FILED: NEW YORK COUNTY CLERK 03/23/2012 INDEX NO /2012 NYSCEF DOC. NO. 2 RECEIVED NYSCEF: 03/23/2012

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1 FILED: NEW YORK COUNTY CLERK 03/23/2012 INDEX NO /2012 NYSCEF DOC. NO. 2 RECEIVED NYSCEF: 03/23/2012 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK Robert E. Wilson III ) ) ) Plaintiff, ) ) Index No. v. ) ) Daniel Valente Dantas, ) ) Opportunity Equity Partners, Ltd. ) (f/k/a CVC/Opportunity Equity Partners, Ltd.), ) ) COMPLAINT Opportunity Equity Partners, L.P. ) (f/k/a CVC/Opportunity Equity Partners, L.P.), ) ) Opportunity Invest II, Inc., ) ) Citibank, N.A., ) ) International Equity Investments, Inc., ) ) Citigroup Venture Capital ) International Brasil, L.L.C., ) ) JURY TRIAL DEMANDED Citigroup Venture Capital International Brasil, L.P. ) ) Defendants. ) Plaintiff Robert E. Wilson III ( Wilson or Plaintiff ), by and through his attorneys, Gusy Van der Zandt LLP, as and for his Complaint against Defendants Daniel Valente Dantas ( Dantas ), Opportunity Equity Partners, Ltd. ( OEP, Ltd. or the General Partner ), Opportunity Equity Partners, L.P. ( OEP LP ), Opportunity Invest II, Inc. ( OI-II ) (Dantas, OEP, Ltd., OEP LP and OI-II together hereinafter the Opportunity Defendants ), and Citibank, N.A. ( Citibank ), International Equity Investments, Inc. ( IEII ), Citigroup Venture Capital International Brasil, L.L.C. ( CVC Brasil LLC ) and Citigroup Venture Capital International Brasil, L.P. ( CVC Brasil LP ) (together hereinafter the Citibank Defendants ) alleges as follows: 1

2 PRELIMINARY STATEMENT Plaintiff seeks to recover damages, equitable relief and a declaratory judgment for Defendants multiple breaches of fiduciary duties, constructive fraud and fraudulent concealment, breaches of contract, conspiracy, tortious interference with contract, business relations, or prospective economic advantage, promissory estoppel, and unjust enrichment. Defendants have engaged in an array of behavior harmful to Plaintiff in connection with an investment program designed and implemented by Plaintiff, which ultimately yielded Defendants billions of dollars in profits, but from which Defendants failed to compensate Plaintiff. In the 1990s, Plaintiff Wilson was employed by Citibank in New York when he devised an investment strategy related to Brazil, which he successfully brought to senior management at Citibank and persuaded them to pursue. Because the Office for the Comptroller of the Currency (OCC) prohibited Citibank from managing an investment fund that would invest directly in Brazil, it was agreed in 1997 among Plaintiff, Citibank and Daniel Dantas that Wilson would form a Cayman Islands investment fund, eventually called CVC/Opportunity Equity Partners L.P. and later Opportunity Equity Partners L.P. (n/k/a CVC International Brasil, L.P.), which will be called the Fund herein, to be managed directly and indirectly by Defendant Dantas and other professionals to be identified. Citibank then instructed Plaintiff to move to Brazil to participate in the general management of the Fund. In exchange, with Citibank s approval and authorization, Plaintiff was employed by the partnership s General Partner and was given a 1% ownership thereof combined with a promise to be paid 1 Point of 20 Points (i.e. 5%) of the profits of the venture, an amount known as the carried interest. The investment strategy was to invest in companies, in conjunction with other coinvestors, and then divest these holdings at an appropriate time under the same terms and conditions to maximize the return on investment and to generate profits on a pro rata basis for all participants from the divestment of the portfolio controlled by the General Partner. This plan, known as Side-by-Side investing, was Citibank s idea, was memorialized in the Fund 2

3 documents authored by Citibank s attorneys, was a precondition to the structuring of the joint venture relationship of shared gains and losses, and was intended to, and did, generate profits for all co-investing participants, as to which Plaintiff was entitled to his promised interest and return. The profits came from three identified sources of co-investment, including the so-called offshore fund (funded by Citibank ), the onshore fund (funded by a consortium of the largest Brazilian pension funds), and vehicles controlled by the General Partner known as Opportunity Investment Vehicles (the OIVs, funded by the Opportunity Defendants). All three co-investors were under the administrative and management control of the General Partner headed by defendant Daniel Dantas. The Side-by-Side investing plan for co-investments was the subject of an Operating Agreement between and among the Citibank Defendants (or their predecessor entities) and the Opportunity Defendants. The Side-by-Side investing plan was also a key mechanism to guarantee an alignment and interdependence of interests among the three coinvestors, and provided an equitable performance incentive for the General Partner through the carried interest. After the portfolio investments had been made, however, Citibank sought to take control of the Fund, including its management and divestment. Initially, Citibank sought to assert control over the Fund and its divestment by engaging in improper side deals with others, including the Brazilian pension fund co-investors. Then, the Citibank Defendants brought suit in the United States District Court for the Southern District of New York ( SDNY ) in case no. 05- Civ-2745 captioned International Equity Investments, Inc. et al. v. Opportunity Equity Partners, Ltd. et al. (hereinafter Citibank SDNY Litigation ) to take legal control of the Fund, its management and divestment. As a result of the Citibank SDNY Litigation and the injunctions issued by the SDNY at the Citibank Defendants request, the original General Partner, OEP, Ltd. was replaced as the Fund s general partner by Defendant CVC Brasil LLC, a wholly-owned subsidiary of Citibank s wholly-owned subsidiary International Equity Investments, Inc. CVC 3

