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SUPREME COURT OF THE STATE OF NEW YORK
COUNTY OF NEW YORK
-----------------------------------------------X
NORMA KNOPF and MICHAEL
KNOPF,
Plaintiffs, Index No. 150315/2019
- against -
FRANK M. ESPOSITO,
DORSEY & WHITNEY, LLP,
NATHANIEL H. AKERMAN,
EDWARD S. FELDMAN,
MICHAEL HAYDEN SANFORD AMENDED COMPLAINT
and SP VOYAGER FUND, LLC,
Defendants.
-----------------------------------------------X
Plaintiffs Norma Knopf and Michael Knopf, by their undersigned counsel, for their
amended complaint, allege as follows:
A. PARTIES
1. Plaintiff Norma Knopf resides in Travelers Rest, South Carolina. Norma is married
to plaintiff Michael Knopf.
2. Plaintiff Michael Knopf resides in Travelers Rest, South Carolina. Michael is married
to plaintiff Norma Knopf. (Hereinafter, Michael and Norma Knopf will be referred to as “the
Knopfs.”)
3. Defendant Frank M. Esposito is an attorney who resides in Nassau County, New
York and has a principal place of business in New York, New York.
4. Defendant Dorsey & Whitney, LLP (“Dorsey”) is a law firm which has a principal
place of business in New York, New York.
5. Defendant Nathaniel H. Akerman is an attorney and partner at Dorsey, and has a
principal place of business in New York, New York. Dorsey is liable for Akerman’s conduct, as
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alleged herein, pursuant to agency law and the doctrine of respondeat superior.
6. Defendant Edward S. Feldman is an attorney who has a principal place of business in
New York, New York.
7. Defendant Michael Sanford resides in Suffolk County, New York. Sanford is the sole
owner of a limited liability company, Pursuit Holdings (NY), LLC fka Pursuit Holdings, LLC,
and owner of defendant SP Voyager Fund, LLC.
8. Defendant SP Voyager Fund, LLC is a Delaware limited liability company, is qualified
to do business in the State of New York, and has a principal place of business in Suffolk County,
New York. SP Voyager Fund, LLC is named as a defendant since its presence in this case may
be necessary for the Court to order some of the relief requested herein.
B. JURISDICTION AND VENUE
9. In personam jurisdiction exists over all defendants since each has either a residence
and/or a principal place of business within the State of New York.
10. Venue properly lies in this Court since Esposito, Dorsey, Akerman and Feldman all
have a place of business in New York County, and because a portion of the events giving rise to
this action occurred in New York County.
C. NATURE OF THE ACTION
11. This is an action against several attorneys, and one non-attorney, Michael Sanford,
for their egregious, recurring, concerted and systematic fraud, deceit and collusion aimed at
misleading the Knopfs, the New York state and federal courts, witnesses upon whom the Knopfs
had served subpoenas and the Chapter 7 Trustee for Pursuit Holdings, LLC, one of Sanford’s
companies. The attorney defendants attempted and perpetrated repeated frauds in various
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lawsuits filed by the Knopfs, and submitted perjured testimony – much of it their own – in
related cases. Then, in their capacity as attorneys, submitted that perjured testimony in various
memoranda of law in the related cases. The attorney defendants conspired each other and with
Sanford and several non-parties in the commission of those frauds. In the process, they violated
not only common law anti-fraud prohibitions but also Judiciary Law §487 (which provides
statutory damages to redress fraud or collusion by attorneys) and the fraudulent conveyance
sections of the Debtor and Creditor Law.
12. Many of the allegations in this amended complaint are established by a March 26,
2018 report by the Inspector General of the New York State Office of Court Administration (“the
OCA Report”) and concern defendants’ corruption of a judicial officer, Melissa Ringel. Ringel is
defendant Frank Esposito’s wife. At the time of the corrupting events, Ringel was a Court
Attorney in the New York State Appellate Division, First Department. She was forced was to
resign following the OCA report.
13. The OCA report is just one chapter in a litigation that began nearly 10 years ago. In
2009, the Knopfs filed an action in Supreme Court, New York County, alleging, inter alia, that
defendant Michael Sanford and several of Sanford’s wholly-owned companies breached several
loan agreement. Knopf et al. v. Sanford, et al., New York County Index No. 113227/2009. The
claims in this 2009 action were based, in part, on the allegation that one of Sanford’s wholly-
owned companies, Pursuit Holdings, LLC, breached its contractual promises to collateralize
with mortgages and repay two purchase money loans from the Knopfs. Pursuit had used the first
of these loans, which was in the amount of $1,690,860, to acquire a penthouse apartment at 44
East 67th Street, in Manhattan. It used the second, in the amount of $3,250,000, to acquire three
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condominium units in a townhouse at 10 Bedford Street, also in Manhattan.
14. In 2014, plaintiffs Norma and Michael Knopf obtained summary judgment on each
of the loan agreements, including those documenting the purchase money loans to Pursuit.
However, the summary judgment decision did not determine damages. In 2015, while the Knopfs
were awaiting a hearing on the amount owed to them, they learned that Pursuit had contracted to
sell the 67th apartment. The Knopfs moved for a prejudgment attachment, which the trial court
(Hon. Richard Braun, J.S.C.) denied.
15. The Knopfs appealed the denial of the attachment motion. While the appeal was
pending, they obtained two orders from the First Department that were intended to protect their
interest in the 67th Street apartment while that appeal was being decided.
16. The first order, dated October 22, 2015, provided that if Pursuit sold the apartment
the proceeds had to be paid into escrow. The second, dated December 29, 2015, denied a
cross-motion by Sanford and Pursuit to vacate the October 22 escrow requirement. Citing these
orders, Pursuit’s in-contract buyer, Michael Phillips, refused to close unless the proceeds were
escrowed.
17. As established by the OCA report, in early January 2016 Sanford and defendant
Frank Esposito met, and Sanford gave Esposito the December 29 order. Esposito shared it with
his wife, Ringel, then employed in the First Department. Ringel informed Esposito that she
would opine that neither the October 22, 2015 escrow order nor the December 29, 2015 ruling
upholding the escrow requirement was an obstacle to an escrow free sale. However, she later
testified that she was never given the October 22 order, and did not understand the one from
December 29.
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18. As further established by the OCA Report, on January 11, 2016, Sanford and
Esposito agreed in writing that Sanford would pay Esposito a $55,000 one-time fee for
unspecified services. They also agreed that Esposito would not be paid until Sanford became
“liquid.”
19. As further established by the OCA Report, on January 12, 2016, at Sanford’s request,
defendant Nathaniel Akerman called Ringel on her unpublished direct number at the First
Department. Akerman did not notify the Knopfs’ attorneys that he intended to make the call, or
give them an opportunity to participate in it. Before calling Ringel, Akerman patched in
Sanford’s real estate attorney, defendant Edward Feldman. Despite not having seen the October
22 order, and by her own admission, not understanding the December 29 order, Ringel advised
Akerman and Feldman that the apartment could be sold without escrowing the proceeds.
20. As further established by the OCA Report, Ringel’s January 12, 2016 advisory
opinion was used to convince Phillips to close on escrow free terms. None of the $3 million in
sale proceeds was escrowed, and none used to pay the Knopfs. A total of $214,000 out of the sale
proceeds was transferred to Esposito.1 The money Esposito received included $50,000 by a check
written by Edward Feldman on February 1, 2016 (the day the sale of the 67th Street property
closed). Feldman was Pursuit’s closing attorney, and the $50,000 check was drawn on his
Feldman’s firm’s escrow account (which held Pursuit’s net sale proceeds).
21. Dorsey, Feldman and Sanford also received payments from the proceeds. $500,000
was used to pay Dechert, LLP an initial retainer, after Ringel recruited Dechert attorney James
1
As detailed below, Esposito deposited all this money in his firm’s business savings
account (where he would collect interest on it), then to a personal checking account. He then
returned $159,217, out of that $224,000, keeping $54,783.
