FILED: NEW YORK COUNTY CLERK 12/17/2015 02:13 PM INDEX NO. 653600/2015 NYSCEF DOC. NO. 40 RECEIVED NYSCEF: 12/17/2015 EXHIBIT B
FILED: NEW YORK COUNTY CLERK 10/29/2015 04:09 PM INDEX NO. 653600/2015 NYSCEF DOC. NO. 1 RECEIVED NYSCEF: 10/29/2015 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK x STANG LLC, suing in its own capacity and in the name of and right of HUDSON SQUARE HOTEL, LLC; 489 SOUTHWEST CANAL ST., INC.; and AVIHU GERAFI, suing in his individual capacity, - against - Plaintiffs HUDSON SQUARE HOTEL, LLC; RAH GIBLY; FOUR BOYS ONE GIRL, LLC; PAOLO MALDINI; BB MAX, LLC; CHRISTIAN VERT; ROOM 45, LLC; ANDRIY SHEVCHENKO; FIVE BOYS ONE GIRL, LLC; ZINEDINE ZIDANE; Z DREAM, LLC; JOEL BRAVER; HUDSON CANAL LLC; FRED L. SEEMAN; EDWARD J. BULLARD; JR., and BULLARD LAW GROUP PLLC a/k/a BULLARD PLLC, Defendants. x Index No. Date Purchased Plaintiff(s) designate(s) NEW YORK County as the place of trial. The basis of the venue designation is Defendant Hudson Square Hotel, LLC's place of business SUMMONS Defendants place of business is: do Fred Seeman, Esq. 32 Broadway, Suite 1214 New York, N.Y. 10004 To the above named Defendant(s) YOU ARE HEREBY SUMMONED and required to answer the complaint in this action and to serve upon Plaintiff's Attorney, an Answer to the complaint in this action within twenty (20) days after the service of this summons, exclusive of the day of service (or within thirty (30) days after the service is complete if this summons is not personally delivered to you within the State of New York); 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: New York, New York October 29, 2015 Law Offices of Steven S. Sieratzki BY: 7. STEVEN S. SIERATZKI, ESQ. Plaintiff(s) Attorney 40 Exchange Place Suite 1800 New York, New York 10005 (212) 471-9525
SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK STANG LLC, suing in its own capacity and in the name of and right of HUDSON SQUARE HOTEL, LLC; 489 SOUTHWEST CANAL ST., INC.; and AVIHU GERAFI, suing in his individual capacity, - against - Plaintiffs, VERIFIED COMPLAINT HUDSON SQUARE HOTEL, LLC; RAFI GIBLY; FOUR BOYS ONE GIRL, LLC; PAOLO MALDINI; BB MAX, LLC; CHRISTIAN VIERI; ROOM 45, LLC; ANDRIY SHEVCHENKO; FIVE BOYS ONE GIRL, LLC; ZINEDINE ZIDANE; Z DREAM, LLC; JOEL BRAVER; HUDSON CANAL LLC; FRED L. SEEMAN; EDWARD J. BULLARD; JR., and BULLARD LAW GROUP PLLC a/ida BULLARD PLLC, Index No. /2015 Defendants. Plaintiff Stang LLC, in its own capacity and on behalf of Hudson Square Hotel, LLC; plaintiff 489 Southwest Canal St., Inc.; and plaintiff Avihu Gerafi (collectively "Plaintiffs"), by their attorney, Steven S. Sieratzki, Esq., as and for its Complaint, allege as follows. PREFATORY STATEMENT 1. This action if fundamentally a derivative action brought by Stang LLC, as a member of Hudson Square Hotel LLC ("Hudson Square Hotel"), to, inter alia, rescind and declare void the unauthorized and fraudulent transfer by defendants of Hudson Square Hotel's principal asset, an extremely valuable parcel of real property located at 219-223 Hudson Street, a/k/a 489/493 Canal Street, New York, New York (the "Property"). This wrongful transfer
occurred on September 21, 2015, and a deed was wrongly conveyed to defendant Hudson Canal LLC. 2. The sale of the Property was cloaked in secrecy, and was consummated without the knowledge of Stang LLC. The sale essentially denuded Hudson Square Hotel of an asset with an appraised value of well more than $18,000,000. In fact, the Property was sold for an egregiously low price of $13,250,000.00 effectively leaving Hudson Square Hotel as an empty shell. 3. This unauthorized and fraudulent transfer was the result of a scheme whereby the Property's prior owner, plaintiff 489 Southwest Canal St., Inc., was defrauded into conveying the Property to Hudson Square Hotel, with the promise of a substantial equity interest in an ongoing enterprise, only for the assets of Hudson Square Hotel to be absconded. 4. As pleaded below, the transaction involving the purported "sale" of the Property is void, and this Complaint seeks appropriate remedies to (a) restore the parties to their position prior to the sale and (b) bar defendants from breaching duties to Stang LLC as a minority member of Hudson Square Hotel. THE PARTIES 5. Plaintiff Stang LLC, as a member of Hudson Square Hotel, suing in the name and right of Hudson Square Hotel, LLC, is a limited liability company organized under the laws of the State of New York, with its principal place of business located at 1110 Westwood Road, Hewlett, New York 11557. 6. Plaintiff Stang LLC, suing in its own capacity, is a limited liability company organized under the laws of the State of New York, with its principal place of business located at 1110 Westwood Road, Hewlett, New York 11557. 2
7. Plaintiff 489 Southwest Canal St., Inc. ("Southwest Canal Inc.") is a corporation organized under the laws of the State of New York, with its principal place of business located at 1110 Westwood Road, Hewlett, New York 11557. 8. Plaintiff Avihu Gerafi ("Gerafi") is an individual who resides at 1110 Westwood Road, Hewlett, New York 11557. 9. Gerafi is a member, the sole managing member and the sole operating officer of Stang LLC, and is the sole shareholder, director and officer of Southwest Canal Inc. 10. Defendant Hudson Square Hotel is a limited liability company organized under the laws of the State of New York, with its principal place of business located at 405 Broadway, New York, New York 10013. 11. Defendant Rail Gibly ("Gibly") is an individual who, upon information and belief, resides and/or has a place of business at 405 Broadway, New York, New York 10013. 12. Defendant Four Boys One Girl, LLC ("Four Boys LLC") is a limited liability company organized under the laws of the State of New York. 13. According to public records, Four Boys LLC has a place of business "c/o Fred L. Sheeman, Esq., 32 Broadway, Suite 1214, New York, NY 10004." 14. Upon information and belief, Gibly is a member, the managing member and an operating officer of Four Boys LLC. 15. Upon information and belief, "Fred L. Sheeman" is actually "Fred L. Seeman," an attorney admitted to practice in New York with the office address of 32 Broadway, Suite 1214, New York, New York 10004. 3
