Filing # 31117306 E-Filed 08/20/2015 02:30:38 PM IN THE CIRCUIT COURT OF THE 11TH JUDICIAL CIRCUIT IN AND FOR MIAMI-DADE COUNTY, FLORIDA CIRCUIT CIVIL DIVISION ARSHAN BORHAN, SIMON AMINI CASE NO.: 15-16183 CA 01 and SCOTT BRANDON, v. Plaintiffs, NRAC SPONSOR I LLC, et al., Defendants. / RECEIVER S MOTION FOR FREEZE OF DEFENDANT ENTITIES ASSETS Receiver Andrew Levi ( Receiver ), in his capacity as receiver for Defendants NRAC SPONSOR I LLC, INTERSPAC LLC, GOLD HILL MINERALS, INC., and NATURAL RESOURCES ACQUISITION CORP. (collectively Defendant Entities ), by and through undersigned counsel, hereby moves to freeze Defendant Entities assets. In support thereof, Receiver states as follows: 1. Plaintiffs Arshan Borhan, Simon Amini, and Scott Brandon filed their Verified Complaint on July 16, 2015, suing Defendant Entites and Unknown Individual, as personal representative of the Estate of David Badner. Count V of Plaintiffs Verified Complaint requested this Court to appoint a receiver pursuant to Sections 605.0704 and 607.1432, Florida Statutes, over the Defendant Entities. See Verified Complaint at 9. 2. On July 17, 2015, Plaintiffs filed their Emergency Motion to Appoint a Receiver pursuant to Florida Rule of Civil Procedure 1.620 over Defendant Entities, alleging that the Defendant Entities all served as fronts for a complex Ponzi scheme orchestrated by decedent
David Badner, who used his control over the Defendant Entities to defraud investors out of millions of dollars. See Emergency Motion to Appoint a Receiver at 2. Plaintiffs allege that the immediate appointment of a receiver is necessary to prevent ongoing diversion of investor funds through the Defendant Entities, preserve whatever investor funds currently remain in escrow and/or within the Defendant Entities, marshal the Defendants assets, assess outstanding claims, recover funds due and owing, and distribute such assets equitably to all claims. See id. 3. This Court held an evidentiary hearing on July 24, 2015, on Plaintiffs Emergency Motion to Appoint a Receiver. 4. On July 27, 2015, this Court appointed Andrew Levi of Lehr, Levi & Mendez, P.A., as receiver over the Defendant Entities pursuant to Florida Rule of Civil Procedure 1.620 and the applicable Florida Statutes. See Order Appointing Receiver at 2 2. 5. In the Order Appointing Receiver, this Court directed the Receiver to: assess the status of the Defendant Entities, manage the Defendant Entities appropriately, investigate ongoing fraud, trace Plaintiffs and other investors financial contributions through the Defendant Entities, recover assets with which to satisfy claims, ensure that the Defendant Entities pay over to each Plaintiff and all other similarly situated investors, lenders, and contributors (collectively, Claimants ), all amounts contributed by each Claimant to the Defendant Entities and/or David Badner, or paid for the Defendant Entities benefit, whether paid to the Defendant Entities directly or indirectly, and all accrued interest thereon, together with all other amounts due and owing to each Claimant from each of the Defendant Entities, and take all such further actions as Receiver deems necessary to accomplish the foregoing. See id. at 2 4. 6. To carry out the above described task, this Court ordered that Receiver shall be named an additional, mandatory signatory over all of the Defendant Entities bank accounts. No Payments shall be made from any of the Defendant Entities accounts without the Receiver s signature or approval, including any payments made by check, cash, wire, electronically, automatically, or through ACH or similar electronic payment. See id. at 5 10. In addition, 2
