郭文贵破产案 · TRANSCRIPT · ECF #3745

1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 UNITED STATES BANKRUPTCY COURT DISTRICT OF CONNECTICUT BRIDGEPORT DIVISION IN RE: . Chapter 11 . Case No. 22-50073 (JAM) HO WAN KWOK, et al., . . (Jointly Administered) Debtors. . . . . . . . . . . . . . . . . . . LUC A. DESPINS, CHAPTER 11 . Adversary Proceeding TRUSTEE, . No. 24-05249 (JAM) . Plaintiff, . . v. . . ACA CAPITAL GROUP, LTD., . et al., . . Defendants. . . . . . . . . . . . . . . . . . . LUC A. DESPINS, CHAPTER 11 . Adversary Proceeding TRUSTEE, . No. 24-05273 (JAM) . Plaintiff, . . v. . . Courtroom 123 NGOK, et al., . Brien McMahon Federal Building . 915 Lafayette Boulevard Defendants. . Bridgeport, Connecticut 06604 . . Tuesday, October 15, 2024 . . . . . . . . . . . . . . . 1:10 p.m. TRANSCRIPT OF HEARING BEFORE THE HONORABLE JULIE A. MANNING UNITED STATES BANKRUPTCY JUDGE Case 22-50073 Doc 3745 Filed 10/23/24 Entered 10/23/24 09:12:17 Page 1 of 59

2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 APPEARANCES: For the Chapter 11 Trustee: Douglas Skalka, Esquire NEUBERT PEPE & MONTEITH, P.C. 195 Church Street 13th Floor New Haven, Connecticut 06510 -and- Luc A. Despins, Esquire Nicholas Bassett, Esquire PAUL HASTINGS, LLP 200 Park Avenue New York, New York 10166 For the U.S. Trustee: Holley L. Claiborn, Esquire OFFICE OF THE UNITED STATES TRUSTEE The Giaimo Federal Building 150 Court Street Room 302 New Haven, Connecticut 06510 For Mei Guo, Hudson Diamond New York LLC, Hudson Diamond Holding, LLC, Leading Shine New York, Ltd., and Gypsy Mei Food Services, LLC: James M. Moriarty, Esquire ZEISLER & ZEISLER, P.C. 10 Middle Street Bridgeport, Connecticut 06604 (APPEARANCES CONTINUED) Audio Operator: Electronically recorded Transcription Company: Reliable The Nemours Building 1007 N. Orange Street, Suite 110 Wilmington, Delaware 19801 Telephone: (302)654-8080 Email: gmatthews@reliable-co.com Proceedings recorded by electronic sound recording, transcript produced by transcription service. Case 22-50073 Doc 3745 Filed 10/23/24 Entered 10/23/24 09:12:17 Page 2 of 59

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 APPEARANCES (CONTINUED): For G Club Operations, LLC, and G Club International, Ltd.: Jeffrey M. Sklarz, Esquire GREEN & SKLARZ, LLC One Audubon Street 3rd Floor New Haven, Connecticut 06511 For Yongbing Zhang: James E. Nealon, Esquire NEALON LAW, LLC 1266 East Main Street Suite 700r Stamford, Connecticut 06902 For Beile Li: Ivan J. Ladd-Smith, Esquire SPEARS MANNING & MARTINI, LLC 2425 Post Road Suite 203 Southport, Connecticut 06824 For Victor Cerda: Jason M. Swergold, Esquire YANKWITT, LLP 140 Grand Street Suite 705 White Plains, New York 10601 For Rule of Law Foundation III, Inc. and Rule of Law Society IV, Inc.: Bryan Ha, Esquire BRYAN HA, ATTORNEY AT LAW 455 Tarrytown Road Suite 1244 White Plains, New York 10607 For Gladys Chow: Emily McDaniels, Esquire SHER TREMONTE, LLP 90 Broad Street 23rd Floor New York, New York 10004

| | | | 4 | |----|-------------------------------------------------------|----------------------------------------|---| | 1 | APPEARANCES (CONTINUED): | | | | 2 | For Celestial Tide | | | | | Limited; G Fashion (CA); | | | | 3 | G Fashion Hold Co A | | | | 4 | Limited; G Fashion Hold<br>Co B Limited; G Fashion | | | | | International Limited; | | | | 5 | G Fashion Media Group, | | | | | Inc.; GF IP, LLC; GF | | | | 6 | Italy, LLC; GFNY, Inc.;<br>Hamilton Capital Holding | | | | 7 | Limited; Hamilton | | | | | Investment Management | | | | 8 | Limited; Hamilton | | | | 9 | Opportunity Fund SPC;<br>Himalaya Currency | | | | | Clearing Pty Ltd.; | | | | 10 | Himalaya International | | | | 11 | Clearing Limited; Himalaya<br>International Financial | | | | | Group Limited; Himalaya | | | | 12 | International Payments | | | | | Limited; Himalaya | | | | 13 | International Reserves<br>Limited; Major Lead | | | | 14 | International Limited; | | | | | William Je; ACA Capital | | | | 15 | Group Ltd.; GETTR USA,<br>Inc.; Hamilton Opportunity | | | | 16 | Fund SPC; Hamilton PE Fund | | | | | SP; Hamilton Digital | | | | 17 | Assets Fund SP; Himalaya | | | | 18 | Currency Clearing Pty Ltd.;<br>Himalaya International | | | | | Clearing Ltd.; Himalaya | | | | 19 | International Financial | | | | 20 | Group Limited; Taurus<br>Fund LLC; Taurus | | | | | Management LLC: | Michael T. Conway, Esquire | | | 21 | | LAZARE POTTER GIACOVAS & MOYLE, LLP | | | | | 747 Third Avenue | | | 22 | | 16th Floor<br>New York, New York 10017 | | | 23 | | | | | | | | | | 24 | | | | | 25 | | | | | | | | | | | | | |

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| | | | 5 | |----------|--------------------------------------|--------------------------------------------|---| | 1 | APPEARANCES (CONTINUED): | | | | 2 | For the Official | | | | 3 | Committee of<br>Unsecured Creditors: | Kristin B. Mayhew, Esquire | | | 4 | | PULLMAN & COMLEY, LLC<br>850 Main Street | | | 5 | | 8th Floor<br>Bridgeport, Connecticut 06601 | | | 6 | | | | | 7 | | | | | 8 | | | | | 9 | | | | | 10 | | | | | 11 | | | | | 12 | | | | | 13 | | | | | 14 | | | | | 15 | | | | | 16 | | | | | 17 | | | | | 18 | | | | | 19<br>20 | | | | | 21 | | | | | 22 | | | | | 23 | | | | | 24 | | | | | 25 | | | | | | | | | | | | | |

6 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 INDEX MOTIONS: PAGE In re: Ho Wan Kwok, et al., Debtors. Case no. 22-50073 (JAM) Matter No. 3592 #3592; Motion to Sell 373 Taconic Road, Greenwich, Connecticut Free and Clear of Liens Claims, Interests and Encumbrances, (II) Authorizing and Approving Purchase and Sale Agreement and (III) Granting Related Relief Filed by Douglas S. Skalka on behalf of Luc A. Despins, Chapter 11 Trustee 11 Court's Ruling: 51 Matter No. 3650 #3650; Motion for Order Increasing Cap on Funding of Expenses of Mahwah Mansion Filed by Patrick R. Linsey on behalf of Luc A. Despins, Chapter 11 Trustee 53 Court's Ruling: 56 In re: Luc A. Despins, Chapter 11 Trustee v ACA Capital Group Ltd., et al Adversary Proceeding no. 24-05249 (JAM) Matter No. 89 #89; Order Setting Status Conference 12 In re: Luc A. Despins, Chapter 11 Trustee v NGOK, et al. Adversary Proceeding no. 24-05273 (JAM) Matter No. 94 #94; Order Setting Status Conference 19 Transcriptionists' Certificate 59 Case 22-50073 Doc 3745 Filed 10/23/24 Entered 10/23/24 09:12:17 Page 6 of 59

7 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 (Proceedings commenced at 1:10 p.m.) THE COURT: Be observing. Have we got parties on observing? THE COURTROOM DEPUTY: Yes, Your Honor. THE COURT: Okay. Thank you. THE COURTROOM DEPUTY: You're welcome. THE COURT: All right. Then, if the courtroom deputy will call the calendar, please. THE COURTROOM DEPUTY: Case 22-50073, Ho Wan Kwok; Adversary Number 24-05249, Despins v ACA Capital Group Ltd., et al.; Adversary 24-05273, Despins v NGOK, et al. THE COURT: Okay. Good afternoon. If I could have appearances for the record, starting with the Chapter 11 Trustee, please. MR. DESPINS: Good afternoon, Your Honor. Luc Despins, Chapter 11 Trustee. THE COURT: Good afternoon. MR. BASSETT: Good afternoon, Your Honor. Nick Bassett from Paul Hastings, counsel for the Chapter 11 Trustee. THE COURT: Good afternoon. MR. SKALKA: Good afternoon u Your Honor. Douglas Skalka, Neubert, Pepe & Monteith, local counsel for the Chapter 11 Trustee. THE COURT: Good afternoon. Case 22-50073 Doc 3745 Filed 10/23/24 Entered 10/23/24 09:12:17 Page 7 of 59

