Contract analysis

1. Default Judgment Against Defendant Meridian Prime Capital LLC. Pursuant to CPLR § 3215, entry of default judgment against Defendant Meridian Prime Capital LLC ("Meridian Prime") for failure to appear through counsel or otherwise defend this action following the effective withdrawal of Whitmore & Gaines LLP on November 13, 2023, and the expiration of the Court's order setting December 15, 2023 as the deadline for M

2. Summary Judgment Against Individual Defendants. Pursuant to CPLR § 3212, entry of summary judgment against Defendants Viktor Andreyevich Zelenko ("Zelenko"), Irene Maria Carvallo ("Carvallo"), and Dmitri Pavlovich Sobchak ("Sobchak") on Plaintiff's claims for common-law fraud, conversion, and alter ego/veil-piercing liability, on the ground that there is no genuine issue of material fact and Plaintiff is entitled

3. Entry of Judgment in the Total Amount of $58,900,000. Entry of a judgment in favor of Plaintiff and against all Defendants, jointly and severally, in the total amount of Fifty-Eight Million Nine Hundred Thousand Dollars ($58,900,000), comprising: (a) Compensatory damages in the amount of $47,300,000, representing the total funds misappropriated by Defendants from January 2022 through July 2023; (b) Prejudgment int

4. Other and Further Relief. Such other and further relief as this Court deems just and proper. Supporting Papers The following papers are submitted in support of this motion: (i) Memorandum of Law in Support of Plaintiff's Motion for Default Judgment and Summary Judgment (annexed hereto as Part Two); (ii) Affirmation of Priya Anand, Esq., with Exhibits A through R (annexed hereto as Part Three); (iii) Affidavit of S

I. PRELIMINARY STATEMENT Plaintiff Driftwood Absolute Return Fund Ltd. ("Driftwood" or "Plaintiff"), a Cayman Islands-domiciled hedge fund managed by Driftwood Capital Management LP ("Driftwood Management"), respectfully submits this Memorandum of Law in support of its motion for entry of default judgment against Defendant Meridian Prime Capital LLC ("Meridian Prime") pursuant to CPLR § 3215, and for summary judgment

II. STATEMENT OF FACTS The following facts are drawn from the Verified Complaint, the Affirmation of Priya Anand, Esq., and attached exhibits, the Affidavit of Sandra Hu, and the Expert Report of Natasha Everett, CPA, CFF. As set forth below, these facts are undisputed on the present record, as Defendants have failed to offer any controverting evidence. A. The Parties

1. Plaintiff Driftwood Absolute Return Fund Ltd. Plaintiff Driftwood Absolute Return Fund Ltd. ("Driftwood" or the "Fund") is an exempted company incorporated under the laws of the Cayman Islands, registered with the Cayman Islands Monetary Authority under Registration Number MC-349217. Driftwood's registered address is c/o Hargrove Corporate Services Ltd., 4th Floor, Windward House, 94 Elgin Avenue, George Town, Gra

2. Defendant Meridian Prime Capital LLC. Defendant Meridian Prime Capital LLC ("Meridian Prime") is a New York limited liability company formed on March 14, 2019, with Employer Identification Number 84-3217659. Meridian Prime's registered address is 140 Broadway, Suite 3510, New York, New York 10005. (Anand Aff. ¶ 12; Ex. I.) Meridian Prime purported to operate as an FX prime brokerage, offering institutional foreign

3. Individual Defendant Viktor Andreyevich Zelenko. Defendant Viktor Andreyevich Zelenko is a United States citizen (naturalized), born on June 3, 1978. His residence is located at 425 East 58th Street, Apt. 32F, New York, New York 10022 — a luxury condominium unit that, as detailed below, was purchased with $4.85 million in funds misappropriated from Driftwood through the entity Castellan Realty Holdings LLC. (Anand

4. Individual Defendant Irene Maria Carvallo. Defendant Irene Maria Carvallo is a United States citizen, born on November 17, 1982. Her residence is located at 88 Greenwich Street, Apt. 2704, New York, New York 10006. (Anand Aff. ¶ 19.) Carvallo is a Certified Public Accountant. Before joining Meridian Prime, she was employed as a senior accountant at Ledgerfield & Associates PC, a New York accounting firm. She serve

5. Individual Defendant Dmitri Pavlovich Sobchak. Defendant Dmitri Pavlovich Sobchak is a Ukrainian national and United States permanent resident, born on February 22, 1985. His residence is located at 301 West 57th Street, Apt. 18B, New York, New York 10019. (Anand Aff. ¶ 22.) Before joining Meridian Prime, Sobchak was employed as an FX desk analyst at Bridgemont Bank NA, where he had been recruited by and worked un

1. Offshore Transfers to Stellaris Trading Ltd.: $18.6 million. Approximately $18.6 million was transferred from Meridian Prime's accounts at Bridgemont Bank NA to accounts at Palmetto International Bank Ltd., located at 302 Bay Street, Nassau, Bahamas, held in the name of Stellaris Trading Ltd. Stellaris Trading Ltd. is a British Virgin Islands business company, Registration No. 2043871, which the fund tracing repor

