UNTED STATES BANRUPTCY COURT SOUTERN DSTRCn re CKapt - PDF document

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UNTED STATES BANRUPTCY COURT  SOUTERN DSTRCn re                  CKapt
UNTED STATES BANRUPTCY COURT  SOUTERN DSTRCn re                  CKapt

UNTED STATES BANRUPTCY COURT SOUTERN DSTRCn re CKapt - Description


A P P E A R A N C E S EO FOx000f ESQ NeZ YorNx000f NeZ YorN Attorney for the TrusteePlainfiffECNER EMAN RAUSE P NeZ YorNx000f NeZ YorN StepKen F EOOmanx000f Esq Attorneys for VNB New Yo ID: 870914 Download Pdf

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x000f tke nez tkat tke x000f tkat nez x000c x000b lbert ltems zere rublnov trustee zas yorn ronl zltk

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1 UN,TED STATES BAN.RUPTCY COURT SOUT+ERN
UN,TED STATES BAN.RUPTCY COURT SOUT+ERN D,STR,C,n re : : CKapter  A.N. FrLeda DLamonds ,nc. : : Case No. 15-1162 ME: Debtor. : MATT+E: C. +ARR,SON -R. : : Trustee-POaLntLff : : v. : Ad : RO

2 NEN .ONF,NO FR,EDA .ONF,NO�
NEN .ONF,NO FR,EDA .ONF,NO : RON, RUB,NOV NE: /,BERTY PA:N : S+OP ,NC. NE: YOR. ESTATE : BUYERS and ABNER RUB,NOV a/N/a : AVNER RUB,NOV : : Defendants. : : VNB NE: YOR. //C : : Defendant-,ntervenor and : Cross

3 -COaLmant : DEC,S,ON AFTER TR,A/ A P P
-COaLmant : DEC,S,ON AFTER TR,A/ A P P E A R A N C E S: /EO FO; ESQ. NeZ YorN NeZ YorN Attorney for the Trustee-Plainfiff=E,C+NER E//MAN & .RAUSE //P NeZ YorN NeZ YorN StepKen F. EOOman Esq. Attorneys for VNB New York, LLC NeZ YorN NeZ YorN S+AFFERMAN & FE/DMAN //P

4 NeZ YorN NeZ YorN +ONORAB/E M,C
NeZ YorN NeZ YorN +ONORAB/E M,C+AE/ E. :,/ES UN,TED STATE BAN.RUPTCY -UD*E preference pa\ments as KavLnJ been made to an entLt\ named RonL named as a defendant. , ZLOO r. RubLnov tKe Trustee Kas aOstKe entLt\ to ZKLcK NeZ /LberttKat are tKe subMect of tKLs proceedLnJ. Avner RubLnov ZKo Ls

5 er oZners of AN FrLeda ZKo are t
er oZners of AN FrLeda ZKo are tbert\. VNB Kas asserted cOaLms tLve trust. VNB Kas aOso asrtLes. mLt tKat Mr. .onfLno deOLvered dproof of oZnersKLp of eacK Ltem. NeZ /Lbert\ and RonL RubLnov furtKer arJue tKat NeZ /Lbert\ reOevant redemptLon perLods Kad e[pLred Ln eacK case Ln accordance ZLtK NeZ

6 /Lbert\’s rLJKts tate Bu\ers
/Lbert\’s rLJKts tate Bu\ers but Avner RubLnov Oater moved to vacate tKe defauOts. TKe partLes resoOvtKe defauOt MudJments ZouOd remYorN Estate udJment tKat Zas fLOed b\ NeZ /L-urLsdLctLon onstLtutLonaO poZer to render a fLnaO 1. Mr. .onfLno deOLvered dLamonds arLnJ tKe perLod December 2013 -oLnt Pretr

7 LaO Order ³-PO´ �
LaO Order ³-PO´ ECF No. 2. As of Ma\ 2015 44 of tKe 135 paZn t D; C. 3. TKLs banNruptc\ case beJan ZLt4. On -uO\ 23 2015 , Lssued an order 5. On AuJust 6 2015 an LnterLm trus consent of AN See 6. At some poLnt tKe LnterLm t. On AuJust 1

8 b; 2015 tKe attorne\ for
b; 2015 tKe attorne\ forsee also . On AuJust 1 2015 Mr. *otOLn sent an emaLO to tKe LnterLm t determLne ZKat Lf an\tKLnJ Ls stLOO Ln KLs possessLon. , Kope . On September 2 2015 tKe LnterLm10. On September  2015 , entered a11. On Septem

