Defendants. July 3, 2013 FIRST AMENDED COMPLAINT - PDF

Please download to get full document.

View again

of 20
All materials on our website are shared by users. If you have any questions about copyright issues, please report us to resolve them. We are always happy to assist you.
Information Report
Category:

History

Published:

Views: 256 | Pages: 20

Extension: PDF | Download: 0

Share
Related documents
Description
UNITED STATES DISTRICT COURT DISTRICT OF CONNECTICUT JOHN J. CARNEY, in his capacity as Court- Appointed Receiver for Michael Kenwood Group, LLC, et al., Civil Action No. 3:13-cv (JCH) v. Plaintiff,
Transcript
UNITED STATES DISTRICT COURT DISTRICT OF CONNECTICUT JOHN J. CARNEY, in his capacity as Court- Appointed Receiver for Michael Kenwood Group, LLC, et al., Civil Action No. 3:13-cv (JCH) v. Plaintiff, PIERO ENRIQUE MONTELLI TORRES, INVERPLUS SOCIEDAD DE CORRETAJE DE TITULOS VALORES, C.A., IVP OVERSEAS LTD., ROMEO MIKAEL MOUAWAD MOUAWAD, JESPA MAWAD DE MOUAWAD, TANIA MOUAWAD MAWAD, MIGUEL ANTONIO MOUAWAD MAWAD, HORION INVESTMENT LTD., GRIMSEL GROUP LTD., and M. HOLDING S.A., JURY TRIAL DEMANDED Defendants. July 3, 2013 FIRST AMENDED COMPLAINT John J. Carney, Esq. (the Receiver ), 1 as Receiver for Michael Kenwood Group LLC (the MK Group ) and certain affiliated entities 2 (the Receivership Entities ) in Securities and 1 Unless otherwise explicitly defined herein, the Receiver adopts for purposes of this complaint the defined terms as set forth in the Amended and Restated Receiver Order (the Receiver Order ) dated March 1, 2013 (SEC Action, Dkt. 666). 2 Under the Receiver Order, the Receivership Entities are Highview Point Partners, LLC; Highview Point Master Fund, Ltd. (the Master Fund ); Highview Point Offshore, Ltd.; Highview Point LP; MK Master Investments LP; MK Investments, Ltd.; MK Oil Ventures LLC; The Michael Kenwood Group, LLC; Michael Kenwood Capital Management, LLC; Michael Kenwood Asset Management, LLC; MK Energy and Infrastructure, LLC; MKEI Solar, LP; MK Automotive, LLC; MK Technology, LLC; Michael Kenwood Consulting, LLC ( MK Consulting ); MK International Advisory Services, LLC; MKG-Atlantic Investment, LLC; Michael Kenwood Nuclear Energy, LLC; MyTcart, LLC; TUOL, LLC; MKCM Merger Sub, LLC; MK Special Opportunity Fund ( SOF ); MK Venezuela, Ltd. ( MKV ); and Short Term Liquidity Fund I, Ltd. Exchange Commission v. Illarramendi, Michael Kenwood Capital Management, LLC et al., No. 3:11-cv (JBA) (the SEC Action ), by and through his undersigned counsel, alleges the following: SUMMARY OF CLAIMS 1. This lawsuit is part of the Receiver s continuing efforts to trace, recapture, and return to investors the hundreds of millions of dollars lost or stolen from investment funds managed and operated as a massive Ponzi scheme (the Fraudulent Scheme ) by Francisco Illarramendi ( Illarramendi ) and other individuals affiliated with the MK Group and Highview Point Partners, LLC ( HVP Partners ). 2. While Illarramendi was the ringleader of the Fraudulent Scheme, and is appropriately incarcerated in federal prison awaiting sentencing, he did not act alone nor did he limit the benefit of the fraud to himself. From the inception of the Fraudulent Scheme, Piero Enrique Montelli Torres ( Montelli ), a childhood friend of Illarramendi, knowingly played a critical role in helping Illarramendi to conceal the Fraudulent Scheme, by creating shell companies to engage in off-the-books transactions, signing and backdating documents, and directing and facilitating numerous impermissible transfers of funds from the Receivership Entities to the Defendants and others. In exchanges with Illarramendi, Montelli openly questioned the legitimacy of certain transactions between the two and acknowledged that they could be engaged in money laundering. Brazen in his disregard for the law, Montelli continued to conspire with Illarramendi even after the Securities and Exchange Commission ( SEC ) had sued Illarramendi and sought to freeze the Receivership Entities assets, furthering the effect of the fraud by assisting Illarramendi to create false documentation in an attempt to circumvent the SEC s pending asset freeze. 