Contract analysis

I. CPLR § 5227 Authorizes Turnover of Trust Assets Held by a Third Party CPLR § 5227 provides the mechanism by which a judgment creditor may reach property of the judgment debtor that is in the hands of a third party. The statute provides, in relevant part: "[U]pon a special proceeding commenced by the judgment creditor, against any person who it is shown is or will become indebted to the judgment debtor, the court s

II. The Transfers to the Trust Were Fraudulent Conveyances Under NYDCL §§ 273–276 The New York Debtor and Creditor Law provides multiple, independent bases for avoiding the transfers from Meridian Prime to the Zelenko Family Irrevocable Trust. The NYDCL establishes both constructive fraud (§§ 273–275) and actual fraud (§ 276) as grounds for avoidance. The transfers here satisfy all four provisions, and the Court shou

III. The Trust Assets Are Not Shielded From Turnover Defendants may attempt to argue that the irrevocable trust structure insulates the Trust's assets from the claims of Zelenko's creditors. That argument fails for two independent reasons. A. Self-Settled Trust Doctrine. Under longstanding New York law, a settlor who creates a trust for his own benefit cannot invoke the trust form to shield assets from creditors. New

IV. The Court Should Enter a Turnover Order Directing Immediate Payment For all of the foregoing reasons, the Court should exercise its broad equitable powers and enter a turnover order directing Marlowe Asset Management Trust Company of Delaware, as trustee of the Zelenko Family Irrevocable Trust, to deliver the full $6,200,000 in trust assets — consisting of securities and cash — to Plaintiff Driftwood Absolute Ret

1. Grant this motion in its entirety;

2. Enter an order pursuant to CPLR § 5227 directing Marlowe Asset Management Trust Company of Delaware, as trustee of the Zelenko Family Irrevocable Trust dated April 8, 2021, to turn over all assets of the Trust, consisting of approximately $6,200,000 in securities and cash, to Plaintiff in partial satisfaction of the judgment entered January 10, 2024 in the amount of $58,900,000;

3. Declare that the transfers of approximately $12,400,000 from Meridian Prime Capital LLC to the Zelenko Family Irrevocable Trust constituted fraudulent conveyances under New York Debtor and Creditor Law §§ 273, 274, 275, and 276, and that the remaining trust assets are subject to execution in satisfaction of the judgment;

4. Award Plaintiff such other and further relief as the Court deems just and proper, including the costs and disbursements of this motion. Dated: New York, New York March 1, 2024 Respectfully submitted, CALDERWOOD & HARKNESS LLP CALDERWOOD & HARKNESS LLP By: ________ Priya Anand (Bar No. 4587123) Hannah Brinkley (Bar No. 5412890) 200 Park Avenue, 42nd Floor New York, New York 10166 Telephone: (212) 558-4000 Facsimile

1. I am an associate at Calderwood & Harkness LLP, counsel of record for Plaintiff Driftwood Absolute Return Fund Ltd. ("Driftwood" or "Plaintiff") in the above-captioned action. I submit this affirmation in support of Plaintiff's motion for a turnover order pursuant to CPLR § 5227 against non-party Marlowe Asset Management Trust Company of Delaware ("Marlowe Asset Management Trust"), as trustee of the Zelenko Family

2. I am admitted to the Bar of the State of New York and to the United States District Courts for the Southern and Eastern Districts of New York. I have been involved in this matter since its inception, when the complaint was filed on August 7, 2023. This matter has been assigned Calderwood & Harkness internal matter number 1024-00003. I am personally familiar with the facts and circumstances set forth herein based o

3. I make this affirmation based upon my personal knowledge and upon information contained in the files and records of Calderwood & Harkness LLP maintained in the ordinary course of business. Where statements are made on information and belief, the sources of that information and the grounds for that belief are identified. Procedural History

4. The Parties. Plaintiff Driftwood Absolute Return Fund Ltd. is a Cayman Islands exempted company (Registration No. MC-349217) managed by Driftwood Capital Management LP (Delaware File No. 7831294), a multi-strategy hedge fund with approximately $1.82 billion in assets under management as of June 30, 2023.

5. Defendant Meridian Prime Capital LLC (EIN: 84-3217659) is a New York limited liability company formed on March 14, 2019, which purported to operate as an FX prime brokerage at 140 Broadway, Suite 3510, New York, New York 10005. Defendant Viktor Andreyevich Zelenko ("Zelenko") is the managing member and CEO of Meridian Prime. Defendant Irene Maria Carvallo ("Carvallo") served as CFO, and Defendant Dmitri Pavlovich

6. On December 15, 2021, Driftwood and Meridian Prime executed an ISDA Master Agreement (2002 form) and Credit Support Annex, under which Driftwood posted $12,000,000 in initial cash margin, with additional variation margin obligations arising from mark-to-market valuations.