4 Brasil LLC was operated by Citibank employees in New York, and it assumed control and responsibility for the management and divestment of the Fund. Throughout these changes, the Side-by-Side investment arrangement was maintained. In April 2008, Defendants negotiated a Settlement Agreement in the Citibank SDNY Litigation. While Defendants have refused to this day to disclose to Plaintiff the terms of this Settlement Agreement, subsequent events have confirmed that it involved the winding down and distribution of the profits (including the carried interest) generated from the co-investment plan. As an immediate result of the Settlement Agreement, a merger was created between the two largest portfolio investments, telecommunications firms Brasil Telecom and Oi, which yielded hundreds of millions of profits for both the Citibank Defendants and the Opportunity Defendants. Despite Plaintiff s requests to participate in the settlement discussions and in the distribution of its proceeds, the Defendants denied Plaintiff any participation in the negotiation or distribution of the resulting profits. In addition, without any disclosure to Plaintiff, the Defendants drafted the Settlement Agreement to bar signatories from disclosing to Plaintiff any of its terms, and indeed, the Defendants have repeatedly since refused Plaintiff s requests for a copy of the Settlement Agreement on the ground that it bars disclosure to him. The Citibank-led restructuring of the co-investments, which includes the Settlement Agreement, accounted for the resolution or divestment of the remaining companies that were in the co-investment portfolio. In so doing, Defendants violated legal duties they owed to Plaintiff, and diverted to themselves millions of dollars to which Plaintiff was justly entitled. PRIOR CASE HISTORY 1. On March 21, 2011, Plaintiff commenced this action in the SDNY under Case No. 11-civ-1936 (hereinafter the Wilson March 2011 SDNY Litigation ). Although neither the Citibank Defendants nor the Opportunity Defendants challenged the SDNY s subject matter 4

5 jurisdiction in their respective motions to dismiss, Judge Batts dismissed Plaintiff s action for lack of subject matter jurisdiction on November 9, This action is brought in this Court pursuant to N.Y. C.P.L.R. 205, in that it is commenced upon the same transaction or occurrence, or series of transactions or occurrences, as were the subject of the timely commenced Wilson March 2011 SDNY Litigation. 3. This Court has personal jurisdiction over the Defendants. The factual basis for personal jurisdiction includes the Grounds of Personal Jurisdiction asserted in the attached Exhibit A which is incorporated herein. PARTIES 4. Plaintiff Robert E. Wilson III is an individual, who during all relevant times either worked and resided in New York, entered into agreements governed by New York law and/or providing for New York dispute resolution with Defendants, or was harmed by Defendant s tortious activity in New York. Plaintiff owns one share in Opportunity Equity Partners, Ltd. (f/k/a CVC/Opportunity Equity Partners, Ltd.). 5. Wilson was born and raised in St. Louis, Missouri. He graduated from Stanford University (B.A.) and Harvard Law School (J.D). Subsequent to his studies, he traveled to Brazil where he taught high school mathematics for three years. After returning to the United States, he worked for the New York City government focusing on municipal and revenue bond issues and real estate development. From 1991 until 1998, Wilson was employed at Citibank as Vice President-Equity Investments and as head of Citibank s asset redeployment program, where he was responsible for diversifying the risk on Citibank s roughly $14 billion of so-called Brady Bonds via sovereign-debt-for-equity swaps, usually through privatizations. The Opportunity Defendants 5

6 6. Defendant Daniel Valente Dantas is a citizen of Brazil, and will be included among the Opportunity Defendants as that term is used herein. At all relevant times, Dantas was a promoter, Director and/or officer of Defendant OEP Ltd., and a beneficial owner of the entire share capital of Defendant OI-II, and owed Plaintiff fiduciary duties. 7. Defendant Opportunity Equity Partners, Ltd. (f/k/a CVC/Opportunity Equity Partners, Ltd.) is a Cayman Islands corporation, and will be included among the Opportunity Defendants as that term is used herein. Opportunity Equity Partners, Ltd. was at all relevant times controlled and dominated by Daniel Dantas, and was his alter ego. 8. Defendant Opportunity Equity Partners, L.P. (f/k/a CVC/Opportunity Equity Partners, L.P.) is a Cayman Islands limited partnership, and will be included among the Opportunity Defendants as that term is used herein. Opportunity Equity Partners was at all relevant times controlled and dominated by Daniel Dantas, and was his alter ego. 9. Defendant Opportunity Invest II, Inc. is a British Virgin Island corporation, and will be included among the Opportunity Defendants as that term is used herein. At all relevant times, Opportunity Invest II, Inc. was a majority and dominant shareholder of OEP, Ltd., was owned, controlled and dominated by Defendant Dantas, and was his alter ego. Opportunity Invest II, Inc. assisted in the formation of OEP Ltd., together with Citibank, and owed Plaintiff fiduciary duties. The Citibank Defendants 10. Defendant Citibank, N.A., is a Delaware corporation with its principal place of business and residence in the State of New York, and will be included among the Citibank Defendants as that term is used herein. 6

