Preview
FILED: KINGS COUNTY CLERK 05/27/2020 03:57 PM INDEX NO. 503139/2020
NYSCEF DOC. NO. 21 RECEIVED NYSCEF: 05/27/2020
SUPREME COURT OF THE STATE OF NEW YORK
COUNTY OF KINGS
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YOUNG S. CHUNG, individually and on behalf of :
URBAN FRESH CORP. and 11 UM FOOD CORP. : AMENDED
: VERIFIED COMPLAINT
Plaintiffs, :
:
-against- : Index No. 503139/2020
:
COLIN K. XIE, BARBARA JANUS, :
JUICEBROTHERS, LLC, and DOES 1-100 :
:
Defendant. :
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Plaintiffs Young S. Chung, individually and on behalf of Urban Fresh Corp. and 11 UM
Food Corp. (collectively, “Plaintiffs”), by their attorneys Wiggin and Dana LLP, as and for their
Verified Complaint against Colin K. Xie, Barbara Janus, Juicebrothers, LLC, and Does 1-100,
allege as follows:
NATURE OF THE ACTION
1. This is an action to protect the fundamental interests of the corporate plaintiffs
Urban Fresh Corp. (“Urban Fresh”) and 11 UM Food Corp. (“11 UM”) (collectively, the
“Companies”) and plaintiff Young S. Chung (“Mr. Chung”) from defendant Colin K. Xie’s
(“Defendant Xie”) extensive malfeasance with respect to the management and operations of the
Companies including the failure to account for millions of dollars in expenses charged to the
Companies and incurred for, among other things, Defendant Xie’s lavish personal expenses.
2. Mr. Chung and Defendant Xie are business partners and respectively each own
50% of the issued and outstanding shares of the Companies, which are engaged in the business
of operating two grocery stores in New York City. Mr. Chung is president of the Companies,
and Defendant is secretary and treasurer.
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3. Defendant Xie has repeatedly breached fiduciary duties owed to Plaintiffs, and
has committed other wrongdoing as stated below, by, among other ways: (i) failing to pay his
share of loan payments owed by Urban Fresh, totaling $73,557.13 to date; (ii) misappropriating
$530,390.82 from Urban Fresh in September, 2018; (iii) failing to account for at least $7 million
paid from 11 UM’s business account by Defendant Xie’s to American Express from 2014 to
June 2019; (iv) failing to account for at least $1,200,002.58 paid from 11 UM’s business account
to Defendant Xie’s personal American Express and Chase card bills from August 2018 to June
2019; (v) failing to account for at least another $2.7 million in payments made from Urban
Fresh’s business checking account to pay for additional American Express charges made by
Defendant from 2014 through 2018; (vi) personally stealing approximately $140,000 in cash
from 11 UM’s store; and (vii) entering into an unauthorized business relationship on behalf of 11
UM with a personal friend named Barbara Janus (“Janus”) and her company, defendant
Juicebrothers, LLC (“Juicebrothers”).
4. Due to Defendant Xie’s blatant misuse of corporate funds, and his refusal to meet
essential financial obligations or respond to basic requests for information, Plaintiffs have no
choice but to seek this Court’s intervention. Plaintiffs accordingly seek an accounting and
declaratory relief compelling Defendant to satisfy his corporate obligations. They further seek
monetary damages for the claims set forth below.
THE PARTIES
5. Plaintiff Young S. Chung (“Mr. Chung”) is an individual residing in Nassau
County, New York.
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6. Plaintiff Urban Fresh Corp. (“Urban Fresh”) is an existing corporation organized
under the laws of the State of New York with a principal place of business located in Queens
County, New York.
7. Plaintiff 11 UM Food Corp. (“11 UM”) is an existing corporation organized under
the laws of the State of New York with a principal place of business located in Kings County,
New York.
8. Defendant Colin K. Xie (“Defendant Xie”) is an individual residing in Nassau
County, New York.
9. Defendant Barbara Janus (“Janus”) is an individual residing in, upon information
and belief, New York County, New York.
10. Defendant Juicebrothers, LLC (“Juicebrothers”) is an existing limited liability
company organized under the laws of the State of New York with a principal place of business
located in New York County, New York.
11. Defendants Does 1 – 100 represent individuals, whose identities are currently
unknown, with whom Mr. Xie engaged in malfeasance related to the Corporate Plaintiffs.
VENUE AND JURISDICTION
12. This Court has jurisdiction, among other grounds, pursuant to CPLR §§ 301, 302,
and 503 because Plaintiff 11 UM is a resident of, and/or conducts business in, Kings County.
13. Venue is also proper, among other reasons, because Plaintiff 11 UM is a resident
of, and/or conducts business in, Kings County.
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OTHER PERTINENT BACKGROUND
A. The Plaintiff Companies
14. Mr. Chung and Defendant Xie are business partners who own and operate two
grocery stores together in New York City.
15. One of the grocery stores, owned by Urban Fresh, is in Far Rockaway, New York
and is currently closed for business and under renovations.
16. The other grocery store is owned by 11 UM and located in Brooklyn and is doing
business under the name “City Acres Market.”
17. Mr. Chung is the president of Urban Fresh and 11 UM (collectively, the
“Companies”).
18. Defendant Xie is the secretary and treasurer of the Companies.
19. Mr. Chung and Defendant Xie each own 50% of the issued and outstanding shares
of the Companies.
B. Defendant’s Failure to Pay His Share of Urban Fresh’s Business Loan
20. Urban Fresh Corp. borrowed $2,500,000 pursuant to a business loan agreement
with NewBank USA dated September 4, 2014 (the “Loan”).
21. Mr. Chung, Defendant Xie, Urban Fresh, 11 UM, and Ryan Food Corp. are
guarantors of the Loan.
22. As 50% shareholders in Urban Fresh, Mr. Chung and Defendant Xie each became
personally responsible for satisfying half of the Loan’s monthly payments, totaling $29,422.85
per month, on December 1, 2019.
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23. Despite Mr. Chung’s repeated demands that Defendant Xie pay his share of the
Loan payments (approximately $14,711.42 per month), Defendant Xie has simply failed to do so
to date.
24. To avoid a default, Mr. Chung has accordingly paid Defendant’s share of the
Loan payments, totaling $73,557.13 to date (the December 1, 2019, January 1, 2020, February 1,
2020, March 1, 2020, and April 1, 2020 Loan payments).
C. Defendant Xie’s Payment of Nearly $4.5 Million
in Credit Card Expenses With Company Funds
25. Mr. Chung has also demanded clarification over Defendant’s use of 11 UM’s and
Urban Fresh’s corporate funds to pay Defendant’s and 11 UM’s credit card bills.
26. From about 2013 to August 2018, the parties maintained American Express
Corporate Plum Cards (the Plum Card) through 11 UM.
27. Over time, Defendant Xie’s use of the Plum Card exceeded normal business
expenditures and resulted in tens of thousands of dollars in bank overdraft fees and credit card
late fees.
28. Upon information and belief, Defendant Xie’s misuse of the Plum Card was an
elaborate scheme designed to hide that fact that he was embezzling millions of dollars from
Urban Fresh and 11 UM.
29. The parties did not maintain any business credit cards through Chase Credit Card
services.
30. The banking records from both the 11 UM and Urban Fresh business checking
accounts reveal that Defendant Xie was making electronic payments to American Express and
Chase Credit Card Services.
