A onetime Locke Lord partner who was convicted in Manhattan federal court in 2019 for laundering about $400 million in an alleged $4 billion cryptocurrency Ponzi scheme must have seemed like a big fat target to the plaintiffs lawyers litigating a fraud class action on behalf of investors in the scheme. Prosecutors, after all, had portrayed the lawyer, Mark Scott, as an integral part of the so-called OneCoin fraud, alleging that he spent the $50 million he reaped from the scheme on seaside real estate, fancy cars and a million-dollar yacht. So it’s not exactly surprising that when investors filed a 69-page amended complaint last September in their class action in Manhattan federal court, plaintiffs lawyers from the firms Levi & Korsinsky, Zelle, and Silver Miller highlighted the role that Scott and two lawyer colleagues allegedly played in the pyramid scheme. The complaint laid out the alleged international hoax, in which a Bulgarian woman known as the “Cryptoqueen” teamed up with a marketing whiz to sell investors materials that would purportedly allow them to mine for what turned out to be a non-existent cryptocurrency called OneCoin. Scott and the other lawyers – one of whom is also facing federal criminal charges in Manhattan – didn"t come up with the alleged scheme. But the complaint contends that the lawyers were responsible for perpetuating the OneCoin fraud by routing investors’ money through offshore funds. Investors lost hundreds of millions, if not billions, of dollars, the complaint alleged, because of the lawyers" participation. Investors have now lost any chance to prove those allegations. On Monday, Scott won the dismissal of all of the OneCoin investors’ claims. So did the two other lawyers who allegedly helped him launder OneCoin’s ill-gotten billions, David Pike and Nicole Huesmann. U.S. District Judge Valerie Caproni of Manhattan concluded that despite all of the details about international intrigue in the investors’ complaint – including allegations from a cooperating witness in the OneCoin criminal investigation – the class action faltered at the very first step: Plaintiffs lawyers, she said, had utterly failed to establish New York’s jurisdiction over Scott and the other lawyers. The judge, who was clearly exasperated with lawyers for the class, denied their request for discovery to bolster their jurisdictional arguments. “This case has been ongoing for over two years, plaintiffs have had the assistance of a cooperator who played a central role in the OneCoin scheme, and they are on their third iteration of the complaint,” Caproni wrote. “Plaintiffs’ jurisdictional allegations are doomed by multiple failures of law, and, therefore, additional discovery would not cure the jurisdictional defects.” Plaintiffs lawyers Donald Enright and Adam Apton of Levi & Korsinsky and John Carriel of Zelle didn’t respond to my email query on Caproni’s ruling, which also dismissed class claims against Bank of New York Mellon Corp for allegedly aiding the laundering of OneCoin money. (Caproni said the class action failed to state a claim against BNY Mellon, which argued that it was a victim of the fraud, not a participant.) The ruling seems to leave plaintiffs without a case, since, according to the judge, all of the other defendants who are named in the investor complaint have defaulted. Scott"s counsel, Kevin Brown of Mintz & Gold, said in an email that his client feels “vindicated” by Caproni’s decision, in part because investors’ claims were based on disputed testimony from the cooperating witness. “The class action claims lacked merit and should never have been brought in New York,” said Brown, who is appealing Scott’s conviction. “We believe this is just the first step for Mr. Scott,” Brown said, adding that he is looking forward to "proving his innocence in his criminal proceedings." I did not hear back from Pike’s counsel from Raskin & Raskin or Huesmann’s lawyer at Hamilton, Miller & Birthisel. Investors, according to the judge, committed all sorts of blunders in their arguments for New York’s personal jurisdiction over Scott, Pike and Huesmann, all of whom live and work in Florida. Broadly speaking, investors alleged both that the lawyers used banks in New York to accomplish their wrongdoing and that the alleged money-laundering scheme affected New Yorkers who lost money when they invested in OneCoin. In their brief opposing defendants’ dismissal motions, plaintiffs lawyers argued that Scott and the other lawyers “doubtlessly availed themselves of the Southern District of New York” when they moved OneCoin money from bank to bank. Under New York’s long-arm statute, they argued, that’s enough to establish personal jurisdiction. Not according to Caproni. The judge began by castigating investors’ counsel for lumping the three lawyers together in allegations about “the Scott group.” Group accusations, she said, are “plainly impermissible” when it comes to establishing jurisdiction over individual defendants – and aside from the improper group allegations, she said, investors didn"t offer a single fact to tie Huesmann to any activity in New York. To establish New York jurisdiction over Pike, plaintiffs pointed to the Manhattan federal-court criminal case against him. Caproni was not persuaded. "The court," she wrote, "is unaware of any authority supporting the proposition that personal jurisdiction may be exercised over a party in a particular jurisdiction because venue was proper for criminal charges against that party.” What about the allegations that Scott’s money laundering plot relied on New York banks to transfer money? Caproni was entirely unimpressed. The complaint described only one specific transaction in which money flowed through BNY Mellon, she said. (Investors irked the judge by citing conflicting dates on that wire transfer.) New York law, Caproni said, is clear that mere knowledge that money will be transferred into or out of a New York bank is not sufficient to establish New York"s jurisdiction. New York can only claim jurisdiction, she said, when a defendant has deliberately directed the involvement of an in-state bank. If Scott and the others committed wrongdoing, Caproni said, it originated in Florida. And if the name plaintiffs were injured, the harm took place in Montana or Tennessee. “None of those event,” the judge wrote, “occurred in New York.” After Monday’s ruling, neither will the class action. Opinions expressed here are those of the author. Reuters News, under the Trust Principles, is committed to integrity, independence and freedom from bias.