FILED: NEW YORK COUNTY CLERK 12/31/2020 02:48 PM
`NYSCEF DOC. NO. 1
`
`INDEX NO. 657399/2020
`
`RECEIVED NYSCEF: 12/31/2020
`
`SUPREME
`COUNTY
`
`OF THE STATE
`COURT
`OF NEW YORK
`
`OF NEW YORK
`
`DANIELLE
`EPSTEIN,
`And WARD GUILDAY,
`
`JASON
`
`GOODMAN,
`
`Petitioners,
`
`Index
`
`No.
`
`/2020
`
`-against-
`
`SECAUCUS
`
`INVESTORS,
`
`LLC,
`
`Respondent.
`
`PETITION
`IN SUPPORT
`AND A PROVISIONAT,
`
`OF A TEMPORARY
`REMEDY
`IN
`
`AID
`
`RESTRAINING
`OF ARRITR
`
`ORDER
`ATION
`
`Petitioners
`
`Danielle
`
`Epstein,
`
`Jason
`
`Goodman,
`
`and Ward
`
`Guilday,
`
`by
`
`their
`
`attorneys,
`
`respectfully
`
`submit
`
`this
`
`Petition
`
`in
`
`support
`
`of
`
`their
`
`application
`
`for
`
`a tersporary
`
`restraining
`
`order
`
`and
`
`pursuant
`
`to
`
`Article
`
`75
`
`of
`
`the
`
`CPLR,
`
`a provisional
`
`remedy
`
`in
`
`aid
`
`of
`
`arbitration
`
`against
`
`Secaucus
`
`Investors,
`
`LLC ("Secaucus").
`
`PRELIlvlINARY
`
`STATEMENT
`
`1.
`
`This
`
`is
`
`an
`
`action
`
`relief
`
`in
`
`aid
`
`of
`
`arbitration,
`
`from
`
`Secaucus'
`
`fraud
`
`and
`
`outright
`
`theft
`
`of
`
`Petitioners'
`
`investment
`
`of
`
`$1.25
`
`million.
`
`Secaucus
`
`was
`
`seeking
`
`preliminary
`
`arising
`
`formed
`
`to provide
`
`a loan
`
`via
`
`a line
`
`of
`
`credit
`
`to non-party
`
`Harmony
`
`(defined
`
`below).
`
`Harmony
`
`was
`
`a not-for-profit
`
`start-up
`
`pharmaceutical
`
`carspany
`
`with
`
`a single
`
`drug,
`
`medical
`
`marijuana.
`
`It
`
`was
`
`one
`
`of
`
`six medical
`
`marijuana
`
`companies
`
`licensed
`
`pursuant
`
`to law in New Jersey.
`
`2.
`
`After
`
`loaning
`
`millions
`
`from
`
`2013
`
`to
`
`2017,
`
`and
`
`prior
`
`to Plaintiff's
`
`investment,
`
`Harmony
`
`still
`
`was
`
`not
`
`yet
`
`operational.
`
`It
`
`had
`
`no
`
`revenue
`
`and
`
`required
`
`significant
`
`additional
`
`1
`
`1 of 16
`
`

`

`FILED: NEW YORK COUNTY CLERK 12/31/2020 02:48 PM
`NYSCEF DOC. NO. 1
`
`INDEX NO. 657399/2020
`
`RECEIVED NYSCEF: 12/31/2020
`
`capital.
`
`Secaucus,
`
`however,
`
`funded
`
`almost
`
`entirely
`
`by
`
`only
`
`one
`
`of
`
`its members,
`
`declined
`
`to
`
`invest
`
`additional
`
`money
`
`in Harmony,
`
`nearly
`
`causing
`
`Harmony
`
`to go out
`
`of business.
`
`3.
`
`Rather
`
`than
`
`loan
`
`additional
`
`money
`
`pursuant
`
`to
`
`the
`
`line
`
`of
`
`credit,
`
`Secaucus
`
`obtained
`
`money
`
`from
`
`the Petitioners.
`
`Each
`
`of
`
`the Petitioners
`
`purchased
`
`a "Participation
`
`Interest"
`
`Agreement."
`
`Secaucus'
`
`in
`
`Petitioners'
`
`line
`
`of
`
`credit
`
`extended
`
`to Harmony
`
`via
`
`a written
`
`"Participation
`
`was
`
`wired
`
`Secaucus'
`
`turn
`
`loaned
`
`to
`
`money
`
`to
`
`bank
`
`account,
`
`which
`
`was
`
`then
`
`in
`
`Harmony,
`
`saving
`
`the
`
`business.
`
`4.
`
`Petitioners
`
`recently
`
`learned
`
`that
`
`Secaucus
`
`is involved
`
`two
`
`separate
`
`litigations:
`
`one
`
`with
`
`Harmony,
`
`and
`
`another
`
`with
`
`a non-party
`
`who
`
`also
`
`purchased
`
`a Participation
`
`Interest.
`
`Secaucus'
`
`position
`
`in those
`
`litigations
`
`are
`
`astonishingly
`
`false.
`
`Secaucus
`
`falsely
`
`claims
`
`that
`
`it
`
`is
`
`unaware
`
`of
`
`Petitioners'
`
`investments.
`
`Secaucus
`
`refuses
`
`to
`
`recognize
`
`that
`
`Petitioners'
`
`Participation
`
`Agreements
`
`are valid
`
`and
`
`as part
`
`of
`
`Petitioners'
`
`money.
`
`binding
`
`its efforts
`
`to steal
`
`5.
`
`Secaucus'
`
`own
`
`documents
`
`put
`
`the
`
`lie
`
`to its position.
`
`In
`
`Secaucus'
`
`own
`
`writings,
`
`it
`
`is crystal
`
`clear
`
`that
`
`Secaucus
`
`was
`
`both
`
`aware
`
`of,
`
`and
`
`approved
`
`of,
`
`Petitioners'
`
`purchase
`
`of
`
`their
`
`participation
`
`interests
`
`(and,
`
`of
`
`course,
`
`received
`
`Petitioners'
`
`money).
`
`6.
`
`Even
`
`worse,
`
`once
`
`Harmony
`
`became
`
`profitable,
`
`Secaucus
`
`arrañged
`
`for
`
`approximately
`
`$2.6 million
`
`of Harmony's
`
`loan
`
`repayments
`
`to be sent
`
`both
`
`to Secaucus
`
`and
`
`to the
`
`member
`
`of Secaucus
`
`(the member
`
`upon
`
`information
`
`and
`
`almost
`
`majority
`
`who,
`
`belief,
`
`entirely
`
`funded
`
`Secaucus
`
`prior
`
`to
`
`Petitioners'
`
`investments),
`
`rather
`
`than
`
`paying
`
`Petitioners
`
`their
`
`pro-rata
`
`portion
`
`of
`
`the
`
`loan
`
`repayments
`
`as required
`
`the Participation
`
`by
`
`Agreements.
`
`7.
`
`In
`
`short,
`
`despite
`
`(a)
`
`having
`
`executed
`
`written
`
`Participation
`
`Agreements
`
`with
`
`each
`
`of
`
`the Petitioners,
`
`(b)
`
`having
`
`received
`
`$1.25
`
`million
`
`from
`
`the
`
`Petitioners
`
`into
`
`its
`
`bank
`
`account,
`
`(c)
`
`loaning
`
`the
`
`$1.25
`
`million
`
`received
`
`from
`
`the Petitioners
`
`to Harmony,
`
`thereby
`
`saving
`
`Harmony
`
`2
`
`2 of 16
`
`

