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Geo-Group Communications, Inc. v. Chopra

United States District Court, S.D. New York

July 30, 2018




         On July 10, 2014, Plaintiff Geo-Group Communications, Inc. (“Plaintiff” or “Geo-Group”) obtained an arbitration award against Jaina Systems Network, Inc. (“Jaina”), and on April 3, 2015, Plaintiff obtained a judgment in New York State Supreme Court, New York County, confirming that award in the amount of $2, 712, 175.51. After Jaina failed to satisfy that judgment, Plaintiff's principal, Govind Vanjani, engaged with several agents and delegates of Jaina to discuss a settlement. When those conversations stalled, Vanjani began to follow the money; he now alleges that Defendants are the recipients or beneficiaries of a series of fraudulent conveyances.

         After several attempts to plead viable claims, Plaintiff filed its Third Amended Complaint (“TAC”) on February 22, 2016, based largely on Vanjani's own analysis of Jaina's bank statements, and alleged actual and constructive fraudulent conveyance under the New York Debtor and Creditor Law. Following a motion to dismiss, Plaintiff's claims against Defendants Ravi Chopra (“Chopra”), NYC Telecommunications Corp. (“NYC Telecom” and, together with Chopra, the “Chopra Defendants”), Mahendra Shah (“M. Shah”), and Vipin Shah (“V. Shah” and, together with M. Shah, the “Shah Defendants”) proceeded to discovery. The record now before the Court demonstrates that Plaintiff's claims against the Chopra Defendants and M. Shah fail as a matter of law, but that genuine disputes of material fact preclude summary judgment in favor of V. Shah.

         BACKGROUND [2]

         A. The Parties

         Geo-Group is a telecommunications company that was in the business of buying minutes from carriers and reselling those minutes to an array of customers. (Vanjani Cert. ¶ 6). Non-party Jaina was a customer of Geo-Group. (Id. at ¶ 7).

         Ravi Chopra is the President of NYC Telecom, a company that sells phone cards and phone card subscriber identification modules (or SIMs). (Chopra Decl. ¶¶ 1-3). NYC Telecom uses the trade name STI Phone Card Warehouse. (Id. at ¶ 1). Chopra is also the sole shareholder of non-party entity STI Consultants, which is the trade name for the corporation New York Main Street Consulting, Inc., and of which Jaina was a client. (Id. at ¶¶ 1, 4-5, 31). Mahendra Shah was a shareholder and the President of Jaina. (M. Shah Aff. ¶ 1). Vipin Shah is Mahendra Shah's brother; Vipin Shah's wife, Nayana Shah, was a Jaina shareholder; and Vipin Shah and his wife often transferred money to Jaina. (V. Shah Aff. ¶¶ 3-4).

         B. Factual Background

         The parties do not dispute the fact of the arbitration between Plaintiff and Jaina; that it commenced on May 30, 2013; that Plaintiff prevailed in that proceeding on July 10, 2014; or that the award was confirmed by the Supreme Court, New York County, which issued judgment on April 3, 2015, in the amount of $2, 712, 175.51. (Chopra 56.1 ¶¶ 8-10).

         The principal dispute among the parties remaining in this litigation concerns whether certain transfers from Jaina's accounts to various third parties were made to satisfy antecedent loan debts. Only one of these alleged loans was reduced to a writing; the loans were otherwise made pursuant to verbal agreements from private lenders. In consequence, the evidence of these loans rests entirely on testimony and affidavits from Jaina representatives and the third parties with which they transacted. Complicating matters further, two of the key witnesses to these loans - Jaina's CEO, Surajit Bose, and its accountant, Jagdish Alwani - are unavailable; Bose is believed to be living abroad and Alwani has passed away. Thus, while the parties have submitted bank records, and while these records verify the fact of the transactions, they do nothing to substantiate any party's explanation of why the transactions occurred. Accordingly, when reviewing the record before it, the Court remains mindful of the admonition that trial courts should not make credibility determinations to resolve a motion for summary judgment. Soto v. Gaudett, 862 F.3d 148, 157 (2d Cir. 2017).

         The TAC, and thus the parties' submissions in connection with the instant motion, centers on four groups of allegedly fraudulent transfers; the Court reviews each in turn.

