SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF SARATOGA
--- X ADIRONDACK TRUST COMPANY,
Plaintiff, -against-
MAHA LAXMI CORP., MAHA LAXMI II CORP., JAGDAMBA INC., JAGDAMBA II CORP., JAGDAMBA III CORP., JAGDAMBA V CORP., JAGDAMBA VI CORP., NORTHEAST DINING & LODGING, INC., POUGHKEEPSIE GC, INC., SYRACUSE GC, INC., NIRAL A. PATEL, and NIRMALA A. PATEL,
Defendants. --- X
Plaintiff Adirondack Trust Company (“ATC”), by and through its attorneys, Cullen and Dykman, LLP, sets forth the following as and for its Verified Complaint:
1. This is an action arising out of a scheme by the Defendants to misuse nearly $2 million in Paycheck Protection Program (“PPP’) funds loaned under the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act and which were intended to provide financial assistance to economic suffering caused by the COVID-19 pandemic.
2. Between April 10 and 13, 2020, ATC entered into ten PPP promissory notes with the Corporate Defendants named herein and disbursed $1,979,600.00 to the Corporate Defendants. Despite the clear requirements under the terms of the notes, 15 U.S.C. § 636(a)(36)(F)(i), and applicable rules and regulations, the Defendants failed to use the PPP loan proceeds for permissible expenses, such as payroll costs, mortgage interest, lease payments and utility payments.
3. Worse yet, the individual Defendants used the PPP loan proceeds for personal expenses and attempted to conceal the improper use of the proceeds, and shield those proceeds
Index No.:
from collection by ATC and other creditors, by diverting them through a web of transfers among their various accounts.
4. Accordingly, ATC brings this action to protect the public fisc by setting aside Defendants’ fraudulent transfers under the Uniform Voidable Transactions Act (New York State Debtor and Creditor Law Article 10) and to remedy the Corporate Defendants’ breaches of contract under the PPP promissory notes.
PARTIES
5. Plaintiff ATC is a banking institution duly chartered by the State of New York and located in the County of Saratoga.
6. Upon information and belief, Defendant Maha Laxmi Corp. (“Maha Laxmi”) is a domestic business corporation existing under the laws of the State of New York with a principal place of business located in the County of Albany.
7. Upon information and belief, Defendant Maha Laxmi II Corp. (“Maha Laxmi II”) is a domestic business corporation existing under the laws of the State of New York with a principal place of business located in the County of Albany.
8. Upon information and belief, Defendant Jagdamba Inc. (“Jagdamba”) is a domestic business corporation existing under the laws of the State of New York with a principal place of business located in the County of Albany.
9. Upon information and belief, Defendant Jagdamba II Corp. (“Jagdamba II”) is a domestic business corporation existing under the laws of the State of New York with a principal place of business located in the County of Albany.
10. Upon information and belief, Defendant Jagdamba III Corp (“Jagdamba III”) is a domestic business corporation existing under the laws of the State of New York with a principal place of business located in the County of Albany.
11. Upon information and belief, Defendant Jagdamba V Inc. (“Jagdamba V”) is a foreign business corporation existing under the laws of the State of New Jersey with a principal place of business located in the County of Saratoga.
12. Upon information and belief, Defendant Jagdamba VI Inc. (“Jagdamba VI”) is a foreign business corporation existing under the laws of the State of New Jersey with a principal place of business located in the County of Saratoga.
13. Upon information and belief, Defendant Northeast Dining & Lodging, Inc. (“Northeast”) is a domestic business corporation existing under the laws of the State of New York with a principal place of business located in the County of Saratoga.
14. Upon information and belief, Defendant Poughkeepsie GC, Inc. (“PGC”) is a domestic business corporation existing under the laws of the State of New York with a principal place of business located in the County of Saratoga.
15. Upon information and belief, Defendant Syracuse GC, Inc. (“SGC”) is a domestic business corporation existing under the laws of the State of New York with a principal place of business located in the County of Saratoga.
16. The corporate defendants herein shall be collectively referred to as the “Corporate Defendants.”
17. Upon information and belief, Defendant Niral A. Patel is an individual residing in the State of New York, County of Saratoga and is a shareholder and officer of the Corporate Defendants in this action.
18. Upon information and belief, Defendant Nirmala A. Patel is an individual residing in the State of New York, County of Schenectady and is a shareholder of the Corporate Defendants in this action.
19. Upon information and belief, Nirmala A. Patel is Niral A. Patel’s mother.
BACKGROUND A. The Corporate Defendants’ Business
20. Upon information and belief, the Corporate Defendants own and operate several businesses, including the Saratoga Springs Comfort Inn and Suites and eight Golden Corral restaurant franchises located in New York and New Jersey.
21. Golden Corral is a buffet-style restaurant.
22. Due to the coronavirus pandemic, the Corporate Defendants’ restaurants have been shut down since March 18, 2020.
23. In a sworn affidavit dated October 1, 2020, Niral Patel claimed the “buffet restaurant concept has suffered irreparable damage in the eyes of consumers” due to the pandemic and the franchisee agreements with Golden Corral mandate the operation of buffet-style Golden Corral restaurants.
24. Due to these purported limitations, Niral Patel admitted under oath that the pandemic has caused “permanent harm” to his restaurant operations requiring him to “repurpose” the restaurants for take-out and delivery only.
25. Northeast owns and operates the Saratoga Springs Comfort Inn and Suites. According to Niral Patel, the pandemic has also had a negative impact on Northeast, although it was not required to close.
B. The Paycheck Protection Program
26. The Paycheck Protection Program (“PPP”) is a Small Business administration (“SBA”) loan program enacted as part of the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act on March 27, 2020 in response to the coronavirus pandemic.
27. The PPP was intended to provide forgivable loans to small businesses to guarantee eight weeks of payroll and other qualified expenses.
28. To qualify for loan forgiveness under the PPP, a business was required to use the loan funds for limited and specific purposes.
29. Specifically, under the CARES Act regulations, 13 CFR Part 120, PPP funds may only be used for certain purposes, including: payroll costs; costs related to the continuation of group health care benefits during periods of paid sick, medical, or family leave, and insurance premiums; mortgage interest payments (but not mortgage prepayments or principal payments); rent; utilities; interest payments on other debt obligations incurred before February 15, 2020; or, refinancing a SBA Economic Injury Disaster Loan (“EIDL”) made between January 31, 2020 and April 3, 2020.
30. To qualify for forgiveness of a PPP loan, the borrower must use the funds for a permissible purpose by the first regular payroll after the “covered period” for the loan (for payroll costs) or the first regular billing date after the covered period (for non-payroll costs). The maximum covered period for a PPP loan is twenty-four weeks from the date of the loan’s issuance. 31. Under the CARES Act regulations, funds may only be used for payroll costs and/or non-payroll costs accrued within the covered period.
32. Additionally, to qualify for full forgiveness of a PPP loan, the borrower must use at least 60 % of the loan proceeds on payroll costs.
