AFFIDAVIT OR AFFIRMATION IN SUPPORT OF MOTION (Motion #003) - Poltorak Affirmation January 26, 2011 (2024)

 
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 INDEX NO. 652408/2010(FILED: NEW YORK COUNTY CLERK 0172672011)NYSCEF DOC. NO. 30-3 RECEIVED NYSCEF: 01/26/2011 m3 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK panne ene nee eee eee eee eee nen YEHUDA KELLER, ALEXANDER TY REL Index No. 652408/10 E ROSEAN, YAACOV LIPSKAR, LECHAIM MERCHANT SERVICES CORP., MERCHANT AFFIRMATION DEVELOPMENT GROUP, ZALMAN BLACHMAN, MOSHE WISNEFSKY, Y EKUSIEL CHANIN, and SHELLIE ZUCKERMAN and SUSAN HILLMAN as TRUSTEES OF THE WOODS EXEMPTION TRUST Plaintiffs, -against MERCHANT CAPITAL PORTFOLIOS, LLC, BUSINESS PAY MENT SYSTEMS, LLC, OLEG FIRER, LEON GOLDSTEIN, ANTHONY W. HOLDER, STAR CAPITAL HOLDING CORP., STAR CAPITAL MANAGEMENT, LLC, STAR CAPITAL JV, LLC, PROCESS PINK PAY MENTS, LLC, MERCHANT PROCESSING SERVICES CORP., UNIFIED PAY CORPORATION, MMOA INC. aka. MONEY MOVERS OF AMERICA, INC., NATIONAL PROCESSING COMPANY, RBL CAPITAL GROUP, LLC, THE COMVEST GROUP, COMVEST INVESTMENT PARTNERS, CY NERGY HOLDINGS LLC, CYNERGY DATA, LLC, CYNERGY PROSPERITY PLUS, LLC, and DOES 1 THROUGH 100, Defendants. panne ene n enn nee eee eee eee een Elie C. Poltorak, an attomey duly admitted to practice in the courts of this state, affirms the following under penalties of perjury: 1 1 am the principal of Poltorak PC, attomeys for Plaintiffs. I make this affirmation in support of Plaintiffs’ Order to Show Cause for sanctions and a temporary restraining order. INTRODUCTION 2. I appeared before Your Honor on January 6 for oral arguments on Plaintiffs’ previous Order to Show Cause (the “First OSC”) seeking a preliminary injunction (i) enjoiningDefendants from conveying, assigning, and/or encumbering any assets acquired by Defendant Merchant Capital Portfolios, LLC (“Merchant”) from Defendant Business Payment Systems, LLC (“BPS”); (ii) enjoining Merchant and related Defendants from soliciting, transfering, or causing to be transferred any merchant account—serviced by Defendant National Processing Corp. (“NPC”) and associated with residual payment entitlements acquired by Merchant from BPS—to any other credit card processor or portfolio; (iii) enjoining NPC from disbursing any residual payments to Defendant RBL Capital Group LLC (“RBL”) or any other Defendant herein, without first deducting the sum of $61,338 from each monthly residual payment and holding same in escrow; (iv) enjoining NPC from disbursing any residual payments to RBL or any other Defendant herein, without first deducting the sum of $561,733.35, such sumrepresenting the amount claimed by Plaintiffs in past due residual payments, and holding same in escrow; (v) granting Plaintiffs expedited discovery against Merchant and associated Defendants;and (vi) granting Plaintiffs such other and further relief as may be just, equitable, and proper. Atrue and accurate copy of the First OSC is annexed hereto as Exhibit “A.” 3, On the retum date, the Court heard extensive oral arguments as to Plaintiff's likelihood of success on the merits. Plaintiffs conclusively refuted each and every one of Defendants’ arguments as to the ultimate merits. Specifically, Plaintiffs demonstrated that (i) the Novation Agreement is ambiguous at best; (ii) the Novation Agreement is superseded by the Assignment Agreement, which by its terms “constitutes the final, complete, and exclusivestatement of the agreement of the Parties with respect to the subject matter hereof, andsupersedes any and all other prior and contemporary agreements and understandings, both written and oral, between the Parties,” and expressly assigns BPS’s agent obligations to Merchant; (iii) as BPS’s assignee, Merchant lacks standing to assert noncompliance with the 47928NPC/RBL Agreements and is, in any event, estopped from making any such arguments as the successor standing in the shoes of BPS (e.g., that Plaintiffs’ assignment agreements required Puior approvals from NPC and RBL) (See, e.g., Unique Laundry Corp. v. Hudson Park NY LLC, 55 A.D.3d 382, 383, 865 N.Y.S.2d 203, 204 (1st Dep't 2008) (holding that the sublessor's assignee could not seek to void a sublease on the grounds that it violated the overlease)); (iv)Plaintiff Keller's assignment predates the RBL agreement; and (v) even if arguendo BPS had purported to transfer its residual income stream free and clear of any obligations to downlines,such transfer would be fraudulent and void as a matter of law, because (a) BPS did not receive adequate consideration for a free and clear assignment (DCL § 272, 275), (b) such assignment rendered BPS insolvent and unable to pay downlines (DCL § 273), and (c) assets cannot be intentionally stripped of their built-in liabilities in order to avoid such liabilities (DCL § 276). 