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McGuire, for whom she had clerked when he was a First Department Justice, to appear as
Sanford’s new counsel.
22. Defendants used Ringel’s “advisory opinion” – not an actual order of an actual
judge – to convince Phillips that the proceeds could be distributed. As Feldman later stated in a
pro se memorandum of law filed in a related federal civil rights case: “This conference call
[with Ringel] lasted but a few minutes. Then, based upon this call, the closing took place and the
proceeds were distributed.” This strategy was chosen specifically, as Feldman pro se memo
admits, to defeat the Knopfs’ judicial “efforts to stop the sale.”
23. On February 25, 2016, one day after the Knopfs learned of the sale, they
successfully enforced the October 22 order escrow requirement, obtaining a new escrow order
from Appellate Division Justice Karla Moskowitz, but only after all but $436,227.32 of the
proceeds was dissipated. On March 24, 2016, the Knopfs prevailed on the appeal when the First
Department ordered a freeze of Pursuit’s assets, including the $436,227.32 paid into the
Moskowitz-ordered escrow and Pursuit’s fee interest in the remaining properties. However,
these orders came too late to prevent the loss of $2.2 million out of the funds distributed (rather
than escrowed) based on the ex parte opinion Ringel provided Akerman. Had the Knopfs been
on the Akerman/Feldman call to Ringel, indisputably, they would have been able to obtain a new
escrow order before the distribution of the proceeds. Trepel v. Dippold, 2006 WL 3054336, *5
(S.D.N.Y., Oct. 27, 2006) (Cote, J.) (upholding Judiciary Law §487 claims because “The
evidence supports an inference that Judge Lynch would have issued an attachment order earlier
and Trepel’s attorneys may have acted differently had [the attorney charged with the §487
violation] not made misrepresentations during the attachment hearing or had [the attorney] not
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delayed in reporting Diop’s car shipments.”)
24. In a related case, Knopf v. Phillips, 16 Civ. 6601 (S.D.N.Y.), Akerman and Feldman
testified that they spoke to Ringel only because they called a general number at the First
Department clerk’s office, and were then randomly and coincidentally transferred to her.
25. Defendants then submitted Akerman’s and Feldman’s perjured testimony of a
transferred call in support of their motions for dismissal and sanctions in a related federal action,
Knopf v. Esposito, 17 Civ. 5833 (S.D.N.Y.) (hereinafter, the Knopf v. Esposito federal civil
rights action) in which the Knopfs filed alleged a conspiracy to violate 42 U.S.C. §1983, based
on assertions that same defendants named herein colluded with Ringel, a state actor, to deprive
the Knopfs of their right to notice and opportunity to be heard in connection with the distribution
of the proceeds of the sale.2
26. Following the dismissal and sanctions order, OCA filed it’s the report on its
investigation into these events, which appended First Department phone records. Those records
showed that, on January 12, 2016, Akerman called Ringel three times on her unpublished direct
number, and did not call the Clerk’s general number at all. The OCA report noted, those records
“belie the . . . deposition testimony of both Mr. Akerman and Mr. Feldman.”
27. As detailed herein, in addition to the egregious fraud, collusion and perjury in
connection with Akerman’s and Feldman’s January 12, 2016 ex parte call to Ringel, both before
and after that call the attorney defendants engaged in a chronic and extreme pattern of materially
2
Several of the claims in this case were previously filed as pendent or ancillary state law
claims in the Esposito federal civil rights action before U.S. District Court Judge Denise L.
Cote. In her December 7, 2017 decision dismissing the Knopfs’s §1983 claim, which was the
only claim in that case that presented a federal question, Judge Cote also dismissed the pendent
state law claims without prejudice to the Knopfs refiling them in this court.
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false and misleading statements in their capacities as the attorneys for Sanford, Pursuit,
themselves (as pro se attorney litigants), and their respective law firms in their dispute with the
Knopfs.
28. The First Claim alleges that Dorsey, Akerman, Feldman and Esposito violated New
York Judiciary Law §487, a treble damages statute, by colluding with Sanford and Ringel, or,
alternatively, misleading Ringel regarding the orders at issue.
29. The Second Claim charges Dorsey, Akerman, Feldman, Esposito and Sanford with a
conspiracy to violate Judiciary Law §487 arising out of the same events.
30. The Third Claim charges all defendants with common law fraud and deceit.
31. The Fourth Claim alleges that Esposito received a fraudulent conveyance in
violation of Article 10 of the Debtor and Creditor Law.
32. The Fifth Claim alleges that Feldman breached fiduciary duties he owed to the
Knopfs since he was an escrow agent with Court-ordered responsibilities to the Knopfs by
dispersing $,061,050.14 he received out of the proceeds from the sale of the 67th Street property.
33. The Sixth Claim alleges a separate fraud and deceit against Sanford. This claim is
based on Sanford’s filing in camera submissions to the First Department in which he cited
Ringel’s ex parte advisory opinion as grounds for denying the Knopfs’ motion to hold him in
contempt of the escrow requirement without disclosing Ringel’s financial interest, by reason of
her marriage to Esposito, in the matter.
34. The Seventh Claim alleges that during the course of the Esposito federal action,
Dorsey, Akerman and Feldman violated Judiciary Law §487 by, in their capacity as attorneys,
proffering their own perjured testimony and that of their coconspirators to the effect that:
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(a) They did not call Ringel directly, but were randomly transferred to her.
(b) That it was merely a remarkable coincidence that the Court employee
they ended up speaking to on January 12, 2016 (Ringel) was not only married to
an individual (Esposito) who, just one day earlier, had agreed to accept $55,000
from Sanford, but had also already agreed to state that the orders at issue did not
“aggrieve” Sanford, despite not having seen one of them and not understanding
the other.
(c) That, during the ex parte call, Ringel advised Akerman and Feldman
that a November 12, 2015 order terminated the escrow requirement when, in fact,
what she actually told them was that a December 29, 2015 order terminated that
escrow requirement.
- and -
(d) That Akerman did not know in advance what the outcome of the call
would be. Feldman, in fact, had testified in his deposition in the Phillips case that
Akerman told him, just before they placed the call, that they would hear from the
court personnel they were calling that all restraints against an escrow had been
dissolved as matter of law. However, shortly before attorney defendants moved
to dismiss the Esposito federal civil rights action, Feldman filed an errata change
to change that deposition testimony, alleging that it had been mis-transcribed, and
asserting that what he actually said (or meant to say) at his
deposition was that:
We had a second conversation to set up a conference call with the
Appellate Division to confirm whether the restraints were dissolved as a
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matter of law. He called me and when I was on the phone, he called the
Appellate Division and asked for the clerk.
However, at a May 23, 2019 hearing in a special proceeding filed by the Knopfs,
Knopf v. Feldman & Associates, PLLC, et al., New York County Index No.
153821/2019, Feldman stated in open Court before Justice Lebovits that Akerman
had, in fact, stated in advance what the outcome of the call would be and that
Feldman himself was on hold when the call was transferred. (The Knopf v.
Feldman & Associates special proceeding was part of the Knopfs’ efforts to
enforce a 2018 judgment against Pursuit.) These representations were false,
credited by the court in the Esposito federal civil rights action, and resulted in
sanctions and judgments against the Knopfs in the amount of $177,857.50, and
caused the Knopfs to incur substantial attorneys fees in defending the sanctions
application, moving to vacate the sanctions and in pursuing two separate appeals.
(Following the filing of the OCA report the sanctions were reduced to $88,928.75,
based on the Knopfs’ motion for reconsideration.)3
35. The Eighth Claim asserts that Esposito and Feldman made false statements in Court
filings in opposition a special proceeding entitled Knopf v. Feldman & Associates, PLLC, New
York County Index No. 153821/2019 as part of an unsuccessful effort to conceal that Feldman
had paid Esposito $50,000 directly out of the proceeds of the sale of the 67th Street property.
