Motion,Ex Parte: BAKER, KENNETH L V NEARY, STEPHEN

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                                Filing # 126421243 E-Filed 05/07/2021 04:53:56 PM

IN THE CIRCUIT COURT OF THE 15" JUDICIAL CIRCUIT
IN AND FOR PALM BEACH COUNTY, FLORIDA

KENNETH L. BAKER;

PEDIGREE MOTORCARS, LLC, Case No.: 2021-CA-004336 MB AH
a Florida Limited Liability Company;

STUART WOLPOFF;

BETHANY FINANCE, LLC,

a Maryland Limited Liability Company; and

OASIS MANAGEMENT, LLC,

a Maryland Limited Liability Company,

Plaintiffs

ve

STEPHEN NEARY a/k/a STEPHEN T. NEARY;
ONEIRO HOLDINGS, INC. d/b/a PALM BEACH
AUTO GROUP, a Florida corporation;

JESSICA MANN a/k/a JESSICA G. MANN;
CLEO NEARY; GARY FEIN; CHRIS SCHMITT;

GREENSWARD PARTNERS, LLC, a Florida
Limited Liability Comnany: and FLORIDA AVIATION

ASSOCIATES, LLC, a Florida limited liability company,

Defendants.
/

PALM BEACH AUTO GROUP DEFENDANTS’ RESPONSE TO PLAINTIFFS’
EMERGENCY EX PARTE MOTION FOR PRELIMINARY INJUNCTION

 

Defendants, Stephen Neary (“Neary”), Oneiro Holdings, Inc. d/b/a Palm Beach Auto
Group (“PBAG?” and together with Neary, the “PBAG Defendants”), Greensward Partners, LLC
(“Greensward”) and Florida Aviation Associates, LLC (“Aviation”), by and through undersigned
counsel, files this Response to Piaintitts’ Emergency Ex Parte Motion for Preliminary injunction
(the “Motion”).
I. INTRODUCTION
Plaintiffs’ come to this Court seeking equitable relief, when in fact it is the PBAG

Defendants that are the victims, not the Plaintiffs. Plaintiffs’ rambling and often incoherent

1

CHEN. DAIAARCACUAAIINTY Cl INGEDU ARDIIV7ZN FLED AEINTINNN NA-F2-Fe DN
Pm. PAL DLA VUUINE TT, PL, JUOL IE mDNUeeYy, ULUIAN, YoruriZue 1) Ut.vu.u¥ itComplaint reads like a novel with conclusory allegations of theft of fraud. Conspicuously lacking
from Plaintiffs’ Complaint and Motion are any details about the actual transactions between the
parties. With the exception of a few promissory notes, Plaintiffs fail to attach any contractual
documents or a schedule of payments between the parties. That is for good reason. Details of the
transactions reveal that Plaintiffs were seeking and obtaining criminally usurious interest rates
from the PBAG Defendants — always in excess of 25% annually, often in excess of 45% annually.

Further, Plaintiffs’ Complaint implies that the PBAG Defendants failed to repay the loans
at issue. However, an initial accounting! of the transactions between the parties reveals that
between December 4, 2017 and March 2, 2021, Plaintiffs loaned the PBAG Defendants over $120
Million and the PBAG Defendants repaid Plaintiffs at least $117 Million.

As demonstrated below, these transactions reflect criminally usurious loans, resulting in a
forfeiture of interest and principal. As a result, no money whatsoever is owing to Plaintiffs. In fact,
the PBAG Defendants anticipate filing a counterclaim seeking a refund of all ill-gotten principal
and interest from the Plaintiffs.

Il. THE TRANSACTIONS WERE THINLY DISGUISED USURIOUS LOANS

 

The Court need look no further than the allegations contained in Plaintiffs’ Complaint to
determine that the so called “Buy Back” and “Fleet” deals were thinly disguised loan transactions
charging usurious rates. In Section II B of the Complaint, Plaintiffs describes what they refer to as

the “Vehicle Buyback Program.” Paragraphs 28 and 29 describe the transactions as follows:

28. At the time of transaction, Defendant Neary would turn over the title
of the automobile, a bill of sale, a postdated check in amount of the proposed
"buyback" price, a promissory note (under Maryland law) payable to Bethany
Finance (or Oasis Management), along with a set of keys to the vehicle. Defendant

1 Due to the short timeline for this response, PBAG Defendants’ forensic accounting team has been unable to
confirm the exact amounts for all the transactions.Neary would also pre-execute a bill of sale dated 90 days out reflecting the 10%
markup.

29. Once the buyback period expired, Defendant Neary would wire the
buyback price to Plaintiff Pedigree Motors or instructed Plaintiff Baker to cash
the postdated check. Plaintiff Baker would then deliver the bill of sale, the title to
the automobile, and keys to Defendant Neary.
Ten percent over 90 days is an annualized interest rate in excess of 40%. Interest rates in excess of
25% are criminally usurious. Pursuant to Florida Statute § 687.071, governing the criminal usury
statute, “any person making an extension of credit to any person, who shall willfully and knowingly
charge, take, or receive interest thereon at a rate exceeding 25 percent per annum but not in excess
of 45 percent per annum, or the equivalent rate for a longer or shorter period of time, whether
directly or indirectly, or conspires so to do, commits a misdemeanor of the second degree ....” §
687.071(2), Fla. Stat. Additionally, “any person making an extension of credit to any person, who
shall willfully and knowingly charge, take, or receive interest thereon at a rate exceeding 45 percent
per annum or the equivalent rate for a longer or shorter period of time, whether directly or indirectly
or conspire so to do, commits a felony of the third degree... .” § 687.071(3), Fla. Stat.
Regardless of the title given the transactions by the parties, it is clear that these are loans
subject to Fiorida’s usury iaws. Florida “courts wili look to the substance of the transaction rather
than to the form to determine usury.” Pinchuck v. Canzoneri, 920 So. 2d 713, 715 (Fla. 4th DCA
2006); see also, Beausejour Corp., N.V. v. Offshore Dey. Co., Inc., 802 F.2d 1319, 1320 (1 Ith Cir.
1986) (applying Florida law) (quoting Growth Leasing, Ltd. v. Gulfview Advertiser, Inc., 448 So.
2d 1224, 1225 (Fla. 2d DCA 1984) (“The Florida courts have held that ‘the substance of a