2. Transfers to the Zelenko Family Irrevocable Trust: $12.4 million. Approximately $12.4 million was transferred from Meridian Prime to the Zelenko Family Irrevocable Trust, Tax Identification Number 86-6092411, established on April 8, 2021. The transfers were routed through Marlowe Asset Management Trust Company of Delaware, located at 1201 North Market Street, Suite 1600, Wilmington, Delaware 19801, which serves as

3. Real Estate Purchases Through Castellan Realty Holdings LLC: $8.0 million. Approximately $8.0 million was used to purchase two Manhattan real estate properties through Castellan Realty Holdings LLC, a Delaware limited liability company (EIN 87-1548203) that the fund tracing report identifies as controlled by Zelenko. Castellan Realty's registered agent address corresponds to Zelenko's residential address. The two

4. Cash Withdrawals and Personal Expenditures: $5.1 million. Approximately $5.1 million was dissipated through cash withdrawals and personal expenditures made by Zelenko, Carvallo, and Sobchak. The fund tracing report documents these expenditures, which include luxury goods, travel, vehicle purchases, and other personal consumption. (Anand Aff. ¶ 43; Ex. K, Kelvantis Report at 27–30.)

5. Funds Retained in Meridian Prime's Accounts: $3.2 million. Approximately $3.2 million remained in Meridian Prime's operating accounts at Bridgemont Bank NA (383 Madison Avenue, New York, New York 10179) at the time the fraud was discovered and is currently subject to the Court's preliminary injunction and order of attachment. (Anand Aff. ¶ 44; Ex. E; Ex. K, Kelvantis Report at 31.) Total. The five categories of di

III. ARGUMENT A. Default Judgment Is Warranted Against Meridian Prime Capital LLC

1. Legal Standard for Default Judgment Under CPLR § 3215. CPLR § 3215(a) provides that "[w]hen a defendant has failed to appear, plead or otherwise defend, the plaintiff may seek a default judgment against him." A default judgment may be entered upon proof of service of the summons and complaint, proof of the facts constituting the claim, and proof of the default. See CPLR § 3215(f); Woodson v. Mendon Leasing Corp.,

2. Meridian Prime's Default. Application of these principles to the undisputed facts leaves no doubt that default judgment is warranted against Meridian Prime. Withdrawal of Counsel. On October 30, 2023, Whitmore & Gaines LLP moved to withdraw as counsel for all Defendants, citing non-payment of legal fees and a complete breakdown in the attorney-client relationship. The Court granted that motion effective November 1

3. Proof of Damages. Even on a default, a plaintiff must establish damages with reasonable certainty. Stonefield Securities Indosuez, 94 N.Y.2d at 547. Driftwood has amply satisfied this requirement through multiple independent and mutually corroborating sources of proof: The Kelvantis Forensic Advisors Fund Tracing Report. The report of Natasha Everett, CPA, CFF, of Kelvantis Forensic Advisors LLC, dated November 20

1. Legal Standard for Summary Judgment Under CPLR § 3212. Under CPLR § 3212(b), summary judgment "shall be granted if, upon all the papers and proof submitted, the cause of action or defense shall be established sufficiently to warrant the court as a matter of law in directing judgment in favor of any party." The movant bears the initial burden of establishing entitlement to judgment as a matter of law by tendering s

2. The Individual Defendants Are Liable for Fraud. ##### a. Elements of Common-Law Fraud Under New York Law To establish a claim for common-law fraud under New York law, a plaintiff must prove: (1) a material misrepresentation of fact; (2) that the misrepresentation was false; (3) that the defendant made the misrepresentation knowingly or with reckless disregard for its truth or falsity (i.e., scienter); (4) that the

3. The Individual Defendants Are Liable for Conversion. Under New York law, conversion is the "unauthorized assumption and exercise of the right of ownership over goods belonging to another to the exclusion of the owner's rights." Colavito v. N.Y. Organ Donor Network, Inc., 8 N.Y.3d 43, 49–50 (2006). A conversion claim may be based on the misappropriation of specifically identifiable funds. Republic of Hait v. Duvali

4. Alter Ego / Veil-Piercing Against Zelenko. Under New York law, the corporate veil of a limited liability company may be pierced where a member has exercised such domination and control over the entity as to render it a mere instrumentality of the member, and the member has used that control to commit a fraud or wrong against the plaintiff, resulting in the plaintiff's injury. Morris v. N.Y. State Dep't of Taxation

5. Individual Liability of Carvallo and Sobchak. Even absent veil-piercing — which is primarily applicable to Zelenko as the sole member and control person of Meridian Prime — Carvallo and Sobchak are individually liable as direct tortfeasors who personally participated in the fraud and conversion. Carvallo. As CFO and a licensed CPA, Carvallo personally prepared and distributed the fabricated monthly account stateme

6. The Individual Defendants Have Failed to Oppose. The individual Defendants have failed to submit any opposition to this motion. No substitute counsel has appeared on their behalf since the withdrawal of Whitmore & Gaines on November 13, 2023. No individual Defendant has filed any papers of any kind — whether pro se or through counsel — since the answer dated September 5, 2023. The answer itself, filed by Whitmore