7 11. Defendant International Equity Investments, Inc. ( IEII ) is a Delaware corporation having its principal place of business at One Penn s Way, New Castle, Delaware, and will be included among the Citibank Defendants as that term is used herein. 12. Defendant Citigroup Venture Capital International Brasil, L.L.C. (CVC Brasil LLC) is a Delaware limited liability company with its principal place of business at 399 Park Avenue, New York, New York, and will be included among the Citibank Defendants as that term is used herein. Defendant IEII was, at all relevant times, the sole member of CVC Brasil LLC. 13. Defendant Citigroup Venture Capital International Brasil, L.P.(CVC Brasil, LP) is a Cayman Islands limited partnership that was formerly known as CVC/Opportunity Equity Partners, L.P. and/or Opportunity Equity Partners, L.P., and will be included among the Citibank Defendants as that term is used herein. STATEMENT OF FACTS The 2008 Settlement Agreement 14. In April 2008, Defendants negotiated the winding down and distribution of the proceeds of a complex but successful investment strategy and portfolio commenced in 1997 in investments in Brazilian companies pursuant to the terms of a settlement agreement of the Citibank SDNY Litigation instituted by Defendant IEII (hereinafter the Settlement Agreement ). The Defendants have since refused to disclose the terms of the Settlement Agreement to Plaintiff as well as the divestments of assets from the Fund which yielded billions of dollars in profits for distribution. 15. Even though Plaintiff was the person who formulated the original investment strategy, actually made the investments with and on behalf of the Defendants, and oversaw the performance of the investments for a decade to bring them to fruition, Defendants have denied 7

8 him any participation in the distribution of the resulting profits. In so doing, Defendants violated legal duties they owed to Plaintiff, and diverted to themselves billions of dollars. Plaintiff s Creation of Citibank s Fund for Brazil Investments 16. In the 1990s, the Brazilian economy suffered from extreme inflation, from sovereign debt legacies, from lack of foreign investment, from poverty, and from underperformance of its industries, which included many government-owned companies. While in the employ of Citibank, Plaintiff designed and proposed an investment program to create a large Citibank-sponsored private equity investment fund targeted at Brazil, capitalized with Citibank s portfolio of Brazilian debt (Brazilian Brady Bonds), and focused on Brazil s announced intentions to privatize a large number of government-owned enterprises.. Wilson s idea was presented to Citibank s senior management, and they authorized him to pursue the structuring and launching of the fund on behalf of Citibank for this purpose, which he then did. 17. Defendant Citibank sponsored, substantially assisted, and participated in all aspects of the portfolio formation and in the formation of a general partner to manage this Brazilian private equity investment initiative. 18. In 1997, Wilson took the first steps toward securing this opportunity by arranging for the first investment in a large iron ore company in May of 1997, and in September 1997 an investment in a large container terminal at the Port of Santos in Santos Brazil. Citibank funded these investments with the intention that both would serve as their first investments of the new fund then known as CVC/Opportunity Equity Partners, L.P. and created by Wilson in the Cayman Islands for just such a purpose. The term CVC in the name of the fund stood for Citibank Venture Capital (the New York City-based private equity investment arm of Citibank at the time), and was licensed by Citibank to the General Partner for purposes of marketing the investment program, and raising capital from other investors. 19. CVC/Opportunity Equity Partners, L.P. eventually raised more than $1.5 billion, with more than $750 million coming from Citibank, to invest in Brazilian companies, and these 8

9 and the earlier investments were brought under management of the fund s management team. Wilson created the legal vehicle, a limited partnership in the Cayman Islands, which was used by Citibank to make its investments. Wilson also assisted in the creation of the legal vehicle in Cayman that served as the Fund s General Partner, Defendant OEP, Ltd. 20. After these successful acquisitions in 1997, Citibank continued to push forward on structuring the investment fund in preparation for the other anticipated Brazilian privatizations and as a means of protecting its existing investments and their prospective upside returns. Citibank instructed Plaintiff to move to Brazil to participate in the general management of the investment, including for the benefit of Defendants or their predecessors. Citibank s Lawyers Draft Formation Documents 21. Accordingly, the New York lawyers for Citibank drafted a variety of contractual documents in New York. In December 1997, the parties had a closing in New York. The purpose of these agreements was to create a team of investment professionals with the proper incentive arrangements to manage the investment of the $1.5 billion. CVC/Opportunity Equity Partners, Ltd. was created specifically as the principal umbrella organization to administer the respective investment vehicles and to manage the agreed upon Side-by-Side investing for the benefit of the co-investors. OEP, Ltd. was controlled and dominated by the Opportunity Defendants, including Defendant Dantas, and it partnered with Citibank in the creation of the onshore fund, and with the other co-investors. The co-investors were Citibank through its 100% subsidiary IEII (contributors to the Offshore Fund ), a number of Brazilian pension funds (contributors to the Onshore Fund ), and the Opportunity Defendants (contributors to the OIV investment vehicles controlled by the General Partner). 22. The investment program that was set forth in the documents drafted by Citibank s lawyers contemplated and required that Citibank, the Brazilian pension funds, and entities controlled by Dantas and by OEP, Ltd (including Defendant OI-II and other vehicles) would implement Side-by-Side investments in companies, all managed and administered by the 9

