Preview
FILED: NEW YORK COUNTY CLERK 01/03/2024 01:30 PM INDEX NO. 653822/2023
NYSCEF DOC. NO. 90 RECEIVED NYSCEF: 01/03/2024
SUPREME COURT OF THE STATE OF NEW YORK
COUNTY OF NEW YORK
Index No.: 653822/2023
BROAD STREET GLOBAL FUND SCSP, BROAD
STREET GP II S.'AR.L., CJS TECHNOLOGY
SELECT MANAGEMENT LLC, CJS
TECHNOLOGY SELECT FUND LLC, CJS
FINANCIAL CORP, DAVID FEINGOLD and
FEINGOLD MORGAN SANCHEZ LLC,
Plaintiffs,
Motion Sequence #s 001 and 002
-against-
RCG ADVANCES, LLC (F/K/A RICHMOND
CAPITAL GROUP, LLC), ROBERT GIARDINA
and RICHARD CARDINALE,
Defendants.
PLAINTIFFS'
MEMORANDUM OF LAW IN OPPOSITION
DEFENDANTS'
TO MOTIONS TO DISMISS OR STAY THIS ACTION
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TABLE OF CONTENTS AND AUTHORITIES
PRELIMINARY STATEMENT ......................................................................1
BACKGROUND..........................................................................................4
The Parties.........................................................................................4
The Escrow Agreement Expressly Contemplates Investments In A Fund.............5
RCG Monitors Fund Investment..............................................................6
FMS Resigns As Escrow Agent In Face Of Guarantee And Multiple Actions.......8
The Liquidation Order In The FTC Action And Broad Street Intervention.........8
RCG Pursues Claims In FTC Action.........................................................9
Court Orders Date For Liquidation Of Portfolio R2 And Order Complied With..11
RCG Seeks To Challenge The Liquidation It Demanded................................11
The Court Denies RCG's Claims.............................................................12
RCG Issues Bogus Demand Letter............................................................13
First-Filed Action In This Court..............................................................13
Second-Filed Action In Florida...............................................................14
Defendants Admit Florida Federal Action Barred........................................14
GOVERNING STANDARDS..........................................................................15
ARGUMENT.............................................................................................16
Defendants'
I. Arguments Are Contradictory..........................................16
II. This First-Filed Action Is More Comprehensive - Affords Full Relief..........17
IIL This Action Is First-Filed Action, Not Forum Shopping, Not Advisory
Opinion..................................................................................18
IV. Defendants Not Entitled To A Stay.....................................................19
V. Cardinale's Additional Arguments For Dismissal Fail.............................19
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CONCLUSION........................................................................................21
AUTHORITIES
Cases
31(ISt
Anonymous v. Anonymous, 165 A.D.3d 19, Dept 2018)..................................21
(4th
Red Barn Country, LLC v. Trombley, 120 A.D.3d 1537, 1538 Dept. 2014)..............15
Syncora Guar. Inc. v. .LP. Morgan Sec. LLC, 110 A.D.3d 87, 95 (1st Dept 2013)...........15
U S. Bank, N.A. v. Deshuk-Flores, 163 A.D.3d 603, 605 (2d Dept 2018).....................15
Statutes and Rules
CPLR 3211(a)(4)
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PRELIMINARY STATEMENT
Plaintiffs BROAD STREET GLOBAL FUND SCSP, BROAD STREET GP II S.'AR.L.,
CJS TECHNOLOGY SELECT MANAGEMENT LLC, CJS TECHNOLOGY SELECT FUND
LLC, CJS FINANCIAL CORP, DAVID FEINGOLD ("Feingold") and FEINGOLD MORGAN
SANCHEZ LLC ("FMS") (collectively, "Plaintiffs"), respectfully submit this memorandum of law
in opposition to Defendants RCG ADVANCES, LLC (F/K/A RICHMOND CAPITAL GROUP,
LLC) ("RCG") and ROBERT GIARDINA's ("Giardina") motion to dismiss or stay this action
[NYSCEF 21 - Mot. Seq. and Defendant RICHARD CARDINALE'S
27, 001] ("Cardinale")
(Cardinale with RCG and Giardina, collectively as "Defendants") motion to dismiss or stay this
action mostly incorporating RCG/Giardina's motion [NYSCEF 28 - 29, Mot. Seq. 002].
