The 2nd U.S. Circuit Court of Appeals has affirmed a nearly $95,000 sanction that Eastern District of New York Judge Denis R. Hurley imposed on a Long Island attorney and his client for knowingly filing a time-barred securities fraud lawsuit. The circuit upheld the 2009 sanction against Northport attorney Mitchell A. Stein and his client, John H. Libaire Jr.
In the underlying dispute, Libaire argued in 2006 that he had been defrauded into buying a single-share of a members-only hunting preserve in 1998 and because the preserve was “not operated in the ordinary course of business,” the security was “worthless.” Leading up to that suit, Libaire and other minority-shareholders sued the preserve in state court in 2003, claiming corporate mismanagement and breach of fiduciary duty. When those claims were dismissed, Libaire claimed in federal court that payment of his $7,800 annual dues for 2005 equaled the purchase of another security.
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