Receiver is authorized to take all such further actions as may be necessary in order to ensure that amounts due and owing are paid to Plaintiffs, beyond the scope contemplated by the provisions set forth above, provided the receiver obtains prior approval of this Court for any actions beyond the scope contemplated herein. See id. at 6 14. FREEZING DEFENDANT ENTITIES ASSETS IS NECESSARY TO PRESERVE ASSETS THAT COULD BE USED TO SATISFY ANY JUDGMENT. A receiver is a disinterested person appointed by a court, or by a corporation or other person, for the protection or collection of property that is the subject of diverse claims. Granada Lakes Villas Condo. Ass n v. Metro-Dade Invs. Co., 125 So. 3d 756, 758 (Fla. 2013), quoting BLACK S LAW DICTIONARY 1383 (9th ed. 2009). Longstanding Florida law provides receivers with the duty to protect and preserve receivership property during a pending litigation. Knickbocker Trust Co. v. Green Bay Phosphate Co., 56 So. 699, 701 (Fla. 1911); see also Fortune Int l Hospitality, LLC v. M Resort Residences Condo. Ass n, 77 So. 3d 741, 744 (Fla. 3d DCA 2011) ( The receiver s role is the preservation and protection of the assets in dispute ); Freeman v. Dean Witter Reynolds, Inc., 865 So. 2d 543, 550 (Fla. 2d DCA 2003) (a receivership typically protects the rights of creditors). Once placed into receivership, the court has custody over the property and only the court can settle questions of its disposition. Murtha v. Steijskal, 232 So. 2d 53, 55 (Fla. 4th DCA 1970). Thus, the court, which has legal possession of the property, has the authority during the pendency of the action to issue orders necessary and proper for the protection of the property and its interests. Abramson v. Brant, 141 So. 2d 777, 778 (Fla. 3d DCA 1962). This Court, in ordering the appointment of a receiver over the Defendant Entities, gave Receiver general authority to do things necessary to, inter alia, investigate ongoing fraud, trace financial contributions through Defendant Entities, and recover assets with which to satisfy any claims. See Order Appointing Receiver at 2 4 & 6 14. That Order, however, did not expressly 3
freeze any of Defendant Entities assets or authorize Receiver to freeze any of those assets. Because a receiver has a duty to protect receivership property and can only deal with or expend such property with court authority, Receiver needs this Court s authority to freeze Defendant Entities assets. See Am. Automatic Co. v. Harbour Towers Dev. Corp., 227 So. 2d 94, 95 (Fla. 3d DCA 1969), quoting 75 C.J.S. Receivers 174(c). In order to protect the assets held by Defendant Entities, freezing Defendant Entities assets prevents further dissipation of investors funds and preserves assets that could be used to satisfy any judgment against Defendant Entities. Likewise, restraining Defendant Entities officers, directors, agents, servants, employees, successors and assigns, and all persons in active participation with them from manipulating Defendant Entities assets will preserve Defendant Entities assets during the pending litigation. Freezing Defendant Entities assets furthers the objective of the receivership, which is to investigate ongoing fraud, trace investors contributions, and recover assets with which to satisfy claims. See Order Appointing Receiver at 2 4. Thus, this Court should protect the receivership property and freeze Defendant Entities assets. 4
WHEREFORE, for the foregoing reasons, this Court should respectfully enter an order (i) freezing Defendant Entities assets and bank accounts until the administration of the receivership, and (ii) restraining Defendant Entities officers, directors, agents, servants, employees, successors and assigns, and all persons in active participation with them from receiving, removing, transferring, alienating, pledging or otherwise impairing any of Defendant Entities assets. Respectfully submitted this 20th day of August, 2015, O QUINN STUMPHAUZER & SLOMAN SunTrust International Center One SE Third Ave., Suite 1820 Miami, FL 33131 Tel./Fax: (305) 371-9686/ (305) 371-9687 By: /s/ Christopher E. Gottfried Ryan D. O Quinn, Esq. Fla. Bar No. 513817 roquinn@osslaw.com Christopher E. Gottfried, Esq. Fla. Bar No. 99780 cgottfried@osslaw.com Attorneys for Receiver CERTIFICATE OF SERVICE I HEREBY CERTIFY that a true and correct copy of the foregoing has been furnished to all counsel of record on the attached services list via electronic mail on this 20th day of August, 2015. By: /s/ Christopher E. Gottfried Christopher E. Gottfried, Esq. 5
BORHAN SERVICE LIST Joe M. Grant, Esq. Bruce H. Lehr, Esq. Stephen J. Leary, Esq. LEHR, LEVI & MENDEZ, P.A. MARSHALL SOCARRAS 1401 Brickell Avenue GRANT, P.L. Suite 910 197 S. Federal Highway Miami, FL 33131 Suite 300 Tel.: (305) 377-1777 Boca Raton, FL 33432 Tel.: 561-361-1000 Attorneys for Receiver Fax: 561-672-7581 jgrant@msglaw.com sleary@mslaw.com Attorneys for Plaintiffs 6