4. At the end of along day of argument, the Court ruled from the bench (i) vacating the previously granted TRO, (ii) denying Plaintiffs a preliminary injunction except as to expedited discovery; (iii) ordering Merchant to fumish Plaintiffs raw “NPC data reports” indicating the residuals on each of the accounts associated with Plaintiffs’ residuals on or beforeJanuary 12, 2010; and (iv) ordering the parties to enter into an expedited discovery schedule. There was some discussion as to confidentiality and initially the Court agreed with counsel forBPS that the parties should all enter into the standard Stipulated Protective Order available on the Commercial Division website. A true and accurate copy of a transcript of the final portion of the hearing, containing the Court’s nulings, is annexed hereto as Exhibit “B.” 5, Subsequently, at the suggestion of an individual affiliated with BPS who was present in the courtroom, it became apparent that the reports do not contain confidential information, as they only identify accounts by a “merchant identification number.” 479286. Counsel for Merchant insisted that he would have to confirm this with his client, in response to which the Court stated that if any issue comes up affecting the disclosure, aconference call should be arranged with the Court on the aftemoon of January 11, so that the reports could be produced by the 12th as ordered. MERCHANT'S DISREGARD FOR THE COURT’S ORDER 7, On the moming of January 11, I emailed Michael Bemstein, counsel to Defendants Oleg Firer, Leon Goldstein, Merchant Capital Portfolios, LLC, Capital Holding Corp., Star Capital Management, LLC, Star Capital JV, LLC, Process Pink Payments, LLC, Merchant Processing Services Corp., Unified Pay Corporation, and MMOA, Inc., d/b/a Money Movers of America (the “Merchant Defendants”), requesting that he confirm that his client would produce the date reports the following day. 8. The purpose of the e-mail was to assure that no issue had arisen requiring a conference call with the Court that day. 9, Mr. Bemstein replied at 5:45 pm that he “will e-mail [me] tomorrow regarding your discovery inquiry.” 10. I further requested that Mr. Bemstein make himself available for a telephone callto confer regarding the expedited discovery schedule the Court had ordered the parties to enter. Mr. Bemstein replied that he would be available on the aftemoon of the 13°. 11. On January 12, at 7:22 pm, I emailed Mr. Bemstein to inquire regarding thereports that were due that day. 12. Mr. Bemstein replied the following aftemoon as follows: With all due respect, the Court did not Order we produce them today. The Court was crystal clear that it was requiringa Confidentiality Order, of which no draft has been circulated or entered. In addition, the Court wanted a conference 4 47928call to discuss the parameters of the disclosure and whether it should be viewed by your Clients or agreed thirc: parties. Having said, that, my Clients are ready willing and able to produce all discovery that can be produced pursuant to the requisite confidentiality safeguards. In addition, it is my understanding that several of the Plaintiffs have made settlement demands directly to my Clients which my Clients are seriously considering and I intend, upon substantiation thereof to forward you a proposed Stipulation of Settlement for these parties which may considerably narrow both the issues before this Court as to both litigation and expedited discovery. I hope that we will, in fact, be able to resolve issues realting [sic] to several of the Plaintiffs and I will email you by tomorow to confirm and/or discuss the parametes [sic] and terms. Atrue and accurate copy of the foregoing e-mail exchange is attached hereto as Exhibit “C.” 13. I then called Mr. Bemstein to demand that the Merchant Defendants comply with the discovery ordered by the Court. 