transaction rather than the form will be examined to determine whether a transaction not cast in

the form of a loan nevertheless constitutes a usurious loan transaction.”’); In re Transcapital Fin.

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UOrp., F59 DaX. JUV, Jul Want. Sa. rid, curuy (un Geurnumng Wieuler @ uansacuon iSusurious, Florida courts look at the substance of the transaction, not the form or designation given
to it by the parties.”); Burket v. Johnson, 61 So. 2d 197 (Fla. 1952) (agreement to purchase property
construed as a loan subject to usury penalties); Morales v. Grassy Key Beach Subdivision, Inc., 50
So. 3d 639 (Fla. 3d CA 2010).

In Morales, the court affirmed an Order entered by the trial court granting the defendant’s
motion for summary judgment and denying plaintiff's motion for summary judgment. Jd. The
plaintiff in that case was the grantee of a mortgage which secured a note executed by the defendant.
See Morales v. Grassy Key Beach Subdivision, Inc., Case No. 09-CA-176-M (Fla. Monroe Cty. Ct.
2010), Order Granting Defendants’ Motion for Summary Judgment and Denying Plaintiff's
Motion for Summary Judgment dated March 4, 2010 attached as Exhibit A. The trial court found
that it was “within the power and duty of the Court, when appropriate, to look beyond the form of
the transaction to its substance.” /d. at 5. The court there found that the “broker’s fee was a fee in
name only” and was in actuality a loan. Jd. The same is true for the “buyback” agreements in the
case at bar. As in Morales, the purpose of these agreements was “clearly an attempt to hide
Defendants’ obligation to pay interest in excess of usury laws in a haystack of subterfuge.” Id.

importantiy, PBAG was unconditionally obiigated to “repurchase” the automobiles at the
set “buyback” price, which included a “10% markup” (i.e. interest), when the buyback period
expired. Motion 5. This type of “sale-option transaction may be considered a loan when the loan
is unconditional and compels the vendor to repurchase the property for an amount that, if the loan
was disguised as a sale, the ‘return’ or profit would be usurious.” Oregrund Ltd., 873 So. 2d at 457
(citing Bermil Corp. v. Sawyer, 353 So. 2d 579 (Fla. 3d DCA 1978)). As the Supreme Court of

Florida has explained:

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of the maturity of a pecuniary debt for a greater profit than is allowed by law, theagreement is illegal through [sic] the transaction is put in whole or in part in the
form ofa sale, a contract to sell or other contract.

Griffin v. Kelly, 92 So. 2d 515, 518 (Fla. 1957) (quoting with approval to the Restatement of
Contracts, Sec. 529). Moreover, the element of “corrupt intent” does not require knowledge of the
usury statutes themselves by the lender and a specific intention to violate them; rather, it requires
proof thai the ender iniended to collect paymenis for the ioan which, when expressed as a simple
rate of interest per annum, exceeded the maximum allowable rate. Saralegui v. Sacher, Zelman,
Van Sant Paul, Beily, Hartman, 19 So. 3d 1048 (Fla. 3d DCA 2009). Here, a simple arithmetic
calculation of the interest rates charged on these loans shows that the rate of interest per annum on
these deals certainly exceeded the maximum allowable rate. “The very purpose of statutes
prohibiting usury is to bind the power of creditors over necessitous debtors and prevent them from
extorting harsh and undue terms in the making of loans.” Dezell v. King, 91 So. 2d 624 (Fla. 1956).

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determine whether there has been a usurious loan. Beausejour Corp., N.V., 802 F.2d at 1320.

b. The parties treated the transactions as loans.

[A] finding of usury depends on the intent and understanding of the parties.” US Connect,
LLC y. Capital Sols. Bancorp LLC, 2:12-CV-615-FTM-29, 2013 WL 4401840, at *2 (M.D. Fla.
Aug. 14, 2013) (quoting Oregrund Ltd. P'ship v. Sheive, 873 So. 2d 451, 457 (Fla. Sth DCA
2004)). The evidence is uncontradicted that the parties themselves treated the “buyback” and
“fleet” deals as loans.

Although the Plaintiffs provided very little documentation defining the transactions, those
documents they did attach clearly demonstrate the parties themselves treated the transactions as
loans. Plaintiffs attached promissory notes to the Complaint as Exhibits H and K, which explicitly

provide that Plaintiff, Bethany Finance, LLC “hereby stipulates and warrants that the loanevidenced hereby is a Commercial Loan”. Complaint, Exhibits H and K at § 14. The notes refer
to Bethany Finance, LLC as the “Lender”, and the amount owed to the Lender as “Funds” or
“Principal”. Further, the notes indicate that “[PBAG] understands and agrees that the Funds plus
any and all costs or fees, as those terms are hereinafter defined, must be repaid in full by [PBAG]
to Lender on or before a date that is no more than NINETY (90) calendar days from the date of
this Note”. /d. (emphasis added). Finally, the notes obligate PBAG to pay a 10% “Loan Fee” and
state that upon an event of default “the entire unpaid balance of the Principal and Loan Fee” shall
be due. /d. f§ 1, 9. There is no escaping that the language in these promissory notes indicates a
loan transaction.