This first-filed action seeks a declaratory judgement that a previously adjudicated dispute
over an Escrow Agreement bars Defendants from relitigating those claims again as initially
threatened in a demand letter and then, after this action was filed, in a lawsuit in Federal Court in
Florida. The parties or their privies previously litigated the dispute in the action styled Federal
Trade Commission v. RCG Advances, LLC, et al., Civ. No. 1:20-cv-04432-JSR (SDNY)(Hon. Jed
S. Rakoff)(the "FTC Action") and the court there found in favor of Plaintiffs. While Defendants
now claim that Feingold/FMS were never parties to the FTC Action and the claims at issue were
not determined there, it told Judge Rakoff an entirely different story:
The Escrow Funds are the cornerstone of the June 2, 2022 Stipulated Order
pursuant to which the underlying action was settled (the "Settlement Order"). See
ECF 127. The Settlement Order includes provisions regarding not only the Escrow
Funds generally, but also limitations on how and when they can be used, as well as
their ultimate disposition. See id. at § VI. The Settlement Order further provides
that the Court retains jurisdiction to ensure enforcement. Id. at § XIII ("[T]his
Court retains jurisdiction of this matter for purposes of construction, modification,
and enforcement of this Order."). See also ECF 157 at 10:3-5 (counsel for Feingold
and Broad Street Global Fund and associated entities ("Broad Street")
acknowledging that that the Court retained jurisdiction over elements of the
1
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Settlement Order). The Court, therefore, has continued jurisdiction over the
Escrow Funds, which are an integral part of and necessary to the enforcement of
the Settlement Order. Moreover, Broad Street and Feingold have appeared in
this action through counsel. See, e.g., ECF 156, at p. 1 and n.1 (noting that the
Weltz firm is appearing on behalf of both Broad Street and Feingold in this case).
Both Broad Street and Feingold also (separately) served and responded to
discovery demands in this case. Thus, there can be no dispute that the Court
has the authority to order them to properly account for and return the missing
Escrow Funds.
On January 6, 2023, without explanation, Broad Street and Feingold wired landolo
$620,000.00-a mere 15.5% of the $4,000,000.00 that Broad Street had repeatedly
"R2" - and
valued RCG's interest in the account having done so, maintain that they
have complied with the Compliance Order.
Feingold is liable to both account for and return the misappropriated Escrow
Funds. He was involved in negotiating the terms of the settlement with the FTC
and knew that the Escrow Funds would be needed to comply therewith (and to settle
other litigations). Feingold thus owed a fiduciary duty not only to RCG, but also
to the FTC and other intended beneficiaries of the Settlement Order. . . .In breach
of his duties, Feingold wrongly transferred and converted the Escrow Funds and
then abruptly resigned as RCG's escrow agent the day after the FTC requested that
he sign a guaranty with respect thereto. . . . In sum, Defendants respectfully request
that the Court set a hearing, in accordance with, inter alia, its retention of
jurisdiction over the Settlement Order (ECF 127), at which Defendants will
seek a full and proper accounting and return of the missing S4,483,072.75 of
Escrow Funds.
Defendants demanded and obtained an order from Judge Rakoff requiring liquidation of
RCG's investments made in an escrow account in strict compliance with the terms of an Escrow
sale"
Agreement even after being warned by Judge Rakoff that a "fire could result for less than
full value. Judge Rakoff ordered the forced sale of the remaining escrow account assets (a limited
interest in a real estate portfolio known as Portfolio R2 - the $4 million) at the demand
partnership
of Defendants themselves.