14. Mr. Bemstein replied that I should circulate a confidentiality stipulation and thathis clients would produce the reports the following day. Further, Mr. Bemstein represented that it would be premature to enter a discovery schedule as he would be sending a proposed stipulation settling this matter with some of the Plaintiffs herein. In a subsequent telephone conversation, Mr. Bemstein informed me that his clients had decided to accept the settlementdemands of all but one of the Plaintiffs and that he would send me a stipulation to that effect in short order. 15. That very night, my paralegal circulated the standard stipulated protective order available on the Commercial Division website to all counsel of record herein. A copy of such e- mail and proposed order is attached hereto as Exhibit “D.” 16. The sole response I received to said e-mail was a letter from Mr. Bemstein, datedJanuary 19, in which he demands changes to the stipulated protective order and “written 47928discovery demands,” to which Defendants “have the right to object.” A copy of said letter isannexed hereto as Exhibit “E.” 17. Also on January 19, Mr. Bemstein submitted a proposed order to the Court. A copy of said proposed order, along with Mr. Bemstein’s cover letter, is annexed hereto as Exhibit “F.” 18. On January 20, I submitted a letter to the Court setting recounting Mr. Bemstein’sfailure to comply with the Court’s order, as set forth above. A copy of the letter is annexed hereto as Exhibit “G.” 19. Mr. Bemstein replied with a letter to the Court completely ignoring the Court’s order that his client produce the data reports, and justifying his obstructionist conducts with the assertion that “Plaintiffs' cannot circumvent the CPLR.” A true and accurate copy of said letter is annexed hereto as Exhibit “H.” 20. On January 21, the Court held a conference call with Mr. Bemstein and meregarding the issues addressed in our respective letters. 21. Tn the course of said conference call, Mr. Bemstein represented to the Court thathis clients were prepared to produce the data reports immediately upon execution of the confidentially order. The court directed Mr. Bemstein to execute the standard Commercial Division confidentiality orderI had circulated the previous week so as to cover the initial court- ordered production of data reports, without prejudice to his right to seek modifications with respect to future discovery. 22. At Mr. Bemstein’s request, the Court instructed that I reduce to writing the scopeof the data reports sought by Plaintiffs, which the Court had ordered produced by January 12. 23. The Court further instructed that counsel appear for a conference this coming 47928Wednesday, January 26—a date chosen due to the fact that Mr. Bemstein is on vacation Mondayand Tuesday. The Court did not set a time for the hearing pending Mr. Bemstein’s travel arrangements. As the conference call was ending, I asked the Court to confirm that Wednesday’ s hearing was definitely scheduled and the Court did so. 24. Immediately following the conference call, I called Mr. Bemstein and discussed the contents of the written request so as to avoid needless back-and-forth, and I immediatelyfollowed up with a letter setting forth such requests. A true and accurate copy of said letter isannexed hereto as Exhibit “I.” 25. Nevertheless, I only received the stipulated confidentiality order with signatures by Mr. Bemstein, Scott Silberfein, Esq. (counsel to RBL Capital Group, LLC), and Ed Floyd, Esq. (counsel to Defendant National Processing Company) on January 25. (Daniel Faizakoff, Esq,, had previously executed the stipulation on behalf of Defendant Business Payment Systems, LLC.) 26. At the present time, notwithstanding the Court's order on J anuary 6 that the data reports be produced on or before January 12 and notwithstanding the Court’s directive during last week’s conference call that the long-overdue reports be produced immediately, the Merchant Defendants have failed to produce any data reports. 27. Furthermore, the Merchant Defendants have simply ignored the Court’s order thatthe parties enter into an expedited discovery schedule, despite several requests by me that we confer regarding same. 28. The Merchant Defendant's flagrant disregard for discovery orders, while leading Plaintiffs down the primrose path with settlements that failed to materialize, has made a mockery of this Court. Furthermore, Plaintiffs have been severely prejudiced by Merchant's conduct, as 47928the Court specifically scheduled the deadline for producing the reports so as to allow Plaintiffstwo days to bring a new Order to Show Cause to enjoin disbursem*nt of the residual funds to Merchant (Hearing Excerpt Transcript at 15, line 13)—funds Plaintiffs are entitled to and Merchant has now presumably pocketed as a direct result of its flouting of the Court’s order. 