10 General Partner. As implemented, therefore, these three participating groups would actually have interdependent pro rata ownership interests in the stock of the same portfolio companies. Hence, the Opportunity Defendants were intended to be, and did become, co-investors with Citibank and the Brazilian pension funds, as well as an investment manager that obtained both management fees and a percentage interest in any resulting profits (known as the carried interest ) from the Side-by-Side investment program. The carried interest of 20% was at the time, and remains today, the customary and reasonable rate in the industry. 23. The Side-by-Side investment program contemplated both that investments and divestments in specific companies would be made in an equitable pro rata manner under the same terms and conditions for all Side-by-Side investors, and that the entire portfolio would be liquidated at some point. As a result, an important responsibility of the General Partner was to coordinate the Side-by-Side investments of the separate joint venture participants to insure that the terms and condition of investment and divestment were equitably offered and applied and that the risks and rewards were properly shared. This ongoing task of making Side-by-Side investments and disinvestments to generate and to share mutual profits was an interdependent, close relationship that was aligned to share the risks and maximize profits. But this arrangement was also subject to potential abuse, as it created opportunities for the participants who had entered into the relationship, and those individuals and entities responsible for making and implementing these decisions, to increase their own profits at the expense of the others. Accordingly, all participants had to repose trust and confidence in the other participants adhering to the common objective. The General Partner s Shareholder Agreement 24. Among the documents drafted by Citibank s lawyers was a Shareholder Agreement for the General Partner CVC/Opportunity Equity Partners Ltd, even though Citibank was not a shareholder in the General Partner. The Office of the Comptroller of the Currency (OCC) prohibited Citibank from managing the Fund. With that OCC decision, however, 10

11 Citibank, had a compelling interest in knowing, and controlling, who held ownership interests in the General Partner because the General Partner would, under the investment structure created by Citibank, be entitled to take as compensation a percentage of the profits resulting from all of the co-investments, the carried interest. 25. Citibank chose Plaintiff, at that time a seven year Citibank employee and the originator of the investment program, as a shareholder within the General Partner. This decision by Citibank provided it, and its New York offices, with continuing access to information about the portfolio for purposes of completing the investment plan that had been approved by Citibank s senior management. In reliance upon Citibank s judgment and assurances that Plaintiff would receive the compensation promised in writing by Dantas, Plaintiff relocated himself and his family to Brazil to implement the investment program. 26. In addition to the carried interest, as is also customary, Citibank agreed to pay ongoing management and other fees to the General Partner to compensate it for its Fund administrative and investment management services. Citibank was the signatory on the various documents but it determined to perform its obligations using its wholly owned subsidiary IEII. The General Partner s Shareholders and Directors 27. The General Partner s Shareholder Agreement provided that the General Partner shall have 100 shares, of which Plaintiff Wilson acquired one share, while three other individuals who were also founding principals of the fund, including Luis Demarco, acquired one share each as well (hereinafter Individual Shareholders ). Each of the Individual Shareholders and Defendant Dantas were made Directors of the General Partner, and were required to devote their full time to the business of the General Partnership, which was restricted to management of the Fund and co-investments. The Shareholder Agreement also required the General Partner to make available to each of the Shareholders information as to all its financial and business affairs. At all times, all the Defendants were aware of this obligation to provide Plaintiff with access to all financial and business affairs about the General Partner. The 11

12 Shareholder Agreement expressly imposed upon the Opportunity Defendants the duty to consult fully with one another, to act in good faith toward the other party," to undertake with each of the others to do all things reasonably within his power which are necessary to give effect to the spirit and intent of this Agreement (including Annex A), and to use their respective reasonable endeavors to procure that any necessary third parties shall, do, execute and perform all such further deeds, documents, assurances, acts and things as any of the parties hereto may reasonably require by notice in writing to the others to carry out the provisions of this Agreement (including Annex A) Next to the four Individual Shareholders, the remaining 96 shares were owned by Opportunity Invest II, Inc., an entity owned, controlled and dominated by Defendant Dantas and as to which he was its alter ego. Wilson was the only individual shareholder who was a United States citizen (the other shareholders were Brazilian) and was the only individual shareholder with an employment history with Citibank. The General Partner s Shareholder Agreement also barred individual shareholders, including Plaintiff Wilson, from directly or indirectly transfer[ing], creat[ing], or dispos[ing] of any interest (including a Security Interest) in or over his Ordinary Shares except to a transferee as permitted by this Agreement. 29. The Shareholder Agreement authorized transfers of shares held by the Individual Shareholders only as follows: (i) an individual shareholder could exercise an irrevocable put option granted by OI-II to sell his share back to OI-II; or (ii) OI-II could exercise an irrevocable call option granted by the individual shareholders to purchase their share. In either instance, the call or put option was to be at a price and according to the payment terms and conditions to be agreed pursuant to Annex A. Citibank s lawyers also provided for a choice of the laws of the Cayman Islands within the Shareholder Agreement. Fund Profits from 1997 through Starting with the initial investments in 1997 and through 2008, the fund made and managed ten large investments in Brazilian companies. The portfolio consisted of some of the 12