2 3. In return for his collaboration and assistance throughout the course of the Fraudulent Scheme, Illarramendi provided Montelli and affiliated entities (the Montelli Defendants ) with millions of dollars of investors money seemingly whenever, wherever and however Montelli requested, without any regard to the purpose of the payments. Montelli s requests included millions in transfers for his personal use deposited into accounts affiliated with his entities and, at other times, he requested millions in transfers for the benefit of Romeo Mikael Mouawad Mouawad ( Mouawad or Romeo Mouawad ), his family, and their affiliated entities (the Mouawad Defendants ). 4. Despite the millions of dollars in investor funds being transferred, the Receiver s investigation has not uncovered any reasonably equivalent value to support the significant transfers to the Montelli or Mouawad Defendants. Rather, the trail of misappropriated funds ran through a labyrinth of off-shore alter-ego entities and bank accounts designed to conceal the ownership and control of the stolen funds. In sum, between May 2009 and the end of 2010 alone, Montelli directed fraudulent transfers totaling more than $257,000,000 from various Receivership Entities on his and his affiliates own behalf, and facilitated further fraudulent transfers totaling more than $71,000,000 to or for the benefit of the Mouawad Defendants. (See Exhibit A, as set forth therein, the Transfers ). These Transfers comprise investor proceeds and other monies that must be recovered for distribution to Illarramendi s investors and other victims of his Fraudulent Scheme. THE DEFENDANTS THE MONTELLI DEFENDANTS 5. Piero Enrique Montelli Torres is a Venezuelan public accountant who actively facilitated Illarramendi s Fraudulent Scheme. At times, such as in correspondence with third party financial institutions, Montelli is described by Illarramendi as one of Highview Point s 3 advisors in the Andean Region and Central America and purportedly assisted the HVP Funds (as defined below) to secure investments. Montelli was also a co-founding partner of JIP Consultores de Venezuela, purportedly a Venezuelan business and financial consulting firm and controlled shell companies such as Naproad Finance, S.A. ( Naproad ) and HPA, Inc. ( HPA ). According to Illarramendi, Montelli previously worked closely with Illarramendi and Frank Lopez ( Lopez ), a principal of HVP Partners and a defendant in another suit brought by the Receiver, while the three of them were employed by a major international bank. 6. Over the course of the fraud, Montelli regularly ed and called Illarramendi and other members and employees of HVP Partners and the MK Group in Connecticut in order to negotiate and execute transfers on behalf of himself, the Defendants, and others, and engaged in other business dealings on behalf of himself and his associates. On at least one occasion, Montelli travelled to Stamford, Connecticut to, upon information and belief, conduct business with Illarramendi and his affiliates. 7. Montelli owns property in Florida and has maintained a residence in Florida at all times relevant to this complaint. In addition, Montelli was assigned a United States Social Security number in 2003 to allow him, upon information and belief, to conduct business in the United States. 8. Montelli s additional business connections to the United States include management of an entity called Weston International Bakery LLC ( Weston ), a Florida corporation formed on May 5, Corporate records list Montelli as a former managing member of Weston from 2005 through Another managing member was Illarramendi. Thereafter, both Illarramendi and Montelli became and remained principals and business partners of Weston until at least 2009 and 2010, respectively. Upon information and belief, Weston operated a bakery franchise known as Don Pan in Florida. 