8 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MS. CLAIBORN: Good afternoon, Holley Claiborn for the U.S. Trustee, and I'm just sitting here because it's an open table. THE COURT: Good afternoon. MR. MORIARTY: Good afternoon, Your Honor. James Moriarty from Zeisler & Zeisler. With me today is Steven Kindseth and we represent in Adversary 24-05273, Ms. Mei Guo, Hudson Diamond New York LLC, Hudson Diamond Holding, LLC, Leading Shine New York, Ltd., and Gypsy Mei Food Services, LLC. And if I may, in Adversary 24-05249, Attorney Kindseth and I filed appearances today on behalf of Ms. Mei Guo. THE COURT: Okay. Thank you. Good afternoon. MR. SKLARZ: Good afternoon, Your Honor. Jeffrey Sklarz, Green & Sklarz, for the Defendants G Club Operations LLC, and G Club International Ltd., in both adversaries. Thank you. THE COURT: Good afternoon. MR. NEALON: Your Honor, James Nealon on behalf of Yongbing Zhang in 05273. Thank you. THE COURTROOM DEPUTY: I'm sorry, I didn't get this gentleman's last name. THE COURT: Nealon. MR. NEALON: Nealon, N-e-a-l-o-n. THE COURTROOM DEPUTY: Okay. Thank you. MR. LADD-SMITH: Good afternoon, Your Honor. Ivan Case 22-50073 Doc 3745 Filed 10/23/24 Entered 10/23/24 09:12:17 Page 8 of 59

9 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Ladd-Smith from Spears Manning & Martini. I represent Beile Li in the 05273 matter. Good afternoon. THE COURT: Good afternoon. MR. SWERGOLD: Good afternoon, Your Honor. Jason Swergold from Yankwitt, LLP. I represent the Defendant Victor Cerda in Adversary Proceeding 05273. And with Your Honor's permission, Defendant Aaron Mitchum (phonetic), who couldn't be here today, asked if I would stand in for him, solely for purposes of discussing scheduling in that adversary proceeding. So I would represent him for that purpose today, as well. THE COURT: Okay. Thank you. MR. SWERGOLD: Thank you. MR. HA: Good afternoon, Judge. Bryan Ha. I represent Defendant Rule of Law Foundation III, Inc. and Rule of Law Society IV, Inc. in both adversary proceedings. THE COURT: Good afternoon. MS. MCDANIELS: Good afternoon, Your Honor. My name is Emily McDaniels and I'm here with my colleague Noam Biale from Sher Tremonte, LLP, and we represent Defendant Gladys Chow in the 05273 matter. THE COURT: Good afternoon. Thank you. MS. MAYHEW: Good afternoon, Your Honor. Kristin Mayhew, on behalf of the Creditors Committee. THE COURT: Good afternoon.

| 1 | MR. CONWAY:<br>Good afternoon, Your Honor.<br>Michael | |----|----------------------------------------------------------------| | 2 | Conway, Lazare Potter Giacovas & Moyle.<br>We represent in the | | 3 | -- excuse me, Your Honor -- in the 24-05249 matter, ACA | | 4 | Capital, LLC, Celestial Tide Limited; G Fashion (CA); G | | 5 | Fashion Hold Co A Limited; G Fashion Hold Co B Limited; G | | 6 | Fashion International Limited; G Fashion Media Group, Inc.; | | 7 | GF IP, LLC; GF Italy, LLC; GFNY, Inc.; Hamilton Capital | | 8 | Holding Limited; Hamilton Investment Management Limited; | | 9 | Hamilton Opportunity Fund SPC; Himalaya financial -- I'm | | 10 | sorry -- Himalaya Currency Clearing Pty Ltd.; Himalaya | | 11 | International Clearing Limited; Himalaya International | | 12 | Financial Group Limited; Himalaya International Payments | | 13 | Limited; Himalaya International Reserves Limited; Major Lead | | 14 | International Limited; and William Je. | | 15 | In the 24-05237 matter, we represent ACA Capital | | 16 | Group Ltd.; GETTR USA, Inc.; Hamilton Capital -- Hamilton | | 17 | Opportunity Fund SPC; Hamilton PE Fund SP; Hamilton Digital | | 18 | Assets Fund SP; Hamilton Currency Clearing Pty Ltd. [sic]; | | 19 | Himalaya International Clearing Ltd.; Himalaya International | | 20 | Financial Group Limited; Taurus Fund LLC; Taurus Management | | 21 | LLC; and William Je. | | 22 | THE COURT:<br>Thank you.<br>Good afternoon. | | 23 | MR. CONWAY:<br>Thank you, Your Honor. | | 24 | THE COURT:<br>Does anyone else wish to note their | | 25 | appearance for the record? |

| | 11 | |----|---------------------------------------------------------------| | 1 | (No verbal response) | | 2 | THE COURT:<br>All right.<br>Trustee Despins, | | 3 | obviously, on the calendar today are two motions in the main | | 4 | case and then these status conferences in these two adversary | | 5 | proceedings in the alter-ego and civil RICO adversary | | 6 | proceeding.<br>I would bet, but I could be wrong, that the | | 7 | majority of people are here for the adversary proceedings, so | | 8 | do you want to proceed with the adversary proceeding status | | 9 | conferences first? | | 10 | MR. DESPINS:<br>Yes, Your Honor.<br>I think it makes | | 11 | sense to do that. | | 12 | THE COURT:<br>Okay.<br>Go right ahead. | | 13 | MR. DESPINS:<br>Mr. Bassett will be handling that. | | 14 | THE COURT:<br>Okay.<br>Thank you. | | 15 | All right.<br>So for whomever is here, in addition | | 16 | for the trustee's counsel, the status conferences were set in | | 17 | these two adversary proceedings because there are numerous | | 18 | Defendants and there are numerous motions to dismiss filed in | | 19 | both of the adversary proceedings and, in fact, I think, and | | 20 | I -- Attorney Bassett, you can correct the record, please, | | 21 | when you do speak, I think in one of these adversary | | 22 | proceedings, some parties had until today to respond, as | | 23 | well.<br>I'm not sure if everyone has responded, but in any | | 24 | event, as you know and all the people here know, these | | 25 | adversary proceedings have multiple Defendants and whether |

1 2 3 4 5 parties have been defaulted or a request for default is entered or a default judgment is entered or an answer has been filed or a motion to dismiss has been filed, we have all different kinds of statuses, with regard to the numerous Defendants.

6 7 8 9 10 11 12 13 So if we look first at the alter-ego adversary, which happens to have the first number numerically, 24-05249, I see that there has been an answer filed, default judgments have entered against a few Defendants. Several Defendants have been defaulted, but there's also several motions to dismiss pending. And the Court entered an order staying the trustee's time to respond to those motions to dismiss until after the status conference today.

14 15 16 17 18 19 So, obviously, I -- well, maybe it's not obvious, but the order was entered so that all of the parties, including any Defendants that wished to participate and then have filed motions to dismiss, would think about how the parties expect the Court is going to handle these matters. So, Attorney Bassett, I'll turn to you, first.

20 21 22 23 24 25 MR. BASSETT: Thank you, Your Honor. So I'll also start with the obvious alter-ego complaint and then we can talk about civil RICO, as well. So, just to recap the status, your observation was correct. There have been some answers filed. There's been some default judgments entered. There's been some entries of

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 default and several motions to dismiss. I think altogether, by my count, in the alter-ego litigation, there are, I believe, 43 total Defendants. Of those 43, I believe there were 3 answers filed. I believe 18 Defendants have moved to dismiss, some of those who were represented by common counsel were part of one consolidated motion, but 18 total Defendants have filed motions to dismiss. There are two Defendants against whom the Court has actually already entered default judgments; that is K Legacy and Chang Guo, pursuant ECF 76. In addition to those two default judgments, the Court has entered 16 entries of default, so the trustee is in the process of preparing a motion for default judgment, but that has not yet occurred for those 16. And then there are another four Defendants who have not yet answered and there's not yet an entry of default.

16 17 18 19 20 21 22 23 24 25 So, Your Honor, I think the answer to the question of how we proceed from here is going to be, in some ways simplified by the fact that our intention, in response to the motions to dismiss that were filed, is to amend the complaint as a matter of right. We would do that to, obviously, add additional allegations, based on the trustee's ongoing investigation. There may be other parties that are added to the litigation, as well. Our view is that while the trustee is amending the complaint, it does not make sense for the trustee to have to respond to pending motions to dismiss or

1 2 3 4 5 6 7 for the Court to spend its time and resources addressing those motions to dismiss. Obviously, any parties who have filed motions to dismiss in response to the original complaint would have their right to file a motion to dismiss in response to the amended complaint, including raising the same arguments that they think that those grounds for dismissal still exist.

