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November 10, 2002 COMPLAINT - against - THOMAS ESPIE, BETTY ESPIE, PATRICK F. MOORE, FRANK E. REDL, WILLIAM L. PAROLI, SR., FRANCES L. RAUCCI as Administrator of the ESTATE OF BASIL RAUCCI, FRED ANDROS, LAWRENCE KNAPP, ROY C. KNAPP & SONS, INC., PETER R. CANTLINE, JOHN V. KANE III, ROGER A. MASTRI, DONALD G. TOMLINS, MARK T.JOHNSON, HAYWARD & PAKAN ASSOCIATES, THOMAS MURPHY, MICHAEL DUNAGAN, MARY PERCESEPE, LORRAINE TRACEY, LOUIS MURASSO, PATRICK HINKLEY, DENNIS LEARY, and PRESIDENTIAL HOMES OF NEW YORK, INC, Defendants. Plaintiff, Town of Poughkeepsie, for its complaint against the defendants alleges upon information and belief as follows: NATURE OF THE ACTION 1. This action commenced on behalf of the Town of Poughkeepsie is brought to recover from the named defendants public funds improperly appropriated or procured through a far-reaching scheme in violation of the public trust. 2. The defendants, though fraudulent and deceptive means conspired to achieve personal benefit and enrichment through a conspiracy powered by bribes, kick backs, overcharges, sham leases, mail fraud, and efforts calculated to circumvent the Municipal Law § 103. PARTIES 3. Plaintiff Town of Poughkeepsie (hereinafter the "Town") is a municipal corporation organized and existing under the laws of the State of New York, with offices at One Overocker Drive, Poughkeepsie, New York, in the County of Dutchess. 4. At all relevant times, the Town was governed by a six-member board, consisting of Michael Dunagan, Mary Percesepe, Lorraine Tracey, Louis Murasso, Patrick Hinkley, Dennis Leary, and a supervisor, Thomas Murphy, who sits as a member of the Board (hereafter collectively the "Board"). 5. Defendants Thomas Espie and Betty Espie are individuals residing at 831 Van Wagner Road, Poughkeepsie, Dutchess County, State of New York (hereinafter collectively "Espie"). 6. Upon information and belief, the Espies are the former co-owners of certain real property located on Tucker Drive in the Town of Poughkeepsie which they sold to Plaintiff Town on or about September 18, 1996, the sale of which gives rise to the claims asserted herein. 7. Defendant Patrick F. Moore is an Attorney-At-Law, licensed to practice law in the State of New York, with a principal place of business at 299-301 Main Mall, Poughkeepsie, Dutchess County, State of New York and has a residence at 10 Argent Drive, Poughkeepsie. 8. Defendant Moore was the Town Attorney for the Town from on or about January 1, 1994 to December 31, 1997, and Deputy Town Attorney from on or about January 1, 1998 to December 31, 1999. 9. Defendant Frank E. Redl is an Attorney-At-Law, licensed to practice law in the State of New York, with a principal place of business at 319 Main Mall, Poughkeepsie, Dutchess County, State of New York and has a residence at Haight Avenue, Poughkeepsie. 10. Defendant Redl was the Deputy Town Attorney for the Town from on or about January 1, 1994 to December 31, 1997, and Town Attorney from on or about January 1, 1998 to December 31, 1999. 11. Defendant William L. Paroli is an individual residing at 10 Cream Street, Poughkeepsie, Dutchess County, State of New York, and was the Town of Poughkeepsie Republican Committee Chairman from 1993 to May 1999, and Dutchess County Republican Committee Chairman from 1997 to May 1999. 12. On February 18, 2000, Defendant Paroli pled guilty in Federal Court for the Southern District of New York to charges that he, along with Defendants the late Basil Raucci and Fred Andros, used their positions of political power and influence to extract payments from various contractors in exchange for favorable treatment with regard to obtaining public works contracts from the Town. 13. Defendant Estate of Raucci is the estate of the late Basil Raucci, who was formerly the Tax Assessor of the Town of Poughkeepsie at all times mentioned herein. 14. Prior to his death Basil Raucci resided at 2 Lauretta Drive, Highland, Ulster County, State of New York. 15. Upon information and belief, Basil Raucci died October 10, 1997. 16. Upon information and belief, Frances L. Raucci was appointed Administratrix of the Estate of Basil Raucci on or about June 25, 1998 by the Surrogate Judge of the County of Ulster, State of New York (hereafter "Estate of Raucci") and resides at 39 Argent Drive, Highland, Ulster County, State of New York. 17. Upon information and belief, the position of Tax Assessor of the Town of Poughkeepsie was a position appointed by the Board and the Tax Assessor served as an employee and officer of the Town. 18. Defendant Fred Andros is an individual formerly residing at 371 Violet Avenue, Poughkeepsie, Dutchess County, State of New York. 19. Defendant Andros was the Water Superintendent of the Town of Poughkeepsie Water Department from on or before 1993 to May 1999. 20. Upon information and belief, the position of Water Superintendent of the Town of Poughkeepsie was a position appointed by the Board and the Water Superintendent served as an employee and officer of the Town. 21. In the Spring of 2000, Defendant Andros pled guilty to a single count of conspiracy in Federal Court for the Southern District of the State of New York, which count of conspiracy involved an arrangement with defendant Paroli to obtain illegal payments from persons doing business with the Town. 22. Defendant Andros is currently incarcerated at the Clinton Correctional Facility, Dannemora, Clinton County, New York for procuring the murder of Susan Fassett, who had been the personnel director for the Town of Poughkeepsie at the time of her death 23. Defendant Lawrence Knapp is an individual residing at 142 Kingwood Park, Poughkeepsie, Dutchess County, State of New York, and upon information and belief, was, at all times relevant herein, an officer, shareholder and/or director of' Defendant Roy C. Knapp & Sons, Inc. 24. Defendant Roy C. Knapp & Sons, Inc. was, at all times relevant herein, a domestic corporation operating as a general contractor in the construction industry, with offices located at 123 Rombout Avenue, Beacon, Dutchess County, State of New York. 25. Upon information and belief, Defendant Peter R. Cantline is an individual residing at 4 Highland Ridge Road, New Paltz, Ulster County, State of New York, and was at all times relevant herein a partner in Defendant Hayward and Pakan Associates. 26. Upon information and belief, Defendant John V. Kane, III is an individual residing at 125 Hooker Avenue, Poughkeepsie, Dutchess County, State of New York, and was at all times relevant herein a partner in Defendant Hayward and Pakan Associates. 27. Upon information and belief, Defendant Roger A. Mastri is an individual residing at 364 Allen Road, Salt Point, Dutchess County, State of New York, and was at all times relevant herein a partner in Defendant Hayward and Pakan Associates. 28. Upon information and belief, Defendant Donald G. Tomlins is an individual residing at 209 Powdersville Main, Easley, Pickens County, State of South Carolina, and was a partner in Defendant Hayward and Pakan Associates from before May 20, 1982 until on or about July 31, 1995. 29. Upon information and belief, Defendant Mark T. Johnson is an individual residing at 462 Rossway Road, Pleasant Valley, Dutchess County, State of New York, and was at all times relevant herein a partner in Defendant Hayward and Pakan Associates. 30. Upon information and belief, Defendant Hayward and Pakan Associates was, at all times relevant herein, a partnership organized under the laws of New York, engaged in providing architectural services, with offices located at 321 Main Mall, Poughkeepsie, Dutchess County, State of New York. 31. Defendant Thomas Murphy is an individual residing at 77 South Gate Drive, Poughkeepsie, Dutchess County, State of New York. 32. Defendant Murphy was formerly the Supervisor of the Town of Poughkeepsie, having served in that position from on or about January 1, 1994 to December 31, 1999. 33. Defendant Michael Dunagan is an individual residing at 7 Peacock Lane, Dutchess County, State of New York. 34. Defendant Dunagan was a member of the Town Board of the Town of Poughkeepsie from on or before January 1, 1994 to December 31, 1999. 35. Defendant Mary Percesepe is an individual residing at 3 Marie Court, Poughkeepsie, Dutchess County, State of New York. 36. Defendant Percesepe was a member of the Town Board of the Town of Poughkeepsie from on or about January 1, 1994 to December 31, 1999. 