7. From January 2022 through July 2023, Meridian Prime, acting through and at the direction of Zelenko, Carvallo, and Sobchak, fabricated trade confirmations and monthly account statements and systematically misappropriated a total of $47,300,000 from Driftwood, consisting of $38,500,000 in margin deposits and $8,800,000 in diverted FX settlement proceeds.

8. The last fabricated monthly account statement, dated June 30, 2023, showed a purported portfolio balance of $52,100,000. Actual balances in Meridian Prime's accounts at Bridgemont Bank NA, located at 383 Madison Avenue, New York, New York 10179, totaled only $3,200,000, as confirmed by Sandra Hu, COO/CCO of Driftwood Capital Management LP, in direct communications with Bridgemont Bank NA on July 18, 2023.

9. On August 7, 2023, Driftwood filed a verified complaint in this Court, asserting claims including fraud, conversion, breach of contract, breach of fiduciary duty, and unjust enrichment.

10. On August 8, 2023, the Honorable Eleanor Vasquez, J.S.C., granted Driftwood's application for a temporary restraining order and an order of attachment in the amount of $50,000,000, freezing the assets of all Defendants and of entities under their control. A true and correct copy of the Order of Attachment dated August 8, 2023 is annexed hereto as Exhibit F.

11. On August 22, 2023, the Court granted Driftwood's motion for a preliminary injunction, continuing the asset restraints and directing Defendants to provide sworn asset disclosures.

12. Defendants' prior counsel, Whitmore & Gaines LLP (60 East 42nd Street, 20th Floor, New York, New York 10165; lead attorney Jonathan Whitmore, Esq.), was granted leave to withdraw as counsel, effective November 13, 2023, on grounds of non-payment of legal fees and an irreparable breakdown in the attorney-client relationship.

13. On January 10, 2024, this Court entered a default judgment against Meridian Prime Capital LLC and summary judgment on Driftwood's fraud and alter ego claims against all individual defendants — Zelenko, Carvallo, and Sobchak — jointly and severally, in the total amount of $58,900,000. The judgment comprises: (i) $47,300,000 in compensatory damages; (ii) $9,460,000 in prejudgment interest at 9% per annum under CPLR

14. On January 22, 2024, Kessler Brandt & Roe LLP (900 Third Avenue, Suite 1700, New York, New York 10022; lead attorney Aaron Kessler, Esq.) entered an appearance on behalf of defendant Zelenko.

15. On February 5, 2024, this Court appointed Barrow & Fitch Realty Inc. (Thomas Barrow, receiver) as receiver over the assets and operations of Meridian Prime Capital LLC and Castellan Realty Holdings LLC (EIN: 87-1548203). A true and correct copy of the Order Appointing Receiver dated February 5, 2024 is annexed hereto as Exhibit G. Fund Tracing — Transfers to the Zelenko Family Irrevocable Trust

16. Calderwood & Harkness LLP retained Kelvantis Forensic Advisors LLC, a forensic accounting firm located at 101 Hudson Street, Suite 2500, Jersey City, New Jersey 07302, to trace the disposition of the $47,300,000 in funds misappropriated from Driftwood. Natasha Everett, CPA, CFF, serves as the lead engagement partner on the Kelvantis engagement.

17. Kelvantis's forensic fund tracing analysis determined that approximately $12,400,000 was transferred from Meridian Prime Capital LLC's accounts at Bridgemont Bank NA to the Zelenko Family Irrevocable Trust's account at Marlowe Asset Management Trust Company of Delaware over the period from January 2022 through approximately mid-2023. The transfers were made in multiple installments via wire transfer. The funds or

18. Kelvantis's analysis further determined that the remaining misappropriated funds were disbursed as follows: (a) approximately $18,600,000 to Stellaris Trading Ltd. (BVI Registration No. 2043871) at Palmetto International Bank Ltd. (302 Bay Street, Nassau, Bahamas); (b) approximately $8,000,000 to real estate purchases through Castellan Realty Holdings LLC; (c) approximately $5,100,000 in cash withdrawals and pers

19. Excerpts from the Kelvantis Forensic Advisors LLC fund tracing report, including detailed schedules showing wire