16. Defendant Fred L. Seeman ("Attorney Seeman") is an attorney admitted to practice in New York with an office address of 32 Broadway, Suite 1214, New York, New York 10004. 17. Defendant Paolo Maldini ("Maldini") is an individual who, upon information and belief, resides and/or has a place of business at 405 Broadway, New York, New York 10013. 18. Defendant BB Max LLC is a limited liability company organized under the laws of the State of New York, with a place of business c/o Attorney Seeman at Attorney Seeman's office address. 19. Upon information and belief, Maldini is a member, the managing member and an operating officer of BB Max LLC. 20. Maldini has availed himself of jurisdiction in New York by engaging in a continuous and systematic course of doing business within the state, and has, upon information and belief, continuously maintained a presence in New York through the maintenance of offices, agencies, and the ownership of property within the state. 21. Defendant Christian Vieri ("Vieri") is an individual who, upon information and belief, resides and/or has a place of business at 405 Broadway, New York, New York 10013. 22. Defendant Room 45, LLC is a limited liability company organized under the laws of the State of New York, with a place of business c/o Attorney Seeman at Attorney Seeman's office address. 23. Upon information and belief, Vieri is a member, the managing member and an operating officer of Room 45 LLC. 24. Vieri has availed himself of jurisdiction in New York by engaging in a continuous and systematic course of doing business within the state, and has, upon information and belief, 4
continuously maintained a presence in New York through the maintenance of offices, agencies, and the ownership of property within the state. 25. Defendant Room 45, LLC is a limited liability company organized under the laws of the State of New York, with a place of business c/o Attorney Seeman at Attorney Seeman's office address. 26. Defendant Andriy Shevchenko ("Schevehenko") is an individual who, upon information and belief, resides and/or has a place of business at 405 Broadway, New York, New York 10013. 27. Defendant Five Boys One Girl, LLC ("Five Boys LLC") is a limited liability company organized under the laws of the State of New York, with a place of business c/o Attorney Seeman at Attorney Seeman's office address. 28. Upon information and belief, Shevchenko is a member, the managing member and an operating officer of Five Boys LLC. 29. Shevchenko has availed himself of jurisdiction in New York by engaging in a continuous and systematic course of doing business within the state, and has, upon information and belief, continuously maintained a presence in New York through the maintenance of offices, agencies, and the ownership of property within the state. 30. Defendant Zinedine Zidane ("Zidane") is an individual who, upon information and belief, resides in Italy and has a place of business c/o Attorney Seeman at Attorney Seeman's office address. 31. Defendant Z Dream LLC is a limited liability company organized under the laws of the State of New York, with a place of business c/o Attorney Seeman at Attorney Seeman's office address. 5
32. Upon information and belief, Zidane is a member, the managing member and an operating officer of Z Dream LLC. 33. Zidane has availed himself of jurisdiction in New York by engaging in a continuous and systematic course of doing business within the state, and has, upon information and belief, continuously maintained a presence in New York through the maintenance of offices, agencies, and the ownership of property within the state. 34. Stang LLC, Four Boys LLC, BB Max LLC, Room 45, LLC, Five Boys LLC and Z Dream LLC are members of Hudson Square Hotel. 35. Upon information and belief, Hudson Canal LLC is a limited liability company organized under the laws of the State of New York, with a place of business do The Limited Liability Company, 144 Spencer Street, Suite 612, Brooklyn, New York 11205. 36. According to public records, Hudson Canal LLC was formed on August 20, 2015. 37. Defendant Joel Braver ("Braver") is an individual having a place of business at 144 Spencer Street, Suite 612, Brooklyn, New York 11205. 38. Upon information and belief, Braver is a member, the managing member and an operating officer of Hudson Canal LLC. 39. Defendant Edward J. Bullard Jr. is an attorney admitted to practice in New York with an office located c/o Bullard PLLC, 15 Michele Lane, Hauppauge, New York 11788. 40. Upon information and belief, Edward J. Bullard Jr. also has an office c/o Bullard Law Group PLLC, 225 Old Country Road, Melville, NY 11747. 41. Defendant Bullard Law Group PLLC is a domestic professional limited liability company, with an office at 15 Michele Lane, Attn: Edward J. Bullard Jr. Esq., Hauppauge, New York 11788. 6
