FILED: KINGS COUNTY CLERK 08/17/ /22/ :24 11:53 PM AM INDEX NO /2015 NYSCEF DOC. NO. 167 RECEIVED NYSCEF: 08/17/2015

Transcription

1 FILED: KINGS COUNTY CLERK 08/17/ /22/ :24 11:53 PM AM INDEX NO / /2014 NYSCEF DOC. NO. 167 RECEIVED NYSCEF: 08/17/ /22/2016 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF KINGS X JULES LEVENTHAL; and HAJE, LLC; ESTHER FRANKEL- ROSS; and JOSEPH GOLDSTEIN, -against- Plaintiffs, KINGSTON CHECK CASHING, INC.; YISSACHAR SUGAR a/k/a Barry Sugar ; STEVEN GOLDBERGER a/k/a Chaim Goldberger a/k/a Chaim Goldberg ; KOVA MAZAL 57 REALTY, LLC; CHAIM BRAUN; and WILLIAM PINZLER, Index No: / 15 Date Purchased: 8 / 14 / 15 Plaintiffs designate KINGS County as the place of trial. The basis of venue is residence of plaintiffs SUMMONS Plaintiff Leventhal resides at: 478 Argyle Rd., B klyn, NY Defendants X TO THE ABOVE NAMED DEFENDANTS: YOU ARE HEREBY SUMMONED to answer the complaint in this action and to serve a copy of your answer, on the plaintiff s Attorneys within 20 days after the service of this summons, exclusive of the day of service (or within 30 days after service is complete if this summons is not personally delivered to you within the State of New York) and to file a copy of your answer with the Clerk of the above-named Court; and in case of your failure to appear or answer, judgment will be taken against you by default for the relief demanded in the complaint. Dated: Brooklyn, New York August, Yours, THE BERKMAN LAW OFFICE, LLC Attorneys for the plaintiff by: Robert J. Tolchin Defendant s address: 111 Livingston Street, Suite 1928 Brooklyn, New York (718) SEE ATTACHED RIDER

2 RIDER Defendants addresses: KINGSTON CHECK CASHING CORP. 433 Kingston Avenue Brooklyn, New York YISSACHAR SUGAR a/k/a Barry Sugar c/o Kingston Check Cashing Corp. 433 Kingston Avenue Brooklyn, New York STEVEN GOLDBERGER a/k/a Chaim Goldberger a/k/a Chaim Goldberg 331 Dahill Road Brooklyn, New York KOVA MAZAL 57 REALTY, LLC th Avenue, Apt. D15 Brooklyn, New York CHAIM BRAUN 8 Wilder Road Monsey, New York WILLIAM M. PINZLER 488 Madison Avenue, Suite 1100 New York, New York

3 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK X JULES LEVENTHAL; HAJE, LLC; ESTHER FRANKEL-ROSS; and JOSEPH GOLDSTEIN, Plaintiffs, Index No: / 15 VERIFIED COMPLAINT -against- KINGSTON CHECK CASHING, INC.; YISSACHAR SUGAR a/k/a Barry Sugar ; STEVEN GOLDBERGER a/k/a Chaim Goldberger a/k/a Chaim Goldberg ; KOVA MAZAL 57 REALTY, LLC; CHAIM BRAUN; and WILLIAM PINZLER, Defendant X Plaintiffs, complaining of the defendants, by their attorneys, THE BERKMAN LAW OFFICE, LLC, alleges for their complaint, upon information and belief, as follows: THE PARTIES 1. At all times mentioned herein, the plaintiff, JULES LEVENTHAL, is a resident of the City and State of New York, County of Kings. 2. At all times mentioned herein, the plaintiff HAJE, LLC is a New York limited liability company, with its principal place of business located in and for the City and State of New York, County of Kings. 3. At all times mentioned herein, the plaintiff ESTHER FRANKEL-ROSS is a natural person, citizen and resident of the State of Pennsylvania, and is a relative of plaintiff LEVENTHAL.

4 4. At all times mentioned herein, the plaintiff, JOSEPH GOLDSTEIN, is a resident of the City and State of New York, County of Kings 5. Upon information and belief, at all times relevant to this complaint, the defendant KINGSTON CHECK CASHING, INC. ( KINGSTON ) is a corporation organized and existing under the laws of the State of New York, with its principal place of business located within and for the City and State of New York, County of Kings. 6. Upon information and belief, at all times relevant to this complaint, the defendant KINGSTON engages in the check cashing business. 7. Upon information and belief, at all times relevant to this complaint, the defendant YISSACHAR SUGAR a/k/a Barry Sugar ( SUGAR ) is a natural person, citizen and resident of the City and state of New York, County of Kings, and is an owner, principal, and officer of the defendant KINGSTON. 8. Upon information and belief, at all times relevant to this complaint, the defendant STEVEN GOLDBERGER a/k/a Chaim Goldberger a/k/a Chaim Goldberg ( GOLDBERGER ) is a natural person, citizen and resident of the City and State of New York, County of Kings, and is an employee of KINGSTON. 9. Upon information and belief, at all times relevant to this complaint, the defendant GOLDBERGER held himself out as a partner of SUGAR in the check cashing business, in the presence of SUGAR. 10. Upon information and belief, at all times relevant to this complaint, the defendant KOVA MAZAL 57 REALTY, LLC is New York limited liability company, with its principal place of business located in and for the City and State of New York, County of Kings. -2-