9 ber 16 2015 , entered a1
ber 16 2015 , entered a12. MattKeZ +arrLson Zas subsequentOetter to RonL RubLnov and NeZ /Lbert\ dated December 2 2015 ttLme tKat Ke became aZare tKat a banNruptc\ case Kad been fLOed13. NeLtKer Mr. RubLnov nor NeZ /Lberted papers Ln connectLon ZLtK 14. , receLved addLtLonaO requests for reOL

10 ef b\ tKe Trustee Ln, entered a furtKer
ef b\ tKe Trustee Ln, entered a furtKer Order dLrectLnJ an accountLnJ b\ Mr. RubLno in limine pOaLnt referenced ,nc. as a defendant. ,n addLtLon tKe pra\er for reOLef dLd no Kerefore denLed tKe Trustee’s AN FrLeda tKat stLOO Oeft open ³subsequent transferee´ of propert\ tKat Mr. .onfLno Kad ta

11 Nen TKLrd tKe Trustee noted tKat
Nen TKLrd tKe Trustee noted tKat Ke Keement ZLtK VNB ,t Zas not untLO ver\ recentO\ tKat tKe Trustee and VNB actuaOO\ announced tKat tKe\ Kad reacKed an Zere aOter eJos of eacK otKer and tKerefore tKat tKe Trustee saJaLnst tKe defendants even Lf tKe defendants Zere successfuO L Trustee’s CompOaL

12 nt ZKLcK aOO PaZnbroNer Transact
nt ZKLcK aOO PaZnbroNer TransactLons Under NeZ YorN /aZ es. NeZ /Lbert\’s for anotKer part\. N.Y. *en. Bus. § 44. ,n tKLs case eacK paZn tLcNet Kad terms and to eacK transactLon. tKe paZned artLcOe untLO pa\ment or See m of /aZ Ln OpposLtLon . 134 at 21. dLsposLtLon LncOudLnJ tKe me

13 tKod manner tLme
tKod manner tLme pOace and termsLcabOe unLform commercLaO posaO of coOOateraO after defaOne UCC requLrement ZLtK reJard O after a defauOt Ls tKat b\ tKe fLOLnJ of a fLnancLnJ statement. dLtor to assert from tKe MunLor secured credLtor and to permLt tKe senLor secu See even Lf NeZ /Lb

14 ert\ Zas a MunLor credLtor Lt stLOO Kad
ert\ Zas a MunLor credLtor Lt stLOO Kad rLJKts u paZned Ltems because NeZ /Lbe an\ amount b\ ZKLcK tKe proceeds e[ceed tKe secured dJor and tKe paZnbroNer Ls requrecourse. TKe paZnbroNer can OPaZnbroNer TransactLons Under tKe BanNruptc\ Code n 2005. ,t does not e[pOLcLtO\ refer to paZnbroNers but

15 Lt Ls JeneraOO\ accepted tKat tKe provSe
Lt Ls JeneraOO\ accepted tKat tKe provSee Collier on Bankruptcya Ooan from a .S.C. § 362 a 3  5  6  Id.; see also Title Max v. In re Mosher No. 0-6000-13 200 BanNr. /E;,S 430 21-22 &#

16 x000b;BanNr. see also In re Canney case.
x000b;BanNr. see also In re Canney case. Mr. DLnoso testLfLed tKat ts ZKo testLfLed RusseOO .ran]Oer Ls a certLfLed pubOLc accountant ZKo testLfLedsts. RonL RubLnov Ls tKe oZner of NeZ receLved varLous nd certaLn otKer Ltems for tKe redemp tLfLed about certaLn of KLs son RonL RubLnov con mLne: �

17 00b;1 ZKLcK Lf an\�
00b;1 ZKLcK Lf an\ of artLcuOar Ltems tKat AN FrLedt tKe paZned Ltems beOonJed to Ke paZned Ltems Zere coOOateraOMudJments tKat sKouOd be entered. , ZLOO revLeZ eacK of tKose Lssues separateO\. ,. AN FrLeda’s ,nterests Ln tKe PaZned ,tems. N.Y. *en. Bus. /aZ § 43. ,n sKorttKe statements

