursory allegations that the appraisers and the law firms worked with “the Aprio Defendants,” Compl. ¶¶ 189, 192, contain any factual grounds that plausibly connect Aprio or Mr. Greenberger with the alleged conspiracy. Accordingly, Aprio's “conduct is equally indicative of rational independent action as it is concerted, illegitimate conduct and thus 'stays in neutral territory'” rather than “plausibly suggest[ing] conspiracy.” Am. Dental, 605 F.3d at 1295 (quoting Twombly, 550 U.S. at 557). “Plaintiffs' allegations of Defendants' parallel conduct, absent a plausibly-alleged 'meeting of the minds,' fail to 'nudge[ ] their claims across the line from conceivable to plausible.'” Id. at 1296 (quoting Twombly, 550 U.S. at 557, 570). And absent this “meeting of the minds,” all of Plaintiffs' RICO claims (Counts 1, 2, 3, and 4) must be dismissed for failure to state a claim.

II. Plaintiffs' RICO Claims Must Be Dismissed as a Matter of Law

Even if Plaintiffs' RICO claims did not suffer from the fatal pleading shortcomings described above, they would still require dismissal with prejudice because they fail to state RICO violations as a matter of law.

A. Plaintiffs' Federal RICO Claims Are Barred Because They Are Actionable as Securities Fraud

Allegations “that would have been actionable as fraud in the . . . sale of securities” cannot support a federal RICO claim. 18 U.S.C. § 1964(c). All of Plaintiffs' federal RICO allegations in the Complaint are precisely this kind of allegation and therefore fail to state a claim. “Prior to 1995, a private plaintiff could assert a civil RICO claim for securities law violations sounding in 'garden variety' fraud. Inasmuch as 'fraud in the sale of securities' was a predicate offense in both criminal and civil RICO actions, plaintiffs regularly elevated fraud to RICO violations because RICO offered the potential bonanza of recovering treble damages. However, in 1995, Congress enacted the Private Securities Litigation Reform Act ('PSLRA'),” amending the federal RICO statute to exclude actionable securities fraud as a RICO predicate act. Bald Eagle Area Sch. Dist. v. Keystone Fin., Inc., 189 F.3d 321, 327 (3d Cir. 1999) (citations omitted). Now, “a plaintiff cannot avoid the RICO Amendment's bar by pleading mail fraud, wire fraud and bank fraud as predicate offenses in a civil RICO action if the conduct giving rise to those predicate offenses amounts to securities fraud.” Licht v. Watson, 567 F. App'x 689, 693 (11th Cir. 2014).

The PSLRA's prohibition applies in this case because the Complaint alleges conduct that would have been actionable as fraud in the sale of securities. The “Promotional Materials” to which the Complaint repeatedly refers, e.g., ¶ 44(c), call the LLC interests “securities.” See Maple Landing, LLC Conf'l Pvt. Off'g Summ. at i, iii, iv, 1, 6, 7; Maple Landing, LLC Op. Agr. at 1; Maple Landing, LLC Conf'l Investor Questionnaire at 1-5; Maple Landing, LLC Subscr. Escrow Agr. at 1-3, 5-7, 12; Maple Landing, LLC Op. Letter at 1.10

Even without such clear documentary evidence, Plaintiffs' allegations independently establish that the challenged conduct was the sale of securities. The Complaint alleges a “common scheme,” Compl. ¶ 9, “pre-planned,” id. ¶¶ 50, 59, and uniformly implemented, id. ¶ 40, to sell land that would become subject to a conservation easement, id. ¶¶ 1-2. The alleged association-in-fact of Defendants, Sponsors, and Other Participants to generate fees and commissions from selling such land and taking the conservation easement tax deductions is the RICO enterprise alleged in Plaintiffs' federal RICO claims in Counts 1 and 2. Id. ¶¶ 211, 266, 276.

The first step Plaintiffs describe in the scheme is the formation of an LLC or the purchase of a majority ownership interest in an existing LLC that owned property that became the subject of a conservation easement.11 Plaintiffs allege they paid money to purchase an interest in that LLC, and as a result of that purchase, they were allocated a tax deduction proportional to their ownership interest in the LLC.12 In other words, the purchase of a membership interest in a LLC was a prerequisite to claiming a tax deduction.

Thus, the membership interests in the LLCs are securities for purposes of the PSLRA. Both the Securities Act of 1933 and the Exchange Act of 1934 include “investment contract[s]” in their definition of a “security.” 15 U.S.C. §§ 77b(a)(1), 78c(a)(10). The term “investment contract” is one of the means employed under those acts to bring “instruments of more variable character” within the coverage of the federal securities laws. Landreth Timber Co. v. Landreth, 471 U.S. 681, 686 (1985). In SEC v. W.J. Howey Co., 328 U.S. 293, 298-99 (1946), the Supreme Court held that an investment contract is a scheme in which a person (1) invests money (2) in a common enterprise and (3) is led to expect profits solely from the efforts of the promoter or a third party — someone other than the investor.

The first element is met because each Plaintiff specifically alleges the amount of money he or she invested in a specific LLC.13 The second element is met because each such investment was in a common enterprise where it was pooled with those of other purchasers of membership interests in the LLC.14

The third element of the “investment contract” test is met because each Plaintiff expected profits to result solely from the efforts of the promoter or a third party.15 Indeed, Plaintiffs affirmatively allege that they were not, in fact, knowledgeable about complex tax matters and tax planning and relied upon the Defendants when they invested in the LLCs.16 Profits are considered to be derived solely from the efforts of others where, as in Plaintiffs' allegations, “the efforts made by those other than the investor are the undeniably significant ones, those essential managerial efforts which affect the failure or success of the enterprise.” Williamson v. Tucker, 645 F.2d 404, 418 (5th Cir. May 1981).

Consistent with the broad definition of security set forth in Howey, numerous federal courts have held that LLC membership interests are securities that render the PSLRA's bar applicable to a RICO case.17 Likewise for the LLC membership interests at issue here, which satisfy the Howey investment contracts test and are therefore securities. The PSLRA prohibition thus applies because the alleged fraud occurred in connection with the purchase or sale of those securities. Section 10(b) of the Securities Exchange Act of 1934 provides in pertinent part:

It shall be unlawful for any person, directly or indirectly, by the use of any means or instrumentality of interstate commerce or of the mails or of any facility of any national securities exchange . . . (b) To use or employ, in connection with the purchase or sale of any security registered on a national securities exchange or any security not so registered, . . . any manipulative or deceptive device or contrivance in contravention of such rules and regulations as the [Securities and Exchange] Commission may prescribe as necessary or appropriate in the public interest or for the protection of investors.