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31. More specifically, records from 11 UM’s business checking account reflect that
from August 2018 to June 2019 after the Plum Card was closed, Mr. Xie paid his personal
American Express and Chase card bills with funds in 11 UM’s business account totaling
approximately $1,200,002.58 and $22,000.00, respectively, totaling $1,222,002.58.
32. Upon information and belief, any electronic payments from 11 UM or Urban
Fresh to Chase Card services were to Defendant Xie’s personal Chase credit cards.
33. Defendant Xie made another approximately $2.7 million in payments from Urban
Fresh’s business checking account for charges made to American Express from 2014 through
2018; and approximately $ 284,500.00 to Chase credit card services from 2016 through 2018.
34. A detailed review of the electronic payments made to American Express from the
11 UM and Urban Fresh business checking accounts in 2018 against the Plum Card statements
and Defendant Xie’s personal American Express card summary for 2018 cannot account for
approximately $1,045,22, namely $558,000 paid from 11 UM and $487,000 paid from Urban
Fresh.
35. Upon information and belief, in 2018, Defendant Xie made more than $ 2 million
in electronic payments to American Express from the 11 UM and Urban Fresh business checking
accounts and diverted approximately $1,045,222 to pay for additional undisclosed American
Express credit card accounts held by either Defendant Xie or other third parties.
36. Upon information and belief, Defendant Xie used his business Plum Card to pay
for personal expenses including, but not limited to, approximately $4,320.23 in charges to
Bloomingdales; $9,607.10 in charges to PHO NY restaurant in a single month; $1,460.15 in
charges in Brazil; charges in grocery stores in Florida; and tens of thousands of dollars in charges
for NYC Football entertainment tickets and charges at night clubs.
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37. Defendant Xie’s actions were hiding a massive fraudulent credit card scheme that
was draining the operating funds from Urban Fresh and 11 UM so that Mr. Chung had to inject
more than $300,000 in personal funds into 11 UM in 2019 to meets its obligations.
D. Defendant’s Unauthorized Removal of Company Funds from Urban Fresh
38. Pursuant to a redevelopment plan by the landlord of the Urban Fresh property, the
landlord induced the parties to vacate the premises and Urban Fresh received a $1.25 million
vacate payment.
39. Without Mr. Chung’s knowledge or consent, Defendant Xie misappropriated the
entire $ 1.25 million vacate payment and established a brokerage account at Morgan Stanley.
40. Upon information and belief, Defendant Xie took out a loan of $ 1 million against
the Morgan Stanley brokerage account which was deposited into the Urban Fresh business
checking account on or about September 24, 2018.
41. Without the knowledge or consent of Mr. Chung, Defendant Xie transferred
$530,390.82 from the Urban Fresh business checking account to his personal account.
42. Upon information and belief, Defendant Xie simply stole this money from Urban
Fresh.
43. Deprived of these funds, Urban Fresh is no longer able to make its monthly Loan
payments.
E. Defendant’s Unauthorized Removal of Cash from 11 UM
44. Mr. Chung also recently discovered, through 11 UM’s store manager, that
Defendant Xie has been regularly removing cash from 11 UM’s store. However, there are no
corroborating records showing that Defendant Xie deposited any of the money into 11 UM’s
accounts.
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45. Upon information and belief, Defendant Xie simply stole this money, which totals
approximately $140,000 to date.
F. Defendant’s Unauthorized Dealings with Janus and
Juicebrothers and Their Unauthorized Use of 11 UM Funds
46. In or around the fall of 2016, Defendant, without Mr. Chung’s knowledge or
consent, entered into an arrangement or contract with defendant Juicebrothers for the provision
of services related to 11 UM. Upon information and belief, Defendant Xie made and continued
this arrangement, even though it resulted in monetary losses to 11 UM, because of a personal
relationship that he has with Juicebrothers’ owner, defendant Janus.
47. Again without Mr. Chung’s knowledge or consent, Defendant Xie issued a Plum
card from 11 UM to Janus, who is not an employee of 11 UM, and she made charges with that
card for which she and Defendant Xie have not accounted. Upon information and belief, these
charges too were for personal expenses unrelated to 11 UM’s business operations.
48. Without Mr. Chung’s knowledge or consent, Defendants Xie and Janus purchased
i) airfare for multiple trips between Amsterdam, Netherland and JFK Airport, New York, ii)
expensive juice extractor equipment; and iii) books.
G. Plaintiff’s Unanswered Demands for Loan Payments and Information
49. In December 2019, Mr. Chung began formally writing to Defendant Xie to
request Defendant Xie’s contribution with his Loan-related obligations and information
concerning his apparent use of corporate funds for personal purposes.
50. On December 3, 2019, Mr. Chung sent Defendant a letter requesting that
Defendant deposit $14,711.42 into Urban Fresh’s business account to satisfy his 50% share of
the monthly Loan payment due on December 1, 2019 (see Ex. A hereto).
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51. Mr. Chung similarly emailed Defendant on December 27, 2019 requesting half of
the January 2020 loan payment, i.e., $14,711.42, be deposited into the Urban Fresh business
account (see Ex. B hereto).
52. Mr. Chung emailed and mailed Defendant on January 14, 2020 requesting 50% of
the February 1, 2020 payment plus the two additional $14,711.42 deposits from Defendant for
his share of the past due December and January Loan payments (see Ex. C hereto) totaling
$44,134.27.
53. On January 21, 2020, Mr. Chung also emailed and mailed Defendant requesting
information to clarify whether and to what extent Defendant’s payment of personal American
Express bills with 11 UM funds was appropriate (see Ex. D hereto). Mr. Chung accordingly
requested Defendant’s American Express statements from January to December 2018 “so that
[Mr. Chung] may review these expenses to confirm that they were bona fide business expenses
for 11 UM” (id.).
54. Mr. Chung recently learned that rather than making any contributions to the
monthly Loan payments, Defendant Xie withdrew $136.47 in cash from the Urban Fresh
business checking account on February 10, 2020 (see Ex. E hereto).
55. On March 19, 2020, Plaintiffs’ brought a motion by order to show cause for a
temporary restraining order and preliminary injunction forcing, among other things, Defendant
Xie to make his monthly contributions to Urban Fresh’s small business loan.
56. On March 24, 2020, Defendant Xie, through his attorney, provided copies of his
2018 Chase card statements and a 2018 American Express card summary, which appeared to be
altered and redacted.
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57. Defendant has failed to substantively respond to any of Plaintiffs’ requests to
date.
58. Prior to bringing this action, no demand was made by Mr. Chung to the
Companies because such an effort would be futile and unnecessary. Mr. Chung and Defendant
Xie have each been at all relevant times, and they today remain, 50% shareholders of the
Companies. Defendant is directly charged with breaches of fiduciary duty owed to the
Companies in that he misappropriated corporate funds to his own individual benefit and
otherwise failed to comply with his corporate obligations. He cannot be expected to vote to
prosecute an action against himself.
H. Defendant Xie’s Misuse of 11 UM Funds to Pay for Construction at an
Unrelated Store
59. Upon information and belief, Defendant Xie misused the 11 UM Plum Card to
pay for hundreds of thousands of dollars in building materials, construction costs, restaurant
supplies and the like at an unrelated grocery store located at 70 Pine Street, New York, NY,
which is owned and operated by GJJG LLC.
AS AND FOR A FIRST CAUSE OF ACTION
(Derivative Demand for An Accounting)
60. Plaintiffs repeat and reallege paragraphs 1 through 59 of this Verified Complaint
as if fully set forth herein.