5 11. Upon information and belief, at all times relevant to this complaint, the defendant CHAIM BRAUN is a natural person, citizen and resident of the City and State of New York, County of Rockland. 12. Upon information and belief, at all times relevant to this complaint, the defendant WILLIAM PINZLER is a natural person, citizen and resident of the City and State of New York, who holds himself out as a lawyer licensed to practice law in the State of New York and maintains an office for the practice of law in the City and State of New York, County of New York. THE UNDERLYING FACTS (As to plaintiffs Leventhal, HAJE and Frankel-Ross) 13. In or about late 2013, the plaintiff LEVENTHAL were seeking to invest some money. 14. A client of the defendant PINZLER advised LEVENTHAL that GOLDBERGER was conducting a lucrative check cashing business involving the cashing of high denomination checks for which he was seeking investors. He explained that his customers often needed to cash large denomination checks rapidly and in order to engage in this business he needed to have access to large amounts of working capital. 15. LEVENTHAL met with GOLDBERGER. 16. The meetings between LEVENTHAL and GOLDBERGER took place at KINGSTON s check cashing store, in the non-public of that facility. 17. GOLDBERGER represented himself to be a partner in KINGSTON. 18. On at least one occasion, GOLDBERGER introduced LEVENTHAL to SUGAR inside the non-public offices of KINGSTON, and led LEVENTHAL to believe that GOLDBERGER and SUGAR were partners. -3-

6 19. Between November 28, 2013 and May 5, 2014, the plaintiffs LEVENTHAL, HAJE and FRANJKEL-ROSS invested at least $1,450,000 in the check cashing business per GOLDBERGER S directions. 20. Each of these investments was, according to GOLDBERGER, earmarked for a particular check cashing deal. 21. For each of these investments, the plaintiffs check or wire transfer was made out in a particular way, per GOLDBERGER s instructions, which was explained as being required as part of the deal. 22. In most instances, the plaintiffs investment was deposited into KINGSTON s bank account. 23. The following chart shows the investments made by the plaintiffs LEVENTHAL, HAJE and FRANJKEL-ROSS and indicates the date, form, payor, payee amount, and where each transaction was deposited. Date Number Type From To Deposited Amount Kova Mazal Personal Jules 11/28/ Realty Kingston $100, check Leventhal LLC 1/28/ Personal check Jules Leventhal Kova Mazal Kingston $100, /1/2014 Cash Kingston Kingston $100, /10/ /10/ Cashier s Check Cashier s Check Jules Leventhal Jules Leventhal -4- Kova Mazal Kingston $300, Kova Mazal Kingston $100, /19/2014 Wire HAJE LLC Chaim Braun $300, /27/ /27/ /2/ Cashier s Check Cashier s Check Cashier s Check HAJE LLC HAJE LLC Jules Leventhal Brooklyn Paint Exclusive Leasing Kingston $50, Kingston $90, Delmas Delmas $40,000.00

7 4/2/ /4/ /8/ Cashier s Check Cashier s Check Cashier s Check 5/5/2014 Wire Jules Leventhal HAJE LLC & Jules Leventhal HAJE LLC & Jules Leventhal Esther L Frankel- Ross Timeworks Timeworks $80, Chaim Braun Kingston $40, Berkan Henoch as Attorneys Ohr Hashabbos Berkman Henoch $50, $100, As the plaintiffs investments via GOLDBERGER began to grow, plaintiff LEVENTHAL sought to obtain security for his investments. 25. To obtain such security, he turned to the defendant PINZLER, a lawyer, to negotiate a security arrangement and prepare the appropriate paperwork to provide security. 26. PINZLER ultimately prepared two promissory notes pursuant to which GOLDBERGER agreed to pay LEVENTHAL $400,000 and $300,000 respectively, with such notes being guaranteed by CHAIM BRAUN and supposedly secured by two pieces of real property. 27. No part of the plaintiffs investments has been repaid. THE UNDERLYING FACTS (As to plaintiff Joseph Goldstein) 28. In or about April 2014 plaintiff Joseph Goldstein was due to receive $250,000 from a real estate sale that was closing. 29. GOLDSTEIN desired to receive the proceeds of that transaction in cash. 30. Knowing that GOLDBERGER worked in the check cashing business with KINGSTON, GOLDSTEIN approached GOLDBERGER and asked if he could cash the proceeds of the transaction. -5-

8 31. GOLDBERGER instructed GOLDSTEIN to have the checks from the transaction made out to Berkman Henoch, as Attorney and Nethaniel Shaki. 32. Checks issued by the buyer s attorney totaling $250,000 were provided to GOLDBERGER, who signed a receipt for same. 33. GOLDBERGER also provided GOLDSTEIN as purported collateral a printed check from KINGSTON in the amount of $250,000, but unsigned. 34. GOLDBERGER deposited the checks provided by GOLDSTEIN into KINGSTON s accounts, but only gave GOLDSTEIN $30,000 out of the $250,000, promising to provide the rest later, but never did. 35. GOLDSTEIN is thus owed $220,000. AS AND FOR A FIRST CLAIM FOR RELIEF AGAINST KINGSTON AND GOLDBERGER BY LEVENTHAL, HAJE AND FRANKEL-ROSS 36. Plaintiffs repeat and re-allege each of the foregoing allegations with the same force and effect as if more fully set forth herein. KINGSTON. 37. At all times relevant to this complaint, GOLDBERGER was employed by 38. At all times relevant to this complaint, KINGSTON gave GOLDBERGER access to the non-public areas of KINGSTON s store. 39. At all times relevant to this complaint, KINGSTON permitted GOLDBERGER to conduct business meetings within KINGSTON s store. 40. At all times relevant to this complaint, KINGSTON permitted GOLDBERGER to have access to KINGSTON s cash till. -6-