         1. The Transfers to Robinson Brog

         Plaintiff alleges that Jaina improperly transferred $1, 350, 000 to the law firm Robinson Brog Leinwand Greene Genovese & Gluck, P.C. (“Robinson Brog”), from February through October 2014. (TAC ¶¶ 23-26). Bank statements and wire transfer receipts reveal that from October 2013 through September 2014, Jaina received a series of cash infusions from the entities TD Time and Vision Impex.[3] (Chopra 56.1 ¶¶ 33-47; Siddiqi Decl., Ex. A-3-A-5 (wire transfer receipts), Ex. B-1-B-8 (bank statements)). TD Time is owned by Surjeet Singh and conducts business in real estate and wholesale cell phones. (Chopra 56.1 ¶¶ 23-24). Singh testified that Jaina's accountant, Jagdish Alwani, approached him to ask for a short-term loan to help Jaina get through a “financial crisis, ” and that Singh loaned Jaina $250, 000 through a series of four transfers spanning October to December 2013. (Singh Dep. 14:12-25, 30:2-31:21, 34:2-36:11; Siddiqi Decl., Ex. A-3-A-5). Singh further testified that he expected to receive his money back in 90 days, as was customary for short-term loans in his line of business, but that he still had not been repaid at the time he testified in September 2017. (Singh Dep. 36:12-37:13).

         Later, Singh entered into a transaction to buy wholesale cell phones from an individual named Dalip Kumar, who owned a company called Vision Impex. (Singh Dep. 17:10-25). Kumar also knew Alwani and wanted to assist Jaina; when Kumar billed Singh for the cell phones, he requested that Singh pay the money he owed for the phones to Jaina directly. (Id.). Singh testified, and bank records confirm, that he made two transfers to Jaina in January 2014 to satisfy his payment to Vision Impex - one for $102, 500 and one for $211, 500. (Id. at 32:4-25, 39:25-43:21; Siddiqi Decl., Ex. A-2, C-3).

         Kumar testified at his deposition that he lent money (through Vision Impex) to Jaina on other occasions. (Kumar Dep. 13:6-8, 14:22-16:10). Kumar recalled that Alwani approached him and told him that Jaina was having financial troubles and needed money. (Id. at 28:1-18). Kumar testified that Jaina repaid those loans by sending money into an account held by the law firm Robinson Brog, which he had retained as counsel to Vision Impex. (Id. at 16:11-17:7). A. Mitchell Greene, a shareholder at Robinson Brog, averred that Robinson Brog had been retained by Vision Impex, and that the transfers identified in Paragraphs 23 to 26 of the TAC had been received in Robinson Brog's Interest on Lawyer Account on behalf of Vision Impex. (Greene Aff. ¶¶ 3-4). Bank statements reflect that in April, May, August, and September 2014, Vision Impex transferred a total of $938, 450 to Jaina. (Siddiqi Decl., Ex. C-3). In total, by October 1, 2014, Jaina received $1, 252, 450 directly from Vision Impex or from Singh on behalf of Vision Impex.

         Kumar testified that he charged interest in the amount of 1.5% per month on his loans to Jaina. (Kumar Dep. 41:4-12). From February 26, 2014, to October 1, 2014, Jaina transferred $1, 350, 000 to Robinson Brog. (Siddiqi Decl., Ex. C-3). On October 16, 2014, and on November 3, 2014, Vision Impex made additional transfers to Jaina, totaling approximately $200, 000. (Id.). Kumar testified that these loans still have not been repaid. (Id. at 15:6-18).

         Defendants are in agreement that the payments to Robinson Brog represent satisfactions of antecedent loans. At his deposition, Chopra testified that he helped to broker these loans; that he understood from either Bose or Alwani that Jaina had taken loans from TD Time and Vision Impex; and that those loans were repaid through payments to the law firm Robinson Brog. (Chopra Dep. 153:25-155:18, 161:4-9).[4] Chopra disclaims any affiliation with Robinson Brog, and attorney Greene confirmed that, to the best of his knowledge, neither Chopra nor NYC Telecom had ever been clients of or indebted to Robinson Brog. (Chopra Decl. ¶¶ 11-14; Greene Decl. ¶ 5). M. Shah offers the same explanation for these transactions. (M. Shah 56.1 ¶ b).[5] Plaintiff admits that Alwani solicited loans from TD Time, but disputes that Vision Impex had any role in these loans; Plaintiff likewise admits the fact of the wire transfers from TD Time and Vision Impex, but disputes that they represent loans from these entities. (Pl. Chopra 56.1 Opp. ¶¶ 31-51). Plaintiff also disputes the role of Robinson Brog in the alleged loan repayments. (Id.). In particular, the TAC alleged that the payments to Robinson Brog were made at Chopra's direction to satisfy a debt Chopra owed to that firm. (TAC ¶¶ 24-26). There is nothing in the record that supports this assertion.