`

`FILED: NEW YORK COUNTY CLERK 12/31/2020 02:48 PM
`NYSCEF DOC. NO. 1
`
`INDEX NO. 657399/2020
`
`RECEIVED NYSCEF: 12/31/2020
`
`from
`
`going
`
`out
`
`of
`
`business,
`
`and
`
`(d)
`
`being
`
`fully
`
`aware
`
`of
`
`Petitioners'
`
`investment,
`
`including
`
`through
`
`documents
`
`Secaucus
`
`itself
`
`provided
`
`in its
`
`litigation
`
`against
`
`Harmony,
`
`Secaucus
`
`takes
`
`the
`
`position
`
`that
`
`Petitioners'
`
`investments
`
`do
`
`not
`
`exist.
`
`Such
`
`theft
`
`gives
`
`rise
`
`to numerous
`
`causes
`
`of
`
`action
`
`against
`
`Secaucus,
`
`including
`
`breach
`
`of
`
`the
`
`Participation
`
`Agreements
`
`(which
`
`includes
`
`an
`
`attorneys'
`
`fees
`
`and
`
`costs
`
`shifting
`
`provision),
`
`fraud,
`
`conversion,
`
`unjust
`
`enrichment,
`
`constructive
`
`breach
`
`of
`
`the
`
`covenant
`
`faith
`
`fair
`
`others.
`
`trust,
`
`of good
`
`and
`
`dealing,
`
`and
`
`an accounting,
`
`among
`
`8.
`
`The
`
`Participation
`
`Agreements
`
`are
`
`governed
`
`by New
`
`York
`
`law
`
`and
`
`contain
`
`an
`
`arbitration
`
`clause,
`
`requiring
`
`arbitration
`
`of all
`
`disputes
`
`in New York,
`
`New York.
`
`Petitioners
`
`thus
`
`bring
`
`this
`
`proceeding
`
`pursuant
`
`to CPLR
`
`7502(c)
`
`for
`
`either
`
`an
`
`injunction
`
`or,
`
`in
`
`the
`
`alternative,
`
`attachment
`
`in
`
`aid
`
`of
`
`arbitration
`
`(both
`
`grounds
`
`are
`
`satisfied
`
`here).
`
`Without
`
`such
`
`preliminary
`
`relief,
`
`the
`
`arbitration
`
`award
`
`to which
`
`the Petitioners
`
`are entitled
`
`may
`
`be rendered
`
`ineffectual.
`
`9.
`
`In
`
`order
`
`is required.
`
`Secaucus'
`
`actions
`
`to-date
`
`addition,
`
`a temporary
`
`restraining
`
`give
`
`rise
`
`to the
`
`very
`
`substantial
`
`likelihood
`
`that while
`
`this
`
`Court
`
`is considering
`
`this
`
`application
`
`for
`
`a provisional
`
`remedy
`
`in
`
`aid
`
`of
`
`arbitration,
`
`that
`
`Secaucus
`
`will
`
`assign
`
`or otherwise
`
`dispose
`
`of
`
`its
`
`interest
`
`in
`
`its
`
`loan
`
`to Harmony
`
`(its
`
`only
`
`asset
`
`and
`
`source
`
`of
`
`income)
`
`to
`
`a non-party,
`
`thereby
`
`completing
`
`its theft
`
`of
`
`Petitioners'
`
`$1.25
`
`million
`
`plus
`
`accrued
`
`interest.
`
`10.
`
`Based
`
`on
`
`its
`
`actions
`
`to-date,
`
`there
`
`is
`
`the
`
`very
`
`real
`
`concern
`
`that
`
`if
`
`Secaucus
`
`application
`
`for
`
`effectuate
`
`the
`
`becomes
`
`aware
`
`of
`
`this
`
`a temporary
`
`restraining
`
`order,
`
`that
`
`it will
`
`disposal
`
`of
`
`its
`
`sole
`
`source
`
`to pay
`
`Petitioners'
`
`expected
`
`arbitration
`
`award.
`
`On the
`
`other
`
`hand,
`
`an
`
`ex-parte
`
`temporary
`
`restraining
`
`order
`
`will
`
`cost
`
`Secaucus
`
`nothing.
`
`Secausus
`
`has
`
`no
`
`ongoing
`
`operations,
`
`and
`
`thus
`
`a temporary
`
`restraining
`
`order
`
`will
`
`have
`
`no
`
`impact
`
`on
`
`its
`
`"business."
`
`Such
`
`an
`
`order
`
`will
`
`simply
`
`maintain
`
`the
`
`status
`
`quo
`
`and
`
`prevent
`
`Secaucus
`
`from
`
`completing
`
`its
`
`theft,
`
`while
`
`still
`
`providing
`
`Secaucus
`
`an opportunity
`
`to defend.
`
`3
`
`3 of 16
`
`

`

`FILED: NEW YORK COUNTY CLERK 12/31/2020 02:48 PM
`NYSCEF DOC. NO. 1
`
`INDEX NO. 657399/2020
`
`RECEIVED NYSCEF: 12/31/2020
`
`IHE
`
`PARTIES
`
`11.
`
`Danielle
`
`Epstein
`
`is
`
`a resident
`
`and
`
`domiciliary
`
`of New
`
`York
`
`County,
`
`NY.
`
`Pursuant
`
`to
`
`a written
`
`agreement
`
`dated
`
`August
`
`29,
`
`2017,
`
`she wired
`
`$500,000
`
`to
`
`Secaucus
`
`satisfaction
`
`of
`
`the
`
`purchase
`
`price
`
`of
`
`a participation
`
`interest
`
`in
`
`a loan
`
`which
`
`Secaucus
`
`made
`
`in
`
`to
`
`Harmony.
`
`is
`
`a
`
`resident
`
`and
`
`of
`
`Delaware
`
`NY.
`
`12.
`
`Jason
`
`Goodman
`
`domiciliary
`
`County,
`
`Pursuant
`
`to
`
`a written
`
`agreement
`
`dated
`
`November
`
`8, 2017,
`
`he wired
`
`$500,000
`
`to Secaucus
`
`satisfaction
`
`of
`
`the
`
`purchase
`
`price
`
`of
`
`a participation
`
`interest
`
`in
`
`a loan
`
`which
`
`Secaucus
`
`made
`
`in
`
`to
`
`Harmony.
`
`13.
`
`Ward
`
`Guilday
`
`is
`
`a resident
`
`and
`
`domiciliary
`
`of
`
`the
`
`State
`
`of
`
`Pennsylvania.
`
`a written
`
`agreement
`
`dated
`
`September
`
`he wired
`
`$250,000
`
`to Secaucus
`
`in
`
`Pursuant
`
`to
`
`15,
`
`2017,
`
`satisfaction
`
`of
`
`the
`
`purchase
`
`price
`
`of
`
`a participation
`
`interest
`
`in
`
`a loan
`
`which
`
`Secaucus
`
`made
`
`to
`
`Harmony.
`
`14.
`
`Upon
`
`information
`
`and
`
`belief,
`
`Secaucus
`
`is a limited
`
`liability
`
`company
`
`formed
`
`under
`
`the
`
`laws
`
`of
`
`the
`
`State
`
`of New Jersey,
`
`having
`
`an
`
`address
`
`of
`
`600 Meadowlands
`
`Parkway,
`
`Suite
`
`#15,
`
`Secaucus,
`
`New Jersey.
`
`Harmony
`
`and
`
`Secaucus
`
`FACTS
`
`of
`
`15.
`
`On or
`
`about
`
`September
`
`12,
`
`2013,
`
`Secaucus
`
`and
`
`the United
`
`States
`
`Division
`
`the
`
`International
`
`Foundation
`
`a/k/a
`
`Foundation
`
`Harmony
`
`("Harmony
`
`International")
`
`and
`
`Harmony
`
`Foundation
`
`of
`
`New
`
`Jersey,
`
`Inc.
`
`("Harmony
`
`Foundation"
`
`and,
`
`with
`
`Harmony
`
`International,
`
`"Harmony")
`
`signed
`
`a Line
`
`of Credit
`
`Promissory
`
`Note
`
`and
`
`Line
`
`of Credit
`
`Security
`
`Agreement,
`
`as amended
`
`from
`
`time
`
`to time
`
`(the
`
`"Loan").
`
`4
`
`4 of 16
`
`