9 41. At all times relevant to this complaint, KINGSTON permitted GOLDBERGER to have access had access to KINGSTON s bank accounts. 42. At all times relevant to this complaint, KINGSTON permitted GOLDBERGER to have access to KINGSTON s financial records. 43. At all times relevant to this complaint, KINGSTON permitted GOLDBERGER to have access to KINGSTON s banking computer systems, including passwords allowing him to engage in transactions on KINGSTON s behalf. 44. At all times relevant to this complaint, KINGSTON permitted GOLDBERGER to hold himself out as doing business on behalf of KINGSTON. 45. At all times relevant to this complaint, KINGSTON permitted GOLDBERGER to conduct check cashing business on behalf of KINGSTON. 46. At all times relevant to this complaint, KINGSTON was aware that GOLDBERGER was raising funds from investors for a check cashing business. 47. At all times relevant to this complaint, KINGSTON permitted GOLDBERGER to act as it agent. 48. At all times relevant to this complaint, KINGSTON permitted GOLDBERGER to act with apparent authority of KINGSTON. 49. At all times relevant to this complaint, most of the plaintiffs investments were deposited to KINGSTON s bank account. 50. At all times relevant to this complaint, KINGSTON was fully aware, or with the exercise of reasonable prudence should have been aware, of the deposit of plaintiffs funds into its accounts. -7-

10 51. At all times relevant to this complaint, KINGSTON had, or with the exercise of reasonable prudence should have had, sufficient accounting systems in place to be aware of the deposit of plaintiffs funds into its accounts 52. At all times relevant to this complaint, KINGSTON was fully aware, or with the exercise of reasonable prudence should have been aware, of the ultimate disposition of plaintiffs funds from its accounts. 53. At all times relevant to this complaint, KINGSTON had, or with the exercise of reasonable prudence should have had, sufficient accounting systems in place to be aware of the ultimate disposition of plaintiffs funds from its accounts 54. At all times relevant to this complaint, KINGSTON was a regulated business subject to state and federal record keeping laws, and governmental reporting requirements. 55. By reason of the aforementioned recordkeeping and reporting requirements, KINGSTON was aware, or with the exercise of reasonable prudence should have been aware, of the deposits of plaintiffs funds. 56. By reason of the aforementioned recordkeeping and reporting requirements, KINGSTON was aware, or with the exercise of reasonable prudence should have been aware, of the ultimate disposition of plaintiffs funds. 57. KINGSTON s owner, SUGAR, met LEVENTHAL in KINGSTON s premises, was introduced by GOLDBERGER as his partner, and was aware, or by the exercise of reasonable prudence should have been aware, that plaintiffs believed they were investing in an investment with KINGSTON, not just with GOLDBERGER. 58. Upon information and belief, KINGSTON regularly disregarded the applicable statutes, laws, rules and regulations in processing the transactions involving the plaintiff s money. For example: -8-

11 a) KINGSTON violated Banking Law 373 by cashing a check from plaintiff to Chaim Braun which was well in excess of $15,000. b) KINGSTON violated Banking Law 373 by cashing he check received from GOLDSTEIN payable to Nethaniel Shaki which was well in excess of $15,000. c) Cashing two checks on March 10, 2014 payable to KOVA MAZAL, one for $300,000 and one for $100,000, a suspicious aggregation with no discernible commercial purpose. d) Failing to record the fee on the face of the check for the March 10, 2014 $300,000 check to Kova Mazal e) Cashing checks made out to Brooklyn Paint, Exclusive Leasing, and Kova Mazal which did not have full entity names and the names used were very generic. None of these entities can be found with a Google search. Plainly no verification was done. f) Cashing two checks payable to Berkman Henoch, as Attorneys even though they were highly suspicious: drawn on an attorney escrow account, payable to another law firm not even in their own capacity, but as attorneys meaning in trust for their client, without any explanation as to why would a major law firm in Garden City, Nassau County, 29 miles away from Boro Park, cash checks that it was supposed to be holding in escrow for its client at a check cashing store in Brooklyn? Obviously no verification of these checks was carried out. g) These checks are all in excess of $10,000. As such they were reportable transactions under 31 CFR and , but upon information and belief no Currency Transaction Reports (FinCen 104 s) were made? -9-

12 h) Upon information and belief, KINGSTON has no identification on file for the persons who cashed these checks. 59. GOLDBERGER, while he was employed by KINGSTON, represented to the plaintiffs LEVENTHAL, HAJE, and FRANKEL-ROSS, directly or through LEVENTHAL, that funds they would invest would be invested in high denomination check cashing transactions. 60. The plaintiffs LEVENTHAL, HAJE, and FRANKEL-ROSS invested the sums alleged above purportedly in check cashing transactions orchestrated by GOLDBERGER while he was employed by KINGSTON. 61. Upon information and belief, there were, in reality, no such check cashing transactions, and the money invested by plaintiffs LEVENTHAL, HAJE, and FRANKEL-ROSS was diverted to other purposes. 62. KINGSTON is vicariously liable for the actions go GOLDBERGER pursuant to the doctrine of respondeat superior and agency / apparent authority. 63. The defendants are jointly and severally liable. 64. By reason of the foregoing, the plaintiffs LEVENTHAL, HAJE, and FRANKEL- ROSS are entitled to recover of the defendants GOLDBERGER and KINGSTON for the full amount of their loss, $1.45 million, plus interest. AS AND FOR A SECOND CLAIM FOR RELIEF AGAINST KINGSTON BY LEVENTHAL, HAJE AND FRANKEL-ROSS 65. Plaintiffs repeat and re-allege each of the foregoing allegations with the same force and effect as if more fully set forth herein. 66. The defendant KINGSTON was reckless, careless, and negligent in: failing to supervise GOLDBERGER; failing to have in place protections, protocols and systems to prevent fraudulent use being made of its accounts; failing to follow proper accounting procedures; failing -10-