8 9 10 11 12 13 14 15 16 We would propose filing that amended complaint within 14 days from today if that's acceptable to the Court. Parties could, thereafter, answer, and then, if they filed motions to dismiss, obviously, the trustee would respond to those in due course. But hopefully this time, if there's been an amended complaint, there would be more consolidation in terms of uniform answer deadlines and, therefore, we could move forward on a briefing schedule that's common to all the parties.

17 18 19 20 21 22 23 24 25 A couple other notes, Your Honor. One primary other note or consideration, as I said, there are two default judgments have been entered and then 16 entries of default. It is important to the trustee to not have either the default judgments or the entries of default disturbed by an amended complaint, so what we would propose to do as part of the Court's scheduling order in this matter is to have those Defendants against whom either defaults have entered or against whom the Court has entered a default judgment severed

1 2 3 4 5 6 7 from the complaint under Federal Rule of Civil Procedure 21, which the Court can do in its discretion and we think that's warranted here, because the trustee, you know, has no need to pursue an amended complaint as to those parties who already have the defaults and then would intend to take advantage of those defaults and move for a default judgment when that has not yet been done.

8 9 10 11 12 13 14 So, Your Honor, that's where things stand from the trustee's perspective on the omnibus alter-ego litigation. And while these motions to dismiss the amended complaint are pending, we would confer with the Defendants regarding discovery and, you know, try to present something uniform to the Court. Obviously, we haven't done that yet, but from a sort of broad level, that's how we envision proceeding.

15 16 17 18 THE COURT: Okay. With regard to what you've stated, you're saying that the trustee is going to prepare an amended complaint that will be filed two weeks from today -- MR. BASSETT: That's what we're proposing, Your

19 Honor.

20

THE COURT: -- the 29th?

21 MR. BASSETT: Correct.

22 23 24 25 THE COURT: And what's the responsive -- what's the response to that for the Defendants who aren't defaulted or against whom a default judgment has entered? You said a date and I didn't hear you.

| 1 | MR. BASSETT:<br>Oh, I did not actually give a | |----|-----------------------------------------------------------------| | 2 | response deadline.<br>I would propose 21 days for Defendants to | | 3 | respond to the amended complaint and then the trustee could | | 4 | file an opposition to the motions to dismiss within 14 days | | 5 | after that. | | 6 | THE COURT:<br>Okay.<br>So, I haven't looked at Rule 21 | | 7 | recently.<br>You have to file a motion to sever? | | 8 | MR. BASSETT:<br>I believe that's what the rule | | 9 | contemplates, Your Honor.<br>I would propose to do it orally | | 10 | under the circumstances, given that we are severing | | 11 | Defendants who have defaulted.<br>Obviously, if the Court would | | 12 | like us to file a written motion, we could do that. | | 13 | THE COURT:<br>I don't know.<br>I have to look at it. | | 14 | I haven't looked at it for some time, so I'd have to look at | | 15 | it. | | 16 | MR. BASSETT:<br>Sure. | | 17 | THE COURT:<br>All right.<br>So I understand, I | | 18 | believe, what your thoughts are, as far as the management of | | 19 | this adversary proceeding would take place.<br>I'm just looking | | 20 | to make sure I don't have any other questions at the moment | | 21 | before I hear from the Defendants who are here. | | 22 | MR. BASSETT:<br>And, Your Honor, we could take each | | 23 | one in turn or I'm happy to do civil RICO now, as well, | | 24 | whichever you think is most efficient. | | 25 | THE COURT:<br>Well, I would assume that your plan | | | |

17 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 isn't very different. Is it different? MR. BASSETT: It is actually different. THE COURT: Oh, so I made the improper assumption. MR. BASSETT: So, Your Honor, if I may? THE COURT: Well, yeah, hold on a second. MR. BASSETT: Sure. THE COURT: I want to -- for the Defendants that are in the courtroom and that have filed motions to dismiss, does anyone wish to be heard, with regard to the trustee's proposal of how to proceed in the alter-ego proceeding? MR. SKLARZ: Good afternoon, Your Honor. Jeffrey Sklarz for G Club. I would just ask that -- THE COURT: I'm sorry, I can't hear you. MR. SKLARZ: Oh, I'm sorry, Your Honor. THE COURT: That's all right. MR. SKLARZ: I would just ask that the trustee will make sure to file a redline version of the amended complaint, as required by the Local Rules, to make it easier for us to respond to the amended complaint. THE COURT: I'm sure that wouldn't be a problem. MR. BASSETT: Of course, Your Honor. THE COURT: So, Attorney Sklarz, just before you walk away, so you don't have any objection to the plan as outlined by Attorney Bassett? So -- because what that would do, if that is the plan that gets carried forward, then all Case 22-50073 Doc 3745 Filed 10/23/24 Entered 10/23/24 09:12:17 Page 17 of 59

| 1 | the motions to dismiss are moot because you have to, then, | |----|----------------------------------------------------------------| | 2 | look at an amended complaint and discern whether you're going | | 3 | to file another amended -- not another, but a Ms. Convoy's to | | 4 | the amended complaint.<br>So you have no opposition to that? | | 5 | MR. SKLARZ:<br>If they're going to file an amended | | 6 | complaint, I see no reason why we need to adjudicate what | | 7 | would be an ultimately moot motion.<br>So I have no -- as long | | 8 | as the amended complaint is actually filed, I have no problem | | 9 | proceeding that way and I have no reason to believe that | | 10 | Attorney Bassett isn't going to file his amended complaint. | | 11 | THE COURT:<br>And the 21-day response period that's | | 12 | been proposed by Attorney Bassett, I think that -- well, | | 13 | that's what the Local Rule -- that's what the District Court | | 14 | Rules are. | | 15 | MR. SKLARZ:<br>I don't have any issue with that. | | 16 | The following week is Thanksgiving.<br>The following week on | | 17 | that, I start a trial, so there's no good time for me, so the | | 18 | 19th sounds great. | | 19 | THE COURT:<br>Okay.<br>Thank you. | | 20 | MR. SKLARZ:<br>Thank you. | | 21 | THE COURT:<br>Does anyone else wish to be heard? | | 22 | (No verbal response) | | 23 | THE COURT:<br>Okay.<br>Then, Attorney Bassett, we can | | 24 | go to the RICO action, then and your proposal about it. | | 25 | MR. BASSETT:<br>Thank -- | | | |

19 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 THE COURT: Okay. Go ahead. MR. BASSETT: Yeah, sorry. Thank you, Your Honor. So, I'll do the same for civil RICO, at the outset, just give a brief recap of the number of Defendants and sort of where things stand. So, in that litigation, there are, by my count 54 total Defendants. On August 16th, the Court entered an order extending many answer deadlines and there was some one-off additional extensions. Ultimately, parties either responded or not last month. Twenty-six of the Defendants have moved to dismiss the complaint; again, many of those are in combined motions where Defendants are represented by common counsel. Twenty-eight Defendants, Your Honor, have not answered or otherwise responded to the complaint. At present, I don't believe there are entries of default or default judgments just yet, but the trustee intends to pursue those. So, Your Honor, our proposal, with respect to this complaint is different because there's sort of a -- and some of this is pointed out in the motions to dismiss -- but there's an overlap between the complaints in that the relief that the trustee is seeking in the civil row coalition as to many Defendants is in the alternative to the relief that he is seeking in the omnibus alter-ego litigation, the reason being that many of the entities at issue in the omnibus

1 2 3 4 5 6 alter-ego litigation, which the trustee believes are alteregos of the debtor and which the trustee seeks an order from the Court, providing that all of their assets are property of the estate, many of those same entities are also Defendants in the civil RICO litigation where the trustee is seeking an award of damages.

7 8 9 10 11 12 13 Obviously, if the trustee were to prevail on his argument that these entities are alter-egos of the debtor, such that all of their assets are property at the estate, the trustee, at that point, would have no reason to, and would not intend to continue to pursue damages claims against those entities in the civil RICO litigation because that would be a claim by the trustee against himself, essentially.