Further, Plaintiffs themselves sent summaries of their dealings with the PBAG Defendants
referring to “amount borrowed”, “term”, “start date”, “due date”, “amount due” and “finance

charge.” An excerpt is reproduced below:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

       

 

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c. Usurious loans are unenforceable and subject to forfeiture of interest and
principal .

“In the case of civil usury in violation of Fla. Stat. § 687.03, the borrower’s remedy is to
seek forfeiture of twice the amount of interest actually paid by the borrower.” Stein v. Lavay (In.
re Omni Capital Group, Ltd), 157 B.R.712, 717 (Bank. S.D. Fla. 1993). See also Fla. Stat. §
687.04, “In the case of a loan which rises to the level of criminal usury under Fla, Stat, § 687.071,

the entire loan obligation is unenforceable and the borrower is entitled to seek forfeiture from the

6lender of any and all principal and interest actually paid by the borrower to the lender under the

usurious loan.” Jd. Accordingly, the loans upon which Plaintiffs actions are based are fully

unenforceable, and no money is owed by any of the Defendants to Plaintiffs.

Til. PLAINTIFFS CANNOT ESTABLISH THE ELEMENTS FOR AN INJUNCTION

The preliminary injunction Plaintiffs seek “is an extraordinary remedy which should be
granted sparingly” and requires Plaintiffs to prove, with competent substantial evidence, the
following elements: “(1) irreparable harm will result if the temporary injunction is not entered; (2)
an adequate remedy at law is unavailable; (3) there is a substantial likelihood of success on the
merits; and (4) entry of the temporary injunction will serve the public interest.” Bautista Reo U.S.,
Ltd. Liab. Co. v. ARR Inv., Inc., 229 So. 3d 362, 364-65 (Fla. 4th DCA 2017) (citations omitted).
Yet, Plaintiffs cannot meet any of the required elements.

Plaintiffs have concocted an elaborate story about a “fraudulent scheme” by the
Defendants, filed two emergency motions prior to serving all defendants, and are seeking an
injunction to effectively shut down a longstanding business so Plaintiffs can engage in an
expedited fishing expedition. They want this court to follow the “Money Trail”, yet they withhold
GiGial Tacis Fegaraing Wiere tial tial eas.

Plaintiffs intentionally fail to mention the fact that collectively they have received no less
than $117 Million.” It is telling, and should be concerning to this Court, that Plaintiffs never allege
the total amount of “funding” that Plaintiffs have provided to PBAG. See Affidavit of Stephen
Neary §/ 5, attached as Exhibit B. Likewise, the Plaintiffs never expressly acknowledge whether

any funds were paid back to Plaintiffs. Jd. Instead, Plaintiffs paint a vague and conflicting picture

2 The amount paid to Plaintiffs is believed to be substantially more than $117 Million and the investigation into the
accounting is ongoing.of what transpired. They allege that “[flollowing the[ir] investigation, Plaintiffs concluded that
Defendants Neary and Palm Beach Auto Group did not use Plaintiffs’ monies to fund “buyback
deals,” “fleet deals,” or “Sprinter Van deals.” Motion 9. However, this contradicts Plaintiffs’
admission that “During the initial transactions ... no issues arose with respect to the VIN numbers
or the payments[ and a] September 2018 audit of the deals and inspection of the vehicles ... raised

no alarms with respect to the transactions at the time.” Motion 5.

a. Plaintiffs have no likelihood of success.

Plaintiffs cannot establish a likelihood of success on the merits. Plaintiffs have failed to
produce the necessary documentation to support their claims, much less show a substantial
likelihood of success on those claims. Though Plaintiffs do not assert a breach of contract claim,
the foundation of all their claims is contractual. Plaintiffs assert multiple agreements with PBAG
in which PBAG allegedly failed to comply with its obligations. Motion 4-6. Yet, Plaintiffs do not
attach all the corresponding documentation relevant to those agreements, in violation of Florida
Rule of Civil Procedure 1.130, which requires contracts and documents “upon which action may
be brought” to be incorporated or attached to a pleading. Fla. R. Civ. P. 1.130(a); Safeco Ins. Co.
v. Ware, 401 So. 2d 1129, 1130 (Fla. 4th DCA 1981) (“In the case of a complaint based on a
written instrument it does not state a cause of action until the instrument or an adequate portion
thereof is attached to or incorporated in the pleading in question.”). The absence of all the relevant
documentation in Plaintiffs’ Motion and Complaint is fatal to their request for an injunction.

Ultimately, Plaintiffs have brought a half-baked lawsuit and are now seeking to enlist this
court to assist in a fishing expedition in order to bolster their claims. But that is not the proper

sequence of events. Plaintiffs must show they have a substantial likelihood of success to get aninjunction; they cannot seek an injunction to prove their likelihood of success. For the reasons

below, Plaintiffs claims have little likelihood of success.

i. Plaintiffs made usurious loans.

Plaintiffs cannot succeed because, as demonstrated above, the transactions are disguised

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ii. Nonpayment of a monetary debt is not conversion or civil theft.