36. The Ninth Claim seeks a declaratory judgment that a second version of a June 16,
3
The Knopfs have appealed the dismissal of the §1983 claim, and the remaining
$88,928.75 in sanctions to the Second Circuit. Knopf v. Esposito, 2d Circuit Docket Nos. 17-
4151, 18-668(l) and 18-2193 (con.)
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2016 order issued by the First Department in the Knopf v. Sanford action is invalid, void and
without effect since it was issued sua sponte and without giving the parties an opportunity to
oppose the revisions it included.
D. ALLEGATIONS COMMON TO ALL CLAIMS
(1) The Knopfs’ Breach of Contract Action against Sanford and Pursuit
37. In 2000, the Knopfs contributed $11,607,810 to Sanford’s “hedge fund,” becoming
its sole investors. In 2002, the Knopfs’ son, Paul, died in a plane crash. Sanford ingratiated
himself with their family, and between 2003 and 2006 the Knopfs made five loans to Sanford
and his companies. As noted, one loan, in the amount of $1,690,860, financed Sanford’s
purchase, through Pursuit, of the 67th Street apartment; another, in the amount of $3.25 million,
financed Pursuit’s acquisition of three condominiums units in a Bedford Street townhouse.
38. Pursuit was required to deliver mortgages on the 67th Street and Bedford properties to
secure the Knopfs’ loans, but did not do so. Pursuit’s breach of its promise to deliver mortgages
means that the Knopfs always had an equitable lien4, which was superior to the rights of
subsequent creditors5, against the 67th Street and Bedford properties.
39. In 2009, the Knopfs filed the Knopf v. Sanford action, discussed above, to enforce
the loan agreements, and demanded both (i) money damages and (ii) the imposition of
constructive trusts upon the 67th and Bedford properties. This action was asserted not only
4
M&B Joint Venture, Inc. v. Laurus Master Fund, Ltd., 12 N.Y.3d 798, 800, 879
N.Y.S.2d 812, 814 (2009) (“New York law allows the imposition of an equitable lien if there is
an . . . agreement ‘that there shall be a lien on specific property[.]’”)
5
Federal Deposit Ins. Corp. v. Five Star Mgmt., Inc., 692 N.Y.S.2d 69, 73 (1st
Dept.1999),
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against Sanford and Pursuit, but also Sanford’s wholly-owned companies, Sanford Partners, L.P.
(aka Sanford Partners Voyager Fund, L.P.) and M.H. Sanford & Co., LLC, which were also the
recipients of $100,000 and $350,000 loans from the Knopfs.
40. Sanford (but not Pursuit or the other companies) filed several counterclaims, each of
which was meritless.6
41. On December 11, 2014, the First Department granted the Knopfs’ summary
judgment on all five loan agreements, including the $1,690,860 loan for the 67th Street
apartment. Knopf v. Sanford, 1 N.Y.S.3d 18 (1st Dept. 2014). The decision did not determine
damages, and denied summary judgment on the constructive trust claim. Id.
42. The trial court (Tingling, J.S.C.) then terminated, without explanation, notices of
pendency the Knopfs had filed against the 67th Street and Bedford properties.
43. While the Knopfs were pursuing a determination of damages, they learned that
Pursuit had contracted to sell the 67th Street property, but not the identity of Phillips as the buyer.
44. The Knopfs sought to prevent the sale which would transform a fixed asset to cash
that could be transferred beyond their reach as eventual judgment creditors. On January 7, 2015,
the Knopfs noticed an appeal from the cancellation of the notices of pendency. On May 11,
2015, Dorsey & Whitney and Akerman (along with Meister, Seelig & Fein, LLP) filed a brief in
6
All Sanford’s counterclaims other than that for tortious interference were dismissed by
the First Department. The tortious interference claim, as it later turned out, was based on
allegations that the Knopfs had interfered with Sanford’s relationship with a mortgage broker.
The broker, Michael Merendino, has provided a February 13, 2015 affidavit stating that in
October 2009 he represented to Sanford that he would attempt to procure a construction loan
secured by the 67th Street property. Merendino’s affidavit further stated that, had Sanford
disclosed the Knopf v. Sanford lawsuit (which was commenced a month earlier), he would not
have promised to try to locate a lender. Merendino’s affidavit further stated that Knopf did not in
any event attempt to interfere with that promise.
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opposition to that appeal on behalf of Sanford and Pursuit.
45. Also, in early 2015, the Knopfs moved in the trial court for judgment in the amount
of the loans or, alternatively, an attachment. They obtained several stays and TROs, followed by
preliminary injunctions, that prohibited the sale of the 67th Street property.
46. On July 2, 2015, the appeal from the cancellation of the notice of pendency was
denied. On July 23, 2015, the motion for an attachment and judgment in the loan amounts was
denied. The preliminary injunctions obtained in these proceedings therefore expired.
47. On July 23, 2015, the Knopfs noticed an appeal (“the July, 23, 2015 appeal”) from
the denial of their motion for either judgment or an attachment. On July 24, they moved in the
First Department for a preliminary injunction prohibiting the sale of Pursuit’s properties pending
that appeal, which was assigned Motion No. M-3660.
(2) The Various Roles of Dorsey and Akerman as Counsel for
Pursuit and Sanford in their Dispute with the Knopfs
48. In the Knopfs’ breach of contract action, Sanford, Pursuit and the rest of Sanford’s
companies routinely changed counsel, using a total of 12 different firms, interspersed with
periods of time in which Sanford appeared pro se and his companies were unrepresented.
Several law firms, such as Dorsey, Meister Seelig & Fein, LLP and The Prestiano Law Firm,
were recycled, making a repeat appearances after previously having been effectively substituted
out of a prior one. Dorsey made four distinct appearances, separated by interregna.
49. Akerman and Dorsey first appeared at Sanford’s deposition on January 10, 2013.
However, their initial engagement did not extend beyond defending that deposition. After the
deposition, Sanford retained new counsel.
50. On June 4, 2014, Sanford, Sanford Partners, L.P. and M.H. Sanford & Co., LLC
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and Pursuit filed a summons with notice in an action against the Knopfs under New York County
Index No. 155496/2014. The summons with notice identified, as the claims Sanford and these
companies intended to assert, the same meritless causes of action that they had already filed as
counterclaims in the Knopfs’ 2009 action. This summons with notice was filed on behalf of
Sanford and his companies by the law firm of Balestriere & Fariello. The summons with notice
alleged damages between the amounts of $54,825,000 and $154,825,000. The summons with
notice was an entirely frivolous filing. The Knopfs owed Sanford no money – indeed, their gifts
and loans were – and remain – the source of all money Sanford has obtained from late 2000
forward. Of course, the amount of damages alleged in the summons with notice was absurd.
The filing was intended to, and succeeded in, triggering a June 4, 2014 Article in Law360.com
entitled “Hedge Fund Sues for $155M Over Breached Biz Agreement,” by David McAfee,
effectively defaming the Knopfs.
51. On July 22, 2014, Akerman and Dorsey substituted into this newly-commenced
action in place of Balestriere Fariello. By appearing, Akerman and Dorsey are deemed as a
matter of law to have represented that the causes of action referenced in the summons with
notice were non-frivolous. In fact, however, having defended Sanford’s deposition, Akerman
and Dorsey knew that those causes of action were entirely frivolous, as evidenced by the fact
that Akerman and Dorsey they never caused the summons with notice to be served upon the
Knopfs.
52. As noted, Akerman and Dorsey appeared as counsel for Sanford and Pursuit and
opposed the appeal that the Knopfs noticed on January 7, 2015 from the order cancelling their
notices of pendency. Akerman and Dorsey, along with Meister, filed a brief in response to that
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appeal and in support of a cross-appeal on May 11, 2015.