15 U.S.C. § 78j(b); see also 17 C.F.R. § 240.10b-5(c) (also prohibiting fraud “in connection with the purchase or sale of any security”). The Supreme Court has explained that the phrase “in connection with” in Section 10(b) should “be construed 'not technically and restrictively, but flexibly to effectuate [the statute's] remedial purposes.'” SEC v. Zandford, 535 U.S. 813, 819 (2002) (quoting Affiliated Ute Citizens of Utah v. United States, 406 U.S. 128, 151 (1972)).

The Complaint repeatedly alleges a conspiracy to “promote” and “sell” tax savings via the purchase of interests in an LLC. E.g., Compl. ¶ 185.18 The Supreme Court has explained that fraudulent conduct is “in connection with” the purchase or sale of securities when the alleged fraud “coincides” with securities transactions and the events are “not independent.” Zandford, 535 U.S. at 820. Plaintiffs allege that the Defendants were engaged in a fraudulent scheme before, during, and after Plaintiffs purchased LLC membership interests.19 The Complaint alleges that the fraud and the sale of LLC membership interests coincided temporally and no allegations suggest they were independent of one another. In fact, each Plaintiff alleges that he or she (1) paid to purchase an LLC membership interest20 and (2) took a deduction in exact proportion to that membership interest.21

It makes no difference for purposes of the PSLRA's application that Plaintiffs do not actually allege securities laws violations, relying instead upon mail or wire fraud, because 18 U.S.C. § 1964(c) expressly prohibits reliance on any conduct that would have been actionable as fraud in the purchase or sale of securities. There is no requirement that securities fraud actually be alleged. As the Eleventh Circuit succinctly stated, “A plaintiff may not dodge this bar by pleading other offenses as predicate acts in a civil RICO action if the claim is based on conduct that would have been actionable as securities fraud.”22 This Court has further noted that

Congress intended this amendment to prohibit plaintiffs from pleading “other specified offenses, such as mail or wire fraud, as predicate acts of racketeering under civil RICO if such offenses are based on conduct that would have been actionable as securities fraud.”

Pack v. Stanley, No. 1:10-cv-2200-AT, 2012 WL 13001918, at *8 (N.D. Ga. May 18, 2012) (quoting Sen. R. Mo. 104-98 at 17).

In determining whether the PSLRA bars a civil RICO claim, courts review a complaint in its entirety, rather than parsing the plaintiff's allegations to distinguish between the various alleged predicate acts.23 And when, as here, a plaintiff alleges a “'single scheme,' courts have held that 'if any predicate act is barred by the PSLRA it is fatal to the entire RICO claim.'”24

Because the Promotional Materials to which the Complaint refers consistently calls the LLC interests “securities,” and because the Complaint repeatedly references a common scheme to sell interests in LLCs,25 dismissal with prejudice is required. In the same vein, the Complaint also alleges that “[t]he claims of all Class Members originate from the same fraudulent transaction predicated by the Defendants.”26 And for good measure, the Complaint also alleges a single enterprise.27 By alleging a single scheme, a single transaction, and a single enterprise, Plaintiffs have inextricably linked their fraud-based RICO claims to the sale of securities in the form of LLC memberships, and the PSLRA bars those claims completely.28

B. The Federal RICO Claims against Mr. Greenberger and Aprio Fail Because They Do Not Allege Operation or Management

Accountants like Mr. Greenberger and the Aprio firm cannot violate § 1962(c) unless they “participate in the operation or management” of the RICO enterprise. Reves v. Ernst & Young, 507 U.S. 170, 185 (1993). In other words, “some part in directing the enterprise's affairs is required” to establish a violation of § 1962(c); thus, merely preparing financial documents based on a client's records does not give rise to RICO liability. Id. at 179, 186. Here, Plaintiffs' Complaint provides no factual allegations that plausibly show that Mr. Greenberger or Aprio participated in the operation or management of the alleged RICO enterprise.

Instead, the Complaint is peppered with conclusory assertions about Aprio's management role, such as that the scheme was “spearheaded by the Aprio Defendants,” Compl. ¶ 3, and that the “Aprio Defendants were the key organizer,” id. ¶¶ 56, 221(a). This Court should disregard these assertions, “eliminat[ing] any allegations in the complaint that are merely legal conclusions,” and instead examine the well-pleaded factual allegations of the complaint. Am. Dental, 605 F.3d at 1290 (citing Iqbal, 556 U.S. at 679).29

Once this conclusory verbiage is set aside, what remains in the 175-page Complaint is insufficient to plausibly show that Mr. Greenberger or Aprio had any part in directing the affairs of the alleged enterprise.30 To the contrary, the Complaint merely alleges that Aprio prepared tax returns and Schedule K-1s for the LLCs, and that Plaintiffs followed advice from accountants. Compl. ¶ 54.31 “Furnishing a client with ordinary professional assistance, even when the client happens to be a RICO enterprise, will not normally rise to the level of participation sufficient to satisfy the Supreme Court's pronouncements in Reves.” Handeen v. Lemaire, 112 F.3d 1339, 1348 (8th Cir. 1997); Rosemann v. Sigillito, 956 F. Supp. 2d 1082, 1098 (E.D. Mo. 2013) (same). Nor will a professional's persuasive power to recommend allegedly fraudulent action. Madanes v. Madanes, 981 F. Supp. 241, 257 (S.D.N.Y. 1997).

Thus, federal courts routinely dismiss RICO complaints that fail to allege facts to support an inference that the defendant accountant operated or managed the enterprise.32 Even activities that were beneficial, important, or essential to the operation of the RICO enterprise do not establish the requisite management or operation of the enterprise. Univ. of Md. at Balt. v. Peat, Marwick, Main & Co., 996 F.2d 1534, 1539 (3rd Cir. 1993) (“Simply because one provides goods or services that ultimately benefit the enterprise does not mean that one becomes liable under RICO as a result.”); Dep't of Econ. Dev. v. Arthur Andersen & Co., 924 F. Supp. 449, 466 (S.D.N.Y. 1996) (“providing important services to a racketeering enterprise is not the same as directing the affairs of the enterprise”); De Wit v. Firstar Corp., 879 F. Supp. 947, 966 (N.D. Iowa 1995) (“even provision of services essential to the operation of the RICO enterprise itself is not the same as participating in the conduct of the affairs of the enterprise”).