13 largest companies in Brazil, particularly in mining and telecommunications, resulting in billions of dollars in profits for the Citibank Defendants and the Opportunity Defendants. The profits include, but are not limited to: a. In October 2011, an arbitration panel awarded Dantas and the Opportunity Defendants an option to increase by tenfold their stock in the controlling shareholder of the same large Brazilian iron ore company that had been one of the first investments made by the Plaintiff on behalf of the Fund s investment program, at a price that is estimated to yield over $800 million in profit; b. As a result of the April 2008 Settlement Agreement between the Defendants, two large Brazilian telecommunications companies (Brasil Telecom and Oi) were merged, in a transaction that yielded over $800 million in profit to Defendant Dantas and over $1 billion to Citibank; and c. As a result of other dividends from, and divestments of, companies from the same portfolio and gains from stakes in companies still in the portfolio, well over an additional billion dollars in profits have been realized. 31. In and after January 2009, at times and under circumstances intentionally concealed by Defendants from Plaintiff, Defendants divested and distributed the remainder of the co-investments and their proceeds. Wilson s Entitlement to 5% of the Fund s Carried Interest 32. Prior to moving to Brazil in 1997 and while employed at Citibank, Wilson negotiated an agreement with Defendant Dantas, with the authorization and approval of Citibank, that Wilson would be entitled to 5% of the carried interest, i.e. 5% of the total profits due the general partner from the co-investments. This agreement was reduced to writing and was reviewed and approved by Citibank by its most senior management. Because Citibank knew the magnitude of its intended investment in the Fund, and had projections of the resulting potential profits, Citibank was aware of the reasonable expectations that it and Dantas were 13

14 creating for Plaintiff, and upon which Plaintiff was relying, in order to undertake and to perform the investment project. This agreement was disclosed in discovery during 2007 in the Citibank SDNY Litigation. All parties to the Citibank SDNY Litigation were aware of the fact and the terms of this agreement prior to entering into the 2008 Settlement Agreement. Demarco s Cayman Litigation 33. In 1999, Demarco, one of the Individual Shareholders of the General Partner was terminated from OEP Ltd. Beginning in 2000, Mr. Demarco sought to enforce his oral agreement made with Dantas, as to the value of his promised interest in OEP Ltd. After OEP Ltd. failed to pay Demarco for his interest, Demarco brought suit in the Cayman Islands to enforce it. 34. Each level of the Cayman Island s judiciary expressed doubt and frustration with the constantly changing positions of Dantas and OEP Ltd. as to the existence and nature of their obligations to Demarco. The Cayman Islands courts, including ultimately the Privy Council in London, ruled that OEP Ltd. had a legal obligation to make a fair offer to Demarco for his interest in OEP Ltd., and ordered that the price be determined by a qualified independent expert. 35. In particular, the Privy Council noted that the relations between Demarco and OEP Ltd. were alleged in Demarco s petition to be that of a quasi-partnership, and this was based on the typical, but non-exhaustive features of a quasi-partnership, including: (i) a business association formed or continued on the basis of a personal relationship of mutual trust and confidence; (ii) an understanding or agreement that all or some of the shareholders will participate in the management of the business; and (iii) restrictions on the transfer of shares so that a member cannot realize his stake if he is excluded from the business. CVC/Opportunity Equity Partners Ltd. and Opportunity Invest II Ltd. v. Demarco Almeida, 2202 CILR 77,. 36 (Privy Council March 21, 2002). The Privy Council held that, where these features are present, it is unfair for the majority to insist on their legal right to exclude the petitioner without making a 14

15 reasonable offer for his shares, and a failure to do so would be unjust or inequitable. Id., 40. The Privy Council rejected the appeal of OEP, Ltd. because, in part, Demarco s petition claim of quasi-partnership was not manifestly unfounded. 36. These features of a quasi-partnership are equally applicable to Plaintiff s relations with Defendant OEP Ltd. and with OEII, such that it is unreasonable, unjust, and inequitable to allow the Defendants to obtain the proceeds of OEP Ltd. s investment program, while excluding Plaintiff Wilson from any participation in the distribution of those proceeds between and among Defendants. These features of a quasi-partnership are equally applicable to Plaintiff s relations with the Citibank Defendants, and with the Opportunity Defendants created by the related agreements and business relations that are governed by Cayman law. 37. In addition, Defendant Citibank participated in the Demarco litigation by agreeing to guarantee payment of the price determined for Demarco s interests in OEP Ltd. upon completion of the independent valuation, and by directly paying Demarco US$7.5 million dollars for modifying an injunction issued by the Cayman courts based upon his interest in the General Partner. By agreeing in advance to pay the amounts due Demarco for his interest in the General Partner, the Citibank Defendants reasonably expected to induce, and did induce, Plaintiff s reasonable, foreseeable, and detrimental reliance upon that promise, including by inducing Plaintiff to participate in the management and maximization of the value of the portfolio companies and their related profits, and to forbear from challenging the settlement negotiations, Settlement Agreement, and the subsequent distribution of profits. In so doing, Citibank acknowledged the fiduciary obligations running among it and OEP Ltd. and its individual shareholders that had been crafted and authored by Citibank s own lawyers. Indeed, the Privy Council ruling in 2002 gave further notice to the Citibank Defendants of the good faith obligations they had created among OEP Ltd. and its management and shareholders, and the risk that these obligations might not be honored by the Opportunity Defendants. 15