Plaintiffs plead conversion and civil theft. However, Plaintiffs’ claims are based on Neary’s

alleged failure to pay an amount owed pursuant to their agreement. “It is well-established law in
Florida that a simple debt which can be discharged by the payment of money cannot generally
form the basis of a claim for conversion or civil theft. Gasparini v. Pordomingo, 972 So. 2d 1053,
1055 (Fla. 3d DCA 2008); Stramaglia v. State, 603 So. 2d 536, 537 (Fla. 4th DCA 1992) (“The

failure to pay an amount due under a contract, in itself, does not amount to theft under Florida

law.”). Additionally, a claim for conversion or civil theft of monies requires that the monies be
identifiable. As the Fourth District Court of Appeals explained in Belford Trucking Co. v. Zagar,

243 So. 2d 646, 648 (Fla. 4th DCA 1970):

The requirement that the money be identified as a specific chattel does not permit
as a subject of conversion an indebtedness which may be discharged by the payment
of money generally. Therefore, where the parties have an open account, and the
defendant is not required to pay the plaintiff identical moneys which he collected,
there can be no action in tort for conversion. A mere obligation to pay money may
not be enforced by a conversion action. ... and an action in tort is inappropriate
where the basis of the suit is a contract, either express or implied. (citations

omitted)

Here, Plaintiffs’ version of the business arrangement proves they cannot, as a matter of
law, state a claim for conversion or civil theft. Plaintiffs do not allege that PBAG was obligated

to pay them with the “identical moneys which [PBAG] collected” from the sale of an automobile.

PBAG was simply obligated to pay Plaintiffs the “buyback” price at the end of the “‘buyback’period”, no matter the source of the funds. See Motion 5. Further, PBAG’s obligation to buy back
the vehicle at the end of the “buyback” period, even if the automobile had not been sold, is proof
that any funds could be used to pay Plaintiffs.

Additionally, to establish a civil theft claim, a Plaintiff must prove through clear and
convincing evidence that the accused party acted with criminal intent. Transcapital Bank v.
Shadowbrook at Vero, Ltd. Liab. Co., 226 So. 3d 856, 864 (Fla. 4th DCA 2017). Having already
received in excess of $117 Million from PBAG through their arrangement, they will be unable to
prove that Neary had criminal intent to steal from Plaintiffs by failing to repay usurious interest.

b. Plaintiffs have an adequate remedy at law — money damages.

Plaintiffs base their injunction on their claim for civil theft. Motion 10, 12-13. Plaintiffs
only allege theft of “monies” in support of their claim. Complaint J 125, 130. Consequently,
even if true, Plaintiffs’ remedy for civil theft would be damages. “Injunctive relief may not be
used to enforce money damages, or to prevent any party from disposing of assets until an action
at law for an alleged debt can be concluded.” Hiles v. Auto Bahn Fed'n, Inc., 498 So. 2d 997, 998

(Fla. 4th DCA 1986) (emphasis added) (citing Action Electric & Repair, Inc. v. Batelli, 416 So.2d

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2011) (“An injunction is inappropriate even when sought under the RICO Act when there is no
special showing of future immediate danger or loss other than past loss of monetary assets.”). The
Hiles court reversed an injunction and found that “an adequate remedy at law exists since the injury
can be redressed in a court of law and the disputed $90,000 can be fully compensated by a
judgment for money damages.” 498 So. 2d at 999. The facts of Hiles are no different than here.

The basis for Plaintiffs’ injunction is a claim for damages and alleged disposal of assets related to

a Ioan transaction

10Furthermore, the case cited by Plaintiffs, Dotolo v. Schouten, 426 So. 2d 1013 (Fla. 2d
DCA 1983), is entirely irrelevant to the facts of this case. In Dotolo, the Defendants were alleged
to have misappropriated and continued to misappropriate trade secrets. Jd. at 1015. The Dotolo
court stated “[t]he misappropriation and continuing use of a trade secret constitutes a continuing
tort” and that “injunctive relief was the only appropriate remedy against the appellees’ continuing
act of misappropriation.” /d. Here, we do not have misappropriation of trade secrets or “continuing
use of a trade secret constitut[ing] a continuing a tort”. Jd. What we have is a standard commercial
litigation case where the harm to Plaintiffs can be remedied by money damages. Thus, there is an
adequate remedy at law and Plaintiffs will not suffer irreparable harm. See Sammie Investments,
247 So. 3d at 600.

c. The injuries to Defendants significantly outweigh any harm to Plaintiffs.

Plaintiffs’ seemingly limitless injunction would likely end PBAG, which may be the
motivation behind seeking an injunction. Florida provides that “[i]njunctions must be specifically
tailored to each case; they should not infringe upon conduct that does not produce the harm sought

to be avoided.” Brower v. Hubbard, 643 So. 2d 28, 30 (Fla. 4th DCA 1994); see also Clark v.

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be broader than is necessary to secure the injured party, without injustice to the adversary, relief
warranted by the circumstances of the particular case”). Here, the injunction is not narrowly

tailored in any way and appears to be meant to ruin PBAG and the other Defendants. Some of the

requests include the following:

e “Enjoining any further transfer of assets”

e “Freezing all bank accounts”

41¢ “Enjoining Palm Beach Auto Group, Greensward Partners, LLC, Florida Aviation
Associates, LLC, and Sunny Bliss, LLC from operating until Plaintiffs’

investigation is complete”

Plaintiffs do not seek injunction relief but, instead, economic destruction. There can be no

circumstances that wouid entitie Piaintitts to the reitef they seek.

Additionally, this Court should decline to appoint a receiver. Appointing a receiver is a
rare and extraordinary remedy. Plaza v. Plaza, 78 So. 3d 4, 6 (Fla. 3d DCA 2011). “It is an abuse
of discretion to appoint a receiver in the absence of a showing that property is subject to a serious
loss.” Jd. For the Court to authorize a receiver, the petition must show a clear legal right to the
property in controversy, or that he has some lien upon or property right in it, or that it constitutes
a special fund of which he is entitled to satisfaction of his demand. Jd.; see also Apalachoicola
N.R. Co. v. Sommers, 79 Fla. 816, 85 So. 361 (Fla. 1920). Here, Plaintiffs cannot show any risk of
loss, clear legal right to property or a special fund creating irreparable harm to them other than the
alleged past loss of monetary assets. As such, this Court cannot appoint a receiver and should deny

the motion for injunction.

d. Plaintiffs have unclean hands, and an injunction would harm the public
interest.

