MEMORANDUM-DECISION AND ORDER
Presently before the Court is Plaintiff's Motion for summary judgment against Defendants' Hudson Converting Inc., d/b/a W.S. Hudson Converting, Inc., d/b/a W.S. Hudson Converting Machinery ("Hudson Converting") and Mr. William Hudson ("Mr. Hudson") (collectively, "Defendants") (Dkt. No. 17). Coactiv Capital Partners, Inc. ("Plaintiff") brings claims for fraud, aiding and abetting fraud, unjust enrichment, violation of the Racketeer Influence and Corrupt Organizations Act ("RICO"), and conversion. Plaintiff seeks a judgment in its favor and against Defendants for compensatory damages, punitive damages, interest, costs, and attorneys' fees. For the reasons that follow, Plaintiff's Motion is granted.
In February 2008, IFC Credit Corporation ("IFC"), a non-party to this lawsuit, entered into Master Lease Agreement No. 801154 ("Lease Agreement") with Wildwood Industries, Inc. ("Wildwood"). Compl. (Dkt. No. 1), Ex. A. The Lease Agreement included a Double Folded Tri-Lock Inline Folding and Finishing System (Serial No. 2008-0096) and a Hepa Filter Production Line (Serial No. 2008-0097) (collectively, "machinery"). Compl. at 3. The Lease Agreement provided that IFC would order the machinery and send payment to a supplier that Wildwood would select. Compl, Ex. A at ¶ 3. The Lease Agreement also provided that Wildwood would make sixty (60) consecutive monthly lease payments of $43,929.00 each. Id. at ¶ 2.
In March 2008, IFC ordered the machinery from Hudson Converting, and Mr. Hudson "mailed Invoice No. 80096 in the amount of Nine Hundred Fifty Thousand Dollars ($950,000.00) to IFC for a Double Folded Tri-lock Inline Folding and Finishing System, purportedly bearing serial number 2008-0096" and "Invoice No. 80097 in the amount of Nine Hundred Sixty Thousand Dollars ($960,000.00) to IFC for a Hepa Filter Production Line, purportedly bearing serial number 2008-0097." Compl. at 4; Compl., Exs. B and C. In April 2008, IFC sold and assigned its interest in the lease pursuant to the terms of the Lease Agreement to Plaintiff's predecessor, which changed its corporate structure and name in August 2008 to "CoActive Capital Partners, Inc." Compl., Exs. D, E, and F. Shortly thereafter, IFC and Wildwood concluded "an Assignment of Payments agreement whereby IFC notified Wildwood that IFC had assigned to Plaintiff CoActiv its rights to lease payments from Wildwood under the Lease Agreement." Compl at 5; Ex. G.
In April 2008, Wildwood issued a Certificate of Acceptance that purported to acknowledge receipt of the machinery from Hudson Converting. Compl., Ex. H. Plaintiff, which had now been assigned IFC's rights and responsibilities in the Lease Agreement, sent $1,910,000.00 to Hudson Converting as payment for the machinery. Compl., Ex. I. On that same day, Defendants wired $500,000 to Wildwood. Compl., Ex. J. After Defendants had received several more payments from other entities who were the victims of this scheme, Defendants wired Wildwood additional payments for $700,000.00 (on April 11), $800,000.00 (on April 14), $850,000.00 (on April 16), $800,000.00 (April 23), $1,000,000 (on April 28), and $500,000 (on April 30). Compl., Ex. K.
Wildwood stopped sending its required monthly payments to Plaintiff in November 2008, and on March 5, 2009, an involuntary Chapter 11 petition was filed against Wildwood in the U.S. Bankruptcy Court for the Central District of Illinois. Compl. at 6. By March 5, 2009, Wildwood owed Plaintiff $2,537,522.50. This bankruptcy proceeding revealed that no machinery with the serial numbers 80096 or 80097 could be located. Compl. at 7. It was also revealed that Wildwood had submitted UCC filings for $130,000,000.00 for Wildwood equipment, despite the fact that the purchase price of this equipment was approximately $20,0000. Compl. at 6.
In March 2010, an action was filed in the United States District Court for the Central District of Illinois (United States of America v. William S. Hudson, Criminal No. 10-10043), in which Mr. Hudson was charged with conspiracy to commit offenses against the United States in violation of 18 U.S.C. § 1956. Plaintiff's Motion, Ex. G. Shortly thereafter, Mr. Hudson agreed to have the case transferred and disposed of in the Northern District of New York, and communicated his intention to plead guilty to the charges pending against him in Illinois. Plaintiff's Motion, Ex. H.
On April 20 2010, in United States of America v. William S. Hudson, No. 1:10-CR-00163, which had been filed in the United States District Court for the Northern District of New York, Judge Thomas J. McAvoy held a Rule 20 Arraignment and Plea hearing, in which Mr. Hudson plead guilty to the charges that were brought against him in Illinois. Plaintiff's Motion, Ex. C. In this proceeding, Mr. Hudson stipulated to the following:
Number one. Wildwood Industries Inc., hereafter "Wildwood", was a company located in Bloomington, Illinois that, among other things, manufactured lawn, leaf, and vacuum bags.
Two. The defendant, William S. Hudson, was President of W.S. Hudson Converting located in Queensbury, New York. Among other things, Hudson Converting produced manufacturing machinery used by Wildwood.
Three. On or about March 5, 2009, creditors filed an involuntary bankruptcy petition as to Wildwood. Two months later, Wildwood's assets were sold for approximately $2 million.
Four. Beginning in or about 2000 and continuing to in or about April 2009, at Bloomington, in the Central District of Illinois and elsewhere, William S. Hudson, defendant herein, knowingly combined, conspired, confederated and agreed with others known and unknown to the grand jury to commit offenses against the United States in violation of Title 18, United States Code, Section 1956, to wit: To knowingly conduct and attempt to conduct financial transactions affecting interstate and foreign commerce which involved the proceeds of a specified unlawful activity, that is mail fraud, in violation of Title 18, United States Code, Section 1341, wire fraud, in violation of Title 18, United States Code, Section 1343, and bank fraud, in violation of Title 18, United States Code, Section 1344, knowing that the transactions were designed in whole and in part to conceal and disguise the nature, location, source, ownership, and control of the proceeds of said specified unlawful activity and that while conducting and attempting to conduct such financial transactions knew that the property involved in the financial transactions represented the proceeds of some form of unlawful activity in violation of Title 18, United States Code, Section 1956(a)(I)(B)(i).
Five. The manner and means used to accomplish the objectives of the conspiracy included, among others, the following:
A. It was a part of the conspiracy that Hudson generated false invoices on behalf of Hudson Converting for machinery that was used by Wildwood to obtain lease funding. The machinery was not actually purchased from Hudson Converting, but instead was already owned by Wildwood. In truth and fact, Hudson Converting did not build or ship any machinery to Wildwood at the times material hereto.
B. It was further a part of the conspiracy that Wildwood provided the false invoices to brokers who presented the invoices, along with Wildwood's reviewed financials and tax returns, to financial institutions and private lenders, hereinafter collectively referred to as lenders, in order to obtain lease funding for the non-existent equipment. In truth and fact, the reviewed financials provided to lenders were based on false and fraudulent information, including the representation that Wildwood was a very profitable company.
C. It was further a part of the conspiracy that after the lender paid Hudson Converting for the non-existent machinery, Hudson kept a portion of the funds and forwarded the balance of the funds to Wildwood's account through a ...