Contract analysis

I. STATEMENT OF FACTS A. The Parties and Relevant Non-Parties

1. Petitioner Driftwood Absolute Return Fund Ltd. Driftwood Absolute Return Fund Ltd. is a Cayman Islands exempted company (Registration No. MC-349217), with its registered address c/o Hargrove Corporate Services Ltd., 4th Floor, Windward House, 94 Elgin Avenue, George Town, Grand Cayman KY1-1104. Driftwood is a private investment fund organized for the purpose of generating absolute returns for its investors through

2. Defendant Meridian Prime Capital LLC. Meridian Prime Capital LLC is a New York limited liability company (EIN 84-3217659), with a registered address at 140 Broadway, Suite 3510, New York, NY 10005. Meridian Prime was formed on March 14, 2019, and purported to operate as an FX prime brokerage, providing FX execution, clearing, and custody services to institutional clients. Viktor Zelenko served as Meridian Prime's

3. Defendant Viktor Andreyevich Zelenko. Viktor Andreyevich Zelenko (date of birth: June 3, 1978) is a naturalized United States citizen who resides at 425 East 58th Street, Apt. 32F, New York, NY 10022. Prior to founding Meridian Prime, Zelenko was employed as a foreign exchange trader at Bridgemont Bank NA from 2006 to 2015, and thereafter at Clarendon Markets LLC from 2015 to 2018. Notably, Zelenko was the subject

4. Defendant Irene Maria Carvallo. Irene Maria Carvallo (date of birth: November 17, 1982) is a United States citizen who resides at 88 Greenwich Street, Apt. 2704, New York, NY 10006. Carvallo is a Certified Public Accountant who was previously employed as a senior accountant at Ledgerfield & Associates PC. She served as Chief Financial Officer of Meridian Prime from its inception and was responsible for, among othe

5. Defendant Dmitri Pavlovich Sobchak. Dmitri Pavlovich Sobchak (date of birth: February 22, 1985) is a United States permanent resident and Ukrainian national who resides at 301 West 57th Street, Apt. 18B, New York, NY 10019. Prior to joining Meridian Prime, Sobchak served as an FX desk analyst at Bridgemont Bank NA, where he worked alongside Zelenko. Zelenko recruited Sobchak to Meridian Prime in 2019. Sobchak was

6. Non-Party Castellan Realty Holdings LLC. Castellan Realty Holdings LLC is a Delaware limited liability company (EIN 87-1548203), with its address listed as c/o Viktor Zelenko, 425 East 58th Street, Apt. 32F, New York, NY 10022. Castellan Realty is wholly owned and controlled by Zelenko. It has no independent officers, directors, employees, or business operations apart from holding title to two New York City real p

II. THE ENTITIES OVER WHICH RECEIVERSHIP IS SOUGHT A. Meridian Prime Capital LLC Meridian Prime Capital LLC is a New York limited liability company (EIN 84-3217659), formed on March 14, 2019, with a registered address at 140 Broadway, Suite 3510, New York, NY 10005. Meridian Prime is a judgment debtor in this action, against which a default judgment in the amount of $58,900,000 was entered on January 10, 2024. Meridi

III. LEGAL STANDARD FOR APPOINTMENT OF A RECEIVER Under New York law, courts possess broad equitable power to appoint a receiver to marshal and protect assets, particularly in cases involving fraud, asset dissipation, and the need for orderly liquidation of a judgment debtor's property. CPLR § 5228(a) provides in pertinent part that "upon motion of the judgment creditor... the court may appoint a receiver of the prop

IV. ARGUMENT A. Receivership Over Meridian Prime Is Warranted The appointment of a receiver over Meridian Prime Capital LLC is warranted by the overwhelming evidence of fraud, the entity's lack of legitimate business operations, the demonstrated risk of asset dissipation, and the inability of less drastic remedies to adequately protect Driftwood's interests. Each of these factors is addressed in turn.