37. Defendant Lorraine Tracey is an individual residing at 26 Rochdale Road, Poughkeepsie, Dutchess County, State of New York. 38. Defendant Tracey was a member of the Town Board of the Town of Poughkeepsie from on or about January 1, 1994 to December 31, 1999. 39. Defendant Louis Nilurasso is an individual residing at 165 Smith Street, Poughkeepsie, Dutchess County, State of New York. 40. Defendant Murasso was a member of the Town Board of the Town of' Poughkeepsie from on or about January 1, 1994 to December 31, 1997. 41. Defendant Patrick Hinkley is an individual residing at 29 Schoolhouse Lane, Poughkeepsie, Dutchess County, State of New York. 42. Defendant Hinkley was a member of the Town Board of the Town of Poughkeepsie from on or about January 1, 1994 to March 2, 1999. 43. Defendant Dennis Leary is an individual residing at 38 Ziegler Avenue, Poughkeepsie, Dutchess County, State of New York. 44. Defendant Leary was a member of the Town Board of the Town of Poughkeepsie from 1994 to November 1996. 45. Defendant Presidential Homes of New York, Inc. (hereafter "Presidential Homes"), was, at all times relevant herein, a domestic corporation having offices located at 730 Violet Avenue, Hyde Park, County of Dutchess, State of New York, having the late Basil Raucci as its president or chief executive officer. JURISDICTION AND VENUE 46. This action is brought pursuant to the provisions of the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. § 1961, et seq., as well as various State law claims predicated upon violations of New York State General Municipal Law § 103, breach of fiduciary duty, attorney malpractice, breach of contract, breach of the covenant of good faith and fair dealing, unjust enrichment, inducement of breach of fiduciary duty, and fraud. Original jurisdiction is conferred upon this Court by 28 U.S.C. § 1331 and 18 U.S.C. § 1964, and supplemental jurisdiction is based upon 28 U.S.C. § 1367 (a), in that all the claims presented herein are based on a common set of facts and form part of the same case controversy. 47. Venue is proper in this District pursuant to 28 U.S.C. § 1391 (b) in that upon information and belief a substantial part of the events or omissions giving rise to the claims asserted herein Occurred in this District. 48. Plaintiff requests a jury trial. FACTS I. THE PAROLI CONSPIRACY OVERVIEW 49. Upon information and belief, from 1993 through 1999, Defendants Paroli, Raucci and Andros, among others engaged in a multi-faceted conspiracy to use their positions of political power to obtain money and other things of value from the Town and from those doing business with the Town, through extortion, bribery and fraud. 50. Upon information and belief, a portion of this money so obtained was paid to Defendants Paroli, Raucci and Andros, with some of the money also being directed to other parties, including Defendant Presidential Homes of New York, Inc. 51. On or about February 18, 2000, Defendant Paroli pled guilty to conspiracy to commit extortion in violation of 18 U.S.C. § 1951. During his plea allocution, Paroli stated: From 1993 through May 1999, I was Chairman of the Republican Party for the Town of Poughkeepsie. From September 1997 through May 1999, I was Chairman of the Republican Party for Dutchess County, New York. From around 1994 until April of 1999, I conspired with other Town officials, including Basil Raucci, the former Tax Assessor * * * and Fred Andros, the former Water Superintendent for the Town and local businessmen. In furtherance of the conspiracy, we approached contractors and other businesses working in the Town of Poughkeepsie and used the power of other (sic) official positions to extort payments from those contractors and businesses. I knew that the payments were extorted from the contractors through the use of our official positions, and the result of the power we held over those contractors to, one, delay the completion of the projects; two, to award town contracts and/or, (three), the harm or help through business interests, depending on whether they made the payments. The payments, which were in the form of cash and materials went to the Republican Party for the Town of Poughkeepsie, and to my co-conspirators and myself. 52. Upon information and belief, it was a practice of Defendants Paroli, Raucci and Andros to route certain payoffs through Defendant Presidential Homes, of New York, Inc. II. THE ESPIE TRANSACTION 53. In or about 1994, the Town was in need of a building for use as a police and court facility and, through the Board, undertook a search for a suitable building for such use. 54. Contemporaneously with the Town's search, Defendants Thomas and Betty Espie were the owners of certain real property located on Tucker Drive in the Town of Poughkeepsie, County of Dutchess, State of New York, which real property was improved with a 120,000 square foot warehouse (hereinafter collectively referred to as the "Espie property"). 55. Said Espie property, as of 1994 and 1995, was unsuitable for use as a police and court facility without extensive renovations. 56. Upon information and belief, during the Spring of 1995, Defendants Moore, Red], and Raucci entered into negotiations with Defendants Thomas Espie and Betty Espie for the acquisition of the Espie property to be used for the police and court facility. 57. Upon information and belief, said negotiations were undertaken at the request of the Board. 58. At all times herein relevant, Plaintiff Town was bound by the competitive bidding requirements of New York State General Municipal Law § 103, which required competitive bidding for all renovation work had the Town bought the Espie property as is, and thereafter made renovations in order to render the building usable as a police and court facility. 59. Upon information and belief, rather than comply with New York State General Municipal Law § 103, Defendants Espie, Paroli, Moore, Redl, Raucci, Murphy, Dunagan, Percesepe, Tracey, Murasso, Hinkley, and Leary, conspired to circumvent said statute. 60. Upon information and belief, the requirements of General Municipal Law § 103 were circumvented by characterizing the transaction as a lease with option to buy, with the Defendant Espies retaining title to the property pending the renovation work and arranging for the contractors to perform said renovation work without complying with the requirements of said statute. 61. Upon information and belief, at all times, however, Defendants Espie, Paroli, Moore, Redl, Raucci, Murphy, Dunagan, Percesepe, Tracey, Murasso, Hinkley, and Leary, intended that the purchase option would be exercised at the earliest opportunity, and never had the intent to actually lease the Espie property, with the result that said lease was a sham. 62. Upon information and belief, the scope and nature of the renovations to be performed by the Defendants Espie were dictated by the Board. 63. In or about April 1995, a lease agreement (hereinafter "lease agreement") with an option to buy was entered into between Plaintiff Town and Defendants Espie for the Espie property. The lease agreement stated a monthly lease amount of forty eight thousand seven hundred fifty ($48,750) dollars, but did not specify the purchase price in the event the option was exercised. 64. In or about May 1995, Plaintiff Town and Defendants Espie executed a purchase and Sale Agreement (hereinafter "purchase agreement") whereby the Town was given the option to purchase the Espie property for five million three hundred fifty thousand ($5,350,000) dollars. 65. Upon information and belief, the five million three hundred fifty thousand ($5,350,000) dollar purchase price was based on a base price of one million nine hundred ninety four thousand six hundred twenty ($1,994,620) dollars for the existing land and building without any renovations, plus the estimated cost of renovations in the amount of three million three hundred filly-five thousand three hundred eighty ($3,355,380) dollars. 66. Pursuant to the agreement between the parties, the Town was not to take possession of the Espie property until certain renovations were completed. 67. The Espies financed the renovations with money lent by Key Bank secured by a mortgage given by Defendants Espie. 