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  • Sang Cheol Woo v. Charles C. Spackman Commercial Division document preview
  • Sang Cheol Woo v. Charles C. Spackman Commercial Division document preview
  • Sang Cheol Woo v. Charles C. Spackman Commercial Division document preview
  • Sang Cheol Woo v. Charles C. Spackman Commercial Division document preview
						
                                

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FILED: NEW YORK COUNTY CLERK 05/02/2019 06:50 PM INDEX NO. 652795/2017 NYSCEF DOC. NO. 96 RECEIVED NYSCEF: 05/02/2019 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK Index No. 652795/2017 SANG CHEOL WOO, Hon Justice O. Peter Sherwood, Plaintiff/Judgment Creditor, J.S.C. Part 49 v. Motion Sequence # 3 CHARLES C. SPACKMAN, Defendant/Judgment Debtor. MEMORANDUM OF LAW OF SANG CHEOL WOO IN (I) OPPOSITION TO MATALON SHWEKY ELMAN PLLC’S AND ELMAN FRIEBERG PLLC’S MOTION FOR A PROTECTIVE ORDER AND (II) SUPPORT OF MR. WOO’S CROSS-MOTION FOR GARNISHMENT John Han john.han@kobrekim.com.hk Darryl Stein Darryl.stein@kobrekim.com KOBRE & KIM LLP 800 Third Avenue New York, New York 10022 (212) 488-1200 Attorneys for Plaintiff/Judgment Creditor Sang Cheol Woo May 2, 2019 1 of 16 FILED: NEW YORK COUNTY CLERK 05/02/2019 06:50 PM INDEX NO. 652795/2017 NYSCEF DOC. NO. 96 RECEIVED NYSCEF: 05/02/2019 TABLE OF CONTENTS Table of Contents ........................................................................................................................... i Table of Authorities ...................................................................................................................... ii Preliminary Statement.................................................................................................................. 1 Factual Background...................................................................................................................... 3 I. Mr. Spackman causes over US $1 billion in losses to a Korean listed company, and this Court enters judgment against him. .................................................................................... 3 II. Multiple courts find that Mr. Spackman has regularly used nominees to shield his assets from Mr. Woo in response to the Korean judgment. .......................................................... 3 III. Mr. Spackman has already used Spackman Media Group—the entity that deposited funds to the Movants’ trust account—to pay more than US $400,000 to attorneys for his legal fees in connection with this matter. .................................................................................... 5 IV. Mr. Woo restrains Mr. Spackman’s assets, including the retainer funds. .......................... 6 Legal Argument ............................................................................................................................ 7 I. The retainer funds are Mr. Spackman’s property. .............................................................. 7 II. The restraining notice should remain in effect. .................................................................. 9 III. The retainer funds should be turned over to Mr. Woo...................................................... 11 Conclusion ................................................................................................................................... 12 i 2 of 16 FILED: NEW YORK COUNTY CLERK 05/02/2019 06:50 PM INDEX NO. 652795/2017 NYSCEF DOC. NO. 96 RECEIVED NYSCEF: 05/02/2019 TABLE OF AUTHORITIES Cases M.M. v. T.M., 50 Misc. 3d 565 (Sup. Ct., Monroe Cnty. 2015) ................................................. 7, 8 Potter v. MacLean, 75 A.D.3d 686 (3d Dep’t 2010) ............................................................ 7, 8, 10 Ray v. Jama Prods., Inc., 74 A.D.2d 845 (2d Dep’t 1980) ............................................................. 9 S.E.C. v. Pentagon Capital Mgmt. PLC, No. 08 Civ. 3324(RWS), 2013 WL 5815374 (S.D.N.Y. 2013).................................................................................................................................... 10, 11 Statutes C.P.L.R. § 5222 .......................................................................................................................... 