C. The Corporate Defendants’ PPP Loans
33. On or about April 4, 2020, the Corporate Defendants applied for PPP loans with ATC.
34. In connection with the loan applications, Niral Patel, as an authorized representative of the Corporate Defendants, certified that “[a]ll SBA loan proceeds will be used only for business-related purposes as specified in the loan application and consistent with the Paycheck Protection Program Rule.”
35. Niral Patel further certified that “[t]he funds will be used to retain workers and maintain payroll or make mortgage interest payments, lease payments, and utility payments, as specified under the Paycheck Protection Program Rule” and that he “understand[s] that if the funds are knowingly used for unauthorized purposes, the federal government may hold [him] legally liable, such as for charges of fraud.”
36. Based on these certifications and the Corporate Defendants’ applications, ATC determined that the Corporate Defendants satisfied the PPP requirements and, from April 10 to April 13, 2020, ATC entered into ten promissory notes with the Corporate Defendants pursuant to the PPP program, as follows:
a. Under a Promissory Note, dated April 10, 2020, ATC loaned Jagdamba $185,700.00 at an interest rate of 1% per annum (the “Jagdamba Note”). Jagdamba agreed to repay the loan in 17 monthly payments of $10,452.50 each, beginning November 10, 2020.
b. Under a Promissory Note, dated April 10, 2020, ATC loaned Jagdamba II $172,900.00 at an interest rate of 1% per annum (the “Jagdamba II Note”).
Jagdamba II agreed to repay the loan in 17 monthly payments of $9,732.03, beginning on November 10, 2020.
c. Under a Promissory Note, dated April 10, 2020, ATC loaned Jagdamba III $203,800.00 at an interest rate of 1% per annum (the “Jagdamba III Note”). Jagdamba III agreed to repay the loan in 17 monthly payments of $11,471.30 each, beginning on November 10, 2020.
d. Under a Promissory Note, dated April 10, 2020, ATC loaned Jagdamba V $181,900.00 at an interest rate of 1% per annum (the “Jagdamba V Note”). Jagdamba V agreed to repay the loan in 17 monthly payments of $10,186.97 each, beginning on May 10, 2020.
e. Under a Promissory Note, dated April 10, 2020, ATC loaned Jagdamba VI $209,400.00 at an interest rate of 1% per annum. Jagdamba VI agreed to repay the loan in 17 monthly payments of $11,786.51 each, beginning on November 10, 2020.
f. Under a Promissory Note, dated April 10, 2020, ATC loaned Maha Laxmi $25,100.00 at an interest rate of 1% per annum (the “Maha Laxmi Note”). Maha Laxmi agreed to repay the loan in 17 monthly payments of $1,412.81 each, beginning on November 10, 2020.
g. Under a Promissory Note, dated April 10, 2020, ATC loaned Maha Laxmi II $110,300.00 at an interest rate of 1% per annum (the “Maha Laxmi II Note”). Maha Laxmi II agreed to repay the loan in 17 monthly payments of $6,208.46 each, beginning on November 10, 2020.
h. Under a Promissory Note, dated April 13, 2020, ATC loaned Northeast $276,400.00 at an interest rate of 1% per annum (the “Northeast Note”). Northeast agreed to repay the loan in 17 monthly payments of $15,557.74 each, beginning on November 13, 2020.
i. Under a Promissory Note, dated April 13, 2020, ATC loaned PGC, $256,200.00 at an interest rate of 1% per annum (the “PGC Note”). PGC agreed to repay the loan in 17 monthly payments of $14,420.34 each, beginning on November 13, 2020. j. Under a Promissory Noted, dated April 10, 2020, ATC loaned SGC $357,900.00 at
an interest rate of 1% per annum (the “SGC Note”). SGC agreed to repay the loan in 17 monthly payments of $20,145.13 each, beginning on November 10, 2020. 37. Copies of the above-referenced promissory notes are attached, collectively, as
Exhibit A (the “PPP Notes”).
38. Defendant Niral Patel signed each of the PPP Notes as an officer on behalf of each of the Corporate Defendants.
39. The PPP Notes are otherwise identical except for the borrower and the amount of the loan.
40. The PPP Notes expressly provide that they are made pursuant to the “Paycheck Protection Program” and that “[n]otwithstanding anything to the contrary herein, the Borrower (a) agrees that this Promisorry Note shall be interpreted and construed to be consistent with the PPP Loan Program Requirements” as set forth in the CARES Act and “any rules or guidance that has been issued by the Small Business Administration implementing the PPP, or any other applicable Loan Program Requirements” (emphasis added).
41. The PPP Notes lists several events that qualify as an “Event of Default” permitting ATC to “declare the entire unpaid principal balance” and “all accrued and unpaid interest immediately due,” including, inter alia:
a. Failure of the borrower “to comply with or to perform any other term, obligation, covenant or condition contained in this Note or in any of the related documents or to perform any term, obligation, covenant or condition contained in any other agreement between Lender and Borrower”;
b. The borrower’s default “under any loan, extension of credit, security agreement, purchase or sales agreement, or any other agreement, in favor of any other creditor or person that may materially affect any of Borrower’s property or Borrower’s ability to repay this Note or perform Borrower’s obligations under this Note or any of the related documents”;
c. “Any warranty, representation or statement made or furnished to Lender by Borrower or on Borrower’s behalf under this Note or the related documents is false or misleading in any material respect, either now or at the time made or furnished or becomes false or misleading at any time thereafter”;
d. “The dissolution or termination of Borrower’s existence as a going business, the insolvency of Borrower, the appointment of a receiver for any part of Borrower’s property, any assignment for the benefit of creditors, any type of creditor workout, or the commencement of any proceeding under any bankruptcy or insolvency laws by or against Borrower”;
e. “A material adverse change occurs in Borrower’s financial condition, or Lender believes the prospect of payment or performance of this Note is impaired.”
D. Defendants’ Fraudulent Transfers
42. Pursuant to the PPP Notes, on April 14 and April 16, 2020, ATC issued ten checks to the Corporate Defendants in a total amount of $1,979,600.00. Specifically, ATC issued the following checks to the Corporate Defendants:
a. Check No. 1082460 in the amount of $185,700.00 to Jagdamba pursuant to the Jagdamba Note;
b. Check No. 1082461 in the amount of $172,900.00 to Jagdabma II pursuant to the Jagdamba II Note;
c. Check No. 1082462 in the amount of $203,800.00 to Jagdamba III pursuant to the Jagdamba III Note;
d. Check No. 1082463 in the amount of $181,900.00 to Jagdamba V pursuant to the Jagdamba V Note;
e. Check No. 1082464 in the amount of $209,400.00 to Jagdamba VI pursuant to the Jagdamba VI Note;
f. Check No. 1082465 in the amount of $276,400.00 to Northeast pursuant to the Northeast Note;
g. Check No. 1082466 in the amount of $256,200.00 to PGC pursuant to the PGC Note;
h. Check No. 1082467 in the amount of $357,900.00 to SGC pursuant to the SGC Note;
i. Check No. 1082468 in the amount of $25,100.00 to Maha Laxmi pursuant to the Maha Laxmi Note;
j. Check No. 1082560 in the amount of $110,300.00 to Maha Laxmi II pursuant to the Maha Laxmi II Note;
43. Niral Patel deposited the checks in each of the Corporate Defendants’ respective checking accounts with ATC beginning on or about April 17, 2020, as follows:
a. Deposit of $185,700.00 into Jagdamba’s checking account no. XXXX523; b. Deposit of $172,900.00 into Jagdamba II’s checking account no. XXXX701; c. Deposit of $203,000.00 into Jagdamba III’s checking account no. XXXX714; d. Deposit of $181,900.00 into Jagdamba V’s checking account no. XXXX549; e. Deposit of $209,400.00 into Jagdamba VI’s checking account no. XXXX565; f. Deposit of $25,100.00 into Maha Laxmi’s checking account no. XXXX536; g. Deposit of $110,300.00 into Maha Laxmi II’s checking account no. XXXX727; h. Deposit of $276,400.00 into Northeast’s checking account no. XXXX484; i. Deposit of $256,200.00 into PGC’s checking account no. XXXX507; j. Deposit of $357,900.00 into SGC’s checking account no. XXXX497.
