Plaintiff's Complaint against two Defendants, Alexander Chaudhry ("Chaudhry") and Ali Farahpour ("Farahpour"), was dismissed on the grounds that the Plaintiffs had insufficiently alleged how those Defendants were involved in the scheme.

Plaintiffs filed a Second Amended Complaint alleging mail and wire fraud, negligent misrepresentation, and civil conspiracy to commit mortgage fraud, again naming Chaudhry and Farahpour as Defendants. Chaudhry and Farahpour moved to dismiss the Second Amended Complaint on the grounds that Plaintiffs failed to plead fraud with particularity, as required by Fed. R. Civ. P. 9(b), and failed to state a claim.

In alleging fraud, Fed. R. Civ. P. 9(b) requires the Complaint to state the time, place, and contents of the false representation, as well as the identity of the person making false representation, and what that person gained from the false representation; otherwise the Complaint may be dismissed for failure to plead fraud with particularity. However, if the court is satisfied that (1) the defendant has been made aware of the particular circumstances for which he will have to prepare a defense at trial; and that (2) the plaintiff has substantial prediscovery evidence of those facts, then dismissal for failure to plead fraud with particularity is not required.

The Court, in denying Defendants' Motion to Dismiss, held that Plaintiffs had fully satisfied their burden of pleading fraud with particularity. In reaching its holding, the Court stated that even broad allegations that Defendants had used U.S. mail and electronic wires in furtherance of the mortgage foreclosure rescue scam, met Rule 9(b)'s requirement of particularity. The Court further stated that the Plaintiffs had more than surmounted the particularity threshold of Fed. R. Civ. P. 9(b).

In alleging mail fraud, Plaintiffs were not required to show that the actual mailings contained the misrepresentation that defrauded them, but rather that the mailings were sent in furtherance of the fraudulent, material misrepresentation upon which Plaintiffs relied to their detriment.

By pleading the predicate acts of mail and wire fraud with particularity against the background of a grand mortgage foreclosure rescue scam, the Court found that Plaintiffs had undoubtedly placed the Defendants on notice of the circumstances for which they will have to prepare a defense, thereby making a dismissal unwarranted. The Court very adamantly stated that Plaintiffs were entitled to honest credit repair and refinancing services, to which they were deprived by the mortgage foreclosure rescue scam.