53. On July 2, 2015, the Knopfs filed a federal action against Meister, Seelig & Fein,
LLP (Knopf v. Meister, 15 Civ. 5090 (S.D.N.Y.)), in which they alleged that a $575,000
mortgage that Pursuit had granted Meister against the 67th Street property (as collateral securing
Pursuit’s obligation to Meister for fees) was a fraudulent conveyance. Pursuit was also named as
a defendant in this action, and the Knopfs sought a permanent injunction against Pursuit taking
further steps to liquidate or impair the value of the 67th Street and Bedford properties. Akerman
and Dorsey appeared for Pursuit and Sanford in this action.
54. In the Knopf v. Meister fraudulent conveyance action, the Knopfs filed notices of
pendency against the 67th Street and Bedford properties.
55. On August 3, 2015 Akerman and Dorsey (along with Katzky Korins LLP) moved
on behalf of Pursuit for reconsideration of the July 2, 2015 First Department decision that had
denied the Knopfs’ appeal from the order cancelling the notices of pendency. (First Department
Motion No. M-3726.) That motion complained that the July 2, 2015 decision had erred in not
awarding Pursuit statutory costs and attorneys fees based on the cancellation of the notices of
pendency that the Knopfs had filed in the Knopf v. Sanford action in 2009. On October 6, 2015,
the First Department granted the motion for reconsideration, and filed a new decision, which
superceded the July 2 decision. The First Department’s October 6, 2015 decision ordered a
hearing on whether Pursuit was entitled to statutory costs and fees relating to the cancelled
notices of pendency (M-3726). It also noted that the filing of the notices of pendency had not
been in “subjective bad faith.” (Indeed, an October 15, 2013 decision by the First Department
extending the notices of pendency ruled that they had been properly filed. Knopf v. Sanford, 110
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A.D.3d 502 972 N.Y.S.2d 893 (1st Dept. 2013).)
56. On October 13, 2015, in the Knopf v. Meister action, Akerman and Dorsey moved on
behalf of Pursuit to cancel the notices of pendency that the Knopfs had filed in connection with
the commencement of that federal fraudulent conveyance action. On October 16, 2015, U.S.
District Court Judge Denise L. Cote granted the motion but stayed the cancellation of the notice
of pendency filed against the 67th Street property so as to afford the Knopfs an opportunity to
return to state court to seek relief against the sale of that property.
57. (Fast-forwarding, on November 2, 2015, in a proceeding entitled Meister, Seelig &
Fein, LLP v. Pursuit Holdings, LLC, New York County Index No. 653634/2015, Meister moved
pursuant to CPLR 3213 to foreclose on the $575,000 mortgage that Pursuit had granted Meister
against the 67th Street property to secure Pursuit’s obligations to pay Meister’s fees. On
December 22, 2015, Akerman and Dorsey appeared in this foreclosure proceeding on behalf of
Pursuit, and cross-moved to compel arbitration of the underlying fees dispute before JAMS. On
March 17, 2016, Meister and Pursuit stipulated to the discontinuance of the proceeding and to
having the dispute determined in a JAMS arbitration. This proceeding and the JAMS arbitration
directly involved the Knopfs’ interest since, if Meister was successful in foreclosing the
mortgage, that would reduce the value of the Knopfs’ equitable lien against the 67th Street
property, and the assets available for the Knopfs to execute upon after obtaining judgment
against Pursuit.)
(3) Justice Sweeny’s October 22, 2015 Escrow Order
58. On October 22, 2015, the Knopfs filed a second motion (M-5459) in the First
Department. Their earlier July 24, 2015 motion (M-3660) was still sub judice at the time. This
16
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second motion ((M-5459) was prompted by Judge Cote’s October 16, 2015 order in the Knopf v.
Meister case which stayed the cancellation of the notice of pendency against the 67th Street
property for ten days to permit the Knopfs to return to state court to seek an order protecting
their interest in that property.
59. As part of this new (October 22), motion, the Knopfs requested a stay of the 67th
Street sale. Justice John W. Sweeny denied the requested stay, but issued an order, dated
October 22, 2015, that required any sale proceeds to be escrowed. Despite Akerman’s and
Dorsey’s status as counsel of record in connection with the appeal that was decided on October
6, 2015, Sanford appeared pro se before Justice Sweeny on October 22, and Pursuit was not
represented.
60. On October 27, 2015 the Knopfs filed Justice Sweeny’s escrow order as a “related
order” in the Knopf v. Meister federal action (in which Akerman and Dorsey had appeared as
Sanford’s counsel), thereby ensuring that Akerman and Dorsey knew about the order despite
their failure to appear before Justice Sweeny on October 22. At the time, Pursuit was scheduled
to close on the sale to Phillips on November 3.
61. On October 29, 2015, Akerman wrote to the condominium board for the building in
which the 67th Street property was located, and attached a copy of Judge Cote’s October 16, 2015
decision in the Meister federal action cancelling the notice of pendency the Knopfs had filed in
that action. Akerman’s letter was copied to Phillips’ real estate attorney Lori Braverman.
Though Akerman was aware of Justice Sweeny’s escrow order, the letter did not disclose or
attach it, thereby concealing it from Braverman in effort to fraudulently induce Phillips to close
on the purchase without causing the proceeds to be escrowed.
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62. Despite Akerman’s concealment of the October 22 escrow order, on November 1,
2015, Matt Bronfman, one of Phillips’ lawyers, learned of it. The next day, November 2, 2015,
Bronfman emailed Sanford complaining that Sanford had concealed that order from Phillips and
Phillips’ closing attorney, Lori Braverman. He also emailed the October 22 escrow order to
Phillips and Braverman, referring to it as the “mystery document.” As stated in a November 3,
2015 email from Bronfman to Sanford, Bronfman, Braverman and Feldman were now all
concerned that, if the transaction closed without escrowing the proceeds, they could be held in
contempt of Court.