68. The Defendants Espie were responsible for coordinating the renovations and, to this end, contracted with various parties, including Defendants Roy C. Knapp & Sons, Inc., and Hayward and Pakan Associates. 69. Upon information and belief, Defendants Espie made a one hundred thousand ($100,000) dollar payoff to Defendant Paroli or his agent in order to secure the contract with the Town for the Espie property for the purposes of constructing the police and court facility. This payoff was made, upon information and belief, using Defendant Roy C. Knapp & Sons, Inc., as the conduit. 70. Upon information and belief, Defendant Hayward and Pakan Associates made a tell thousand ($10,000) dollar payoff to defendant Paroli or his agent in order to secure their contract with tile Defendant Espies. 71. Upon information and belief, Defendant Roy C. Knapp & Sons, Inc., made a twenty-seven thousand ($27,000) dollar payoff to Defendant Paroli or his agent ill order to secure their contract with the Defendant Espies. 72. Upon information and belief, Defendant Presidential Homes of New York, Inc., was one of the agents used by Defendant Paroli to receive said payoffs from Defendants Espie, Roy C. Knapp & Sons, Inc. and Hayward and Pakan Associates. 73. Upon information and belief, these payoffs were included in each such Defendants' estimate for tile work to be performed, and thus caused the amount charged to the Town to be unreasonable and inflated. 74. The lease agreement was subsequently amended in or about July 1996 (hereinafter "amended lease agreement"), to increase the monthly rental amount to eighty thousand ($80,000) dollars. 75. Upon information and belief, the amended lease agreement was executed in order to satisfy Key Bank lending requirements and so as to obtain an increase in the amount of the Key Bank loan. 76. The purchase agreement was subsequently amended in or about July 1990 (hereinafter "amended purchase agreement") by the Town Board and Defendants Espie, to increase the sale price to six million nine hundred fifty thousand ($6,950,000) dollars, an increase of one million six hundred thousand ($1,600,000) dollars. 77. Upon information and belief, Defendants Moore and Raucci, at the direction of the Town Board, negotiated the said one million six hundred thousand ($1,600,000) dollar price increase in the amended purchase agreement with Defendants Espie. 78. Upon information and belief, at various times Defendants Moore and Raucci met with Board members and recommended the said price increase of one million six hundred thousand ($1,600,000) dollars during the Spring of 1996. 79. Upon information and belief, in or about the Spring of 1996, the entire Town Board, and Defendant Moore, met with Defendant Paroli at Defendant Paroli's home, at which meeting it was agreed, at the direction of Defendant Paroli, that the amended purchase agreement and amended lease agreement would be approved by the Board. 80. Upon information and belief, there was no adequate justification for the increase in the purchase price in the amended purchase agreement of one million six hundred thousand ($1,600,000) dollars and representations to that effect were fraudulent and made with the intent to defraud the Town. 81. Upon information and belief, the amount Defendant Espies paid for the renovations at issue herein was approximately three million two hundred thousand ($3,200,000) dollars. 82. At the time Defendants Espie entered into the lease agreement and purchase agreement, they knew that the Board intended to purchase the property outright, that the Town through the action of the Board never intended to lease the property and improvements and that the reason for the transaction being so structured was to avoid § 103 of the General Municipal Law. 83. In a memorandum dated July 17, 1996 from Defendant Moore to Defendant Murphy and the Board, an intent to circumvent the competitive bidding laws is set forth. 84. In his July 17, 1996 memorandum, Moore states: The monthly lease figure [under the amended lease agreement] is $80,000. However, in order to render the arrangement a legal one, we cannot and should not say publicly that we do not intend on paying any rental moneys. * * * In order to legally concluded this matter, we cannot publicly state that it is not our intention to lease the facility at any time, even though that is the case. 85. The Board exercised the option to buy the Espie property at a closing oil September 18, 1996, and paid the six million nine hundred fifty thousand ($6,950,000) dollar purchase price. 86. In order to fund the purchase of the Espie property, the Board with the assistance of Defendants Moore and Redl, issued bond resolutions in October 1995 and July 1996, with the total amount of borrowing equal to seven million ($7,000,000) dollars and borrowed said amount to fund the purchase of the Espie property on or about September 18, 1996. 87. Upon information and belief, the Town Board and Defendant Moore conspired to prevent members of the public from discovering the true nature of the contracts entered into by the Town Board and Defendants Thomas and Betty Espie, by delaying responses to lawfully made Freedom of Information Law requests made by members of the community. 88. Upon information and belief, each Defendant has acted tortiously against Plaintiff Town, causing damage to Plaintiff by reason thereof. 89. Upon information and belief, each Defendant had an understanding, either express or tacit, to participate in a common plan or design to commit a tortious act against Plaintiff Town, to wit, to defraud Plaintiff Town of the honest services of its elected officials, as well as money and other things of value. 90. Upon information and belief, Defendants Espie, Moore, Redl, Paroli, Raucci, Andros, Knapp, Roy C. Knapp & Sons, Inc., Cantline, Kane, Mastri, Tomlins, Johnson, Hayward & Pakan Associates, Murphy, Dunagan, Percesepe, Tracey, Murasso, Hinkley, Leary, and Presidential Homes of New York, Inc., each have committed a tort in furtherance of the aforementioned understanding. 91. By reason of the foregoing, all Defendants are jointly and severally liable for all damages awarded with regard to the claims for relief asserted herein. FIRST CLAIM FOR RELIEF (VIOLATIONS OF THE RACKETEER INFLUENCED AND CORRUPT ORGANIZATION ACT, 18 U.S.C. §1961, ET AL. AGAINST ALL DEFENDANTS) 92. Plaintiff Town incorporates by reference as if fully set forth herein the allegations contained in paragraphs one through ninety-one of this complaint. 93. Upon information and belief, Defendants Moore, Redl, Murphy, Dunagan, Percespe, Tracey, Murasso, Hinkley and Leary, while employed or associated with the Town Board, an enterprise affecting interstate commerce, conducted and participated in the affairs of the Town Board through a pattern of racketeering activity, to wit, said defendants knowingly participated in it scheme to enter into an illegal contract on behalf of the Town of Poughkeepsie through a pattern of mail fraud and bank fraud in furtherance of this scheme, and intended to deceive members of the public and the Town's constituents from uncovering the illegal contract, in violation of 18 U.S.C. § 1962 (C). 94. Upon information and belief, Defendants Moore, Redl, Murphy, Dunagan, Percesepe, Tracey, Murasso, Hinkley and Leary, from on or about January 1995 until on or about September 1996 joined together with the other Defendants named herein in an agreement to so conduct the affairs of the Town Board through a pattern of racketeering activity and Defendants Moore, Redl, Murphy, Dunagan, Percesepe, Tracey, Murasso, Hinkley and Leary understood the unlawful character of said agreement and agreed that said purpose would be and was in fact effectuated and concealed by multiple acts of mail fraud, bank fraud, and bribery, in violation of 18 U.S.C. § 1962 (d). 95. Upon information and belief, Defendants Paroli, Raucci, and Andros, while employed or associated with the Town Board, an enterprise affecting interstate commerce, conducted and participated in the affairs of tile Town Board through a pattern of racketeering activity, to wit, said defendants solicited and received bribes in exchange for which they utilized their influence over the Town Board to cause the Town to enter into an illegal contract and engage in a pattern of mail fraud, bank fraud and money laundering in furtherance of this scheme and intended to deceive members of the public and the Town's constituents from uncovering the illegal contract, in violation of 18 U.S.C. § 1962 (c). 