Disappointed over the results of the court-ordered sale that obtained less than $4 million,
Defendants again went back to Judge Rakoff with false allegations of misappropriations and Judge
Rakoff again denied their specious claims. Indeed, Judge Rakoff concluded that Defendants "got
2
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it"
what they wanted and now regret getting after they were "warned that the assets in this account
value" effected"
...could not be sold for their full market and "[n]ow [that] the liquidation has been
swindled"
they "claim they have been but the evidence shows "Defendants received what they
sale."
were due from a disappointing
"investment" "fund"
As demonstrated to Judge Rakoff, an in a was made by wires sent
directly to the investment fund pursuant to the exact terms of the Escrow Agreement, RCG actively
monitored and directed the investment activity over the course of years, RCG demanded and
obtained a court-ordered sale of the property (i.e., the so called "Misappropriated Funds") after
sale,"
being warned of a potential "fire RCG kept the proceeds of the court-ordered sale, and the
court in the FTC Action noted the extensive sale efforts and found no wrongdoing.
Nonetheless and months later, on July 28, 2023, Defendants ignored the court-ordered sale
they demanded and obtained in the FTC Action and bizarrely made a written demand for the return
$4,483,072.75."
of the same property sold pursuant to a court-ordered sale "in the amount of In
2862
response to the fraudulent July letter, on August 8, 2023 at 1:55 p.m., Plaintiffs promptly
commenced this action by Summons with Notice seeking a declaratory judgment based upon the
determinations made by Judge Rakoff in the FTC Action. This action was commenced in this
Court because Defendants are all New York citizens and it includes all of those involved in the
intervention in the FTC Action.
Thereafter, on the same day and in response to Plaintiffs filing of this action, RCG filed an
action in the Southern District of Florida styled RCG Advances, LLC v. David Feingold and
Feingold Morgan Sanchez LLC, Case No. 9:23-cy-81128-AMC (SD Florida)(the "Florida Federal
Action"), cutting and pasting the issues and claims adjudicated in the FTC Action into the
complaint in the Florida Federal Action. Indeed, the complaint there includes the exact purported
3
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- - the "misappropriated" - - not
issues and claims purportedly $4 million in funds long ago decided
Defendants'
against the Defendants by Judge Rakoff. As demonstrated in more detail below,
motions to dismiss or stay this action should be denied because this first-filed action is more
Defendants'
comprehensive than the Florida Federal Action, and includes all necessary parties in
home State and will afford full relief.
BACKGROUND1
The Parties
Feingold is a businessman and an attorney in good standing licensed for over 30 years and
Plaintiffs'
FMS is a limited liability company law firm. NYSCEF 8, Complaint ("C"), ¶¶ 7-8.
Plaintiff entities are various investment entities which intervened in the FTC Action (collectively,
Street"
"Broad or "Broad Street Intervenors"). C, ¶¶ 9-13. RCG (f/1da Richmond Capital Group,
LLC) is owned by Giardina and Cardinale (both NY citizens) and Jonathan Braun ("Braun"). C,
¶¶ 15-18.
RCG and Giardina recently settled with the FTC in the FTC Action wherein the FTC
alleged that defendants there threatened physical violence to compel consumers to pay usurious
loans. C, ¶ 19. RCG, Giardina and Braun are likewise also defendants in People of the State of
Cty).2
New York v. Richmond Capital Group LLC, et al., Index No. 451368/2020 (Sup. Ct, NY
Braun is reportedly a notorious drug smuggler who had been serving a 10-year jail sentence until
commuted. Id. Cardinale is currently being sued for fraud and wrongdoing by investors and also
1
See Affidavit of Irwin Weltz submitted concurrently herewith which includes, among other things,
Feingold/FMS's motion to dismiss RCG's Corrected First Amended Complaint, dated October 15, 2023
(the "FAC"), in the Florida Federal Action, the ECF docket from the FTC Action (the "FTC ECF"), and
other documents or information from the FTC Action.
2 - OW-sn1all-businesses-harmed-
https://ag.ny.cov/press-release/2023/attorn 3-Bla
predatory#:~:text=New%20York%20%E2%800093°o20 e 20 York%20Attorney,Giardina%2C%20and%20Mich
elleM20GreeeM2C%20for
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by former business associates, including Feingold. Id. Interestingly, RCG waited years after the
Escrow Agreement and investments were made and only after Feingold sued one of its owners
(Cardinale) for fraud in another Federal case before miraculously claiming a loss of escrow funds.