         2. The Transfers to the LLC Entities

         The only one of the putative loans to be reduced to writing was the January 18, 2013 Commercial Loan Agreement (“CLA”) between Sanjiv Chand on behalf of his company, Kedis Enterprises LLC (“Kedis”), and M. Shah on behalf of his company, Neminath, Inc. (“Neminath”). (M. Shah 56.1, Ex. 215). The CLA memorialized a $600, 000 loan from Kedis to Neminath with 15% annual interest, and with a building Neminath owned in Williston Park, New York, posted as collateral. (Id.). The loan was personally guaranteed by M. Shah, V. Shah, and their wives. (Id.). The mortgage was recorded with the Nassau County clerk. (Id.). A wire transfer receipt from Citizens Bank shows that on January 22, 2013, Kedis transferred $600, 000 to Neminath. (Siddiqi Decl., Ex. C-18).

         Chand stated in an affidavit that he understood that the money he loaned to Neminath would be used for Jaina's benefit. (Chand Aff. ¶ 6). Plaintiff fails to respond to Chopra's allegation that the transfer from Kedis to Neminath was a loan, and indeed admits that the money was to be used by Jaina. (Pl. Chopra 56.1 Opp. ¶¶ 80-81).[6] The parties agree that $570, 000 ($600, 000, less closing costs) was transferred from Neminath to Jaina between January 22, 2013, and February 6, 2013. (Id. at ¶ 82). Chand states that he understood that Jaina - and not Neminath - would repay this loan, and that he assigned Kedis's right to collect on the loan to the entities 728 Melville Petrol LLC (“Melville”) and JMVD Hillside (“JMVD, ” and together with Kedis and Melville, the “LLC Entities”). (Chand Aff. ¶¶ 1-2, 9, 11). Chand asked Jaina to send the loan repayments to the LLC Entities directly, and he avers that the payments from Jaina to these entities that are recounted in Paragraphs 37 to 44 of the TAC were made in satisfaction of the debt incurred under the CLA. (Id. at ¶¶ 12-13). Chand also states that Kedis loaned $200, 000 directly to Jaina on December 16, 2013. (Id. at ¶ 14). A wire transfer receipt confirms this. (Siddiqi Decl., Ex. C-18). Chand states that the transfers recounted at Paragraphs 51 and 52 of the TAC were made in satisfaction of this loan. (Chand Aff. ¶ 14).

         Plaintiff alleges, and bank statements confirm, that: (i) in January 2014, Jaina made two transfers to Kedis, totaling $200, 000; (ii) on August 13, 2014, Jaina transferred $200, 000 to JMVD; and (iii) in October 2014, Jaina made a series of transfers totaling $460, 000 to Melville. (TAC ¶¶ 37-44, 51-52; Siddiqi Decl., Ex. C-3). M. Shah states that these payments were made to satisfy loan debts. (M. Shah 56.1 ¶¶ e-g). Chopra supports this statement; he testified at his deposition that he was approached by Alwani, who was looking for financing for Neminath to use for the benefit of Jaina. (Chopra Dep. 45:19-52:23). Chopra testified that Jaina was chronically short on cash, and he was told that Jaina needed money quickly. (Id.). Chopra understood that because Neminath had a building to put up as collateral, Alwani and Bose decided to seek funding using Neminath that they could then transfer to Jaina. (Id.). Chopra helped arrange the loan with Chand and received a broker's fee. (Id. at 62:4-15, 77:21-24).

         Plaintiff disputes that the payments from Jaina to Kedis were made in satisfaction of existing loan debts. (See, e.g., Pl. Chopra 56.1 Opp. ¶ 83). Plaintiff points to Neminath's 2014, 2015, and 2016 tax returns (submitted to the Court in connection with earlier motion practice) that show an outstanding $600, 000 loan receivable due and owing from Jaina even after these transfers were made. (Id.; see also Dkt. #180-3, 180-4, 180-5). Jaina's 2014 and 2015 tax returns show liabilities in excess of $600, 000, but do not itemize to whom those liabilities are owed. (Vanjani Cert., Ex. L-M).

         3. The Transfers to Chopra-Owned Entities

         Entities owned and controlled by Ravi Chopra also transferred money to Jaina. In January 2013, STI Consultants issued checks worth $29, 500 to Jaina, and in January 2014, STI Consultants wired $100, 000 to Jaina. (Chopra Decl., Ex. A-C). Copies of checks, wire transfer receipts, and Jaina's bank statements confirm these transfers. (Id.; Siddiqi Decl., Ex. C-3). In total, STI Consultants transferred $129, 500 to Jaina.