18 contcLdLnJ ZKo oZned tKe paZned avaLOa
contcLdLnJ ZKo oZned tKe paZned avaLOabOe to permLt a reconstructKe Ltems for ZKLcK Lts name ³MLdtoZn :atcKes.´ Ltems beOonJed to AN FrLeda or toOO\ attempt to ascertaLn tKe oZnersKLp of eacK Ltem and tKat AN FrLeda’s name appeared on paZn tLcNets mereO\ because Lt TKe tKree transactLons tKat LnvoPaZn tLcNet

19 number 242 Zas dated December 3
number 242 Zas dated December 30 2013. ,t LnvoOv to tKe contrar\ and tKe mere possLbLOLt\ tKat Lt couOd Kave besNeptLcLsm about tKe oZnersKLp of testLmon\ or e[KLbLts. TKe mere possLbLOLt\ Ls not enouJK. TKe preponderance of tKe evLde partLcuOar Ltems. PaZn tLcNet 3434 Ls dated December 1

20 5 2014. ,t LnvoOved a Ooa.onfLn
5 2014. ,t LnvoOved a Ooa.onfLno ZearLnJ tKe ZatcK on prLor occasLons. , fLnd after conn tLcNet. not to Ronen .onfLno or KLs t at tKe tLme ZKetKer tKe of one transactLon paZn tLcNet ed to AN FrLeda. ,,. VNB’s SecurLt\ ,nterests. See N.Y.U.C.C. § -60 a 1

21 . TKose rLJKts Zere enforceabOe
. TKose rLJKts Zere enforceabOe as bettKouJK ZLtK respect to AN FrLeda svis--vis ,,,. AN FrLeda’s and VNB’s ,nterests ,n ,tems ObtaLned ³On Memo nce tKat eLJKt partLcuOar Lte transactLons tKat Zere descrLbed at trLaO constLtuted consLJnmeUnLform CommercLaO Code as foOOoZs: A tKe mer

22 cKant: L deaOs Ln Jood
cKant: L deaOs Ln Joods of tKat NLnd unde LL Ls not an LLL Ls not JeneraOO\ B ZLtK respect to eacK deOLver\ tKe aJJreJate vaOue of tKe C tKe Joods are not consumer D tKe transactLon does not creat oZn merc

23 KandLse for Lts oZn abeKaOf of otKers.
KandLse for Lts oZn abeKaOf of otKers. TKe Ltems LnvoOved Ln eacK ³memorandum´ tranr Joods´ because tKe\ Zere Ke\ Zere not KeOd b\ tKe consLJKer mercKant. Lnterest LJKts ZLtK respect to tKe cons s specLaO protectLons under tKe *eneraO BusLness /aZ ce to tKe coOOateraO to tKe OeJaO oZner prLs paLd. N.Y

24 . *en. Bus. /aZ § 44 3 .
. *en. Bus. /aZ § 44 3 . +oZev NeZ /Lbert\ Kas suJJested tKat VNB’s securLt\ Lnterests because tKose Lnterests Zere set fortstatement. SeeESCR,PT,ON OF O//ATERA/ ,N ,NANC,N* AND ³enforceabOe aJaLnst aOO of tKe ZorOd b\ JLvLnJ notLce to aOO tdetermLne ZKetKer tKe Ltem or Ltems tKat Ke pOa

25 ns to accept as Cadillac-Oldsmobile, Inc
ns to accept as Cadillac-Oldsmobile, Inc. ,V. NeZ /Lbert\’s .noZOedJe of trt’s Orders. \ named DanLeO *otOand as an attorne\ actLnJ for NeZ /Lan emaLO to Mr. *otOLn dated AuecaOOed tKat at some poLnt Oater Ln e representLnJ tKe ace Ln AuJust ZLtK foOOoZ-up communLcatLons Ln Oate November or December.

26 represent KLm Ln RonL RubLnov admLt
represent KLm Ln RonL RubLnov admLtted O on prLor occasLons and tKe , fLnd based on tKe evLdence tKat Mr. *otOLn Zas actLnJ as counseO to NeZ /Lbert\ and tKat RonL RubLnov and Mr. *otOLn Zere aZare of tKe AN FrLeda bae e[Lstence of V. NeZ /Lbert\’s DLsposLtLons neraO BusLness /aZ requLres tdLsposLtLon

27 LncOudLnJ tKe metKod manner�
LncOudLnJ tKe metKod manner tLme pOace and termsreasonabOe and conducted Ln conformLt\ ZLtK appOLcabOe unLform commercLaO code oOOateraO Ln fLve separate tLons tKat are reOevant Kere tKe TKe onO\ tZo Lnstances Ln Z credLbOe on tKLs poLnt and , found tKe testLmon\ of RonL RubLnKe e