Id. at ¶ 20.
The Escrow Agreement Expressly Contemplates Investments In A Fund
The Escrow Agreement, dated December 10, 2018 (the "Escrow Agreement")(C, at Ex. A),
"investments" "fund."
specifically contemplated that the funds could be used for in a Thus, the
made,"
Sixth paragraph of the Escrow Agreement refers to "account, fund or investment and the
Seventh paragraph states,."We are further authorized to place the Money in an interest bearing
account,fund or investments during the term of this escrow relationship and .... shall not be held
responsible for any investment gains or losses generated by the Money and we are authorized to
same."
so invest said Money upon receipt of the (emphasis supplied). Thus, the entire premise of
Defendants' - that
arguments investments could not be made, or only certain investments could be
made - is untrue and belied the face of the document which was likewise the focal
completely by
point before Judge Rakoff. Money sent to an investment fund exactly as stated and authorized in
the Escrow Agreement. C, at ¶¶ 23-26.
"investment"
Defendants contend that the language of the Escrow Agreement authorizing
"fund"
in a somehow conflicts with the language that "to be used to pay any fines, settlements,
owed."
judgements, pending or threatened claims or any potential liabilities or monies There is
no conflict here at all though - - it is manufactured. Had Defendants wished to
obviously simply
deposit its funds with a bank or place parameters on the nature of investments, as they now in
hindsight suggest, they simply would have stated as much in the Escrow Agreement or just
deposited the funds with a bank.
5
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But Defendants, owned by experienced securities brokers, RIA owners and real estate
developers (WD, Ex. JJ, FTC ECF 173, 173-9) who obviously kept track of their funds and
investments, did neither. In fact, in the email from Feingold to Giardina, dated December 10,
discussed"
2018, at the very first point it states that the funds would be "invested as (WD, Ex. FF,
FTC ECF 169-3) and consistent with that discussion the first wire was sent to CJS Technology
Select Management (the "Broad Street Fund") a private investment fund, on December 12, 2018
- fund).3
(WD, Ex. JJ, FTC ECF 173, 173-6 showing wiring proofs of all funds to investment
the stayed in that investment fund for years and after the multi-million-
Thereafter, money
dollar settlement with the FTC by RCG for fraud and their purported inability to pay the FTC, it
was at that point (and after Feingold sued Cardinale) that the Defendants went to the Federal Judge
overseeing the FTC Action and complained that the FTC could not be paid due to the fault of
RCG's former attorney, Feingold, and the alleged failure to follow the Escrow Agreement. C, at ¶
26.
RCG Monitors Fund Investment
RCG fully controlled the disposition of these escrow funds. The funds were initially
invested in a fixed income portfolio (known as Portfolio F1) but that changed during the stock
market correction which began in approximately March 2020 when Giardina demanded that more
of the funds be invested in real estate due to stock market concerns. WD, Ex. Y, FTC ECF 162-1,
¶ 2. The remainder of the funds ($4 million) were placed in Portfolio R2 of seven ongoing, but not
3
Feingold did not hold any position with the investment fund until years later. WD, Ex. JJ, FTC ECF 173,
173-7, Feingold Decl. at ¶ 2 (Feingold did not join Broadstreet, Inc. until July 2022, years after the
investments were made in December 2018/early 2019, at Ex. JJ, FTC ECF 173, 173-2). Further,
FTC/NYAG litigation commenced much
Preview