96. Upon information and belief, as part of their scheme, Defendants Paroli, Raucci, and Andros, from on or about January 1995 through on or about September 1990 joined together with Defendants herein in an agreement to conduct the affairs of the Town Board through a pattern of racketeering activity, and each such Defendant understood the unlawful character of the agreement and agreed that said purpose would be and was in fact effectuated and concealed by multiple acts of mail fraud, bank fraud, and bribery, in violation of 18 U.S.C. § 1962 (d). 97. Upon information and belief, Defendants Espie acquired and maintained influence and control in and of the Town Board, an enterprise affecting interstate commerce, through a pattern of racketeering activity, to wit, Defendants Espie paid bribe(s) to obtain such influence and thereby secure a lucrative contract with the Town, which contract was known to them to be illegal, and furthered and concealed their scheme through multiple acts of mail fraud, bank fraud and money laundering, in violation of 18 U.S.C. § 1962 (b). 98. Upon information and belief, Defendants Espie, from on or about January 1995 through on or about September 1996 joined together with Defendants herein in an agreement to conduct the affairs of the Town Board through a pattern of racketeering activity, and each such Defendant understood the unlawful character of the agreement and agreed that said purpose would be and was in fact effectuated by multiple acts of mail fraud, bank fraud, bribery and money laundering, in violation of 18 U.S.C. § 1962 (d). 99. Upon information and belief, Defendant Presidential Homes, from on or about January 1995 through on or about September 1996 joined together with Defendants herein agreement to conduct the affairs of the Town Board through a pattern of racketeering activity, it understood the unlawful character of said agreement and agreed that said purpose would be and was in fact effectuated by multiple acts of money laundering in an effort to conceal the illegal source of funds derived from Defendants' scheme, all in violation of 18 U.S.C. § 1962 (d). 100. Upon information and belief, Defendants Roy C. Knapp & Sons, Knapp, Hayward & Pakari Associates, Cantline, Kane, Mastri, Tomlins, and Johnson, acquired and maintained influence and control in and of the Town Board, an enterprise affecting interstate commerce, through a pattern of racketeering activity, to wit, Defendants Roy C. Knapp & Sons, Knapp, Hayward & Pakan Associates, Cantline, Kane, Mastri, Tomlins, and Johnson paid bribes to obtain such influence and secure lucrative contracts with the Town, which contracts were known to them to be illegal, and furthered and concealed their scheme through multiple acts of mail fraud, bank fraud and money laundering, all in violation of 18 U.S.C. § 1962 (b). 101. Upon information and belief, Defendants Roy C. Knapp & Sons, Knapp, Hayward & Pakan Associates, Cantline, Kane, Mastri, Tomlins, and Johnson, from on or about March 1995 through on or about September 1996 joined together with the other Defendants named herein in an agreement to conduct the affairs of the Town Board through a pattern of racketeering activity and they understood the unlawful character of said agreement, and agreed that said purpose would be and was in fact effectuated by multiple acts of mail fraud, bank fraud, and bribery, in violation of 18 U.S.C. § 1962 (d). 102. Each Defendant named in this action directly or indirectly benefited from the racketeering alleged herein. 103. The Board of the Town is an enterprise as that term is used in 18 U.S.C. § 1961 (4). 104. Upon information and belief, at all times relevant herein, Defendant Paroli, along with Defendants Andros, and Raucci, conspired to unlawfully exert, and did so exert, their political power for their own personal gain by soliciting and demanding, and agreeing to accept, things of value from, among others, Defendants Espie, Roy C. Knapp & Son, Inc., Hayward and Pakan Associates, Knapp, Cantline, Kane, Mastri, Tomlins and Johnson, in exchange for assistance in securing lucrative contracts for said Defendants Espie, Roy C. Knapp & Son, Inc. and Hayward & Pakan Associates. 105. Upon information and belief, from 1995 through in or about June 1997, one hundred thirty seven thousand eight hundred ($137,800) dollars in bribe/extortion money was collected by Defendants Raucci, Paroli and Andros from business entities associated with the building of the Town Police and Court Facility. 106. Upon information and belief, Presidential Homes was a conduit through which a portion of said one hundred thirty-seven thousand eight hundred ($137,800) dollars was funneled to Defendants Paroli and Raucci, among others. 107. Specifically, upon information and belief, the following payoffs were made with respect to this matter: (a) Upon information and belief, the Defendant Espies made a one hundred thousand ($100,000) dollar payoff purportedly as a "donation" to the Town of Poughkeepsie Republican Party. Using Defendant Roy C. Knapp & Sons, Inc. as a conduit, the one hundred thousand ($100,000) dollars ultimately went directly or indirectly to Presidential Homes. Upon information and belief, Defendant Knapp, as a director or officer of Defendant Roy C. Knapp & Sons, Inc., was the individual responsible for facilitating this payoff. (b) Upon information and belief', Defendant Hayward and Pakan
Associates was told by Defendant Raucci to make a ten thousand ($
10,000) dollar payoff, purportedly as a "donation" to
the Town of Poughkeepsie Republican Party. Defendant Hayward and
Pakan Associates understood this "donation" was
necessary to be awarded the contract. The money was paid in four
parts: two thousand five hundred ($2,500) dollars in cash paid to
Defendant Raucci; two thousand five hundred ($2,500) dollars by
check to the Republican Party; two thousand five hundred ($2,500)
dollars by check to the Dutchess County Republican Party, which
in turn wrote a two thousand five hundred ($2,500) (c) Upon information and belief, Defendants Roy C. Knapp & Sons, Inc. and Knapp were required by Defendant Raucci to make a twenty seven thousand eight hundred ($27,800) dollar payoff as a "donation" to the Town of Poughkeepsie Republican Party. Defendants Roy C. Knapp & Sons, Inc. and Knapp were told that the payoff was expected in exchange for being awarded the contract for the renovation work at the Espie property. Upon information and belief, twenty thousand ($20,000) dollars of this money was in the form of a check that, through a complex transaction involving other entities designed to disguise the flow of money, ultimately was paid to Presidential Homes. Five-thousand ($5,000) dollars of this money was made payable to an entity under Defendant Raucci's control, some of which Defendant Raucci converted to cash, and the rest of which Defendant Raucci paid to Presidential Homes. The remaining two thousand eight hundred ($2,800) dollars was provided in cash f1roin Defendant Roy C. Knapp & Sons, Inc., to Defendant Raucci through a third party. 108. Upon information and belief, it was a part and object of the conspiracy engaged in by all Defendants that said Defendants devised a scheme and artifice to defraud the Town of money, goods, services, and the honest services of its employees and elected representatives. 109. Upon information and belief, Defendants agreed and conspired to obtain direct and indirect control over the Board, and its assets and as a result operated said Board through a pattern of racketeering activities. 110. Upon information and belief, the Defendants acted to accomplish this by abusing fiduciary relationships and engaging in fraudulent misrepresentations with regard to the circumstances surrounding the various contracts whereby the Town was obligated to lease and/or purchase the Espie property. 111. Upon information and belief, the aforesaid control of the Board of the Town was obtained through multiple counts of bribery, mail fraud, bank fraud and money laundering, in violation of 18 U.S.C. §§ 1341,1346, 1956, 1961 and New York Penal Law §§ 200.00, 200.03, 200.10 and 200.11. 