MEMORANDUM OPINION AND ORDER
LAURA TAYLOR SWAIN, District Judge.
Following entry of judgment in its favor in the above captioned-actions, Universitas Education, LLC ("Petitioner") seeks, pursuant to New York Civil Practice Law and Rules ("CPLR") section 5225(b) and Federal Rule of Civil Procedure 69, the turnover of assets by respondent Daniel E. Carpenter and certain of his affiliated entities (docket entry no. 308), as well as preliminary injunctive relief pending determination of the turnover motion. The Court entered an order to directing Mr. Carpenter to show cause as to why he should not be preliminarily enjoined, pending determination of the turnover motion, from "directly or indirectly, causing, making, permitting or suffering any sale, assignment or transfer of, or any interference with, any asset or property of his, and any asset or property of any company, corporation or entity (including any trusts) in which he has a direct or indirect interest or control: provided that Mr. Carpenter be permitted to expend and/or transfer up to an aggregate amount of $20, 000.00 per month for ordinary expenses of his or one of his entities with any such payments or transfer to be reported, in writing, with supporting documentation to [Petitioner's] counsel within seven (7) days of such payment/transfer being made."
The Court has jurisdiction of the action pursuant to 28 U.S.C. §§ 1331, 1332(a)(1) and 1441.
The Court held an evidentiary hearing on the preliminary injunction motion on November 22, 2013. Post-hearing submissions were completed on December 16, 2013. The Court has considered carefully all of the submissions and arguments of the parties, the documentary evidence, including transcripts of deposition testimony, and the courtroom testimony.
In accordance with Federal Rules of Civil Procedure 52(a) and 65, this Memorandum Opinion and Order constitutes the Court's findings of fact and conclusions of law. To the extent any finding of fact includes conclusions of law it is deemed a conclusion of law, and vice versa. For the following reasons, the motion for a preliminary injunction is granted.
FINDINGS OF FACT
These cases arise out of a longstanding dispute over the payment of the proceeds of two life insurance policies obtained by the now-deceased Sash A. Spencer, the former Chief Executive Officer of Holding Capital Group, Inc., in connection with the Charter Oak Trust Welfare Benefit Plan ("Charter Oak Trust, " or "Plan"). Mr. Spencer named Petitioner the sole, irrevocable beneficiary of his Plan death benefit comprising the proceeds payable under the two life insurance policies, whose face values totaled $30 million (the "Life Insurance Proceeds"). Nova Group, Inc. ("Nova") served as trustee and plan administrator of Charter Oak Trust. In May 2009, after receiving payment of the Life Insurance Proceeds, Nova denied Petitioner's death benefit claim. Petitioner challenged the denial through a binding arbitration proceeding commenced on June 17, 2010 (the "Arbitration"). The arbitrator awarded Petitioner the entire proceeds, less $4.02 million in policy financing-related fees and expenses owed to Grist Mill Capital, LLC ("Grist Mill"), an affiliate of Nova, Charter Oak Trust and Mr. Carpenter, plus 10% prejudgment interest. (Ex. 18 at pg. 14, January 2, 2011). On June 7, 2012, this court entered judgment confirming the $26, 558, 308.36 arbitration award issued on January 24, 2011, plus interest at an annual rate of ten percent, for a total judgment against Nova of $30, 181.880.30 (the "Judgment"). Following the entry of the Judgment, Nova filed a motion to dismiss Universitas' confirmation petition for lack of subject matter jurisdiction; this Court summarily denied that motion as "wholly without merit" on October 5, 2012. The Second Circuit denied Nova's subsequently-filed appeal, summarily as well. Universitas Educ., LLC v. Nova Grp., Inc., No. 12-3504, 513 F.Appx. 62, 64 (2d Cir. 2013).
On March 4, 2013, the Court entered an order to show cause regarding Petitioner's application for turnover of the proceeds of property and casualty insurance on certain real property purchased by a Carpenter-affiliated entity with funds traceable to a portion of the portion of Life Insurance Proceeds. The property and casualty insurer, Mr. Carpenter, his wife, and their affiliated entity, Moonstone Partners, LLC, appeared as respondents to the order to show cause. After evidentiary proceedings, this Court granted relief in an order entered on November 20, 2013. Universitas Educ., LLC v. Nova Grp., Inc., 11 Civ. 1590, 2013 WL 6123104 (S.D.N.Y. Nov. 20, 2013) (the "November Order").