It is telling that ¶ 56 of the Complaint suggests ways Aprio could have managed the enterprise — but never actually alleges that they did so. For example, Plaintiffs allege that Aprio had “the reputation and 'brand name' to attract additional potential participants,” but do not allege how it actually leveraged its reputation to exert control. Further, Plaintiffs allege that Aprio's “unique position” allowed it “to choose which sponsors they wanted to use,” but do not allege how it exercised any control in “teaming up with” the alleged sponsors. Similarly, Plaintiffs allege that “the Appraiser Defendants allowed the Aprio Defendants . . . to control” their appraisals, Compl. ¶ 189, but do not allege whether or how Aprio exercised that control. Instead, the factual allegations merely establish that Aprio provided ordinary professional services including preparing tax returns and K-1s for the LLCs and “assist[ing] and advis[ing]” the alleged sponsors.33 Other, false allegations about Aprio's role also omit any suggestion of management or direction when taken as true: “the Aprio Defendants worked closely with the Appraiser Defendants to prepare the Appraisals,” Compl. ¶ 50; Aprio prepared tax returns and K-1s, id. ¶¶ 56, 90, 91, 117, 118, 142, 143; Aprio represented the LLCs during their audit by the IRS and notified clients, id. ¶¶ 95, 121, 146, 182.34 By alleging only the provision of ordinary professional services, Plaintiffs fail to state a claim under § 1962(c) and, by extension, under § 1962(d).35

C. The Federal RICO Claims Are Time-Barred

The four-year statute of limitations for federal civil RICO actions, Agency Holding Corp. v. Malley-Duff & Assocs., 483 U.S. 143, 156 (1987), expired years ago. It began to run when Plaintiffs' injury “was or should have been discovered.” Lehman v. Lucom, 727 F.3d 1326, 1330 (11th Cir. 2013). Taking Plaintiffs at their word that they were “injured as a result of the Defendants' and their co-conspirators' misrepresentations and omissions in carrying out the transactions and subsequently filing tax returns” for 2010 and 2011, Compl. ¶¶ 239, 93, 117, 143, it is clear that they discovered their injuries by 2015 at the latest — when they received notice that the IRS was disallowing the conservation easement tax deductions at the partnership level. See id. ¶¶ 96, 122. Those communications put Plaintiffs on notice that they should diligently investigate the fraud of which they now complain. See Rowe, 181 F. Supp. 3d at 1174. Because more than four years elapsed between the IRS notices and the filing of this Complaint, Plaintiffs' federal RICO claims are time-barred.

D. All RICO Claims against Mr. Greenberger and Aprio Fail to State a Claim Because Plaintiffs Lack Standing

All of Plaintiffs' RICO claims also fail because their allegations do not establish any direct nexus between a predicate act by Mr. Greenberger or Aprio and the injury Plaintiffs have purportedly sustained.36 Courts interpreting both the federal and Georgia RICO statutes hold this nexus to be an essential part of the proximate cause element of RICO. “When a court evaluates a RICO claim for proximate causation, the central question it must ask is whether the alleged violation led directly to the plaintiff's injuries.” Ray v. Spirit Airlines, Inc., 836 F.3d 1340, 1349 (11th Cir. 2016); accord Wylie v. Denton, 323 Ga. App. 161, 166 (2013) (Georgia RICO).

Plaintiffs' sole suggestion of RICO proximate cause is the shotgun allegation, repeated four times, that they have been injured “[a]s a proximate result of Defendants' unlawful pattern of illegal fraudulent conduct as described above.” Compl. ¶¶ 270, 281, 290, 301. “[T]his allegation amounts to little more than a '[t]hreadbare recital[ ] of the elements of a cause of action, supported by mere conclusory statements,' which is plainly insufficient to support a cause of action.” Ray, 836 F.3d at 1350 (quoting Iqbal, 556 U.S. at 678). If Plaintiffs' injury was “causing them to pay substantial fees and transaction costs, be exposed to interest and penalties from the IRS, and incur additional accounting and legal fees and expenses to deal with the IRS fallout,”37 Compl. ¶ 8, nothing in the Complaint explains how these varying injuries flowed directly from any predicate act of wire fraud or mail fraud. And even if Plaintiffs had pleaded that their injuries were the reasonably foreseeable result of Defendants' acts, “the fact that an injury is reasonably foreseeable is not sufficient to establish proximate cause in a RICO action — the injury must be direct.” Ray, 836 F.3d at 1349.

Instead, the Complaint alleges only that three LLCs are in various stages of the process of having their tax deductions reduced or disallowed. Compl. ¶¶ 96, 98, 99, 122, 124, 147, 149, 150. An injury is not direct if it is first suffered by another. And Plaintiffs have not purported to bring their claims on behalf of the injured LLCs, nor can they; a member lacks standing to prosecute civil RICO claims on behalf of the entity. Shneydershteyn-Kuvykin v. iPayment Holdings, Inc., No. 14-CV-4728, 2015 WL 6507451, at *4 (E.D.N.Y. Oct. 27, 2015) (citing Manson v. Stacescu, 11 F.3d 1127, 1131 (2d Cir. 1993)). Nor have Plaintiffs pursued their claims on behalf of the direct victim of any tax fraud: the United States government. As the Ninth Circuit explained, “It was the United States that lost tax revenue as a direct result of [the admitted tax-shelter] fraud. [Plaintiff]'s asserted injury only indirectly resulted from HVB's fraudulent activity against the United States.” Rezner v. Bayerische Hypo-Und Vereinsbank AG, 630 F.3d 866, 873 (9th Cir. 2010) (reversing summary judgment for RICO plaintiff). Thus, RICO proximate cause was not established by the Rezner plaintiff, even though he, unlike any Plaintiff here, had been personally audited and ordered to pay $11 million in back taxes and interest. Id. at 869, 874.

