ESG Capital Partners, LP v. Stratos
United States Court of Appeals for the Ninth Circuit
828 F.3d 1023 (2016)
ESG Capital Partners (ESG) (plaintiff) was a group of investors formed to purchase pre-IPO Facebook shares. Troy Stratos (defendant) was a con artist who presented himself to ESG using the alias “Ken Dennis.” Stratos claimed to be the head of a securities company capable of selling such stock. Stratos hired the law firm Venable LLP to represent him in this fraudulent Facebook securities deal, and David Meyer was his primary attorney. Meyer assisted Stratos in creating Soumaya Securities, a company purported to be authorized for the sale that listed Stratos as its sole member and “Kenneth Dennis” as its CEO. Both Stratos as “Dennis” and Meyer represented to ESG that Stratos had an affiliation with a billionaire connected to Facebook. Stratos as “Dennis” negotiated the purported sale of stock to ESG. Meyer was copied on every email ESG sent to “Dennis,” all of which went to the same email address that Meyer used to communicate with Stratos. During a phone call with ESG’s managing agent, Meyer asserted that “Dennis” was a legitimate businessman, that the sale was valid, and that Meyer would provide deal documentation. Upon Meyer’s assurances, ESG wired almost $3 million as a deposit into a Venable trust account as payment to Soumaya Securities, but the funds were then transferred by Venable into Stratos’s personal client trust on the same day. ESG eventually transferred more than $11 million to Stratos through Venable for these nonexistent shares. Upon discovery of the fraud, ESG filed suit against Stratos, Venable, and Meyer, alleging federal securities fraud, state law fraud, and other causes of action. The district court dismissed the claims against Venable and Meyer for failing to sufficiently plead their claims. ESG appealed.
Rule of Law
Holding and Reasoning (Pregerson, J.)
What to do next…
Unlock this case brief with a free (no-commitment) trial membership of Quimbee.
You’ll be in good company: Quimbee is one of the most widely used and trusted sites for law students, serving more than 726,000 law students since 2011. Some law schools—such as Yale, Berkeley, and Northwestern—even subscribe directly to Quimbee for all their law students.Unlock this case briefRead our student testimonials
Learn more about Quimbee’s unique (and proven) approach to achieving great grades at law school.
Quimbee is a company hell-bent on one thing: helping you get an “A” in every course you take in law school, so you can graduate at the top of your class and get a high-paying law job. We’re not just a study aid for law students; we’re the study aid for law students.Learn about our approachRead more about Quimbee
Here's why 726,000 law students have relied on our case briefs:
- Written by law professors and practitioners, not other law students. 45,700 briefs, keyed to 983 casebooks. Top-notch customer support.
- The right amount of information, includes the facts, issues, rule of law, holding and reasoning, and any concurrences and dissents.
- Access in your classes, works on your mobile and tablet. Massive library of related video lessons and high quality multiple-choice questions.
- Easy to use, uniform format for every case brief. Written in plain English, not in legalese. Our briefs summarize and simplify; they don’t just repeat the court’s language.