4 9. Inverplus Sociedad de Corretaje de Titulos Valores, C.A. ( Inverplus ) was incorporated in Venezuela on May 9, 2008, with a business address in Caracas. It is owned by Eduardo Marquez ( Marquez ) and Montelli, who were described to the SEC by an employee of HVP Partners as friends of Francisco Illarramendi for many years. As late as 2010, Illarramendi had also represented to others that Defendants Horion Investment Ltd. and Grimsel Group Ltd., entities controlled by the Mouawad Defendants and defined below, were also subsidiaries/affiliates of Inverplus and preferred regular Venezuelan Broker Dealer Counterparties of HVP Partners. Upon information and belief, at all times relevant to the complaint, Inverplus has been dominated and controlled by Montelli. 10. Inverplus s operations were suspended by the Venezuelan Comision Nacional de Valores (National Securities Commission) on August 13, According to information published in the Gaceta Oficial (Official Gazette), Inverplus was suspected of violating Venezuelan securities law, specifically Article 82 of the Ley de Mercado de Capitales (Capital Markets Act). As a result, an auditor was appointed for Inverplus and charged with reporting on the monthly progress of the intervention to the National Securities Commission. 11. IVP Overseas Ltd. ( IVP ) was incorporated in the British Virgin Islands on September 25, Upon incorporation, Montelli was appointed as a director of IVP and owns 50% of the company. The other 50% is owned by Marquez, who was a senior director and president of Inverplus. IVP acted as a purported counterparty to HVP Partners in connection with Inverplus transactions including purchases and sales of bonds in Venezuelan local markets. IVP is a purported affiliate of Inverplus. Upon information and belief, at all times relevant to the complaint IVP has been dominated and controlled by Montelli. Montelli used IVP to actively participate in the Fraudulent Scheme by allowing Illarramendi to pass money through IVP for the 5 Mouawad Defendants to avoid banking compliance, and Montelli s use of IVP to perpetuate the Fraudulent Scheme deepened the losses to the Receivership Estate. THE MOUAWAD DEFENDANTS 12. Romeo Mikael Mouawad Mouawad, also known in relevant correspondence as el Libanés (the Lebanese), is a Venezuelan citizen and a wealthy financier who operates an international brokerage firm and maintains significant political connections in Venezuela. 13. Romeo Mouawad maintained residences in Miami and Miami Beach, Florida at all times relevant to this complaint, and regularly conducts business in the United States. Upon information and belief, Romeo Mouawad owns, in whole or in part, and controls, the following entities (named entities defined below): Defendant M. Holding, Defendant Horion, Defendant Grimsel, Perafita, and several other corporations based in Panama and the U.K. with other members of the Mouawad Family. Romeo Mouawad has received the benefit of funds transferred from Receivership Entities. 14. Jespa Mawad De Mouawad ( Jespa Mouawad ) is, upon information and belief, Romeo Mouawad s wife. She maintained residences in Miami and Miami Beach, Florida at all times relevant to this complaint, and regularly conducts business in Florida. Jespa Mouawad, together with the other members of her family, jointly owns and has Power of Attorney to act on behalf of Horion. 15. Jespa Mouawad is also a director of several other corporations with other members of the Mouawad Family, several of which control millions of dollars of real estate assets in Florida. Together with her son, Miguel Mouawad, Jespa Mouawad has actively managed those Florida real estate assets. Jespa Mouawad has received the benefit of funds transferred from Receivership Entities. 6 16. Miguel Antonio Mouawad Mawad ( Miguel Mouawad ) is, upon information and belief, Romeo Mouawad s son. He maintained multiple residences in Miami and Miami Beach, Florida at all times relevant to this complaint, and regularly conducts business in the United States. Together with his parents and sister, Miguel Mouawad jointly owns and has Power of Attorney to act on behalf of Horion. Upon information and belief, Miguel Mouawad has participated in business ventures with Romeo Mouawad that were funded by transfers from Receivership Entities and holds himself out to be a business partner with his father in Grimsel and other ventures. 