28 vLdence sKoZed tKat RonL conceaOLnJ ZKat
vLdence sKoZed tKat RonL conceaOLnJ ZKat actuaOO\ Kappened to tKe paZned Ltems. , fLndLnvoOved fLctLtLous prLces. TKe purported prLces Zere set at aranteed not to cover tKe accrued Lnterest ZKLcK accrued at tKe rate of 3% per montK. , fLnd tKeceLve tKe dLfference betZeen tKe Oue for tKemseOves. ac

29 e prLor to tKe e[pLratLon s. As e[pOaL
e prLor to tKe e[pLratLon s. As e[pOaLned above tKe rede because tKe provLsLons of sectLon f tKe sta\ are In re Enron Corp.Federal Ins. Co. v. Sheldonb\ tKeLr oZn accounts tKree of tKe purported saOes tooN pOace aes tKat aOOeJedO\ tooN pOace on perfected b\ tKe fLOLnJ of an approprLate fLnancLnJ statemen

30 t. readLO\ ascertaLnabOe. because Ke t
t. readLO\ ascertaLnabOe. because Ke tKouJKt tKose prLces Zere faLr but Ke aOso admLttedtestLmon\ Zas credLbOe and RonL saOes prLces ZerereasonabOe. reasonabOe because tKe\ dLd not occur pursuant to arm’s OenJtK NeZ /Lbert\ aOso purported to s ³commercLaOO\ reasonabOe´ Ln otKer respects tKa

31 t Lt Ls not necessar\ to decLde tKLs poL
t Lt Ls not necessar\ to decLde tKLs poLnt and ZLtKout e[pOorLnJ otKer opd Ltems. ommanded RonL RubLnov to turnd tKat tKe tZo purported saOes to someKoZ tKat tKe\ couOd succeed Oater Ln contendLnJ tKat Ltems ert\ tKat remaLned Ln Lts events. NeZ /Lbert\’s deceptLons and mLsconduct Zere desLJned cLrcumstances N

32 eZ /Lbert\ Ls eststate faLOed to taNe tL
eZ /Lbert\ Ls eststate faLOed to taNe tLmeO\ actLon to redeem tKe paZned Ltems. from Lts oZn mLsrepresentatLons´  urLt\ Lnterests because to VNB. B\ statute KoZever Lt Za. TKe evLdence sKoZed and NeZ /Lbcannot reO\ upon Lts oZn faLOures OeJLtLmate cOaLms of VNB. V,. VaOues of tKe R

33 eOevant ,tems. actuaO arm’s-O
eOevant ,tems. actuaO arm’s-OenJtK saOes of tKe saOes denLed tKe trustee access to tKe reOevant propert\ and Nept no accurate and credLbOe arLed ZLdeO\. TKere Zas no evLde sucK ³memo´ transactLons Zere combLned ZLtK otKer coOOateraO Lntrustee and ZLtK VNB as tKe pOZLtKKoOdLnJ facts or t

34 KrouJK Lnaccurate record-NeepLnJ
KrouJK Lnaccurate record-NeepLnJ an\ doubts about tKe actuaO assessment ertaLnabOe vaOue´  15-CV-1 .AM  201 :/ 113 at 2 E.D.N.Y. Mar. 13 201se Lf tKe coOOateraO Zas not red

35 eemed ZaavaLOabOe evLdence tKat
eemed ZaavaLOabOe evLdence tKat tKLs Zas V,,. -udJments to be Entered. A. VNB’s COaLms. Lnterests Ln tKe coOOateraO. see generally Secured Transactions Under the UCC ZLtK a secured credLtor’s abLOLt[cOusLon of tKe oZner s rLJKts´  tKe pOaLntLff s rLJKts . See TMMB tKe stateme

36 nt Zas suffLcLent t tKerefore tKat tKe s
nt Zas suffLcLent t tKerefore tKat tKe senLor credLtor’s TKe evLdence at trLaO sKoZed tKat VNB’s secured cOaLm Zas Ln tKOaLm sKouOd aOso LnLnterest accruaOs at fOoatLnJ caOcuOatLon. Even Lf VNB’s cOaLm Zere $1350er tKat cOaLm stLOO e[ceeded tKe vaOue of tKe coOOateraO $1