44. The Corporate Defendants did not use the PPP funds for permissible purposes under the PPP Notes or the PPP regulations.
45. Instead, beginning on or around May 7, 2020, Niral Patel caused the Corporate Defendants to transfer the majority of PPP funds to Nirmala Patel’s personal checking account with ATC, account no. XXXX819.
46. Specifically, Niral Patel made the following transfers of PPP funds:
a. $185,000.00 from Jagdamba’s checking account no. XXXX523 to Nirmala Patel’s checking account no. XXXX819 on May 7, 2020;
b. $172,000 from Jagdamba II’s checking account no. XXXX701 to Nirmala Patel’s checking account no. XXXX819 on May 7, 2020;
c. $203,000.00 from Jagdamba III’s checking account no. XXXX714 to Nirmala Patel’s checking account no. XXXX819;
d. $171,000.00 from Jagdamba V’s checking account no. XXXX549 to Nirmala Patel’s checking account no. XXXX819;
e. $225,000.00 from Jagdamba VI’s checking account no. XXXX565 to Nirmala Patel’s checking account no. XXXX8191;
f. $257,000.00 from Northeast’s checking account no. XXXX484 to Nirmala Patel’s checking account no. XXXX819;
g. $251,000.00 from PGC’s checking account no. XXXX507 to Nirmala Patel’s checking account no. XXXX819;
h. $350,000.00 from SGC’s checking account no. XXXX497 to Nirmala Patel’s checking account no. XXXX819.
i. $110,000.00 from Maha Laxmi II’s checking account no. XXXX727 to Nirmala Patel’s checking account no. XXXX819.
47. In total, Niral Patel transferred $1,924,000.00 to Nirmala Patel’s checking account on May 7, 2020 from the checking accounts of Maha Laxmi II, Jagdamba, Jagdamba II, Jagdamba III, Jagdamba V, PGC, Northeast, and SGC.
48. As of May 5, 2020, the balance in Nirmala Patel’s checking account was $5,926.15. Following the transfers, the balance in Nirmala Patel’s checking account ballooned to
$1,929,926.15. Thus, as of May 5, 2020, all but $5,926.15 in Nirmala Patel’s checking account were funds from the Corporate Defendants’ PPP loans.
49. Following these transfers, Nirmala Patel did not use the Corporate Defendants’ PPP loan funds for proper purposes under the Notes or the PPP regulations, but instead made payments to her personal mortgage loans, Niral Patel, and Maha Laxmi in violation of the Notes and the PPP regulations.
50. The transfer of PPP funds from the Corporate Defendants’ respective accounts to a single personal checking account owned by a third party is in violation of 15 U.S.C. § 636(a)(36)(F)(i).
51. On June 1, 2020, July 1, 2020, August 3, 2020, September 1, 2020, and October 1, 2020, Nirmala Patel made payments of $17,263.40 of PPP funds to her residential mortgage loan with ATC.
52. In addition, on September 11, 2020, Nirmala Patel transferred $1,000.00 to Niral Patel’s personal checking account no. XXXX423; on September 15, 2020, Nirmala Patel transferred $19,000.00 to Niral Patel’s personal checking account no. XXXX423; and, on September 18, 2020, Nirmala Patel transferred $6,0000.00 to Niral Patel’s personal checking account no. XXXX423.
53. In total, Nirmala Patel funneled $26,000.00 of PPP funds to Niral Patel’s personal checking account.
54. Nirmala Patel also transferred PPP funds to Maha Laxmi far in excess of the $25,100.00 PPP loan granted to Maha Laxmi under the Maha Laxmi Note.
55. Specifically, from July 22, 2020 through September 28, 2020, Nirmala Patel transferred a total of $102,000.00 in PPP funds to Maha Laxmi’s checking account no. XXXX536, as follows:
a. 7/22/2020 transfer to checking account no. XXX536 of $2,000.00 b. 7/23/2020 transfer to checking account no. XXX536 of $50,000.00 c. 7/28/2020 transfer to checking account no. XXX536 of $1,500.00 d. 8/3/2020 transfer to checking account no. XXX536 of $3,500.00 e. 8/6/2020 transfer to checking account no. XXX536 of $5,000.00 f. 8/7/2020 transfer to checking account no. XXX536 of $3,000.00 g. 8/26/2020 transfer to checking account no. XXX536 of $2,500.00 h. 9/8/2020 transfer to checking account no. XXX536 of $3,000.00 i. 9/10/2020 transfer to checking account no. XXX536 of $10,000.00 j. 9/11/2020 transfer to checking account no. XXX536 of $3,000.00 k. 9/17/2020 transfer to checking account no. XXX536 of $5,000.00 l. 9/28/2020 transfer to checking account no. XXX536 of $3,500.00 m. 9/28/2020 transfer to checking account no. XXX536 of $10,000.00
56. Additionally, from May 7, 2020 through October 5, 2020, $493,500.00 was transferred from Northeast’s account nos. XXXX484, XXXX438, and XXXX967 to Nirmala Patel’s personal checking account no. XXXX819 and $649,550.00 was transferred from Nirmala Patel’s personal checking account no. XXXX819 to Northeast’s accounts no. XXXX967 and XXXX938.
57. ATC’s investigation has revealed that, through these transactions, $68,550.00 of PPP funds were impermissibly funneled into Northeast accounts.
58. Upon information and belief, the Corporate Defendants’ PPP loans are not eligible for forgiveness because the funds have not been used for permissible purposes based on the maximum covered period of twenty-four weeks from the date of the loans’ issuance.
59. The PPP loans also are not eligible for forgiveness because none of the funds have been used for payroll costs.
60. As a result, the Corporate Defendants have violated the express requirement of the PPP that 60% of the funds be used for payroll costs to be eligible for full forgiveness.