29. It is particularly galling that the Merchant Defendants have submitted a proposed. order so-ordering the transcript of the hearing “effective January 6, 2011,” thereby seeking to “upgrade” their conduct from a sanctionable disregard for the Court’s discovery instructions, to adirect violation of a court order, punishable by civil and criminal contempt. 30. The Merchant Defendants and Mr. Bemstein have willfully disregarded this Court’s order and engaged in frivolous conduct intended solely to stonewall and delay the court ordered production, so that said Defendants may continue to embezzle Plaintiffs’ share of theresidual payments. 31. The Merchant Defendants and Mr. Bemstein’s obstructionist and frivolous conduct is richly deserving of sanctions, up to and including entry of a default judgment, monetary sanctions, and Plaintiffs’ attomeys’ fees. 32. Additionally, the Merchant Defendants should be compelled to comply with the Court’s prior order. PLAINTIFFS ARE ENTITLED TO A TRO AND PRELIMINARY INJUNCTION 33. As a preliminary matter, at the lengthy January 6 hearing, the Court did not address the branch of Plaintiff's application seeking to enjoin Merchant and related Defendants from soliciting, transferring, or causing to be transferred any merchant account—serviced by Defendant National Processing Corp. (“NPC”) and associated with residual payment entitlements acquired by Merchant from BPS—to any other credit card processor or portfolio. 479283A. Plaintiffs are indisputably entitled to a temporary restraining order and preliminary injunction to this extent, as any transfer of merchant accounts would clearlyconstitute imeparable harm without adequate remedy at law. 35. The balance of equities tips decidedly in Plaintiffs’ favor as such conduct would violate Merchant’ s agreement with NPC, in addition to interfering with Plaintiffs’ rights. 36. With respect to the branches of the First OSC seeking to escrow funds, the Court found that Plaintiffs were not entitled to the requested NPC Injunction on the basis that Plaintiffs could not show irreparable harm since they primarily seek money damages. 37. Respectfully, however, the Court’s finding is contrary to well-settled case law, which clearly holds that dissipation of funds that are the subject of a lawsuit constitutes irreparable harm and merits preliminary injunctive relief to protect against such dissipation. See, eg., Ma v. Lien, 198 A.D.2d 186, 186, 604 N-Y.S.2d 84, 85 (1st Dep't 1993) (“Contrary to the finding of the IAS court, plaintiff has shown imeparable injury absent the relief sought. Defendant. . . has indicated his intention to share his winnings with his family, and the first installment has already been paid to him. Thus, if the requested relief is not granted, a substantial amount of money may be dissipated or otherwise unavailable for recovery.”); McNeil v. Mohammed, 32 A.D.3d 829, 829-30, 821 N.Y.S.2d 225, 225-26 (2d Dep’ t 2006) (“the plaintiff demonstrated that she would suffer irreparable harm absent preliminary relief” when she moved “for a preliminary injunction restraining the defendant, inter alia, from transferring or otherwise disposing of funds realized from the sale of certain real property”); AOM 1703 Lexington Ave. LLC v. Malik, No. 115718/05, 2006 WL 2726816, at *2 (Sup. Ct. NY. County Aug. 16, 2006) (“T]he insurance proceeds are clearly specific funds which are a subject of this action and, as such, plaintiffs will suffer irreparable ham if they are dissipated by the defendant’). 4792838. While certain cases have held that Plaintiffs seeking only monetary relief are not entitled to a preliminary injunction prohibiting a defendant from transferring or dissipating assets, see, e.g., Credit Agricole Indosuez v. Rossiyskiy Kredit Bank, 94 N.Y .2d 541, 548 (2000); Dinner Club Corp. v. Hamlet on Olde Oyster Bay Homeowners Ass'n, Inc., 21 A.D.3d 777, 778, 801 N-Y.S.2d 25, 26-27 (1st Dep't 2005), these cases “have expressly recognized that a plaintiffmay obtain a preliminary injunction where the assets sought to be restrained are specific fundswhich can righily be regarded as ‘the subject of the action.’”