`

`FILED: NEW YORK COUNTY CLERK 12/31/2020 02:48 PM
`NYSCEF DOC. NO. 1
`
`INDEX NO. 657399/2020
`
`RECEIVED NYSCEF: 12/31/2020
`
`16.
`
`17.
`
`The
`
`Loan
`
`carries
`
`an interest
`
`rate
`
`of
`
`18% per
`
`year
`
`and matures
`
`on July
`
`27,
`
`2022.
`
`Harmony
`
`Foundation
`
`is
`
`a not-for-profit
`
`compañy
`
`formed
`
`for
`
`the
`
`purpose
`
`of
`
`growing
`
`and
`
`dispensing
`
`medical
`
`marijuana
`
`in the State
`
`of New Jersey.
`
`18.
`
`Secaucus
`
`is a New Jersey
`
`limited
`
`liability
`
`company
`
`formed
`
`for
`
`the
`
`purpose
`
`of
`
`making
`
`an investment
`
`in Harmony.
`
`Upon
`
`information
`
`and
`
`belief,
`
`it has
`
`no
`
`real
`
`operations
`
`other
`
`than
`
`to administer
`
`the
`
`than
`
`Loan.
`
`Loan,
`
`and
`
`has no assets
`
`other
`
`the
`
`receivable
`
`on account
`
`of
`
`the
`
`19.
`
`Pursuant
`
`to
`
`the
`
`underlying
`
`Loan
`
`documents
`
`("Loan
`
`Agreement"),
`
`Secaucus
`
`originally
`
`committed
`
`to lend
`
`Harmony
`
`up to $2 million.
`
`The
`
`Loan
`
`Agreement
`
`was
`
`amended
`
`on
`
`September
`
`21,
`
`2016,
`
`increasing
`
`the maximum
`
`amount
`
`of
`
`the
`
`loan
`
`to $6.5 million.
`
`Harmony
`
`Runs
`
`Out
`
`of Money
`
`20.
`
`Subsequent
`
`to the
`
`first
`
`amendment
`
`to the
`
`Loan
`
`Agreement,
`
`Secaucus
`
`was
`
`either
`
`unable
`
`or unwilling
`
`to provide
`
`any
`
`further
`
`funding
`
`to Harmony.
`
`21.
`
`Harmony,
`
`however,
`
`was
`
`not
`
`yet
`
`operational,
`
`and
`
`needed
`
`additional
`
`funds
`
`to
`
`complete
`
`the
`
`building
`
`of
`
`its
`
`facility
`
`and
`
`otherwise
`
`set up its highly
`
`regulated
`
`business.
`
`It had
`
`no
`
`since
`
`without
`
`the
`
`completion
`
`of
`
`its
`
`facility
`
`it was
`
`unable
`
`to
`
`obtain
`
`a "license
`
`to
`
`revenue,
`
`dispense."
`
`22.
`
`As
`
`a result,
`
`Harmony
`
`was
`
`in imminent
`
`danger
`
`of
`
`folding
`
`before
`
`it
`
`started.
`
`In
`
`order
`
`to prevent
`
`from
`
`out
`
`of business,
`
`Secaucus
`
`amended
`
`the
`
`Loan
`
`Harmony
`
`going
`
`and Harmony
`
`Agreement
`
`on August
`
`29,
`
`2017,
`
`increasing
`
`the maximum
`
`amount
`
`of
`
`the
`
`loan
`
`to $10 million.
`
`23.
`
`In
`
`connection
`
`with
`
`the
`
`second
`
`amendment
`
`to
`
`the
`
`Loan
`
`Agreement,
`
`the
`
`Petitioners
`
`were
`
`approached
`
`about
`
`investing
`
`in
`
`the
`
`Loan.
`
`The
`
`Petitioners
`
`thereafter
`
`invested
`
`through
`
`Participation
`
`Agreements.
`
`Under
`
`the
`
`Participation
`
`Agreements,
`
`the
`
`Petitioners
`
`paid
`
`a
`
`collective
`
`sum of
`
`$1.25
`
`million
`
`to Secaucus,
`
`which
`
`was
`
`wired
`
`to its bank
`
`account.
`
`That money
`
`5
`
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`
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`INDEX NO. 657399/2020
`
`RECEIVED NYSCEF: 12/31/2020
`
`was
`
`thereafter
`
`loaned
`
`to Harmony
`
`via
`
`the
`
`Loan
`
`Agreement.
`
`24.
`
`Without
`
`the
`
`Petitioners'
`
`participation,
`
`Harmony
`
`would
`
`have
`
`almost
`
`certainly
`
`collapsed,
`
`causing
`
`the
`
`Loan
`
`to default
`
`and
`
`Secaucus'
`
`investment
`
`to become
`
`worthless.
`
`25.
`
`Indeed,
`
`as
`
`a direct
`
`result
`
`of
`
`the
`
`Petitioners'
`
`support,
`
`as well
`
`as
`
`that
`
`of
`
`a
`
`subsequent
`
`investor
`
`who
`
`entered
`
`into
`
`a nearly
`
`identical
`
`Participation
`
`Agreement
`
`with
`
`Secaucus
`
`build
`
`of
`
`obtained
`
`in March
`
`2018,
`
`Harmony
`
`completed
`
`the
`
`out
`
`its manufacturing
`
`facility,
`
`approval
`
`for
`
`a license
`
`to
`
`dispense,
`
`and
`
`began
`
`selling,
`
`all
`
`of which
`
`enabled
`
`it
`
`to
`
`pay
`
`down
`
`approximately
`
`$2.6 million
`
`of
`
`the
`
`Loan,
`
`further
`
`benefiting
`
`Secaucus.
`
`Petitioners'
`
`Particination
`
`Agreements
`
`26.
`
`As
`
`explained
`
`above,
`
`in
`
`order
`
`for
`
`Secaucus
`
`to
`
`advance
`
`additional
`
`funds
`
`to
`
`Harmony
`
`to
`
`cover
`
`capital
`
`expenses,
`
`Secaucus
`
`amended
`
`its
`
`Loan
`
`Agreement
`
`with
`
`working
`
`Harmony
`
`to
`
`increase
`
`the
`
`total
`
`amount
`
`of
`
`the
`
`Loan
`
`and
`
`entered
`
`into
`
`a series
`
`of Participation
`
`Agreements
`
`with
`
`Petitioners
`
`through
`
`which
`
`Secaucus
`
`increased
`
`its
`
`Loan
`
`to Borrowers
`
`$1.25
`
`by
`
`million.
`
`27.
`
`Contrary
`
`to
`
`what
`
`Secaucus
`
`now
`
`claims
`
`does
`
`not
`
`exist,
`
`the
`
`Petitioners'
`
`Participation
`
`Agreements
`
`are memorialized
`
`in:
`
`(i)
`
`a Participation
`
`Agreement,
`
`dated
`
`as of August
`
`and
`
`between
`
`Petitioner
`
`Danielle
`
`Epstein
`
`and
`
`Secaucus
`
`(Participation
`
`Amount
`
`of
`
`29,
`
`2017,
`
`by
`
`$500,000);
`
`(ii)
`
`a Participation
`
`Agreement,
`
`dated
`
`as
`
`of November
`
`8,
`
`2017,
`
`by
`
`and
`
`between
`
`Petitioner
`
`Jason
`
`Goodman
`
`and
`
`Secaucus
`
`(Participation
`
`Amount
`
`of
`
`$500,000);
`
`and
`
`(iii)
`
`a
`
`Participation
`
`Agreement,
`
`dated
`
`as
`
`of
`
`September
`
`15,
`
`2017
`
`by
`
`and
`
`between
`
`Petitioner
`
`Ward
`
`Guilday
`
`and
`
`Secaucus
`
`(Participation
`
`Amount
`
`of $250,000).
`
`28.
`
`Each
`
`of
`
`the
`
`aforementioned
`
`participation
`
`agreements
`
`are referred
`
`to herein
`
`as a
`
`6
`
`6 of 16
`
`