61. As the treasurer and secretary of the Companies, Defendant Xie owes a fiduciary
duty to Plaintiffs which requires Defendant Xie to, among other things, render an accounting and
to otherwise provide full and complete disclosure of all pertinent facts to Plaintiffs.
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62. Although no demand or refusal is required, Defendant Xie has nevertheless
consistently refused Plaintiffs’ demands for an accounting of payments made by 11 UM for
Defendant Xie’s credit card charges.
63. Plaintiffs urgently need an accounting to confirm to what extent Defendant Xie
has improperly used corporate funds to pay for personal expenses, and to what, if any, extent
such charges were made for legitimate business purposes.
64. Plaintiffs are accordingly entitled to a prompt accounting of expenses charged to
Defendant’s American Express and Chase credit card bills ranging from January 1, 2014 to June
31, 2019.
AS AND FOR A SECOND CAUSE OF ACTION
(Direct Demand for a Declaratory Judgment)
65. Plaintiffs repeat and incorporate paragraphs 1 through 64 as if more fully set forth
herein.
66. As a borrower, Urban Fresh became obligated to satisfy its monthly payments due
on the Loan, totaling $29,422.85 per month, beginning on September 4, 2014.
67. As a 50% owner of Urban Fresh, Defendant Xie became obligated to satisfy half
of Urban Fresh’s monthly payments due on the Loan, totaling $29,422.85 per month, beginning
on December 1, 2019 when there were insufficient funds in the business account of Urban Fresh.
68. Despite Mr. Chung’s repeated demands that Defendant Xie pay his share of the
Loan’s month payments, totaling $14,711.42 per month, starting from December 1, 2019,
Defendant has failed to pay his share to date.
69. To avoid a default on the Loan, Mr. Chung has paid Defendant Xie’s share of the
Loan payments, totaling $73,557.13 to date.
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70. Based on Defendant’s wrongful failure to pay, the Court should enter an order
declaring that Defendant Xie must pay his 50% share of future monthly payments due on the
Loan and reimburse Mr. Chung for all Loan payments advanced on Defendant Xie’s behalf.
AS AND FOR A THIRD CAUSE OF ACTION
(Derivative Claim Breach of Fiduciary Duty)
71. Plaintiffs repeat and incorporate paragraphs 1 through 70 as if more fully set forth
herein.
72. As the treasurer and secretary of the Companies, Defendant Xie owes a fiduciary
duty to Plaintiffs which requires Defendant to, among other things, provide full and complete
disclosure of information relevant to the Companies’ expenses, satisfy the Companies’ financial
obligations, otherwise avoid self-dealing at Plaintiffs’ expense, and avoid diverting to his own
use and benefit any of the Companies’ funds, opportunities, and profits rightfully belonging to
the Companies.
73. Defendant Xie has nevertheless consistently refused Plaintiff’s demands for,
among other things, for information concerning his use of corporate funds to pay credit card bills
totaling nearly $7 million from 2014 through 2019,
74. Based on Defendant Xie’s breaches of fiduciary duty, Plaintiffs have suffered
damages in an amount to be determined at trial, plus costs, expenses, and statutory interest at a
rate of 9% per annum.
AS AND FOR A FOURTH CAUSE OF ACTION
(Direct Claim for Conversion as to Defendant Xie)
75. Plaintiffs repeat and incorporate paragraphs 1 through 74 as if more fully set forth
herein.
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76. At all relevant times, Defendant maintained ownership, possessory, and property
rights to his 50% share of the $29,422.85 monthly payments due on the Loan, forcing Mr. Chung
to pay Defendant’s share of the Loan payments, totaling $73,557.13 to date.
77. Defendant has thus wrongfully exercised dominion over property belonging to
Mr. Chung, in derogation of Mr. Chung’s rights to such property.
78. By reason of the foregoing conversion, Mr. Chung has suffered damages in an
amount totaling at least $73, 557.13 to date and accruing at the rate of $14,711.42 per month,
plus costs, expenses, and statutory interest at a rate of 9% per annum.
AS AND FOR A FIFTH CAUSE OF ACTION
(Direct Claim for Unjust Enrichment)
79. Plaintiffs repeat and incorporate paragraphs 1 through 78 as if more fully set forth
herein.
80. Defendant engaged in wrongful, unfair and inequitable conduct, as complained of
above, and have benefitted from their wrongful conduct.
81. Defendant was enriched from his wrongful and unfair conduct at Mr. Chung’s
expense.
82. It would be against equity and good conscience for Defendant to retain the benefit
from his wrongful and unfair conduct.
83. By reason of the foregoing unjust enrichment, Mr. Chung has suffered damages in
an amount totaling $73,557.13 to date and accruing at the rate of an additional $14,711.42 per
month, plus costs, expenses, and statutory interest at a rate of 9% per annum.
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AS AND FOR A SIXTH CAUSE OF ACTION
(Derivative Claim for Conversion as to Defendants Xie, Janus, and Juicebrothers)
84. Plaintiffs repeat and incorporate paragraphs 1 through 83 as if more fully set forth
herein.
85. At all relevant times, Defendant Xie maintained ownership, possessory, and
property rights to funds rightfully belonging to 11 UM and Urban Fresh but illicitly used to pay
for Defendant Xie’s credit card expenses and other credit card expenses incurred without
Plaintiffs’ knowledge or consent.
86. At all relevant times, Defendants Janus and Juicebrothers maintained ownership,
possessory, and property right to funds rightfully belonging to 11 UM but illicitly used to pay for
credit card expenses incurred by Defendants Janus and Juicebrothers without Plaintiffs’
knowledge or consent.
87. Defendants Xie, Janus, and Juicebrothers have thus wrongfully exercised
dominion over property belonging to the Companies, in derogation of the Companies’ rights to
such property.
88. By reason of the foregoing conversion, Plaintiffs have suffered damages in an
amount to be determined at trial, plus costs, expenses, and statutory interest at a rate of 9% per
annum.
AS AND FOR A SEVENTH CAUSE OF ACTION
(Derivative Claim for Unjust Enrichment as to Defendants Xie, Janus, and Juicebrothers)
89. Plaintiffs repeat and incorporate paragraphs 1 through 88 as if more fully set forth
herein.
90. Defendant engaged in wrongful, unfair and inequitable conduct, as complained of
above, and have benefitted from their wrongful conduct.
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91. Defendant was enriched from his wrongful and unfair conduct at Mr. Chung’s
expense.
92. It would be against equity and good conscience for Defendant to retain the benefit
from his wrongful and unfair conduct.
93. By reason of the foregoing unjust enrichment, Plaintiffs have suffered damages in
an amount to be determined at trial, plus costs, expenses, and statutory interest at a rate of 9%
per annum.
AS AND FOR AN EIGHTH CAUSE OF ACTION
(Violation of N.Y. Bus. Corp. Law § 720 as to 11 UM)
94. Plaintiffs repeat and incorporate paragraphs 1 through 93 as if more fully set forth
herein.
95. At all relevant times herein, Mr. Chung was and is an individual holding 50% of
the outstanding shares in, and is a director of, 11 UM.
96. Defendant Xie is a 50% shareholder of 11 UM and served, and still serves, as a
director and officer of 11 UM.
97. Defendant Xie neglected, failed to perform, and violated his duties in the
management of 11 UM by, among other things: (i) stealing corporate assets; (ii) entering into
unauthorized business relationships on behalf of the Company; (iii) using 11 UM’s credit cards
and other corporate funds to pay for lavish personal expenses. None of the funds that Defendant
Xie misappropriated have been repaid.