. AOM 1703 Lexington Ave., 2006 WL 2726816, at *2 (emphasis added); see also Dinner Club Corp., 21 A.D.3d at 778, 801 N.Y.S.2d at 26 (“Where the suit involves the plaintiff's claims to a specific fund, that fund is ‘the subject of the action’ and a preliminary injunction is appropriate under the express wording of CPLR 6301”); Ficus Investments, Inc. v. Private Capital Management, LLC, 61 A.D.3d 1, 11-12, 872 NY.S.2d 93, 101 (1st Dep't 2009) (where managing member and part owner of limited liability company that bought, managed and sold non-performing real estate mortgages commenced action against former corporate officers of the company for breach of fiduciary duty based on allegations that they misappropriated millions of dollars in funds and assets, trial courtjustified in granting preliminary injunction directing certain mortgage assets to be placed in escrow because those assets were “the subject of the action”); Ma, 198 A.D.2d at 186, 604 N-Y.S.2d at 85 (although ultimate relief sought was monetary damages, court reversed trial court's ruling, and granted plaintiff's motion for preliminary injunctive relief ordering future lottery payments to be escrowed because action was directed at a specific fund); Parker v. Parker, 196 Misc. 2d 672, 676, 766 N-Y.S.2d 315, 319 (Sup. Ct. Nassau County 2003) (“[I]nactions where the subject matter is a specific fund of money, such as lottery winnings, preliminary injunctive relief may lie upon the requisite showing of the likelihood of success on 10 47928the merits and that the balance of the equities lies in the movant's favor.”); New York State Crime Victims Bd. v. Majid, 193 Misc. 2d.710, 715, 749 N-Y.S.2d 837, 841-42 (Sup. Ct. Albany County 2002) (court granted plaintiff's motion brought under the “Son of Sam” law for preliminary injunctive relief enjoining inmate, who was about to receive a deposit of $15,000 into his prison inmate account, from spending funds in that account notwithstanding the general rule that an injunction is not available in a case seeking monetary damages because the account constituted a special fund which could be regarded as the subject of the action). 39. Here, the residual payments are specific funds which can rightly be regarded asthe subject of this action. 40. Specifically, Plaintiffs allege that they are entitled to portion of these specificfunds by virtue of various agreements between all of the parties in this action. 41. Under these circ*mstances, Plaintiffs have clearly shown ineparable injury and they are consequently entitled to the requested preliminary injunction. 42. Moreover, a preliminary injunction is warranted here for the independent reason. that Plaintiffs assert a cause of action for fraudulent conveyance. 43. Debtor and Creditor Law Section 279 provides (emphasis added): Where a conveyance made or obligation incurred is fraudulent as to a creditor whose claim has not matured he may proceed in a court of competent jurisdiction against any person against whom he could have proceeded had his Claim matured, and the court may, a. Restrain the defendant from disposing of his property. b, Appoint a receiver to take charge of the property, c. Set aside the conveyance or annul the obligation, or d. Make any order which the circ*mstances of the case may require. 4A, Indeed, in the context of fraudulent conveyance actions, courts routinely grant injunctive relief, including asset freeze orders and other remedies designed to prevent improper 11 47928dissipation of property, to ensure that assets and property are still available when the dispute is resolved. See, eg., Winchester Global Trust Co. Ltd. v. Donovan, 58 A.D.3d 833, 834 (2nd Dep't 2009) (affirming preliminary injunction baring dissipation of assets in fraudulent conveyance action where “the uncontrolled sale and disposition by the appellants of their assets would threaten to render ineffectual any judgment which the plaintiff might obtain’); Galleon Syndicate Corp. v. Pan Atlantic Group, Inc., 223, A.D.2d 510, 511-12, 637 N-Y.S.2d 104, 105- 06 (1st Dep't 1996); Mishkinv. Kenney & Branisel, Inc., 609 F.Supp. 1254 (S.D.N-Y. 1985), aff'd, 779 F.2d 35 (2d. Cir.). 