E. The PPP Loans Are in Default
61. Under the express terms of the Notes, each of the Corporate Defendants are in default based on several Events of Default, as that term is defined in the Notes, including, without limitation: (A) the Corporate Defendants’ failure to comply with the terms of the Notes and related documents, including the regulations applicable to the PPP; (B) the Corporate Defendants’ default under loan agreements with other creditors; (C) the Corporate Defendants’ false statements in their PPP applications; (D) the termination of the Corporate Defendants’ existence as going businesses and their insolvency; and (E) material adverse changes in the Corporate Defendants’ financial condition and ATC’s belief that the prospect of payment or performance under the Notes is impaired.
a. The Corporate Defendants Failed to Comply with the Notes and Related
Documents
62. As an initial matter, the Corporate Defendants failed to comply with the Notes and related documents applicable to PPP loans, including the requirements of the CARES Act and the Loan Program Requirements, as set forth in 13 CFR Part 120, by failing to use the loan funds for permissible purposes under the PPP regulations.
63. Among other things, the Corporate Defendants failed to comply with the Notes and the Loan Program Requirements by transferring the funds to Nirmala Patel’s and Niral Patel’s personal checking accounts and using the funds for personal purposes.
64. Indeed, to date, Nirmala Patel holds over $1.9 million in PPP funds in her personal checking account in flagrant violation of the Notes and the Loan Program Requirements.
ii. Maha Laxmi, Maha Laxmi II, Jagdamba, Jagdamba II, and Jagdamba III are
in Default Under Loan Agreements With Other Creditors
65. Defandants Maha Laxmi, Maha Laxmi II, Jagdamba, Jagdamba II, Jagdamba III, and Nirmala Patel are currently defendants in a lawsuit brought by BankUnited, N.A. (“BankUnited”) and captioned as BankUnited, N.A. v Jagdamba III Corp. et al., Suffolk County, Index No. 601000/2020 (the “Suffolk Action”).
66. In the Suffolk Action, BankUnited alleges that Jagdamba III is liable to it under a promissory note in the amount of $2,850,000.00, with $2,576,079.35 outstanding. Defendants Jagdamba, Jagdamba II, Maha Laxmi, Maha Laxmi II, and Nirmala Patel are alleged to be liable as guarantors of the debt.
67. The defendants in the Suffolk Action do not dispute their default under the loan from BankUnited or the associated guaranties.
68. By virtue of their default under the loan from BankUnited, Defendants Jagdamba, Jagdamba II, Maha Laxmi and Maha Laxmi II are in default under their respective PPP Notes with ATC.
69. Additionally, Defendants Jagdamba, Jagdamba II, Maha Laxmi, Maha Laxmi II and Nirmala Patel are co-defendants as guarantors in a $10 million mortgage foreclosure action entitled SDI Matto JV Holdco LLC v Ambica M&J Two, LLC, et al., Supreme Court, Saratoga County Index No. 2015/2201 (the “Saratoga Foreclosure Action”).
70. Summary judgment was granted to the plaintiff in the Saratoga Foreclosure Action and the plaintiff’s motion or judgment of foreclosure and sale currently is pending.
71. By virtue of their default under the guaranties at issue in the Saratoga Foreclosure Action, Defendants Jagdamba, Jagdamba II, Maha Laxmi and Maha Laxmi II are in default under their respective PPP Notes with ATC.
iii. The Corporate Defendants Owe more than $6.6 million in Unsatisfied Federal
and State Tax Liens and Warrants
72. In addition, the following liabilities arising from warrants, tax liens, and judgments against Defendants remain outstanding:
a. A warrant against Defendant Jagdamba filed in Saratoga County (Index No. 2020-022960) relating to $11,943.03 owed to the New York State Department of Taxation and Finance (“DTF”);
b. A warrant against Defendant Jagdamba in Saratoga County (Index No. 2020-007967) relating to $34,273.76 owed to DTF;
c. A tax lien against Defendant Jagdamba in Saratoga County (Index No. 2020-001782) relating to $2,573.50 owed to the U.S. Internal Revenue Service (“IRS”); d. A tax lien against Defendant Jagdamba in Saratoga County (Index No.
2019-030279) relating to $140,857.62 owed to IRS;
e. A tax lien against Defendant Jagdamba in Saratoga County (Index No. 2018-032988) relating to $15,314.27 owed to IRS;
f. A tax lien against Defendant Jagdamba in Saratoga County (Index No. 2018-015489) relating to $564,930.77 owed to IRS;
h. A warrant against Defendant Jagdamba in Albany County (Index No. X20-7105) relating to $6,109.38 owed to DTF;
i. A warrant against Defendant Jagdamba in Albany County (Index No. X20-38044) relating to $7,571.75 owed to DTF;
j. A warrant against Defendant Jagdamba in Albany County (Index No. X20-38055) relating to $56,378.11 owed to DTF;
k. A warrant against Defendant Jagdamba in Albany County (Index No. X20-38807) relating to $7,600.12 owed to DTF;
l. A warrant against Defendant Jagdamba II in Saratoga County (Index No. 2020-023943) relating to $4,788.88 owed to DTF;
m. A warrant against Defendant Jagdamba II in Saratoga County (Index No. 2020-022953) relating to $5,636.96 owed to DTF;
n. A warrant against Defendant Jagdamba II in Saratoga County (Index No. 2020-022954) relating to $28,627.91 owed to DTF;
o. A warrant against Defendant Jagdamba II in Saratoga County (Index No. 2020-022956) relating to $9,155.25 owed to DTF;
p. A warrant against Defendant Jagdamba II in Saratoga County (Index No. 2020-007965) relating to $2,529.06 owed to DTF;
q. A warrant against Defendant Jagdamba II in Saratoga County (Index No. 2020-007319) relating to $5,361.14 owed to DTF;
r. A warrant against Defendant Jagdamba II in Saratoga County (Index No. 2020-006257) relating to $8,381.10 owed to DTF;
s. A warrant against Defendant Jagdamba II in Saratoga County (Index No. 2020-006258) relating to $35,321.68 owed to DTF;
t. A tax lien against Defendant Jagdamba II in Saratoga County (Index No. 2020-01781) relating to $5,584.15 owed to IRS;
u. A warrant against Defendant Jagdamba II in Saratoga County (Index No. 2019-033732) relating to $3,987.34 owed to DTF;
v. A warrant against Defendant Jagdamba II in Saratoga County (Index No. 2019-030922) relating to $4,378.03 owed to DTF;
w. A warrant against Defendant Jagdamba II in Saratoga County (Index No. 2019-030923) relating to $36,919.66 owed to DTF;
x. A tax lien against Defendant Jagdamba II in Saratoga County (Index No. 2019-030276) relating to $202,702.03 owed to IRS;
y. A warrant against Defendant Jagdamba II in Saratoga County (Index No. 2019-027733) relating to $5,206.91 owed to DTF;
z. A warrant against Defendant Jagdamba III in Saratoga County (Index No. 2020-022957) relating to $17,923.15 owed to DTF;