An injunction against Defendants would do a great disservice to the public. Plaintiffs have

committed the same acts they accuse Defendants of commii

 

ing. Plaintiffs cannot seek an

injunction when their conduct was improper. As the Fourth DCA explained:

“[O]ne who comes into equity must come with clean hands else all relief will be
denied him regardless of the merits of his claim. It is not essential that the act be a
crime; it is enough that it be condemned by honest and reasonable men.”

12[U]nclean hands is tantamount to “[uJnscrupulous practices, overreaching,
concealment, trickery or other unconscientious conduct.”

Shahar v. Green Tree Servicing, LLC, 125 So. 3d 251, 253 (Fla. 4th DCA 2013)
The improper conduct by Plaintiffs is extensive. In addition to loan sharking, Plaintiff, KENNETH

BAKER has been engaging in a campaign of intimidation towards Defendant STEPHEN NEARY.

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injunction they seek.

Additionally, the tactics employed by the defense should not be rewarded. Plaintiffs filed
this action on April 1, 2021 and filed two emergency motions, one of which ex parte, prior to
serving all defendants. Then, rather than allow Defendants to respond to the Complaint, Plaintiffs
obtained a two-day evidentiary hearing, forcing the four law firms representing the eight
Defendants to scramble to defend their clients from salacious claims by Plaintiffs. In Plaintiffs
unmitigated rush to file suit, Plaintiffs had to file a Motion to Correct Case Style in order to remove
a named defendant, JAMES C. NEARY, who was allegedly included due to a “scrivener’s error”.
Contemporaneously, Plaintiffs voluntarily dismissed SUNNY BLISS, LLC. The mere fact that
Plaintiffs cite the allegation that SUNNY BLISS, LLC received “ill-gotten proceeds” as support
for an injunction when Plaintiffs have since impliedly acknowledged the falsity of that allegation
by dismissing SUNNY BLISS, LLC, ought to undermine Plaintiffs’ entire Motion. There certainly

is a “fraudulent scheme” afoot, and this Court need only look to the procedural scheming Plaintiffs

 

IV. Plaintiffs Motion has extensive factual errors.
Plaintiffs’ Motion and its entire case is replete with provably false accusations and red
herrings meant to outrage the Court and distract it from the criminally usurious transactions

perpetrated by Plaintiffs. In addition to the fact that Plaintiffs cleverly avoid describing the

13transactions as loans, they make multiple false allegations to support their theory of a scheme.

Since Plaintiffs have the burden to prove an injunction is warranted by competent substantial

evidence, it suffices to point out only a handful of the false allegations by Plaintiffs:

KENNETH BAKER asked STEPHEN NEARY to incorporate Pedigree Motors,
LLC in order to help facilitate the business transactions related to his Manheim
credit line that he offered to PBAG.

Defendant, STEPHEN NEARY has not been “hiding in New Hampshire”.

PBAG does not have any automobiles belonging to Plaintiffs. >

The “warehouse” STEPHEN NEARY rented to allegedly “store and hide
vehicles rightfully belonging to Plaintiffs” is 20 feet by 30 feet and contains
primarily furniture and one vehicle.

Compare Motion 3 to Neary Affidavit §{[ 10, 11, 14.

V. Conclusion

Plaintiffs’ Motion amounts to little more than an attempt to convict Defendants without a

trial. Even if they could prove their claims, Plaintiffs should be obligated to litigate their case like

every other plaintiff that comes before a court. Ultimately, Plaintiffs cannot be allowed to enforce

their usurious loans through an expedited process of injunctions and discovery.

WHEREFORE, Defendants, STEPHEN NEARY, ONEIRO HOLDINGS, INC. D/B/A

PALM BEACH AUTO GROUP, GREENSWARD PARTNERS, LLC, and FLORIDA

AVIATION ASSOCIATES, LLC, respectfully request that this Court deny Plaintiffs’ Motion

3 If the alleged vehicles existed, Plaintiffs would have the right to repossess them. The fact that they have not

done so, is telling.

14and allow this action to proceed in the normal course, with no expedited discovery, and grant any

further relief this Court deems just and proper.

Certificate of Service

I HEREBY CERTIFY that a copy of the foregoing has been furnished to Marissel
Descalzo, Esquire, Tache, Bronis, Christianson and Descalzo, P.A., Attorneys for Plaintiffs, 150
SE 2 Avenue, Sutte 600, Miami, Florida 33131, by email at mdescaizo@tachebronis.com;
service@tachebronis.com; wtache@tachebronis.com; sbattistoni@tachebronis.com;
to Andrew P. Gold, Esq., Akerman LLP, Attorneys for Defendant, CLEO NEARY, 201 East Las
Olas Boulevard, Suite 1800, Fort Lauderdale, Florida 33301 by email at
Andrew.gold@akerman.com; jill.parnes@akerman.com; to Joshua L. Fisher, Esq., Peter Butlein,
Esq., Attorneys for Defendant, GARY FEIN and CHRIS SCHMITT, The Law Offices of Joshua L.
Fisher, P.A., 520 NW 165" Street RD., 106, Miami, FL 33169 by email at

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JOISHeIWYUsMaWesg.COMl, FAD WyLisiawesg.couL, imiamiorc@isnawesg. COI, aia WW iviaiKx 1.