45. Notably, courts grant such preliminary injunctions even where plaintiffs would not be entitled to such relief under CPLR § 6301. See, eg., Galleon Syndicate Corp., 223 A.D.2d at 512, 637 N-Y.S.2d at 105-06 (affirming grant of an injunction pursuant to DCL § 279 on a showing only that “there was adequate support in the record that [defendant] had formed.and transferred assets to an offshore affiliate ... that might hinder, delay or defraud either presentor future creditors, to warrant the temporary relief awarded by the trial court”); Trafalgar Power, Inc. v. Aetna Life Ins. Co., 131 F.Supp.2d 341, 350 (N.D.N-Y. 2001) (while a “court has no authority to issue a preliminary injunction freezing a debtor's assets pending adjudication of an action solely at law’ a preliminary injunction is proper where the “request for preliminary injunctive relief is . . rooted in the ultimate equitable relief. . under Debtor and Creditor Law § 279 should [plaintiff] prevail on its section 273 or 276 claims”). 46. Thus, because Plaintiffs assert causes of action for fraudulent conveyance, they are undoubtedly entitled to preliminary injunction preventing Defendants from further dissipating the relevant assets during the pendency of this action. 12 4792847. Finally, there is no question that the balance of equities tips in Plaintiffs’ favor. “Tn balancing the equities, the court must weigh the harm each side would suffer in the absence or face of injunctive relief.” Gerald Modell, Inc. v. Morgenthau, 196 Misc.2d 354, 363, 764 NY.S.2d 779, 786 (Sup. Ct. N-Y. County 2003). “[T]he balancing of the equities usually simplyrequires the court to look to the relative prejudice to each party accruing from a grant or denial of the requested relief.” Ma, 198 A.D.2d at 186-87, 604 N-Y.S.2d at 85 48. Furthermore, the issue of ensuring that other downlines are paid is a red herring, as Plaintiffs have repeatedly indicated that any TRO or preliminary injunction should include a carve-out allowing RBL or NPC to pay other legitimate downlines—i.e., downlines that hadbeen entitled to a share of the residual stream of these accounts prior to the accounts’ assignmentto Merchant. 49. As between Plaintiffs and Merchant Capital, the balance of equities tips clearly in favor of Plaintiffs. Here, Plaintiffs are being deprived of their livelihood thereby causing them severe prejudice. The Merchant Defendants, on the other hand, would suffer no prejudice froman Order enjoining the disbursem*nt of funds that they are indisputably not entitled to. 50. Merchant Capital’s unjustified and repeated refusal to honor the terms of the Downline Agreements, coupled with its repeated representations to Plaintiffs that it would honor these agreements, tips the balance of the equities decidedly in Plaintiffs’ favor. 51. As noted above, absent the requested injunction, there is a substantial probabilitythat the residual payments to which Plaintiffs are entitled will be dissipated, leaving no funds from which Plaintiffs can recover, making any eventual award a hollow victory. 52. In contrast, there is no harm to Defendants in placing these funds in an interest-bearing escrow account until this matter is adjudicated. See Ma, 198 A.D.2d at 187, 604 13 47928N-Y.S.2d at 85 (injunction should have been granted where the plaintiff would suffer irreparable injury absent the relief sought, and there was no great harm to defendants if the disputed monieswere kept in escrow pending resolution of the matter); AOM 1703 Lexington Ave. LLC v. Malik, No. 115718/05, 2006 WL 2726816, at *3 (Sup. Ct. N-Y. County Aug. 16, 2006). 53. As between Plaintiffs and RBL, the balance of equities also clearly tips in favor of Plaintiffs. A. Significantly, Plaintiffs seek a limited preliminary injunction, which would allowRBL to retain all funds necessary to fully service MCP’ s debt owed to it, but merely require RBLto place into an escrow the funds that would otherwise by payable to Merchant Capital. At this point, Plaintiffs no longer seek to enjoin RBL from servicing its debt (without prejudice to theirTight to seek such relief at a future date). Hence, RBL cannot claim any prejudice by reason of the injunction. 55. As RBL would not retain these funds in any event, it could not possibly beprejudiced from being required to place them in an escrow account. 56. Moreover, the fact that RBL is not the primary wrongdoer in this case is irrelevant. As the First Department explained in Ma: 14 47928[T]he IAS court erred when it found that the equities do not favor either side because no wrongdoing had been established. While the existence of some wrongdoing may impel a result for one side, the “balancing of the equities” usually simply requires the court to look to the relative prejudice to each party accruing from a grant or a denial of the requested relief. Here, as noted, the Plaintiff would suffer irreparable injury absent the relief sought. On the other hand, we can perveive no great harm to defendants if the monies disbursed by the State are kept in escrow by their counsel pending resolution of the matter 198 A.D.2d at 186-87, 604 N-Y.S.2d at 85. 