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Dukes v. Pappas

February 17, 2010


The opinion of the court was delivered by: Yohn, J.


Plaintiff, Marcus Dukes, a prisoner, has filed a pro se civil rights complaint pursuant to (1) Bivens v. Six Unknown Named Agents of Federal Bureau of Narcotics, 403 U.S. 388 (1971);

(2) 42 U.S.C. § 1983; and (3) the Federal Tort Claims Act ("FTCA"), 28 U.S.C. § 1346. Plaintiff sues the following defendants: (1) Catherine Pappas, Katy Cody, and Amy Greer, attorneys employed by the Securities Exchange Commission ("SEC"); (2) Kevin Delacy, an SEC accountant; (3) Lucy Cardwell, identified in plaintiff's complaint as "Lucy Caldawell," a Maryland Assistant Attorney General employed in the Maryland Securities Division;*fn1 (4) J. Joseph Curran Jr., the Attorney General of Maryland; (5) the Financial Industry Regulation Authority ("FINRA"), a federal agency; (6) Mimi Lee, a FINRA attorney; and (7) the United States. Plaintiff sues all individual defendants in their official and individual capacities. Plaintiff alleges that defendants "conspired in the spring and summer of 2001 to destroy [plaintiff's] business, Financial Warfare Club, Inc. ["FWC"], and to destroy the business reputation of the plaintiff." (Am. Compl. ("Compl.") ¶ 1.) To this end, defendants allegedly "falsified documents, manipulated records, provided perjured testimony in Federal Court and violated the plaintiff's Fourth, Fifth, Sixth and Fourteenth Amendment Rights." (Id.) Plaintiff also alleges that defendants targeted him for investigation and prosecution as a result of his race and the race of FWC members. Plaintiff claims that, as a result of defendants' misdeeds, (1) he was wrongfully convicted for mail fraud, (2) a civil judgment was obtained improperly against him and his companies, and (3) his companies lost value, resulting in financial losses on the part of plaintiff and his clients.

Because plaintiff proceeds in forma pauperis, the court has authority under 28 U.S.C. § 1915(e)(2) to dismiss the complaint sua sponte to the extent that it is frivolous or fails to state a claim. Pursuant to § 1915(e)(2), I will dismiss plaintiff's claims for prospective non-monetary relief, as plaintiff has not established any basis for standing to pursue such claims and, in addition, has not stated a claim for which such relief may be granted. I will also dismiss such claims that necessarily imply the invalidity of plaintiff's criminal conviction or sentence, as such claims are barred by Heck v. Humphrey, 512 U.S. 477 (1994). I will dismiss plaintiff's claims against the United States and FINRA, as plaintiff has failed to comply with the exhaustion requirements of the FTCA. I will dismiss as time-barred those remaining § 1983 and Bivens claims arising out of events before July 23, 2006. Finally, having dismissed all of the claims that plaintiff asserts against them, I will dismiss the United States, FINRA, Curran, Delacy, and Lee as parties to this action.

Plaintiff's only remaining claims concern the SEC attorneys' and Cardwell's allegedly misleading or threatening statements to FWC members. Because the complaint fails to specify which, if any, of these statements occurred on or after July 23, 2006, I will direct plaintiff to file a second amended complaint setting forth in greater detail the time, content, and source of each such statement.

I. Factual Background

Plaintiff is currently incarcerated for mail fraud and money laundering in connection with his operation of the FWC. He was convicted on June 8, 2005, in the District of Maryland. Plaintiff unsuccessfully appealed his conviction. United States v. Dukes, 242 F. App'x 37, 43 (4th Cir. 2007). In a related civil proceeding in the Eastern District of Pennsylvania, the Securities and Exchange Commission ("SEC") obtained a judgment against plaintiff, a co-conspirator, and four companies controlled by plaintiff and the co-conspirator*fn2 for civil fraud and for failure to comply with the registration requirements of the Securities Act. SEC v. Fin. Warfare Club, Inc., No. 02-7156 (E.D. Pa. Jan. 11, 2008). Plaintiff filed an unsuccessful motion pursuant to Federal Rule of Civil Procedure 60(b) for relief from the judgment, but did not appeal.

Plaintiff also sought relief from his conviction and sentence pursuant to 28 U.S.C. § 2255, which the District of Maryland denied on November 3, 2009. Dukes v. United States, No. 09-135, 2009 U.S. Dist. LEXIS 102271 (D. Md. Nov. 3, 2009). The District of Maryland denied a certificate of appealability on January 12, 2010. 2010 U.S. Dist. LEXIS 2559 (Jan. 12, 2010).