Raymond, Esq. Kayla Quintana, Esq., Nelson Mullins Broad and Cassel, Attorneys for JESSICA
MANN, 2. South Biscayne Boulevard, Suite 2100, Miami, Florida 33131
mark.raymond@nelsonmullins.com; kayla.quintana@nelsonmullins.com;
kayla.quintana@nelsonmullins.com; marisa.armas@nelsonmullins.com this 7th day of May,
2021.

Tavalle Rrown & Ranan DA

qua vaute, QB NCnan, oe

Attorneys for STEVE NEARY, ONEIRO,
GREENSWARD and FLORIDA AVIATION
750 South Dixie Highway

Boca Raton, FL 33432

561-395-0000 / 855BocaLaw

Is)_ Gocthong, Brown .
By: Anthony D. Brown, Esq.

Florida Bar No.: 125829
abrown@lavallebrown.com
Kenneth J, Ronan, Esa,
Florida Bar No. 339038
kronan@lavallebrown.com
Jeff M. Brown, Esq.
Florida Bar No. 197912
abrown@lavallebrown.com
Designation of email:

Primary email: efiling@lavallebrown.com

Secondary email: cmartin@lavallebrown.com

15IN THE CIRCUIT COURT OF THE SIXTEENTH JUDICIAL DISTRICT
IN AND FOR MONROE COUNTY, FLORIDA

Hugo G. Morales,
As Trustee under Trust Agreement

Dated May 9, 2008,

Plaintiff
v. Case No.: 09-CA-176-M
Grassy Key Beach Subdivision,
Inc., a Florida Corporation and
Donald Mackenzie,

Defendants

/

ORDER GRANTING DEFENDANTS’ MOTION FOR SUMMARY
TM OMENT ANM NENVING PY AINTTRIS MOTTON

ay Garay a Sy ayy 2 ALG 2 a eae TU UT

FOR SUMMARY JUDGMENT

The motions before the Court are the product of the Plaintiff's action to foreclose
a mortgage executed by the Defendants on May 9, 2008. The Court, having examined
the record, the applicable law, and being otherwise informed in the premises, renders the
following findings of fact, conclusions of law, and order:

L The property subject to the mortgage in question is located in Monroe County,
Florida. The Defendants granted the mortgage,

2. The Piaintiffis a trustee in a trust agreement with Hugo Moraies, as settior of

the trust.

3. Hugo G. Morales, as Trustee under Trust Agreement dated May 9, 2008, is the

grantee ofa mortgage which secured a note executed by the Defendant.3. The second paragraph of the trust provides, “the Settior has caused titie to the
following Note and Mortgage to be conveyed to the trustee, for the benefit of the
Beneficiaries whose names and interests are attached hereto as Exhibit “A”, said Note
and Mortgage. being described as follows: $9,000,000.00 Note and Mortgage executed
by GRASSY KEY BEACH SUBDIVISION, INC., A FLORIDA CORPORATION,
dated May 9, 2008, encumbering property in Monroe, Florida.”

4. Morales was the largest participant in the trust.

5. Ostensibly, the mortgage was the product of a mortgage brokerage agreement
between Defendant Grassy Key Beach Subdivision, Inc,, Defendant Donald A.
Mackenzie, and Mutual Investment Trust, Inc.

6. The brokerage agreement provided in its first paragraph, “Client, GRASSY
KEY BEACH SUBDIVISION, INC., and DONALD A. MacK ENSIB, applies for a
mortgage loan commitment and engages Broker as his exclusive agent to obtain this
commitment.! Client agrees to pay Brokerage Fee, and other costs upon Broker obtaining
the commitment, or in the event of breach by Client, Client submits to Broker a non-
refundable application fee of $waived to be utilized by Broker consistent with the terms
of this contract.”

7. The loan amount was to be $9,000,000.00.

8. Paragraph “2” provided for a brokerage fee for originating the loan of 6 %%
computed to be $562,500.

9. The agreement provided for payment of the Plaintiff's attomey fees. The

attorney, Gary Bodzin, Esq., was a participant in the trust.19, Paragraph “3” of the original proposed agreement for a loan lender’s”
origination fee of 1 4% computed to be $135,000.

11, The document, as eventually signed by the parties, provided for a lender’s
loan origination fee of 1%, computed to be $85,000.00.

12. The changes were initialed by Hugo G. Morales with no designation of the
capacity in which he initialed.

13, The document was signed by the Defendants and by Hugo G. Morales, as
president of Mutual Investment Trust, Inc., the brokerage.

14. The transaction which is the subject of this foreclosure is the fifth in a series
of similar, short term transactions between the Plaintiff and Defendants reaching back to
2003.

15, Each new morteage and note would nav off the last, with new money
borrowed each time.

16. The most recent loan was to pay off approximately $7,000,000.00 still due
from the previous loan.

17. This final loan was for a term of 18 moriths, and required a prepayment of 9
months interest.

18. The loan agreement required payment of attorney’s fees to the lender, a
broker’s fee to Mutual Investment Trust, Inc., and an origination fee to Morales as
trustee.

19. The Defendants defaulted and this action was commenced,

20. The Defendants’ only defense was a claim of criminal usury.

24. Both sides have moved for summary iudoment,
Sad Soe SSeS See Se ee By99 Thora ava na Alonited nanan af fant anlyas ta Lav thace fants nea tn he
22 1UviU ale LU UlspuLoU losuve Ul aul, Uluy ao WO HUW UlUDu 1aULS ale tu UU

interpreted in applying the law.