`

`FILED: NEW YORK COUNTY CLERK 12/31/2020 02:48 PM
`NYSCEF DOC. NO. 1
`
`INDEX NO. 657399/2020
`
`RECEIVED NYSCEF: 12/31/2020
`
`"Participation
`
`Agreemeñt"
`
`and,
`
`collectively,
`
`the
`
`"Participation
`
`Agreements."I
`
`29.
`
`The
`
`Participation
`
`Agreements,
`
`in applicable
`
`part,
`
`provide
`
`that
`
`Secaucus
`
`sold
`
`to
`
`Petitioners
`
`a participation
`
`interest
`
`"consisting
`
`of
`
`an undivided
`
`interest
`
`in Lender's
`
`[Secaucus's]
`
`right,
`
`"Assets")"
`
`title
`
`and
`
`interest
`
`in
`
`and
`
`to
`
`each
`
`of
`
`the
`
`Assets
`
`(each
`
`an
`
`"Asset"
`
`and
`
`collectively
`
`the
`
`in the
`
`amount
`
`of
`
`Petitioners'
`
`Percentage
`
`Interest
`
`at an interest
`
`rate
`
`of
`
`18% per
`
`year.
`
`"Assets"
`
`30.
`
`incudes,
`
`without
`
`limitation,
`
`"the
`
`Lender's
`
`rights
`
`in
`
`and
`
`to
`
`the
`
`loan
`
`documents,
`
`including
`
`all
`
`Loan
`
`Agreements,
`
`notes,
`
`security
`
`agreements,
`
`guaranties,
`
`or
`
`other
`
`agreements
`
`related
`
`thereto
`
`(the
`
`'Loan
`
`Documents')
`
`and
`
`all
`
`collateral
`
`('Collateral')
`
`as
`
`set
`
`forth
`
`and
`
`identified
`
`therein."
`
`31.
`
`Section
`
`2 of
`
`the Participation
`
`Agreements
`
`addresses
`
`distributions
`
`of
`
`the
`
`Loan
`
`repayments
`
`that
`
`"all
`
`monies
`
`derived
`
`from
`
`Assets
`
`...
`
`be
`
`allocated
`
`providing
`
`the
`
`shall
`
`and,
`
`within
`
`ten
`
`(10)
`
`business
`
`days
`
`after
`
`the
`
`collection
`
`thereof
`
`in
`
`immediately
`
`available
`
`funds.
`
`disbursed...."
`
`32.
`
`After
`
`taking
`
`the
`
`reasonable
`
`costs
`
`and
`
`expenses
`
`incurred
`
`by
`
`Secaucus
`
`in
`
`connection
`
`with
`
`the management
`
`of
`
`the
`
`Loan
`
`off
`
`the
`
`top
`
`of
`
`the
`
`Loan
`
`repayments,
`
`the
`
`remainder
`
`of Harmony's
`
`repayments
`
`under
`
`the
`
`loan
`
`are required
`
`to be disbursed
`
`to Petitioners
`
`on a pro
`
`rata
`
`basis.
`
`33.
`
`the Participation
`
`Secaucus
`
`deposit
`
`Relatedly,
`
`Agreements
`
`require
`
`to (a)
`
`"promptly
`
`all
`
`of
`
`the
`
`Loan
`
`repayments
`
`it
`
`receives
`
`into
`
`a bank
`
`account
`
`under
`
`its
`
`control,"
`
`and
`
`(b)
`
`exercise
`
`"care
`
`and
`
`good
`
`faith
`
`judgment"
`
`in
`
`the
`
`management,
`
`performance,
`
`administration,
`
`and
`
`enforcement
`
`of
`
`the
`
`terms
`
`of
`
`the
`
`Loan
`
`Documents.
`
`34.
`
`Thus,
`
`in summary,
`
`after
`
`reasonable
`
`expenses
`
`related
`
`to
`
`Secaucus'
`
`management
`
`1 Capitalized
`
`terms not defined
`
`herein
`
`shall have the meanings
`
`prescribed
`
`to them in the Participation
`
`Agreements.
`
`7
`
`7 of 16
`
`

`

`FILED: NEW YORK COUNTY CLERK 12/31/2020 02:48 PM
`NYSCEF DOC. NO. 1
`
`INDEX NO. 657399/2020
`
`RECEIVED NYSCEF: 12/31/2020
`
`of
`
`the
`
`Loan
`
`have
`
`been
`
`deducted,
`
`Secaucus
`
`must
`
`disburse
`
`to Petitioners
`
`their
`
`pro
`
`rata
`
`share
`
`of
`
`Loan
`
`repayments
`
`received
`
`from
`
`Harmony
`
`within
`
`ten
`
`(10)
`
`business
`
`days
`
`of
`
`receipt
`
`thereof.
`
`35.
`
`Moreover,
`
`while
`
`Secaucus
`
`has
`
`the
`
`ability
`
`to
`
`take
`
`action
`
`which
`
`necessary
`
`to
`
`perfect
`
`and maintain
`
`its
`
`security
`
`interest
`
`and
`
`liens
`
`with
`
`respect
`
`to
`
`the
`
`"shall
`
`consult
`
`meaninggilly
`
`with
`
`[Petitioners1
`
`any
`
`enforcement
`
`action
`
`may
`
`Loan,
`
`be
`
`it
`
`the
`
`Collateral
`
`and
`
`act
`
`reasonably
`
`in response
`
`thereto."
`
`regarding
`
`involving
`
`36.
`
`Secaucus
`
`must
`
`also
`
`promptly
`
`notify
`
`Petitioners
`
`of
`
`certain
`
`events
`
`including
`
`"the
`
`occurrence
`
`of any
`
`event
`
`which
`
`with
`
`the
`
`passage
`
`of
`
`time
`
`and/or
`
`failure
`
`to cure would
`
`constitute
`
`an
`
`event
`
`of default
`
`[by Harmony
`
`Foundation]
`
`under
`
`the Asset
`
`or
`
`the
`
`Loan
`
`Documents."
`
`37.
`
`Notably,
`
`Secaucus
`
`"represents
`
`and warrants
`
`that
`
`the
`
`execution
`
`and
`
`delivery
`
`of
`
`[the
`
`Participation
`
`has
`
`been
`
`duly
`
`authorized
`
`by
`
`all
`
`anorooriate
`
`coroorate
`
`and
`
`legal
`
`Agreements]
`
`action
`
`and
`
`this
`
`Agreement
`
`constitutes
`
`its
`
`legal
`
`and
`
`valid
`
`obligation.
`
`binding
`
`and
`
`enforceable
`
`in
`
`accordance
`
`with
`
`its
`
`terms."
`
`38.
`
`Secaucus
`
`was
`
`also
`
`represented
`
`by
`
`counsel
`
`at
`
`all
`
`times
`
`relevant
`
`to
`
`the
`
`negotiation
`
`and
`
`execution
`
`of
`
`the Participation
`
`Agreements.
`
`39.
`
`In
`
`the
`
`event
`
`of
`
`any
`
`"claim
`
`or
`
`controversy
`
`litigated
`
`in
`
`any
`
`lawsuit
`
`between
`
`any
`
`of
`
`the
`
`parties
`
`in connection
`
`[]
`
`with
`
`[the
`
`Participation
`
`Agreements],
`
`the
`
`prevailing
`
`narty
`
`shall
`
`be
`
`attornevs'
`
`entitled
`
`to rçcover
`
`from
`
`the
`
`other
`
`party
`
`its reasonable
`
`costs
`
`and
`
`fees.
`
`40.
`
`The
`
`Petitioners
`
`funded
`
`each
`
`of
`
`their
`
`respective
`
`Participations
`
`consistent
`
`with
`
`the
`
`Participation
`
`Agreements.
`
`The
`
`funding
`
`occurred
`
`via wire
`
`transfers
`
`on
`
`or about
`
`August
`
`24
`
`and
`
`30,
`
`2017
`
`to Secaucus,
`
`account
`
`ending
`
`#5322
`
`(Petitioner
`
`Epstein's
`
`wires),
`
`November
`
`9, 2017
`
`to
`
`Secaucus,
`
`account
`
`ending
`
`#5322
`
`(Petitioner
`
`Goodman's
`
`wire),
`
`and
`
`October
`
`2,
`
`2017
`
`to
`
`Secaucus,
`
`account
`
`ending
`
`#5322
`
`(Petitioner
`
`Guilday's
`
`wire).
`
`8
`
`8 of 16
`
`