FILED: NEW YORK COUNTY CLERK 01/03/2024 01:30 PM INDEX NO. 653822/2023 NYSCEF DOC. NO. 90 RECEIVED NYSCEF: 01/03/2024 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK Index No.: 653822/2023 BROAD STREET GLOBAL FUND SCSP, BROAD STREET GP II S.'AR.L., CJS TECHNOLOGY SELECT MANAGEMENT LLC, CJS TECHNOLOGY SELECT FUND LLC, CJS FINANCIAL CORP, DAVID FEINGOLD and FEINGOLD MORGAN SANCHEZ LLC, Plaintiffs, Motion Sequence #s 001 and 002 -against- RCG ADVANCES, LLC (F/K/A RICHMOND CAPITAL GROUP, LLC), ROBERT GIARDINA and RICHARD CARDINALE, Defendants. PLAINTIFFS' MEMORANDUM OF LAW IN OPPOSITION DEFENDANTS' TO MOTIONS TO DISMISS OR STAY THIS ACTION 1 of 25 FILED: NEW YORK COUNTY CLERK 01/03/2024 01:30 PM INDEX NO. 653822/2023 NYSCEF DOC. NO. 90 RECEIVED NYSCEF: 01/03/2024 TABLE OF CONTENTS AND AUTHORITIES PRELIMINARY STATEMENT ......................................................................1 BACKGROUND..........................................................................................4 The Parties.........................................................................................4 The Escrow Agreement Expressly Contemplates Investments In A Fund.............5 RCG Monitors Fund Investment..............................................................6 FMS Resigns As Escrow Agent In Face Of Guarantee And Multiple Actions.......8 The Liquidation Order In The FTC Action And Broad Street Intervention.........8 RCG Pursues Claims In FTC Action.........................................................9 Court Orders Date For Liquidation Of Portfolio R2 And Order Complied With..11 RCG Seeks To Challenge The Liquidation It Demanded................................11 The Court Denies RCG's Claims.............................................................12 RCG Issues Bogus Demand Letter............................................................13 First-Filed Action In This Court..............................................................13 Second-Filed Action In Florida...............................................................14 Defendants Admit Florida Federal Action Barred........................................14 GOVERNING STANDARDS..........................................................................15 ARGUMENT.............................................................................................16 Defendants' I. Arguments Are Contradictory..........................................16 II. This First-Filed Action Is More Comprehensive - Affords Full Relief..........17 IIL This Action Is First-Filed Action, Not Forum Shopping, Not Advisory Opinion..................................................................................18 IV. Defendants Not Entitled To A Stay.....................................................19 V. Cardinale's Additional Arguments For Dismissal Fail.............................19 2 of 25 FILED: NEW YORK COUNTY CLERK 01/03/2024 01:30 PM INDEX NO. 653822/2023 NYSCEF DOC. NO. 90 RECEIVED NYSCEF: 01/03/2024 CONCLUSION........................................................................................21 AUTHORITIES Cases 31(ISt Anonymous v. Anonymous, 165 A.D.3d 19, Dept 2018)..................................21 (4th Red Barn Country, LLC v. Trombley, 120 A.D.3d 1537, 1538 Dept. 2014)..............15 Syncora Guar. Inc. v. .LP. Morgan Sec. LLC, 110 A.D.3d 87, 95 (1st Dept 2013)...........15 U S. Bank, N.A. v. Deshuk-Flores, 163 A.D.3d 603, 605 (2d Dept 2018).....................15 Statutes and Rules CPLR 3211(a)(4) 3 of 25 FILED: NEW YORK COUNTY CLERK 01/03/2024 01:30 PM INDEX NO. 653822/2023 NYSCEF DOC. NO. 90 RECEIVED NYSCEF: 01/03/2024 PRELIMINARY STATEMENT Plaintiffs BROAD STREET GLOBAL FUND SCSP, BROAD STREET GP II S.'AR.L., CJS TECHNOLOGY SELECT MANAGEMENT LLC, CJS TECHNOLOGY SELECT FUND LLC, CJS FINANCIAL CORP, DAVID FEINGOLD ("Feingold") and FEINGOLD MORGAN SANCHEZ LLC ("FMS") (collectively, "Plaintiffs"), respectfully submit this memorandum of law in opposition to Defendants RCG ADVANCES, LLC (F/K/A RICHMOND CAPITAL GROUP, LLC) ("RCG") and ROBERT GIARDINA's ("Giardina") motion to dismiss or stay this action [NYSCEF 21 - Mot. Seq. and Defendant RICHARD CARDINALE'S 27, 001] ("Cardinale") (Cardinale with RCG and Giardina, collectively as "Defendants") motion to dismiss or stay this action mostly incorporating RCG/Giardina's motion [NYSCEF 28 - 29, Mot. Seq. 002]. This first-filed action seeks a declaratory judgement that a previously adjudicated dispute over an Escrow Agreement bars Defendants from relitigating those claims again as initially threatened in a demand letter and then, after this action was filed, in