13 to employ and deploy efficient and sufficient personnel; failing to monitor its staff; failing to perform proper background checks; failing to see what should be seen; closing its eyes; failing to monitor transactions; failing to have a proper compliance procedure; and the defendant was otherwise reckless, careless and negligent. 67. KINGSTON is vicariously liable for the actions go GOLDBERGER pursuant to the doctrine of respondeat superior and agency / apparent authority. 68. The defendants are jointly and severally liable. 69. By reason of the foregoing, the plaintiffs LEVENTHAL, HAJE, and FRANKEL- ROSS are entitled to recover of the defendants GOLDBERGER and KINGSTON for the full amount of their loss, $1.45 million, plus interest. AS AND FOR A THIRD CLAIM FOR RELIEF AGAINST KINGSTON AND GOLDBERGER BY GOLDSTEIN 70. Plaintiffs repeat and re-allege each of the foregoing allegations with the same force and effect as if more fully set forth herein. 71. GOLDBERGER, while he was employed by KINGSTON, represented to the plaintiff GOLSTEIN that he could cash checks from his real estate sale if they were made payable as instructed by GOLDBERGER. 72. Upon information and belief, the funds from the checks provided by GOLDSTEIN were diverted by the defendants to other purposes. 73. KINGSTON is vicariously liable for the actions go GOLDBERGER pursuant to the doctrine of respondeat superior and agency / apparent authority. 74. The defendants are jointly and severally liable. -11-

14 75. By reason of the foregoing, the plaintiff GOLDSTEIN is entitled to recover of the defendants GOLDBERGER and KINGSTON for the full amount of his loss, $220,000, plus interest. AS AND FOR A FOURTH CLAIM FOR RELIEF AGAINST KINGSTON AND GOLDBERGER BY GOLDSTEIN 76. Plaintiffs repeat and re-allege each of the foregoing allegations with the same force and effect as if more fully set forth herein. 77. The defendant KINGSTON was reckless, careless, and negligent in: failing to supervise GOLDBERGER; failing to have in place protections, protocols and systems to prevent fraudulent use being made of its accounts; failing to follow proper accounting procedures; failing to employ and deploy efficient and sufficient personnel; failing to monitor its staff; failing to perform proper background checks; failing to see what should be seen; closing its eyes; failing to monitor transactions; failing to have a proper compliance procedure; and the defendant was otherwise reckless, careless and negligent. 78. KINGSTON is vicariously liable for the actions go GOLDBERGER pursuant to the doctrine of respondeat superior and agency / apparent authority. 79. The defendants are jointly and severally liable. 80. By reason of the foregoing, the plaintiff GOLDSTEIN is entitled to recover of the defendants GOLDBERGER and KINGSTON for the full amount of his loss, $220,000, plus interest. -12-

15 AS AND FOR A FIFTH CLAIM FOR RELIEF AGAINST CHAIM BRAUN, GOLDBERGER, AND KINGSTON BY LEVENTHAL AND HAJE 81. Plaintiffs repeat and re-allege each of the foregoing allegations with the same force and effect as if more fully set forth herein. 82. On or about March 19, 2014, at the request and instruction of GOLDBERGER, plaintiff HAJE wired $300,000 to CHAIM BRAUN, which according to GOLDBERGER was part of an investment in a check cashing transaction. 83. On or about March 27, 2014, at the request and instruction of GOLDBERGER, plaintiff HAJE issued a cashier s check to Exclusive Leasing, in the amount of $90,000 which according to GOLDBERGER was part of an investment in a check cashing transaction. BRAUN. 84. Upon information and belief, Exclusive Leasing was an entity wholly owned by 85. On or about April 4, 2014, at the request and instruction of GOLDBERGER, plaintiffs HAJE and LEVENTHAL issued a cashier s check to CHAIM BRAUN, in the amount of $40,000 which according to GOLDBERGER was part of an investment in a check cashing transaction. 86. Upon information and belief, despite GOLDBERGER s representations that these funds were to be used in connection with a check cashing transaction, in reality BRAUN kept the money. 87. Neither HAJE nor LEVENTHAL received any consideration for these transfers. 88. Upon information and belief, the defendant BRAUN was working together with GOLDBERGER. 89. GOLDBERGER and KINGSTON remain liable to LEVENTHAL and HAJE for these funds since the transfers to BRAUN and his company were made at the instruction of -13-

16 GODLBERGER, and KINGSTON is liable for the actions of GOLDBERGER under respondeat superior and agency / apparent authority. 90. By reason of the foregoing, the plaintiffs LEVENTHAL and HAJE are entitled to recover of the defendants BRAUN, GOLDBERGER and KINGSTON for the full amount of these transactions, $ , plus interest. AS AND FOR A SIXTH CLAIM FOR RELIEF AGAINST KINGSTON AND SUGAR 91. Plaintiffs repeat and re-allege each of the foregoing allegations with the same force and effect as if more fully set forth herein. 92. The Bank Secrecy Act and its implementing regulations require, among other things, that financial institutions: (1) implement an effective AML program to prevent the financial institutions from being used to facilitate money laundering or the financing of terrorist activities; and (2) report suspicious transactions involving potentially unlawful activity. See 31 U.S.C. 5318(g), (h); 31 C.F.R , , re-codified at 31 C.F.R , FinCEN is a bureau within the Department of the Treasury. The Secretary of the Department of the Treasury has delegated to the Director of FinCEN the authority to implement and enforce compliance with the BSA, including through the promulgation of regulations. See 31 U.S.C. 310(b)(2)(I); Treasury Order : A. The Requirement to Implement an Effective AML Program 94. The BSA requires that all financial institutions establish an AML program that includ[es], at a minimum : (1) the development of internal policies, procedures, and controls ; (2) the designation of a compliance officer ; (3) an ongoing employee -14-