98. Moreover, upon information and believe, none of the foregoing transactions
served any legitimate business purpose, and Defendant Xie knew of the unlawfulness of each act
of corporate malfeasance identified above and that he was transferring and wasting 11 UM’s
assets.
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99. Accordingly, Defendant Xie has mismanaged 11 UM and wasted its assets.
Plaintiffs are accordingly entitled to have Defendant disgorged of his ill-gotten proceeds back to
11 UM. In addition, Defendant Xie must be enjoined from further unlawfully conveying,
assigning, or transferring 11 UM’s assets.
AS AND FOR A NINTH CAUSE OF ACTION
(Violation of N.Y. Bus. Corp. Law § 720 as to Urban Fresh)
100. Plaintiffs repeat and incorporate paragraphs 1 through 99 as if more fully set forth
herein.
101. At all relevant times herein, Mr. Chung was and is an individual holding 50% of
the outstanding shares in, and is a director of, Urban Fresh.
102. Defendant Xie is a 50% shareholder of Urban Fresh and served, and still serves,
as a director and officer of Urban Fresh.
103. Defendant Xie neglected, failed to perform, and violated his duties in the
management of Urban Fresh by, among other things: (i) stealing corporate assets; and (ii) failing
to pay his share of loan payments owed by Urban Fresh, totaling $73,557.13 to date; (iii) using
Urban Fresh funds to pay for 11 UM’s credit cards and to pay for lavish personal expenses.
None of the funds that Defendant Xie misappropriated have been repaid.
104. Moreover, upon information and believe, none of the foregoing transactions
served any legitimate business purpose, and Defendant Xie knew of the unlawfulness of each act
of corporate malfeasance identified above and that he was transferring and wasting Urban
Fresh’s assets.
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105. Accordingly, Defendant Xie has mismanaged Urban Fresh and wasted its assets.
Plaintiffs are accordingly entitled to have Defendant Xie disgorged of his ill-gotten proceeds
back to Urban Fresh. In addition, Defendant Xie must be enjoined from further unlawfully
conveying, assigning, or transferring Urban Fresh’s assets.
WHEREFORE, Plaintiffs respectfully request that the Court enter judgment:
(1) Directing Defendant Xie to promptly render an accounting of expenses charged to
Defendant Xie’s American Express and Chase credit card bills ranging from
January 1, 2014 to December 31, 2019;
(2) Declaring that Defendant Xie must pay his 50% share of all future monthly
payments due on Urban Fresh’s loan with NewBank (the “Loan”) and reimburse
Mr. Chung for all Loan payments advanced on Defendant Xie’s behalf;
(3) Against Defendant Xie in favor of Plaintiffs for breach of fiduciary duty in an
amount to be determined at trial, plus costs, expenses, and statutory interest at a
rate of 9% per annum;
(4) Against Defendant Xie in favor of Mr. Chung for conversion in an amount
totaling at least $73,557.13 to date and accruing at the rate of $14,711.42 per
month, plus costs, expenses, and statutory interest at a rate of 9% per annum;
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(5) Against Defendant Xie in favor of Mr. Chung for unjust enrichment in an amount
totaling at least $73,557.12 to date and accruing at the rate of $14,711.42 per
month, plus costs, expenses, and statutory interest at a rate of 9% per annum;
(6) Against Defendants Xie, Janus, and Juicebrothers in favor of Plaintiffs for
conversion in an amount to be determined at trial, plus costs, expenses, and
statutory interest at a rate of 9% per annum;
(7) Against Defendants Xie, Janus, and Juicebrothers in favor of Plaintiffs for unjust
enrichment in an amount to be determined at trial, plus costs, expenses, and
statutory interest at a rate of 9% per annum;
(8) Against Defendant Xie in favor of 11 UM for violations of N.Y. Bus. Corp. Law
§ 720 in an amount to be determined at trial, plus costs, expenses, and statutory
interest at a rate of 9% per annum;
(9) Against Defendant Xie in favor of Urban Fresh for violations of N.Y. Bus. Corp.
Law § 720 in an amount to be determined at trial, plus costs, expenses, and
statutory interest at a rate of 9% per annum;
(10) Enjoining Defendant Xie from making any payments or withdrawals from 11 UM
or Urban Fresh for personal expenses, and requiring the express consent from
Plaintiff Chung for Xie to make any payments for bona fide business expenses;
and
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(11) Granting Plaintiffs such other and further relief as this Court deems just and
proper.
Dated: New York, New York WIGGIN AND DANA LLP
May 27, 2020
By: /s/ Kenneth K. Cho
Kenneth K. Cho
Michael L. Kenny Jr.
437 Madison Avenue, 35th Floor
New York, New York 10022
(212) 551-2600
Attorneys for Plaintiffs
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NYSCEF DOC. NO. 21 RECEIVED NYSCEF: 05/27/2020
VERIFICATION
State of New York )
) ss:
County of Nassau
I, Young S. Chung, being duly sworn, depose and say:
1. I am the individual plaintiff in this action and the president of the corporate
plaintiffs, Urban Fresh Corp. (“Urban Fresh”) and 11 UM Food Corp. (“11 UM”).
2. I have read the foregoing Revised Verified Complaint and know the contents
thereof, and the same is true to my own knowledge, except as to the matters stated to be alleged
upon information and belief, and, as to those matters, I believe them to be true.
3. The reason why this verification is made by me is that I am the president and a 50%
shareholder in Urban Fresh and 11 UM, which are corporations existing and organized under the
laws of the State of New York, and I am otherwise familiar with the facts and circumstances of
this case.