1. Meridian Prime Has No Legitimate Business Operations. The evidence adduced during this litigation, including the Kelvantis Forensic Advisors fund tracing report, the fabricated trade confirmations and account statements, and the findings of this Court in its January 10, 2024 decision, conclusively establishes that Meridian Prime had no legitimate business operations. It was not a bona fide FX prime brokerage. It d

2. Meridian Prime's Assets Are at Risk of Dissipation. Despite the preliminary injunction and order of attachment entered by this Court, Meridian Prime's residual assets remain at risk. The approximately $3,200,000 in frozen accounts at Bridgemont Bank NA represents only a fraction of the funds that passed through Meridian Prime. Other assets — including books and records, electronic data, potential claims against th

3. Meridian Prime's Principals Cannot Be Trusted to Preserve Assets. Zelenko, Carvallo, and Sobchak orchestrated a $47,300,000 fraud over eighteen months. Their conduct was not a single act of misappropriation, but a sustained and deliberate scheme involving the fabrication of documents, the creation of shell entities, the use of offshore accounts, and the systematic diversion of funds through multiple channels. Thes

4. A Receiver Will Facilitate Comprehensive Asset Identification and Recovery. A court-appointed receiver will be empowered to take immediate possession and control of all of Meridian Prime's assets, books, records, and accounts. The receiver will have authority to conduct a comprehensive investigation of the entity's financial affairs, to issue subpoenas and conduct examinations as necessary, and to pursue claims ag

5. The Appointment Will Aid in the Orderly Winding Down of Meridian Prime's Affairs. Meridian Prime has no ongoing business, no customers to serve, and no legitimate purposes to fulfill. It is, for all practical purposes, a defunct entity whose sole remaining function is to serve as a repository of assets (and potential assets) that may be applied toward satisfaction of the $58,900,000 judgment. A receiver will ensur

1. Castellan Realty Is the Alter Ego of Judgment Debtor Zelenko. Castellan Realty is a Delaware LLC wholly owned and controlled by Zelenko. It has no independent officers, directors, employees, or business operations. Its registered address is Zelenko's personal residence at 425 East 58th Street, Apt. 32F, New York, NY 10022. It was formed by Zelenko and exists solely for the purpose of holding title to real property

2. Castellan Realty's Real Properties Were Purchased Entirely with Misappropriated Funds. The Kelvantis Forensic Advisors fund tracing analysis traces, with specificity, the flow of $8,000,000 in misappropriated funds from Driftwood's margin deposits through Meridian Prime's accounts and ultimately to the closing accounts used to fund the purchase of the two Castellan Realty properties. The $4,850,000 used to purchas

3. The Properties Must Be Professionally Managed and Marketed for Sale. The two properties held by Castellan Realty are substantial real estate assets located in prime Manhattan neighborhoods. They require ongoing maintenance, including payment of real estate taxes, common charges, insurance premiums, and ordinary upkeep. The commercial property at 17 Wooster Street may also require management of tenant relationships

4. There Is a Risk of Encumbrance or Waste. Without the appointment of a receiver, there is a substantial and immediate risk that Zelenko will attempt to mortgage, encumber, transfer, or otherwise diminish the value of the Castellan Realty properties. Zelenko has no legitimate income stream to maintain the properties or to pay the taxes, insurance, and common charges associated with their ownership. Moreover, Zelenko

5. Driftwood Intends to Commence a Fraudulent Conveyance Action Under NYDCL §§ 273–276. Driftwood intends to file — and has since filed on March 8, 2024 — a separate fraudulent conveyance action against Castellan Realty Holdings LLC and Viktor Zelenko under Sections 273 through 276 of the New York Debtor and Creditor Law. That action will seek to establish that: (a) The transfers of $8,000,000 from Meridian Prime (th

1. The Preliminary Injunction and Order of Attachment Do Not Provide for Active Management or Liquidation. The preliminary injunction and order of attachment entered by this Court on August 8 and August 22, 2023, respectively, remain in effect. They have been effective in freezing the approximately $3,200,000 in Meridian Prime's accounts at Bridgemont Bank NA and in restraining the individual defendants from dissipat