7, 8 C.P.L.R. § 5225..................................................................................................................... 2, 7, 11 C.P.L.R. § 5227......................................................................................................................... 2, 11 ii 3 of 16 FILED: NEW YORK COUNTY CLERK 05/02/2019 06:50 PM INDEX NO. 652795/2017 NYSCEF DOC. NO. 96 RECEIVED NYSCEF: 05/02/2019 PRELIMINARY STATEMENT Plaintiff Sang Cheol Woo submits this memorandum of law in opposition to Matalon Shweky Elman PLLC’s (“MSE”) and Elman Frieberg PLLC’s (“EF”) (together, the “Movants’”) motion for a protective order (the “Motion”) and in support of Mr. Woo’s cross-motion for garnishment of Mr. Spackman’s assets in the Movants’ trust account (the “Cross-Motion”). It has been nearly twenty years since Charles Spackman caused Littauer Technologies Inc. to write down over US $1 billion and be delisted from the Korean KOSDAQ exchange, resulting in immense losses to investors including Sang Cheol Woo. Yet despite Mr. Spackman’s subsequent criminal conviction and the judgments entered against him by this Court and the Korean courts, Mr. Spackman has failed to pay one penny of the debt that he owes to Mr. Woo. Now, Mr. Spackman has added the Movants to his growing list of unpaid creditors, who find themselves in the middle of Mr. Spackman’s refusal to pay this Court’s judgment. Mr. Woo is sympathetic to the Movants’ situation. Nonetheless, because the retainer funds were restrained by Mr. Woo as Mr. Spackman’s judgment creditor nearly one month before Movants first invoiced against those funds, the Motion should be denied. Mr. Spackman used a third-party nominee, Spackman Media Group PTE Limited (“Spackman Media Group”) to deposit the retainer at issue into the Movants’ trust account. The Movants argue that this money should be released to pay their invoices to Mr. Spackman, but New York law is clear that such funds are the property of the judgment debtor and properly subject to restraint when deposited by a third party for a judgment debtor’s benefit. Furthermore, Mr. Spackman’s use of Spackman Media Group to pay his personal expenses falls within his consistent pattern of using nominees to shield his assets from creditors. Since the Korean judgment was entered against Mr. Spackman on September 29, 2011, he has continued to enrich himself through a complex network of nominees throughout the world, leaving in his wake a trail of unpaid 1 4 of 16 FILED: NEW YORK COUNTY CLERK 05/02/2019 06:50 PM INDEX NO. 652795/2017 NYSCEF DOC. NO. 96 RECEIVED NYSCEF: 05/02/2019 creditors. As a result, courts in Singapore and the BVI have issued worldwide freezing injunctions in connection with the Korean judgment against Mr. Spackman, his business partner Richard Lee, and four companies in the British Virgin Islands (“BVI”) owned in the name of Mr. Spackman’s wife and his brother-in-law. The same Singapore entity, Spackman Media Group, that deposited the retainer for Mr. Spackman’s post-judgment legal services with the Movants has already paid for more than US $400,000 of his legal fees in connection with enforcement of the Korean judgment. The deposit to the Movants’ client trust account arrived after this Court entered the judgment against Mr. Spackman; Movants performed the bulk of the work for Mr. Spackman (75% or US $25,728.10) after the funds in the trust account were restrained, and, in their own words, “despite the Restraining Notices” (Movants’ Br. at 8); and, critically, the Movants only invoiced against the retainer held in trust for Mr. Spackman’s benefit after the restraining notices were served. The governing law is clear: Deposits by third parties for the benefit of the judgment debtor, including legal retainers, constitute assets of the debtor subject to execution and enforcement. This is particularly true where, as here, there is substantial evidence showing that Spackman Media Group is one of many nominees used by Mr. Spackman to shield his personal assets from his creditors. Not only should the restraining notice be maintained, but the funds in the trust account should be used to satisfy the judgment. Since the trust account funds are property of Mr. Spackman, this Court should order the funds to be paid to Mr. Woo pursuant to Sections 5225(b) and 5227 of the Civil Practice Law and Rules. For the reasons discussed below, the Motion for a protective order should be denied and the Cross-Motion for garnishment of the retainer funds should be granted. 