YoungJs. Chung
Sworn to before me
this ly of May, 2020
\ WOOCHUL KIM
Notary Public, State of Now York
V0 -> No, 01K1623293&
Notary Public Qualified In Nassau County; ^
Commission Expires Dec 20,20
28806\ 1\4831 -5210-3353 .v7
20
20 of 20
Preview
FILED: KINGS COUNTY CLERK 05/27/2020 03:57 PM INDEX NO. 503139/2020 NYSCEF DOC. NO. 21 RECEIVED NYSCEF: 05/27/2020 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF KINGS --------------------------------------------------------------------- x YOUNG S. CHUNG, individually and on behalf of : URBAN FRESH CORP. and 11 UM FOOD CORP. : AMENDED : VERIFIED COMPLAINT Plaintiffs, : : -against- : Index No. 503139/2020 : COLIN K. XIE, BARBARA JANUS, : JUICEBROTHERS, LLC, and DOES 1-100 : : Defendant. : --------------------------------------------------------------------- x Plaintiffs Young S. Chung, individually and on behalf of Urban Fresh Corp. and 11 UM Food Corp. (collectively, “Plaintiffs”), by their attorneys Wiggin and Dana LLP, as and for their Verified Complaint against Colin K. Xie, Barbara Janus, Juicebrothers, LLC, and Does 1-100, allege as follows: NATURE OF THE ACTION 1. This is an action to protect the fundamental interests of the corporate plaintiffs Urban Fresh Corp. (“Urban Fresh”) and 11 UM Food Corp. (“11 UM”) (collectively, the “Companies”) and plaintiff Young S. Chung (“Mr. Chung”) from defendant Colin K. Xie’s (“Defendant Xie”) extensive malfeasance with respect to the management and operations of the Companies including the failure to account for millions of dollars in expenses charged to the Companies and incurred for, among other things, Defendant Xie’s lavish personal expenses. 2. Mr. Chung and Defendant Xie are business partners and respectively each own 50% of the issued and outstanding shares of the Companies, which are engaged in the business of operating two grocery stores in New York City. Mr. Chung is president of the Companies, and Defendant is secretary and treasurer. 1 of 20 FILED: KINGS COUNTY CLERK 05/27/2020 03:57 PM INDEX NO. 503139/2020 NYSCEF DOC. NO. 21 RECEIVED NYSCEF: 05/27/2020 3. Defendant Xie has repeatedly breached fiduciary duties owed to Plaintiffs, and has committed other wrongdoing as stated below, by, among other ways: (i) failing to pay his share of loan payments owed by Urban Fresh, totaling $73,557.13 to date; (ii) misappropriating $530,390.82 from Urban Fresh in September, 2018; (iii) failing to account for at least $7 million paid from 11 UM’s business account by Defendant Xie’s to American Express from 2014 to June 2019; (iv) failing to account for at least $1,200,002.58 paid from 11 UM’s business account to Defendant Xie’s personal American Express and Chase card bills from August 2018 to June 2019; (v) failing to account for at least another $2.7 million in payments made from Urban Fresh’s business checking account to pay for additional American Express charges made by Defendant from 2014 through 2018; (vi) personally stealing approximately $140,000 in cash from 11 UM’s store; and (vii) entering into an unauthorized business relationship on behalf of 11 UM with a personal friend named Barbara Janus (“Janus”) and her company, defendant Juicebrothers, LLC (“Juicebrothers”). 4. Due to Defendant Xie’s blatant misuse of corporate funds, and his refusal to meet essential financial obligations or respond to basic requests for information, Plaintiffs have no choice but to seek this Court’s intervention. Plaintiffs accordingly seek an accounting and declaratory relief compelling Defendant to satisfy his corporate obligations. They further seek monetary damages for the claims set forth below. THE PARTIES 5. Plaintiff Young S. Chung (“Mr. Chung”) is an individual residing in Nassau County, New York. 2 2 of 20 FILED: KINGS COUNTY CLERK 05/27/2020 03:57 PM INDEX NO. 503139/2020 NYSCEF DOC. NO. 21 RECEIVED NYSCEF: 05/27/2020 6. Plaintiff Urban Fresh Corp. (“Urban Fresh”) is an existing corporation organized under the laws of the State of New York with a principal place of business located in Queens County, New York. 7. Plaintiff 11 UM Food Corp. (“11 UM”) is an existing corporation organized under the laws of the State of New York with a principal place of business located in Kings County, New York. 8. Defendant Colin K. Xie (“Defendant Xie”) is an individual residing in Nassau County, New York. 9. Defendant Barbara Janus (“Janus”) is an individual residing in, upon information and belief, New York County, New York. 10. Defendant Juicebrothers, LLC (“Juicebrothers”) is an existing limited liability company organized under the laws of the State of New York with a principal place of business located in New York County, New York. 11. Defendants Does 1 – 100 represent individuals, whose identities are currently unknown, with whom Mr. Xie engaged in malfeasance related to the Corporate Plaintiffs. VENUE AND JURISDICTION 12. This Court has jurisdiction, among other grounds, pursuant to CPLR §§ 301, 302, and 503 because Plaintiff 11 UM is a resident of, and/or conducts business in, Kings County. 13. Venue is also proper, among other reasons, because Plaintiff 11 UM is a resident of, and/or conducts business in, Kings County. 3 3 of 20 FILED: KINGS COUNTY CLERK 05/27/2020 03:57 PM INDEX NO. 503139/2020 NYSCEF DOC. NO. 21 RECEIVED NYSCEF: 05/27/2020 OTHER PERTINENT BACKGROUND A. The Plaintiff Companies 14. Mr. Chung and Defendant Xie are business partners who own and operate two grocery stores together in New York City. 15. One of the grocery stores, owned by Urban Fresh, is in Far Rockaway, New York and is currently closed for business and under renovations. 16. The other grocery store is owned by 11 UM and located in Brooklyn and is doing business under the name “City Acres Market.” 17. Mr. Chung is the president of Urban Fresh and 11 UM (collectively, the “Companies”). 18. Defendant Xie is the secretary and treasurer of the Companies. 19. Mr. Chung and Defendant Xie each own 50% of the issued and outstanding shares of the Companies. B. Defendant’s Failure to Pay His Share of Urban Fresh’s Business Loan 20. Urban Fresh Corp. borrowed $2,500,000 pursuant to a business loan agreement with NewBank USA dated September 4, 2014 (the “Loan”). 21. Mr. Chung, Defendant Xie, Urban Fresh, 11 UM, and Ryan Food Corp. are guarantors of the Loan. 22. As 50% shareholders in Urban Fresh, Mr. Chung and Defendant Xie each became personally responsible for satisfying half of the Loan’s monthly payments, totaling $29,422.85 per month, on December 1, 2019. 4 4 of 20 FILED: KINGS COUNTY CLERK 05/27/2020 03:57 PM INDEX NO. 503139/2020 NYSCEF DOC. NO. 21 RECEIVED NYSCEF: 05/27/2020 23. Despite Mr. Chung’s repeated demands that Defendant Xie pay his share of the Loan payments (approximately $14,711.42 per month), Defendant Xie has simply failed to do so to date. 24. To avoid a default, Mr. Chung has accordingly paid Defendant’s share of the Loan payments, totaling $73,557.13 to date (the December 1, 2019, January 1, 2020, February 1, 2020, March 1, 2020, and April 1, 2020 Loan payments). C. Defendant Xie’s Payment of Nearly $4.5 Million in Credit Card Expenses With Company Funds 25. Mr. Chung has also demanded clarification over Defendant’s use of 11 UM’s and Urban Fresh’s corporate funds to pay Defendant’s and 11 UM’s credit card bills. 26. From about 2013 to August 2018, the parties maintained American Express Corporate Plum Cards (the Plum Card) through 11 UM. 27. Over time, Defendant Xie’s use of the Plum Card exceeded normal business expenditures and resulted in tens of thousands of dollars in bank overdraft fees and credit card late fees. 28. Upon information and belief, Defendant Xie’s misuse of the Plum Card was an elaborate scheme designed to hide that fact that he was embezzling millions of dollars from Urban Fresh and 11 UM. 29. The parties did not maintain any business credit cards through Chase Credit Card services. 