Chokatos v. Magnate Fund
Plaintiffs John N. Chokatos and Giancarlo Maranghi appeal judgments of dismissal in favor of several defendants following orders sustaining without leave to amend demurrers to plaintiffs’ third amended complaints for fraud (complaints). We consolidated the appeals for review.
Plaintiffs allege individuals and related corporations conspired to operate a “Ponzi scheme†in which money was borrowed from plaintiffs with false promises that the loans were secured by deeds of trust. We conclude the court rightly sustained demurrers brought by several limited liability companies because plaintiffs failed to allege adequately facts that support the alter ego or single enterprise doctrine under which plaintiffs seek to hold the affiliated companies responsible for the acts of other companies. The deficiency may be cured, however, and we thus conclude that the court erred in denying plaintiffs leave to amend their pleadings.
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