17. Miguel Mouawad has been issued a United States Social Security number, maintains an active Florida motor vehicle registration, and has participated in amateur motorsports racing in the United States. As recently as March 2013, Miguel Mouawad also owned a multi-million dollar condominium in New York City. 18. Miguel Mouawad is also a director of several other corporations with other members of the Mouawad Family, several of which control millions of dollars of real estate assets in Florida. Together with his mother, Jespa Mouawad, Miguel Mouawad has actively managed those Florida real estate assets. Miguel Mouawad has received the benefit of funds transferred from Receivership Entities. 19. Tania Mouawad Mawad ( Tania Mouawad ) is, upon information and belief, Romeo Mouawad s daughter. She maintained residences in Miami and Miami Beach, Florida at all times relevant to this complaint. Tania Mouawad jointly owns and has Power of Attorney to act on behalf of Horion. Tania Mouawad has received the benefit of funds transferred from Receivership Entities. 20. Horion Investment Ltd. ( Horion ), a shell corporation, was formed in the British Virgin Islands on or about April 22, Horion was formed approximately two weeks 7 before it received the first transfer from a Receivership Entity. Each of the four members of the Mouawad Family has power of attorney over Horion and owns 25% of its shares. Horion was formed by the Mouawad Family for the sole purpose of engaging in transactions with and receiving transfers from the Receivership Entities (see ). 21. Grimsel Group Ltd. ( Grimsel ) was formed in the British Virgin Islands on or about June 4, Romeo Mouawad is the sole director of Grimsel and 100% of the shares of equity were issued to Romeo Mouawad. Grimsel was formed by the Mouawad Family for the sole purpose of engaging in transactions with and receiving transfers from the Receivership Entities (see ). 22. M. Holding S.A. ( M. Holding ) was incorporated in Belize on or about May 6, When incorporated, M. Holding issued 300 shares of the company, of which 150 were issued each to Romeo Mouawad and Miguel Mouawad. Miguel Mouawad is its sole director. M. Holding was formed approximately two weeks before Illarramendi and Montelli first attempted to transfer funds to M. Holding. 23. Horion, M. Holding and Grimsel have been completely dominated and controlled by Romeo Mouawad, Jespa Mouawad, Tania Mouawad, and Miguel Mouawad, and used in furtherance of the Fraudulent Scheme, to such a degree that these entities and the Mouawad Family are effectively alter egos of each other, and therefore the corporate form should be disregarded. NON-DEFENDANTS BCT BANK INTERNATIONAL AND PERAFITA CORP. 24. BCT Bank International ( BCT ) is a Central American bank of which Lopez was a director. Lopez was also a director of HVP Partners and the HVP Funds, and was integral in helping Illarramendi to sustain and conceal the fraud. Illarramendi maintained an account at BCT in the name of Highview Point Offshore, Ltd (the BCT Account ), but the BCT Account 8 was not recorded in the books or records of the HVP Funds and was instead used by Illarramendi to commingle funds from the HVP Funds and various third party sources in an attempt to conceal and perpetrate the fraud. 25. Perafita Corp. ( Perafita ) is an entity controlled by Romeo Mouawad and believed to have been incorporated in Panama, which is purportedly involved in the financial services business in Venezuela. Perafita and MK Consulting entered into a cooperation agreement (the Perafita Agreement ) executed by Romeo Mouawad and Illarramendi and purportedly dated June 22, 2009, proposing to cooperate in the development and execution of financial transactions in Latin America, and elsewhere as and when opportunities arise. RELEVANT RECEIVERSHIP ENTITIES 26. Michael Kenwood Venezuela ( MKV, together with Short Term Liquidity Fund, I, Ltd. and SOF, the MK Funds ) is a fund registered in the Cayman Islands. MKV was formed on August 14, 2008, with the purported purpose of investing in the Bolivarian Republic of Venezuela ( Venezuela ) credit spectrum including arbitrage between the Venezuela Bolivar (VEF) and the US dollar (USD), as well as in the high returns currently being offered by Venezuelan USD international bonds. Its office and principal place of business was located in Stamford, Connecticut. 