Without explaining how the predicate acts of mail and wire fraud in ¶ 234 led directly to the Plaintiffs' injuries, the Complaint fails to state a claim for violations of federal and Georgia RICO. “A plaintiff cannot allege merely that an act of racketeering occurred and that he lost money. He must show a causal connection between his injury and a predicate act.” Longino v. Bank of Ellijay, 228 Ga. App. 37, 41 (1997). And a plaintiff must do more than plead “merely that his injury was an eventual consequence of the [predicate act] or that he would not have been injured but for the [predicate act].” Wylie, 323 Ga. App. at 166. “The connection between the racketeering activity and the injury can be neither remote, purely contingent, nor indirect.” Ray, 836 F.3d at 1349. Accordingly, all RICO claims (Counts 1, 2, 3, and 4) must be dismissed for failure to state a claim.

III. Plaintiffs' Common-Law Claims Must Be Dismissed for Failure to State a Claim

Plaintiffs' common law claims are also subject to dismissal. The Complaint fails to allege an accountant-client relationship between any of the Plaintiffs and Aprio or Mr. Greenberger, which is fatal to Plaintiffs' professional negligence and breach of fiduciary duty claims. Moreover, the disclaimers and warnings in the Promotional Materials repeatedly referenced in the Complaint demonstrate that the Plaintiffs could not have reasonably relied on any alleged misrepresentation by any Defendant, barring their reliance-based claims. Finally, facially, the allegations of the Complaint establish that Plaintiffs' common law claims are time-barred and that Plaintiffs are not entitled to tolling under any of the theories alleged in the Complaint.

A. Absent an Accountant-Client Relationship, Plaintiffs Have No Claims for Professional Negligence or Breach of Fiduciary Duty Against Aprio or Mr. Greenberger

“Georgia law . . . provides only one cause of action to persons who are not clients of an accounting firm but who wish to sue the firm and any of its accountants for professional malpractice: an action for negligent misrepresentation.”38 White v. BDO Seidman, LLP, 249 Ga. App. 668, 670 (2001). Here, Plaintiffs have merely alleged that they received K-1s and other documents prepared by Aprio,39 which was retained by LLCs who have not brought suit. Plaintiffs have not alleged that they had their own, direct and independent accountant-client relationships with the firm. Accordingly, under White, Plaintiffs' professional negligence and breach of fiduciary duty claims should be dismissed.40

B. Plaintiffs' Reliance-Based Claims Are Barred by the Contents of the Promotional Materials

Some of Plaintiffs' common law claims involve an element of justifiable or reasonable reliance. See Summit Auto. Grp., LLC v. Clark, 298 Ga. App. 875, 880 (2009) (fraud, cf. Compl. ¶ 331); Marquis Towers, Inc. v. Highland Grp., 265 Ga. App. 343, 346 (2004) (negligent misrepresentation, cf. Compl. ¶ 315). Plaintiffs' allegations of the Promotional Materials, and the contents of those materials [Dkt. 135-3], establish that Plaintiffs cannot have justifiably relied on any Defendant's representations, so those claims must be dismissed as a matter of law.

For example, the Subscription and Suitability Agreement for Maple Landing, LLC that each investor signed contains disclaimers that expressly disavow reliance on the Promotional Materials:

The Subscriber recognizes that the information furnished by the Company does not constitute investment, accounting, legal or tax advice. The Subscriber is not relying on the Company with respect to the economic or tax considerations of the Subscriber relating to this investment, in particular the possibility of the Company receiving a charitable deduction in the event that a majority of the members votes to place one or more conservation easements on the Property. In regard to such considerations, the Subscriber has relied on the advice of, or has consulted with, only his or her own advisor(s).

Maple Landing, LLC Subscr. Agr. ¶ 4(o) (emphasis added). Similarly, the Promotional Materials explain that the materials are not “legal, business or tax advice” and that prospective investors “should consult your attorney or business advisor” about those matters. Maple Landing, LLC Conf'l Pvt. Off'g Summ. at iii; see also id. at 12 (“PROSPECTIVE INVESTORS ARE URGED TO CONSULT WITH AND RELY ONLY UPON THE ADVICE OF THEIR OWN TAX ADVISORS WITH REGARD TO ALL TAX ASPECTS OF INVESTMENT IN THE COMPANY WITH SPECIFIC REFERENCE TO THEIR OWN TAX SITUATIONS.”). As noted above, no Aprio accountant was any investor's own tax advisor; Plaintiffs have not alleged that they had an accountant-client relationship with Aprio, Mr. Greenberger, or any other Aprio accountant. Thus, these disclaimers effectively limited any duty that Aprio may have had to third-parties like the Plaintiffs. Williams v. Fortson, Bentley & Griffin, 212 Ga. App. 222, 224 (1994). As a result, “their reliance on such representations was unreasonable as a matter of law.” Legacy Acad., Inc. v. Mamilove, LLC, 297 Ga. 15, 18 (2015).

Similarly, reliance on Sirote & Permutt's opinion letters to the LLCs, see Compl. ¶¶ 58(e), 76, cannot be the basis for a reliance-based tort. The Promotional Materials explicitly warn that individual purchasers should not rely on the opinion letter: “It is also important to note that the Tax Opinion has been issued to the Company only and has not been issued to any Investor, and no Investor may rely upon such Tax Opinion for any purpose whatsoever without the prior written consent of the opinion giver.” Maple Landing, LLC Conf'l Pvt. Off'g Summ. at 12.41 More fundamentally, it was inherently unreasonable to rely on the opinion letter's “more likely than not” language. J & M Assocs. v. Callahan, 753 F. Supp. 2d 1183, 1211 (S.D. Ala. 2010).

Thus, Plaintiffs cannot, as a matter of law, establish that they were harmed by justifiable reliance upon any alleged misrepresentation by any Defendant. After reading the Promotional Materials and signing the Subscription Agreement, with their broad disclaimers and clear instructions that investors should consult with their own advisors, it was not reasonable for any Plaintiff to rely on any expectation to the contrary. Their reliance-based claims must therefore be dismissed.