         In January, September, and October 2014, Jaina made a series of transfers to STI Consultants. (See Siddiqi Decl., Ex. C-3). Chopra states in his Declaration and testified at his deposition that Jaina only repaid $109, 000. (Chopra Decl. ¶ 27; Chopra Dep. 293:3-15). The Court's review of Jaina's bank statements reveals that Jaina transferred more than $109, 000 (even accounting for alleged transfers that the parties agree did not occur or were subsequently reversed); at the very least, the bank statements show that Jaina transferred no less than $109, 000 to STI Consultants in 2014. (See Siddiqi Decl., Ex. C-3).

         Chopra's company, Defendant NYC Telecom, also transferred money to Jaina. In January 2013, NYC Telecom issued a check for $25, 000 to Jaina, and in November 2013, it issued checks worth $145, 088 to Jaina. (Chopra Decl., Ex. F-H).[7] In 2014, NYC Telecom engaged in two transactions to sell merchandise to an entity called Tricom International, LLC (“Tricom”). (Id. at ¶¶ 36-37). Invoices show that on September 24, 2014, NYC Telecom billed Tricom $182, 500 for cell phones and SIM cards, and that on October 2, 2014, NYC Telecom billed Tricom $148, 500 for SIM cards and calling cards. (Id. at Ex. I-J). Chopra states in his Declaration that he asked Tricom to wire its payments for the merchandise directly to Jaina. (Id. at ¶ 38).

         Charan Narang, Tricom's manager, states in his Declaration that Chopra asked him to send his payments for the merchandise to Jaina instead of to NYC Telecom; Narang understood that those transfers would discharge Tricom's debt to NYC Telecom, and that Jaina would thereafter be indebted to NYC Telecom, not to Tricom. (Narang Decl. ¶ 9). Attached to the Narang Declaration are two wire transfer receipts - one is dated October 23, 2014, and shows a transfer of $182, 500 from Tricom to Jaina; the other is dated October 30, 2014, and shows a transfer of $148, 500 from Tricom to Jaina. (Id. at Ex. C-D). Jaina's bank statements reflect it received these transfers from Tricom. (Siddiqi Decl., Ex. C-3). In total, Jaina received $501, 088 directly from NYC Telecom or from Tricom on behalf of NYC Telecom.

         According to Jaina's bank statements, Jaina transferred a total of $406, 000 to NYC Telecom from October to December, 2014. (Siddiqi Decl., Ex. C-3). Chopra testified at his deposition that he caused NYC Telecom to give this money to Jaina as a loan, and that Jaina still owed him about $100, 000 on that loan. (Chopra Dep. 297:12-298:15). Plaintiff disputes that these payments to STI Consultants and NYC Telecom were meant to satisfy existing debts; in particular, Plaintiff notes the absence of writings reflecting the alleged loans from Chopra's companies to Jaina. (Pl. Chopra 56.1 Opp. ¶¶ 58-77).[8] M. Shah states that these payments were made to satisfy antecedent loan debts. (M. Shah 56.1 ¶¶ c-d).

         4. The Transfers to Defendant Vipin Shah

         Finally, the record reflects that V. Shah, whose brother and wife were Jaina shareholders, transferred large sums of money from his and his wife's bank accounts to Jaina over the years. V. Shah attaches to his Local Rule 56.1 Statement copies of checks and transaction receipts showing transfers from his accounts to Jaina, often in the tens or hundreds of thousands of dollars. (See V. Shah 56.1, Ex. 301). V. Shah also attaches documentation of a $249, 500 line of credit that he and his wife took out on their home on August 28, 2012, through Capital One Bank, as well as Capital One Bank account records showing that he drew down the full amount of the credit line on September 5, 2012, and withdrew $260, 000 from his account the next day. (Id. at Ex. 302-303). The appended documents also include receipts showing that the $260, 000 was transferred to Jaina. (Id.). V. Shah contends that he transferred nearly $2, 000, 000 to Jaina from 2010 to 2014. (Id. at Ex. 301).

         Plaintiff alleges that Jaina transferred $685, 603 to V. Shah between June 2013 and December 2014. (Vanjani Cert. ¶¶ 104-05). The Chopra Defendants' submissions do not address these transfers, as there is no allegation that they had any involvement in them. M. Shah, like V. Shah, contends that the ...

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