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August 17, 2005.

RUDOLPH J. LOWY, Plaintiff,

The opinion of the court was delivered by: JED RAKOFF, District Judge


On March 22, 2005, the Court signed a consent order confirming that defendant owes plaintiff $943,537.37 as of February 10, 2005 (with post-judgment interest continuing to run thereafter), as a result of a judgment plaintiff won against defendant in California state court on May 10, 2001. See Order, 3/22/05. Plaintiff then moved to compel defendant to make installment payments on this debt. In addition to receiving written submissions, the Court held an evidentiary hearing on June 1, 2005, at which fact witnesses Joseph Bobker, Eli Bobker, and Ben Bobker and expert witnesses Alan C. Winters and Mitchell R. LaBar testified.

For the following reasons, the Court now grants the motion and orders defendant to make installment payments to plaintiff in the amount of $8,333 per month until the judgment (including interest) is fully satisfied.

  The pertinent facts, as hereby found by the Court, are as follows:

  Defendant Joseph Bobker, trained as an architect, has had a long and prosperous career in the real estate industry, initially in Australia. Affidavit of Joseph Bobker, 7/18/03 ("Joseph Bobker Aff."), attached to Declaration of Paul J. Hyams, 2/17/05 ("Hyams Decl.") as Exhibit F, ¶ 4. In 1980, he moved to Los Angeles, where he successfully developed and re-sold numerous shopping centers, office buildings, residential apartment developments and other properties. Id. ¶ 5. In 2001, the defendant moved to New York. Transcript, 6/1/05 ("Tr."), at 7.

  Joseph Bobker has four adult sons, Eli, Ben, Avi, and Dov, but only Ben and (very recently) Eli have followed him into the real estate business.*fn1 The Bobker family has established two New York corporations — Millennium Assets, LLC ("Millennium"), in 1996, and Bluebell Assets, LLC ("Bluebell"), in October of 2001. Affidavit of Ben Baruch Bobker, 7/17/03 ("Ben Bobker Aff."), attached to Hyams Decl. as Exhibit G, ¶ 4; Tr. at 102. Ben Bobker previously attested that both companies are owned equally by all four brothers, see Ben Bobker Aff. ¶ 5, but at the evidentiary hearing he stated that he incorporated Bluebell as its sole owner. Tr. at 103. In any event, he has always been the manager of both companies and is solely responsible for their day-to-day activities. Ben Bobker Aff. ¶ 5. Eli Bobker is the sole owner of a closely related company called Checkmate Holdings ("Checkmate"), which has only become active in the past year or so, as Eli has moved from full-time legal work to part-time real estate activity. Tr. at 83-84. It is apparent that the activities of Bluebell (the most active of the three companies), Millennium (which has seen little activity since Bluebell's founding) and, now, Checkmate, are closely coordinated.

  While Ben Bobker states that he began working in the real estate field in 1996, Deposition of Ben Bobker ("Ben Bobker Dep."), 9/14/04, at 10, he provides no specifics as to his experience in the industry prior to his father moving to New York in 2001.*fn2 In the absence of such specifics, the Court concludes, notwithstanding the formation of Millennium Assets in 1996,*fn3 that Ben Bobker could not have played a major role in the family's real estate ventures prior to 2001. Until 1997, he was either attending Johns Hopkins University in Baltimore or studying in Israel toward a degree in Talmudic law. Ben Bobker Dep. at 8, 10; Tr. at 104. He became a full-time law student at Cardozo School of Law in New York in 1998, graduating in 2001. Id. At this point he was 24 or 25 years old. See Tr. at 102. While the litigation against defendant Joseph Bobker was pending in California, defendant took what the Court concludes were steps intended to try to insulate himself from an anticipated adverse judgment by, among other things, relocating to New York. On January 24, 2001, Eli Bobker purchased a house at Wildacre Avenue in Lawrence, New York (the "Wildacre property") in the name of a trust comprised of defendant Joseph Bobker's four sons (the "Bobker Family Trust"). See Indenture, attached to Hyams Aff. as Exhibit M. In March 2001, shortly before judgment was formally entered against him in California, defendant Joseph Bobker moved to New York.*fn4 Tr. at 7. Since then, he has resided at the Wildacre property.*fn5 The property has been extensively renovated over the past four years, at a cost of about $800,000. Tr. at 21. It is now valued at over two million dollars. Tr. at 6.

  Bluebell, which was incorporated soon after Joseph Bobker moved to New York, quickly became a tremendously successful real estate venture. While neither side has introduced corporate balance sheets, the Court, based on evidence plaintiff has introduced as to the profitability of certain individual deals,*fn6 finds that the company's profits have exceeded $1 million per year since 2001 and are likely to continue to do so.