57. The Court rightfully found that the numbers submitted by Plaintiffs are not definite and cannot form the basis of a preliminary injunction. 58. The Court stated that Plaintiffs could make a new motion for a preliminary injunction after Defendants fumish the reports as per the Court’s order. 59. Plaintiffs were unable to do so due to the Merchant Defendants’ failure to comply with the Court’s discovery order. 60. The Merchant Defendants should not be rewarded for their dilatory conduct and. flouting of the Court's clear directives. 61. Accordingly, Plaintiffs respectfully request that the Court issue a temporaryrestraining order until Defendants produce the reports, which can then serve as a basis for a preliminary injunction. 15 47928WHEREFORE, it is respectfully requested that Plaintiffs’ Order to Show Cause begranted in all respects and Plaintiffs be awarded allowable costs, disbursem*nts and attomeys’fees herein and such other and further relief as the Court may deem good and proper. Dated: Brooklyn, New York January 26, 2011 —~ Elie C. Poltorak 16 47928EXHIBIT Adle oem perma Ee Padg, thom*ow | eer At anlAS Beitr Part of the Supreme Court of the State of New A York, held in and for the County of New York, at the courthouse located e? at 60 Centre Street, State and City of New York, County of New York on the og ay of December, 2010. PRESENT: on. MARTIN SHULMAN Justice ewe YEHUDA KELLER, ALEXANDER TYREL Index No. PED ¢ Se OS */ ROSEAN, YAACOV LIPSKER, LECHAIM. ‘ MERCHANT SERVICES CORP., MERCHANT ORDER DEVELOPMENT GROUP, ZALMAN TO SHOW CAUSE BLACHMAN, MOSHE WISNEFSKY, YEKUSIEL CHANIN, and SHELLIE ZUCKERMAN and SUSAN HILLMAN as TRUSTEES OF THE WOODS EXEMPTION TRUST, Plaintiffs, -against- MERCHANT CAPITAL PORTFOLIOS, LLC, BUSINESS PAYMENT SYSTEMS, LLC, OLEG FIRER, LEON GOLDSTEIN, ANTHONY W. HOLDER, STAR CAPITAL HOLDING CORP., STAR CAPITAL MANAGEMENT, LLC, STAR CAPITAL JV, LLC, PROCESS PINK PAYMENTS, LLC, MERCHANT PROCESSING SERVICES CORP., UNIFIED PAY CORPORATION, MMOA INC. a.k.a. MONEYoz. 2) MOVERS OF AMERICA, INC., NATIONAL ROCESSING COMPANY, RBL CAPITAL OUP, LLC, THE COMVEST GROUP, MVEST INVESTMENT PARTNERS, ERGY HOLDINGS LLC, CYNERGY DATA, CYNERGY PROSPERITY PLUS, LLC, and * THROUGH 100, Defendants. wane eee eee een ne neeUpon the annexed Emergency Affirmation of Elie C. Poltorak, Affirmation inSupport of Elie C. Poltorak, Affidavit of Yaacov Lipsker, and Affidavit of YehudaKeller, all affirmed to on the OF day of December, 2010, along with the exhibitsannexed thereto, and upon all the prior papers and proceedings in this action, Let Defendants or their counsel, show cause before this Court, at LA.S. PartComme, Room JNO, at the courthouse located at 60 Centre Street, New York, NewYork, on the( say of - , 20 tl , at 9:30 a.m. or as soonthereafter as counsel may be heard, why an Order should not be made and entered: 1 Preliminarily enjoining Defendants from conveying, assigning, and/orencumbering any assets acquired by Defendant Merchant Capital Portfolios, LLC fromDefendant Business Payment Systems, LLC; ii. Preliminarily enjoining Defendants Oleg Firer, Leon Goldstein, AnthonyW. Holder, Star Capital Holding Corp., Star Capita) Management, LLC, Star Capital JV,LLC, Process Pink Payments, LLC, Merchant Processing Services Corp., Unified PayCorporation, and MMOA Ine. a.k.a. Money Movers of America, Inc., along with allpersons acting in concert with the aforesaid and all persons with notice of this Order,from soliciting, transferring, or causing to be transferred any merchant account—servicedby Defendant National Processing Corp. and associated with residual paymentsntitlements acquired by Defendant Merchant Capital Portfolios, LLC from Defendant xiness Payment Systems, LLC—to any other credit card processor or portfolio; iil, Preliminarily enjoining Defendant National Processing Corp. from g any residual payments to RBL Capital Group LLC or any other Defendantherein, without first deducting the sum of $61,338 from each monthly residual payment and holding same in escrow; iv. Preliminarily enjoining Defendant National Processing Corp. from disbursing any residual payments to RBL Capital Group LLC or any other Defendant herein, without first deducting the sum of $561,733.35, such sum representing the amount claimed