63. Paul Malon, counsel for Phillips’ would-be title insurer (Fidelity), noted in a
November 3, 2015 email to Phillips’ title examiner (CB Title) that the escrow order clouded
Pursuit’s ability to deliver title, stating:
In [the order], Judge Sw
Preview
FILED: NEW YORK COUNTY CLERK 06/13/2019 11:18 PM INDEX NO. 150315/2019 NYSCEF DOC. NO. 14 RECEIVED NYSCEF: 06/13/2019 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK -----------------------------------------------X NORMA KNOPF and MICHAEL KNOPF, Plaintiffs, Index No. 150315/2019 - against - FRANK M. ESPOSITO, DORSEY & WHITNEY, LLP, NATHANIEL H. AKERMAN, EDWARD S. FELDMAN, MICHAEL HAYDEN SANFORD AMENDED COMPLAINT and SP VOYAGER FUND, LLC, Defendants. -----------------------------------------------X Plaintiffs Norma Knopf and Michael Knopf, by their undersigned counsel, for their amended complaint, allege as follows: A. PARTIES 1. Plaintiff Norma Knopf resides in Travelers Rest, South Carolina. Norma is married to plaintiff Michael Knopf. 2. Plaintiff Michael Knopf resides in Travelers Rest, South Carolina. Michael is married to plaintiff Norma Knopf. (Hereinafter, Michael and Norma Knopf will be referred to as “the Knopfs.”) 3. Defendant Frank M. Esposito is an attorney who resides in Nassau County, New York and has a principal place of business in New York, New York. 4. Defendant Dorsey & Whitney, LLP (“Dorsey”) is a law firm which has a principal place of business in New York, New York. 5. Defendant Nathaniel H. Akerman is an attorney and partner at Dorsey, and has a principal place of business in New York, New York. Dorsey is liable for Akerman’s conduct, as 1 of 85 FILED: NEW YORK COUNTY CLERK 06/13/2019 11:18 PM INDEX NO. 150315/2019 NYSCEF DOC. NO. 14 RECEIVED NYSCEF: 06/13/2019 alleged herein, pursuant to agency law and the doctrine of respondeat superior. 6. Defendant Edward S. Feldman is an attorney who has a principal place of business in New York, New York. 7. Defendant Michael Sanford resides in Suffolk County, New York. Sanford is the sole owner of a limited liability company, Pursuit Holdings (NY), LLC fka Pursuit Holdings, LLC, and owner of defendant SP Voyager Fund, LLC. 8. Defendant SP Voyager Fund, LLC is a Delaware limited liability company, is qualified to do business in the State of New York, and has a principal place of business in Suffolk County, New York. SP Voyager Fund, LLC is named as a defendant since its presence in this case may be necessary for the Court to order some of the relief requested herein. B. JURISDICTION AND VENUE 9. In personam jurisdiction exists over all defendants since each has either a residence and/or a principal place of business within the State of New York. 10. Venue properly lies in this Court since Esposito, Dorsey, Akerman and Feldman all have a place of business in New York County, and because a portion of the events giving rise to this action occurred in New York County. C. NATURE OF THE ACTION 11. This is an action against several attorneys, and one non-attorney, Michael Sanford, for their egregious, recurring, concerted and systematic fraud, deceit and collusion aimed at misleading the Knopfs, the New York state and federal courts, witnesses upon whom the Knopfs had served subpoenas and the Chapter 7 Trustee for Pursuit Holdings, LLC, one of Sanford’s companies. The attorney defendants attempted and perpetrated repeated frauds in various 2 2 of 85 FILED: NEW YORK COUNTY CLERK 06/13/2019 11:18 PM INDEX NO. 150315/2019 NYSCEF DOC. NO. 14 RECEIVED NYSCEF: 06/13/2019 lawsuits filed by the Knopfs, and submitted perjured testimony – much of it their own – in related cases. Then, in their capacity as attorneys, submitted that perjured testimony in various memoranda of law in the related cases. The attorney defendants conspired each other and with Sanford and several non-parties in the commission of those frauds. In the process, they violated not only common law anti-fraud prohibitions but also Judiciary Law §487 (which provides statutory damages to redress fraud or collusion by attorneys) and the fraudulent conveyance sections of the Debtor and Creditor Law. 12. Many of the allegations in this amended complaint are established by a March 26, 2018 report by the Inspector General of the New York State Office of Court Administration (“the OCA Report”) and concern defendants’ corruption of a judicial officer, Melissa Ringel. Ringel is defendant Frank Esposito’s wife. At the time of the corrupting events, Ringel was a Court Attorney in the New York State Appellate Division, First Department. She was forced was to resign following the OCA report. 13. The OCA report is just one chapter in a litigation that began nearly 10 years ago. In 2009, the Knopfs filed an action in Supreme Court, New York County, alleging, inter alia, that defendant Michael Sanford and several of Sanford’s wholly-owned companies breached several loan agreement. Knopf et al. v. Sanford, et al., New York County Index No. 113227/2009. The claims in this 2009 action were based, in part, on the allegation that one of Sanford’s wholly- owned companies, Pursuit Holdings, LLC, breached its contractual promises to collateralize with mortgages and repay two purchase money loans from the Knopfs. Pursuit had used the first of these loans, which was in the amount of $1,690,860, to acquire a penthouse apartment at 44 East 67th Street, in Manhattan. It used the second, in the amount of $3,250,000, to acquire three 3 3 of 85 FILED: NEW YORK COUNTY CLERK 06/13/2019 11:18 PM INDEX NO. 150315/2019 NYSCEF DOC. NO. 14 RECEIVED NYSCEF: 06/13/2019 condominium units in a townhouse at 10 Bedford Street, also in Manhattan. 14. In 2014, plaintiffs Norma and Michael Knopf obtained summary judgment on each of the loan agreements, including those documenting the purchase money loans to Pursuit. However, the summary judgment decision did not determine damages. In 2015, while the Knopfs were awaiting a hearing on the amount owed to them, they learned that Pursuit had contracted to sell the 67th apartment. The Knopfs moved for a prejudgment attachment, which the trial court (Hon. Richard Braun, J.S.C.) denied. 15. The Knopfs appealed the denial of the attachment motion. While the appeal was pending, they obtained two orders from the First Department that were intended to protect their interest in the 67th Street apartment while that appeal was being decided. 16. The first order, dated October 22, 2015, provided that if Pursuit sold the apartment the proceeds had to be paid into escrow. The second, dated December 29, 2015, denied a cross-motion by Sanford and Pursuit to vacate the October 22 escrow requirement. Citing these orders, Pursuit’s in-contract buyer, Michael Phillips, refused to close unless the proceeds were escrowed. 17. As established by the OCA report, in early January 2016 Sanford and defendant Frank Esposito met, and Sanford gave Esposito the December 29 order. Esposito shared it with his wife, Ringel, then employed in the First Department. Ringel informed Esposito that she would opine that neither the October 22, 2015 escrow order nor the December 29, 2015 ruling upholding the escrow requirement was an obstacle to an escrow free sale. However, she later testified that she was never given the October 22 order, and did not understand the one from December 29. 4 4 of 85 FILED: NEW YORK COUNTY CLERK 06/13/2019 11:18 PM INDEX NO. 150315/2019 NYSCEF DOC. NO. 14 RECEIVED NYSCEF: 06/13/2019 18. As further established by the OCA Report, on January 11, 2016, Sanford and Esposito agreed in writing that Sanford would pay Esposito a $55,000 one-time fee for unspecified services. They also agreed that Esposito would not be paid until Sanford became “liquid.” 19. As further established by the OCA Report, on January 12, 2016, at Sanford’s request, defendant Nathaniel Akerman called Ringel on her unpublished direct number at the First Department. Akerman did not notify the Knopfs’ attorneys that he intended to make the call, or give them an opportunity to participate in it. Before calling Ringel, Akerman patched in Sanford’s real estate attorney, defendant Edward Feldman. Despite not having seen the October 22 order, and by her own admission, not understanding the December 29 order, Ringel advised Akerman and Feldman that the apartment could be sold without escrowing the proceeds. 