C. Plaintiffs' Common Law Claims Are Time-Barred

Each of the common law claims asserted in the Complaint is subject to Georgia's four-year statute of limitations. O.C.G.A. § 9-3-31 (actions for injuries to personalty); see also Duke Galish, L.L.C. v. Arnall Golden Gregory, L.L.P., 288 Ga. App. 75, 76 (2007) (four-year statute of limitations applies to professional negligence claims); Brooks v. Freeport Kaolin Co., 253 Ga. 678, 679 (1985) (four-year statute of limitations applies to fraud claims); Kothari v. Patel, 262 Ga. App. 168, 174 (2003) (four-year statute of limitations applies to breach of fiduciary duty claim). Notwithstanding these limitations periods, Plaintiffs have asserted obviously stale claims. On its face, the Complaint alleges that Plaintiffs made their investments and took the deductions at issue for the 2010 and 2011 tax years. The only specific alleged acts attributed to Mr. Greenberger took place in 2010 and 2012 according to the Complaint. Compl. ¶¶ 117, 234(a). Accordingly, Plaintiffs' only hope of proceeding on any of these common law theories rests on tolling the applicable statutes of limitation. But none of the tolling theories Plaintiffs allege in the Complaint rescues their claims.

Plaintiffs' first tolling theory is “the discovery rule and equitable tolling.” Compl. ¶¶ 249-253. Neither doctrine applies in Georgia. This is apparently another artifact from an earlier case in another jurisdiction. As our Supreme Court recently noted, there is not “any Georgia precedent in which [the state supreme court] has endorsed or applied a doctrine of equitable tolling, and [the Georgia Supreme Court] . . . found only one case in which [that court] even discuss[ed] equitable tolling.” Stubbs v. Hall, 840 S.E.2d 407, 419 (Ga. 2020). And a simple “discovery rule” is not the starting point for claim accrual of any of the common law theories Plaintiffs have advanced.42 Instead, Georgia courts will deny tolling to litigants who have constructive knowledge — a “should have known” standard. Thus, recognition that “something was amiss” is sufficient to put a plaintiff on notice so that by the exercise of due diligence they may discover the alleged fraud. Bauer v. Weeks, 267 Ga. App. 617, 620 (2004); Gerald v. Doran, 169 Ga. App. 22, 23 (1983).

For example, a party's suspicion that it has been misled is enough to set the statute of limitations running, Smith v. Alimenta Processing Corp., 197 Ga. App. 57, 58 (1990), as is the receipt of conflicting information, McClung Surveying, Inc. v. Worl, 247 Ga. App. 322, 325 (2000). In other words, any fact that should raise a red flag is sufficient to put an end to tolling, because it imposes upon the alleged victim an obligation of diligence, and one who is not diligent cannot benefit from tolling. Cochran Mill Assocs. v. Stephens, 286 Ga. App. 241, 246 (2007). The Complaint repeatedly alleges circumstances from which Plaintiffs might have concluded “something was amiss,” so they cannot benefit from tolling on a “discovery rule” basis either. See, e.g., Compl. ¶ 122 (alleging that the members of Mossy Rock received the IRS Revenue Agent Report in January 2015 concluding that the entire deduction “was to be disallowed”).

To benefit from their second tolling theory for fraud-based claims, Compl. ¶¶ 255-258, that do not themselves sound in fraud (i.e., professional negligence or breach of fiduciary duty), Plaintiffs must allege:

(1) actual fraud involving moral turpitude on the part of the defendant; (2) the fraud must conceal the cause of action from the plaintiff, thereby debarring or deterring the knowing of the cause of action; and (3) the plaintiff must have exercised reasonable diligence to discover the cause of action, notwithstanding the failure to discover within the statute of limitation.

Allmond v. Young, 314 Ga. App. 230, 232 (2012). Of course, as an initial matter, Plaintiffs must plead any entitlement to tolling based on fraud with the particularity Rule 9(b) requires, and they have not done that.43 Compl. ¶¶ 255-258 (lumping together all Defendants and failing to allege any who, what, when, where, or how facts as to any Defendant). But even if the underlying fraud claims in the Complaint were pleaded with the requisite particularity, there are no allegations in the Complaint, with respect to Aprio, Mr. Greenberger, or any other Defendant, that could satisfy any of the three substantive elements Georgia courts require for an otherwise time-barred complaint to escape the applicable statutes of limitation.

Finally, in Hunter, Maclean, Exley & Dunn, P.C. v. Frame, the Georgia Supreme Court rejected the “continu[ous] representation rule” upon which Plaintiffs rely, again, an apparent artifact from an earlier case in another jurisdiction. 269 Ga. 844, 847-49 (1998); Compl. ¶¶ 260-261. That tolling theory therefore also fails. Without a basis for tolling for their facially time-barred claims, Plaintiffs cannot hope to recover on any of their common law theories and the Court should dismiss them.

CONCLUSION

Plaintiffs' Complaint is long and full of hyperbolic language and sweeping accusations. Nevertheless, it fails to plead the facts necessary to survive a motion to dismiss under Federal Rules 8, 9, or 12. More fundamentally, the Complaint pleads a federal RICO claim that fails as a matter of law, and state law claims that are time-barred and otherwise contrary to black-letter Georgia law. Aprio and Mr. Greenberger therefore respectfully request that the Court grant their motion and dismiss the claims against them with prejudice.

Respectfully submitted this 7th day of August, 2020.

John E. Floyd
Georgia Bar No. 266413
floyd@bmelaw.com
John H. Rains IV
Georgia Bar No. 556052
rains@bmelaw.com
Jennifer L. Peterson
Georgia Bar No. 601355
peterson@bmelaw.com

BONDURANT, MIXSON & ELMORE, LLP
3900 One Atlantic Center
1201 West Peachtree Street, N.W.
Atlanta, Georgia 30309
(404) 881-4100 (telephone)
(404) 881-4111 (facsimile)

Attorneys for Defendants
Aprio, LLP and Robert Greenberger

FOOTNOTES

1Compl. [Dkt. 1] ¶¶ 40-43, 90-91 (Maple Landing, LLC), 117-118 (Mossy Rock, LLC), 142-143 (Oakhill Woods, LLC). The Complaint repeatedly uses the invented term “SCE Strategy” to falsely suggest that the sale of ownership interests in these various LLCs, together with associated professional support services, were part of a cohesive, unified strategy or scheme. Plaintiffs' acronym evokes the memory of notorious 1990s abusive tax shelter schemes that bear no resemblance to the conservation easement transactions at issue here.