17 training program ; and (4) an independent audit function to test [the] program[]. 31 U.S.C. 5318(h)(1). 95. In 2002, FinCEN issued a regulation implementing 31 U.S.C. 5318(h)(l). See 31 C.F.R That regulation (which was in effect at all times relevant to this complaint) requires that all Money Services Businesses ( MSBs ), including those that function as check cashers and money transmitters (like KINGSTON), develop, implement, and maintain an effective [AML] program. Id (a). The regulation provides that [a]n effective [AML] program is one that is reasonably designed to prevent the [MSB] from being used to facilitate money laundering and the financing of terrorist activities, and shall be commensurate with the risks posed by the location and size of, and the nature and volume of the financial services provided by, the [MSB]. Id (a)-(b). 96. The above-referenced regulation, 31 C.P.R , also provides that an effective AML program must, [a]t a minimum : (1) [i]ncorporate policies, procedures, and internal controls reasonably designed to assure compliance with [the requirements of 31 C.P.R. Part 103], including policies for the [f]iling [of] reports ; (2) [d]esignate a person to assure day to day compliance with the [AML] program and [the requirements of31 C.P.R. Part 103] (the AML Compliance Officer ); (3) [p]rovide education and/or training [to] appropriate personnel concerning their responsibilities under the [AML] program, including training in the detection of suspicious transactions to the extent that the [MSB] is required to report such transactions under [31 C.P.R. Part 103] ; and (4) [p]rovide for independent review to monitor and maintain an adequate [AML] program. jd (d)(l)-(4). 97. Pursuant to 31 C.P.R , an MSB s AML Compliance Officer must, among other things, ensure that: (1) [t]he [MSB] properly files reports... in accordance with applicable requirements of[31 C.P.R. Part 103] ; (2) [t]he [MSB s] compliance -15-

18 program is updated as necessary to reflect current requirements of [31 C.P.R. Part 103], and related guidance issued by the Department of the Treasury ; and (3) [t]he [MSB] provides appropriate training and education in accordance with [31 C.P.R (d)(3)]. Id (d)(2). B. The Requirement to Report Suspicious Activity 98. The BSA also authorizes FinCEN to require any financial institution, and any director, officer, employee, or agent of any financial institution, to report any suspicious transaction relevant to a possible violation of law or regulation. 31 U.S.C. 5318(g)(1). 99. In 2000, FinCEN issued a regulation implementing 31 U.S.C. 5318(g)(l). See 31 C.F.R That regulation (which was amended in relevant part in 2003 and in effect at all times relevant to this complaint) requires that certain MSBs, including ones that function as check cashers and money transmitters (like KINGSTON), report any transaction [that] is conducted or attempted by, at, or through [the MSB], involves or aggregates funds or other assets of at least $2,000..., and the [MSB] knows, suspects, or has reason to suspect : [i]nvolves funds derived from illegal activity or is intended or conducted in order to hide or disguise funds or assets derived from illegal activity... as part of a plan to violate or evade any federal law or regulation or to avoid any transaction reporting requirement under federal law or regulation ; [i]s designed, whether through structuring or other means, to evade any requirements of [31 C.F.R. Part 103] or of any other regulations promulgated under the [BSA] ; [s]erves no business or apparent lawful purpose, and the reporting [MSB] knows of no reasonable explanation for the transaction after -16-

19 examining the available facts, including the background and possible purpose of the transaction ; or [i]nvolves use of the [MSB] to facilitate criminal activity. Id (a)(l)-(2). At all times relevant to this complaint, MSBs were required to report such transactions by filing a SAR no later than 30 calendar days after the date of the initial detection by the [MSB] of facts that may constitute a basis for filing a SAR[]. Id (b)(3) At all times relevant to this complaint, FinCEN required SARs to be filed on a standard form. That form was divided into multiple sections, with the following titles and purposes: (1) Subject Information, wherein the reporting party was to identify the suspected wrongdoer and indicate whether that individual or entity was the [p]urchaser/sender or [p]ayee/receiver, or had some other role in the suspicious transaction(s); (2) Suspicious Activity Information, wherein the reporting party was to provide specific details regarding the suspicious activity, including its date or date range; (3) Transaction Location, wherein the reporting party was to identify the physical location where the suspicious activity had occurred, and identify whether it was the [s]elling location, the [p]aying location, or some other location; (4) Reporting Business and Contact for Assistance, wherein the reporting party was to provide certain information about itself; and (5) Suspicious Activity Information Narrative, wherein the reporting party was to provide a narrative description of the subject s suspicious activity. See FinCEN Form 109; Form TD F C. Sugar s Role Within KINGSTON 101. At all times relevant to this complaint, Sugar was Kingston s Owner, Chief Operating Officer, and ultimately Chief Compliance Officer and was ultimately responsible for -17-

20 all AML Compliance and Fraud prevention. All other functionaries of Kingston all worked under, and had direct contact with, Sugar Sugar was responsible for ensuring that Kingston complied with its obligations under the BSA and its implementing regulations, including that it (1) implemented and maintained an effective AML program, and (2) complied with its SAR-reporting obligations Upon information and belief, Sugar was the architect of Kingston s AML program, and was also responsible for assuring the Company s day-to-day compliance with it and for approving AML related policy changes as appropriate. In addition, Sugar was responsible for ensuring that Kingston s AML program complied with the requirements of the BSA and its implementing regulations As Kingston s Chief Compliance Officer, Sugar had the authority to terminate or otherwise discipline Kingston employees because of compliance concerns. Sugar also had the authority to decline to approve new employees. D. Fraudulent Use of Kingston s Check Cashing Business 105. At all times relevant to this complaint, and during , certain Kingston employees, including the defendant GOLDBERGER, participated in schemes to defraud the public, using Kingston s check cashing system to facilitate the schemes The fraudulent schemes relied on a variety of false promises and other representations aimed at misleading the public and inducing unsuspecting victims to lend money in exchange for high rates of return, purportedly to facilitate what was described as a high denomination check cashing business, sometimes as investors, and sometimes by inducing individuals who wished to cash large checks to take only some of their cash and let the rest ride as an investment. -18-