112. Upon information and belief, tile following uses of the United States mail occurred as a necessary and direct result of the Defendants' scheme to defraud Plaintiff: (a) Upon information and belief, in order to falsely justify the increased purchase price, Defendants Espie knowingly and intentionally caused to be mailed via tile United States Postal Service false estimates to the Board, Moore, Redl and Raucci, which estimates were in turn used to justify the acquisition of the Espie property; (b) A May 25, 1995 letter from Defendant Murphy to ECCO III Enterprises stating that the Town "anticipates purchase in accordance with an agreement already signed by both parties"; (c) A May 5, 1995 letter from Defendant Murphy to ECCO III Enterprises stating that the Town is a "lessee and contract vendee" of the Espie Property, the purpose of which letter was to procure fill for the renovation project; (d) A January 5, 1995 letter from Defendant Moore to Defendant Thomas Espie, with a copy sent to Defendant Raucci, stating that the price would be based oil a base price of one million nine hundred ninety four thousand six hundred twenty ($1,994,620) dollars plus the cost of renovations, and asking for an estimate of the renovation costs; (e) Upon information and belief, notices of the October 1995 and July 1996 bond resolutions were mailed to the Poughkeepsie Journal for publication. The publication of such resolutions was authorized by Defendants Moore, Redl, Murphy, Dunagan, Percesepe, Tracey, Murasso, Hinkley, and Leary; (f) Said notices stated the bonds were for a lawful purpose when, in fact, Defendants Moore, Redl, Murphy, Dunagan, Percesepe, Tracey, Murasso, Hinkley and Leary knew that such was not the case and that said publication was made with the intent to finance the illegal transaction surrounding the purchase of the said Espie property by the Town; (g) A May 29, 1996 letter was mailed from Defendant Moore to Ted Finklestein, attorney 1br Defendant Thomas Espie with respect to extending the lease to twenty (20) years, increasing the lease price, and increasing the purchase price to six million nine hundred fifty thousand ($6,950,000) dollars; (h) A July 2, 1996 letter from Town Comptroller Wojtowicz to Munistat Services sent at tile direction of Moore and the Board advising that the Bond Resolution was increased to seven million ($7,000,000) dollars; (i) Upon information and belief, in an effort to deflect public attention from the acquisition of the Espie property, Defendant Moore mailed letters to Kristen Jemiolo and Ann Barcher in response to each individual's request for information pursuant to the Freedom of Information Law, setting a date by which such information on the lease agreement, purchase agreement, amended lease agreement, and amended purchase agreement would be available. Upon information and belief, Defendant Moore purposely selected the date for the FOIL disclosure to ensure that such disclosure did not take place until after the Board held a vote to authorize Defendant Murphy to execute the amended purchase agreement and amended lease agreement, with the intent to prevent Jemiolo and Barcher from being able to effectively object to said vote; (j) An August 7, 1996 letter from Defendant Moore to Key Bank enclosing the bond resolution passed by the Board regarding tile Town's acquisition of the Espie property; (k) Numerous letters were sent to bond counsel, which correspondence was a necessary step in securing bond counsel approval and, ultimately, financing for the Espie transaction. (1) Upon information and belief, various other communications by and among the Defendants and others were sent via the United States Mail, including invoices for payment, payments made by the Town, cost estimates and correspondence intended to justify the cost increases and induce Key Bank to increase its lending to the Defendant Espies. 113. Upon information and belief, as a necessary and direct result of the scheme to defraud Plaintiff Town, Defendants Espie entered into a Building Loan Agreement with Key Bank oil August 9, 1995, tile purpose of which was to induce Key Bank to lend tile Defendant Espies sufficient funds to complete the renovations as required by the Board. 114. By the terms of the said Building Loan Agreement the Defendants Espie warranted that the construction budget accurately reflected the costs of construction and it authorized payments out of the loan proceeds for only expenses actually incurred during the renovation. 115. Upon information and belief, Defendants Espie … renovation expenses, and took payments for amounts greater than those actually incurred during the renovation process, which acts constituted bank fraud in violation of 18 U.S.C. § 1344. 116. Upon information and belief, Defendants Espie, Knapp and Roy C. Knapp & Sons, Inc. committed acts of illegal money laundering including the wire transfer by Defendants Espie of one million six hundred thousand ($1,600,000) dollars of the proceeds from the sale of their property to the Town on September 18, 1996 to other accounts tinder their control, as well as the payment by Defendants Espie, Knapp and Roy C. Knapp & Sons, Inc. of said illegal bribes to Defendant Paroli through Defendant Presidential Homes and other entities to conceal the illegal nature of said payments. 117. The racketeering activity and the predicate acts detailed herein were aimed at (1) inducing Plaintiff Town to execute a lease agreement with regard to the Espie property, (2) inducing Plaintiff to execute a purchase agreement with regard to the Espie property, (3) inducing Plaintiff to execute an amended lease contract at a higher monthly rental price, (4) inducing Plaintiff to execute an amended purchase contract at a higher purchase price, (5) inducing Plaintiff to undertake the issuance of public bonds in order to pay for the costs associated with the Espie property, (6) preventing the general public from discovering the misfeasance of the various Defendants named herein, and (7) inducing Key Bank to lend money, and to increase the amount lent at various times, in order to finance the renovations that allegedly were performed on the Espie property prior to title being conveyed to the Town. 118. The Board of the Town is an enterprise that engages in and affects interstate commerce in numerous ways, including, but not limited to, the following: (a) But for the acts of Defendants, the renovation work performed on the Espie property would have been subject to competitive bidding which, upon information and belief, would have allowed for bidding by companies engaged in interstate commerce; (b) Upon information and belief, Defendants Roy C. Knapp & Sons, Inc. and Hayward and Pakan Associates, in the regular course of their businesses in the work on the Espie property, used products and materials that traveled in interstate commerce; (c) The municipal bonds that were issued to finance the renovation and purchase of the Espie property were, upon information and belief, sold in interstate commerce; (d) The Town Board purchased goods and services that have traveled in interstate commerce; (c) The Town Board utilized the U.S. Postal Service and telephone lines to communicate across State boundaries. 119. Because the make-up of the Town Board and Town Attorney's Office remained substantially constant until December 31, 1999, to wit, Defendants Moore and Redl retained their positions as Town Attorneys through December 31, 1999, Defendant Murphy remained as Town Supervisor through December 31, 1999, and Defendants Dunagan, Percesepe, and Tracey remained as members of the Town Board through December 31, 1999 and Hinkley remained as a member of the Town Board through March 2, 1999, the Defendants were able to, and in fact did, prevent the disclosure of' the various illegal acts surrounding tile renovations and purchase of the Espie property. 