16 38. In 2006, while Citibank s lawsuit was still pending in the Southern District Court of New York, the Privy Council issued another ruling in the Demarco litigation. In that ruling, the Council sustained the trial court s ruling that Demarco s oral agreement with Dantas regarding his interests in OEP Ltd. was enforceable notwithstanding the fact that it was not fully contained in Annex A of the Shareholder s Agreement. Demarco Almeida v. CVC /Opportunity Equity Partners, Ltd., 2006 CILR 430, 441 (October 2006). Hence, Citibank, as the guarantor of the OEP Ltd obligation to Demarco in that litigation, was placed on notice of the fact and enforceability of that obligation arising from a purely oral agreement. In 2007, a court-appointed independent expert valued Demarco s promised interest in OEP, Ltd., and he was paid, and these facts were known to the Citibank Defendants and the Opportunity Defendants prior to the April 2008 Settlement Agreement. Citibank s Efforts to Terminate the Fund s General Partner 39. In 2005, Citibank through its wholly-owned subsidiary, Defendant IEII, undertook efforts to terminate OEP Ltd. s general partnership status, and appointed Defendant CVC Brasil LLC (a wholly owned subsidiary of IEII) as the successor General Partner. Citibank also renamed the Fund as Citigroup Venture Capital International Brasil L.P., also a Defendant herein. Prior to the termination, the Citibank Defendants were simultaneously attempting to sell their interests in portfolio companies in order to obtain a financial advantage for themselves and to the disadvantage of OEP, Ltd. After the substitution of General Partners, a Citibank employee in New York was designated to manage CVC Brasil LP, through CVC Brasil LLC. The operations of both entities were administered by Citibank employees in New York. After CVC Brasil LLC took control of the Fund in 2005, Defendant Dantas was in regular and routine oral and written communication for years with the Citibank employees in New York who conducted CVC Brasil LLC s management of the Fund from New York, including weekly or daily telephone calls to transact business involving or related to the Fund and co-investments. 16

17 40. Under the terms of the Limited Partnership Agreement, upon the removal of the original General Partner, the original General Partner retained its rights to receive the accrued carried interest from investments it had previously made and managed. But the carried interest (i.e., profit) is neither static nor certain, and by contract formula and by events, the magnitude of the carried interest is dependent upon the management, skill, expertise, and discretion of the successor general partner. By removing the original General Partner and by substituting Defendant CVC Brasil LLC as the successor General Partner, the Citibank Defendants voluntarily, knowingly, and willfully accepted and assumed fiduciary duties to those with interests in the co-investment portfolio, including in the ongoing carried interests, a group which includes the former General Partner and Plaintiff. Hence, the Citibank Defendants voluntarily assumed control, discretionary authority, and responsibility for Plaintiff s ongoing interests in the co-investments. 41. By taking sole control, discretionary authority, and responsibility for the management and divestment of the CVC Brasil LP fund and co-investments, and for management of the underlying portfolio companies (including the obligation to engage in sideby-side divestment), the Citibank Defendants voluntarily, knowingly, and willfully accepted and occupied a relationship of trust and confidence with respect to Plaintiff under which Plaintiff reposed trust and confidence in them to manage their mutual interest in the profitability, and timely divestment of the existing investment program. In asserting and voluntarily assuming control over the divestment process including after the Settlement Agreement, the Citibank Defendants were under a duty to act for or to give advice for the benefit of Plaintiff. Finally, as a result of the Citibank Defendants assertion of control over its portfolio companies, and over their divestment, the Citibank Defendants voluntarily, knowingly, and intentionally accepted and occupied a superior position to Plaintiff with superior access to confidential information so great as to require Plaintiff to repose trust and confidence in the Citibank Defendants. The Citibank SDNY Litigation 17

18 42. One of Citibank s purposes for the initiation of the Citibank SDNY Litigation in 2005 was to secure, to accept, and to exercise control over the management of the portfolio companies, which they accomplished by various means, including by seeking and obtaining the issuance of several injunctions from the SDNY. Among other claims in the complaint filed in support of their litigation, the Citibank plaintiffs (the Citibank Defendants herein, other than Citibank) contended that Dantas controlled OEP, Ltd. and that it and other affiliated Opportunity companies, were the alter egos of Dantas. The Citibank plaintiffs further pled that OEP, Ltd. and Dantas had violated fiduciary duties and duties owed to it to disclose financial and transaction information to Citibank, and otherwise engaged in transactions that caused significant monetary damages to the Citibank plaintiffs, including by failing immediately to register CVC Brasil LLC as the new General Partner of the Fund. The Citibank plaintiffs pled that the fiduciary duties of Dantas and affiliated Opportunity companies owed to the Citibank plaintiffs survived the replacement of the original General Partner by the successor General Partner (CVC Brasil LLC). The Citibank plaintiffs also pled that the fiduciary duty of Dantas, and of his affiliated Opportunity companies, to the Citibank plaintiffs continued after the commencement of the Citibank SDNY Litigation. Finally, the Citibank plaintiffs pled that they all had a claim of unjust enrichment against Dantas and his affiliated Opportunity companies because they had allegedly diverted monies, profits (including pro rata shares of profits), and assets to themselves from the portfolio companies that otherwise should belong to the Citibank plaintiffs, and requested that a constructive trust be imposed on past and future proceeds obtained by Dantas and his affiliated Opportunity companies. 43. OEP, Ltd. filed counterclaims against the Citibank plaintiffs. OEP, Ltd admitted, on information and belief, that Dantas is the ultimate controlling shareholder of Opportunity, Ltd. OEP, Ltd. alleged that the Citibank plaintiffs (all of which are Citibank Defendants herein) had assumed fiduciary duties by interfering with portfolio divestment strategy, by voluntarily assuming managerial control of the portfolio companies, and by engaging in a joint venture 18