14 15 16 17 18 19 20 21 22 23 24 25 And so, if you look at, of the civil RICO Defendants who have actually responded to the complaint, I think I said there were 26 or 28 who have filed motions to dismiss, nearly half of those, Your Honor, are entities that are also subject to the omnibus alter-ego litigation. And because of that and because the trustee does not have any reason to move forward with civil RICO claims against those entities at this time until the alter-ego litigation is adjudicated, it's our view that it would be in the best interests of the estate and the Court and all parties concerned for the Court to actually impose a stay on the civil RICO litigation for the time being while the omnibus

1 alter-ego litigation continues.

| 2 | I think the result of that, Your Honor, is while | |----|-----------------------------------------------------------------| | 3 | the alter-ego litigation sorts itself out, the civil RICO | | 4 | case, in the meantime, could be drastically simplified. | | 5 | Obviously, again, if the Court were to enter orders finding | | 6 | that some or all of the entities in the alter-ego litigation | | 7 | are, in fact, property of the estate, those entities would be | | 8 | removed from the list of Defendants in the civil RICO | | 9 | litigation.<br>In addition to that, we have not been sitting on | | 10 | our hands for the past several months while these litigations | | 11 | have been on file.<br>We have, in fact, been having discussions | | 12 | with Defendants, where we were able to do so, including the | | 13 | civil RICO Defendants, in particular.<br>I anticipate having a | | 14 | settlement with least one of the individual Defendants in the | | 15 | civil RICO litigation, if not more, so I think over time we'd | | 16 | likely be able to simplify that litigation by reducing the | | 17 | number of Defendants in that way, as well. | | 18 | So, that's how we would propose, Your Honor, | | 19 | dealing with the civil RICO litigation; again, we just think | | 20 | that makes logical sense in light of the overlap between the | | 21 | two adversary proceedings.<br>The other thing that we would do, | | 22 | and we can do this, again, by written motion, is for those | | 23 | who have had the opportunity to respond to the complaint and |

25 move to sever those particular parties from the complaint so

have not timely done so, again, our view is that we would

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1 2 that the trustee could proceed to file suits against them while the remainder of the litigation is stayed.

22

3 4 THE COURT: Just on the parties that haven't timely responded?

5 6 7 MR. BASSETT: That's correct, Your Honor. THE COURT: Okay. I think I understand what you're saying.

8 9 10 11 12 13 14 All right. So, then, I guess I need to hear from the Defendants in the civil RICO action who are in the courtroom and have filed motions to dismiss, if they have any opposition. What is the position of one or any of the Defendants with regard to the proposal how to proceed with the civil RICO action that Attorney Bassett just made on the record?

15 16 17 18 19 20 21 22 23 MR. BASSETT: Your Honor, the last thing I would note, if I may, is that if and when we do proceed with the civil RICO litigation, our intention, as in the omnibus alter-ego litigation, would be to file an amended complaint, which we have not yet done and, therefore, have the ability to do as of right, and therefore, I think the pending motions to dismiss should be mooted in any way, in any event when we get to that point. But, again, I don't think it makes sense for these --

24 25 THE COURT: But you're saying that's only if the matter isn't stayed or when the stay is lifted?

23 MR. BASSETT: Exactly, Your Honor. Our view, in the interests of saving estate resources, significantly curtailing the costs that we would otherwise incur, it makes sense to not spend the time and effort completing an amended complaint at this time when, again, you know, a lot of what we would add may end up coming out based on intervening events. THE COURT: Understood, thank you. Do any of the Defendants wish to be heard, with regard to the trustee's proposal of how to proceed in the civil RICO action? MR. SWERGOLD: Thank you, Your Honor. Again, Jason Swergold on behalf of Defendant Victor Cerda. Obviously, my intention here is not to litigate our pending motion to dismiss, but I think a little bit of background is important for the argument that I'm going to make, which would be to oppose the stay, at least with respect to my client. Mr. Cerda is a private attorney. He has had this civil RICO action pending over his head now for civil E. several months because it was stayed pending the criminal case against the debtor. In the 18-month investigation of the trustee to date, prior to the filing of the civil RICO action, there were a total of two allegations

against him, one, that he was listening on a phone call and

one that his law firm was paid for legal work. He obviously

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1 2 3 4 has an interest in being done with this civil RICO claim against him, which we feel is meritless and which the trustee is not going to be able to amend their complaint in a way to even be able to stay the claim.

5 6 7 8 9 10 11 Courts in this circuit have observed the dangers and the damages to Defendants just by being named as Defendants in civil RICO matters, which is why courts give such exacting scrutiny to civil RICO claims. And so, you know, I emailed with Mr. Bassett last week about this case and I was told that they were going to amend the complaint as of right.

12 13 14 15 16 17 18 19 20 21 22 23 24 Now, I hear for the first time that they are seeking to just stay the civil RICO matter, which means that my client now will have to sit here sort of in purgatory waiting and waiting while these claims against him, again, a private attorney at his own law firm with a distinguished career in both, public and private practice, has to wait with these claims pending against him. So I would object to the stay because he has a real interest in litigating the civil RICO claim against him. THE COURT: Okay. Thank you. MR. SWERGOLD: Thank you. THE COURT: Any of the other Defendants? MS. MCDANIELS: Yes, Your Honor, thank you. Emily

McDaniels and Noam Biale, on behalf of Gladys Chow.

25

25 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 We would join in Attorney -- THE COURT: Would you just spell your Defendant's last name for me, please. MS. MCDANIELS: Chow, C-h-o-w. THE COURT: Right. Okay. Thank you. MS. MCDANIELS: So, we would join in Attorney Swergold's objection to the stay. Our client is similarly situated. She is only alleged to have engaged in two different -- She's only mentioned twice in the entire complaint; she is not mentioned with respect to any of the predicate acts. She has an interest in moving on with her life. She no longer works with any of the defendants' companies. And we think that, you know, our motion to dismiss deserves to be handled promptly and not after a stay or after a further amendment. Thank you. THE COURT: Okay. Thank you. Anyone else wish to be heard? (Participants confer) MR. MORIARITY: Good afternoon, Your Honor. James Moriarity for Mei Guo, Hudson Diamond New York, LLC, Hudson Diamond Holding, LLC, Leading Shine New York Limited, and Gypsy Mei Food Services, LLC. I'm not taking a position, Your Honor, on the trustee's request for a stay. I just want to clarify. My five clients have not responded to the complaint -- Case 22-50073 Doc 3745 Filed 10/23/24 Entered 10/23/24 09:12:17 Page 25 of 59

26 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 THE COURT: Hold on just a second, Attorney Moriarity. (Pause in proceedings) MR. MORIARITY: I won't take that as a hint that my time is up. THE COURT: No, it's not a time thing, it's an issue of air in the courtroom. MR. MORIARITY: I see. THE COURT: You can go right ahead. MR. MORIARITY: All right. Thank you, Your Honor. My clients have not responded to the complaint as of today by agreement with the trustee, who, through his counsel, has worked with us on extensions, as we worked to figure out the direction that his case is going. My clients' response is due today. And I would ask that, to the extent the case is going to be stayed or it's going to be dismissed without prejudice to refile, whatever is going to happen procedurally, that my clients be included on the side of those who have responded. I don't want to be back in front of the Court arguing a motion for default because my clients have not responded to the complaint or don't respond to it as of today. So I would ask that the Court, whatever order is entered, that the case be stayed as to my five clients. Thank you. THE COURT: Okay. Thank you. Case 22-50073 Doc 3745 Filed 10/23/24 Entered 10/23/24 09:12:17 Page 26 of 59

27 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MR. LADD-SMITH: Good afternoon, Your Honor. Ivan Ladd-Smith on behalf of Beile Li. I have a question of the Court, which is, if the Court knows: Does Your Honor know whether you plan to decide whether to issue a stay today? THE COURT: I have no idea. I just heard the request a few minutes ago, just like you did, so -- MR. LADD-SMITH: Right. And that's why I ask because I guess I would respectfully request that defendants be given some time to consult with clients and to think about whether or not they object -- THE COURT: About the stay -- MR. LADD-SMITH: About the -- THE COURT: -- in particular? MR. LADD-SMITH: Correct, correct. And you know, not a lot of time, a few days. THE COURT: Well, I think -- you know, I -- well, okay. I understand your request. That's a fair request, and I'll -- but I'll want to hear back from the trustee, too. Do you have any other issues that you want to raise other than asking for some time to consult with your clients about the request for a stay from the trustee? MR. LADD-SMITH: Well, I had one other thought, Your Honor. And again, you know, just hearing this for the first time today. And it seems as though it may take a long

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 time for the alter ego matter to resolve itself, such that a stay will last a significant amount of time. And if the trustee, it seems has already decided to amend the RICO claim, I just wonder if it might make sense to have that amendment occur prior to a stay being put in place. You know, otherwise, defendants are sort of in the dark during the course of the stay as to what the new complaint is going to say; whereas, you know, if, essentially, the substance of the amendment is known to the trustee at this time, it would seem as though a similar twenty-one-day period would be sufficient for the trustee to make those amendments. And to the extent is that the point is that some of the alter ego defendants would be dismissed from the case, you know, that could still happen at the conclusion of the stay of the alter ego matters. So I'm not -- it's just a thought -- THE COURT: I understand. MR. LADD-SMITH: -- for the Court's consideration. THE COURT: Okay. Thank you. MR. LADD-SMITH: Thank you. MR. HA: Judge, on behalf of the Rule of Law Foundation and Rule of Law Society, I would join in the request for some additional time to consult with my clients and respond to the trustee's request for a stay.