a lawsuit in Federal Court in Florida. The parties or their privies previously litigated the dispute in the action styled Federal Trade Commission v. RCG Advances, LLC, et al., Civ. No. 1:20-cv-04432-JSR (SDNY)(Hon. Jed S. Rakoff)(the "FTC Action") and the court there found in favor of Plaintiffs. While Defendants now claim that Feingold/FMS were never parties to the FTC Action and the claims at issue were not determined there, it told Judge Rakoff an entirely different story: The Escrow Funds are the cornerstone of the June 2, 2022 Stipulated Order pursuant to which the underlying action was settled (the "Settlement Order"). See ECF 127. The Settlement Order includes provisions regarding not only the Escrow Funds generally, but also limitations on how and when they can be used, as well as their ultimate disposition. See id. at § VI. The Settlement Order further provides that the Court retains jurisdiction to ensure enforcement. Id. at § XIII ("[T]his Court retains jurisdiction of this matter for purposes of construction, modification, and enforcement of this Order."). See also ECF 157 at 10:3-5 (counsel for Feingold and Broad Street Global Fund and associated entities ("Broad Street") acknowledging that that the Court retained jurisdiction over elements of the 1 4 of 25 FILED: NEW YORK COUNTY CLERK 01/03/2024 01:30 PM INDEX NO. 653822/2023 NYSCEF DOC. NO. 90 RECEIVED NYSCEF: 01/03/2024 Settlement Order). The Court, therefore, has continued jurisdiction over the Escrow Funds, which are an integral part of and necessary to the enforcement of the Settlement Order. Moreover, Broad Street and Feingold have appeared in this action through counsel. See, e.g., ECF 156, at p. 1 and n.1 (noting that the Weltz firm is appearing on behalf of both Broad Street and Feingold in this case). Both Broad Street and Feingold also (separately) served and responded to discovery demands in this case. Thus, there can be no dispute that the Court has the authority to order them to properly account for and return the missing Escrow Funds. On January 6, 2023, without explanation, Broad Street and Feingold wired landolo $620,000.00-a mere 15.5% of the $4,000,000.00 that Broad Street had repeatedly "R2" - and valued RCG's interest in the account having done so, maintain that they have complied with the Compliance Order. Feingold is liable to both account for and return the misappropriated Escrow Funds. He was involved in negotiating the terms of the settlement with the FTC and knew that the Escrow Funds would be needed to comply therewith (and to settle other litigations). Feingold thus owed a fiduciary duty not only to RCG, but also to the FTC and other intended beneficiaries of the Settlement Order. . . .In breach of his duties, Feingold wrongly transferred and converted the Escrow Funds and then abruptly resigned as RCG's escrow agent the day after the FTC requested that he sign a guaranty with respect thereto. . . . In sum, Defendants respectfully request that the Court set a hearing, in accordance with, inter alia, its retention of jurisdiction over the Settlement Order (ECF 127), at which Defendants will seek a full and proper accounting and return of the missing S4,483,072.75 of Escrow Funds. Defendants demanded and obtained an order from Judge Rakoff requiring liquidation of RCG's investments made in an escrow account in strict compliance with the terms of an Escrow sale" Agreement even after being warned by Judge Rakoff that a "fire could result for less than full value. Judge Rakoff ordered the forced sale of the remaining escrow account assets (a limited interest in a real estate portfolio known as Portfolio R2 - the $4 million) at the demand partnership of Defendants themselves. Disappointed over the results of the court-ordered sale that obtained less than $4 million, Defendants again went back to Judge Rakoff with false allegations of misappropriations and Judge Rakoff again denied their specious claims. Indeed, Judge Rakoff concluded that Defendants "got 2 5 of 25 FILED: NEW YORK COUNTY CLERK 01/03/2024 01:30 PM INDEX NO. 653822/2023 NYSCEF DOC. NO. 90 RECEIVED NYSCEF: 01/03/2024 it" what they