2. Post-Judgment Disclosure Proceedings Are Insufficient. Information subpoenas and post-judgment disclosure proceedings under CPLR § 5223 are underway, and Driftwood intends to vigorously pursue all available post-judgment discovery remedies. However, these proceedings are inherently limited in scope and effect. They can compel the production of information, but they cannot compel the active management or preservati

3. Turnover Proceedings Cannot Substitute for Receivership. Turnover proceedings under CPLR §§ 5225 and 5227 are being pursued against third-party custodians, including financial institutions that may hold assets of the judgment debtors or their controlled entities. While these proceedings may yield some recovery, they cannot address the assets held directly by Meridian Prime and Castellan Realty — particularly the t

4. The Judgment Debtors Have Demonstrated That They Will Not Cooperate. The judgment debtors' conduct throughout this litigation provides no basis for confidence that they will cooperate in post-judgment enforcement efforts. Zelenko has only recently retained counsel (Kessler Brandt & Roe LLP, as of January 22, 2024), and that engagement relates solely to Zelenko's individual defense, not to any effort to satisfy the

V. PROPOSED ORDER In connection with this Petition, Driftwood respectfully submits a proposed order (attached hereto as Exhibit A) for the Court's consideration. The proposed order provides for:

1. The appointment of Barrow & Fitch Realty Inc. (Thomas Barrow, principal), 1185 Avenue of the Americas, 15th Floor, New York, NY 10036, as receiver over Meridian Prime Capital LLC (140 Broadway, Suite 3510, New York, NY 10005) and Castellan Realty Holdings LLC (c/o Viktor Zelenko, 425 East 58th Street, Apt. 32F, New York, NY 10022).

2. The vesting in the receiver of all powers described in Section IV.C above, including the power to take possession and control of all assets, manage and maintain the real properties, market and sell the real properties subject to Court approval, investigate and recover additional assets, commence and settle litigation, retain professionals, and report periodically to the Court.

3. A directive requiring all persons and entities in possession of property, assets, books, records, or accounts of Meridian Prime Capital LLC or Castellan Realty Holdings LLC to turn over such property, assets, books, records, or accounts to the receiver forthwith upon presentation of the order.

4. A prohibition on any person, entity, or agent from interfering with, obstructing, or impeding the receiver in the discharge of the receiver's duties under the order.

5. A provision setting the receiver's bond in an amount to be determined by the Court and authorizing reasonable compensation and reimbursement of expenses, subject to Court approval.

6. A requirement that the receiver file periodic accountings with the Court, no less frequently than quarterly, detailing all assets identified, recovered, and disbursed, and all actions taken in furtherance of the receivership.

7. A provision setting a return date for hearing on the Petition, or alternatively, granting the Petition on submission if no opposition is filed within such time as the Court may set. Driftwood respectfully requests that the Court schedule this matter for hearing at the earliest available date, or alternatively, grant the Petition on submission if no timely opposition is filed.

VI. CONCLUSION For all of the foregoing reasons, Petitioner Driftwood Absolute Return Fund Ltd. respectfully requests that this Court enter an order appointing Barrow & Fitch Realty Inc. (Thomas Barrow, principal) as receiver over Meridian Prime Capital LLC and Castellan Realty Holdings LLC, with the powers described herein and in the proposed order attached as Exhibit A. This relief is essential to marshal and prese

1. I am the Chief Operating Officer and Chief Compliance Officer of Driftwood Capital Management LP ("DCM"), the investment manager of Driftwood Absolute Return Fund Ltd. ("Driftwood"), the Plaintiff and Petitioner in the above-captioned action. I make this verification on behalf of Driftwood because Driftwood is a Cayman Islands exempted company and this verification is made by an officer of its investment manager w

2. I have read the foregoing Petition for Appointment of Receiver Over Meridian Prime Capital LLC and Castellan Realty Holdings LLC. The statements contained therein are true and correct to the best of my knowledge, information, and belief. The sources of my knowledge and information are the books and records of DCM and Driftwood, the documents produced or obtained during this litigation, the analyses and reports pre

3. This verification is not made by the Plaintiff directly because Dr