2Cf. id. ¶¶ 8, 310, 319, 333, 337, 347, 354 (alleging only that Plaintiffs have been “exposed”).

3Plaintiffs also vaguely allege that Mr. Greenberger “advised the Dalba Plaintiffs” regarding compliance “with the requirements of Code Section 170(h) and, as a result, they could legally report this allocated charitable contribution deduction.” Compl. ¶ 78. This allegation contains no suggestion of fraud, but even if it did, it omits the essential elements of when, where, and how the Plaintiffs were defrauded by it.

Plaintiffs further allege that Mr. Greenberger signed the tax return for Mossy Rock, LLC on April 7, 2012, id. ¶ 117, but this allegation likewise contains no suggestion of fraud or the particulars required by Rule 9(b). These are the only three substantive mentions of activity by Mr. Greenberger in the entire Complaint.

4Although this subparagraph alleges that “the Aprio Defendants” prepared K-1s for members of LLCs, Compl. ¶ 237(dd), in fact, Aprio prepared tax returns (including K-1s) only for the LLCs themselves. Id. ¶ 45.

5Though we have addressed only ¶ 234's allegations of mail and wire fraud by Mr. Greenberger or Aprio, none of the 37 subparagraphs of ¶ 234 pleads mail fraud or wire fraud with the particularity that Rule 9(b) requires. Dismissal is appropriate where “Plaintiffs' complaint provides a list of mailings and wires, without ever identifying any actual fraud.” Am. Dental, 605 F.3d at 1292. With no predicate act sufficiently pleaded, all of Plaintiffs' federal and Georgia RICO claims fail.

6“The particularity requirement of Rule 9 is a nullity if Plaintiff gets a ticket to the discovery process without identifying a single claim.” United States ex rel. Atkins v. McInteer, 470 F.3d 1350, 1359 (11th Cir. 2006) (affirming dismissal with prejudice).

7Id.

8Not only is this an impermissible legal conclusion, it is an unnecessary one. The Supreme Court held in 2009 that proving a RICO association-in-fact enterprise does not require the recitation of an “ascertainable structure.” Boyle v. United States, 556 U.S. 938, 940-41 (2009). This allegation is apparently an artifact from a much earlier matter.

9The Complaint's vaguely repeated allegation that “Defendants” received fees, see also Compl. ¶¶ 73, 127, 212, 214, 224, again harks back to the abusive tax shelters of the 1990s, in which major international accounting firms received millions of dollars simply from promoting the sale of tax-shelter securities. Here, Plaintiffs never allege precisely what fees Aprio received with respect to the sale of LLC interests. In fact, Aprio received only its ordinary fees for the preparation of LLC tax returns.

10These Promotional Materials for Maple Landing, LLC, are collectively attached as Exhibit 1 [Dkt. 135-3] to Defendant Sirote & Permutt, P.C.'s brief in support of its motion to dismiss [Dkt. 135-1], along with an authenticating declaration [Dkt. 135-2]. This Court may consider the Promotional Materials because Plaintiffs referred to them in their Complaint, they are central to Plaintiffs' claims, their consideration comports with notice pleading, and no party has challenged their authenticity. Fin. Sec. Assur., Inc. v. Stephens, Inc., 500 F.3d 1276, 1285 (11th Cir. 2007).

11Compl. ¶ 44(a). Although Plaintiffs refer to “Syndicates,” it is clear that these are really just the limited liability companies in which Plaintiffs purchased ownership interests. See id. ¶¶ 70 (Maple Landing, LLC), 100 (Mossy Rock, LLC), 125 (Oakhill Woods, LLC).

12Id. ¶¶ 79, 88 (Dalbas), 106, 114 (Thompsons), 132, 140 (Lechter); see also id. ¶ 45 (Plaintiffs' deductions were allocated in proportion to their ownership interests in the respective LLCs).

13Compl. ¶¶ 79, 106, 132.

14Id. ¶ 44(d).

15The profits included tax deductions several times the size of Plaintiffs' investments. For example, the Dalbas invested $42,000 in Maple Landing, LLC in 2010 and reported a charitable contribution deduction of $162,984 on their individual tax returns for that year. Id. ¶¶ 79, 93. The Thompsons invested $19,000 in Mossy Rock, LLC in 2011 and reported a charitable contribution deduction of $92,835 on their individual tax returns for that year. Id. ¶¶ 106, 119. Mr. Lechter invested $141,312 in Oak Hill Woods, LLC in 2010 and reported a charitable contribution deduction of $635,920 on his individual tax return for that year. Id. ¶¶ 132, 145.

16Id. ¶ 52. Consistent with that alleged reliance, Plaintiffs identify a designated manager for each LLC. Id. ¶¶ 57(b), 58(b), 70, 100, 125. And Plaintiffs affirmatively allege that the decision to pursue a conservation easement was made by the manager of each respective LLC. Id. ¶¶ 80, 107, 133.

17See, e.g., Intelligent Inv. Int'l LLC v. Fu, No. 1:17-CV-05296-RWS, 2019 WL 1281204, at *5-*7 (N.D. Ga. Mar. 20, 2019); Cohen v. Feiner, No. 18 C 7328, 2019 WL 1787527, at *4 (N.D. Ill. Apr. 24, 2019); Fagan v. Fischer, No. 14-7013 (FLW) (TJB), 2019 WL 5587286, at *8-*10 (D.N.J. Oct. 30, 2019); Domico v. Kontas, No. 3:12CV1449, 2013 WL 1248638, at *8 n. 11 (M.D. Pa. Mar. 26, 2013); Gilmore v. Gilmore, No. 09 CIV. 6230 WHP, 2011 WL 3874880, at *5 (S.D.N.Y. Sept. 1, 2011), aff'd, 503 F. App'x 97, 99 (2d Cir. 2012); Martinek v. Diaz, No. 11 C 7190, 2012 WL 2953183, at *13 (N.D. Ill. July 18, 2012); Greenfield Plaza Inv'rs LLC v. Stearns Bank N.A., No. CV 12-389-PHX-SRB, 2012 WL 13024089, at *6 (D. Ariz. Aug. 14, 2012); AFFCO Invs., LLC v. KPMG, LLP, No. CIV.A. H-07-3379, 2008 WL 5070053, at *5 (S.D. Tex. Nov. 20, 2008), aff'd, 625 F.3d 185, 189 (5th Cir. 2010). See also SEC v. Edwards, 540 U.S. 389, 393 (2004) (“'Congress' purpose in enacting the securities laws was to regulate investments, in whatever form they are made and by whatever name they are called.' To that end, it enacted a broad definition of 'security,' sufficient 'to encompass virtually any instrument that might be sold as an investment.'”) (quoting Reves v. Ernst & Young, 494 U.S. 56, 61 (1990)).