by Plaintiffs in past due residual payments, and holding same in escrow; v Granting Plaintiffs expedited discovery against Defendants Oleg Firer, Leon Goldstein, Anthony W. Holder, Star Capital Holding Corp., Star Capital Management, LLC, Star Capital JV, LLC, Process Pink Payments, LLC, Merchant Processing Services Corp., Unified Pay Corporation, and MMOA Inc. a.k.a. Money Movers of America, Inc.; and vi. Granting Plaintiffs such other and further relief as may be just, equitable, and proper. ond = 5 Sufficient cause ceases : therefor, pending a hearing of this application, it is 2 i ORDERED, that Defendants are hereby enjoined from conveying, assigning, | and/or encumbering any assets acquired by Defendant Merchant Capital Portfolios, LLC \ from Defendant Business Payment Systems, LLC; and it is furtherSouJ tv ORDERED, that Defendants Oleg Firer, Leon Goldstein, Anthony W. Holder, Star Capital Holding Corp., Star Capital Management, LLC, Star Capital IV, LLC, Process Pink Payments, LLC, Merchant Processing Services Corp., Unified Pav mu Corporation, and MMOA Inc. a.k.a. Money Movers of America, Inc., along persons acting in concert with the aforesaid and persons with notice of (Weg AUS 4 hereby enjoined from soliciting, transferring, or causing to be tran. 3 478account—serviced by Defendant National Processing Corp. and associated with residual /) payment entitlements acquired by Defendant Merchant Capital Portfolios, LLC from ‘t Defendant Business Payment Systems, LLC-—to any other credit card processor or i. and it is further= St > ERED, that Defendant M' erchant Capital Portfe hose LC/shall everpics a top full ac; pr they * are entitled to purguant to their contractsG with oka Bu ces ryment Syster ng Lbesthin seven (7) days“6f receipt of this Order; and it is furth t Sete oaperep that Defendant National Processing Corp. is enjoined from disbursing any residual payments to RBL Capital Group LLC or any other Defendant herein, without first deducting the sum of $61,338 from each monthly residual payment and etding same in escrow; and it is further =a ORDERED. that Defendant National Processing Corp. s enjoined from disbursing any residual payments to RBL Capital Group LLC or any other Defendant herein, without first deducting the sum of $561,733.35, such sum representing the amount plaskehskdates claimed by Plaintiffs in past due residual payments, and ean Ws in ste and it is Lup Cr epick fA bs Bebe kt furth Orders, | cu ue tull LAR A 4 orepetif— 70 & Bory egrole Azs i AEM eee © Te. ORDERED, 1 fen pposition papers to this Tder She se be SL filed in Part Comm. ___ and served upon Plaintiffs’ counsel via overnight deli delives? on or 2y Py ———— coed before OrT; and that Plaintiffs reply papers be tty filed in Part Comm, hd served upon Defendants’ counsel via overnight delivery on or feult OLA ie befor , 2011 and that counsel appear for oral Vi icef Ie ni b arguments on the re tehereof. egao?a ws \ 47815 EXHIBIT A _ ormLet service of a true copy of thiss Order and the papers upon which it is b: sed,together wi Ss SUN Mow > awe Complete OTS ONEupon Defendants via dblivery, -or_theiz counsel wiaEBeF, on or before c- 30 20 1%, be deemed good and sufficient service <7 Oral Argument ENTER Af Directed a JSC / TS 47815At an Ex Parte Motion Tem of the Supreme Court of the State of New CONFORMED COPY York, held in and for the County of New York, at the courthouse located at 60 Centre Street, Stateand City of New York, County of New York on the 29th day of December, 2010.PRESENT: Hon. Martin Shulman, Justicewane nnn enn enn enn ee eee!YEHUDA KELLER, ALEXANDER TY REL Index No. 652408/10 EROSEAN, YAACOV LIPSKER, LECHAIMMERCHANT SERVICES CORP., MERCHANT ORDERDEVELOPMENT GROUP, ZALMAN TO SHOW CAUSEBLACHMAN, MOSHE WISNEFSKY,YEKUSIEL CHANIN, and SHELLIEZUCKERMAN and SUSAN HILLMAN asTRUSTEES OF THE WOODS EXEMPTIONTRUST, Plaintiffs, -against-MERCHANT CAPITAL PORTFOLIOS, LLC,BUSINESS PAY MENT SYSTEMS, LLC, OLEGFIRER, LEON GOLDSTEIN, ANTHONY W.HOLDER, STAR CAPITAL HOLDING CORP.,STAR CAPITAL MANAGEMENT, LLC, STARCAPITALJV, LLC, PROCESS PINKPAYMENTS, LLC, MERCHANT PROCESSINGSERVICES CORP., UNIFIED PAYCORPORATION, MMOA INC. a.k.a. MONEYMOVERS OF AMERICA, INC., NATIONALPROCESSING COMPANY, RBL CAPITALGROUP, LLC, THE COMVEST GROUP,COMVEST INVESTMENT PARTNERS,CYNERGY HOLDINGS LLC, CYNERGY DATA,LLC, CYNERGY PROSPERITY PLUS, LLC, andDOES 1 THROUGH 100, Defendants.a---. ---. aa. 

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