21 107. After such payments had been sent, the employee(s) participating in the fraud on the receiving end would remove the victims money from Kingston s accounts and the money would ultimately be divided among the perpetrators Kingston was required to implement and maintain an effective AML program, as set forth in the BSA and its implementing regulations As Kingston s Chief Compliance Officer, Sugar was responsible for ensuring that Kingston implemented and maintained an effective AML program As set forth above, throughout his employment at Kingston-including during the Assessment Period Sugar failed to ensure that Kingston implemented and maintained an effective AML program. Among other things, Sugar failed to: (1) implement a policy for disciplining high-risk employees; (2) ensure that unambiguously high-risk employees of which he was on notice were terminated; (3) ensure that there was sufficient coordination between Kingston s Fraud Department and Kingston s SAR analysts, such that timely SARs were filed on agents/outlets that the Fraud Department had identified as, among other things, having accumulated an excessive number of Consumer Fraud Reports; (4) ensure that highrisk agents/outlets were subjected to proper audits; or (5) ensure that Kingston adequately screened new agents, or existing agents seeking to open new outlets The failure of SUGAR and KINGSTON to comply with the AML laws led to the plaintiffs being victimized by GOLDBERGER s false investment scheme As a result of the failure of SUGAR and KINGSTON to comply with the AML laws each of the plaintiffs was caused to lose money, as detailed above By reason of the foregoing, the plaintiffs are entitled to recover of the defendants SUGAR and KINGSTON for the full amount of their losses, $1.45 million collectively to LEVENTHAL, HAJE and FRANKEL-ROSS, and $220,000 to GOLDSTEIN, plus interest. -19-

22 AS AND FOR A SEVENTH CLAIM FOR RELIEF AGAINST KOVA MAZAL, GOLDBERGER, AND KINGSTON BY LEVENTHAL AND HAJE 114. Plaintiffs repeat and re-allege each of the foregoing allegations with the same force and effect as if more fully set forth herein As enumerated above, $600,000 of the investment of plaintiffs LEVENTHAL and HAJE was payable to defendant KOVA MAZAL at GOLDBERGER s instruction and on his representation that the funds were to be used for check cashing transactions These funds were deposited into KINGSTON s accounts The relationship between KINGSTON, GOLDBERGER, and KOVA MAZAL is not known to plaintiff Neither HAJE nor LEVENTHAL received any consideration for these transfers GOLDBERGER and KINGSTON remain liable to LEVENTHAL and HAJE for these funds since the transfers to KOVA MAZAL and his company were made at the instruction of GODLBERGER, and KINGSTON is liable for the actions of GOLDBERGER under respondeat superior and agency / apparent authority Morever, upon information and belief, the checks to KOVA MAZAL were cashed by GOLDBERGER and the funds were not received by KOVA MAZAL This cause of action is asserted to the extent that the defendant KOVA MAZAL actually received the plaintiff s funds By reason of the foregoing, the plaintiffs LEVENTHAL and HAJE are entitled to recover of the defendants KOVA MAZAL, GOLDBERGER and KINGSTON for the full amount of these transactions, $ , plus interest. -20-

23 AS AND FOR A EIGHTH CLAIM FOR RELIEF AGAINST GOLDBERGER BY LEVENTHAL 123. Plaintiffs repeat and re-allege each of the foregoing allegations with the same force and effect as if more fully set forth herein The defendant GOLDBERGER executed two promissory notes in favor of the plaintiff LEVENTHAL, which by their terms required GOLDBERGER to pay $300,000 and $400,000 respectively to LEVENTHAL, failing which payment LEVENTHAL would be entitled to record deeds conveying certain parcels of real property, th Street, Brooklyn, NY, and 813 Bedford Avenue, Unit 2, Brooklyn, NY, to himself These notes accrue interest at the rate of five percent per annum Copies of the aforementioned promissory notes and deeds are annexed hereto as Ex. A At all times relevant to this complaint, the parcels of real property in question were titled to Shlomo Braun Pursuant to the terms of the notes, GOLDBERGER is required to assure that Shlomo Braun will execute all documents required to convey the real property Despite due demand, GOLDBERGER has failed and refused to make payment due under either of the notes, and is thus indebted to LEVENTHAL pursuant to the notes in the amount of $700, Despite due demand, GOLDBERGER has failed and refused to secure the signature of Shlomo Braun on the documents necessary to convey the real property All the debts secured by these notes remain unpaid By reason of the foregoing, the plaintiff LEVENTHAL is entitled to judgment against GOLDBERGER in the amount of $700,000, plus interest from the dates of the notes. -21-

24 AS AND FOR A NINTH CLAIM FOR RELIEF AGAINST BRAUN BY LEVENTHAL AND HAJE 133. Plaintiffs repeat and re-allege each of the foregoing allegations with the same force and effect as if more fully set forth herein Upon information and belief, as part of a business relationship between GOLDBERGER and BRAUN, BRAUN agreed to guarantee debts to LEVENTHAL at the request of GOLDBERGER As a guarantor, BRAUN executed a promissory note in favor of the plaintiff LEVENTHAL, which by its terms required BRAUN to pay $400,000 to LEVENTHAL, failing which payment LEVENTHAL would be entitled to record deeds conveying a certain parcel of real property 813 Bedford Avenue, Unit 2, Brooklyn, NY, to himself At all times relevant to this complaint, the parcels of real property in question were titled to Shlomo Braun Pursuant to the terms of the notes, GOLDBERGER is required to assure that Shlomo Braun will execute all documents required to convey the real property Upon information and belief, Shlomo Braun and CHAIM BRAUN are first degree relatives Copies of the aforementioned promissory note and deed are annexed hereto as Ex. A Despite due demand, GOLDBERGER has failed and refused to make payment due under the note guaranteed by BRAUN Despite due demand, GOLDBERGER has failed and refused to secure the signature of Shlomo Braun on the documents necessary to convey the real property All the debts secured by these notes remain unpaid. -22-