Plaintiff has also requested a certificate of appealability from the Fourth Circuit, which is pending. See United States v. Dukes, No. 09-8158 (4th Cir. filed Dec. 3, 2009).

On or around July 23, 2009, plaintiff submitted to federal prison authorities a civil rights complaint alleging that his conviction was the result of perjury and fraud on the part of defendants.*fn3 The complaint was filed in the Eastern District of Michigan on July 31, 2009. The matter was transferred to this court because a substantial part of the events giving rise to plaintiff's claims occurred in this district. Plaintiff filed an amended complaint in this court on January 7, 2010, setting forth claims for relief pursuant to Bivens, § 1983, and the FTCA. For the purposes of this opinion, I will refer to this amended complaint simply as the "complaint." Plaintiff seeks compensatory damages, punitive and exemplary damages, fees and costs, and an injunction "requiring the Defendants to put policies in place that ensure equitable treatment to both minorities but also small businesses instead of the current system that treat non-minorities and large corporations different and better than minorities and small companies." (Compl. 12.)

With his complaint, plaintiff requests leave to proceed in forma pauperis. Because it appears he is unable to pay the cost of commencing this action, leave to proceed in forma pauperis will be granted. However, much of the complaint will be dismissed as legally frivolous, as discussed in further detail below.

II. Claims

A liberal reading of plaintiff's complaint pursuant to Haines v. Kerner, 404 U.S. 519, 520-21 (1972), reveals the following claims, for which plaintiff seeks both monetary and prospective relief.

A. SEC Defendants*fn4

1. SEC Attorneys

Plaintiff alleges that the SEC "[i]n its role as 'gatekeeper' to the public markets has and continues to use numerous tactics and selective investigation to prevent African Americans from owning public companies in majority ownership or control ownership positions." (Compl. ¶ 3.) Plaintiff alleges that this activity violates the Federal Constitution as well as the "civil right act." (Id.)

Plaintiff alleges that Greer and Pappas "conspired with the Department of Justice officials to prevent exculpatory evidence acquired by [the] State of Maryland and [the SEC] from being provided to plaintiff in violation of plaintiff's constitutional rights." (Id. ¶ 12.) Plaintiff alleges that the SEC also allowed its accountant Kevin Delacy to commit perjury at plaintiff's criminal trial in order to "prevent exposure of the criminal evidentiary fraud." (Id. ¶ 5.) "The SEC has filed as late as May 2009 to prevent disclosure of this evidence." (Id.) Plaintiff also alleges that Cody "encouraged and guided" Delacy's testimony "with nonverbal communication." (Id. ¶ 13.)

Plaintiff alleges that Pappas used plaintiff's criminal conviction, which was allegedly "fraudulently obtained," to "obtain an equally fraudulent civil judgment for over $1 million dollars against the plaintiff, which she has used as both harassment and a retaliatory device in anticipation of this lawsuit." (Id. ¶ 14.)

During the course of the civil proceedings initiated by the SEC, plaintiff alleges that the SEC, due to racial animus against plaintiff and FWC members, refused to settle its civil enforcement action against plaintiff and the FWC at a time when "FWC and its affiliated companies had greater assets than the amount of membership fees paid in by FWC members." (Id. ¶ 4.)

Plaintiff alleges that, "during depositions,"*fn5 the SEC "repeatedly inquired about the plaintiff's belief as stated in his 'Financial Apartheid' speeches, that the SEC was a big part of the obstacle in creating wealth for African Americans." (Id. ¶ 2.) According to plaintiff, the SEC did so in order to deny him his "constitutional right to freedom of speech." (Id.)

Plaintiff alleges that, sometime shortly after March 2001, "employees of the SEC," along with other defendants, "conspired to change plaintiff's . . . status" in FINRA's Central Registry Database ("CRD"). (Id. ¶ 10.) The altered status apparently reflected that plaintiff had been "disbarr[ed]" by FINRA in 1995. (Id. ¶ 11.) Plaintiff contends that, to the contrary, there were "no violations listed" in the CRD earlier in 2001 and plaintiff had, at that point, "not operated under FINRA's authority for over 6 years." (Id. ¶ 10.) Plaintiff alleges that this modification was "used to persuade FWC members that they were scammed." (Id.)

Plaintiff alleges that the SEC "attacked and threatened members, affiliated companies and others in a suc[c]essful campaign to destroy any value remaining accessible to FWC." (Id. ΒΆ 4.) Plaintiff alleges that these threats constituted "discrimination against protected minority groups," i.e., ...

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