29 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 THE COURT: And is the issue that you would like time on the same, just with regard to the stay, nothing else? MR. HA: Just with the stay of the civil RICO action, correct. THE COURT: Okay. Thank you. MR. HA: Thank you. THE COURT: Does anyone else wish to be heard? (No verbal response) THE COURT: Attorney Bassett, do you have any response to the issues raised by the defendants' counsel who spoke? MR. BASSETT: Just briefly, Your Honor. Again, Nick Bassett from Paul Hastings for the record. So, in response to the request for time to confer among clients, the trustee has no objection to that. From our point of view, people can take as much time as they need. If they want to consult with us in the meantime, that's fine, too. So no objection to that request. Also no objection to Attorney Moriarity's request concerning his clients. We're not trying to force anybody else to file an answer or otherwise respond to the complaint at this time, if we're -- since we are requesting a stay. As to the request -- or the opposition, rather, to the stay that was raised by counsel for two of the parties, Your Honor, we, as I said, intend to amend the complaint in Case 22-50073 Doc 3745 Filed 10/23/24 Entered 10/23/24 09:12:17 Page 29 of 59

1 2 3 4 5 response to motions to dismiss that have been filed. I don't really understand the prejudice argument. I mean, to the extent that the -- some of the defendants in the complaint are the subject of fewer allegations than others, that's exactly what we intend to address in our amendment.

6 7 8 9 10 11 12 13 14 15 As the Court may recall, we filed this complaint in February of 2024. The -- since then, a lot has happened. Not only has our investigation continued, but the debtor's entire criminal trial played out. We've gotten access to thousands of pages of exhibits, hundreds, if not thousands of pages of transcript from that trial of testimony. So suffice it to say we will be amending the complaint substantially when we do that to add additional allegations, et cetera. And I don't know how that's going to serve any of these defendants in a way that they would expect.

16 17 18 19 20 21 22 23 24 25 So I think it's in everybody's best interests, including especially conserving estate resources, to not require us to move forward with litigation at this time, not require us to spend time and effort preparing an amended complaint because, again, there is substanatial overlap with what is happening in the omnibus alter ego litigation. And depending upon how that's resolved, depending on other resolutions that we may be able to work out in the background, a lot of the work we would do will just become unnecessary.

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 So that's our position, Your Honor, but certainly no opposition to giving people time to think about this. THE COURT: So how do you want to handle that? If you're going to give them time to think about it, what is it that you would like the Court to do? MR. BASSETT: I think ... (Participants confer) MR. BASSETT: Yeah, I think the logical conclusion would be to have a, at a minimum, temporary adjournment of all deadlines or a temporary stay of the litigation, pending, you know, whatever period of time people think they need to confer. At the end of that period of time, we could either have another status conference or submit something to Your Honor with a -- you know, our respective proposals. And at that point, you know, we would expect the Court to issue a ruling on a scheduling order moving forward. THE COURT: So you are -- you will be prepared to submit some kind of order to the Court that will set forth your proposal and then provide parties with time to object to it or do you -- are you having these conversations with the parties in the courtroom and then you're going to report back to the Court? MR. BASSETT: I mean, I think our proposal is really a lot more detailed than what I have stated, so I think it probably makes sense -- I think it would be

1 2 3 4 5 6 7 sufficient to confer with the parties for whatever period of time they think they need. And then, at the end of that, to the extent that there's agreement, we could submit a proposed order, you know, with the agreement of the parties; to the extent that there's not, then we could submit competing orders. And if people still oppose it, we could be back before Your Honor to have those disputes resolved.

8 9 10 THE COURT: All right. Let me take a look for a moment; if you would, please, just give me a moment. (Pause in proceedings)

11 12 13 14 15 16 17 18 19 THE COURT: So, with regard to the alter ego proposal that you made, no one has objected. And I think that the proposal that you made is that you'll file -- the trustee will file an amended complaint on October 29th. All defendants would have 21 days to respond to that complaint, which I think Attorney Sklarz said was November 19th or something, sounds about right. And then the -- and then the trustee would have 14 days to respond to the defendants' response.

20 21 22 23 24 25 And that you then would propose a briefing schedule with regard to that or how are you going -- I just want to -- I think the -- obviously, to me, at least, the alter ego proposal is not controversial and no one opposes it. So I understand the dates and I'm -- that's fine. What happens when you then respond, the trustee?

33 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MR. BASSETT: I think the movants, whoever files a motion to dismiss, would naturally have the opportunity to file a reply. THE COURT: Yeah. No, I'm including all of that. MR. BASSETT: Okay. THE COURT: You file your amended complaint on the 29th. MR. BASSETT: Right. THE COURT: The defendants file their motions to dismiss 21 days later, which -- MR. BASSETT: We will then file opposition briefs to those motions. THE COURT: Fourteen days later. And then what happens? Are you expecting me to have a hearing on every motion to dismiss? I mean, part of why we were doing this was so that we could figure out how we can not have, I don't know, twenty motions to dismiss to decide, right?? MR. BASSETT: So I -- very fair point, Your Honor. So I think, to contrast this a little bit with the avoidance action status conference we had several weeks ago and the large number of adversary proceedings pending there, I think the path forward here is a little bit more streamlined and that, while there are, say, 20 motions to dismiss, a lot of those -- I would say -- off the top of my head, I think there are maybe 5 or 6, potentially 7 or 8, Case 22-50073 Doc 3745 Filed 10/23/24 Entered 10/23/24 09:12:17 Page 33 of 59

34 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 actual motions to dismiss. But they are consolidated, in that many of them are on behalf of multiple parties, Attorney Conway, for example. THE COURT: Well, I was going to ask Attorney Conway -- MR. BASSETT: Yeah. THE COURT: -- if he can file one motion to dismiss, as opposed to several, right? MR. BASSETT: I think that's -- I think that's what he has done, generally. And I think Attorney Sklarz did that, as well, although maybe he did file a couple of separate ones. But in any event, from our point of view, the issues are very similar across all of the motions to dismiss. And the number of motions is not so unmanageable, that we don't think, if the Court wanted to have a hearing, that couldn't happen all at the same time. I wouldn't think it would be necessary to have a separate hearing each of the motions to dismiss. We could, I think, figure out a way to do that all in one -- THE COURT: Well Attorney -- MR. BASSETT: -- all in -- THE COURT: -- Conway has -- MR. BASSETT: -- one shot. THE COURT: -- just for example, has at least four Case 22-50073 Doc 3745 Filed 10/23/24 Entered 10/23/24 09:12:17 Page 34 of 59

1 2 3 motions to dismiss on behalf of his parties. So that's what my question is. Why -- do we need to have four motions to dismiss?

4 5 6 7 8 9 10 Are they raising -- I mean, Attorney Conway, maybe you can -- I'm sorry I'm using you as an example, but I have to. You're here and I see ECF 84, 85, 86, 87, and 89 -- oh, no, I guess those four. So are those -- can that be consolidated into one motion? And if not, please explain to me why. I'm not saying that you don't have a valid explanation, I'm trying to understand.

11 12 13 14 MR. CONWAY: Several of the issues were common in those motions, as you can imagine, Your Honor, and the way they were categorized was by jurisdiction, where there was some different law that related to different jurisdictions.

15 16 17 18 19 Whether I need to make a motion to increase the briefing size, just so I can put them into one motion or not, I'm open to whatever suggestions. I think we -- they could easily be in one motion. And the only issue would be that I think it would take a few extra pages to do that.

20 21 22 23 24 25 MR. BASSETT: And that's fine with us, Your Honor. THE COURT: Well, why don't you both talk about that? I think it's fine -- I think it would be easier for the Court, right? If it's all, if it's really the same issues because I'm not going to -- at some point, I assume, unless these issues are resolved, which I don't anticipate

36 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 they will be, I'll have to write something, right? MR. CONWAY: Yes, Your Honor, and -- THE COURT: So I'd rather not write 20 things, maybe just 2 or 1. MR. CONWAY: And Your Honor, it was difficult for us, as well, trying to split them up that way, so we would welcome the idea of putting them in one motion. And to be honest with you, you may have seen that there is a motion relating to default on Sunday that was filed by Mr. Bassett. The -- we've talked about that and he's graciously agreed -- because we managed to leave off some of the parties on these multiple motions because they had to be stuck in different buckets. So putting them all into one motion would be welcome and easier for us. And I'll talk to Mr. Bassett about what I think the pages that we would need to do that are. I can't imagine that -- since some of the issues overlap, that it would be that many more pages, but -- THE COURT: If there's an agreement, I will have no problem with that, exceeding what -- the local rule page limit. Okay? If everyone agrees, that's fine with me. MR. CONWAY: Okay. And obviously, we would be welcome to whatever Mr. Bassett suggests for a response, increasing pages for the response. The other issue I wanted to raise, Your Honor, Case 22-50073 Doc 3745 Filed 10/23/24 Entered 10/23/24 09:12:17 Page 36 of 59

1 2 3 4 5 6 while I'm up here, is Mr. Bassett noted that there was this conference a few weeks ago with the avoidance action parties, where a lot of the communal motion issues were going to be made in the hopes that Your Honor could resolve these issues, to make it easier to mediate. I have now one of those clients, as well.