42. Upon information and belief Bullard Law Group PLLC is also known as Bullard PLLC. Hereafter, Edward J. Bullard Jr., Bullard Law Group PLLC and Bullard PLLC are collectively referred to as "Bullard." FACTS COMMON TO ALL CAUSES OF ACTION A. The Formation of Hudson Square Hotel 43. In and around February 2013, Gerafi and Gibly, close childhood friends, determined to enter into a joint venture to develop the Property as a boutique hotel (the "Project"). Hudson Square Hotel was formed in March 2013 for that purpose. 44. The foundation of the Project was the Property, which had been in Gerafi's family for more than 25 years and was owned in 2013 by Gerafi's wholly-owned company, Southwest Canal Inc. 45. While Gerafi owned the real property necessary for the Project, Gibly represented to that Gerafi that he knew many well-known, affluent individuals in the entertainment and sports worlds who would invest in and provide all capital necessary for the Project. The agreed structure of the anticipated venture is as pleaded below. 46. Gerafi, through Southwest Canal Inc., would convey the property to Hudson Square Hotel and, in exchange, Gerafi's wholly-owned company plaintiff Stang LLC would receive a 30% membership interest in Hudson Square Hotel (and also receive $2.5 million in cash). 47. Thereafter, Gibly was to find well-known investors for the project (specifically identified as Paolo Maldini, Christian Vieri, Andriy Shevchenko and Zinedine Zidane, who are hereinafter referred to as the "Investment Group.") 48. Gibly represented this Investment Group would provide the funds needed to fully develop the Project, in exchange for membership interests in Hudson Square Hotel. 7
49. Maldini was to make a cash contribution of $3 million on behalf of or through his company BB Max LLC, and BB Max LLC would receive a 10% membership interest in Hudson Square Hotel; 50. Vieri would make a cash contribution of $3 million on behalf or through his company, Room 45, LLC, and Room 45, LLC would receive a 10% membership interest in Hudson Square Hotel; 51. Shevchenko would make a cash contribution of $3 million on behalf of or through his company, Five Boys, LLC, and Five Boys, LLC would receive a 10% membership interest in Hudson Square Hotel; 52. Zidane would make a cash contribution of $3 million on behalf or through his company, Z Dream, LLC, and Z Dream, LLC would receive a 10% membership interest in Hudson Square Hotel. 53. In exchange for finding the Investment Group and securing their capital contributions, as well as being responsible for obtaining the further investments needed for the Project, Gibly, on behalf of or through his company Four Boys, LLC, and Four Boys, LLC would receive a 10% membership interest in Hudson Square Hotel 54. The remaining 20% of the unallocated membership interests was to be held as "treasury membership" and to be sold to future investors in Hudson Square Hotel for at least $3 million per 10% membership interest. B. The First Conveyance of the Property 55. In October 2013, in furtherance of Gibly's representations, an Agreement of Members of Hudson Square Hotel LLC Operating Agreement (the "Operating Agreement") was executed between and among Gerafi, Gibly, Schevchenko, Maldini, Vieri and Zidane, on behalf of their respective entities. 8
56. The Operating Agreement acknowledged the equity interests of Gibly, Schevchenko, Maldini, Vieri and Zidane, which they were to receive in exchange for their respective cash capital contributions. 57. On October 9, 2013, having been led to believe by Gibly that the required capital contributions had in fact been completed, Gerafi, on behalf of Southwest Canal Inc., conveyed the Property to Hudson Square Hotel. C. The Purported Attempt to Develop the Property 58. With the Property now deeded to Hudson Square Hotel and the capital contributions of the Investment Group purportedly collected, Hudson Square Hotel was to move forward with the development of the Project. 59. Pursuant to the Operating Agreement, Gibly acted as the Managing Member for the sole purpose of executing the contract of sale for the Property. Thereafter, a new entity, HSH Construction, Inc. ("HSH"), was to act as Managing Member of Hudson Square Hotel. Critically, Gibly and Gerafi were to be the sole managing members of HSH. 60. Shortly following the conveyance of the Property, Gerafi requested access to the financial information of Hudson Square Hotel, it being his intent to confirm that the capital contributions had been made and that the available funds were being used appropriately and in furtherance of the Project. His requests were repeatedly dodged by Gibly. 61. By Winter 2014, Hudson Square Hotel had not yet broken ground on the Project. 62. On December 16, 2014, Attorney Seeman sent a letter to the members of Hudson South, purporting to inform them that Gibly had resigned as "managing member" and was replaced by Maldini. It further stated that a capital contribution was required under the penalty of a potential dilution of interest. The December 16 letter also enclosed a document entitled "Notice Authorizing A Capital Contribution From LLC Members," dated December 12, 2014 9