2 5 of 16 FILED: NEW YORK COUNTY CLERK 05/02/2019 06:50 PM INDEX NO. 652795/2017 NYSCEF DOC. NO. 96 RECEIVED NYSCEF: 05/02/2019 FACTUAL BACKGROUND I. Mr. Spackman causes over US $1 billion in losses to a Korean listed company, and this Court enters judgment against him. This Court is already well-familiar with Mr. Spackman’s misconduct in Korea that led to the Korean judgment, and this Court’s resulting entry of the New York judgment. Mr. Woo was a minority shareholder in Littauer Technologies, a publicly listed company in Korea. Mr. Spackman caused Littauer to enter into a self-dealing transaction, liquidated a substantial percentage of outstanding shares of Littauer in three days, and thereby collected a profit of more than US $100 million at the expense of Mr. Woo and Littauer’s other shareholders. (NYSCEF #78 at 2.) Mr. Spackman was found liable in Korea—a judgment twice affirmed by the Supreme Court of Korea—and this Court recognized the judgment pursuant to C.P.L.R. Article 53. (NYSCEF #78.) This Court entered judgment on September 11, 2018 (NYSCEF #79); notice of entry was served on September 13, 2018 (NYSCEF #80); and Mr. Spackman’s time to appeal later expired. (See Spray Aff. ¶ 11.) Mr. Woo has sought discovery in aid of execution of the Korean and New York judgments. II. Multiple courts find that Mr. Spackman has regularly used nominees to shield his assets from Mr. Woo in response to the Korean judgment. Since this Court entered the judgment, courts in Singapore and the BVI have entered ex parte freezing orders against Mr. Spackman and five other parties acting as his nominees. Spackman uses some of the nominees to pay his personal expenses, and he uses others to profit from businesses in a way that would not be detected by creditors. For example, his business partner Richard Lee’s (“Spackman’s Partner”) assets were frozen based on evidence that he used Singapore-based accounts to pay US $299,663 for Mr. Spackman’s personal expenses, including his U.S. federal taxes and his legal fees in these proceedings. (See Stein Ex. 1 (hereinafter the “Han Aff.”) ¶¶ 65-73; Stein Aff. Ex. 7 at 6-10.) In addition, Mr. Woo alleged that Mr. Spackman 3 6 of 16 FILED: NEW YORK COUNTY CLERK 05/02/2019 06:50 PM INDEX NO. 652795/2017 NYSCEF DOC. NO. 96 RECEIVED NYSCEF: 05/02/2019 used four BVI companies owned by his wife, So Hee Kim, and brother-in-law, Jae Sung Kim, to profit from self-dealing share swaps with a publicly traded public company in Singapore called Spackman Entertainment Group Limited founded and controlled by Mr. Spackman (SGX: 40E). (See Han Aff. ¶¶ 27-64, 82-89; see also Stein Aff. Exs. 6-7 (Freezing Orders).) Spackman Entertainment is one of Korea’s leading entertainment production groups and behind such box- office hits as Snowpiercer, The Priests, and most recently Default, which has grossed more than US $27 million since its release.1 Mr. Woo alleged that Spackman Entertainment repeatedly overpaid the BVI companies for securities while Mr. Spackman and Richard Lee operated Spackman Entertainment as CEO/Executive Chairman and Interim CEO/Director, respectively. (Han Aff. ¶¶ 27, 28, 66, 67.) It was alleged that the BVI companies bought the shares of another Spackman-related entity (Spackman Media Group Limited) for as little as US $0.13 per share but sold them to Spackman Entertainment for US $3.00 per share only a few months later, generating a profit of US $6,307,500 for investments held for less than a year. (Han Aff. ¶¶ 28, 52, 63.)2 Despite Mr. Spackman’s control of the BVI entities, he and Mr. Lee allegedly signed off on public announcements that the BVI entities were not related to any of the directors of Spackman Entertainment or their associates. (Han Aff. ¶ 110; Stein Aff. Ex. 9 at 7, 15, 21, 28.) Through the transactions, the BVI companies are believed to have accumulated a substantial (and possibly controlling) stake in the publicly 1 See Spackman Entertainment Group, http://www.spackmanentertainmentgroup.com (last accessed May 2, 2019). 