Chess

MEMORANDUM AND ORDER

This action was brought under section 10(b) of the Securities Exchange Act of 1934 (15 U.S.C. § 78j (b) (hereinafter section 10(b)), section 17 of the Securities Exchange Act of 1933 (15 U.S.C. § 77q) (hereinafter section 17), and Rule 10b-5 ( 17 C.F.R. § 240 .10b-5) to secure damages and other relief for alleged violations of these securities acts and the common law. The gravamen of the plaintiffs’ allegations is that the defendants conspired to enter into and did enter into a common scheme to defraud and deceive the three groups of plaintiffs-purchasers in a series of real estate transactions, and to thereby deprive the plaintiffs of money and property. It is alleged that the defendants formed a deliberate design and purpose to sell to each group of plaintiffs-purchasers certain real property at prices much greater than their value and to obtain secret profits and commissions. The plaintiffs also allege that each of them was induced to execute promissory notes and deeds of trust in favor of the defendants in connection with the real property transactions.

In order to assist in an understanding of the issues presented below a brief description of the scheme…