20. As further established by the OCA Report, Ringel’s January 12, 2016 advisory opinion was used to convince Phillips to close on escrow free terms. None of the $3 million in sale proceeds was escrowed, and none used to pay the Knopfs. A total of $214,000 out of the sale proceeds was transferred to Esposito.1 The money Esposito received included $50,000 by a check written by Edward Feldman on February 1, 2016 (the day the sale of the 67th Street property closed). Feldman was Pursuit’s closing attorney, and the $50,000 check was drawn on his Feldman’s firm’s escrow account (which held Pursuit’s net sale proceeds). 21. Dorsey, Feldman and Sanford also received payments from the proceeds. $500,000 was used to pay Dechert, LLP an initial retainer, after Ringel recruited Dechert attorney James 1 As detailed below, Esposito deposited all this money in his firm’s business savings account (where he would collect interest on it), then to a personal checking account. He then returned $159,217, out of that $224,000, keeping $54,783. 5 5 of 85 FILED: NEW YORK COUNTY CLERK 06/13/2019 11:18 PM INDEX NO. 150315/2019 NYSCEF DOC. NO. 14 RECEIVED NYSCEF: 06/13/2019 McGuire, for whom she had clerked when he was a First Department Justice, to appear as Sanford’s new counsel. 22. Defendants used Ringel’s “advisory opinion” – not an actual order of an actual judge – to convince Phillips that the proceeds could be distributed. As Feldman later stated in a pro se memorandum of law filed in a related federal civil rights case: “This conference call [with Ringel] lasted but a few minutes. Then, based upon this call, the closing took place and the proceeds were distributed.” This strategy was chosen specifically, as Feldman pro se memo admits, to defeat the Knopfs’ judicial “efforts to stop the sale.” 23. On February 25, 2016, one day after the Knopfs learned of the sale, they successfully enforced the October 22 order escrow requirement, obtaining a new escrow order from Appellate Division Justice Karla Moskowitz, but only after all but $436,227.32 of the proceeds was dissipated. On March 24, 2016, the Knopfs prevailed on the appeal when the First Department ordered a freeze of Pursuit’s assets, including the $436,227.32 paid into the Moskowitz-ordered escrow and Pursuit’s fee interest in the remaining properties. However, these orders came too late to prevent the loss of $2.2 million out of the funds distributed (rather than escrowed) based on the ex parte opinion Ringel provided Akerman. Had the Knopfs been on the Akerman/Feldman call to Ringel, indisputably, they would have been able to obtain a new escrow order before the distribution of the proceeds. Trepel v. Dippold, 2006 WL 3054336, *5 (S.D.N.Y., Oct. 27, 2006) (Cote, J.) (upholding Judiciary Law §487 claims because “The evidence supports an inference that Judge Lynch would have issued an attachment order earlier and Trepel’s attorneys may have acted differently had [the attorney charged with the §487 violation] not made misrepresentations during the attachment hearing or had [the attorney] not 6 6 of 85 FILED: NEW YORK COUNTY CLERK 06/13/2019 11:18 PM INDEX NO. 150315/2019 NYSCEF DOC. NO. 14 RECEIVED NYSCEF: 06/13/2019 delayed in reporting Diop’s car shipments.”) 24. In a related case, Knopf v. Phillips, 16 Civ. 6601 (S.D.N.Y.), Akerman and Feldman testified that they spoke to Ringel only because they called a general number at the First Department clerk’s office, and were then randomly and coincidentally transferred to her. 25. Defendants then submitted Akerman’s and Feldman’s perjured testimony of a transferred call in support of their motions for dismissal and sanctions in a related federal action, Knopf v. Esposito, 17 Civ. 5833 (S.D.N.Y.) (hereinafter, the Knopf v. Esposito federal civil rights action) in which the Knopfs filed alleged a conspiracy to violate 42 U.S.C. §1983, based on assertions that same defendants named herein colluded with Ringel, a state actor, to deprive the Knopfs of their right to notice and opportunity to be heard in connection with the distribution of the proceeds of the sale.2 26. Following the dismissal and sanctions order, OCA filed it’s the report on its investigation into these events, which appended First Department phone records. Those records showed that, on January 12, 2016, Akerman called Ringel three times on her unpublished direct number, and did not call the Clerk’s general number at all. The OCA report noted, those records “belie the . . . deposition testimony of both Mr. Akerman and Mr. Feldman.” 27. As detailed herein, in addition to the egregious fraud, collusion and perjury in connection with Akerman’s and Feldman’s January 12, 2016 ex parte call to Ringel, both before and after that call the attorney defendants engaged in a chronic and extreme pattern of materially 2 Several of the claims in this case were previously filed as pendent or ancillary state law claims in the Esposito federal civil rights action before U.S. District Court Judge Denise L. Cote. In her December 7, 2017 decision dismissing the Knopfs’s §1983 claim, which was the only claim in that case that presented a federal question, Judge Cote also dismissed the pendent state law claims without prejudice to the Knopfs refiling them in this court. 7 7 of 85 FILED: NEW YORK COUNTY CLERK 06/13/2019 11:18 PM INDEX NO. 150315/2019 NYSCEF DOC. NO. 14 RECEIVED NYSCEF: 06/13/2019 false and misleading statements in their capacities as the attorneys for Sanford, Pursuit, themselves (as pro se attorney litigants), and their respective law firms in their dispute with the Knopfs. 28. The First Claim alleges that Dorsey, Akerman, Feldman and Esposito violated New York Judiciary Law §487, a treble damages statute, by colluding with Sanford and Ringel, or, alternatively, misleading Ringel regarding the orders at issue. 29. The Second Claim charges Dorsey, Akerman, Feldman, Esposito and Sanford with a conspiracy to violate Judiciary Law §487 arising out of the same events. 30. The Third Claim charges all defendants with common law fraud and deceit. 31. The Fourth Claim alleges that Esposito received a fraudulent conveyance in violation of Article 10 of the Debtor and Creditor Law. 32. The Fifth Claim alleges that Feldman breached fiduciary duties he owed to the Knopfs since he was an escrow agent with Court-ordered responsibilities to the Knopfs by dispersing $,061,050.14 he received out of the proceeds from the sale of the 67th Street property. 33. The Sixth Claim alleges a separate fraud and deceit against Sanford. This claim is based on Sanford’s filing in camera submissions to the First Department in which he cited Ringel’s ex parte advisory opinion as grounds for denying the Knopfs’ motion to hold him in contempt of the escrow requirement without disclosing Ringel’s financial interest, by reason of her marriage to Esposito, in the matter. 34. The Seventh Claim alleges that during the course of the Esposito federal action, Dorsey, Akerman and Feldman violated Judiciary Law §487 by, in their capacity as attorneys, proffering their own perjured testimony and that of their coconspirators to the effect that: 8 8 of 85 FILED: NEW YORK COUNTY CLERK 06/13/2019 11:18 PM INDEX NO. 150315/2019 NYSCEF DOC. NO. 14 RECEIVED NYSCEF: 06/13/2019 (a) They did not call Ringel directly, but were randomly transferred to her. (b) That it was merely a remarkable coincidence that the Court employee they ended up speaking to on January 12, 2016 (Ringel) was not only married to an individual (Esposito) who, just one day earlier, had agreed to accept $55,000 from Sanford, but had also already agreed to state that the orders at issue did not “aggrieve” Sanford, despite not having seen one of them and not understanding the other. (c) That, during the ex parte call, Ringel advised Akerman and Feldman that a November 12, 2015 order terminated the escrow requirement when, in fact, what she actually told them was that a December 29, 2015 order terminated that escrow requirement. - and - (d) That Akerman did not know in advance what the outcome of the call would be. Feldman, in fact, had testified in his deposition in the Phillips case that Akerman told him, just before they placed the call, that they would hear from the court personnel they were calling that all restraints against an escrow had been dissolved as matter of law. However, shortly before attorney defendants moved to dismiss the Esposito federal civil rights action, Feldman filed an errata change to change that deposition testimony, alleging that it had been mis-transcribed, and asserting that what he actually said (or meant to say) at his deposition was that: We had a second conversation to set up a conference call with the Appellate Division to confirm whether