aa. A warrant against Defendant Jagdamba III in Saratoga County (Index No. 2020-007966) relating to $30,518.83 owed to DTF;
bb. A tax lien against Defendant Jagdamba III in Saratoga County (Index No. 2020-000860) relating to $13,601.61 owed to IRS;
cc. A tax lien against Defendant Jagdamba III in Saratoga County (Index No. 2019-030278) relating to $161.297.39 owed to IRS;
dd. A tax lien against Defendant Jagdamba III in Saratoga County (Index No. 2018-031865) relating to $20,610.69 owed to IRS;
ee. A warrant against Defendant Jagdamba III in Warren County (Index No. 2020-7101977) relating to $6,835.82 owed to DTF;
ff. A warrant against Defendant Jagdamba III in Warren County (Index No. 7101946) relating to $7,749.12 owed to DTF;
gg. A warrant against Defendant Jagdamba III in Warren County (Index No. 7101947) relating to $27,177.52 owed to DTF;
hh. A warrant against Defendant Jagdamba III in Warren County (Index No. 7100875) relating to $8,957.40 owed to DTF;
ii. A warrant against Defendant Jagdamba III in Warren County (Index No. 2020-7100018) relating to $4,871.71 owed to DTF;
jj. A warrant against Defendant Jagdamba III in Warren County (Index No. 2019-7105272) relating to $32,476.53 owed to DTF;
kk. A warrant against Defendant Jagdamba III in Warren County (Index No. 2019-7105129) relating to $5,686.05 owed to DTF;
ll. A warrant against Defendant Jagdamba III in Warren County (Index No. 2019-7105130) relating to $33,984.81 owed to DTF;
mm. A warrant against Defendant Jagdamba III in Warren County (Index No. 2019-7105131) relating to $65,045.87 owed to DTF;
nn. A judgment against Defendant Jagdamba V in Mercer, New Jersey (Index No. DJ010341-20) relating to $150,235.72 owed to the New Jersey Division of Taxation (“NJDT”);
oo. A judgment against Defendant Jagdamba V in Mercer, New Jersey (Index No. DJ102452-19) relating to $11,137.05 owed to NJDT;
pp. A judgment against Defendant Jagdamba V in Mercer, New Jersey (Index No. DJ105851-18) relating to $22,116.79 owed to NJDT;
qq. A judgment against Defendant Jagdamba V in Mercer, New Jersey (Index No. DJ048832-18) relating to $280,109.58 owed to NJDT;
rr. A judgment against Defendant Jagdamba V in Mercer, New Jersey (Index No. DJ091581-18) relating to $284,833.13 owed to NJDT;
ss. A judgment against Defendant Jagdamba VI in Mercer, New Jersey (Index No. EA087789-20) relating to $517,287.78 owed to NJDT;
tt. A judgment against Defendant Jagdamba VI in Mercer, New Jersey (Index No. DJ010342-20) relating to $38,400.66 owed to NJDT;
uu. A judgment against Defendant Jagdamba VI in Mercer, New Jersey (Index No. 007440-19) relating to $10,136.43 owed to NJDT;
vv. A judgment against Defendant Jagdamba VI in Mercer, New Jersey (Index No. DJ105852-18) relating to $3,813.24 owed to NJDT;
ww. A judgment against Defendant Jagdamba VI in Mercer, New Jersey (Index No. DJ074707-18) relating to $347,971.77 owed to NJDT;
xx. A judgment against Defendant Jagdamba VI in Mercer, New Jersey (Index No. DJ074706-18) relating to $5,062.48 owed to NJDT;
yy. A judgment against Defendant Jagdamba VI in Mercer, New Jersey (Index No. DJ210659-17) relating to $77,521,92 owed to NJDT;
zz. A judgment against Defendant Jagdamba VI in Mercer, New Jersey (Index No. DJ161839-18) relating to $356,149.51 owed to NJDT;
aaa. A warrant against Defendant Northeast in Saratoga County (Index No. 2020-023944) relating to $18,866.85 owed to DTF;
bbb. A warrant against Defendant Northeast in Saratoga County (Index No. 2020-022-955) relating to $36,679.15 owed to DTF;
ccc. A warrant against Defendant Northeast in Saratoga County (Index No. 2020-022959) relating to $41,918.23 owed to DTF;
ddd. A warrant against Defendant Northeast in Saratoga County (Index No. 2020-007352) relating to $749.48 owed to DTF;
eee. A warrant against Defendant Northeast in Saratoga County (Index No. 2020-06256) relating to $13,235.99 owed to DTF;
fff. A tax lien against Defendant Northeast in Saratoga County (Index No. 2020-005965) relating to $3,6785.66 owed to IRS;
ggg. A warrant against Defendant Northeast in Saratoga County (Index No. 2019-037263) relating to $15,7255.96 owed to DTF;
hhh. A warrant against Defendant Northeast in Saratoga County (Index No. 2019-035067) relating to $1,015.34 owed to DTF;
iii. A tax lien against Defendant Northeast in Saratoga County (Index No. 2019-030282) relating to $783,498.85 owed to IRS;
jjj. A warrant against Defendant Northeast in Saratoga County (Index No. 2019-024475) relating to $15,118.21 owed to DTF;
kkk. A warrant against Defendant Northeast in Saratoga County (Index No. 2019-024192) relating to $2,655.79 owed to DTF;
lll. A warrant against Defendant PGC in Saratoga County (Index No. 2020-006255) relating to $81,689.62 owed to DTF;
mmm. A warrant against Defendant PGC in Saratoga County (Index No. 2020-022962) relating to $209,525.22 owed to DTF;
nnn. A warrant against Defendant PGC in Dutchess County (Index No. 10-2019-53768T) relating to $155,900.51 owed to DTF;
ooo. A warrant against Defendant PGC in Dutchess County (Index No. 10-2019-53767T) relating to $54,908.23 owed to DTF;
ppp. A warrant against Defendant PGC in Dutchess County (Index No. 10-2020-50388T) relating to $58.921.98 owed to DTF;
qqq. A warrant against Defendant PGC in Dutchess County (Index No. 10-2020-50758T) relating to $27,457.45 owed to DTF;
rrr. A warrant against Defendant SGC in Saratoga County (Index No. 2020-023945) relating to $16,157.80 owed to DTF;
sss. A warrant against Defendant SGC in Saratoga County (Index No. 2020-022961) relating to $171,279.64 owed to DTF;
ttt. A warrant against Defendant SGC in Saratoga County (Index No. 2020-022958) relating to $28,815.28 owed to DTF;
uuu. A warrant against Defendant SGC in Onondaga County (Index No. 2019-00045739) relating to $7,154.87 owed to DTF;
vvv. A warrant against Defendant SGC in Onondaga County (Index No. 2020-00000707) relating to $154,968.25 owed to DTF;
www. A warrant against Defendant SGC in Onondaga County (Index No. 2020-00011073) relating to $59,493.80 owed to DTF;
xxx. A warrant against Defendant SGC in Onondaga County (Index No. 2020-00011074) relating to $52,558.32 owed to DTF; and
yyy. A warrant against Defendant SGC in Onondaga County (Index No. 2020-00011675) relating to $9,463.23 owed to DTF.
iv. Defendants Falsely Certified They Would Use the PPP Funds for Permissible
Purposes
73. In each of the PPP applications to ATC, Niral Patel certified, as an officer and authorized representative of the Corporate Defendants, that the Corporate Defendants would use the PPP funds “to retain workers and maintain payroll or make mortgage interest payments, lease payments, and utility payments as specified under the Paycheck Protection Program Rule.”