25 143. Pursuant to the guarantee he executed, BRAUN is now liable to LEVENTHAL in the amount of $400, By reason of the foregoing, the plaintiff LEVENTHAL is entitled to judgment against BRAUN in the amount of $700,000, plus interest from the dates of the notes. AS AND FOR A TENTH CLAIM FOR RELIEF AGAINST PINZLER BY LEVENTHAL AND HAJE 145. Plaintiffs repeat and re-allege each of the foregoing allegations with the same force and effect as if more fully set forth herein At all times relevant to this complaint, the defendant PINZLER is an attorney licensed to practice law in the State of New York At all times relevant to this complaint, PINZLER held himself out as an attorney competent to advise LEVENTHAL regarding his transactions with GOLDBERGER, BRAUN, Shlomo Braun, and KINGSTON Upon information and belief, PINZLER was operating under a conflict of interest, since he simultaneously was representing the interests of another individual who had invested money with GOLDBERGER, and who had, upon information and belief, received a commission from GOLDBERGER for bringing in LEVENTHAL as an investor LEVENTHAL retained PINZLER to advise him on his transactions with GOLDBERGER and KINGSTON and to prepare document sufficient to protect LEVENTHAL s interests and provide him with security that the funds he lent would be repaid PINZLER failed to properly and competently advise LEVENTHAL in many respects, including: a. PINZLER failed to request or obtain documentation of the relationship between GOLDBERGER and KINGSTON. -23-

26 b. PINZLER failed to verify with KINGSTON s management that the transactions GOLDBERGER was engaging in were authorized. c. PINZLER failed to verify whether the purported high denomination check cashing transactions existed. d. PINZLER failed to request or obtain documentation regarding the specific transactions that LEVENTHAL was investing in. e. PINZLER failed to request or obtain verification that GOLDBERGER and KINGSTON were complying with applicable anti-money-laundering rules. f. PINZLER failed to request or obtain documentation from GOLDBERGER as to why LEVENTHAL s investments were requested to be in the form of checks or wires issued to multiple payees, instead of just to GOLDBERGER or KINGSTON. g. PINZLER failed to advise LEVENTHAL that absent the foregoing documentation the transactions could not be verified and were unwise. h. PINZLER failed to advise to LEVENTHAL that the transactions with GOLDBERGER and KINGSTON had all the classical hallmarks of a Ponzi scheme PINZLER should have advised LEVENTHAL of the above, or should have advised LEVENTHAL that he was unfamiliar with transactions of this nature and that LEVENTHAL should seek alternate counsel PINZLER also failed to properly advise LEVENTHAL regarding LEVENTHAL s expressed desire to obtain from GOLDBERGER security with respect to his investment Once PINZLER undertook to represent LEVENTHAL in the negotiation and execution of the promissory notes and deeds, he had an obligation to do so competently and provide LEVENTHAL with accurate and correct advise about his legal position. -24-

27 154. The security documents that PINZLER negotiated and had executed the two promissory notes and the two deeds were plagued with weaknesses and defects, including: a. The signatures of GOLDBERGER were unwitnessed and un-notarized, leaving LEVENTHAL vulnerable to GOLDBERGER denying that he had even signed them. b. The signature of BRAUN as guarantor on one of the notes was unwitnessed and un-notarized, leaving LEVENTHAL vulnerable to BRAUN denying that he had even signed them. c. The purported collateral for one of the promissory notes, namely the real property known as 813 Bedford Avenue, Unit 2, Brooklyn, NY, was not owned by either GOLDBERGER or BRAUN, but was owned by Shaul Braun, who was not a signatory to the guaranty. d. The purported collateral for the other promissory note, namely the real property known as th Street, Brooklyn, NY, was not owned by either GOLDBERGER or BRAUN, but was owned by Shaul Braun and Judith Braun, who were not signatories to the guaranty. e. With respect to each property, the guarantees provide that GOLDBERGER undertakes to assure that Shlomo Braun will execute all documents necessary to transfer the named properties. But because Shlomo Braun did not agree to this transfer, GOLDBERGER s assurances were of no real value. Moreover, because the 56th Street property was not owned by Shaul Braun alone, but rather owned together with Judith Braun, even if GOLDBEGER had somehow obtained Shlomo Braun s signature on whatever documents it would not have been sufficient to transfer the property. -25-

28 f. The deed with respect to the 56th Street property was beset with defects that would render it un-recordable, including: i) it was executed by Shaul Braun only, even though the property was owned by Shaul Braun and Judith Braun; ii) it failed to provide a legal description for the property, instead saying legal description to be provided later ; iii) it was unwitnessed, and had no acknowledgement executed by a notary or commissioner of deeds; and iv) although it bore a notary stamp, the notary never signed; v) the documents necessary to actually record a deed, such as transfer tax forms, etc., were not present, nor were social security numbers of Shomo Braun obtained. No competent lawyer could believe that this document in this form executed in this manner could be recorded as a deed. g. The deed with respect to the Bedford Avenue property was also beset with defects that would render it un-recordable, including: i) Shlomo Braun purportedly signed it on the line meant for the notary to sign the acknowledgement; ii) it was unwitnessed, and had no acknowledgement executed by a notary or commissioner of deeds; and iii) although it bore a notary stamp, the notary never signed iv) the documents necessary to actually record a deed, such as transfer tax forms, etc., were not present, nor were social security numbers of Shlomo Braun obtained. No competent lawyer could believe that this document in this form executed in this manner could be recorded as a deed. h. Additionally, the Bedford Avenue property was a condominium unit, which would require additional documentation to be signed and executed with respect to the condominium board, none of which was obtained In short, the promissory notes and deeds provided LEVENTHAL with no actual security or protection. -26-