the restraints were dissolved as a 9 9 of 85 FILED: NEW YORK COUNTY CLERK 06/13/2019 11:18 PM INDEX NO. 150315/2019 NYSCEF DOC. NO. 14 RECEIVED NYSCEF: 06/13/2019 matter of law. He called me and when I was on the phone, he called the Appellate Division and asked for the clerk. However, at a May 23, 2019 hearing in a special proceeding filed by the Knopfs, Knopf v. Feldman & Associates, PLLC, et al., New York County Index No. 153821/2019, Feldman stated in open Court before Justice Lebovits that Akerman had, in fact, stated in advance what the outcome of the call would be and that Feldman himself was on hold when the call was transferred. (The Knopf v. Feldman & Associates special proceeding was part of the Knopfs’ efforts to enforce a 2018 judgment against Pursuit.) These representations were false, credited by the court in the Esposito federal civil rights action, and resulted in sanctions and judgments against the Knopfs in the amount of $177,857.50, and caused the Knopfs to incur substantial attorneys fees in defending the sanctions application, moving to vacate the sanctions and in pursuing two separate appeals. (Following the filing of the OCA report the sanctions were reduced to $88,928.75, based on the Knopfs’ motion for reconsideration.)3 35. The Eighth Claim asserts that Esposito and Feldman made false statements in Court filings in opposition a special proceeding entitled Knopf v. Feldman & Associates, PLLC, New York County Index No. 153821/2019 as part of an unsuccessful effort to conceal that Feldman had paid Esposito $50,000 directly out of the proceeds of the sale of the 67th Street property. 36. The Ninth Claim seeks a declaratory judgment that a second version of a June 16, 3 The Knopfs have appealed the dismissal of the §1983 claim, and the remaining $88,928.75 in sanctions to the Second Circuit. Knopf v. Esposito, 2d Circuit Docket Nos. 17- 4151, 18-668(l) and 18-2193 (con.) 10 10 of 85 FILED: NEW YORK COUNTY CLERK 06/13/2019 11:18 PM INDEX NO. 150315/2019 NYSCEF DOC. NO. 14 RECEIVED NYSCEF: 06/13/2019 2016 order issued by the First Department in the Knopf v. Sanford action is invalid, void and without effect since it was issued sua sponte and without giving the parties an opportunity to oppose the revisions it included. D. ALLEGATIONS COMMON TO ALL CLAIMS (1) The Knopfs’ Breach of Contract Action against Sanford and Pursuit 37. In 2000, the Knopfs contributed $11,607,810 to Sanford’s “hedge fund,” becoming its sole investors. In 2002, the Knopfs’ son, Paul, died in a plane crash. Sanford ingratiated himself with their family, and between 2003 and 2006 the Knopfs made five loans to Sanford and his companies. As noted, one loan, in the amount of $1,690,860, financed Sanford’s purchase, through Pursuit, of the 67th Street apartment; another, in the amount of $3.25 million, financed Pursuit’s acquisition of three condominiums units in a Bedford Street townhouse. 38. Pursuit was required to deliver mortgages on the 67th Street and Bedford properties to secure the Knopfs’ loans, but did not do so. Pursuit’s breach of its promise to deliver mortgages means that the Knopfs always had an equitable lien4, which was superior to the rights of subsequent creditors5, against the 67th Street and Bedford properties. 39. In 2009, the Knopfs filed the Knopf v. Sanford action, discussed above, to enforce the loan agreements, and demanded both (i) money damages and (ii) the imposition of constructive trusts upon the 67th and Bedford properties. This action was asserted not only 4 M&B Joint Venture, Inc. v. Laurus Master Fund, Ltd., 12 N.Y.3d 798, 800, 879 N.Y.S.2d 812, 814 (2009) (“New York law allows the imposition of an equitable lien if there is an . . . agreement ‘that there shall be a lien on specific property[.]’”) 5 Federal Deposit Ins. Corp. v. Five Star Mgmt., Inc., 692 N.Y.S.2d 69, 73 (1st Dept.1999), 11 11 of 85 FILED: NEW YORK COUNTY CLERK 06/13/2019 11:18 PM INDEX NO. 150315/2019 NYSCEF DOC. NO. 14 RECEIVED NYSCEF: 06/13/2019 against Sanford and Pursuit, but also Sanford’s wholly-owned companies, Sanford Partners, L.P. (aka Sanford Partners Voyager Fund, L.P.) and M.H. Sanford & Co., LLC, which were also the recipients of $100,000 and $350,000 loans from the Knopfs. 40. Sanford (but not Pursuit or the other companies) filed several counterclaims, each of which was meritless.6 41. On December 11, 2014, the First Department granted the Knopfs’ summary judgment on all five loan agreements, including the $1,690,860 loan for the 67th Street apartment. Knopf v. Sanford, 1 N.Y.S.3d 18 (1st Dept. 2014). The decision did not determine damages, and denied summary judgment on the constructive trust claim. Id. 42. The trial court (Tingling, J.S.C.) then terminated, without explanation, notices of pendency the Knopfs had filed against the 67th Street and Bedford properties. 43. While the Knopfs were pursuing a determination of damages, they learned that Pursuit had contracted to sell the 67th Street property, but not the identity of Phillips as the buyer. 44. The Knopfs sought to prevent the sale which would transform a fixed asset to cash that could be transferred beyond their reach as eventual judgment creditors. On January 7, 2015, the Knopfs noticed an appeal from the cancellation of the notices of pendency. On May 11, 2015, Dorsey & Whitney and Akerman (along with Meister, Seelig & Fein, LLP) filed a brief in 6 All Sanford’s counterclaims other than that for tortious interference were dismissed by the First Department. The tortious interference claim, as it later turned out, was based on allegations that the Knopfs had interfered with Sanford’s relationship with a mortgage broker. The broker, Michael Merendino, has provided a February 13, 2015 affidavit stating that in October 2009 he represented to Sanford that he would attempt to procure a construction loan secured by the 67th Street property. Merendino’s affidavit further stated that, had Sanford disclosed the Knopf v. Sanford lawsuit (which was commenced a month earlier), he would not have promised to try to locate a lender. Merendino’s affidavit further stated that Knopf did not in any event attempt to interfere with that promise. 12 12 of 85 FILED: NEW YORK COUNTY CLERK 06/13/2019 11:18 PM INDEX NO. 150315/2019 NYSCEF DOC. NO. 14 RECEIVED NYSCEF: 06/13/2019 opposition to that appeal on behalf of Sanford and Pursuit. 45. Also, in early 2015, the Knopfs moved in the trial court for judgment in the amount of the loans or, alternatively, an attachment. They obtained several stays and TROs, followed by preliminary injunctions, that prohibited the sale of the 67th Street property. 46. On July 2, 2015, the appeal from the cancellation of the notice of pendency was denied. On July 23, 2015, the motion for an attachment and judgment in the loan amounts was denied. The preliminary injunctions obtained in these proceedings therefore expired. 47. On July 23, 2015, the Knopfs noticed an appeal (“the July, 23, 2015 appeal”) from the denial of their motion for either judgment or an attachment. On July 24, they moved in the First Department for a preliminary injunction prohibiting the sale of Pursuit’s properties pending that appeal, which was assigned Motion No. M-3660. (2) The Various Roles of Dorsey and Akerman as Counsel for Pursuit and Sanford in their Dispute with the Knopfs 48. In the Knopfs’ breach of contract action, Sanford, Pursuit and the rest of Sanford’s companies routinely changed counsel, using a total of 12 different firms, interspersed with periods of time in which Sanford appeared pro se and his companies were unrepresented. Several law firms, such as Dorsey, Meister Seelig & Fein, LLP and The Prestiano Law Firm, were recycled, making a repeat appearances after previously having been effectively substituted out of a prior one. Dorsey made four distinct appearances, separated by interregna. 49. Akerman and Dorsey first appeared at Sanford’s deposition on January 10, 2013. However, their initial engagement did not extend beyond defending that deposition. After the deposition, Sanford retained new counsel. 