Contract analysis

I. PURPOSE AND EXECUTIVE SUMMARY This memorandum is prepared for the purpose of memorializing the final disposition of Matter No. 1024-00003 and documenting the key facts, litigation outcomes, financial results, and lessons learned for firm records prior to formal file closure. It is intended to serve as the comprehensive closing record for the matter and to provide a reference document for the engagement team, firm

II. ENGAGEMENT TEAM AND CLIENT CONTACTS A. Calderwood & Harkness LLP Engagement Team The following attorneys comprised the Calderwood & Harkness engagement team for this matter: Priya Anand served as the responsible partner with overall supervisory authority for the matter, including strategy decisions, client communications, and court appearances. Douglas Carmichael served as the billing partner responsible for fee

III. PARTIES AND KEY ENTITIES A. Plaintiff. Driftwood Absolute Return Fund Ltd. is a Cayman Islands exempted company (Registration No. MC-349217) that operates as a multi-strategy absolute return fund. As of June 30, 2023, the fund had assets under management of approximately $1.82 billion. The fund is managed by Driftwood Capital Management LP, a Delaware limited partnership, whose general partner is Driftwood Capit

IV. SUMMARY OF THE FRAUD SCHEME A. The ISDA Relationship The relationship between Driftwood and Meridian Prime was governed by an ISDA Master Agreement (2002 form) that became effective on December 15, 2021. The ISDA Master Agreement was negotiated by Sandra Hu on behalf of Driftwood and Viktor Zelenko on behalf of Meridian Prime. The agreement contemplated the trading of FX forwards and vanilla FX options, with prim

V. COMPLETE LITIGATION TIMELINE A. Pre-Suit Phase (July 18 – August 6, 2023) July 18, 2023. Sandra Hu, Chief Operating Officer and Chief Compliance Officer of Driftwood Capital Management LP, discovers the fraud through a routine margin reconciliation. Direct confirmation from Bridgemont Bank NA reveals a discrepancy of $48.9 million between Meridian Prime's reported account values and actual balances on deposit. Ms.

1. Fraud — against all defendants, based on the fabrication of trade confirmations and account statements, material misrepresentations regarding the status and value of Driftwood's portfolio, and the intentional concealment of the misappropriation of funds;

2. Conversion — against all defendants, based on the unauthorized diversion and appropriation of $47.3 million in funds belonging to Driftwood;

3. Breach of Fiduciary Duty — against the individual defendants, based on their positions of trust and confidence as principals of Meridian Prime, a counterparty with custodial responsibility over Driftwood's margin deposits;

4. Unjust Enrichment — against all defendants and related entities, based on the defendants' retention of funds and assets obtained through the fraud scheme; and

5. Alter Ego / Veil-Piercing — against Zelenko, Carvallo, and Sobchak, seeking to hold the individual defendants personally liable for the obligations of Meridian Prime on the basis that Meridian Prime was operated as the alter ego and instrumentality of Zelenko and that the corporate form was used to perpetrate fraud and injustice. Simultaneously with the filing of the complaint, Calderwood & Harkness filed an ex pa

VI. JUDGMENT DETAILS The following summarizes the judgment entered on January 10, 2024: Court: Supreme Court of the State of New York, New York County (Commercial Division) Index Number: 654321/2023 Presiding Justice: Honorable Eleanor Vasquez, J.S.C. Date of Judgment: January 10, 2024 Nature of Judgment: (a) Default judgment against Meridian Prime Capital LLC on all causes of action (fraud, conversion, breach of fid

VII. RECOVERY SUMMARY A. Tabular Summary of Recoveries The following table summarizes all recoveries obtained through the post-judgment enforcement campaign: B. Recovery Metrics The key recovery metrics for the matter are as follows: • Total Judgment: $58,900,000 • Total Recovered: $41,600,000 • Recovery Rate: $41,600,000 ÷ $58,900,000 = 70.6% • Unrecovered Balance: $58,900,000 − $41,600,000 = $17,300,000 The unrecov

VIII. FEE AND COST SUMMARY A. Engagement Terms Calderwood & Harkness's representation of Driftwood was governed by an engagement letter dated July 25, 2023, executed by Marcus Ellison on behalf of Driftwood Capital Management LP in its capacity as investment manager of Driftwood Absolute Return Fund Ltd. The engagement provided for compensation on the following basis: Hourly Rates: Contingency Enhancement: In additio

IX. KEY CPLR AND NYDCL PROVISIONS UTILIZED The following statutory provisions were central to the prosecution and enforcement of this matter: CPLR § 6201 *et seq.* — Attachment. The attachment statute provided the basis for the $50 million order of attachment granted by Justice Vasquez on August 8, 2023, one day after the filing of the complaint. The order of attachment was a critical tool in preserving the $3.2 mill

X. LESSONS LEARNED A. Expedited Ex Parte Relief in FX Fraud Cases The immediate filing of an ex parte application for a temporary restraining order and order of attachment simultaneously with the verified complaint on August 7, 2023 was the single most critical tactical decision in this matter. The one-day turnaround — from filing on August 7 to the grant of the TRO on August 8 — preserved $3.2 million in Meridian Pr