30. The banking records from both the 11 UM and Urban Fresh business checking accounts reveal that Defendant Xie was making electronic payments to American Express and Chase Credit Card Services. 5 5 of 20 FILED: KINGS COUNTY CLERK 05/27/2020 03:57 PM INDEX NO. 503139/2020 NYSCEF DOC. NO. 21 RECEIVED NYSCEF: 05/27/2020 31. More specifically, records from 11 UM’s business checking account reflect that from August 2018 to June 2019 after the Plum Card was closed, Mr. Xie paid his personal American Express and Chase card bills with funds in 11 UM’s business account totaling approximately $1,200,002.58 and $22,000.00, respectively, totaling $1,222,002.58. 32. Upon information and belief, any electronic payments from 11 UM or Urban Fresh to Chase Card services were to Defendant Xie’s personal Chase credit cards. 33. Defendant Xie made another approximately $2.7 million in payments from Urban Fresh’s business checking account for charges made to American Express from 2014 through 2018; and approximately $ 284,500.00 to Chase credit card services from 2016 through 2018. 34. A detailed review of the electronic payments made to American Express from the 11 UM and Urban Fresh business checking accounts in 2018 against the Plum Card statements and Defendant Xie’s personal American Express card summary for 2018 cannot account for approximately $1,045,22, namely $558,000 paid from 11 UM and $487,000 paid from Urban Fresh. 35. Upon information and belief, in 2018, Defendant Xie made more than $ 2 million in electronic payments to American Express from the 11 UM and Urban Fresh business checking accounts and diverted approximately $1,045,222 to pay for additional undisclosed American Express credit card accounts held by either Defendant Xie or other third parties. 36. Upon information and belief, Defendant Xie used his business Plum Card to pay for personal expenses including, but not limited to, approximately $4,320.23 in charges to Bloomingdales; $9,607.10 in charges to PHO NY restaurant in a single month; $1,460.15 in charges in Brazil; charges in grocery stores in Florida; and tens of thousands of dollars in charges for NYC Football entertainment tickets and charges at night clubs. 6 6 of 20 FILED: KINGS COUNTY CLERK 05/27/2020 03:57 PM INDEX NO. 503139/2020 NYSCEF DOC. NO. 21 RECEIVED NYSCEF: 05/27/2020 37. Defendant Xie’s actions were hiding a massive fraudulent credit card scheme that was draining the operating funds from Urban Fresh and 11 UM so that Mr. Chung had to inject more than $300,000 in personal funds into 11 UM in 2019 to meets its obligations. D. Defendant’s Unauthorized Removal of Company Funds from Urban Fresh 38. Pursuant to a redevelopment plan by the landlord of the Urban Fresh property, the landlord induced the parties to vacate the premises and Urban Fresh received a $1.25 million vacate payment. 39. Without Mr. Chung’s knowledge or consent, Defendant Xie misappropriated the entire $ 1.25 million vacate payment and established a brokerage account at Morgan Stanley. 40. Upon information and belief, Defendant Xie took out a loan of $ 1 million against the Morgan Stanley brokerage account which was deposited into the Urban Fresh business checking account on or about September 24, 2018. 41. Without the knowledge or consent of Mr. Chung, Defendant Xie transferred $530,390.82 from the Urban Fresh business checking account to his personal account. 42. Upon information and belief, Defendant Xie simply stole this money from Urban Fresh. 43. Deprived of these funds, Urban Fresh is no longer able to make its monthly Loan payments. E. Defendant’s Unauthorized Removal of Cash from 11 UM 44. Mr. Chung also recently discovered, through 11 UM’s store manager, that Defendant Xie has been regularly removing cash from 11 UM’s store. However, there are no corroborating records showing that Defendant Xie deposited any of the money into 11 UM’s accounts. 7 7 of 20 FILED: KINGS COUNTY CLERK 05/27/2020 03:57 PM INDEX NO. 503139/2020 NYSCEF DOC. NO. 21 RECEIVED NYSCEF: 05/27/2020 45. Upon information and belief, Defendant Xie simply stole this money, which totals approximately $140,000 to date. F. Defendant’s Unauthorized Dealings with Janus and Juicebrothers and Their Unauthorized Use of 11 UM Funds 46. In or around the fall of 2016, Defendant, without Mr. Chung’s knowledge or consent, entered into an arrangement or contract with defendant Juicebrothers for the provision of services related to 11 UM. Upon information and belief, Defendant Xie made and continued this arrangement, even though it resulted in monetary losses to 11 UM, because of a personal relationship that he has with Juicebrothers’ owner, defendant Janus. 47. Again without Mr. Chung’s knowledge or consent, Defendant Xie issued a Plum card from 11 UM to Janus, who is not an employee of 11 UM, and she made charges with that card for which she and Defendant Xie have not accounted. Upon information and belief, these charges too were for personal expenses unrelated to 11 UM’s business operations. 48. Without Mr. Chung’s knowledge or consent, Defendants Xie and Janus purchased i) airfare for multiple trips between Amsterdam, Netherland and JFK Airport, New York, ii) expensive juice extractor equipment; and iii) books. G. Plaintiff’s Unanswered Demands for Loan Payments and Information 49. In December 2019, Mr. Chung began formally writing to Defendant Xie to request Defendant Xie’s contribution with his Loan-related obligations and information concerning his apparent use of corporate funds for personal purposes. 50. On December 3, 2019, Mr. Chung sent Defendant a letter requesting that Defendant deposit $14,711.42 into Urban Fresh’s business account to satisfy his 50% share of the monthly Loan payment due on December 1, 2019 (see Ex. A hereto). 8 8 of 20 FILED: KINGS COUNTY CLERK 05/27/2020 03:57 PM INDEX NO. 503139/2020 NYSCEF DOC. NO. 21 RECEIVED NYSCEF: 05/27/2020 51. Mr. Chung similarly emailed Defendant on December 27, 2019 requesting half of the January 2020 loan payment, i.e., $14,711.42, be deposited into the Urban Fresh business account (see Ex. B hereto). 52. Mr. Chung emailed and mailed Defendant on January 14, 2020 requesting 50% of the February 1, 2020 payment plus the two additional $14,711.42 deposits from Defendant for his share of the past due December and January Loan payments (see Ex. C hereto) totaling $44,134.27. 53. On January 21, 2020, Mr. Chung also emailed and mailed Defendant requesting information to clarify whether and to what extent Defendant’s payment of personal American Express bills with 11 UM funds was appropriate (see Ex. D hereto). Mr. Chung accordingly requested Defendant’s American Express statements from January to December 2018 “so that [Mr. Chung] may review these expenses to confirm that they were bona fide business expenses for 11 UM” (id.). 54. Mr. Chung recently learned that rather than making any contributions to the monthly Loan payments, Defendant Xie withdrew $136.47 in cash from the Urban Fresh business checking account on February 10, 2020 (see Ex. E hereto). 55. On March 19, 2020, Plaintiffs’ brought a motion by order to show cause for a temporary restraining order and preliminary injunction forcing, among other things, Defendant Xie to make his monthly contributions to Urban Fresh’s small business loan. 56. On March 24, 2020, Defendant Xie, through his attorney, provided copies of his 2018 Chase card statements and a 2018 American Express card summary, which appeared to be altered and redacted. 