74. As described above, the Corporate Defendants have not used the PPP funds for permissible purposes and, in fact, have diverted the PPP funds to their personal accounts and used the funds for personal purposes.
75. Upon information and belief, the Corporate Defendants have failed to use at least $1.9 million in PPP funds for permissible purposes.
76. By falsely certifying that the funds would be used for permissible purposes under the PPP rules, Niral Patel and the Corporate Defendants materially mislead ATC in applying for and accepting the PPP funds.
v. The Restaurant Defendants Are No Longer a Going Business
77. Niral Patel submitted in affidavit in the Suffolk Action attesting that the restaurant defendants, including Jagdamba (Albany Golden Corral), Jagdamba II (Saratoga Golden Corral), Jagdamba III (Queensbury Golden Corral), Jagdamba V (Delran, New Jersey Golden Corral), Jagdamba VI (Egg Harbor, New Jersey Golden Corral), Poughkeepsie GC (Poughkeepsie Golden Corral) and Syracuse GC (Syracuse Golden Corral) have not been in operation since March 18, 2020 and that he has no intention of reopening the restaurants as Golden Corral franchises.
78. According to Niral Patel, the pandemic has caused “permanent harm to the Restaurants” and, as a result, he “began a concerted effort to repurpose the Restaurants.”
79. Thus, according to Niral Patel’s sworn admission, Defendants Jagdamba, Jagdamba II, Jagdamba III, Jagdamba V, Jagdamba VI, Poughkeepsie GC and Syracuse GC are no longer a going business and he has no intention of operating the Golden Corral franchises in the future.
vi. There Has Been a Material Adverse Change in the Corporate Defendants
Financial Condition
80. As described in the Suffolk Action and the Saratoga Foreclosure Action and as evidenced by the eighty unsatisfied federal and state tax liens filed against Defendants, there has been a material adverse change in the Corporate Defendants’ financial condition and, based on their own admissions, ATC reasonably believes the prospect of payment under the Notes is impaired.
81. According to Niral Patel, the Restaurant Defendants’ business model of providing buffet-style dining has “suffered irreparable damage in the eyes of consumers.” For this reason, Niral Patel has represented that the Restaurant Defendants’ “cannot reopen” and, therefore, must be “repurposed.” Likewise, Northeast, which operates a hotel in Saratoga Springs, has been
AS AND FOR A FIRST CAUSE OF ACTION
Avoidance of Transfers Pursuant to Debtor and Creditor Law §§ 273, 276 and 276-a
82. ATC repeats all prior allegations.
83. As alleged herein, between April 10 and April 13, 2020, ATC entered into ten promissory notes with the Corporate Defendants pursuant to the PPP program.
84. As alleged herein, pursuant to the PPP Notes, on April 14 and April 16, 2020, ATC issued ten checks to the Corporate Defendants totaling $1,979,600.00.
85. As alleged herein, pursuant to the PPP Notes, ATC has a right to payment of $1,979,600.00 plus interest from the Corporate Defendants.
86. ATC is the creditor of the Corporate Defendants.
87. Beginning on May 7, 2020, the Corporate Defendants, Niral Patel and Nirmala Patel, with actual intent to hinder, delay or defraud ATC, the Corporate Defendants’ creditor, transferred $1,924,000.00 in PPP funds from the Corporate Defendants’ respective checking accounts to Nirmala Patel’s personal checking account no. XXXX819.
88. Upon information and belief, Niral Patel is a director, officer or person in control of the Corporate Defendants.
89. Nirmala Patel is a relative of Niral Patel.
90. Additionally, upon information and belief, Nirmala Patel is a director, officer or person in control of all or some of the Corporate Defendants, and is a relative of Niral Patel, a director, officer, or person in control of the Corporate Defendants. .
91. Accordingly, the unauthorized transfers of $1,924,000.00 by the Corporate Defendants from their respective checking accounts was to an “insider” as that term is defined in Debtor and Creditor Law § 270(2)(i), (ii), (iii), (iv), and (vi).
92. Niral Patel controls Nirmala Patel’s personal checking account no. XXXX819 by virtue of a power attorney dated September 24, 2014.
93. After the Corporate Defendants transferred $1,924,000.00 in PPP funds from their respective accounts to Nirmala Patel’s personal checking account no. XXXX819, Niral Patel transferred a portion of the PPP funds to accounts owned by Northeast and Maha Laxmi and to his personal checking account.
94. Upon information and belief, Niral Patel is a director, officer or person in control of Northeast and Maha Laxmi.
95. Accordingly, by virtue of his control of Nirmala Patel’s checking account no. XXXX819 and the transfer of a portion of the PPP funds from that account to corporate accounts that he controls and to his personal account, Niral Patel and the Corporate Defendants have retained possession and control of the PPP funds after they were transferred from the Corporate Defendants’ respective accounts.
96. The Corporate Defendants, Niral Patel and Nirmala Patel failed to disclose to ATC the unauthorized transfers of $1,924,000.00 in PPP funds from the Corporate Defendants’ respective accounts to Nirmala Patel’s personal checking account no. XXXX819.
97. Prior to the unauthorized transfers of $1,924,000.00 in PPP funds from the Corporate Defendants’ respective accounts to Nirmala Patel’s personal checking account no. XXXX819, some or all of the Corporate Defendants had been sued, including in the Suffolk Action, which was commenced on January 16, 2020 and relates to nonpayment of a $2.85 million promissory note, and the Saratoga Foreclosure Action, which was commenced in 2015 and relates to foreclosure on a $10 million mortgage liability.
98. Upon information and belief, there is excess of $20 million in known liabilities owed by the Corporate Defendants, Niral Patel, and Nirmala Patel pursuant to eighty unsatisfied federal and state tax liens totaling in excess of $6.6 million, as well as pursuant to the unpaid obligations enforced in the pending Suffolk Action and Saratoga Foreclosure Action.
99. Accordingly, the unauthorized transfers of $1,924,000.00 in PPP funds from the Corporate Defendants’ respective accounts to Nirmala Patel’s personal checking account no. XXXX819 was of all or substantially all of the Corporate Defendants’ assets.
100. The $1,979,600.00 in PPP funds received by the Corporate Defendants from ATC in accordance with the PPP Notes were assets owned by the Corporate Defendants.
101. The Corporate Defendants, Niral Patel, and Nirmala Patel removed or concealed the Corporate Defendants’ assets by transferring $1,924,000.00 in PPP funds from the Corporate Defendants’ respective accounts to Nirmala Patel’s personal checking account no. XXXX819.