120. Upon information and belief, Plaintiff Town did not discover, and could not have discovered with diligent efforts, the RICO violations by which it was injured until some time after December 31, 1999 because of Defendants' control of the Town Board and Town Attorney's office up until such time. 121. As a result of Defendants RICO violations, Plaintiff has been damaged in an amount to be determined at trial, but not less than one million seven hundred thirty seven thousand eight hundred ($1,737,800) dollars, trebled to five million two hundred thirteen thousand four hundred ($5,213,400) dollars, punitive damages thereon, together with treble damages representing the costs of servicing the debt incurred by Plaintiff as a result of the bonds issued with respect to the acquisition of the Espie property, reasonable attorneys' fees and disbursements, and such other relief as the Court deems just and proper. SECOND CLAIM FOR RELIEF (VIOLATION OF NEW YORK STATE GENERAL MUNICIPAL LAW §103 AGAINST DEFENDANTS THOMAS ESPIE AND BETTY ESPIE) 122. Plaintiff Town incorporates by reference as if fully set forth herein paragraphs one through one hundred twenty-one of this Complaint. 123. General Municipal Law § 103 was applicable to the renovation work done on tile Espie property to improve it for use by the Town. 124. Upon information and belief, although the lease agreement and amended I case contract between Defendants Espie and plaintiff Town were couched in terms of a lease, with an option to buy, it was, at all times, the intent of Defendants Espie and the Board that the Board would purchase the property as … completed, thus avoiding any rental payments, and rendering said lease a sham. 125. Upon information and belief, the agreement was labeled a lease with option to buy in order to circumvent the competitive bidding requirements of General Municipal Law § 103. 126. The renovation work referenced herein should have been let out for competitive bidding in accordance with General Municipal Law § 103. 127. Upon information and belief, the renovation work undertaken by Defendants Espie with regard to the Espie property was not awarded to the lowest bidder and no competitive bidding was held as required by General Municipal Law § 103. 128. Upon information and belief, by virtue of the intent of the Board and Defendants Espie to circumvent the requirements of General Municipal Law § 103, the lease agreement, amended lease agreement, purchase agreement and amended purchase agreement, as well as the renovations made pursuant thereto, were in violation of General Municipal Law § 103, which mandates that public works contracts be awarded by competitive bidding. 129. By reason of tile foregoing, the closing that took place on September 18, 1996 was in violation of General Municipal Law §103. 130. By reason of tile violation of General Municipal Law § 103, the lease agreement, purchase agreement, amended lease agreement and amended purchase agreement are void ab-initio. 131. By reason of tile foregoing, Defendants Espie should be required to disgorge all funds received from Plaintiff Town in connection with said agreements, and meruit or any other legal principal. 132. Upon information and belief, Defendants Espie conspired with the Town Board to make false statements designed to induce members of the public and Plaintiff Town to believe that the agreements executed by the Board and Defendant Espies were not in violation of any law and were valid contracts. 133. Said deception was continued until December 31, 1999 due to Defendants' control of tile Town Board and Town Attorney's Office through said time period. 134. Plaintiff Town did not discovery and could not have discovered through diligent efforts, the breach of General Municipal Law § 103 until sometime after December 31, 1999. 135. Plaintiff Town and its constituents did reasonably rely on and believe said raise statements with tile result that it was not determined, nor could it have been determined by diligent efforts that said agreements were illegal until sometime after December 31, 1999. 136. By reason of tile foregoing, and the fact that Defendants Espie conspired with the Board to circumvent the requirements of New York General Municipal Law § 103, the Town is entitled to tile return of all monies paid to Defendants Espie with regard to the Espie property, in the amount of six million nine hundred fifty thousand ($6,950,000) dollars, punitive damages thereon, together with the cost of servicing the debt incurred by virtue of the bonds issued to pay for the acquisition of the Espie property and such other relief as the Court deems just and proper. THIRD CLAIM FOR RELIEF (BREACH OFFIDUCIARY DUTY AGAINST DEFENDANTS PATRICK F. MOORE, FRANK E. REDL, ESTATE OF BASIL RAUCCI, FRED ANDROS, THOMAS MURPHY, MICHAEL DUNAGAN, MARY PECESEPE, LORRAINE TRACEY, LOUIS MURASSO, PATRICK HINKLEY, AND DENNIS LEARY) 137. Plaintiff Town incorporates by reference as if fully set forth herein paragraphs one through one hundred thirty-six of this Complaint. 138. During tile negotiation of the lease agreement, purchase agreement, amended lease agreement and amended purchase agreement, up to and including the consummation of the conveyance of the Espie property on September 18, 1996, Defendants Moore, Redl, Raucci, Andros, Murphy, Dunagan, Percesepe, Tracey, Murasso, Hinkley, and Leary were members of the Town government, and as such, were charged with the authority and fiduciary duty to conduct the Town' s business in good faith and in compliance with the law. 139. Defendants Moore, Redl, Raucci, Andros, Murphy, Dunagan, Percesepe, Tracey, Murasso, Hinkley, and Leary caused Plaintiff Town to enter into the lease agreement, purchase agreement, amended lease agreement, and amended purchase agreement. 140. Upon information and belief, these agreements were entered into and tile closing consummated with the full knowledge of Defendants Moore, Redl, Raucci, Andros, Murphy, Dunagan, Percesepe, Tracey, Murasso, Hinkley, and Leary that the lease was a sham and would never be utilized, and that the express purpose for entering into the lease with option to buy was to circumvent the requirements of competitive bidding contained in New York General Municipal Law § 103. 141. The agreement referenced herein and the closing that took place on September 18, 1996 constituted a breach of General Municipal Law §103 and was unlawful by reason thereof. 142. The aforementioned acts in violation of General Municipal Law § 103 constituted a breach of the above-referenced Defendants' fiduciary duty. 143. Upon information and belief, Defendants Espie conspired with Defendants Moore, Redl and the Board to make false statements designed to induce members of the public and Plaintiff Town to believe that the agreements executed by the Board and Defendants Espie were not in violation of any law and were valid agreements. 144. Said deception was continued until January 1, 2000 due to Defendants' control of the Board and Town Attorney's Office until that date. 145. Plaintiff Town and its constituents did reasonably rely on and believe said false statements with the result that it was not discovered, nor could it have been determined by diligent efforts, (fiat said agreements were illegal until on or about January 1,2000. 146. By reason of the foregoing breach of fiduciary duty, Plaintiff Town has been damaged in art amount to be determined at trial but not less than four million nine hundred fifty-five thousand three hundred eighty ($4,955,380) dollars, punitive damages thereon, together with the costs associated with servicing the debt incurred by the Town as a result of the foregoing breach of fiduciary duty and such other relief as the Court deems just and proper. FOURTH CLAIM FOR RELIEF 147. Plaintiff Town incorporates by reference as if fully set forth herein one through one hundred forty-six of this Complaint. 148. Upon information and belief, in the course of their representation of the Town, Defendants Moore and Redl had the duty to advise the Board as to the legality of the lease agreement, purchase agreement, amended lease agreement and amended lease agreement entered into between the Town and Defendants Espie. 149. Upon information and belief, Defendants Moore and Redl advised the members of the Board that the said agreements between Defendants Espie and Plaintiff Town would allow the Board to avoid the requirements of General Municipal Law § 103, despite the fact that Defendants Moore and Redl knew that the Board intended to exercise the purchase option immediately so as to avoid making any lease payments, thus rendering the lease a sham. 150. Upon information and belief, the advice given in this regard was erroneous and this error would have been readily ascertainable had Defendants Moore and Redl reviewed then available, binding case law. 151. Upon information and belief, as a result of the advice given by Defendants Moore and Redl, the Board failed to use competitive bidding as required by New York State General Municipal Law § 103 which, upon information and belief, resulted in the Town paying a higher purchase price for the Espie property, based on increased and inflated renovation expenses. 