37 2325.&#x
2325.1 tKat NeZ /of $12325.1. +oZever tKe trustee and VNB Kave recentO\ spartLaO recover\ from FrLeda .onfLno tKrouJK proceedLnJs tKat Z , ZLOO taNe MudLcLaO notLce of tKLs aJaLnst NeZ /Lbert\ and RonL RubLnov cannot e[

38 ceed tKat fLJure.controOOed tKe coOOater
ceed tKat fLJure.controOOed tKe coOOateraO and acubLnov Zas tKe LndLvLduaO ZKo compOaLnt ³>s]uffLcLentO\ pOeaded tKe LndLvLduaO Defendants personaO partLcLpatLon Ln deceptLve offLcer ZKo partLcLpates Ln a torcommLssLons of torts ³even Lf tKe commLssLon or partLcLpatLon Ls for tKe corporatLnov are OLabOe to VNB&#

39 x000f; for a separate In re Dreier LLP
x000f; for a separate In re Dreier LLP³>t]racLnJ Ls necessar\ ZKere a prLvate pOaLntLff seeNs to LmpoMudJment from tKe proceeds of tKe traceabOe funds or propert\´ e trust ma\ be Lmposed a cOaLmant United States v Ovid , fLnd tKat Avner RubLnov and NeZ B. TKe Trustee’s COaLms. NeZ YorN /aZ dLd n

40 ot permLt tKe dLsposLtLon of paZned Ltem
ot permLt tKe dLsposLtLon of paZned Ltems unt Ke Trustee Kad a rLJKt to an\ ³surpOus´ proceeds but after ause tKe secured credLtors’ n Lf NeZ /Lbert\ approprLated tK11 U.S.C. § 550. , do not NnoZ ZKo tKe ³transferee´ Zas for tKe benefLt´ e persons ZKo Kad prevLousO\ Kad tKe vaOue to tKe Tr

41 ustee b tKe reco
ustee b tKe recoverLes ZouOd fLrst be aOOocated to VNB’s secured cOaLm aJaLbenefLt to tKe estate. VNB’s cKappen Lf NeZ /Lbert\ Zere to maNe pa\ments to VNB based on VNB’s oZn cOaLms. TKat deposLt because tKe transactLon vaOue for tKe estate  Bank (In re Three Partners,

42 Inc.)coOOateraO because tKe banN Kad a f
Inc.)coOOateraO because tKe banN Kad a fLrst secured posLtLon on tKa sKouOd requLre NeZ /Lbert\ to O//,ER ON AN.RUPTCYresoOved´  seeIn re Vivaro Corp.cOaLm ma\ be dLsaOOoZed temporarZas not determLned to be preferentLaO untLO court Lssued Lts decOaLms temporarLO\ dLsaOOoZed untLO credLtor paLd amoun

43 t aZarde actLon  to banN&
t aZarde actLon  to banN sectLon 502 d precOuded tKe banN from fLOLnJ a cOaLm turned over tKe proceeds of tKe cKecN to tKe trustee .and no condLtLons tKat must fLrst be met Ln order for tKe propeeOevant sectLons of tKe BanNruptc\ Code to sa\ tKat tKe paZned Ltems Zere sub

44 Mect to a redemptLon tee from tKat redem
Mect to a redemptLon tee from tKat redemptLon not occurred. +ere tKat ZouOd mereO\ reLnstate not eOLmLnate tKe Trustee’s redemptLon d 550 do not permLt tKe tLon condLtLons tKat are permLt tKe Trustpropert\ or proceeds ZouOd stLOO be subMect to tKe prLor secuNeZ /Lbert\ Zou

45 Od Must receLve a ZLndfaOO ZKLOe
Od Must receLve a ZLndfaOO ZKLOe tKe estate ZoureOLef. aOOeJed transferees of AN FrLeRonL RubLnov actuaOO\ receLved tKe Ltems tKat beOonJed to AN Frpropert\. TKe Trustee tKerefore L , KoOd tKat NeZ /Lbert\ ZronJO\ dLt\’s faLOure to cKecN tKe UCC fcoOOateraO Ln deOLberate dLsreJonstLtuted a conversLon of p

46 ropert\ betZeen tKose partLes an
ropert\ betZeen tKose partLes and MudJment on VNB’s cOaLm ZLOO be entered Ln favor of tKe Trustee and aJaLnst Avner RubLnov and NeZ YorN Estate Bu\ers ZLOO be vacated and MudJment ZLOO be Dated: NeZ YorN NeZ YorN AprLO 2 2020 /s/ UnLted States BanNruptc

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