`

`FILED: NEW YORK COUNTY CLERK 12/31/2020 02:48 PM
`NYSCEF DOC. NO. 1
`
`INDEX NO. 657399/2020
`
`RECEIVED NYSCEF: 12/31/2020
`
`41.
`
`Petitioners'
`
`Participation
`
`Agreements
`
`were
`
`executed
`
`by
`
`Yehuda
`
`Meer
`
`as
`
`Manager
`
`of Secaucus.
`
`42.
`
`While
`
`the
`
`precise
`
`date
`
`is unknown,
`
`Secaucus
`
`appointed
`
`Mr. Meer
`
`as a Manager
`
`of Secaucus
`
`prior
`
`to December
`
`17,
`
`2016,
`
`a date
`
`well
`
`before
`
`the
`
`Petitioners'
`
`involvement
`
`with
`
`Secaucus.
`
`43.
`
`Mr.
`
`Meer's
`
`appointment
`
`was
`
`acknowledged
`
`in
`
`a December
`
`17,
`
`2016
`
`written
`
`agreement
`
`between
`
`the
`
`indirect
`
`owner
`
`of Secaucus,
`
`and Mr. Meer.
`
`Mr.
`
`Irving
`
`Langer,
`
`majority
`
`Langer
`
`is, upon
`
`information
`
`and
`
`belief,
`
`the member
`
`to have
`
`almost
`
`entirely
`
`funded
`
`Secaucus
`
`in
`
`order
`
`that
`
`it
`
`could
`
`make
`
`a loan
`
`to Harmony.
`
`The
`
`agreement,
`
`among
`
`other
`
`things,
`
`not
`
`only
`
`acknowledged
`
`Mr.
`
`Meer's
`
`prior
`
`appointment
`
`as a Manager
`
`of Secaucus,
`
`but
`
`also
`
`required
`
`that
`
`"the
`
`only
`
`managers
`
`of Secaucus
`
`shall
`
`be Yehuda
`
`Meer,
`
`Irving
`
`Langer,
`
`and Harry
`
`Daskal."2
`
`In
`
`of
`
`Petitioners'
`
`Langer
`
`and Daskal
`
`were
`
`other
`
`words,
`
`as of
`
`the
`
`date
`
`the
`
`investment,
`
`Messrs.
`
`Meer,
`
`the
`
`sole Managers
`
`of Secaucus.
`
`The Harmony
`
`Foundation
`
`Board
`
`44.
`
`Upon
`
`information
`
`and
`
`belief,
`
`the
`
`board
`
`of Harmony
`
`Foundation
`
`("Harmony
`
`Board")
`
`consisted
`
`of,
`
`at all
`
`times
`
`relevant
`
`to this
`
`proceeding:
`
`(i) Yehuda
`
`Meer;
`
`(ii)
`
`Irving
`
`Langer
`
`(who
`
`as noted
`
`above
`
`was
`
`at
`
`all
`
`times
`
`relevant
`
`to
`
`this
`
`proceeding,
`
`the
`
`controlling
`
`member
`
`of
`
`Secaucus'
`
`investor
`
`and
`
`served
`
`Secaucus,
`
`a manager,
`
`and,
`
`upon
`
`information
`
`and
`
`belief,
`
`principal
`
`as the
`
`Lender
`
`(Secaucus)
`
`Designee
`
`pursuant
`
`to the
`
`Loan
`
`Agreement).
`
`In
`
`other
`
`words,
`
`two
`
`of
`
`the
`
`three
`
`Secaucus
`
`Managers
`
`were
`
`directly
`
`involved
`
`in
`
`and
`
`aware
`
`of
`
`Petitioners'
`
`investment
`
`which
`
`saved
`
`Harmony.
`
`45.
`
`Thus
`
`representatives
`
`of Secaucus
`
`make
`
`up
`
`fifty
`
`(50%)
`
`percent
`
`of
`
`the Harmony
`
`2
`
`Hannony
`
`also acknowledged
`
`the agreement
`
`by signing
`
`it.
`
`9
`
`9 of 16
`
`