50. On June 4, 2014, Sanford, Sanford Partners, L.P. and M.H. Sanford & Co., LLC 13 13 of 85 FILED: NEW YORK COUNTY CLERK 06/13/2019 11:18 PM INDEX NO. 150315/2019 NYSCEF DOC. NO. 14 RECEIVED NYSCEF: 06/13/2019 and Pursuit filed a summons with notice in an action against the Knopfs under New York County Index No. 155496/2014. The summons with notice identified, as the claims Sanford and these companies intended to assert, the same meritless causes of action that they had already filed as counterclaims in the Knopfs’ 2009 action. This summons with notice was filed on behalf of Sanford and his companies by the law firm of Balestriere & Fariello. The summons with notice alleged damages between the amounts of $54,825,000 and $154,825,000. The summons with notice was an entirely frivolous filing. The Knopfs owed Sanford no money – indeed, their gifts and loans were – and remain – the source of all money Sanford has obtained from late 2000 forward. Of course, the amount of damages alleged in the summons with notice was absurd. The filing was intended to, and succeeded in, triggering a June 4, 2014 Article in Law360.com entitled “Hedge Fund Sues for $155M Over Breached Biz Agreement,” by David McAfee, effectively defaming the Knopfs. 51. On July 22, 2014, Akerman and Dorsey substituted into this newly-commenced action in place of Balestriere Fariello. By appearing, Akerman and Dorsey are deemed as a matter of law to have represented that the causes of action referenced in the summons with notice were non-frivolous. In fact, however, having defended Sanford’s deposition, Akerman and Dorsey knew that those causes of action were entirely frivolous, as evidenced by the fact that Akerman and Dorsey they never caused the summons with notice to be served upon the Knopfs. 52. As noted, Akerman and Dorsey appeared as counsel for Sanford and Pursuit and opposed the appeal that the Knopfs noticed on January 7, 2015 from the order cancelling their notices of pendency. Akerman and Dorsey, along with Meister, filed a brief in response to that 14 14 of 85 FILED: NEW YORK COUNTY CLERK 06/13/2019 11:18 PM INDEX NO. 150315/2019 NYSCEF DOC. NO. 14 RECEIVED NYSCEF: 06/13/2019 appeal and in support of a cross-appeal on May 11, 2015. 53. On July 2, 2015, the Knopfs filed a federal action against Meister, Seelig & Fein, LLP (Knopf v. Meister, 15 Civ. 5090 (S.D.N.Y.)), in which they alleged that a $575,000 mortgage that Pursuit had granted Meister against the 67th Street property (as collateral securing Pursuit’s obligation to Meister for fees) was a fraudulent conveyance. Pursuit was also named as a defendant in this action, and the Knopfs sought a permanent injunction against Pursuit taking further steps to liquidate or impair the value of the 67th Street and Bedford properties. Akerman and Dorsey appeared for Pursuit and Sanford in this action. 54. In the Knopf v. Meister fraudulent conveyance action, the Knopfs filed notices of pendency against the 67th Street and Bedford properties. 55. On August 3, 2015 Akerman and Dorsey (along with Katzky Korins LLP) moved on behalf of Pursuit for reconsideration of the July 2, 2015 First Department decision that had denied the Knopfs’ appeal from the order cancelling the notices of pendency. (First Department Motion No. M-3726.) That motion complained that the July 2, 2015 decision had erred in not awarding Pursuit statutory costs and attorneys fees based on the cancellation of the notices of pendency that the Knopfs had filed in the Knopf v. Sanford action in 2009. On October 6, 2015, the First Department granted the motion for reconsideration, and filed a new decision, which superceded the July 2 decision. The First Department’s October 6, 2015 decision ordered a hearing on whether Pursuit was entitled to statutory costs and fees relating to the cancelled notices of pendency (M-3726). It also noted that the filing of the notices of pendency had not been in “subjective bad faith.” (Indeed, an October 15, 2013 decision by the First Department extending the notices of pendency ruled that they had been properly filed. Knopf v. Sanford, 110 15 15 of 85 FILED: NEW YORK COUNTY CLERK 06/13/2019 11:18 PM INDEX NO. 150315/2019 NYSCEF DOC. NO. 14 RECEIVED NYSCEF: 06/13/2019 A.D.3d 502 972 N.Y.S.2d 893 (1st Dept. 2013).) 56. On October 13, 2015, in the Knopf v. Meister action, Akerman and Dorsey moved on behalf of Pursuit to cancel the notices of pendency that the Knopfs had filed in connection with the commencement of that federal fraudulent conveyance action. On October 16, 2015, U.S. District Court Judge Denise L. Cote granted the motion but stayed the cancellation of the notice of pendency filed against the 67th Street property so as to afford the Knopfs an opportunity to return to state court to seek relief against the sale of that property. 57. (Fast-forwarding, on November 2, 2015, in a proceeding entitled Meister, Seelig & Fein, LLP v. Pursuit Holdings, LLC, New York County Index No. 653634/2015, Meister moved pursuant to CPLR 3213 to foreclose on the $575,000 mortgage that Pursuit had granted Meister against the 67th Street property to secure Pursuit’s obligations to pay Meister’s fees. On December 22, 2015, Akerman and Dorsey appeared in this foreclosure proceeding on behalf of Pursuit, and cross-moved to compel arbitration of the underlying fees dispute before JAMS. On March 17, 2016, Meister and Pursuit stipulated to the discontinuance of the proceeding and to having the dispute determined in a JAMS arbitration. This proceeding and the JAMS arbitration directly involved the Knopfs’ interest since, if Meister was successful in foreclosing the mortgage, that would reduce the value of the Knopfs’ equitable lien against the 67th Street property, and the assets available for the Knopfs to execute upon after obtaining judgment against Pursuit.) (3) Justice Sweeny’s October 22, 2015 Escrow Order 58. On October 22, 2015, the Knopfs filed a second motion (M-5459) in the First Department. Their earlier July 24, 2015 motion (M-3660) was still sub judice at the time. This 16 16 of 85 FILED: NEW YORK COUNTY CLERK 06/13/2019 11:18 PM INDEX NO. 150315/2019 NYSCEF DOC. NO. 14 RECEIVED NYSCEF: 06/13/2019 second motion ((M-5459) was prompted by Judge Cote’s October 16, 2015 order in the Knopf v. Meister case which stayed the cancellation of the notice of pendency against the 67th Street property for ten days to permit the Knopfs to return to state court to seek an order protecting their interest in that property. 59. As part of this new (October 22), motion, the Knopfs requested a stay of the 67th Street sale. Justice John W. Sweeny denied the requested stay, but issued an order, dated October 22, 2015, that required any sale proceeds to be escrowed. Despite Akerman’s and Dorsey’s status as counsel of record in connection with the appeal that was decided on October 6, 2015, Sanford appeared pro se before Justice Sweeny on October 22, and Pursuit was not represented. 60. On October 27, 2015 the Knopfs filed Justice Sweeny’s escrow order as a “related order” in the Knopf v. Meister federal action (in which Akerman and Dorsey had appeared as Sanford’s counsel), thereby ensuring that Akerman and Dorsey knew about the order despite their failure to appear before Justice Sweeny on October 22. At the time, Pursuit was scheduled to close on the sale to Phillips on November 3. 61. On October 29, 2015, Akerman wrote to the condominium board for the building in which the 67th Street property was located, and attached a copy of Judge Cote’s October 16, 2015 decision in the Meister federal action cancelling the notice of pendency the Knopfs had filed in that action. Akerman’s letter was copied to Phillips’ real estate attorney Lori Braverman. Though Akerman was aware of Justice Sweeny’s escrow order, the letter did not disclose or attach it, thereby concealing it from Braverman in effort to fraudulently induce Phillips to close on the purchase without causing the proceeds to be escrowed. 17 17 of 85 FILED: NEW YORK COUNTY CLERK 06/13/2019 11:18 PM INDEX NO. 150315/2019 NYSCEF DOC. NO. 14 RECEIVED NYSCEF: 06/13/2019 62. Despite Akerman’s concealment of the October 22 escrow order, on November 1, 2015, Matt Bronfman, one of Phillips’ lawyers, learned of it. The next day, November 2, 2015, Bronfman emailed Sanford complaining that Sanford had concealed that order from Phillips and Phillips’ closing attorney, Lori Braverman. He also emailed the October 22 escrow order to Phillips and Braverman, referring to it as the “mystery document.” As stated in a November 3, 2015 email from Bronfman to Sanford, Bronfman, Braverman and Feldman were now all concerned that, if the transaction closed without escrowing the proceeds, they could be held in contempt of Court. 63. Paul Malon, counsel for Phillips’ would-be title insurer (Fidelity), noted in a November 3, 2015 email to Phillips’ title examiner (CB Title) that the escrow order clouded Pursuit’s ability to deliver title, stating: In [the order], Judge Sw