102. Additionally, the Corporate Defendants, Niral Patel, and Nirmala Patel removed or concealed the Corporate Defendants’ assets by subsequently transferring from Nirmal Patel’s personal checking account no. XXXX819 the following sums: (A) approximately $68,550 to an account owned by Northeast; (B) $102,000 to an account owned by Maha Laxmi; (C) $26,000 to Niral Patel’s personal account; and (D) approximately $12,122.67 to Nirmala Patel’s residential mortgage loans.
103. The value of the consideration received by the Corporate Defendants was not reasonably equivalent to the value of the $1,924,000 in unauthorized transfers of PPP funds to Nirmala Patel’s personal checking account no. XXXX819.
104. The Corporate Defendants, Niral Patel and Nirmala Patel have in excess of $20 million in known liabilities pursuant to the eighty unsatisfied federal and state tax liens totaling in
excess of $6.6 million, as well as pursuant to the unpaid obligations enforced in the pending Suffolk Action and Saratoga Foreclosure Action.
105. Accordingly, at the time the Corporate Defendants transferred $1,924,000.00 in PPP funds to Nirmala Patel’s personal checking account no. XXXX819, the Corporate Defendants were insolvent or became insolvent shortly after said transfers.
106. Moreover, the Corporate Defendants were engaged or were about to engage in a business or transaction for which the remaining assets of the Corporate Defendants were unreasonably small in relation to the business or transaction.
107. Based on the foregoing, pursuant to Debtor and Creditor Law §276(a), ATC is entitled to: (A) avoidance of the unauthorized transfers of $1,924,000.00 in PPP funds to Nirmala Patel’s personal checking account no. XXXX819; (B) avoidance of the $68,550.00 in net transfers from Nirmala Patel’s personal checking account no. XXXX819 to Northeast’s account nos. XXXX484, XXXX967 and/or XXXX938 from May 7, 2020 through October 5, 2020; (C) avoidance of the $102,000.00 in transfers from Nirmala Patel’s personal checking account no. XXXX819 to Maha Laxmi’s account no. XXXX536 from July 22, 2020 through September 28, 2020; (D) avoidance of the $26,000.00 in transfers from Nirmala Patel’s personal checking account no. XXXX819 to Niral Patel’s personal account no. XXXX423 from September 11, 2020 through September 18, 2020; (E) attachment or other provisional remedy against Nirmala Patel’s personal checking account no. XXXX819, Northeast’s account no. XXXX484, Maha Laxmi’s account no. XXXX536 and Niral Patel’s personal account no. XXXX423; (F) an injunction against further disposition by the Corporate Defendants, Niral Patel and Nirmala Patel of the PPP funds or any other property; and (G) an award to ATC for its attorneys’ fees pursuant to Debtor and Creditor Law § 276-a.
AS AND FOR A SECOND CAUSE OF ACTION
Avoidance of Transfers Pursuant to Debtor and Creditor Law §§ 274, 276 and 276-a
108. ATC repeats all prior allegations.
109. As alleged herein, between April 10 and April 13, 2020, ATC entered into ten promissory notes with the Corporate Defendants pursuant to the PPP program.
110. As alleged herein, pursuant to the PPP Notes, on April 14 and April 16, 2020, ATC issued ten checks to the Corporate Defendants in a total amount of $1,979,600.00.
111. As alleged herein, pursuant to the PPP Notes, ATC has a right to payment of $1,979,600.00 plus interest from the Corporate Defendants.
112. ATC is the creditor of the Corporate Defendants.
113. ATC’s right to payment of $1,979,600.00 plus interest from the Corporate Defendants arose before May 7, 2020.
114. Beginning on May 7, 2020, the Corporate Defendants, Niral Patel, and Nirmala Patel transferred $1,924,000.00 in PPP funds from the Corporate Defendants’ respective checking accounts to Nirmala Patel’s personal checking account no XXXX819.
115. The Corporate Defendants did not receive a reasonably equivalent value in exchange for the transfer of $1,924,000.00 in PPP funds to Nirmala Patel.
116. The Corporate Defendants, Niral Patel, and Nirmala Patel have in excess of $20 million in known liabilities pursuant to the eighty unsatisfied federal and state tax liens totaling in excess of $6.6 million, as well as pursuant to the unpaid obligations enforced in the pending Suffolk Action and Saratoga Foreclosure Action.
117. Accordingly, at the time the Corporate Defendants transferred $1,924,000.00 in PPP funds to Nirmala Patel, the Corporate Defendants were insolvent or became insolvent shortly after said transfers.
118. Upon information and belief, Niral Patel is a director, officer, or person in control of the Corporate Defendants.
119. Nirmala Patel is a relative of Niral Patel.
120. Additionally, upon information and belief, Nirmala Patel is a director, officer, or person in control of all or some of the Corporate Defendants, and is a relative of Niral Patel, a director, officer, or person in control of the Corporate Defendants.
121. Accordingly, the unauthorized transfers of $1,924,000.00 by the Corporate Defendants from their respective checking accounts was to an “insider” as that term is defined in Debtor and Creditor Law Section 270(2)(i), (ii), (iii), (iv), and (vi).
122. Upon information and belief, the unauthorized transfers of $1,924,000.00 in PPP funds to Nirmala Patel were for an antecedent debt.
123. At the time the Corporate Defendants transferred $1,924,000.00 in PPP funds to Nirmala Patel, the Corporate Defendants were insolvent.
124. Upon information and belief Nirmala Patel is a director, officer, and/or person in control of some or all Corporate Defendants.
125. Additionally, Nirmala Patel is a party to the Suffolk Action and the Saratoga Foreclosure Action which collectively seek in excess of $12 million related to unpaid indebtedness owed by some or all of the Corporate Defendants and Nirmala Patel and Niral Patel as guarantors of the indebtedness.
126. Accordingly, Nirmala Patel had reasonable cause to believe that the Corporate Defendants were insolvent at the time they transferred $1,924,000.00 in PPF funds to Nirmal Patel. 127. Based on the foregoing, pursuant to Debtor and Creditor Law §276(a), ATC is entitled to: (A) avoidance of the unauthorized transfers of $1,924,000.00 in PPP funds to Nirmala
Patel’s personal checking account no. XXXX819; (B) avoidance of the $68,550.00 in net transfers from Nirmala Patel’s personal checking account no. XXXX819 to Northeast’s account nos. XXXX484, XXXX967, and/or XXXX938 from May 7, 2020 through October 5, 2020; (C) avoidance of the $102,000.00 in transfers from Nirmala Patel’s personal checking account no. XXXX819 to Maha Laxmi’s account no. XXXX536 from July 22, 2020 through September 28, 2020; (D) avoidance of the $26,000.00 in transfers from Nirmala Patel’s personal checking account no. XXXX819 to Niral Patel’s personal account no. XXXX423 from September 11, 2020 through September 18, 2020; (E) attachment or other provisional remedy against Nirmala Patel’s personal checking account no. XXXX819, Northeast’s account nos. XXXX484, XXXX967 and XXXX938, Maha Laxmi’s account no. XXXX536, and Niral Patel’s personal account no. XXXX423; (F) an injunction against further disposition by the Corporate Defendants, Niral Patel and Nirmala Patel of the PPF funds or any other property; and (G) an award to ATC for its attorneys’ fees pursuant to Debtor and Creditor Law § 276-a.