7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Several of these issues are common with those issues. And I just wanted to throw out there that whatever briefing schedule we end up with here -- and I know we've got a briefing schedule for those motions -- for those issues, as well; they don't have to correspond, necessarily. But I would just suggest the Court that maybe the hearing could be on the same date, given the fact that the issues are so similar, and Your Honor won't have to listen to parties argue all these motions -- all these issues on different days, when they are so similar. I don't think we have to have corresponding briefing schedules for that, but I just wanted it pointed out that there are similar issues. THE COURT: Okay. Thank you. MR. CONWAY: Uh-huh. THE COURT: So, Attorney Bassett, what do you propose to do today or tomorrow with regard to the alter ego action, submit a scheduling order? MR. BASSETT: Yes, Your Honor. THE COURT: Okay.

| 1 | MR. BASSETT:<br>We would submit a scheduling order | |----|-----------------------------------------------------------------| | 2 | along the lines that we discussed.<br>I'm happy to do that say, | | 3 | like Your Honor was suggesting, I think tomorrow.<br>In the | | 4 | meantime, I could confer with Attorney Conway about the | | 5 | consolidation of his motions to dismiss and a page limit | | 6 | extension, and then hopefully submit something that is | | 7 | acceptable to everybody. | | 8 | THE COURT:<br>All right.<br>And in that, I think you | | 9 | should propose, also, that the claims against the defendants | | 10 | who have -- default judgments have entered against and | | 11 | defaults have entered will be severed, subject to court | | 12 | approval, because I have to look at it.<br>I haven't looked at | | 13 | it.<br>I have to look at it, right?<br>So I would do that, as | | 14 | well. | | 15 | I think that makes sense, unless someone else | | 16 | wishes to be heard on the alter ego status conference.<br>And I | | 17 | think we've done what we can do today with regard to the | | 18 | alter ego complaint and the pending motions, correct, | | 19 | Attorney Bassett? | | 20 | MR. BASSETT:<br>I believe so, Your Honor. | | 21 | THE COURT:<br>Okay.<br>All right.<br>So then I'll let | | 22 | you submit something -- I'll give you until Thursday. | | 23 | Obviously, I know you may get it in tomorrow.<br>And I will | | 24 | just say, if you get it in late tomorrow -- and Thursday, we | | 25 | have hearings -- but it will be done by early afternoon.<br>So | | | |

1 2 3 4 that's the only thing I would say, as far as if you're looking for the entry of some order, it may not be in until then, after those hearings. Okay? MR. BASSETT: Understood. Thank you.

5 6 7 8 9 10 11 12 13 14 THE COURT: Okay. All right. So then let's go back to the RICO action. So the -- you have no prob -- you have no opposition, the trustee has no opposition to giving the parties to -- when I say the "parties," the defendants that are in the courtroom -- time to determine whether they have any problem with the stay that you've proposed; and that, with regard to Attorney Moriarty's clients, their responsive pleading deadline is today. That's going to be extended for however long. They're not going to be thrown into the default bucket because of where we are today.

15 16 17 18 19 20 21 MR. BASSETT: That's correct, Your Honor. THE COURT: With regard to the Defendants Mr. Cerda and the Defendant Chow, they would like -- they object to the stay, and they'd like to have their motions to dismiss heard. So your point -- your response to that is you don't see that that's necessary and they're not being prejudiced. So what I have to ask is -- I think you're going

22 23 24 25 to have to talk to them, right? To both of those defendants because they didn't know -- nobody knew until -- and that's why we're having a status conference -- that you were going to ask for a stay, so I think you need to talk to them.

1 2 3 4 5 6 7 8 9 And then what about the issue that was raised about filing the amended complaint now? You're saying you don't want to do that right now because it would be -- it would be a use of resources that you'd rather use in another way at this time in this estate. MR. BASSETT: That's correct, Your Honor. That's true for a number of reasons. There -- and our investigation has been going on and is still ongoing, you know, up to this moment. So, you know, even though we've had access to

10 11 12 13 information, for example, from the criminal trial for awhile, we have a lot more work to do to continue supplementing an amended complaint with all of the additional information that we would want to include.

14 15 16 There are also additional amendments we would make in light of or in response to arguments that have been raised motions to dismiss, which, of course, we are entitled to do.

17 18 19 20 21 22 And then, finally, Your Honor, a lot of the allegations that we would add and a lot of the substance that would go into our amendment would relate to defendants that are either omnibus alter ego parties or, potentially, defendants who may come out as a result of other negotiated resolutions of our claims.

23 24 25 So the result would be spending a ton of time and effort, a lot of estate resources, a lot of costs putting together an amended complaint that, you know, may ultimately

1 2 3 not be necessary. So, for that reason, yes, Your Honor, we do not think, if we are going to stay the litigation, an amended complaint has to be filed first.

4 5 6 7 8 9 THE COURT: Okay. I think I heard you also say that you -- it might make sense then to adjourn or continue this status conference for some time in the alter ego -- I'm sorry -- in the civil RICO action, in order for you to have discussions with parties who appeared and discussed these issues today. Is that correct?

10 11 12 MR. BASSETT: That's correct, Your Honor. And I'll defer to defense counsel as to how long they might need, but they can have as much time as they would like.

13 14 15 16 17 18 19 20 21 22 23 THE COURT: Well, I'm looking at the calendar. For now, we have hearings in this case and in adversary proceedings on November 5th, that's three weeks from today. That seems, to me, to be a reasonable amount of time for the parties to -- but if people want to go longer, apparently - you know, that's fine, too. I'm just looking at the calendar to see when other -- there's also a hearing on the 19th of November, which is the week before Thanksgiving. And there's also a hearing on the -- November 26th, which is the week of Thanksgiving. I don't see anything scheduled into December yet.

24 25 So I don't know how you'd like to proceed. If you'd like to take a recess, talk to people, if you'd like to

42 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 suggest a date of those dates I just suggested, Attorney Bassett, and we'll see whatever others think, or however you'd like to proceed. MR. BASSETT: Just choosing a date, Your Honor, November 19th would be fine with us. If other defense counsel want to be heard on that, they certainly may. Does anyone have any objection to continuing these -- this status conference in the civil RICO action, Adversary 24-05273, to November 19th, at 1 p.m.? If you do, you need to raise it now, please. (No verbal response) THE COURT: Okay. Hearing nothing, then I'm going to continue the status conference until October 19th, with the understanding, Attorney Bassett, that the trustee's counsel is going to be speaking to the counsel who spoke today about their issues and see whether or not there's some kind of agreed-upon order that can be submitted with regard to the continued prosecution of the civil RICO action. MR. BASSETT: Yes, Your Honor. THE COURT: Okay? MR. BASSETT: Thank you very much. THE COURT: All right. So we'll continue the civil RICO action status conference to October -- I'm sorry -

24 - November 19th, at 1 p.m.

25

All right. That takes care of the status

| 43 | |-----------------------------------------------------------------| | conferences in the adversaries.<br>We have matters in the main | | case.<br>People are welcome to stay, obviously, but they're | | also welcome to go if they don't have any interest in the | | main case.<br>So thank you, all. | | (Pause in proceedings) | | MR. DESPINS:<br>May I approach, Your Honor? | | THE COURT:<br>Yes, go right ahead. | | MR. DESPINS:<br>For the record, Luc Despins, Chapter | | 11 Trustee. | | And we were -- we would turn now for the motion to | | sell the Taconic property.<br>I would -- you know, the | | highlight, Your Honor, is that -- very good news for the | | estate, we were able to increase the purchase price | | substantially, and I'll get to that in a second. | | But we filed, at Docket Number 3682, yesterday, a | | notice of the receipt and acceptance, subject to Bankruptcy | | Court approval, of a higher and better offer.<br>And we also | | attached a revised contract and a revised proposed order. | | I'll say at the outset that the buyer intended to | | use an LLC for confidentiality reasons and -- but for the | | purpose of this hearing, I need to disclose the name of the | | new buyer.<br>His name is Ross Jackman, R-o-s-s, Jackman, of | | New York City.<br>He has represented he has no connection or -- | | at all with Mr. Kwok or affiliates of Mr. Kwok.<br>And he will | | own the property through and LLC that is called B-E-C-C-T, | | |

| | | 44 | |--|--|----| | | | |

1 LLC.

2 3 4 5 6 7 8 9 10 11 12 13 14 So, to make a long story short, Your Honor, there -- you'll recall that there was a bid accepted for six million nine. And after the bid was accepted, we received a higher and better offer from this bidder that was substantially increased after that as a result of competitive bidding between the act -- the existing bidder and the new bidder. And we got to a purchase price of 7,250,000. You'll recall that the asking price was seven million one. So this represents an increase over the existing contract of \$350,000, an increase of three fifty, which is, you know, very good, considering the circumstances here. The revised order, there's a version that's marked to show changes that reflects all the changes we've made.