(the "Notice"), claiming that Maldini alone had determined that a capital contribution of Thirty Million Five Hundred Fifty Thousand ($30,550,000.00) was required. 63. The December 16 letter and Notice were deficient in several respects, as more fully described below. 64. First, Gibly was only authorized as "Managing Member" for the purpose of the initial conveyance of the Property, after which the managing member was FISH, in which Gerafi was a manager. Accordingly, Gibly's "resignation" would not result in a new managing member having to be put in place. To the contrary, it would leave HSI-I as the managing member of Hudson Square Hotel, but with FISH acting under the auspices of plaintiff Gerafi. 65. Second, Stang LLC, a 30% member and the single largest of the equity investors, did not receive notice of a meeting or a vote in connection with Maldini's purported appointment as managing member. 66. Third, the Notice only identified the specific contribution that Stang LLC allegedly would need to make ($9,165,000.00), without detailing the contributions that each of the other members would need to make. It did not specify why the capital contribution was needed. Nor did the December 16 letter or the Notice detail what had become of the supposed initial capital contributions, which were earmarked for the development of the Project and had previously been determined to be sufficient for its completion. 67. On February 4, 2015, Maldini, still purporting to act as "Managing Member," attempted to correct the deficiencies in the Notice. Maldini sent out a letter enclosing a document entitled "Supplemental Notice Amplifying Notice Dated 12/12/2014 Authorizing A Capital Contribution From LLC Members" (the "Supplemental Notice"). 10
68. The Supplemental Notice sought to cure the defects of the Notice by stating the purposes of the capital contribution, namely, "use in the construction and opening of the Hotel to be operated at 219 Hudson Street..." Once again, the Supplemental Notice failed to set forth each members required contribution and, instead, only providing that information with regard to Stand LLC. 69. Maldini's February 4 letter attempted to provide more detail as to the need for the capital contribution. Incredibly, the February 4 letter claimed that the required $30,550,000.000 capital contribution equaled the current budget for the development of the Project. There was no mention of the original capital contributions, (ii) no discussion of Gibly's efforts to find an investors for the remaining 20% interest in Hudson Square as contemplated, and (iii) no description of how the supposed original capital contribution funds had been spent. D. Gerafi's Repeated Attempts to Investigate the Use of Hudson Square's Funds 70. In February 2015, Stang LLC and Gerafi stepped up their requests for information relating to the purported resignation of Gibly and the appointment of Maldini as so-called "managing member." They also repeated their informational requests as to the finances of the Project. Such requests were directed to Hudson Square's attorney, Attorney Seeman. 71. Defendant Seeman was, and still is, the attorney for Hudson Square Hotel, and upon information and belief, was and still is the attorney for Gibly, Maldini, Vieri, Shevchenko and Zidane, and their respective entities, Four Boys, LLC, BB Max, LLC, Room 45, LLC, Five Boys, LLC and Z Dream, LLC. Seeman purportedly kept the books and records of Hudson Square Hotel at his law offices and was responsible for providing financial information to Hudson Square Hotel's members and for arranging for inspection of those books and records upon demand. 11
72. Despite requested requests by the largest single equity owner of Hudson Square Hotel, Attorney Seeman repeatedly stalled and ultimately failed to provide the information that had been requested by Stang LLC and to which Stang was entitled. 73. To this day, Stang LLC and Gerafi have not been provided access to Hudson Square Hotel's books and records. E. The Second Conveyance of Property 74. By October 2015, the reason for Attorney Seeman's delay tactics became apparent. 75. On October 7, 2015, Stang LLC and Gerafi received a letter from defendants Bullard (the "Bullard Letter"), which letter claimed that Bullard had been retained by Hudson Square Hotel to sell the Property. The Bullard Letter went on to advise that, pursuant to a Contract of Sale (that is, a heretofore undisclosed contract of sale dated September 21, 2015 between Hudson Square Hotel, as seller, and Hudson Canal LLC, as purchaser), the Property had been conveyed to Hudson Canal LLC. Remarkably, the closing of the sale had taken place the same day as the Contract of Sale, September 21, 2015. Moreover, the proceeds of the sale were stated to be $13,250,000,00, with Bullard concluding that Stang LLC's share of the sale proceeds would be only $2,473,599.47. 76. Accompanying the Bullard Letter was the Contract of Sale, an "accountant statement of membership distribution" and a "closing statement summary." Conspicuously missing were any of the closing exhibits which would ordinarily accompany a closing statement. 77. At no time prior to October 7, 2015 were either Stang LLC or Gerafi made aware of who Bullard, Hudson Canal LLC and the latter party's principal, Braver, were, or of their involvement with Hudson Square Hotel or the Property. 12