152. Upon information and belief, Defendants Moore and Redl also Failed to advise the Board of the illegality of 'holding a closed Board meeting at Defendant Paroli's residence or that it was illegal to take directions from Paroli with regard to the approval of the amended lease and purchase agreements. 153. Defendant Moore affirmatively instructed tile Town Board to remain silent regarding their failure to abide by the requirements of New York State General Municipal Law § 103 in order to defraud the public about the true nature of the transaction involving the purchase of the Espie property. 154. Defendant Moore, in a memo to the Town Board prior to the approval of the amended lease and purchase agreements, justified the increased purchase price by citing alleged increased construction cost. Upon information and belief, Defendant Moore failed to undertake a diligent review of the purported cost increases before adopting them, and had lie done so lie would have discovered that the price increase was not justified in any way. 155. Upon information and belief, but for the acts and omissions of Defendants Moore and Redl, the Board would not have entered into the illegal lease agreement, purchase agreement, amended lease agreement and amended purchase agreement. 156. Upon information and belief, Defendants Moore and Redl, in their capacity as Town Attorneys, and representing the Town Board and Plaintiff Town, continued to handle all matters relating to the Espie transaction and continuously represented the Town with respect to said matters and controlled the Town Attorney's Office through December 31, 1999. 157. Upon information and belief, Defendants Moore and Redl fraudulent1y concealed the aforementioned acts of malpractice. 158. Upon information and belief, Defendants Moore and Redl, as Town attorneys for Plaintiff Town, stood in a fiduciary relationship with the Town, and were obligated to notify the Town of the various illegal acts surrounding the Espie transaction, but failed to do so in further breach of their professional obligations to the Town. 159. Based on the foregoing attorney malpractice, Plaintiff Town has been damaged in an amount to be determined at trial, but not less than four million nine hundred fifty-five thousand three hundred eighty ($4,955,380) dollars, punitive damages thereon, together with the costs associated with servicing the debt incurred by tile Town as a result of the foregoing attorney malpractice and such other relief as the Court deems just and proper. FIFTH CLAIM FOR RELIEF (FRAUD AGAINST DEFENDANTS THOMAS ESPIE AND BETTY ESPIE) 160. Plaintiff Town incorporates by reference as if fully set forth herein paragraphs one through one hundred fifty-nine of this Complaint. 161. Upon information and belief, during the course of the renovations to the Espie property, Defendants Espie represented to members of the Town government that the various costs of tile renovations had increased, and asked for approval of an increase in the purchase price. 162. Upon information and belief, in … six million nine hundred fifty thousand ($6,950,000) dollars, a one million six hundred thousand ($1,600,000) dollar increase over the original agreed upon purchase price, the Board relied upon the representations made by Defendants Espie with regard to the actual costs of the renovations. 163. Upon information and belief, the representations made by Defendants Espie were false in that the actual renovation costs were less than as stated by Defendants Espie and were in fact unjustifiably inflated by an amount equal to or greater than one million six hundred thousand ($1,600,000) dollars. 164. Upon information and belief, Defendants Espie originally represented to the Board that the true cost of the renovations would be three million three hundred fifty-five thousand three hundred eighty ($3,355,380) dollars. 165. Upon information and belief, said estimate was made with the knowledge that $137,800 of said estimate constituted illegal bribes paid to Defendants Paroli, Raucci and Andros, which unlawfully inflated the cost to Plaintiff Town. 166. Upon information and belief, Defendants Espie made all such misrepresentations knowingly and with the intent of inducing tile Board to approve the purchase agreement and amended purchase agreement with increased price and thereby defrauded Plaintiff Town of money. 167. Upon information and belief, the Board did so authorize the purchase agreement and amended purchase agreement in reliance upon the representations made by Defendants Espie. 168. Defendants Moore, Redl, Paroli, Murphy, Dunagan, Percesepe, and Tracey remained in control of the Town Board until and through December 31, 1999, and thus were able, upon information and belief, to prevent Plaintiff Town and/or members of the public from discovering the fraud perpetrated herein. 169. Upon information and belief, Plaintiff Town did not discover, and could not have discovered with diligent efforts, the fraud alleged herein until some time after January 1, 2000 because of Defendants' control of the Board and Town Attorney's Office until such time. 170. As a result of the acts of Defendants Espie, Plaintiff Town has been injured in an amount to be determined at trial but not less than four million nine hundred fifty-five thousand three hundred eighty ($4,955,380) dollars, punitive damages thereon, together with the costs associated with servicing the debt incurred by the Town and such other relief as the Court deems just and proper. SIXTH CLAIM FOR RELIEF (BREACH OF CONTRACT AGAINST DEFENDANTS THOMAS ESPIE AND BETTY ESPIE) 171. Plaintiff Town incorporates by reference as if fully set forth herein paragraphs one through one hundred seventy of this Complaint. 172. Pursuant to the agreement between the Town and Defendants Espie, all renovations were to be performed in a good and workmanlike fashion. 173. Subsequent to the Town taking title to the Espie property on September 18, 1996, the Espie building has been damaged by cracks in the concrete slab under the building caused by a settling of the underlying soil, along with multiple other violations of the Building Code in effect at the time the premises were transferred to the Town on September 18, 1996, resulting in the need to make repairs to said building. 174. Upon information and belief, this damage has been caused by the failure of Defendants Espie to perform their obligations under their agreement with the Town in a good and workmanlike manner. 175. As a result of this breach of contract, the Town has suffered damages in an amount to be determined at trial but not less than one million five hundred thousand ($1,500,000) dollars, punitive damages thereon, together with interest costs, and such other relief as the Court deems just and proper. SEVENTH CLAIM FOR RELIEF (BREACH OF EXPRE SS AND IMPLIED COVENANT OF GOOD FAITH AND FAIR DEALING AGAINST DEFENDANTS THOMAS ESPIE AND BETTY ESPIE) 176. Plaintiff Town incorporates by references as if fully set forth herein paragraphs one through one hundred seventy-five of this Complaint. 177. The acts of Defendants Espie as herein set forth in materially, substantially, and willfully failing to perform pursuant to, and breaching the agreement existing between, Plaintiff and Defendants Espie, constitutes a breach of the express and implied covenant of good faith and fair dealing. 178. As a result of said breach, Plaintiff has suffered irreparable harm and damages, including, but not limited to, loss of the honest services of municipal employees and elected officials, increased expenses associated with the renovations undertaken by the Espies, increased expenses necessitated by the failure of Defendants Espie to perform renovations in a good and workmanlike manner, as well as increased costs to service the undertaken by the Espies. 