`

`FILED: NEW YORK COUNTY CLERK 12/31/2020 02:48 PM
`NYSCEF DOC. NO. 1
`
`INDEX NO. 657399/2020
`
`RECEIVED NYSCEF: 12/31/2020
`
`Board,
`
`and
`
`actions
`
`approved
`
`by
`
`the Harmony
`
`Board
`
`are therefore
`
`approved
`
`by
`
`both managers
`
`of
`
`Secaucus
`
`(Meer
`
`and
`
`Langer)
`
`and
`
`a Lender
`
`Designee
`
`(Langer).
`
`Secancus'
`
`Defaults
`
`of
`
`the
`
`Participation
`
`Agreements
`
`46.
`
`In
`
`or about
`
`June
`
`2018,
`
`after
`
`the
`
`State
`
`of New Jersey
`
`granted
`
`Harmony
`
`final
`
`approval
`
`of
`
`its
`
`license
`
`to dispense,
`
`became
`
`operational.
`
`At
`
`that
`
`time,
`
`its
`
`first
`
`revenue
`
`was
`
`received
`
`from
`
`sales.
`
`Harmony
`
`47.
`
`A short
`
`documentary
`
`video
`
`describing
`
`Harmony's
`
`operations
`
`and
`
`clearly
`
`demonstrating
`
`the
`
`professionalism
`
`of
`
`this
`
`pharmaceutical
`
`business
`
`can
`
`be
`
`seen
`
`here:
`
`https://www.youtube.com/watch?v-ObQdZSrX90c
`
`48.
`
`Accordingly,
`
`beginning
`
`in or about
`
`late
`
`2018
`
`or 2019,
`
`Harmony
`
`began
`
`paying
`
`off
`
`its
`
`Loan
`
`with
`
`Secaucus.
`
`Between
`
`2018
`
`and
`
`the
`
`present,
`
`Harmony
`
`has
`
`repaid
`
`Secaucus
`
`$2.6
`
`million
`
`of
`
`Loan.
`
`the
`
`49.
`
`Despite
`
`a very
`
`substantial
`
`portion
`
`of
`
`the
`
`Loan
`
`having
`
`been
`
`repaid,
`
`Secaucus
`
`has
`
`failed
`
`to
`
`disburse
`
`a penny
`
`to Petitioners
`
`in
`
`breach
`
`of
`
`the
`
`Participation
`
`Agreements.
`
`Indeed
`
`Secaucus,
`
`despite
`
`being
`
`fully
`
`aware
`
`of
`
`Petitioners'
`
`investment,
`
`did
`
`not
`
`even
`
`notify
`
`Petitioners
`
`that
`
`there
`
`had
`
`been
`
`a partial
`
`repayment.
`
`Even
`
`worse,
`
`the majority
`
`of Harmony's
`
`repayment
`
`was
`
`Langer
`
`Management
`
`through
`
`made
`
`directly
`
`to either
`
`Irving
`
`or Sixty
`
`Three
`
`Group
`
`LLC (the
`
`entity
`
`which
`
`Mr.
`
`Langer
`
`holds
`
`his majority
`
`interest
`
`in Secaucus).
`
`Secaucus
`
`Ripüdiates
`
`Petitioners'
`
`Investments
`
`50.
`
`Secaucus
`
`initiated
`
`litigation
`
`on September
`
`23,
`
`2020
`
`in
`
`the
`
`Superior
`
`Court
`
`of
`
`New Jersey,
`
`Chancery
`
`Division,
`
`General
`
`Equity,
`
`Bergen
`
`County,
`
`captioned
`
`Secaucus
`
`Investors,
`
`LLC
`
`v.
`
`Jeshayahu
`
`Brodchandel
`
`a/k/a
`
`Shaya
`
`Brodchandel,
`
`Harmony
`
`Foundation
`
`of New
`
`10
`
`10 of 16
`
`

`

`FILED: NEW YORK COUNTY CLERK 12/31/2020 02:48 PM
`NYSCEF DOC. NO. 1
`
`INDEX NO. 657399/2020
`
`RECEIVED NYSCEF: 12/31/2020
`
`Jersey,
`
`Inc.,
`
`Yehuda
`
`Meer,
`
`and
`
`Juniper
`
`Green.
`
`LLC
`
`alleging,
`
`among
`
`other
`
`things,
`
`certain
`
`purported
`
`events
`
`of
`
`default
`
`by
`
`Harmony
`
`Foundation
`
`of
`
`the
`
`underlying
`
`Loan
`
`Documents
`
`("Superior
`
`Court
`
`Action").
`
`51.
`
`The
`
`purpose
`
`of
`
`the
`
`Superior
`
`Court
`
`Action
`
`was
`
`to
`
`seek
`
`temporary
`
`injunctive
`
`relief
`
`pending
`
`an arbitration
`
`between
`
`the
`
`parties.
`
`The
`
`gravamen
`
`of
`
`the
`
`dispute
`
`as laid
`
`out
`
`in the
`
`Superior
`
`Court
`
`Action
`
`was
`
`that with
`
`a recent
`
`change
`
`law,
`
`was
`
`permitted
`
`in New Jersey
`
`Harmony
`
`to,
`
`and
`
`in the
`
`process
`
`of,
`
`converting
`
`to a for
`
`profit
`
`business,
`
`but
`
`that
`
`Secaucus
`
`was
`
`being
`
`denied
`
`the
`
`right
`
`to participate
`
`in the
`
`conversion
`
`by
`
`obtaining
`
`an equity
`
`interest
`
`in the
`
`for
`
`profit
`
`business.
`
`Regardless
`
`of
`
`the merits
`
`of
`
`Secaucus'
`
`position,
`
`there
`
`is not
`
`a hint
`
`of any
`
`agreement
`
`for
`
`equity
`
`in
`
`the
`
`Loan
`
`Agreement,
`
`although
`
`Secaucus
`
`appears
`
`to take
`
`the
`
`position
`
`that
`
`it
`
`is an implied
`
`term.
`
`52.
`
`Secaucus
`
`not
`
`consult
`
`with
`
`Petitioners
`
`in
`
`respect
`
`the
`
`Superior
`
`did
`
`any
`
`concerning
`
`Court
`
`Action
`
`in
`
`violation
`
`of
`
`Section
`
`7.3
`
`of
`
`the
`
`Participation
`
`Agreemeñts.
`
`Indeed,
`
`Petitioners
`
`were
`
`unaware
`
`of
`
`the Superior
`
`Court
`
`Action
`
`until
`
`approximately
`
`a month
`
`ago.
`
`53.
`
`The
`
`reason
`
`that
`
`Secaucus
`
`never
`
`(a) paid
`
`over
`
`to Petitioners
`
`their
`
`pro-rata
`
`share
`
`of
`
`the
`
`Loan
`
`repayments,
`
`and
`
`(b)
`
`did
`
`not
`
`consult
`
`with
`
`Petitioners
`
`prior
`
`to filing
`
`the
`
`Superior
`
`Court
`
`is made
`
`clear
`
`in
`
`the
`
`follow
`
`on
`
`arbitration.
`
`In
`
`the
`
`arbitration,
`
`Secaucus
`
`rejects
`
`the
`
`Action,
`
`existence
`
`of
`
`Petitioners'
`
`it and
`
`not
`
`authorized.
`
`$1.25
`
`million
`
`investment,
`
`incredibly
`
`stating
`
`that
`
`it was
`
`both
`
`unaware
`
`of
`
`54.
`
`It was
`
`through
`
`the
`
`papers
`
`filed
`
`in
`
`this
`
`arbitration
`
`that
`
`Petitioners
`
`learned
`
`that
`
`Harmony
`
`had
`
`repaid
`
`at
`
`least
`
`$2.6 million
`
`of
`
`the
`
`Loan
`
`to Secaucus.
`
`55.
`
`This
`
`arbitration
`
`also
`
`seeks
`
`to
`
`adjudicate
`
`Petitioners'
`
`rights,
`
`even
`
`though
`
`they
`
`are
`
`not
`
`parties.
`
`56.
`
`When
`
`Petitioners'
`
`learned
`
`of Secaucus
`
`repudiating
`
`their
`
`investments,
`
`they
`
`were
`
`11
`
`11 of 16
`
`