2 A table of the share swaps can be found in a table at Han Aff. ¶ 28, with supporting documents at Stein Aff. Ex. 8 at 3, 7-8, 33-34, 44, 47-49. Evidence showing beneficial owners, shareholders, and directors of the BVI entities can be found at Stein Aff. Ex. 2 at 2, 4-6, 8-15, 54-55, 58-59, 79; Stein Aff. Ex. 3 at 3-4, 7-9, 12-14, 16, 23, 26, 28-32; Stein Aff. Ex. 4 at 2-3, 8, 13-14, 16, 18-22; Stein Aff. Ex. 5 at 1-2, 4-11, 42, 45, 50, 53-55, 58. 4 7 of 16 FILED: NEW YORK COUNTY CLERK 05/02/2019 06:50 PM INDEX NO. 652795/2017 NYSCEF DOC. NO. 96 RECEIVED NYSCEF: 05/02/2019 traded Korean entertainment company (Han Aff. ¶¶ 82-90), which has now been frozen pursuant to the BVI and Singapore courts’ orders.3 Since Spackman Entertainment entered into the transactions, its share price has plummeted 80%. (See Han Aff. ¶ 29.) III. Mr. Spackman has already used Spackman Media Group—the entity that deposited funds to the Movants’ trust account—to pay more than US $400,000 to attorneys for his legal fees in connection with this matter. Spackman Media Group, the entity that deposited funds to the Movants’ client trust account, has already paid for more than US $400,000 in legal services for Mr. Spackman in connection with proceedings to enforce the Korean judgment. On twelve different occasions between July 27, 2017, and September 11, 2018, Spackman Media Group wired funds to Mr. Spackman’s previous New York counsel, Quinn Emanuel Urquhart & Sullivan LLP (“Quinn Emanuel”) for Mr. Spackman’s personal legal services. (See Stein Aff. Ex. 10 at 3-14.) In total, Spackman Media transferred US $400,761 to Quinn Emanuel. This sum is in addition to US $174,731 paid by Spackman’s Partner, Richard Lee, for the same purpose. (See Han Aff. ¶ 69; Stein Aff. Ex. 10 at 1-2.) Consistent with that pattern, on September 21, 2018, Spackman Media Group deposited the retainer funds at issue with MSE, which were then placed in MSE’s client trust account. (Spray Aff. ¶ 3.) Thus, despite Movants’ suggestion that Spackman Media Group is an independent, third- 3 On April 11, 2019, the BVI court froze the assets of the four BVI companies nominally owned by Spackman’s wife and brother-in-law—Azur Investissement Ltd., Trinity Capital Advisors Limited, DVG Limited, and GD Enterprise Holdings Ltd—based on Mr. Woo’s showing that they were acting as Mr. Spackman’s nominees. See Stein Aff. Exs. 2-5 (BVI registered agent productions); Stein Aff. Ex. 6 (BVI Court Freezing Orders); Han Aff. ¶¶ 35-39, 44-46, 48, 53-55, 58, 64. And, on April 23, 2019, the Singapore court also froze the assets of Mr. Spackman and his nominees, including the same BVI companies and Spackman’s Partner. (See Stein Aff. Ex. 7 (Singapore Court Freezing Orders).) 5 8 of 16 FILED: NEW YORK COUNTY CLERK 05/02/2019 06:50 PM INDEX NO. 652795/2017 NYSCEF DOC. NO. 96 RECEIVED NYSCEF: 05/02/2019 party payor, evidence strongly suggests that Spackman Media Group is another emanation of Mr. Spackman’s sprawling network of nominees. IV. Mr. Woo restrains Mr. Spackman’s assets, including the retainer funds. After noticing entry of this Court’s judgment, Mr. Woo served the restraining notices at issue and subpoenas on the Movants. (Spray Aff. ¶¶ 5, 9.) Since then, Mr. Woo’s counsel has been in contact with Movants about this matter, including the status of Movants’ subpoena responses and the status of the trust account. (Stein Aff. ¶ 14.) In these discussions, Mr. Woo’s counsel has consistently taken the position that Mr. Woo is entitled to the funds. (Id.) In response to the subpoenas, Movants produced their retainer agreements with “Mr. Charles C. Spackman.” (Stein Aff. Ex. 11.) Mr. Spackman agreed to deposit “an initial retainer of $35,000,” from which the agreement authorized the Movants to deduct fees seven days after issuing an invoice. (Id. at 3) The agreement further provided that “any unused portion of the retainer remaining at the end of the representation will be returned to you,” referring to Mr. Spackman. (Id.) It is not disputed that the Movants’ invoices issued to Spackman were issued after receipt of the restraining notices. MSE received a restraining notice on September 27, 2018 (Spray Aff. ¶ 5) and issued an invoice dated October 18, 2018 (Spray Aff. Ex. A). Likewise, EF received a restraining notice on November 1, 2018 (Spray Aff. ¶ 9) and issued an invoice nearly a month later on November 29, 2018 (Spray Aff. Ex. C). 