18See also Compl. ¶¶ 211 (alleging fraudulent solicitation of “persons to participate”), 219 (alleging efforts to fraudulently “persuade and mislead the Plaintiffs to agree to participate”).

19See, e.g., id. ¶¶ 51 (Defendants, Sponsors, and Other Participants continued to promote, sell and implement after they knew it was improper), 55 (Defendants, Sponsors, and Other Participants continued to promote and encourage despite knowing the IRS was scrutinizing and challenging syndicated conservation easements for potential abuse).

20Id. ¶¶ 79, 106, 132.

21Id. ¶¶ 88, 114, 140.

22Dusek v. JPMorgan Chase & Co., 832 F.3d 1243, 1249 (11th Cir. 2016); see also Bald Eagle, 189 F.3d at 330 (plaintiffs cannot plead “mail fraud, wire fraud and bank fraud as predicate offenses in a civil RICO action if the conduct giving rise to those predicate offenses amounts to securities fraud”).

23See, e.g., Bald Eagle, 189 F.3d at 329 (holding that the PSLRA bars an action even when only some of the predicate acts are actionable as securities fraud, because allowing a “surgical presentation of the cause of action . . . undermine[s] the congressional intent behind the RICO Amendment.”); Gatz v. Ponsoldt, 297 F. Supp. 2d 719, 731 (D. Del. 2003) (“A plaintiff cannot circumvent the PSLRA's exclusion of securities fraud as a RICO predicate act through artful pleading”).

24In re LIBOR-Based Fin. Instruments Antitrust Litig., 935 F. Supp. 2d 666, 730 (S.D.N.Y. 2013), vacated on antitrust grounds, 823 F.3d 759 (2d Cir. 2016); Gilmore, 2011 WL 3874880, at *6 (dismissing RICO claims because where plaintiff alleges a single scheme, and “the securities aspects of the fraud must be aggregated with the non-securities aspects”).

25Compl. ¶¶ 1, 6, 7, 40, 59, 185, 214.

26Id. ¶ 196.

27Id. ¶ 211.

28In re Enron Corp. Secs., Derivative & ERISA Litig., 284 F. Supp. 2d 511, 622 (S.D. Tex. 2003); Perkumpulan Inv'r Crisis Ctr. Dressel-WBG v. Wong, No. C09-1786-JCC, 2014 WL 1047946, at *7 (W.D. Wash. Mar. 14, 2014); Awad v. Omar, No. 18 CIV. 10810 (NRB), 2019 WL 5727327, at *5 (S.D.N.Y. Nov. 5, 2019); EIG Energy Fund XIV, L.P. v. Keppel Offshore & Marine Ltd., No. 18 CIV. 1047 (PGG), 2020 WL 2319127, at *9 (S.D.N.Y. May 11, 2020).

29In Iqbal, the Supreme Court considered the complaint's allegations that Attorney General Ashcroft was “the principal architect” of, and FBI Director Mueller was “instrumental” in adopting, the discriminatory policies at issue. 556 U.S. at 680-81. The Court concluded, “These bare assertions . . . amount to nothing more than a 'formulaic recitation of the elements,'” and disregarded them. Id. at 681.

30Indeed, Plaintiffs' allegations of a RICO enterprise contradict these suggestions of Aprio's leadership. Cf. Compl. ¶ 216 (“Defendants, the Sponsors, and the Other Participants maintained an interest in and control of the Enterprise and also conducted or participated in the conduct of the affairs of the Enterprise through a pattern of racketeering activity.”) (emphasis added).

31In fact, Aprio never advised any Plaintiff how to file or report on his or her individual tax returns, which Aprio did not prepare. Cf. Compl. ¶ 54. The Complaint also makes the false allegations that Aprio approved promotional materials for the LLCs and prepared conservation easement deeds, appraisals, and Form 8283s. See id. ¶ 56. However, even taken as true, all of these allegations of ordinary professional assistance fail to establish that Aprio or Mr. Greenberger operated or managed the RICO enterprise.

32See, e.g., Brennan v. Ferreira, 251 F. Supp. 3d 338, 342 (D. Mass. 2017) (complaint alleged that accountant filed false tax returns); Hayden v. Paul, Weiss, Rifkind, Wharton & Garrison, 955 F. Supp. 248, 253-54 (S.D.N.Y. 1997) (complaint alleged misrepresentation and omissions in audited financial statements and tax returns); Gilmore v. Berg, 820 F. Supp. 179, 182-83 (D.N.J. 1993) (complaint alleged that accountant prepared forecast letters); see also Dep't of Econ. Dev. v. Arthur Andersen & Co., 924 F. Supp. 449, 468-69 (S.D.N.Y. 1996) (granting summary judgment to accountant who fraudulently certified misleading financial statements); Terrell v. Childers, 920 F. Supp. 854, 864 (N.D. Ill. 1996) (granting summary judgment to accountants who prepared tax projections and allowed their firm “to be a source of credibility”).

33Compl. ¶ 56. Likewise, the Complaint's only allegations specific to Mr. Greenberger allege merely his general professional advice and services. Id. ¶¶ 78 (advice to the Dalbas), 117 (signing tax return for Mossy Rock, LLC), 234(a) (email to Mr. Dalba “regarding participation in the Maple Landing Syndicate”).

34In fact, Aprio had no role in selecting the appraisers or preparing the appraisals. Further, Aprio's role in the IRS audits was secondary — not managerial — and consisted of assisting the tax controversy lawyers under a Kovel arrangement. See United States v. Kovel, 296 F.2d 918, 922 (2d Cir. 1961) (communications with an accountant may be attorney-client privileged “if the lawyer has directed the client” to communicate with the accountant whom the lawyer has retained) (emphasis added).