78. Critically, at no time prior to the Bullard Letter had anyone ever attempted to market the Property. Given its location in a "hot area" of Manhattan, the failure to market the Property ensured that any sale would be an off-market transaction at a likely lower price than the market would otherwise have set. 79. The copy of the Contract of Sale accompanying the Bullard Letter stated that Hudson Square Hotel now had offices do Bullard Law Group PLLC, 225 Old Country Road, Melville, New York 11747. Stang LLC and Gerafi were never made aware that Hudson Square Hotel ever had offices other than its place of business at 405 Broadway, New York, New York 10013 or c/o Attorney Seeman's office address. 80. While the sale of the Property conveyed Hudson Square Property's primary asset, the sale of the Property by Hudson Square Hotel to Hudson Canal was made without notice to the members or any vote as required both by the Operating Agreement and New York's Limited Liability Company Law. 81. The sale, which was held abruptly and without the prior knowledge of Stang and its sole member, Gerafi, was designed to defraud Stang LLC and Gerafi, which, via their wholly owned affiliate, plaintiff Southwest Canal Inc., had supplied virtually all of the capital to Hudson Hotel LLC. It bears repeating that it was plaintiffs that cause the transfer of the Property, by Southwest Canal Inc. to Hudson Hotel LLC, in October 2013. 82. To effect this fraud, the following occurred acts, misrepresentations and omissions occurred. 83. Upon information and belief, defendant Braver formed Hudson Canal in August 2015 for the purposes of purchasing the Property. 13
84. The Property was sold through a simultaneous "contract and closing" with the execution of the contract and the closing taking place on the same day, September 21, 2015. Accordingly, Hudson Canal did not undertake any diligence period in advance of the sale. 85. The sale was for a "fire sale" price that all defendants knew to be approximately 40% below the market value of the land. 86. The signatory on the sale, Maldini, had no authority to convey the asset. 87. To ensure that Stang LLC and Gerafi did not learn of and attempt to prevent the sale, the transaction was consummated during the Jewish High Holy Days the period between Rosh Hashanah and Yom Kippur a period during which Gibly knew Gerafi to be occupied. 88. The transfer of the Property to Hudson Square Hotel was an in kind capital contribution by Stang and Gerafi to Hudson Square Hotel. The other members of Hudson Square Hotel, to wit, Four Boys, LLC, BB Max, LLC, Room 45, LLC, Five Boys, LLC and Z Dream, I,LC, were each supposed to contribute their respective portions of Hudson Square Hotel's capital by cash contributions. Each contribution was to be $3,000.000.00, and the aggregate contribution was to be some $18,000,000.00. However, upon information and belief, those members contributed nothing or at best nominal amounts towards their required capital contributions to Hudson Square Hotel. 89. Upon information and belief, the $13,250,000,00 proceeds of the sale of Property are to be divided among the six members of Hudson Square Hotel, to wit: Stang, LLC, Four Boys, LLC, BB Max, LLC, Room 45, LLC, Five Boys, LLC and Z Dream, LLC. If Stang LLC is to receive only one-sixth share of those proceeds or approximately $2,473,599.47, Stang and Gerafi will have been defrauded by at least $20,000,000 and likely far more. 14
90. Defendants Four Boys, LLC, BB Max, LLC, Room 45, LLC, Five Boys, LI,C and Z Dream, LLC, and their principals, perpetrated a fraud through the following specific misrepresentations, acts and omissions described below. 91. Upon information and belief, these defendants failed to make the initial capital contributions to vest their equity interest in Hudson Square Hotel. 92. Upon information and belief, these defendants failed to answer the capital call for funds made by the purported managing member, Maldini. 93. Upon information and belief, these defendants had Maldini installed a "managing member" in order to convey the Property. 94. Upon information and belief, these defendants made no effort to develop the Project and, instead, "flipped" the Property for well below market value. In the process, these defendants realized a substantial gain as they had never made their capital investments into Hudson Square Hotel as required. 95. Upon information and belief, these defendants agreed not to market the property or conduct an auction which would maximize its value. Such a process would have blown the secrecy that their scheme required. 96. This fraud was also perpetrated with the knowing cooperation of attorneys Seeman and Bullard, who cast aside their fiduciary obligations towards plaintiffs. Among other things, these attorney defendants concealed the books and records of Hudson Square Hotel, upheld the facially invalid installation of Maldini as "managing member", and consummated the Transaction without plaintiffs' knowledge or consent. 97. This fraud was also consummated with the knowing cooperation and overt acts of Braver and Hudson Canal. These defendants entered into a transaction with an unauthorized 15
managing member, Maldini; apparently closed without engaging in any diligence (during which Maldini's lack of authority would have become apparent), and paid a purchase price that they unquestionably knew to be so far below market value as to raise numerous questions regarding the reasons for and authority of the seller to sell. DERIVATIVE AND DEMAND FUTILITY ALLEGATIONS 98. Defendants, including the members of Hudson Square Hotel other than plaintiff Stang, LLC, have committed, inter alia, fraud, fraudulent transfer of title to the Property and misappropriation of the assets of Hotel LLC. Because of the fraudulent and tortious conduct of defendants, especially the sudden, secretive and wrongful sale by Hudson Square Hotel of its valuable and rapidly appreciating Property, demand upon the other members of Hudson Hotel LLC, that is, upon Four Boys, LLC, BB Max, LLC, Room 45, LLC, Five Boys LLC and Z Dream LLC, to void the Transaction would be futile. Accordingly, Plaintiffs have not demanded these defendants rescind this sale transaction, void the transfer of title of the Property to Hudson Canal LLC, or commence this lawsuit. FIRST CAUSE OF ACTION FOR FRAUD AGAINST DEFENDANTS GIBLY AND FOUR BOYS LLC 99. Plaintiffs repeat and re-allege paragraphs 1 98 of this Complaint with the same full force and effect as though more fully set forth herein at length. 100. Gibly and Four Boys LLC represented to Stang LLC, Gerafi and Southwest Canal Inc. that (a) the all members of Hudson Square Hotel would contribute capital in accordance with their intended membership ownership interests, (b) the capital contribution of Stang LLC, Gerafi and Southwest Canal Inc. to Hudson Square Hotel would primarily be an in kind contribution of the Property; and (c) the capital contributions of the other members would be cash contributions 16