6 9 of 16 FILED: NEW YORK COUNTY CLERK 05/02/2019 06:50 PM INDEX NO. 652795/2017 NYSCEF DOC. NO. 96 RECEIVED NYSCEF: 05/02/2019 LEGAL ARGUMENT I. The retainer funds are Mr. Spackman’s property. The funds deposited in the trust account are property of the judgment debtor, Mr. Spackman. Under C.P.L.R. § 5201, a “money judgment may be enforced against any property which could be assigned or transferred, whether it consists of a present or future right or interest and whether or not it is vested,” which plainly includes the cash balance of an account. While certain money and property are exempt from restraint under Section 5222, “funds held in escrow for the purpose of retaining an attorney are not included in [that] statutory list.” See Potter v. MacLean, 75 A.D.3d 686, 686-67 & n.1 (3d Dep’t 2010) (citing C.P.L.R. 5222(e) and listing exempt property). The fact that the funds have been deposited with counsel—rather than held directly by Mr. Spackman—does not change Mr. Spackman’s property interest in the funds. The C.P.L.R. specifically recognizes that a judgment debtor’s property may be in the possession of a third party. See, e.g., C.P.L.R. 5225(b). And numerous courts have recognized that funds deposited in a retainer account with counsel can be restrained, attached, and garnished. See, e.g., Potter v. 75 A.D.3d at 686-67 & n.1 (affirming restraining notice issued against attorney); M.M. v. T.M., 50 Misc. 3d 565, 578 (Sup. Ct., Monroe Cnty. 2015) (maintaining restraining notice of attorney’s accounts). In this case, the funds at issue in Movants’ trust account may be attached because “they are subject to the judgment debtor’s ‘present or future control,’ or are required to be returned to the judgment debtor if not used to pay for services rendered.” Potter, 75 A.D.3d at 687. The retention agreement states that Mr. Spackman controls the retainer: Invoices are provided to Mr. Spackman so that he has “a ready means of monitoring and controlling the expenses,” and invoiced funds will be deducted unless he objects within seven days of receipt. (Stein Aff. Ex. 11 at 3.) The 7 10 of 16 FILED: NEW YORK COUNTY CLERK 05/02/2019 06:50 PM INDEX NO. 652795/2017 NYSCEF DOC. NO. 96 RECEIVED NYSCEF: 05/02/2019 agreement explains that EF was retained to “render legal services to you,” referring to Mr. Spackman. (Stein Aff. Ex. 11 at 1.) The scope of the retainer, moreover, refers to the above- captioned litigation, which states a claim against Mr. Spackman in his personal capacity. (Id.) Finally, the agreement provides that “any unused portion of the retainer remaining at the end of the representation will be returned to you,” again addressed to Mr. Spackman. (Stein Aff. Ex. 11 at 3) And because the invoices against the retainer funds were issued after the restraining notices were served, Movants have no title to the funds. The agreement clearly states that the retainer funds were deposited in EF’s “attorney trust account,” that Movants’ fees could only be deducted seven days after invoicing, and that “any unused portion of the retainer” will be returned to Mr. Spackman. (Stein Aff. Ex. 11 at 3.) A security retainer deposited in an attorney’s trust account to be drawn upon invoicing for future services is, by definition, not property of an attorney. See M.M., 50 Misc.3d at 574-578 (agreement providing return of unused funds created “security retainer” subject to restraint). The fact that the invoices here were only issued after the funds in the account had already been restrained is dispositive. See M.M., 50 Misc.3d at 577 (holding that title transfers to attorney only after an invoice is issued and “[i]f the restraining notice is served in advance of any billing by the attorney against those funds, the entire sum of deposited funds is subject to the restraining notice”). The restraining notice thus means that retainer funds remained the judgment debtor’s property, and neither possession nor title could have transferred to the Movants. It is immaterial that the funds were deposited by Spackman Media Group, rather than Mr. Spackman directly. A security retainer deposited by third parties is subject to restraint under Section 5222 of the C.P.L.R., as the Appellate Division squarely held in Potter 75 A.D.3d at 687. 