9 9 of 20 FILED: KINGS COUNTY CLERK 05/27/2020 03:57 PM INDEX NO. 503139/2020 NYSCEF DOC. NO. 21 RECEIVED NYSCEF: 05/27/2020 57. Defendant has failed to substantively respond to any of Plaintiffs’ requests to date. 58. Prior to bringing this action, no demand was made by Mr. Chung to the Companies because such an effort would be futile and unnecessary. Mr. Chung and Defendant Xie have each been at all relevant times, and they today remain, 50% shareholders of the Companies. Defendant is directly charged with breaches of fiduciary duty owed to the Companies in that he misappropriated corporate funds to his own individual benefit and otherwise failed to comply with his corporate obligations. He cannot be expected to vote to prosecute an action against himself. H. Defendant Xie’s Misuse of 11 UM Funds to Pay for Construction at an Unrelated Store 59. Upon information and belief, Defendant Xie misused the 11 UM Plum Card to pay for hundreds of thousands of dollars in building materials, construction costs, restaurant supplies and the like at an unrelated grocery store located at 70 Pine Street, New York, NY, which is owned and operated by GJJG LLC. AS AND FOR A FIRST CAUSE OF ACTION (Derivative Demand for An Accounting) 60. Plaintiffs repeat and reallege paragraphs 1 through 59 of this Verified Complaint as if fully set forth herein. 61. As the treasurer and secretary of the Companies, Defendant Xie owes a fiduciary duty to Plaintiffs which requires Defendant Xie to, among other things, render an accounting and to otherwise provide full and complete disclosure of all pertinent facts to Plaintiffs. 10 10 of 20 FILED: KINGS COUNTY CLERK 05/27/2020 03:57 PM INDEX NO. 503139/2020 NYSCEF DOC. NO. 21 RECEIVED NYSCEF: 05/27/2020 62. Although no demand or refusal is required, Defendant Xie has nevertheless consistently refused Plaintiffs’ demands for an accounting of payments made by 11 UM for Defendant Xie’s credit card charges. 63. Plaintiffs urgently need an accounting to confirm to what extent Defendant Xie has improperly used corporate funds to pay for personal expenses, and to what, if any, extent such charges were made for legitimate business purposes. 64. Plaintiffs are accordingly entitled to a prompt accounting of expenses charged to Defendant’s American Express and Chase credit card bills ranging from January 1, 2014 to June 31, 2019. AS AND FOR A SECOND CAUSE OF ACTION (Direct Demand for a Declaratory Judgment) 65. Plaintiffs repeat and incorporate paragraphs 1 through 64 as if more fully set forth herein. 66. As a borrower, Urban Fresh became obligated to satisfy its monthly payments due on the Loan, totaling $29,422.85 per month, beginning on September 4, 2014. 67. As a 50% owner of Urban Fresh, Defendant Xie became obligated to satisfy half of Urban Fresh’s monthly payments due on the Loan, totaling $29,422.85 per month, beginning on December 1, 2019 when there were insufficient funds in the business account of Urban Fresh. 68. Despite Mr. Chung’s repeated demands that Defendant Xie pay his share of the Loan’s month payments, totaling $14,711.42 per month, starting from December 1, 2019, Defendant has failed to pay his share to date. 69. To avoid a default on the Loan, Mr. Chung has paid Defendant Xie’s share of the Loan payments, totaling $73,557.13 to date. 11 11 of 20 FILED: KINGS COUNTY CLERK 05/27/2020 03:57 PM INDEX NO. 503139/2020 NYSCEF DOC. NO. 21 RECEIVED NYSCEF: 05/27/2020 70. Based on Defendant’s wrongful failure to pay, the Court should enter an order declaring that Defendant Xie must pay his 50% share of future monthly payments due on the Loan and reimburse Mr. Chung for all Loan payments advanced on Defendant Xie’s behalf. AS AND FOR A THIRD CAUSE OF ACTION (Derivative Claim Breach of Fiduciary Duty) 71. Plaintiffs repeat and incorporate paragraphs 1 through 70 as if more fully set forth herein. 72. As the treasurer and secretary of the Companies, Defendant Xie owes a fiduciary duty to Plaintiffs which requires Defendant to, among other things, provide full and complete disclosure of information relevant to the Companies’ expenses, satisfy the Companies’ financial obligations, otherwise avoid self-dealing at Plaintiffs’ expense, and avoid diverting to his own use and benefit any of the Companies’ funds, opportunities, and profits rightfully belonging to the Companies. 73. Defendant Xie has nevertheless consistently refused Plaintiff’s demands for, among other things, for information concerning his use of corporate funds to pay credit card bills totaling nearly $7 million from 2014 through 2019, 74. Based on Defendant Xie’s breaches of fiduciary duty, Plaintiffs have suffered damages in an amount to be determined at trial, plus costs, expenses, and statutory interest at a rate of 9% per annum. AS AND FOR A FOURTH CAUSE OF ACTION (Direct Claim for Conversion as to Defendant Xie) 75. Plaintiffs repeat and incorporate paragraphs 1 through 74 as if more fully set forth herein. 12 12 of 20 FILED: KINGS COUNTY CLERK 05/27/2020 03:57 PM INDEX NO. 503139/2020 NYSCEF DOC. NO. 21 RECEIVED NYSCEF: 05/27/2020 76. At all relevant times, Defendant maintained ownership, possessory, and property rights to his 50% share of the $29,422.85 monthly payments due on the Loan, forcing Mr. Chung to pay Defendant’s share of the Loan payments, totaling $73,557.13 to date. 77. Defendant has thus wrongfully exercised dominion over property belonging to Mr. Chung, in derogation of Mr. Chung’s rights to such property. 78. By reason of the foregoing conversion, Mr. Chung has suffered damages in an amount totaling at least $73, 557.13 to date and accruing at the rate of $14,711.42 per month, plus costs, expenses, and statutory interest at a rate of 9% per annum. AS AND FOR A FIFTH CAUSE OF ACTION (Direct Claim for Unjust Enrichment) 79. Plaintiffs repeat and incorporate paragraphs 1 through 78 as if more fully set forth herein. 80. Defendant engaged in wrongful, unfair and inequitable conduct, as complained of above, and have benefitted from their wrongful conduct. 81. Defendant was enriched from his wrongful and unfair conduct at Mr. Chung’s expense. 82. It would be against equity and good conscience for Defendant to retain the benefit from his wrongful and unfair conduct. 83. By reason of the foregoing unjust enrichment, Mr. Chung has suffered damages in an amount totaling $73,557.13 to date and accruing at the rate of an additional $14,711.42 per month, plus costs, expenses, and statutory interest at a rate of 9% per annum. 13 13 of 20 FILED: KINGS COUNTY CLERK 05/27/2020 03:57 PM INDEX NO. 503139/2020 NYSCEF DOC. NO. 21 RECEIVED NYSCEF: 05/27/2020 AS AND FOR A SIXTH CAUSE OF ACTION (Derivative Claim for Conversion as to Defendants Xie, Janus, and Juicebrothers) 84. Plaintiffs repeat and incorporate paragraphs 1 through 83 as if more fully set forth herein. 85. At all relevant times, Defendant Xie maintained ownership, possessory, and property rights to funds rightfully belonging to 11 UM and Urban Fresh but illicitly used to pay for Defendant Xie’s credit card expenses and other credit card expenses incurred without Plaintiffs’ knowledge or consent. 86. At all relevant times, Defendants Janus and Juicebrothers maintained ownership, possessory, and property right to funds rightfully belonging to 11 UM but illicitly used to pay for credit card expenses incurred by Defendants Janus and Juicebrothers without Plaintiffs’ knowledge or consent. 87. Defendants Xie, Janus, and Juicebrothers have thus wrongfully exercised dominion over property belonging to the Companies, in derogation of the Companies’ rights to such property. 88. By reason of the foregoing conversion, Plaintiffs have suffered damages in an amount to be determined at trial, plus costs, expenses, and statutory interest at a rate of 9% per annum. AS AND FOR A SEVENTH CAUSE OF ACTION (Derivative Claim for Unjust Enrichment as to Defendants Xie, Janus, and Juicebrothers) 89. Plaintiffs repeat and incorporate paragraphs 1 through 88 as if more fully set forth herein. 