27. Short Term Liquidity Fund, I, Ltd. ( STLF ) is a fund registered in the Cayman Islands. STLF was formed on June 20, 2008, with the purported purpose of investing in products offered in the global fixed income and derivatives markets to generate gains through short-term (under one year) investments in sovereign securities, particularly those subject to currency arbitrage opportunities in their country of issuance, due to a particular country s exchange rate policy. Its office and principal place of business was located in Stamford, Connecticut. 9 28. Special Opportunities Fund is a fund registered in the Cayman Islands. SOF was formed September 12, 2007, with the purported purpose of operating as a fund-of-funds while making direct investments on an opportunistic basis. 29. Highview Point Partners, LLC is a Delaware limited liability company organized on August 27, HVP Partners was founded by Illarramendi and two other individuals and managed the Highview Point Master Fund Ltd. and two feeder funds, Highview Point Offshore, Ltd. ( HVP Offshore ) and Highview Point LP (collectively, the HVP Funds ). Its office and principal place of business was located in Stamford, Connecticut. JURISDICTION AND VENUE 30. This Court has subject matter jurisdiction over this matter pursuant to 28 U.S.C in that this is an action brought by the Receiver appointed by this Court concerning property under this Court s exclusive jurisdiction. See, Receiver Order. 31. This Court has personal jurisdiction over Defendants pursuant to 28 U.S.C. 754 and 1692 and under applicable state law. 32. The District of Connecticut is the appropriate venue for any claims brought by the Receiver pursuant to 28 U.S.C. 754 as the acts and transfers alleged herein occurred in the District. RECEIVER S STANDING 33. On January 14, 2011, the SEC commenced a civil enforcement action against Illarramendi, MK Capital, and various relief defendants (the SEC Defendants ). The SEC s complaint alleges that Illarramendi and others misappropriated investor assets in violation of Section 206(1), (2) and (4) of the Investment Advisers Act of 1940 and Rule 206(4)-(8) thereunder. The SEC also sought equitable relief, including injunctions against future violations of the securities laws, disgorgement, prejudgment interest, and civil monetary penalties. 10 34. Simultaneously with the filing of its complaint, the SEC sought emergency relief, including a preliminary injunction, in the form of an order freezing the assets of the SEC Defendants. The SEC also sought the appointment of a receiver over those assets. 35. On February 3, 2011, the Court appointed Plaintiff John J. Carney, Esq. as Receiver over all assets under the direct or indirect control of Defendant MK Capital and various relief defendants. A motion to expand the scope and duties of the Receivership was filed on March 1, 2011, and an Amended Receiver Order was entered on March 1, 2011, expanding both the duties of the Receiver and the definition of the Receivership Estate to include the MK Funds, namely SOF, MKV and STLF. 36. The most recent Receiver Order, entered on March 1, 2013, further expanded the Receivership to include, inter alia, the HVP Funds. 37. Pursuant to the Receiver Order, the Receiver has the duty of identifying and recovering property of the Receivership Entities to ensure the maximum distribution to the Receivership Entities defrauded creditors and to maximize the pool of assets available for distribution. Pursuant to the Receiver Order, the Receiver must take control of all assets owned by or traceable to the Receivership Estate, including any funds that were stolen, misappropriated, or fraudulently transferred as alleged here
Recommended
View more...
We Need Your Support
Thank you for visiting our website and your interest in our free products and services. We are nonprofit website to share and download documents. To the running of this website, we need your help to support us.

Thanks to everyone for your continued support.

No, Thanks