wanted and now regret getting after they were "warned that the assets in this account value" effected" ...could not be sold for their full market and "[n]ow [that] the liquidation has been swindled" they "claim they have been but the evidence shows "Defendants received what they sale." were due from a disappointing "investment" "fund" As demonstrated to Judge Rakoff, an in a was made by wires sent directly to the investment fund pursuant to the exact terms of the Escrow Agreement, RCG actively monitored and directed the investment activity over the course of years, RCG demanded and obtained a court-ordered sale of the property (i.e., the so called "Misappropriated Funds") after sale," being warned of a potential "fire RCG kept the proceeds of the court-ordered sale, and the court in the FTC Action noted the extensive sale efforts and found no wrongdoing. Nonetheless and months later, on July 28, 2023, Defendants ignored the court-ordered sale they demanded and obtained in the FTC Action and bizarrely made a written demand for the return $4,483,072.75." of the same property sold pursuant to a court-ordered sale "in the amount of In 2862 response to the fraudulent July letter, on August 8, 2023 at 1:55 p.m., Plaintiffs promptly commenced this action by Summons with Notice seeking a declaratory judgment based upon the determinations made by Judge Rakoff in the FTC Action. This action was commenced in this Court because Defendants are all New York citizens and it includes all of those involved in the intervention in the FTC Action. Thereafter, on the same day and in response to Plaintiffs filing of this action, RCG filed an action in the Southern District of Florida styled RCG Advances, LLC v. David Feingold and Feingold Morgan Sanchez LLC, Case No. 9:23-cy-81128-AMC (SD Florida)(the "Florida Federal Action"), cutting and pasting the issues and claims adjudicated in the FTC Action into the complaint in the Florida Federal Action. Indeed, the complaint there includes the exact purported 3 6 of 25 FILED: NEW YORK COUNTY CLERK 01/03/2024 01:30 PM INDEX NO. 653822/2023 NYSCEF DOC. NO. 90 RECEIVED NYSCEF: 01/03/2024 - - the "misappropriated" - - not issues and claims purportedly $4 million in funds long ago decided Defendants' against the Defendants by Judge Rakoff. As demonstrated in more detail below, motions to dismiss or stay this action should be denied because this first-filed action is more Defendants' comprehensive than the Florida Federal Action, and includes all necessary parties in home State and will afford full relief. BACKGROUND1 The Parties Feingold is a businessman and an attorney in good standing licensed for over 30 years and Plaintiffs' FMS is a limited liability company law firm. NYSCEF 8, Complaint ("C"), ¶¶ 7-8. Plaintiff entities are various investment entities which intervened in the FTC Action (collectively, Street" "Broad or "Broad Street Intervenors"). C, ¶¶ 9-13. RCG (f/1da Richmond Capital Group, LLC) is owned by Giardina and Cardinale (both NY citizens) and Jonathan Braun ("Braun"). C, ¶¶ 15-18. RCG and Giardina recently settled with the FTC in the FTC Action wherein the FTC alleged that defendants there threatened physical violence to compel consumers to pay usurious loans. C, ¶ 19. RCG, Giardina and Braun are likewise also defendants in People of the State of Cty).2 New York v. Richmond Capital Group LLC, et al., Index No. 451368/2020 (Sup. Ct, NY Braun is reportedly a notorious drug smuggler who had been serving a 10-year jail sentence until commuted. Id. Cardinale is currently being sued for fraud and wrongdoing by investors and also 1 See Affidavit of Irwin Weltz submitted concurrently herewith which includes, among other things, Feingold/FMS's motion to dismiss RCG's Corrected First Amended Complaint, dated October 15, 2023 (the "FAC"), in the Florida Federal Action, the ECF docket from the FTC Action (the "FTC ECF"), and other documents or information from the FTC Action. 