90. Defendant engaged in wrongful, unfair and inequitable conduct, as complained of above, and have benefitted from their wrongful conduct. 14 14 of 20 FILED: KINGS COUNTY CLERK 05/27/2020 03:57 PM INDEX NO. 503139/2020 NYSCEF DOC. NO. 21 RECEIVED NYSCEF: 05/27/2020 91. Defendant was enriched from his wrongful and unfair conduct at Mr. Chung’s expense. 92. It would be against equity and good conscience for Defendant to retain the benefit from his wrongful and unfair conduct. 93. By reason of the foregoing unjust enrichment, Plaintiffs have suffered damages in an amount to be determined at trial, plus costs, expenses, and statutory interest at a rate of 9% per annum. AS AND FOR AN EIGHTH CAUSE OF ACTION (Violation of N.Y. Bus. Corp. Law § 720 as to 11 UM) 94. Plaintiffs repeat and incorporate paragraphs 1 through 93 as if more fully set forth herein. 95. At all relevant times herein, Mr. Chung was and is an individual holding 50% of the outstanding shares in, and is a director of, 11 UM. 96. Defendant Xie is a 50% shareholder of 11 UM and served, and still serves, as a director and officer of 11 UM. 97. Defendant Xie neglected, failed to perform, and violated his duties in the management of 11 UM by, among other things: (i) stealing corporate assets; (ii) entering into unauthorized business relationships on behalf of the Company; (iii) using 11 UM’s credit cards and other corporate funds to pay for lavish personal expenses. None of the funds that Defendant Xie misappropriated have been repaid. 98. Moreover, upon information and believe, none of the foregoing transactions served any legitimate business purpose, and Defendant Xie knew of the unlawfulness of each act of corporate malfeasance identified above and that he was transferring and wasting 11 UM’s assets. 15 15 of 20 FILED: KINGS COUNTY CLERK 05/27/2020 03:57 PM INDEX NO. 503139/2020 NYSCEF DOC. NO. 21 RECEIVED NYSCEF: 05/27/2020 99. Accordingly, Defendant Xie has mismanaged 11 UM and wasted its assets. Plaintiffs are accordingly entitled to have Defendant disgorged of his ill-gotten proceeds back to 11 UM. In addition, Defendant Xie must be enjoined from further unlawfully conveying, assigning, or transferring 11 UM’s assets. AS AND FOR A NINTH CAUSE OF ACTION (Violation of N.Y. Bus. Corp. Law § 720 as to Urban Fresh) 100. Plaintiffs repeat and incorporate paragraphs 1 through 99 as if more fully set forth herein. 101. At all relevant times herein, Mr. Chung was and is an individual holding 50% of the outstanding shares in, and is a director of, Urban Fresh. 102. Defendant Xie is a 50% shareholder of Urban Fresh and served, and still serves, as a director and officer of Urban Fresh. 103. Defendant Xie neglected, failed to perform, and violated his duties in the management of Urban Fresh by, among other things: (i) stealing corporate assets; and (ii) failing to pay his share of loan payments owed by Urban Fresh, totaling $73,557.13 to date; (iii) using Urban Fresh funds to pay for 11 UM’s credit cards and to pay for lavish personal expenses. None of the funds that Defendant Xie misappropriated have been repaid. 104. Moreover, upon information and believe, none of the foregoing transactions served any legitimate business purpose, and Defendant Xie knew of the unlawfulness of each act of corporate malfeasance identified above and that he was transferring and wasting Urban Fresh’s assets. 16 16 of 20 FILED: KINGS COUNTY CLERK 05/27/2020 03:57 PM INDEX NO. 503139/2020 NYSCEF DOC. NO. 21 RECEIVED NYSCEF: 05/27/2020 105. Accordingly, Defendant Xie has mismanaged Urban Fresh and wasted its assets. Plaintiffs are accordingly entitled to have Defendant Xie disgorged of his ill-gotten proceeds back to Urban Fresh. In addition, Defendant Xie must be enjoined from further unlawfully conveying, assigning, or transferring Urban Fresh’s assets. WHEREFORE, Plaintiffs respectfully request that the Court enter judgment: (1) Directing Defendant Xie to promptly render an accounting of expenses charged to Defendant Xie’s American Express and Chase credit card bills ranging from January 1, 2014 to December 31, 2019; (2) Declaring that Defendant Xie must pay his 50% share of all future monthly payments due on Urban Fresh’s loan with NewBank (the “Loan”) and reimburse Mr. Chung for all Loan payments advanced on Defendant Xie’s behalf; (3) Against Defendant Xie in favor of Plaintiffs for breach of fiduciary duty in an amount to be determined at trial, plus costs, expenses, and statutory interest at a rate of 9% per annum; (4) Against Defendant Xie in favor of Mr. Chung for conversion in an amount totaling at least $73,557.13 to date and accruing at the rate of $14,711.42 per month, plus costs, expenses, and statutory interest at a rate of 9% per annum; 17 17 of 20 FILED: KINGS COUNTY CLERK 05/27/2020 03:57 PM INDEX NO. 503139/2020 NYSCEF DOC. NO. 21 RECEIVED NYSCEF: 05/27/2020 (5) Against Defendant Xie in favor of Mr. Chung for unjust enrichment in an amount totaling at least $73,557.12 to date and accruing at the rate of $14,711.42 per month, plus costs, expenses, and statutory interest at a rate of 9% per annum; (6) Against Defendants Xie, Janus, and Juicebrothers in favor of Plaintiffs for conversion in an amount to be determined at trial, plus costs, expenses, and statutory interest at a rate of 9% per annum; (7) Against Defendants Xie, Janus, and Juicebrothers in favor of Plaintiffs for unjust enrichment in an amount to be determined at trial, plus costs, expenses, and statutory interest at a rate of 9% per annum; (8) Against Defendant Xie in favor of 11 UM for violations of N.Y. Bus. Corp. Law § 720 in an amount to be determined at trial, plus costs, expenses, and statutory interest at a rate of 9% per annum; (9) Against Defendant Xie in favor of Urban Fresh for violations of N.Y. Bus. Corp. Law § 720 in an amount to be determined at trial, plus costs, expenses, and statutory interest at a rate of 9% per annum; (10) Enjoining Defendant Xie from making any payments or withdrawals from 11 UM or Urban Fresh for personal expenses, and requiring the express consent from Plaintiff Chung for Xie to make any payments for bona fide business expenses; and 18 18 of 20 FILED: KINGS COUNTY CLERK 05/27/2020 03:57 PM INDEX NO. 503139/2020 NYSCEF DOC. NO. 21 RECEIVED NYSCEF: 05/27/2020 (11) Granting Plaintiffs such other and further relief as this Court deems just and proper. Dated: New York, New York WIGGIN AND DANA LLP May 27, 2020 By: /s/ Kenneth K. Cho Kenneth K. Cho Michael L. Kenny Jr. 437 Madison Avenue, 35th Floor New York, New York 10022 (212) 551-2600 Attorneys for Plaintiffs 19 19 of 20 FILED: KINGS COUNTY CLERK 05/27/2020 03:57 PM INDEX NO. 503139/2020 NYSCEF DOC. NO. 21 RECEIVED NYSCEF: 05/27/2020 VERIFICATION State of New York ) ) ss: County of Nassau I, Young S. Chung, being duly sworn, depose and say: 1. I am the individual plaintiff in this action and the president of the corporate plaintiffs, Urban Fresh Corp. (“Urban Fresh”) and 11 UM Food Corp. (“11 UM”). 2. I have read the foregoing Revised Verified Complaint and know the contents thereof, and the same is true to my own knowledge, except as to the matters stated to be alleged upon information and belief, and, as to those matters, I believe them to be true. 3. The reason why this verification is made by me is that I am the president and a 50% shareholder in Urban Fresh and 11 UM, which are corporations existing and organized under the laws of the State of New York, and I am otherwise familiar with the facts and circumstances of this case. YoungJs. Chung Sworn to before me this ly of May, 2020 \ WOOCHUL KIM Notary Public, State of Now York V0 -> No, 01K1623293& Notary Public Qualified In Nassau County; ^ Commission Expires Dec 20,20 28806\ 1\4831 -5210-3353 .v7 20 20 of 20