THE APPLICABLE LAW

The Defendants must prove four elements to establish that a loan is criminally
usurious. They are:

(1) That such transaction must be a loan, expressed or implied; (2)

that an undertaking must exist between the parties that the money

lent shall be retumed; (3) that for such loan, a greater rate of interest

than is allowed by law shall be paid or agreed to be paid as the case

may be; and (4) that there must exist a corrupt intention to take more

than the legal rate for the use of the money loaned. Diversified
Enters., Inc, v. West, 141 So.2d 27, 29 Fla. 2d DCA 1962).

Proofof cormmnt intent, the final element, does not reanire the tune ofnroofthat
the word “corrupt” would suggest. The borrower does not have to vilify the lender in
order to prové the requisite intent. A party claiming that the rate of a loan is usurious
need not prove that the lender had knowledge of the usury statute, or had a specific intent
to violate them. Saralegui v. Sacher, et al., 19 80.3" 1048 la" DCA 2009). “[I]t
requires proof that the lender intended to collect payments for the loan which, when
expressed as a simple rate of interest per annum, exceeded the maximum allowable rate.
dd, at 1051. Though the quoted language in Saralegui suggests merely the entry of
numbers taken from the face of the loan agreement into a computer will determine
whether a loan is usurious, the process goes beyond that. Saralegui shows that a court
can look beyond the form of the parties’ obligations to determine what numbers are to be

fed into the calculations‘Tha intaract rate nermitted hy lau: in record tna Inan in avrece nf C&AN ANN AN
aule DRUTeot ave purine Uy sary i iegaiu to a 1Gau ub UACUSS Ul wo UU UUU.UU

may not exceed 25%, Fla. Stat. §§687.02 and 687.071.

- The first two elements of criminal usury are not in dispute, and, regarding element
number “3”, the Court has calculated the interest allegedly due the Plaintiff if the
attorney’s fees, broker’s fee, and the loan origination fee are considered dehors that
calculation, and has found that the interest rate does not exceed 25% permitted. As the
Defendant correctly claims, generally, payment of the lender’s attorney fees, broker’s
fees, and loan origiriation fees are not to be included in the calculation of interest. Fla.
Stat. §687,05; Rosenhouse v. Kimbrig, 147 So.2d 354; Fla. Stat. §494.0042.

However, itis both within the power and duty of the Court, when appropriate, to
look beyond the form of the transaction to its substance (Saralegui, supra). Florida’s
Second District Court of Anneal colorfully stated in Kay y, Amendola, 129 So.24 170
(Fla.2d DCA 1961) at 173, “[oJur usury statutes show a clear legislative intent to prevent
accomplishment of a usurious scheme by indirection, and the concealment of the needle

of usury in a haystack of subterfuge will not avail to prevent its pricking the body of the

law into action.” 7
CONCLUSIONS OF LAW

In regard to the mortgage and note, and the obligations of the Defendants as
borrowers, the most prickly problem for the Plaintiff in defending a claim of usury is the
so-called broker’s fee of $562,000, and the loan origination fee. The Court finds that the

broker’s fee was a fee in name only. The broker’s agreement was signed by Hugo

Morales as nresident af Mntnal Investment Tmst Inc The te nature of the brokerace
2S PISSiCens Of VAIIZ) -RVESUESN: afd, nc, 208 TRE RAMS Of ne OTOxeragcacreement a wav for
agreement,

2Wa2y Sore st

 

when Mr. Morales was confident enough in his authority as lender to agree toa’ %
decrease in the lender's loan origination fee while, at the same time, acting, and signing
as a “broker”,

The brokerage agreement is also shown to be only a facade by its context. This
was the fifth loan of a similar nature. Upon execution of the agreement, agents of Mutual
Investment Tiust, Inc. did not, as broker, scour the financial community to find a lender
willing to commit its money, thus earning over a half million dollars in fees. The
Plaintiff did little or nothing to earn its loan origination fee of $85,000.00. The identity
of the lender was always a given. The purpose of the agreement was clearly an attempt to
hide the Defendants’ obligation to pay interest in excess of usury laws in a haystack of
subterfuge. See Richardson v. Cortner, 232 Miss. 885 (1958).

Applying Fla: Stat. §687.03, when the brokerage fee, and loan origination fee are
added to the prepaid interest, the rate charged is in excess of 25% and is usurious. The
calculation is as follows:

$1,080,000.00—9 mos. Prepaid interest (see First American Bank & Trust
v. International Medical Centers, 565 So. 2d 1369
I" DCA 1990)
+. 562,500,00—broker’s fees

+ °85,000.00—origination fee

= $1,727.500.00 deemed interest to be included in the calculations

+$9,000,000.00—loan amount

= 19%= 13%

+ 16% interest as reflected on the note
= 29%

The court cannot find, as a matter of law, that the attomey’s fees of Gary Bodzins
should be deemed interest. However, the Defendants’ obligation to pay those fees
depended on the legitimacy of ihe agreement requiring inem 10 do s0.

Hugo Morales, a man of obvious financial acumen, was the architect of a scheme
to charge excessive interest in the.guise of a so-called brokerage fee, and a loan
origination fee. He knew the parties’ history, and knew, or should have known, that over
one-half million dollars was not going to be legitimately earned in acquiring an already
known party who could loan the money. The scheme afforded an imaginative, but
transparent, attempt to avoid Florida’s usury laws.