179. As a result the said breach, Plaintiff has been damaged in an amount to be determined at trial but not less than three million two hundred thirty seven thousand eight hundred ($3,237,800) dollars, punitive damages thereon, together with a cost associated with servicing the debt incurred by the town to finance the contract renovations set forth herein, and such other relief as the Court deems just and proper. EIGHTH CLAIM FOR RELIEF (UNJUST ENRICHMENT AGAINST DEFENDANTS THOMAS ESPIE, BETTV ESPIE, WILLIAM L. PAROLI, SR., ESTATE OF RAUCCI, FRED ANDROS, LAWRENCE KNAPP, PETER R. CANTLINE, JOHN V. KANE, 111, ROGER A. MASTRI, DONALD G. TOMLINS, MARK T. JOHNSON, ROY C. KNAPP & SONS, INC., AND HAYWARD & PAKAN ASSOCIATES) 180. Plaintiff Town incorporates by reference as if fully set forth herein paragraphs one through one hundred seventy-nine of this Complaint. 181. Upon information and belief, as a result of tile acts of various Defendants named herein, Defendants Espie, Paroli, Raucci, Andros, Knapp, Cantline, Kane, Mastri, Tomlins, Johnson, Roy C. Knapp.& Soils, Inc., and Hayward & Pakan Associates have each been unjustly enriched in that said Defendants have either received monies to which they were not entitled as a result of the breach of their respective duties owed to the Town, received funds extorted from other individuals and entities which amounts were ultimately passed on to the Town in the form of inflated contract prices, and/or received a direct benefit of having been awarded a contract by the Town, which contracts were, Upon information and belief, based upon inflated expenses, all of which represents a windfall to the various defendants named herein and constitute unjust enrichment. 182. As a result of the acts by Defendants Espie, Paroli, Raucci, Andros, Knapp, Cantline, Kane, Mastri, Tomlins, Johnson, Roy C. Knapp & Sons, Inc., and Hayward & Pakan Associates, Plaintiff has been injured in an amount to be determined at trial but not less than Four million nine hundred fifty-five thousand three hundred eighty ($4,955,380) dollars, Punitive damages thereon, together with the costs associated with servicing the debt incurred by the Town as a result of the acts of defendants, and such other relief as the Court deems just and proper. NINTH CLAIM FOR RELIEF (INDUCEMENT OF BREACH OF FIDUCIARY DUTY AGAINST DEFENDANTS PAROLI, RAUCCI AND ANDROS) 183. Plaintiff Town incorporates by reference as if fully set forth herein paragraphs one through one hundred eighty-two of this Complaint. 184. Upon information and belief, as a result of the acts of Defendants Paroli, Raucci and Andros, members of the Town government, including employees and elected/appointed officials, have been induced to breach their fiduciary duty owed to the Town causing damage to the Town. 185. As a result of said inducement, Plaintiff Town has suffered irreparable harm and damages, including the loss of honest services of its municipal civil employees and elected officials, as well as artificially inflated renovation expenses with regard to renovations undertaken on the Espie property. 186. Upon information and belief, Defendants Moore, Redl, Raucci, Andros, Murphy, Dunagan, Percesepe, Tracey, Murasso, Hinkley and Leary breached their fiduciary duty by causing the Board, on behalf of Plaintiff Town, to execute the lease agreement, purchase agreement, amended purchase agreement and amended lease agreement, and ultimately exercising the purchase option contained therein on September 18, 1996. 187. Upon information and belief, this breach of fiduciary duty was a direct result and was the express objective of the inducements made by Defendants Paroli, Raucci, and Andros. 188. As a result of the acts of Defendants Paroli, Raucci and Andros, Plaintiff Town has been injured in an amount to be determined at trial but not less than four million nine hundred fifty-five thousand three hundred eighty ($4,955,380) dollars, punitive damages thereon, together with the cost associated with servicing the debt incurred by the Town in this matter, and such other relief as the Court deems just and proper. PRAYER FOR RELIEF WHEREFORE, the Plaintiff prays for entry of judgment against all Defendants, jointly and severally, for the following: A. With respect to the First Claim for Relief for RICO violations, actual damages in an amount to be determined at trial but not less than one million seven hundred thirty seven thousand eight hundred ($1,737,800) dollars, trebled to five million two hundred thirteen thousand four hundred ($5,213,400) dollars, together with an amount to be determined at trial representing the cost to the Town to service the debt incurred as a result of the tortious conduct of Defendants, which amount should also be trebled, together with reasonable attorneys' fees and costs of this action. B. With respect to the Second Claim for Relief for violation of New York General Municipal Law § 103, damages in the amount of six million nine hundred fifty thousand ($6,950,000) dollars, together with the cost of servicing the debt incurred as a result of the acquisition of the Espie property, reasonable attorneys' fees and costs of this action. C. With respect to the Third Claim for Relief for Breach of Fiduciary Duty, actual damages in an amount to be determined at trial but not less than four million nine hundred fifty-five thousand three hundred eighty ($4,955,380) dollars, together with ail amount to be determined at trial representing the cost to the Town to service the debt incurred as a result of the tortuous conduct of Defendants, with reasonable attorneys' fees and costs of this action. D. With respect to the Fourth Claim for Relief for Attorney Malpractice, actual damages in ail amount to be determined at trial but not less than four million nine hundred fifty-five thousand three hundred eighty ($4,955,380) dollars, together with an amount to be determined at trial representing the cost to the Town to service the debt incurred as a result of the tortious conduct of Defendants, with reasonable attorneys' fees and costs of this action. E. With respect to the Fifth Claim for Relief for Fraud, actual damages in an amount to be determined at trial but not less than four million nine hundred fifty-five thousand three hundred eighty ($4,955,380) dollars, together with an amount to be determined at trial representing the cost to the Town to service the debt incurred as a result of the tortious conduct of Defendants, with reasonable attorneys' fees and costs of this action. F. With respect to tile Sixth Claim for Relief for Breach of Conti-act, actual damages in ail amount to be determined at trial but not less than one million five hundred thousand ($1,500,000) dollars, together with reasonable attorneys' fees and costs of this action. G. With respect to the Seventh Claim for Relief for Breach of Express and Implied Covenants of Good Faith and Fair Dealing, actual damages in an amount to be determined at trial but not less than three million two hundred thirty-seven thousand eight hundred ($3,237,800) dollars, together with the costs associated with servicing the debt incurred as a result of Defendants' actions, with reasonable attorneys' fees and costs of this action. H. With respect to the Eighth Claim for Relief for Unjust Enrichment, actual damages in an amount to be determined at trial but not less than four million nine hundred fifty-five thousand three hundred eighty ($4,955,380) dollars, together with the costs associated with servicing the debt incurred by the Town as a result of Defendants actions, with reasonable attorneys' fees and cost in this action. I. With respect to the Ninth Claim for Relief for Inducement of Breach of Fiduciary Duty, actual damages is an amount to be determined at trial but not less than four million nine hundred fifty-five thousand three hundred eighty ($4,955,380) dollars, together with the cost associated with servicing tile debt incurred by the Town, as a result of Defendants' tortuous conduct, with reasonable attorneys' fees and costs of this action. J. A declaration that all defendants are liable jointly and severally for all damages awarded in this action. K. With respect to all Claims for Relief, Plaintiff requests an award of punitive damages in an amount to be determined at trial but not less than five million ($5,000,000) dollars. L. Pre-judgment and post-judgment interest on all claims as permitted by law. M. Such other and further relief as this Court deems just and proper together with the costs and disbursements of this action. DATED: August 29, 2002 By: |
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