in accordance with their respective membership ownership percentages. These defendants further represented that the cash contributions raised would be sufficient to complete the Project. 101. These representation was false inasmuch as, upon information and belief, Gibly, Maldini, Vieri, Shevchenko and Zidane, and their respective companies, Four Boys, LLC, BB Max, LLC, Room 45, LLC, Five Boys, LLC and Z Dream LLC, did not contribute their respective capital contributions to Hudson Square Hotel. 102. Gibly and Four Boys LLC made their representations with intent of misleading Stang LLC, Gera() and Southwest Canal Inc. and, more specifically, to induce plaintiffs into contributing the Property to Hudson Square Hotel. 103. Gibly and Four Boys LLC knew that their representations were false when made. 104. Stang, LLC, Gerafi and Southwest Canal LLC detrimentally relied on these representations by transferring the Property to Hudson Square Hotel. 105. By virtue of the foregoing, Stang LLC, Gerafi and Southwest Canal Inc. have been damaged and are entitled to recover at least the sum of 'Iwenty Million Dollars ($20,000,000), plus such additional damages as maybe proven at trial. SECOND CAUSE OF ACTION AGAINST DEFENDANTS GIBLY AND FOUR BOYS LLC FOR BREACH OF FIDUCIARY DUTY 106. Plaintiffs repeat and re-allege paragraphs 1-105 of this Complaint with the same full force and effect as though more fully set forth herein at length. 107. All members of Hudson Square Hotel had a fiduciary relationship among each of them, especially duties of loyalty and honesty. 108. In particular, Four Boys, LLC and Gibly owed Stang LLC a fiduciary duty. 109. Four Boys LLC and its member, Gibly, committed gross misconduct toward Stang LLC as more fully set forth above. 17
110. By virtue of this misconduct, Four Boys breached its duties of care and loyalty owed to Stang LLC. 111. By virtue of the foregoing, Stang LLC, Gerafi and Southwest Canal Inc. have been damaged and are entitled to recover at least the sum of Twenty Million Dollars ($20,000,000), plus such additional damages as maybe proven at trial. THIRD CAUSE OF ACTION AGAINST DEFENDANTS GIBLY AND FOUR BOYS LLC FOR UNJUST ENRICHMENT 112. Plaintiffs repeat and re-allege paragraphs 1-111 of this Complaint with the same full force and effect as though more fully set forth herein at length. 113. Gibly and Four Boys LLC have been enriched at the expense of Stang, LLC, Gerafi and Southwest Canal Inc. 114. It is against equity and good conscience to permit Gibly and Four Boys LLC to retain what Plaintiffs seek to recover herein. 115. Plaintiffs have no adequate remedy at law. 116. By virtue of the foregoing, Gibly and Four LLC Boys have been unjustly enriched and Stang, LLC, Gerafi and Southwest Canal Inc. have been damaged and are entitled to recover at least the sum of Twenty Million Dollars ($20,000,000), plus such additional damages as maybe proven at trial. FOURTH CAUSE OF ACTION AGAINST DEFENDANTS FOUR BOYS, LLC, BB MAX, LLC, ROOM 45, LLC, FIVE BOYS, LLC AND Z DREAM LLC AND THEIR PRINCIPALS 117. Plaintiffs repeat and re-allege paragraphs 1-116 of this Complaint with the same full force and effect as though more fully set forth herein at length. 18
118. Upon information and belief, Gibly, Maldini, Vieri, Shevchenko, and Zidane and their respective companies, Four Boys, LLC, BB Max, LLC, Room 45, LLC, Five Boys, LLC and Z Dream, LLC, have obtained shares of the sale proceeds of the Property. 119. Gibly, Maldini, Vieri, Shevchenko, and Zidane and their respective companies, Four Boys, LLC, BB Max, LLC, Room 45, LLC, Five Boys, LLC and Z Dream, LLC, have been enriched at the expense of Stang LLC, Gerafi and Southwest Canal Inc. 120. It is against equity and good conscience to permit Four Boys, LLC, BB Max, LLC, Room 45, LLC, Five Boys, LLC and Z Dream, LLC or their principals to retain any of the proceeds of the sale. 121. Plaintiffs have no adequate remedy at law. 122. By virtue of the foregoing, Four Boys, LLC, BB Max, LLC, Room 45, LLC, Five Boys, LLC and Z Dream, LLC have been unjustly enriched and Stang, LLC, Gerafi and Southwest Canal Inc. have been damaged and are entitled to recover at least the sum of Thirty Million Dollars ($30,000,000), plus such additional damages as maybe proven at trial. FIFTH CAUSE OF ACTION AGAINST ALL DEFENDANTS FOR FRAUD AND AIDING AND ABETTING THE FRAUD AGAINST PLAINTIFFS 123. Plaintiffs repeat and re-allege paragraphs 1-122 of this Complaint with the same full force and effect as though more fully set forth herein at length. 124. Defendants (excluding Hudson Square Hotel) each aided and abetted the abovedescribed fraud against plaintiffs. 125. Defendants (excluding Hudson Square Hotel) had actual knowledge of this fraud. 126. Defendants (excluding Hudson Square Hotel) had actual knowledge that they were providing substantial assistance in carrying out the fraud. 19