Accordingly, the Court finds that the Plaintiff's actions satisfied the elements of
criminal usury. The penalty provided is forfeiture of interest as heretofore characterized
by the Court, the right to collect the amount purportedly due on the note, and the right to

foreclose the mortgage. Palm-Gross, Inc. v. Paper, 639 So.2d 664 (Fla. 4" DCA 1994).

wrEPEENAND 2:. ANNENEN .24 ANAM ai na
WE? Uiiy 1L15 URW UD aU Avy UDO Ut WG rid 5 moon

for summary judgment is denied, The Defendants’ motion for summary judgment is
granted. Itis further ORDERED and ADJUDGED that the Plaintiff has forfeited the

tight to foreclose on the mortgage and to collect amounts purportedly owed pursuant tothe nramicenn nate and chall rahim fa the Nefandante all amannte naid tn the Dlaintiff ac

UIC Proocouly HUW; GU culddd Totus FO We 27 CauuuCuLS

part of the transaction sub judice.

Gu Giucuue pol bo ule 4 AauuL

ORDERED in chambers in Marathon, Monroe County, Florida this f day of

March 2010.

Copies furnished to:

Martin I Bodzin, Esq.

18205 Biscayne Blvd., #2201
Aventura, FL 33180

Dexter Lehtinen, Esq.

Lehtinen Riedi Brooks Moncarz, P.A.

7700 N. Kendall Drive, Suite 303
Miami, FL 33156

Richard W. Gross, Esq.
Ambassador Plaza, Suite 101
6447 Miami Lakes Dr.
Miami Lakes, FL 33014

  

er, Acting Circuit JudgeExhibit BIN THE CIRCUIT COURT OF THE 15* JUDICIAL CIRCUIT!
| IN AND FOR PALM BEACH COUNTY, FLORIDA

KENNETH L. BAKER; ;
PEDIGREE MOTORCARS, LLC, Case No.:
2021-CA-004336 MB AH
a Florida Limited Liability Company:
: STUART WOLPOFF;
BETHANY FINANCE, LLC,
a Maryland Limited Liability Company; and
OASIS MANAGEMENT, LLC,
a Maryland Limited Liability Company,

Plaintiffs
v.

STEPHEN NEARY a/k/a STEPHEN T. NEARY;

OTUAT ANIMA rt.
ONEIRC HOLDINGS, INC. d/b/a FALM BEACH

AUTO GROUP, a Florida corporation;

JESSICA MANN a/k/a JESSICA G. MANN;

CLEO NEARY; GARY FEIN; CHRIS SCHMITT;
GREENS WARD PARTNERS, LLC, a Florida

Limited Liability Company; and FLORIDA AVIATION

AQAA am.

ASSOCIATES, LLC, a Fiorida limited liability company,
Reteinceatea

| FFIDAVIT OF STEPHEN NEARY
STATE OF FLORIDA

COUNTY OF PALM BEACH

BEFORE ME, the undersigned authority, personally
appeared, STEPHEN NEARY, who after being duly sworn
deposes and says:

1. I am over the age of 18, and have personal knowledge of
the facts contained in this Affidavit.

2. I am the President of Palm Beach Auto Group, which has
operated i in Delray Beach, Florida since 2006.

3. In 2017, Palm Beach Auto Group began a series of
; aittransactions with Plaintiffs that were intended to function
as loans whereby Palm Beach Auto Group would have
access to funds or automobiles that it could then sell at a
profit and pay Plaintiffs the interest owed on the
transactions.

4. The transactions between Palm Beach Auto Group and
Plaintiffs continued until early 2021.

5. A record of completed transactions between Palm Beach
Auto Group and Plaintiffs, which was created by
KENNETH BAKER or his agent, shows Palm Beach Auto
Group paid Plaintiffs.at least $117-Million. 2. |.

. In addition to direct wire transfers.and checks to Plaintiffs,
Palm Beach Auto Group made payments to KENNETH
BAKER in the form of cash, automobile.trade-i -ins, or
purchases of items such as furniture.

: Palm Beach Auto Group was also.asked by KENNETH

BAKER to send gifts, cash, and in one instance an

OQ

—72

automobile, to women I was told were his girlfriends in
order.to not alert his wife.

8! The cash and items sent to the women was credited as
payments to Plaintiffs pursuant to the transactions.

9! My. relationship. with Baker_was never “extremely close”,

ag ha allanan hos rales na hsiain alatianahin
a5 1G aueZzes, out Mercy a-ousiness relationsnip.

10. -Irent.a.20 feet by 30.feet storage unit.located.at 1885
S.W. 4° Avenue, Unit B7, Delray Beach, Florida, which
‘contains appliances and furniture for the Palm Beach Auto
Group dealership as well as one 1972 Volkswagen Van.

11. I was asked to incorporate “Pedigree Motors, LLC” by
|Keiiieih Baker if order io help facilitate ihe business
transactions related to his Manheim credit line that he
offered to Palm Beach Auto.Group.. _ . :

12. Neither I nor Palm Beach Auto Group possesses any

' \cars owned by any of the Plaintiffs.

13. Baker has engaged in a campaign of intimidation
|towards me by making veiled threats and regularly driving
by the Palm Beach Auto Group dealership despite not.
living or working near the dealership.

14. Other than the following dates, I have been in the state
of Florida since January 1, 2021.

a. February 1-3 in New Hampshire

b. February 11-15 in Vermont

c. March 19-April.3 in New Hampshire and Vermont
15. If granted, the injunction requested by Plaintiffs wouldprevent Palm Beach Auto Group from operating its
business and likely lead to its closure.

FURTHER AFFIANT SAITH NAUGHT.

STATE OF FLORIDA
COUNTY OF PALM BEACH

 

STEPHEN NEARY

j THe foregoing Affidavit of Stephen Neary was
acknowledged before me this 7* day of
May 2021, by Stephen Neary, who is personally known to me

andjwho did take an oath.

ee \

. NOTARY PUBLIC