`

`FILED: NEW YORK COUNTY CLERK 12/31/2020 02:48 PM
`NYSCEF DOC. NO. 1
`
`INDEX NO. 657399/2020
`
`RECEIVED NYSCEF: 12/31/2020
`
`astonished.
`
`As
`
`set
`
`forth
`
`above,
`
`they
`
`had
`
`duly
`
`executed
`
`Participation
`
`Agreements.
`
`They
`
`wired
`
`their
`
`investments
`
`directly
`
`to
`
`Secaucus'
`
`bank
`
`account.
`
`Secaucus
`
`took
`
`that money
`
`and
`
`loaned
`
`it
`
`to
`
`Harmony.
`
`Secaucus
`
`is engaged
`
`in outright
`
`theft.
`
`57.
`
`To
`
`add
`
`insult
`
`to injury,
`
`Secaucus,
`
`while
`
`in one
`
`breath
`
`claiming
`
`to not
`
`have
`
`been
`
`aware
`
`of
`
`Petitioners'
`
`investments
`
`despite
`
`receiving
`
`their money,
`
`in the
`
`next
`
`breath
`
`admitted
`
`via
`
`a
`
`two
`
`years
`
`ago
`
`of
`
`Petitioners'
`
`declaration
`
`pursuant
`
`to perjury
`
`that
`
`it knew
`
`more
`
`than
`
`investment,
`
`providing
`
`the
`
`court
`
`with
`
`a "distribution
`
`plan"
`
`from
`
`2018
`
`that
`
`included
`
`Petitioners!
`
`Secaucus
`
`was
`
`simultaneously
`
`lying
`
`and
`
`admitting
`
`it
`
`lied.
`
`58.
`
`Secaucus
`
`further
`
`took
`
`polar
`
`opposite
`
`positions
`
`in the
`
`Superior
`
`Court
`
`Action
`
`and
`
`the
`
`follow-on
`
`arbitration.
`
`In
`
`the
`
`verified
`
`Complaint
`
`in the
`
`Superior
`
`Court
`
`Action,
`
`it
`
`stated
`
`as a
`
`fact
`
`that
`
`the
`
`second
`
`amendment
`
`to the
`
`Loan
`
`Agreement
`
`between
`
`Harmony
`
`and Secaucus
`
`existed.
`
`it objected
`
`It did
`
`not
`
`even
`
`hint
`
`that
`
`it was
`
`improper.
`
`Yet
`
`in the
`
`follow-on
`
`arbitration,
`
`to this
`
`very
`
`same
`
`amendment
`
`as unauthorized.
`
`This
`
`is
`
`the
`
`amendment
`
`that
`
`increased
`
`the
`
`Loan
`
`amount
`
`in
`
`order
`
`to permit
`
`Petitioners'
`
`investment.
`
`59.
`
`In other
`
`words,
`
`when
`
`under
`
`oath
`
`Secaucus
`
`admits
`
`the
`
`existence
`
`and
`
`validity
`
`of
`
`the
`
`amêñdment
`
`to
`
`the
`
`Loan
`
`Agreement
`
`which
`
`permitted
`
`Petitioners'
`
`investment.
`
`And
`
`when
`
`not
`
`under
`
`oath
`
`in the
`
`arbitration,
`
`it disputes
`
`the
`
`amendment.
`
`default
`
`pursuant
`
`to
`
`60.
`
`As
`
`a result,
`
`Petitioners,
`
`through
`
`counsel,
`
`sent
`
`notice
`
`of
`
`Section
`
`14
`
`of
`
`the
`
`Participation
`
`Agreements
`
`by
`
`correspondence
`
`dated
`
`December
`
`15,
`
`2020
`
`requesting,
`
`among
`
`other
`
`things,
`
`copies
`
`of
`
`any
`
`notices
`
`and
`
`any
`
`other
`
`information
`
`that
`
`Secaucus
`
`received
`
`from
`
`Borrowers
`
`pursuant
`
`to the
`
`Loan
`
`Documents.
`
`61.
`
`This
`
`included
`
`any
`
`financial
`
`statements,
`
`trial
`
`balances,
`
`appraisals,
`
`mañagement
`
`letters
`
`or
`
`other
`
`accounting
`
`records
`
`concerning
`
`the
`
`financial
`
`status
`
`of Harmony
`
`Foundation
`
`12
`
`12 of 16
`
`

`

`FILED: NEW YORK COUNTY CLERK 12/31/2020 02:48 PM
`NYSCEF DOC. NO. 1
`
`INDEX NO. 657399/2020
`
`RECEIVED NYSCEF: 12/31/2020
`
`pursuant
`
`to Section
`
`7.12
`
`of
`
`the
`
`Line
`
`of Credit
`
`Security
`
`Agreement,
`
`dated
`
`as of September
`
`12,
`
`2013
`
`(the
`
`"Security
`
`Agreement").
`
`62.
`
`Petitioners
`
`also
`
`requested
`
`information
`
`with
`
`respect
`
`to
`
`the
`
`Loan
`
`status
`
`and
`
`repayment
`
`including,
`
`without
`
`limitation,
`
`the
`
`amount
`
`of any
`
`Lender
`
`Charges
`
`(as
`
`defined)
`
`and
`
`the
`
`amount
`
`of
`
`any
`
`Collateral
`
`Proceeds
`
`available
`
`for
`
`disbursement
`
`to Petitioners
`
`under
`
`Sections
`
`2
`
`and
`
`8.14
`
`of
`
`the Participation
`
`Agreement.
`
`63.
`
`64.
`
`Secaucus
`
`failed
`
`to respond
`
`to the
`
`default
`
`notice.
`
`In
`
`addition,
`
`Secaucus
`
`once
`
`again
`
`failed
`
`to
`
`consult
`
`with
`
`Petitioners
`
`prior
`
`to filing
`
`its Counterclaims
`
`in
`
`the
`
`arbitration
`
`in
`
`further
`
`violation
`
`of
`
`7.3
`
`of
`
`the
`
`Participation
`
`Agreements
`
`Secaucus'
`
`and
`
`obligation
`
`to act
`
`in good
`
`faith.
`
`65.
`
`As
`
`a result
`
`of
`
`the
`
`it
`
`is clear
`
`that
`
`despite
`
`their
`
`money,
`
`Secaucus
`
`wants
`
`to
`
`keep
`
`it.
`
`Such
`
`fraud
`
`and
`
`theft
`
`require
`
`this
`
`Court's
`
`intervention
`
`in
`
`aid
`
`of
`
`arbitration
`
`foregoing,
`
`taking
`
`pursuant
`
`to CPLR 7502
`
`(c).
`
`FIRST
`
`COUNT
`
`(Injunction)
`
`66.
`
`Petitioners
`
`repeat
`
`and
`
`re-allege
`
`each
`
`and
`
`every
`
`allegation
`
`contained
`
`in
`
`the
`
`preceding
`
`paragraphs
`
`as though
`
`fully
`
`set
`
`forth
`
`herein.
`
`67.
`
`The
`
`Participation
`
`Agreemeñts
`
`are
`
`valid
`
`and
`
`enforceable
`
`agreements,
`
`through
`
`Petitioners'
`
`of
`
`the
`
`which
`
`Secaucus
`
`agreed,
`
`among
`
`other
`
`things,
`
`to:
`
`(i)
`
`disburse
`
`pro
`
`rata
`
`share
`
`Collateral
`
`Proceeds
`
`to Petitioners
`
`within
`
`ten
`
`(10)
`
`business
`
`days
`
`of
`
`receipt
`
`by Secaucus;
`
`and
`
`(ii)
`
`provide
`
`Petitioners
`
`with
`
`information
`
`relating
`
`to
`
`the
`
`Loan,
`
`Assets,
`
`Collateral,
`
`and
`
`Participation
`
`Interest
`
`as set
`
`forth
`
`in more
`
`detail
`
`above.
`
`68.
`
`Secaucus
`
`has
`
`breached
`
`its
`
`obligations
`
`under
`
`the
`
`Participation
`
`Agreements
`
`by,
`
`13
`
`13 of 16
`
`