127. Defendants (excluding Hudson Square Hotel) each provided substantial assistance in carrying out this fraud. 128. With respect to Maldini, among other things: (a) Maldini somehow had himself cloaked as the managing member of Hudson Square Hotel, without complying in an manner with the Operating Agreement or the New York Limited Liability Company Law. (b) Maldini signed the Contract of Sale, and upon information and belief, signed the deed from Hudson Square Hotel to Hudson Canal LLC and the various required closing documents without any authority (c) Maldini never made the contributions required of him to Hudson Square Hotel. (d) Maldini never sought to market the Property. 129. With respect to Attorney Seeman, among other things: (a) Attorney Seeman intentionally delayed the production of the books and records of Hudson Square Hotel such that the true financial status of Hudson Square Hotel, the identities of the members, and their actual capital contributions (if any) would never be revealed. (b) Attorney Seeman failed to disclose to plaintiffs that there was an "offer" by Hudson Canal LLC to purchase the Property for the sum of $13,265,149.39 until approximately one month after the sale. (c) Attorney Seeman failed to disclose that Hudson Square Hotel had retained another attorney, Bullard, to represent it, and that Hudson Square Hotel was 20
representing that Bullard's law office address had become Hudson Hotel LLC's place of business. 130. With respect to Bullard, among other things: (a) Bullard concealed from plaintiffs all pertinent and material information pertaining to the sale of the Property; (b) Bullard failed to disclose to plaintiffs that there was an offer by Hudson Canal LLC to purchase the Property for the sum of $13,265,149.39 until approximately one month after the sale. (c) Bullard knew that the Maldini was not authorized to sign the Contract of Sale or otherwise effectuate the sale of the Property on behalf of Hudson Square Hotel. 131. With respect to Hudson Canal LLC and Braver, among other things: (a) Upon information and belief, Hudson Canal and Braver knew that Maldini was not authorized to sign the Contract of Sale and the closing documents, including the Deed on behalf of Hudson Square Hotel. (b) By having the Contract of Sale and Closing occur on the same day, i.e., September 21, 2015, liudson Canal LLC and Braver assured that the sale would remain a secret from plaintiffs and effectively prevent plaintiffs from stopping the sale prior to closing. (c) These defendants knew that, by virtue of an accepted purchase price that was at least 40% below market value, these defendants were trading in a tainted asset, as no market participant would knowingly sell this asset for this price. 21
132. By virtue of the foregoing, Stang, LLC, Cierafi and Southwest Canal Inc. have been damaged and are entitled to recover at least the sum of Thirty Million Dollars ($30,000,000), plus such additional damages as maybe proven at trial, including such punitive damages as may be warranted. SIXTH CAUSE OF ACTION AGAINST ALL DEFENDANTS FOR JUDGMENT DECLARING THAT THE SALE OF THE PROPERTY TO HUDSON CANAL LLC IS VOID 133. Plaintiffs repeat and re-allege paragraphs 1-132 of the Complaint with the same full force and effect as though more fully set forth herein at length. 134. There is a justiciable controversy between Plaintiffs and Defendants was to whether, inter alia, title to the Property was legally and properly conveyed by Hudson Square Hotel to Hudson Canal LLC. 135. By virtue of the foregoing, plaintiffs arc entitled to judgment declaring that the sale of the Property is void, that conveyance of title of the Property by Hudson Square Hotel to Hudson Canal LLC is void and that beneficial title to the Property remains vested in Hudson Square Hotel. SEVENTH CAUSE OF ACTION AGAINST ALL DEFENDANTS FOR THE IMPOSITION OF A CONSTRUCTIVE TRUST AGAINST THE PROPERTY 136. Plaintiffs repeat and re-allege paragraphs 1-135 of this Complaint with the same full force and effect as though more fully set forth herein at length. 137. Defendants (with the exception of defendant Hudson Square Hotel) have breached their respective fiduciary duties owed to Stang LLC and Hudson Square Hotel. 138. Defendants (with the exception of defendant Hudson Square Hotel) promised plaintiffs that if they contributed the Property to Hudson Square Hotel as a capital contribution to Hudson Square Hotel, then (a) the Property would be developed, constructed and managed by 22
defendants; (b) defendants had the cash to contribute their capital contributions, that is, $3,000,000 for every 10% tranche of membership interest, (c) defendants would promptly contribute said cash contributions to Hudson Hotel LLC; and (d) the total contributions would be sufficient to complete the Project. 139. Relying upon the foregoing promises, Stang LLC, Gerafi and Southwest Canal St. Inc., transferred the Property to Hudson Square Hotel. 140. Defendants (with the exception of defendant Hudson Square Hotel) have been unjustly enriched at plaintiffs' expense. 141. The Property was secretly sold to and acquired by defendant Hudson Canal LLC under such circumstances that Hudson Canal LLC may not, in equity retain any legal or beneficial interest in the Property. 142. By virtue of the foregoing, this Court should impose a constructive trust upon the Property in favor of plaintiffs. EIGHTH CAUSE OF ACTION BY PLAINTIFF STANG LLC FOR AN ACCOUNTING AGAINST HUDSON SQUARE HOTEL AND GIBLY 143. Plaintiffs repeat and re-allege paragraphs 1 142 of this Complaint with the same full force and effect as though more fully set forth herein at length. 144. Pursuant to Paragraph 17 of the Operating Agreement, all members of the Hudson Square Hotel are entitled to inspect its books and records. 145. Pursuant to that right, Hudson Square Hotel and Gibly owe Stang, LLC a duty to allow it to have unfettered access to the books and records of Hudson Square Hotel and to provide Stang LLC with an accounting, including but not limited to (a) who were or are the members of Hudson Square Hotel, (b) what were or are their respective ownership percentages, (c) what consideration was ever provided by each former and current member to Hudson Square 23