35“It almost goes without saying that, having failed to sufficiently plead the underlying substantive RICO claim, Plaintiffs have also failed to sufficiently allege their RICO conspiracy claim.” Rowe, 181 F. Supp. 3d at 1194.

36Civil RICO damages are available only to a “person injured in his business or property by reason of a violation of section 1962.” 18 U.S.C. § 1964(c) (emphasis added); accord O.C.G.A. § 16-14-6(c) (Georgia RICO).

37Tellingly, the Complaint does not allege that any Plaintiff has had his or her personal tax liability increased or even questioned by the IRS, even though that is an element of its proposed class definition. See Compl. ¶ 193 (“All Persons who . . . have been assessed back-taxes, penalties, and/or interest by the Internal Revenue Service. . . .”); cf. id. ¶¶ 8, 310, 319, 333, 337, 347, 354 (alleging only that Plaintiffs have been “exposed”).

38As noted in Section I above, Plaintiffs' claim for negligent misrepresentation must be dismissed for failure to plead fraud with particularity. See Fed. R. Civ. P. 9(b); Feldman, 849 F.3d at 1340.

39Plaintiffs do not allege that they received K-1s from Aprio. To the contrary, they allege that they received K-1s from the LLC, as is customary. Compl. ¶¶ 42 (“The partnership is also required to furnish statements, known as Schedule K-1s, to its members”), 43 (Plaintiffs reported charitable deductions “based on the Schedule K-1 received from the respective Syndicate in which they were a member.”) (emphasis added).

Nor do Plaintiffs allege that Aprio represented them in the IRS audits. Cf. id. ¶¶ 252, 257 (alleging that “Defendants” advised Plaintiffs that they should be represented in the IRS proceedings by Aprio and Sirote). Aprio and Sirote represented the LLCs. Id. ¶¶ 95 (Maple Landing, LLC), 121 (Mossy Rock, LLC), 146 (Oakhill Woods, LLC).

40Alternatively, this Court may also dismiss the claims as duplicative. As the Georgia Court of Appeals held in Oehlerich v. Llewellyn, where “claims for breach of fiduciary duty . . . are simply duplications of [a] . . . malpractice claim,” those claims fail as well. 285 Ga. App. 738, 740 (2007). Federal courts construing Georgia law, as well as courts from other jurisdictions, routinely dismiss similar claims on this basis. See, e.g., Hays v. Page Perry, LLC, 26 F. Supp. 3d 1311, 1320 (N.D. Ga. 2014) (“The Plaintiff's remaining claims are duplicative of the professional malpractice claim. Georgia courts routinely dismiss fiduciary duty and contract claims when they rely on the same allegations . . .”); see also Schutz v. Kagan Lubic Lepper Finkelstein & Gold LLP, 552 F. App'x 79, 79-80 (2d Cir. 2014) (affirming dismissal of breach of fiduciary duty claim as duplicative of professional negligence claim); Nettleton v. Stogsdill, 899 N.E.2d 1252, 1267 (Ill. App. Ct. 2008) (dismissing breach of fiduciary duty claim as duplicative of professional negligence claim where both claims were “based on the same operative facts and alleged the same injury”).

41The Promotional Materials [Dkt. 135-3] could scarcely have been more explicit in warning about the IRS-related uncertainties involved with these purchases. See, e.g., Maple Landing, LLC Conf'l Pvt. Off'g Summ. at 39 (“There can be no assurance that the IRS will recognize the Conservation Easement as qualified real property interests or, if it does, that it will accept the amount of the claimed charitable deductions. . . . [T]here is a risk that the IRS could audit the Company's information return on which such contribution deduction is claimed. A successful challenge by the IRS could result in the disallowance of some or all of the charitable deductions taken by the Company, with the result that the Members could owe additional tax and interest and possibly a penalty.”), 36 (“The Internal Revenue Service on June 30, 2004 released Notice 2004-41 indicating the government's awareness that some taxpayers are 'improperly' claiming charitable contribution deductions.”), 33-34 (listing 36 reported court decisions involving conservation easement deductions and their “highly variable” results), 37-40 (extended discussion of possible regulatory and legislative changes), 28 (“YOU SHOULD REVIEW CAREFULLY THE TAX RISKS DESCRIBED IN THIS OFFERING SUMMARY AND YOU ARE URGED TO CONSULT WITH AND RELY UPON YOUR OWN PERSONAL TAX ADVISORS WITH RESPECT TO THE TAX CONSEQUENCES ARISING FROM THE PURCHASE OF THE UNITS BEFORE MAKING A DECISION TO INVEST IN THE COMPANY.”).

42The four-year statute of limitations for negligent misrepresentation claims begins to run when an “economic loss actually was sustained.” Hardaway Co. v. Parsons, Brinckerhoff, Quade & Douglas, Inc., 267 Ga. 424, 427 (1997). The statute of limitations for a professional negligence claim begins to run at the time of the alleged malpractice. Shores v. Troglin, 260 Ga. App. 696, 697 (2003). For breach of fiduciary duty, the statute “is triggered by a wrongful act accompanied by any appreciable damage.” Hendry v. Wells, 286 Ga. App. 774, 779 (2007). And “where the gravamen of the underlying complaint is actual fraud, the limitation period is tolled 'until such fraud is discovered, or could have been discovered by the exercise of ordinary care and diligence.'” Hunter, Maclean, Exley & Dunn, P.C. v. Frame, 269 Ga. 844, 847 (1998).

43See, e.g., Larson v. Northrop Corp., 21 F.3d 1164, 1173 (D.C. Cir. 1994) (holding that “allegations of fraudulent concealment, which toll the statute of limitations, must meet the requirements of Rule 9(b)”); Nat'l Group for Commc'ns & Computers Ltd. v. Lucent Techs. Inc., 420 F. Supp. 2d 253, 264-65 (S.D.N.Y. 2006) (to demonstrate appropriateness of equitable tolling, plaintiff must plead elements of fraudulent concealment with particularity pursuant to Rule 9(b)); Pedraza v. United Guar. Corp., 114 F. Supp. 2d 1347, 1356 (S.D. Ga. 2000) (“a plaintiff must satisfy Federal Rule of Civil Procedure 9(b)'s requirement to plead with particularity in her complaint the facts giving rise to a claim of fraudulent concealment before a federal court will toll the statute of limitations”).

END FOOTNOTES

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