8 11 of 16 FILED: NEW YORK COUNTY CLERK 05/02/2019 06:50 PM INDEX NO. 652795/2017 NYSCEF DOC. NO. 96 RECEIVED NYSCEF: 05/02/2019 There, the Third Department concluded that because the defendant—not the third-parties who deposited funds in the law firm account for the benefit of the defendant—had the right to the return of the retainer fee, and thus the restraining notice applied to the funds. See also Ray v. Jama Prods., Inc., 74 A.D.2d 845 (2d Dep’t 1980) (restraining notice applied to funds held by third party but “utilized to satisfy” a judgment debtor’s “debts and expenses”). It is clear under the retainer agreement in this case that Spackman Media Group did not retain any property interest in the funds as the third-party payor. However, evidence also strongly suggests that Spackman Media Group is acting as Spackman’s nominee. Mr. Spackman has an extensive record of using nominees to hold assets and pay for his personal expenses, and, in this case, Spackman Media Group, a company named after and founded by Mr. Spackman, has already paid US $400,761 for Mr. Spackman’s personal legal expenses. (Stein Aff. Ex. 10.) Mr. Spackman’s use of nominees to pay his legal expenses is consistent with his regular practice of using nominees to pay for his personal expenses. He has used Richard Lee to pay US $124,932 for his U.S. taxes (Han Aff. ¶ 70.) and $174,731 for his personal legal fees (Han Aff. ¶ 69; Stein Aff. Ex. 10). Thus, even if New York law gave the depositor a continued interest in the retainer funds—which it does not—substantial evidence suggests that the depositor, Spackman Media Group, is merely a nominee for Mr. Spackman and that, therefore, the funds are subject to enforcement of the judgment. II. The restraining notice should remain in effect. Because the retainer funds are property of Mr. Spackman, they should be used to satisfy the judgment. Movants’ only arguments to the contrary rest on this Court’s discretion to modify a restraining notice based on equitable considerations. But the equities here support using the retainer funds to satisfy the pre-existing judgment against Mr. Spackman, which has not been paid even though it has been nearly twenty years since Mr. Spackman defrauded Mr. Woo. Much like 9 12 of 16 FILED: NEW YORK COUNTY CLERK 05/02/2019 06:50 PM INDEX NO. 652795/2017 NYSCEF DOC. NO. 96 RECEIVED NYSCEF: 05/02/2019 the judgment debtor in Potter, Mr. Spackman has “willfully violated his obligation” to Mr. Woo. See Potter, 75 A.D.3d at 686. Nearly eight years after the Korean courts found Mr. Spackman liable to Mr. Woo—and months after this Court granted Mr. Woo’s motion for summary judgment—Mr. Spackman used Spackman Media Group to transfer this money to Movants on September 21, 2018. (Spray Aff. ¶ 3.) The Movants made the deliberate choice to continue work on Mr. Spackman’s case for nearly one month after receiving the restraining notices. (Movants’ Br. at 8 (noting that Movants chose to “continu[e] to represent Mr. Spackman despite the Restraining Notices”).) And nearly 75% of the fees they ultimately invoiced—US $25,728.10 out of US $34,413.10—was for work undertaken after the retainer funds were restrained on September 27, 2018. Id. Accordingly, they assumed the risk (and it was inevitable) that their invoices would not be paid from the retainer funds, and that they would become a creditor like Mr. Woo. Movants rely on Pentagon Capital Management to suggest that the equities weigh in favor of a protective order. However, that case counsels in favor of restraining the retainer funds. The court in Pentagon did not “exercise its discretion to modify the restraining notice to allow [the individual defendant] to pay counsel fees” for