29 156. PINZLER incorrectly advised LEVENTHAL that the promissory notes and deeds provided him with strong security, and that LEVENTHAL could immediately record the deeds, thereby transferring the real property to himself, if the notes were not paid PINZLER failed to advise LEVENTHAL that holding un-recordable deeds was not good security PINZLER failed to advise LEVENTHAL that only the proper execution and successful recording of a mortgage on the collateral property would give him strong security PINZLER failed to advise LEVENTHAL that when one holds a deed as security for a loan it is treated as a mortgage and one cannot take title without going through the lengthy process for foreclosing a mortgage After GOLDBERGER defaulted on the notes, LEVENTHAL instructed PINZLER to commence a lawsuit against GOLDBERDER, BRAUN and Shlomo Braun, and to file a notice of pendency with respect to the two properties PINZLER failed to timely and correctly file the notices of pendency, and as a result Shlomo Braun and Judith Braun managed to transfer the two properties before the notices of pendency were filed The defendant PINZLER was reckless, careless, and negligent, and failed to act in accordance with good and accepted legal practice, in that he: failed to properly advise LEVENTHAL; failed to properly execute documents; failed to advise LEVENTHAL that the documents were not properly executed; failed to obtain adequate security for LEVENTHAL; failed to inform LEVENTHAL that the promissory notes and deeds were not strong security, and were likely no security at all; failed to inform LEVENTHAL that he was acting outside his competence zone; failed to properly conduct due diligence; failed to spot a Ponzi scheme; failed to inform LEVENTHAL that he should seek advice of other counsel; failed to comply with -27-

30 applicable statutes, laws, rules and regulations; failed to have efficient and sufficient personnel; failed to comport himself as a reasonably prudent attorney; failed to warn LEVENTHAL of the dangers and perils; and the defendant PINZLER was otherwise negligent As a result of PINZLER s recklessness, carelessness, negligence, and professional malpractice, LEVENTHAL was caused to be damaged to the extent of his investments with GOLDBERGER / KINGSTON By reason of the foregoing, the plaintiff LEVENTHAL is entitled to recover from PINZLER the full extent of his damages in the amount of $1.45 million, plus interest. AS AND FOR A ELEVENTH CLAIM FOR RELIEF AGAINST PINZLER BY LEVENTHAL AND HAJE 165. Plaintiffs repeat and re-allege each of the foregoing allegations with the same force and effect as if more fully set forth herein PINZLER was paid to provide competent legal services, but failed to provide same By reason of the foregoing, the plaintiff LEVENTHAL is entitled to recover from PINZLER all legal fees paid to PINZLER. WHEREFORE, the plaintiff demands judgment against the defendants in the amounts and for the relief requested herein, plus attorney s fees to the extent permitted by law. -28-

31 Dated: Brooklyn, New York August 17, 2015 Yours, THE BERKMAN LAW OFFICE, LLC Attorneys for the plaintiff by: Robert J. Tolchin 111 Livingston Street, Suite 1928 Brooklyn, New York (718)

32 VERIFICATION Robert J. Tolchin, an attorney for the plaintiffs in the within action, duly admitted to practice in the Courts of the State of New York, affirms the following statements to be true under the penalties of perjury, pursuant to CPLR 2016: He has read the foregoing complaint and knows the contents thereof to be true to his own knowledge except as to those matters therein stated to be alleged on information and belief, and as to those matters he believes it to be true. He further states that the source of this information and the grounds for her belief are derived from the file maintained in the normal course of business of the attorneys for the plaintiff herein. He further states that the reason this affirmation is not made by the plaintiff is that at the time the complaint was being prepared, the plaintiff was not found to be within the County of Kings, which is the county where the attorney for the plaintiff herein maintains his office. Dated: Brooklyn, New York August 17, 2015 Robert J. Tolchin

33 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK X JULES LEVENTHAL; HAJE, LLC; ESTHER FRANKEL-ROSS; and JOSEPH GOLDSTEIN, Index No: / 15 -against- Plaintiffs, KINGSTON CHECK CASHING, INC.; YISSACHAR SUGAR a/k/a Barry Sugar ; STEVEN GOLDBERGER a/k/a Chaim Goldberger a/k/a Chaim Goldberg ; KOVA MAZAL 57 REALTY, LLC; CHAIM BRAUN; and WILLIAM PINZLER, Defendant X NOTICE OF COMMENCEMENT OF ACTION SUBJECT TO MANDATORY ELECTRONIC FILING PLEASE TAKE NOTICE, that the matter captioned above, which has been commenced by filing of the accompanying documents with the County Clerk, is subject to mandatory electronic filing pursuant to bb of the Uniform Rules for Trial Courts. This notice is being served as required by subdivision (b)(3) of that section. The New York State Court Electronic Filing System ( NYSCEF ) is designed for the electronic filing of documents with the County Clerk and the Court and for the electronic service of those documents, court documents, and court notices upon counsel and self-represented parties. Counsel and/or parties who do not notify the court of claimed exemption (see below) as required by Section bb(e) must immediately record their representation within the e-filed matter on the Consent page in NYSCEF. Failure to do so may result in an inability to receive electronic notice of document filings. Exemptions from mandatory e-filing are limited to: 1) Attorneys who certify in good faith that they lack the computer equipment and (along with all employees) the requisite knowledge to comply; and 2) self-represented parties who choose not to participate in e-filing. For additional information about electronic filing, including access to bb, consult the

34 NYSCEF website at or contact the NYSCEF Resource Center at or Dated: Brooklyn, New York August 15, 2015 Yours, THE BERKMAN LAW OFFICE, LLC Attorneys for the plaintiff by: Robert J. Tolchin 111 Livingston Street, Suite 1928 Brooklyn, New York (718)