19 through Side-by-Side investing. OEP, Ltd. also counterclaimed for breach of fiduciary duty, alleging that it was attempting to devise an exit strategy for the portfolio s divestment but that the Citibank plaintiffs had assumed control over the portfolio by various means, including side deals with the underlying co-investors and portfolio companies, purporting to bind the Fund prior to OEP Ltd. s termination, and otherwise interfering with and blocking OEP Ltd. s investment and exit strategies, and causing damages. In substance, OEP, Ltd. contended that the Citibank plaintiffs harmed the co-investment portfolio and its profits in violation of their fiduciary duties, and in violation of their agreement not to manage the investments, and to engage only in Sideby-Side investing. Plaintiff makes the same allegations herein that Dantas controls the corporate Opportunity Defendants and they are his alter ego, and that each Citibank Defendant voluntarily accepted, by their actions, a fiduciary duty to Plaintiff. 44. By voluntarily assuming de facto and legal responsibility for the management and divestment of the portfolio companies, the Citibank Defendants occupied a relationship of trust and confidence with respect to Plaintiff under which Plaintiff necessarily reposed confidence in them to manage their mutual interests in the profitability, and timely divestment, of the existing investment program. The SDNY held that the counterclaim allegations were sufficient to raise factual issues as to whether the Citibank SDNY Litigation Citibank plaintiffs assumed fiduciary duties to OEP, Ltd. because of their involvement in portfolio management. 45. Counsel for the Citibank plaintiffs, Cleary Gottlieb Steen & Hamilton, LLP, deposed Plaintiff Wilson in New York City on December 5, Counsel for Dantas and OEP, Ltd. were also present. During the deposition in Cleary s New York City offices, Citibank s counsel specifically asked for and was provided by Plaintiff with details of Plaintiff s contract as it related to Plaintiff s 5% stake in the portfolio carried interest and right to the distribution of profits. At that time and thereafter, Wilson s contractual agreement was the subject of discovery by Citibank. Plaintiff provided the requested copies of the agreement. Both the Citibank Defendants and the Opportunity Defendants knew of Plaintiff s claimed interests prior to 19

20 completing the Settlement Agreement. Plaintiff Wilson requested of all parties that he receive notice of and participation in the settlement negotiations regarding the Citibank SDNY Litigation. Defendants Misrepresentations, Concealment and Conspiracy 46. During the Citibank SDNY Litigation, the parties to the litigation continued to conduct the business associated with the Fund, including the purchase and sale of stock and assets. Accordingly, the parties continued their ongoing relations, including through negotiations and exchanges between and among New York counsel for the parties. During and up through mid-april 2008, Dantas and OEP Ltd. represented to Plaintiff Wilson that, as part of the settlement negotiations, he would be receiving his 5% stake in the carried interest and all other promised compensation. Citibank also knew of the representations being made by Dantas and OEP Ltd. to Plaintiff that Plaintiff would receive the agreed distribution as part of the settlement. Citibank also, however, knew that Dantas and OEP Ltd. intended to exclude Plaintiff from participating in the proceeds of the Settlement Agreement. The Citibank Defendants and the Opportunity Defendants conducted the settlement negotiations to the exclusion of Plaintiff in order to facilitate the circumvention of, and interference with, Plaintiff s contractual rights and business expectations. At no time prior to the execution of the Settlement Agreement did the Defendants disclose to Plaintiff that they were entering into an agreement to bar disclosure of the settlement terms to Plaintiff. Defendants knew that this was material information, but agreed to conceal this confidentiality agreement, and the terms of the Settlement Agreement, from Plaintiff. Defendants had a duty to disclose material facts to Plaintiff and failed to do so, including but not limited to (i) that they were agreeing to bar disclosure of the Settlement Agreement to Plaintiff; including its terms, and (ii) that they were agreeing to, and did, conceal from Plaintiff the divestment of the investment program and any resulting distributions. 47. In April 2008, Plaintiff Wilson had a meeting with Dantas, at which Dantas assured Wilson that his 5% carried interest would be recognized, valued, and paid, as part of 20

21 the negotiations resulting in the Settlement Agreement. Specifically, Dantas promised Plaintiff that he would be paid his interest from the distributions provided in the Settlement Agreement. In addition, Dantas represented to Plaintiff that the pay out would be a liquidated amount, including payment to Plaintiff, rather than distributing profits only as accrued from the portfolio companies. These promises were false, and were made by Dantas to induce Plaintiff to take no action with respect to the settlement, and Plaintiff detrimentally relied upon such promises. At his last meeting with Dantas, Dantas told Wilson that Citibank had made it clear to Dantas that Wilson s payout was too high, and had indicated that Dantas should not pay Wilson the monies promised him. 48. At some time during April 2008, the Citibank Defendants entered into a confidential Settlement Agreement with the Opportunity Defendants, thereby successfully cutting off Wilson s chance of participating in, or to have knowledge of, the settlement negotiations, terms, or outcome. At no time prior to the execution of the Settlement Agreement did Defendants disclose to Plaintiff that they were agreeing not to disclose the Settlement Agreement terms to Plaintiff. At all relevant times, Defendants knew that Plaintiff was entitled to access to all information about the business and financial affairs of OEP, Ltd. Despite Plaintiff s repeated requests of all Defendants, the Defendants have since collectively refused to provide Wilson with a copy of the Settlement Agreement based upon their agreement not to make such disclosures to Plaintiff, and have refused to provide any explanation of its terms. This mutual agreement of the Defendants not to disclose the Settlement Agreement terms to Plaintiff, confirms that Defendants agreed to, intended to, and did withhold this material information from Plaintiff both during the negotiations for, and after the execution of, the Settlement Agreement. By restricting knowledge of the Settlement Agreement s terms to themselves, and barring Plaintiff from access, Defendants placed themselves in a position of superior knowledge as to its terms. But for Defendants agreement not to disclose this material information to Plaintiff, and affirmatively to conceal this fact from him, Plaintiff would not have relied upon the Defendants 21