15 16 17 18 19 20 21 22 23 It's really to substitute the new buyer for the old buyer and to implement other changes that were made. So it's not only the purchase price that was increased, Your Honor, but there were other terms that were -- that are now much more favorable to us; so that, for example, if Your Honor were to -- you're inclined to grant the relief we're seeking and to enter an order today, I believe the new buyer would have to close by Friday. For us, that's very beneficial for all sorts of reasons.

24 25 THE COURT: Does the new buyer have counsel? MR. DESPINS: Yes, and counsel -- and I should say

45 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 counsel, Mr. Murray, is in -- THE COURT: Okay. MR. DESPINS: -- the courtroom here -- THE COURT: Thank you. MR. DESPINS: -- today. THE COURT: Okay. Just want to make sure the buyer is ready, willing, and able to close. MR. DESPINS: That -- THE COURT: There's no contingencies, there's no issues? MR. DESPINS: No, there's no financing -- THE COURT: All -- MR. DESPINS: -- contingency -- THE COURT: All cash. MR. DESPINS: -- because no objections were filed. You know, I think the obligation under the contract is to close by Friday of this week, subject to the entry of the order by Your Honor today. Also, I want to address one issue. You may have seen that there was a bracketed paragraph that was added at - - you know, at the end, new Paragraph 24, that said as follows: "For the reasons stated at the hearing, the trustee is hereby authorized to reimburse the original buyer for up to 20,000 of reasonable, documented out-of-pocket Case 22-50073 Doc 3745 Filed 10/23/24 Entered 10/23/24 09:12:17 Page 45 of 59

| 1 | expense, such as inspection fees, appraisal fees, and counsel | |----|-----------------------------------------------------------------| | 2 | fees incurred by the original buyer in furtherance of the | | 3 | potential acquisition of the Greenwich property." | | 4 | We're not going to proceed with that relief, so | | 5 | we're taking that paragraph out of the proposed order at this | | 6 | time.<br>We've had discussions with the U.S. Trustee about | | 7 | this.<br>And it is possible that we'll come back to Your Honor | | 8 | and ask for that relief in summary fashion, but we're not | | 9 | pursuing that relief today. | | 10 | So I'm happy to answer any questions you my have, | | 11 | but at this point, it's fairly straightforward.<br>From our | | 12 | point of view, this is 350,000 more value for the estate | | 13 | with, I would say, certainty of closing in the short term, | | 14 | which will allow us to stop spending money on this property. | | 15 | THE COURT:<br>I -- my only questions are -- and I | | 16 | agree that, you know, the process, it has produced a higher | | 17 | and better offer, so I think that's obviously beneficial to | | 18 | the estate. | | 19 | My question is -- and I see counsel is here for | | 20 | the buyer.<br>I know that Attorney Major cooperated with regard | | 21 | to essentially giving up possession of the property to the | | 22 | trustee, and I have no idea and I don't -- maybe no one -- | | 23 | maybe that's something you've all worked out.<br>But you know, | | 24 | I have no idea what, if anything, is in the home and what has | | 25 | to be done. | | | |

| 1 | MR. DESPINS:<br>Yes.<br>So there is some -- so | |----|---------------------------------------------------------------| | 2 | Attorney Major has been -- we've been in touch with him as of | | 3 | last Friday, we were in communications.<br>There are some -- | | 4 | I'd say some furniture, although "furniture" is a big word, | | 5 | sports equipment is in the gym, I think there's outside | | 6 | furniture, as well, that the buyer is buying for the | | 7 | 7,250,000. | | 8 | The rest -- and that was another concession that | | 9 | was very favorable to us, is we're allowed to keep our | | 10 | furniture that's not sold to the buyer in that house for, I | | 11 | think it's 30 or 45 days -- | | 12 | THE COURT:<br>Okay. | | 13 | MR. DESPINS:<br>-- whatever the contract -- | | 14 | THE COURT:<br>So then -- | | 15 | MR. DESPINS:<br>-- provides. | | 16 | THE COURT:<br>-- we'll figure it out from -- | | 17 | MR. DESPINS:<br>Yes.<br>So it's -- it will -- but Mr. | | 18 | Major has made no claim to that -- to those assets.<br>So our | | 19 | intent is probably to move this, consolidate that with the | | 20 | other furniture that we have from various other locations, so | | 21 | that we can have an auction at one point to sell all of this. | | 22 | THE COURT:<br>Okay. | | 23 | MR. DESPINS:<br>So, in addition to that -- and I | | 24 | don't know if I ever told you this -- but they left a car at | | 25 | the property, and we figured out who was the owner.<br>We | | | |

48 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 contacted the "owner," and I say in quote, who said no, I don't own this case, you can have it. So now we have title in my name, so we can -- THE COURT: You have title? MR. DESPINS: -- so we can sell -- THE COURT: Okay. MR. DESPINS: -- that car. And -- but they've agreed that we can keep the car there for -- I forget if it's 30 or 45 days. UNIDENTIFIED: Forty-five days. MR. DESPINS: Twenty -- UNIDENTIFIED: Forty-five days. MR. DESPINS: But we intend to sell it earlier than the 45 days. So all of that is all good, from our point of view. THE COURT: Okay. Those were my only questions. And obviously -- I think your name is Mr. Murray, did I hear? MR. DESPINS: Yeah, Robert Murray. MR. MURRAY: Yes, Your Honor. THE COURT: Okay. So your client, the buyer, is ready, willing, and able to close by this Friday? MR. MURRAY: Yes. THE COURT: Okay. And obviously, the questions I had about what's at the premises has been answered and Case 22-50073 Doc 3745 Filed 10/23/24 Entered 10/23/24 09:12:17 Page 48 of 59

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 there's some agreement. I haven't studied it, obviously, because this was all filed yesterday, that the property that the estate claims an interest in will be able to remain at the property for some period of time, 45 days or less, and the trustee will take whatever actions he needs to take with regard to that, and the buyer is fine with that. MR. MURRAY: Yes, Your Honor. THE COURT: Okay. I just want to make sure, obviously. I mean, sometimes, we've had issues come up in sales where things have been left behind and that's caused a problem, and I don't want to have any -- we, obviously, want to do whatever we can to avoid any problems. Is there anything else that you would like to tell me about -- and you don't have to, I'm just asking if -- is there anything else you'd like to say about the sale or anything you think the Court needs to be aware of? MR. MURRAY: No, Your Honor. I think the process went very smoothly, and I appreciate Attorney Despins efforts in that regard. THE COURT: Okay. Thank you very much. MR. MURRAY: Thank you, Your Honor. THE COURT: All right. So then I haven't looked at the order, other than to see it. I mean, I've looked at it. I know it was filed yesterday and we were closed yesterday --

50 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MR. DESPINS: Yes, Your Honor. THE COURT: -- for the holiday. So I -- what I have looked at, I've skimmed, and it looks fine. You've redlined it. I did see the original order. I don't see anything in the order itself that is of concern to me, but I still want to read it -- MR. DESPINS: Of course, Your Honor. THE COURT: -- and I haven't read it fully. But I have to ask if anybody else wishes to be heard. Attorney Claiborn, does the U.S. Trustee have any position on -- with regard to the sale? MS. CLAIBORN: Your Honor, the U.S. Trustee has no objection to the sale. Trustee Despins added a paragraph that I requested, and that was Paragraph Number 21. It has to do with filing a report of sale after the closing. THE COURT: Yes, that's required under our local rule. Well, maybe it's not as clear as it should be, actually, under the local rules, but I would have wanted that anyway, just to know, so that the record is clear. MS. CLAIBORN: And I have nothing further to add, Your Honor. THE COURT: Thank you. Does anyone else wish to be heard? (No verbal response) THE COURT: Even though you're deleting Paragraph Case 22-50073 Doc 3745 Filed 10/23/24 Entered 10/23/24 09:12:17 Page 50 of 59