  Much of this income has been used to pay defendant Joseph Bobker's personal expenses, often directly out of Bluebell's corporate funds, see Tr. at 11. The bills for credit cards in the name of defendant and his wife go directly to Bluebell's corporate offices. Id. at 13. If defendant or his wife need a check, such as for car payments, Ben Bobker signs a blank check on either Bluebell's account*fn7 or that of the Bobker Family Trust. Id. at 14, 81-82. Ben Bobker often does not know the purpose of the check or even to whom it will be made out, although he is informed of the check's amount so that he knows how much is in the account. Tr. at 112.

  Defendant acknowledges that, in this fashion, Bluebell paid about $155,000 per year in living expenses for him and his wife, see Expense Schedule, Defendant's Exhibit A; Tr. at 16. This figure does not include the mortgage payments on defendant's house, which are also paid in this fashion and which amount to an additional $65,000 per year, see Expense Schedule. Defendant thus admits to having $220,000 in annual expenses paid in this fashion. Additionally, $800,000 in Bluebell funds were used to renovate defendant's home (which, the Court finds, was done at the behest of defendant or his wife). Tr. at 21; see Plaintiff's Exhibits 1 & 2 (photographs showing transformation of Wildacre property).

  These conceded figures very probably underestimate the reality of the monies defendant receives from Bluebell. In particular, the figure of $155,000 in yearly expenses is based on a schedule prepared by defendant's wife (who did not testify at the hearing) that on its face appears problematic.*fn8 See Tr. at 48, 66. For example, the category "Insurances" lists $19,000 for 2003 but only $12,200 for 2004, but defendant could not explain if or why the premiums had dropped. Tr. at 68. Furthermore, he was unsure whether medical insurance was part of this category, whereas he was certain the category did include life insurance policies on both him and his wife. Tr. at 68, 78. Indeed, he did not rule out the possibility that his medical insurance, which (given his claim of persistent poor health) should include very high premiums, is covered by Bluebell as if he were a standard employee and thus is not included in his schedule at all. Tr. at 79. Furthermore, regardless of insurance, the line item called "Medical," which ranges between $500 and $1800 annually, is clearly too low. In addition, the schedule excludes certain known items because of the defendant's (or his wife's) very selective notion of what constitutes his expenses. In particular, in order to honor a commitment made years ago by the defendant personally, Bluebell pays about $80,000 per year to maintain a life insurance policy on the lives of Frank McHugh and Christina O'Donovan, two residents of California who are not related to the Bobkers. See Tr. at 156; Application for Life Insurance, attached to Plaintiff's Letter Brief of June 8, 2005 ("June 8 Letter") as Exhibit A. Almost 90 percent of the policy's benefits of $8.6 million are currently due to be paid to UJEF, LLC, a California corporation owned solely by Joseph Bobker, and defendant retains the right to redirect those benefits at will. About seven and a half percent of the benefits are irrevocably committed to one Yale Butler, with the remainder irrevocably committed to Ner-Israel Rabbinical College. See 1999 Policy Service Application, attached to June 8 Letter as Exhibit E; Corporate Records Report, attached to June 8 Letter as Exhibit F.*fn9

  The Court notes, in passing, that in respect to this policy, as elsewhere, the defendant's testimony was evasive and incredible. Thus, the defendant maintained that the policy was properly left off the expense list because it was an act of charity that did not benefit him or his wife. This would be faulty logic in any case, since any charitable contribution remains the defendant's personal expense so long as he is the one directing the payment. More generally, however, defendant's tortured explanations of this item speak volumes about his overall lack of candor.

  Thus, the defendant initially explained that the policy was taken out, at the urging at Mr. McHugh, to benefit "several" Jewish charities, with some money to go to his children.*fn10 Tr. at 127. Defendant first said he had made Yale Butler a beneficiary as an act of charity because Butler had three sick children and was losing his business. Id. at 157. However, he then acknowledged that he had made Butler a beneficiary in exchange for ownership of a newspaper, having given Butler the choice of accepting cash instead. Id. at 157-58.

  Defendant also testified that when he and his wife could no longer afford to make payments on the policy, they "passed it over to [their] children and told them to make the payments." Id. at 127. He said he and his wife "get no benefit . . . out of this policy whatsoever." Id. Recalled to the stand after the Court expressed skepticism as to his credibility, defendant clarified that 85 to 88 percent of the benefits would go to the Bobker Family Trust, with the remainder going to "third-party groups." Id. at 151. He said he "advised" his sons that continuing to make payments on the policy was "a great investment opportunity," but "they're free to stop making payments anytime they want." Id. at 152. However, no evidence was introduced indicating that, in fact, the beneficiary had been changed to the Bobker Family Trust, and defendant acknowledged that his wife was the person who continued making out checks (pre-signed by Ben Bobker) to pay ...

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