`

`FILED: NEW YORK COUNTY CLERK 12/31/2020 02:48 PM
`NYSCEF DOC. NO. 1
`
`INDEX NO. 657399/2020
`
`RECEIVED NYSCEF: 12/31/2020
`
`among
`
`other
`
`things,
`
`failing
`
`to provide
`
`Petitioners
`
`with
`
`the
`
`aforesaid
`
`information
`
`and
`
`failing
`
`to
`
`disburse
`
`Petitioners'
`
`pro
`
`rata
`
`share
`
`of
`
`the
`
`$2.6 million
`
`in Collateral
`
`Proceeds.
`
`69.
`
`Secaucus
`
`has
`
`also
`
`breached
`
`its obligations
`
`under
`
`the Participation
`
`Agreements
`
`by,
`
`among
`
`other
`
`things,
`
`commencing
`
`the
`
`Superior
`
`Court
`
`Action
`
`and
`
`filing
`
`its Counterclaims
`
`in the
`
`without
`
`first
`
`with
`
`Petitioners.
`
`Harmony
`
`Arbitration
`
`consulting
`
`70.
`
`As
`
`a direct
`
`and
`
`proximate
`
`result
`
`of
`
`Secaucus'
`
`breach,
`
`Petitioners
`
`have
`
`suffered,
`
`and will
`
`continue
`
`to suffer,
`
`substantial
`
`damages.
`
`Petitioners'
`
`are owed,
`
`among
`
`other
`
`things,
`
`as of
`
`this
`
`date
`
`approximately
`
`$2 million
`
`in principal
`
`and
`
`accrued
`
`interest
`
`($2.375
`
`million
`
`through
`
`the
`
`loan maturity
`
`date),
`
`attorneys'
`
`fees
`
`and
`
`costs
`
`pursuant
`
`to the Participation
`
`Agreements
`
`(for
`
`both
`
`and
`
`damages
`
`to be
`
`this
`
`action
`
`and
`
`the
`
`arbitration
`
`to be commenced
`
`against
`
`Secaucus),
`
`exemplary
`
`decided
`
`by
`
`an arbitrator.
`
`71.
`
`Based
`
`upon
`
`Secaucus'
`
`actions,
`
`it
`
`is clear
`
`that
`
`petitioners
`
`will
`
`prevail
`
`in arbitration,
`
`but
`
`that
`
`the
`
`award
`
`they
`
`receive
`
`may
`
`be rendered
`
`ineffectual
`
`without
`
`provisional
`
`relief.
`
`SECOND
`
`COUNT
`
`(Attachment)
`
`72.
`
`Petitioners
`
`repeat
`
`and
`
`re-allege
`
`each
`
`and
`
`every
`
`allegation
`
`contained
`
`in
`
`the
`
`herein.
`
`preceding
`
`paragraphs
`
`as though
`
`fully
`
`set
`
`forth
`
`73.
`
`In the
`
`alternative
`
`to a preliminary
`
`injunction
`
`in aid
`
`of arbitration,
`
`petitioners
`
`are
`
`entitled
`
`to an attachment
`
`of
`
`Secaucus'
`
`right
`
`to receive
`
`payments
`
`with
`
`respect
`
`to the
`
`Loan.
`
`THIRD
`
`COUNT
`
`(Temporary
`
`Restraining
`
`Order)
`
`74.
`
`Petitioners
`
`repeat
`
`and
`
`re-allege
`
`each
`
`and
`
`every
`
`allegation
`
`contained
`
`in
`
`the
`
`preceding
`
`paragraphs
`
`as though
`
`fully
`
`set
`
`forth
`
`herein.
`
`14
`
`14 of 16
`
`

`

`FILED: NEW YORK COUNTY CLERK 12/31/2020 02:48 PM
`NYSCEF DOC. NO. 1
`
`INDEX NO. 657399/2020
`
`RECEIVED NYSCEF: 12/31/2020
`
`75.
`
`Without
`
`a temporary
`
`restraining
`
`order,
`
`any
`
`relief
`
`in
`
`the
`
`form
`
`of
`
`a provisional
`
`remedy
`
`granted
`
`by
`
`this
`
`Court
`
`will
`
`be mooted
`
`by
`
`Secaucus'
`
`actions
`
`prior
`
`to the
`
`granting
`
`of
`
`such
`
`relief.
`
`WHEREFORE,
`
`petitioners
`
`demands
`
`as follows:
`
`A.
`
`As
`
`to
`
`the
`
`First
`
`Count,
`
`entering
`
`an
`
`appropriate
`
`preliminary
`
`injunction
`
`against
`
`Secaucus.
`
`Such
`
`injunction
`
`must
`
`include
`
`(but
`
`not
`
`be limited
`
`to)
`
`an order
`
`a preliminary
`
`directing
`
`any
`
`repayment
`
`of
`
`the
`
`Loan
`
`up
`
`to
`
`a total
`
`amount
`
`of
`
`$3 million
`
`be
`
`placed
`
`by
`
`Secaucus
`
`into
`
`an
`
`escrow
`
`account
`
`or,
`
`if
`
`the
`
`payor
`
`has
`
`received
`
`notice
`
`of
`
`the
`
`order,
`
`directly
`
`into
`
`such
`
`escrow
`
`account
`
`thereby
`
`bypassing
`
`Secaucus,
`
`and
`
`preventing
`
`Secaucus
`
`from
`
`assigning,
`
`transferring,
`
`hypothecating,
`
`the
`
`Loan,
`
`or
`
`any
`
`other
`
`act with
`
`respect
`
`to the
`
`Loan
`
`that
`
`or encumbering
`
`taking
`
`may
`
`have
`
`the
`
`effect
`
`of
`
`rendering
`
`Petitioners'
`
`arbitration
`
`award
`
`ineffectual,
`
`pending
`
`further
`
`Order
`
`of
`
`this Court;
`
`B.
`
`As
`
`to
`
`the
`
`Second
`
`Count
`
`and
`
`in
`
`the
`
`alternative
`
`to
`
`the
`
`First
`
`Count,
`
`granting
`
`Petitioners
`
`an
`
`attachment
`
`of
`
`the
`
`Loan
`
`Agreement
`
`in
`
`an amount
`
`not
`
`less
`
`than
`
`$3 million,
`
`such
`
`that
`
`all
`
`repayments
`
`amount
`
`shall
`
`be attached
`
`pending
`
`further
`
`Order
`
`of
`
`this Court.
`
`up to such
`
`C.
`
`As
`
`to
`
`the
`
`Third
`
`Count,
`
`pending
`
`the
`
`hearing
`
`and
`
`decision
`
`of
`
`this
`
`Court,
`
`a
`
`Temporary
`
`Restraining
`
`Order
`
`against
`
`Secaucus,
`
`preventing
`
`it
`
`from
`
`assigning,
`
`transferring,
`
`hypothecating,
`
`or encumbering
`
`the
`
`Loan,
`
`or
`
`taking
`
`any
`
`other
`
`act with
`
`respect
`
`to the
`
`Loan
`
`that
`
`may
`
`have
`
`the
`
`effect
`
`of
`
`rendering
`
`Petitioners'
`
`arbitration
`
`award
`
`ineffectual;
`
`[Remainder
`
`of Page
`
`Intentionally
`
`Left
`
`Blank]
`
`15
`
`15 of 16
`
`

`

`FILED: NEW YORK COUNTY CLERK 12/31/2020 02:48 PM
`NYSCEF DOC. NO. 1
`
`INDEX NO. 657399/2020
`
`RECEIVED NYSCEF: 12/31/2020
`
`D.
`
`Such
`
`other
`
`relief
`
`as may
`
`be permitted
`
`under
`
`applicable
`
`law
`
`and which
`
`the Court
`
`deems
`
`appropriate
`
`under
`
`the
`
`circumstances.
`
`Dated:
`
`New York,
`December
`
`NY
`
`31,
`
`2020
`
`RASCO
`
`KLOCK
`
`PEREZ
`
`& NIETO,
`
`LLC
`
`Esq.
`Esq.
`
`By.
`
`Blaine
`Bortnick,
`James W. Halter,
`Avenue
`
`Fifth
`555
`1782 Floor
`New York, NY 10017
`970-4770
`(646)
`
`Attorneys
`
`for
`
`Petitioners
`
`16
`
`16 of 16
`
`