further appellate review, in part because an individual defendant may proceed pro se, unlike a corporate defendant that cannot appear but through counsel. S.E.C. v. Pentagon Capital Mgmt. PLC, No. 08 Civ. 3324(RWS), 2013 WL 5815374, at *7 n.3 (S.D.N.Y. Oct. 29, 2013). In fact, the equitable considerations in Pentagon favoring a right to counsel decidedly do not apply here given that Mr. Spackman already benefitted from $575,492 in legal services in this matter from Quinn Emanuel, and he has already received representation from the Movants and decided not to appeal the Court’s judgment. (Han Aff. ¶ 69; 10 13 of 16 FILED: NEW YORK COUNTY CLERK 05/02/2019 06:50 PM INDEX NO. 652795/2017 NYSCEF DOC. NO. 96 RECEIVED NYSCEF: 05/02/2019 Stein Aff. Ex. 10.)4 The restraining notice therefore has no forward looking impact on Mr. Spackman’s ability to engage attorneys. Lastly, because evidence strongly shows that Spackman Media Group is being used by Mr. Spackman as a nominee, the Movants’ suggestion that it would be “unfair to that third party [Spackman Media Group] to force the funds to be turned over to Mr. Woo” is particularly misplaced. (Movants’ Br. at 10.) Mr. Spackman has consistently used corporate forms like Spackman Media Group to serve his own interests and deceive third parties. Indeed, Mr. Woo has spent the past several months disentangling Mr. Spackman’s use of foreign companies to pay personal expenses, which has resulted in the freezing orders against Mr. Spackman, Spackman’s Partner, and the four BVI companies in the BVI and Singapore. (Stein Aff. Exs. 6-7 (Freezing Orders).) Accordingly, this record shows that Mr. Spackman used Spackman Media Group as a nominee to deposit the US $35,000 retainer funds into the Movants’ client trust account in this case. III. The retainer funds should be turned over to Mr. Woo. For the same reasons discussed above and because the retainer funds are property of Mr. Spackman, the Court should require Movants “to pay the money” at issue to Mr. Woo. C.P.L.R. § 5225; see also id. § 5227. Due to the restraining notice, title to the trust account funds never transferred to the Movants, and the retainer remains Mr. Spackman’s property. Accordingly, these funds should be turned over to Mr. Woo toward satisfying this Court’s judgment. 4 Although the court in Pentagon allowed the defendant’s counsel to receive additional fees, it did so based on “prior agreements” between the judgment debtor with the restraining party to allow the funds to be released. Pentagon Capital Mgmt. PLC, 2013 WL 5815374, at *7. There is, of course, no agreement between Mr. Woo and Mr. Spackman to allow the Movants to receive the funds in this case. 11 14 of 16 FILED: NEW YORK COUNTY CLERK 05/02/2019 06:50 PM INDEX NO. 652795/2017 NYSCEF DOC. NO. 96 RECEIVED NYSCEF: 05/02/2019 CONCLUSION Mr. Woo is empathetic to the Movants’ position because he, too, has suffered first-hand from Mr. Spackman’s refusal to pay his creditors. However, because the fees on deposit with Movants’ client trust account were restrained by Mr. Woo as judgment creditor more than a month before Movants invoiced against the funds, the Motion should be denied and the Cross-Motion should be granted. Dated: May 2, 2019 New York, NY By: /s/ Darryl Stein Darryl Stein Darryl.stein@kobrekim.com John Han john.han@kobrekim.com.hk Kobre & Kim LLP 800 Third Avenue New York, New York 10022 Tel: +1 212 488 1200 Fax: + 1 212 488 1220 Attorneys for Plaintiff/ Judgment Creditor Sang Cheol Woo 12 15 of 16 FILED: NEW YORK COUNTY CLERK 05/02/2019 06:50 PM INDEX NO. 652795/2017 NYSCEF DOC. NO. 96 RECEIVED NYSCEF: 05/02/2019 CERTIFICATION OF WORD COUNT Pursuant to Commercial Division Rule 17, I hereby certify that the number of words in the accompanying Memorandum of Law of Sang Cheol Woo in (I) Opposition to Matalon Shweky Elman PLLC’s and Elman Frieberg PLLC’s Motion for a Protective Order and (II) Support of Mr. Woo’s Cross-Motion for Garnishment is 3,660, excluding the caption, table of contents, table of authorities, and signature block, according to the word count by MS Word used to prepare the document. Dated: May 2, 2019 New York, NY By: /s/ Darryl Stein Darryl Stein 13 16 of 16