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HBE LEASING CORP. v. FRANK

May 4, 1994

HBE LEASING CORP., SIGNAL CAPITAL CORP., REYNA LEASING CORP., and JOHN HANCOCK LEASING CORP., Plaintiffs,
v.
HIRAM J. FRANK, SUSAN MURPHY FRANK, CARL P. GOLDSTEIN, RICHARD A. STOLOFF, GOLDSTEIN & STOLOFF, a partnership and WALLACE BERKOWITZ, as Trustee and CLEMENCE FRANK, Defendants.



The opinion of the court was delivered by: CHARLES L. BRIEANT

 Brieant, J.

 This action in which jurisdiction is based on diversity of citizenship grows out of a judgment dated November 10, 1992 in favor of plaintiffs against defendant Hiram J. Frank ("H.J. Frank") and others for a total of approximately $ 25 million dollars recovered in HBE Leasing Corp. et al. v. Frank, 88 Civ. 1724 (GLG) ("the Lawsuit") based upon fraud and RICO charges. Approximately $ 100,000 has been collected on the judgment.

 The judgment was unanimously affirmed by the Court of Appeals of the Second Circuit under Dkt. No. 93-7085 decided April 13, 1994. Circuit Judge Walker, writing for the Court, described how the defendants arranged for various egg producing farm enterprises to lease machinery after which "the defendants had systematically divested the farms of cash and liquid assets, thus making repayment of the leases impossible as a practical matter." Opinion at 5. There was "no challenge as to the sufficiency of the evidence, nor could there be on this record. . ." Id. The "defendants contended that equipment purportedly installed during the 1980's had actually been purchased in the 1960's and put in storage." Id. at 6. Familiarity of the reader with the opinion of the Court of Appeals is assumed.

 On November 9, 1992, the Hon. Gerard L. Goettel of this Court signed an order that H.J. Frank and all other defendants in 88 Civ. 1724 be enjoined pending further order from transferring any property except as allowed therein, and setting forth as exceptions "reasonable living expenses and attorneys fees . . .".

 Plaintiffs have moved for summary judgment holding certain transfers by H.J. Frank void as fraudulent conveyances. Plaintiffs' motion is granted to the extent that the following transfers are held void:

 1. The following transfers to or for the benefit of Susan Murphy Frank, wife of H.J. Frank:

 (a) Bonds valued at $ 750,000 transferred in October 1990 by H.J. Frank to Wallace Berkowitz in trust for Susan Murphy Frank;

 (b) Gifts by H.J. Frank to Susan Murphy Frank in October 1990 of a $ 43,000 yacht and $ 11,000 engagement ring;

 (c) Transfer by H.J. Frank to Susan Murphy Frank in October 1990 of a $ 383,000 residence;

 2. The transfer by H.J. Frank:

 (a) of bonds and interest "with net proceeds of $ 227,107.78 received on November 23, 1992," as described in the response filed December 22, 1993, Doc. No. 30 at page 3 of Goldstein & Stoloff and other defendants, in reply to plaintiffs' Civil Rule 3(g) statement, and

 (b) of a promissory note valued at $ 201,000 to Kevin Gleason on November 13, 1992 as set forth in Kevin Gleason's affidavit filed December 23, 1993 (Doc. No 35).

 The property mentioned above or its equivalent held by the transferees may be recovered by plaintiffs to satisfy the unpaid portion of the judgment, subject to repayment to attorneys who received sums mentioned in paragraph 2 to the extent that such sums are deemed to ...


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