2 - OW-sn1all-businesses-harmed- https://ag.ny.cov/press-release/2023/attorn 3-Bla predatory#:~:text=New%20York%20%E2%800093°o20 e 20 York%20Attorney,Giardina%2C%20and%20Mich elleM20GreeeM2C%20for 7 of 25 FILED: NEW YORK COUNTY CLERK 01/03/2024 01:30 PM INDEX NO. 653822/2023 NYSCEF DOC. NO. 90 RECEIVED NYSCEF: 01/03/2024 by former business associates, including Feingold. Id. Interestingly, RCG waited years after the Escrow Agreement and investments were made and only after Feingold sued one of its owners (Cardinale) for fraud in another Federal case before miraculously claiming a loss of escrow funds. Id. at ¶ 20. The Escrow Agreement Expressly Contemplates Investments In A Fund The Escrow Agreement, dated December 10, 2018 (the "Escrow Agreement")(C, at Ex. A), "investments" "fund." specifically contemplated that the funds could be used for in a Thus, the made," Sixth paragraph of the Escrow Agreement refers to "account, fund or investment and the Seventh paragraph states,."We are further authorized to place the Money in an interest bearing account,fund or investments during the term of this escrow relationship and .... shall not be held responsible for any investment gains or losses generated by the Money and we are authorized to same." so invest said Money upon receipt of the (emphasis supplied). Thus, the entire premise of Defendants' - that arguments investments could not be made, or only certain investments could be made - is untrue and belied the face of the document which was likewise the focal completely by point before Judge Rakoff. Money sent to an investment fund exactly as stated and authorized in the Escrow Agreement. C, at ¶¶ 23-26. "investment" Defendants contend that the language of the Escrow Agreement authorizing "fund" in a somehow conflicts with the language that "to be used to pay any fines, settlements, owed." judgements, pending or threatened claims or any potential liabilities or monies There is no conflict here at all though - - it is manufactured. Had Defendants wished to obviously simply deposit its funds with a bank or place parameters on the nature of investments, as they now in hindsight suggest, they simply would have stated as much in the Escrow Agreement or just deposited the funds with a bank. 5 8 of 25 FILED: NEW YORK COUNTY CLERK 01/03/2024 01:30 PM INDEX NO. 653822/2023 NYSCEF DOC. NO. 90 RECEIVED NYSCEF: 01/03/2024 But Defendants, owned by experienced securities brokers, RIA owners and real estate developers (WD, Ex. JJ, FTC ECF 173, 173-9) who obviously kept track of their funds and investments, did neither. In fact, in the email from Feingold to Giardina, dated December 10, discussed" 2018, at the very first point it states that the funds would be "invested as (WD, Ex. FF, FTC ECF 169-3) and consistent with that discussion the first wire was sent to CJS Technology Select Management (the "Broad Street Fund") a private investment fund, on December 12, 2018 - fund).3 (WD, Ex. JJ, FTC ECF 173, 173-6 showing wiring proofs of all funds to investment the stayed in that investment fund for years and after the multi-million- Thereafter, money dollar settlement with the FTC by RCG for fraud and their purported inability to pay the FTC, it was at that point (and after Feingold sued Cardinale) that the Defendants went to the Federal Judge overseeing the FTC Action and complained that the FTC could not be paid due to the fault of RCG's former attorney, Feingold, and the alleged failure to follow the Escrow Agreement. C, at ¶ 26. RCG Monitors Fund Investment RCG fully controlled the disposition of these escrow funds. The funds were initially invested in a fixed income portfolio (known as Portfolio F1) but that changed during the stock market correction which began in approximately March 2020 when Giardina demanded that more of the funds be invested in real estate due to stock market concerns. WD, Ex. Y, FTC ECF 162-1, ¶ 2. The remainder of the funds ($4 million) were placed in Portfolio R2 of seven ongoing, but not 3 Feingold did not hold any position with the investment fund until years later. WD, Ex. JJ, FTC ECF 173, 173-7, Feingold Decl. at ¶ 2 (Feingold did not join Broadstreet, Inc. until July 2022, years after the investments were made in December 2018/early 2019, at Ex. JJ, FTC ECF 173, 173-2). Further, FTC/NYAG litigation commenced much