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Securities and Exchange Commission v. Shainberg

March 17, 2010

SECURITIES AND EXCHANGE COMMISSION, PLAINTIFF,
v.
JOSHUA S. SHAINBERG AND LARYSSA SHAINBERG, DEFENDANTS.



OPINION AND ORDER

The Securities and Exchange Commission moves for summary judgment that defendant Joshua Shainberg's conveyance of a Manhattan cooperative apartment to Laryssa Shainberg was constructively fraudulent under New York Debtor and Creditor Law ("DCL") § 273-a*fn1 because he made it without fair consideration when he was a defendant in a civil enforcement action, from which a judgment against him remains unsatisfied.*fn2

The cooperative apartment is Apartment L806 at 385 Grand Street, New York, New York. Record ownership of the apartment is evidenced by a proprietary lease and 39 shares of stock in the Seward Park Housing Corporation ("Seward Park"). Conveyance of the apartment requires Seward Park's consent. The share certificate and proprietary lease were in the name of Joshua Shainberg's father, Nuta Shainberg.

The following events are not in dispute or have been accepted for purposes of this motion:

* On October 18, 1975, Nuta Shainberg, the owner of the apartment, died intestate, survived by his wife, Rachel, and their three sons, Abraham, Mark (also known as Morris), and defendant Joshua.

* On March 18, 1990, Rachel Shainberg died intestate, survived by the three sons. The apartment remained in Nuta Shainberg's estate, however, as no new share certificate or proprietary lease had been prepared and delivered, and Nuta Shainberg's estate had never been administered through the Surrogate's Court.

* On January 1, 1997, defendants Joshua and Laryssa

Shepherd (later Shainberg) entered into a Premarital Agreement. The SEC "accepts the authenticity, validity and purported date of the Premarital Agreement solely for the purposes of this summary judgment motion." Pl.'s Mem. 4 n.5. The Premarital Agreement states, in part (I have added the material in brackets):

1. Joshua Shainberg should transfer after marriage his interest to the cooperative at 385 Grand Street, Apartment L806, New York, N.Y. 10002.

2. As Joshua Shainberg and his brothers, Abe and Mark are attempting through the Surrogate and Probate Courts to transfer their interest in this cooperative apartment to Joshua Shainberg from the estate of his parents, it is agreed that after this process Joshua Shainberg will transfer this apartment to Laryssa Shepherd [defendant Laryssa Shainberg's maiden name]. I, Laryssa Shepherd fully understand that this property will be transferred to me and because of the Court system it may take some tim [sic]

3. Both parties acknowledge that Joshua Shainbergs [sic] brothers have both consented to this transfer to me and are doing so because of the marriage. The reason that both brothers may have to transfer their interest to Joshua before he transfers the cooperative to me is based upon various New York surrogate issues as well as the intent of the brothers to make sure that the marriage goes forth.

* On June 4, 1998, Joshua and Laryssa married.

* On November 10, 1999, the SEC filed a securities fraud action against Joshua Shainberg in the United States District Court for the Eastern District of New York.

* On October 16, 2001, Seward Park issued a share certificate and proprietary lease for the apartment in the names of Joshua and Laryssa Shainberg as joint tenants with right of survivorship.

* On April 3, 2003, Seward Park issued a share certificate and proprietary lease for the apartment in Laryssa Shainberg's name alone.

* On March 9, 2006, the SEC obtained a judgment against Joshua Shainberg in the securities fraud action, no portion of which has been paid.

The SEC contends that the October 16, 2001 conveyance of partial ownership of the apartment to Laryssa Shainberg and the April 3, 2003 conveyance of the remainder of the apartment to her were ...


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