The November Order addressed some of the same transactions that are the subject of this proceeding. In the November Order, the Court found that Mr. Carpenter controlled, during the periods relevant to these transactions, Nova, Charter Oak Trust, Grist Mill, Grist Mill Trust ("GM Trust"), Grist Mill Holdings ("GM Holdings"), Phoenix Capital Management, LLC ("Phoenix"), and Caroline Financial Group, Inc. ("Caroline Financial"), as well as hundreds of other related entities. In the November Order, the Court held that two May 2009 transfers, aggregating more than $10.8 million, from Charter Oak Trust to Grist Mill were fraudulent conveyances of a portion of the Life Insurance Proceeds. November Order at *12. The Court also found that Mr. Carpenter, through a variety of entities he controlled, retained that portion of the Life Insurance Proceeds for his own benefit. November Order at *2-3. The Court hereby incorporates by reference all of the findings of fact set forth in the November Order. On October 27, 2009, a further $19.8 million was transferred from Charter Oak Trust to Grist Mill. (Ex. 1 at 348-349.) At the evidentiary hearing on the earlier turnover application, Peter A. Goldman, Esq., testifying on direct examination by Petitioner in his capacity of "agent to Grist Mill, " stated that he could not explain the second transfer from Charter Oak Trust to Grist Mill, and that it was listed in Grist Mill's ledger as an "unknown deposit." (May 9 Tr. at 118:17-25.)
Mr. Carpenter's Role in the Underlying Arbitration Proceeding
The instant preliminary injunction and turnover proceedings constitute efforts by Petitioner to enforce and realize upon the judgment that was entered against Nova upon confirmation of the Arbitration award. Among other defenses, Mr. Carpenter asserts that he is not bound by the decision rendered by the Arbitrator because he was not a party to the Arbitration, noting that he had originally been named as a party to the Arbitration but that the petition had been dismissed as against him before the award was rendered. (Nov. 22 Tr. at 42:2-9.) Petitioner has presented persuasive evidence that Mr. Carpenter was nonetheless deeply involved in the arbitration, as architect and financier of Nova's claims and defenses. Indeed, Mr. Carpenter admitted that he had paid for the litigation through which Nova had obtained payment to Charter Oak Trust of the Life Insurance Proceeds to which Petitioner made claim in the Arbitration. (Nov. 22 Tr. at 33:2-12.) Mr. Carpenter was initially named as a party to the Arbitration, and he communicated with Nova's attorneys, Updike Kelley & Spellacy P.C. ("Updike"), no fewer than nine times in the month leading up to the December 2010 Arbitration hearings. (Ex. 54.) In fact, portions of the fees for the Arbitration were paid to Updike with checks from Audit Risk Indemnity Association, LLC, and Grist Mill that were signed by Mr. Carpenter. (Ex. 54 at 53-56.) Updike's records reflect that these payments were "For Payment [sic] of Nova Group, Inc." (Id.) The Court finds that Mr. Carpenter controlled material aspects of the affairs of Charter Oak Trust and Nova prior to and during the Arbitration and, in particular, that he controlled Nova's litigation strategy. Furthermore, insofar as Nova raised defenses and claims of rights to payment in the arbitration that are substantially identical to such claims and defenses raised here by Mr. Carpenter, the record of the Arbitration proceeding confirms that Mr. Carpenter's interests were represented through Nova, notwithstanding the dismissal of the petition as against him for that phase of the proceeding.
Mr. Carpenter's Testimony Regarding the Transfers of the Life Insurance Proceeds to Grist Mill
Mr. Carpenter has offered several explanations as to why his transfer and retention (directly and/or through his controlled entities) of Life Insurance Proceeds - the $10.8 million transfers in May 2009, and the $19.8 million transfer in October 2009 - were proper. (See, e. g., Nov. 22 Tr. at 26:22-27:24.) Mr. Carpenter testified, among other things, that Charter Oak Trust owed Grist Mill $60 million before the transfers of money it received in May and October 2009. (Nov. 22 Tr. at 23:25; 24:1-3.) He further testified that Grist Mill had a security interest in all of the assets of Charter Oak Trust. Mr. Carpenter had proffered testimony to the same effect in the earlier turnover proceeding. In the November Order, the Court explicitly rejected Mr. Carpenter's testimony regarding the $60 million loan and security interest as incredible, and his more recent testimony is no more persuasive. See November Order at *10. At the November 22, 2013, hearing, Mr. Carpenter again testified that the debt and security interest allowed Grist Mill to retain the benefit of the Spencer life insurance policies. Mr Carpenter's testimony in this regard was neither consistent with the documents of record nor credible. The arbitrator had rejected similar contentions advanced by Nova, and held, in the confirmed Arbitration award, that the total amount payable to Grist Mill from the Life Insurance Proceeds was only $4.02 million, and that the remainder of the Life Insurance Proceeds, plus interest, were payable to Petitioner. (See Ex. 18 at 5-6, 9, 13-14.)
Taking another tack entirely, Mr. Carpenter also testified at the preliminary injunction hearing that Universitas was entitled at best to only $1.8 million because Mr. Spencer had entered into a secret deal with Grist Mill, in which he had agreed to sell his interest in the life insurance polices to Grist Mill for $1.8 million. (Nov. 22 Tr. at 49:18-22.) Nova had also proffered this theory during the Arbitration, and it was explicitly rejected. (Ex. 18 at 5.) The arbitrator found that "there is no credible evidence that any agreement was ever consummated arising out of the discussions Mr. Spencer had before he died with Grist Mill Capital regarding the possible assignment of the beneficial interest under the policies to Grist Mill Capital in ...