AS AND FOR A THIRD CAUSE OF ACTION Breach of PPP Notes
128. ATC repeats all prior allegations.
129. As alleged herein, between April 10 and April 13, 2020, ATC entered into ten promissory notes with the Corporate Defendants pursuant to the PPP program (the “PPP Notes”).
130. As set forth in the PPP Notes, ATC agreed to lend money to the Corporate Defendants and the Corporate Defendants agreed to comply with the terms and conditions contained in the PPP Notes.
131. As alleged herein, pursuant to the PPP Notes, on April 14 and April 16, 2020, ATC issued ten checks to the Corporate Defendants in a total amount of $1,979,600.00 (the “PPP funds”).
132. The Corporate Defendants availed themselves of the PPP funds.
133. As alleged herein, each of the Corporate Defendants are in default under the PPP Notes, based on several Events of Default, as that term is defined in the PPP Notes, including, without limitation: (A) the Corporate Defendants’ failure to comply with the terms of the Notes and related documents, including the regulations applicable to the PPP; (B) the Corporate Defendants’ default under loan agreements with other creditors; (C) the Corporate Defendants’ false statements in their respective PPP applications; (D) the termination of the Corporate Defendants’ existence as going businesses and their insolvency; and (E) material adverse changes in the Corporate Defendants’ financial condition and ATC’s belief that the prospect of payment or performance under the PPP Notes is impaired.
134. ATC has been harmed as a result of the Corporate Defendants’ respective breaches. 135. Pursuant to the PPP Notes, the Corporate Defendants must pay ATC’s reasonable costs and expenses incurred to collect sums due under the PPP Notes, including reasonable attorneys’ fees and ATC’s legal expenses.
136. Based on the foregoing, ATC is entitled to judgment: (A) against Jagdamba Inc. in the amount of $185,700.00 plus interest and ATC’s reasonable attorneys’ fees and legal expenses; (B) against Jagdamba II Corp. in the amount of $172,900.00 plus interest and ATC’s reasonable attorneys’ fees and legal expenses; (C) against Jagdamba III Corp. in the amount of $203,800.00 plus interest and ATC’s reasonable attorneys’ fees and legal expenses; (D) against Jagdamba V Corp. in the amount of $181,900.00 plus interest and ATC’s reasonable attorneys’ fees and legal
expenses; (E) against Jagdamba VI, Inc. in the amount of $209,400.00 plus interest and ATC’s reasonable attorneys’ fees and legal expenses; (F) against Maha Laxmi Corp. in the amount of $25,100.00 plus interest and ATC’s reasonable attorneys’ fees and legal expenses; (G) against Maha Laxmi II Corp. in the amount of $110,300.00 plus interest and ATC’s reasonable attorneys’ fees and legal expenses; (G) against Northeast Dining & Lodging, Inc. in the amount of $276,400.00 plus interest and ATC’s reasonable attorneys’ fees and legal expenses; (H) against Poughkeepsie GC, Inc. in the amount of $256,200.00 plus interest and ATC’s reasonable attorneys’ fees and legal expenses; and (I) against Syracuse GC, Inc. in the amount of $357,900.00 plus interest and ATC’s reasonable attorneys’ fees and legal expenses;
WHEREFORE, Plaintiff Adirondack Trust Company demands that judgment be entered
as follows:
A. On its First and Second Causes of Action, (1) avoiding the unauthorized transfers of $1,924,000.00 in PPP funds to Nirmala Patel’s personal checking account no. XXXX819; (2) avoiding the $68,550.00 in net transfers from Nirmala Patel’s personal checking account no. XXXX819 to Northeast’s account nos. XXXX484, XXXX967, and/or XXXX938 from May 7, 2020 through October 5, 2020; (3) avoiding the $102,000.00 in transfers from Nirmala Patel’s personal checking account no. XXXX819 to Maha Laxmi’s account no. XXXX536 from July 22, 2020 through September 28, 2020; (4) avoiding the $26,000.00 in transfers from Nirmala Patel’s personal checking account no. XXXX819 to Niral Patel’s personal account no. XXXX423 from September 11, 2020 through September 18, 2020; and (5) awarding ATC its attorneys’ fees pursuant to Debtor and Creditor Law § 276-a.
B. On the Third Cause of Action, (1) against Jagdamba Inc. in the amount of $185,700.00 plus interest and ATC’s reasonable attorneys’ fees and legal expenses; (2) against Jagdamba II Corp. in the amount of $172,900.00 plus interest and ATC’s reasonable attorneys’ fees and legal expenses; (3) against Jagdamba III Corp. in the amount of $203,800.00 plus interest and ATC’s reasonable attorneys’ fees and legal expenses; (4) against Jagdamba V Corp. in the amount of $181,900.00 plus interest and ATC’s reasonable attorneys’ fees and legal expenses; (5) against Jagdamba VI, Inc. in the amount of $209,400.00 plus interest and ATC’s reasonable attorneys’ fees and legal expenses; (6) against Maha Laxmi Corp. in the amount of $25,100.00 plus interest and ATC’s reasonable attorneys’ fees and legal expenses; (7) against Maha Laxmi II Corp. in the amount of $110,300.00 plus interest and ATC’s reasonable attorneys’ fees and legal expenses; (8) against Northeast Dining & Lodging, Inc. in the amount of $276,400.00 plus interest and ATC’s reasonable attorneys’ fees and legal expenses; (9) against Poughkeepsie GC, Inc. in the amount of $256,200.00 plus interest and ATC’s reasonable attorneys’ fees and legal expenses; and (10) against Syracuse GC, Inc. in the amount of $357,900.00 plus interest and ATC’s reasonable attorneys’ fees and legal expenses; and
C. Such other and further relief the Court deems necessary and proper, including such equitable relief as may be granted.
Dated: October 12, 2020 Albany, New York
CULLEN AND DYKMAN LLP
By: _____________________ Christopher E. Buckey, Esq. Nicholas J. Faso, Esq. Timothy A. Chorba, Esq. 80 State Street, Suite 900 Albany, New York 12207 (518) 788-9440
VERIFICATION
STATE OF NEW YORK )
) ss: COUNTY OF ALBANY )
CHRISTOPHER E. BUCKEY, being duly sworn, deposes and says as follows:
1. I am a member of the law firm of Cullen and Dykman LLP, attorneys for Plaintiff, Adirondack Trust Company, in this matter.
2. I have read the foregoing Verified Complaint and the same is true to my own knowledge, except those matters stated to be upon information and belief, and as to those matters, I believe them to be true. The source of my belief is my review of the pertinent documents and information provided by my client.
3. The reason why this verification is made by me and not Plaintiff is that Plaintiff is not located within the County of Albany.
____________________________________ CHRISTOPHER E. BUCKEY
Sworn to before me this 12th day of October, 2020
______________________________ NOTARY PUBLIC
Commission Expires: February 22, 2022 Reg. No.: 01WE6137913