Hotel as a capital contribution, and (d) a statement showing all monies which flowed into and out of Hudson Square Hotel. above. 146. By virtue of the foregoing, Stang LLC is entitled to an accounting as set forth NINTH CAUSE OF ACTION FOR A PRELIMINARY AND PERMANENT INJUNCTION ENJOINING HUDSON CANAL FROM ENCUMBERING AND/OR ALIENATING THE PROPERTY 147. Plaintiffs repeat and re-allege paragraphs 1-146 of this Complaint with the same full force and effect as though more fully set forth herein at length. 148. If the Property is encumbered, alienated or sold by Hudson Canal LLC, plaintiffs will suffer irreparable harm. 149. Plaintiffs have no adequate remedy at law. 150. By virtue of the foregoing, Plaintiffs are entitled to a preliminary and permanent injunction enjoining Hudson Canal LLC from encumbering, alienating or selling the Property. WHEREFORE, plaintiffs demand judgment as follows: On the First Cause of Action, in favor of Stang LLC, Gerafi and Southwest Canal Inc. and against defendants for damages in an amount not yet known but believed to be at least in the sum of Thirty Million ($30,000,000) Dollars, plus such other damages as may be proven at trial; On the Second Cause of Action, in favor of Stang LLC, Gerafi and Southwest Canal Inc. and against defendants for damages in an amount not yet known but believed to be at least in the sum of Thirty Million ($30,000,000) Dollars, plus such other damages as may be proven at trial; 24
On the Third Cause of Action, in favor of plaintiffs and against Gibly and Four LLC Boys for unjust enrichment in an amount not yet known but believed to be at least in the sum of Thirty Million ($30,000,000) Dollars, plus such other damages as may be proven at trial; On the Fourth Cause of Action, in favor of plaintiffs and against Four Boys, LLC, BB Max, LLC, Room 45, LLC, Five Boys, LLC and Z Dream, LLC and their principals for unjust enrichment for unjust enrichment in an amount not yet known but believed to be at least in the sum of Thirty Million ($30,000,000) Dollars, plus such other damages as may be proven at trial; On the Fifth Cause of Action, in favor of plaintiffs and against defendants for damages in an amount not yet known but believed to be at least in the sum of 20 Million $20,000,000) Dollars, plus such other damages as may be proven at trial; On the Sixth Cause of Action, in favor of plaintiffs and against defendants declaring that the sale of the property is void, that conveyance of title of the Property by Hudson Square Hotel to Hudson Canal LLC is void, and that beneficial title to the Property remains vested in Hudson Square Hotel; On the Seventh Cause of Action, in favor of plaintiffs and against defendants imposing a constructive trust upon the Property in favor of plaintiffs; On the Eighth Cause of Action, in favor of plaintiff Stang LLC and against the applicable defendants granting Stang LLC an accounting as requested in this cause of action; and On the Ninth Cause of Action, for a preliminary and permanent injunction enjoining Hudson Canal LLC from encumbering, alienating or selling the Property, 25
For an award of punitive damages against defendants in amounts to be determined at trial on all causes of action for which such an award is permitted; Cost, reasonable attorneys' fees as permitted by contract or statute, and interest as permitted by law, together with Such other and further relief that the court deems appropriate. Dated: New York, New York October 27, 2015 Law Office of Steven S. Sieratzki, Esq. By: Atv,e, A _ Steven S. Sieratzki 40 Exchange Place Suite 1800 New York, NY 10005 (212) 471-9525 Attorney for Plaintiffs 26
STATE OF NEW YORK COUNTY OF NEW YORK ss. : VERIFICATION I, AVIHU GERAFI, being duly sworn, deposes and says: I am one of the plaintiffs in the within action; I have read the foregoing COMPLAINT and know the contents thereof; the same is true to my own knowledge, except as to the matters therein stated to be alleged on information and belief, and as to those matters I believe it to be true. et, AVIHU QiERAFI Sworn to before me this ' day October, 2015 Notary Pubic JARDEEN SAE1GEANT Notary Public, State of New York No. 01SA6318249 Qualified in New York County Commission Expires January 20, 2019
SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK STANG LLC, suing in its own capacity and in the name of Index No. /15 and right of HUDSON SQUARE HOTEL, LLC; 489 SOUTHWEST CANAL ST., INC.; and AVIFIU GERAFI, suing in his individual capacity HUDSON. SQUARE_ HOTEL, LLC; RAN GIBLY; FOUR : BOYS ting..64; IAA PAOLO MALD1NI; BB. MAX, 1:14 CHRISTIAN 'VIEW; ROOM 4$;14,C; ANDRIY SHEVC11ENKO; FIVE BOYS ONEGIRL,: LLC; ZINEDINE :ZIDANE; Z DREAM, LLC, JOEL BRAVER; HUDSON CANAL LW; FRED L SEEMAN; EDWARD J BULLARD; JR., and BOLLARD LAW GROUP PLLC aficht13ullaptillt; Defendants. SUMMONS AND VERIFIED COMPLAINT STEVEN S. SIERATZKI, ESQ. Attorney for Plaintiff 40 Exchange Place Suite 1800 New York, New York 10005 (21 Service of a copy &the within is hereby admitted. Dated.