22 assurances of Plaintiff s participation in the distributions resulting from the Settlement Agreement. 49. At all relevant times, the Defendants acted with actual malice involving an intentional wrongdoing, or engaged in conduct that amounted to a wanton, willful, or reckless disregard of Plaintiff s rights. Plaintiff s 2011 Action 50. On February 4, 2011, Plaintiff Wilson gave notice to the Opportunity Defendants, that he was exercising his irrevocable put option under the General Partner s Shareholder Agreement, was asking for production of the Settlement Agreement and other relevant financial information, and was asking them to put a price on Wilson s share within thirty days. The Opportunity Defendants have not provided any response, thereby breaching their contractual and good faith obligations as recognized by the Privy Council. 51. On March 21, 2011, Plaintiff initiated the above mentioned litigation against the Citibank and Opportunity Defendants in the United States District Court for the Southern District of New York. In that litigation, Plaintiff asked for damages and that the Defendants produce a copy of the Settlement Agreement, but Defendants refused. CLAIMS First Cause of Action Breach of Fiduciary Duty (against all Defendants) 52. Plaintiff incorporates by reference paragraphs 1 through 51 as though set forth fully herein. 53. Both under Cayman and New York laws, the Opportunity Defendants owed Plaintiff a fiduciary duty as a result of the creation of a quasi-partnership relationship, as a result of their fiduciary obligations to plaintiff as a shareholder, by their superior knowledge (including 22

23 regarding the settlement negotiations from which they excluded Plaintiff), and as a result of the relationship of trust and confidence created by the nature of their ongoing investment program The Citibank Defendants also owed Plaintiff fiduciary duties as a result of the relationship of trust and confidence created by the nature of their ongoing business relationship that had started with an employment for 7 years and resulted in Citibank approving the investment plan and directing Plaintiff to relocate to Brazil to implement it through the approved association with the General Partner controlling the co-investments, including by: (a) authorizing his shareholder and fiduciary beneficiary interests, including his participation in the carried interest; (b) sending him to create, manage, and maximize the co-investments; (c) drafting the terms of the agreement that created his interest in the partnership or quasi-partnership that was responsible for managing Side-by-Side co-investments with resulting profits and carried interest in the portfolio, including a partnership or a quasi-partnership among Plaintiff, the Citibank Defendants, and the Opportunity Defendants; (d) interfering with the original General Partner s investment and disinvestment strategies; (e) voluntarily assuming General Partnership responsibilities for, and control over, the management of the co- investments and portfolio companies in 2005 (including Plaintiff s interests therein); (f) voluntarily assuming the role of guarantor for the payment of Mr. Demarco s shareholder interest in the Caymans litigation, and paying $7.5 million in partial satisfaction thereof; (g) managing the disinvestment and liquidation of the co- investments beginning in 2005, including on a side-by-side basis, resulting in the Settlement Agreement in 2008 and subsequent distributions; (h) their superior knowledge; and (i) entering into negotiations and a Settlement Agreement whereby Plaintiff was excluded from access to information concerning the divestment of the co-invested assets and profits. 54. As fiduciaries of Plaintiff, the Opportunity Defendants and the Citibank Defendants owed Plaintiff the duty of utmost good faith. Among other obligations, the Defendants had a duty to inform Plaintiff of the terms negotiated in the Settlement Agreement, 23

24 which they breached by agreeing among themselves they would not do, and have since failed to do, despite repeated requests. 55. The Opportunity and Citibank Defendants also breached their fiduciary duties to Plaintiff by failing to disclose the terms of the Settlement Agreement including its prohibition on disclosures to Plaintiff, and by reaching a Settlement Agreement that excluded Plaintiff from knowledge of its terms and from participation in the distribution of proceeds, and by thereafter failing to distribute to Plaintiff his interest in the subsequent proceeds of the divestment, which continued up through The Citibank Defendants knew of the fiduciary duties of Opportunity Defendants to Plaintiff, and provided substantial assistance to induce the Opportunity Defendants to breach their fiduciary duties. The Citibank Defendants knew of the Opportunity Defendants fiduciary duty because Citibank drafted or authorized the documents creating the partnership or quasipartnership relationship and valuing Plaintiff s interests therein, and also participated in the Demarco Caymans litigation where such duties were identified by the Cayman Island courts in 2002 and again in 2006, resulting in the enforcement of the Demarco oral contract in 2007, for which Citibank guaranteed payment. The Citibank Defendants knew of the Opportunity Defendants intent to breach their fiduciary duties to Plaintiff, and knowingly provided substantial assistance in order to bring about this breach of fiduciary duty to Plaintiff. The Citibank Defendants knew of the duty created by the Shareholder Agreement drafted by its lawyers that Plaintiff be provided with all financial and business information about the Fund, but substantially assisted in the breach of this duty by entering into a Settlement Agreement, without disclosure to Plaintiff, that prohibited disclosing its terms to Plaintiff. The Citibank Defendants knew of the promises of the Opportunity Defendants to compensate Plaintiff, both when Citibank originally approved of the agreement, and as a result of the discovery in the Citibank SDNY Litigation leading to the Settlement Agreement, but nonetheless entered into an agreement precluding the parties from disclosing to Plaintiff the information necessary to implement that agreement. The 24