51 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 24, 23 says that the trustee shall return the original buyer's deposit within two business days -- MR. DESPINS: Yes. THE COURT: -- of the -- MR. DESPINS: That's -- THE COURT: Okay. MR. DESPINS: We're doing that today, Your Honor. THE COURT: Okay. MR. DESPINS: Yes, that remains. They're entitled to their deposit back. THE COURT: Of course. MR. DESPINS: Yeah. THE COURT: I'm just saying -- MR. DESPINS: Yeah. THE COURT: I was looking at 24, when you said that you were deleting it, but 23 is somewhat related, not exactly. MR. DESPINS: Yeah. THE COURT: Okay. Well, I -- under the circumstances and the familiarity with this case and this asset and Attorney Major's representation of the corporate entity and the individuals who were residing in the house, the documents that have been filed in connection with Greenwich Land, including -- although I don't have it in front of me, I recall very vividly Mr. Major's agreement to Case 22-50073 Doc 3745 Filed 10/23/24 Entered 10/23/24 09:12:17 Page 51 of 59

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 turn possession over to the estate on behalf of his clients that had the interests in the property. I understand why the trustee wants to sell the property free and clear of liens and that the new buyer has come in and is ready, willing, and able to close the transaction for a purchase price of \$7,250,000? MR. DESPINS: Correct, Your Honor. THE COURT: That's right. Then, for all those reasons, the -- and there are a lot of reasons that I'm not reiterating for the record at the moment because there has been a lot of hearings and motions and litigation about Greenwich Land and this asset. But I'm obviously going to grant the motion to sell and authorize and approve the sale of the property free and clear of liens, claims, and interests, and authorizing the trustee and approving the trustee to enter into and approving the sale agreement. So all I need to do, at this point, is just review this order, which I should be able to do this afternoon, and try to get that in for you all because I'm sure you're going to want -- well, I would assume you're going to want it for the closing. MR. DESPINS: Well, the entry of the order is what triggers the obligation to close by Friday, so -- THE COURT: Right. So we'll get it done this

53 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 afternoon. MR. DESPINS: Okay. But -- so we need to -- Mr. Skalka will send, through the courtroom deputy's email address the clean order without that paragraph that I mentioned. THE COURT: Okay. MR. DESPINS: Okay. THE COURT: That would be very helpful, yes. MR. SKALKA: I will do that, Your Honor. Thank you. THE COURT: Okay. Just do it in Word format, please. MR. SKALKA: Will do, Your Honor. THE COURT: Okay. Thank you. All right. So we will get that entered this afternoon. MR. DESPINS: Thank you, Your Honor. THE COURT: Okay? So -- and thank you, and thank you, Counsel, for your client's interest and working with the trustee to get this sold. So that concludes the motion to sell, and -- MR. DESPINS: So I think we're moving on, Your Honor, to the motion to increase the expense cap for -- THE COURT: All right. MR. DESPINS: -- the Mahwah mention. And perhaps Case 22-50073 Doc 3745 Filed 10/23/24 Entered 10/23/24 09:12:17 Page 53 of 59

54 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Mr. Murray's client is interested in buying that mansion, as well. (Laughter) MR. MURRAY: He's done enough. MR. DESPINS: He's done enough for the estate, yes. So, Your Honor, this is pretty straightforward. The expenses for the Mahwah mansion are -- I use the term "insane" too much, but in this case, they are insane. So we had a cap in the initial order that you approved of \$300,000. We are exceeding that cap by a lot. We need to increase the cap to a \$1,000,000 total because, you know, the security -- it's not only the security, but electricity, 17,000 a month or something like that. It's just a -- there are numbers that are just -- and by the way, we didn't just take that. We sent someone there to check all the thermostats, tried to reduce them to make sure that there's not -- there's no waste. But this is an incredibly expensive property to maintain; and, therefore, we have no choice but to ask the Court to increase the cap to a million dollars, which we're not happy about, but we have to do it. THE COURT: I understand. MR. DESPINS: And that's Docket Number 3650, Your Honor. Case 22-50073 Doc 3745 Filed 10/23/24 Entered 10/23/24 09:12:17 Page 54 of 59

55 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 THE COURT: Attorney Claiborn, does the U.S. Trustee's Office have any position with regard to this motion? MS. CLAIBORN: The U.S. Trustee has no objection to the motion. I'd just ask for an edit to the order to clarify something, so a revised order, I think, should be submitted to Your Honor. THE COURT: What's the edit? MS. CLAIBORN: Let me -- THE COURT: If you remember, I -- MS. CLAIBORN: If you just give me a second, I can pull up the order and I can tell you. (Pause in proceedings) MS. CLAIBORN: I apologize. I'm confusing this with another motion. There are many, and my brain obviously got muddled. I apologize, Your Honor. THE COURT: That's all right. MS. CLAIBORN: I have no changes on this one. THE COURT: Three are 3,600 -- MS. CLAIBORN: I apologize. THE COURT: -- and some-odd docket entries in the case, so I think confusion does happen from time to time. But -- so you're fine with the proposed order? MS. CLAIBORN: I am. THE COURT: Okay. Case 22-50073 Doc 3745 Filed 10/23/24 Entered 10/23/24 09:12:17 Page 55 of 59

56 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MS. CLAIBORN: Thank you, Your Honor. I apologize. THE COURT: As filed. MS. CLAIBORN: Yes. THE COURT: The one that was filed on the 8th of October, correct? MR. DESPINS: Yes. Yes. THE COURT: Okay. All right. I've looked at the proposed order, it looks fine to me, I don't have any changes. The only -- except the one thing I would change, just one minor thing that we can change, you do not need to change, is to say -- as the courtroom deputy knows I like to do, "and after a hearing held on." Okay? MR. DESPINS: Right. THE COURT: "And after a hearing held on October 15, 2024," right before the "it is hereby ordered" language, please. And otherwise, I'm fine. I understand the reason, I understand that you don't -- aren't happy about it. But I think, unfortunately, under the circumstances, the increased cap on the funding of expenses is warranted. All the notice parties were served with your motion. No one has filed any written objections to the motion. There is no one -- none -- there is no one Case 22-50073 Doc 3745 Filed 10/23/24 Entered 10/23/24 09:12:17 Page 56 of 59

57 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 participating in this hearing today that is objecting to the motion. And as I said, I think it's warranted under Section 363 of the Code. For all of those reasons, the motion is granted and the proposed order that was attached to the motion can enter. MR. DESPINS: Your Honor, I think that completes the matters for today. THE COURT: Yes. MR. DESPINS: But if I may, just going to back to the sale order, although it's not part of the sale order, but that paragraph that we took out. I want to make sure Your Honor knew the intent there. And I'm not going to ask for an advisory opinion, but I want to make sure you understand the context here, which is that the buyer that signed the 6.9 million-dollar offer obviously is ending the process - ending the process with nothing, and they have expended real money. And the estate has benefitted for that -- from that because, for example, the new buyer relied, without seeing it, on the inspection that was done by the first buyer. So that's why I was considering this. And by the way, we're -- I'm not asking for that relief today, but I want to make sure you understand that where we're coming from is that, you know, from their point of view, they end up with nothing, which is -- you know, Case 22-50073 Doc 3745 Filed 10/23/24 Entered 10/23/24 09:12:17 Page 57 of 59

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 that's not my problem. On the other hand, they did add a lot of value because they validated the value of the property and the fact that the property was worthy of buying without the new buyer conducting its own investigation. So that would be the reason for this. We're not asking for this today, but I may come back, Your Honor, asking for that relief. But I wanted you -- while it was still fresh in your mind, explaining the situation of why we were considering this. I know there are two ways of looking at this, which is hey, they took their chances, it's a Bankruptcy Court sale, and you may end up with nothing. I understand that. But in this case, I think there was value added. But I just wanted to make sure that it was clear to Your Honor. THE COURT: I understand. Thank you. All right. Is there anything further we need to address this afternoon? MR. DESPINS: Not from our point of view, Your Honor. Thank you. THE COURT: Okay. Then thank you all. All the matters on today's calendar have been addressed, so court is adjourned. THE COURT OFFICER: All rise. Court is adjourned. (Proceedings concluded at 2:23 p.m.)

| Case 22-50073 | Doc 3745<br>Filed 10/23/24<br>Entered 10/23/24 09:12:17<br>Page 59 of 59 | |---------------|--------------------------------------------------------------------------| | | 59 | | 1 | CERTIFICATION | | 2 | We certify that the foregoing is a correct | | 3 | transcript from the electronic sound recording of the | | 4 | proceedings in the above-entitled matter to the best of our | | 5 | knowledge and ability. | | 6 | | | 7 | /s/ William J. Garling<br>October 21, 2024 | | 8 | William J. Garling, CET-543 | | 9 | Certified Court Transcriptionist | | 10 | For Reliable | | 11 | | | 12 | /s/ Coleen Rand<br>October 21, 2024 | | 13 | Coleen Rand, CET-341 | | 14 | Certified Court Transcriptionist | | 15 | For Reliable | | 16 | | | 17 | | | 18 | | | 19 | | | 20 | | | 21 | | | 22 | | | 23 | | | 24 | | | 25 | | | | | | | | | | |