Guo Wengui / Miles Guo — bankruptcy case · EXHIBIT · ECF #440-18

May 27, 2021 Hearing Transcript, PAX v. Kwok, Index. No. 652077/2017 (N.Y. Sup. Ct.), Dkt. 833

IN RE:

P.E.

1 SUPREME COURT OF THE STATE OF NEW YORK FILED: NEW YORK COUNTY CLERK 06/01/2021 04:48 PM INDEX NO. 652077/2017 NYSCEF DOC. NO. 833 RECEIVED NYSCEF: 06/01/2021 Case 22-50073 Doc 440-18 Filed 05/25/22 Entered 05/26/22 15:30:37 Page 2 of 20

> 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 COUNTY OF NEW YORK : CIVIL TERM : PART 61 ------------------------------------------X PACIFIC ALLIANCE ASIA OPPORTUNITY FUND L.P., Plaintiff, INDEX NO: -against- 652077/2017 KWOK HO WAN, a/k/a KWOK HO, a/k/a GWO WEN GUI, a/k/a GUO WENGUI, a/k/a GUO WENGUI, a/k/a WAN GUE HAOYUN, a/k/a MILES KWOK, a/k/a HAOYUN GUO, GENEVER HOLDINGS CORPORATION, and GENEVER HOLDINGS LLC, Defendants. ------------------------------------------X MICROSOFT TEAMS May 27, 2021 B E F O R E: THE HONORABLE BARRY OSTRAGER, J U S T I C E A P P E A R A N C E S: O'MELVENY & MYERS LLP Attorney for the Plaintiff Times Square Tower New York, New York 10036 BY: EDWARD MOSS, ESQ. STUART SARNOFF, ESQ. BAKER HOSTETLER, LLP Attorney for the Defendant 45 Rockefeller Plaza New York, New York 10111 BY: MELISSA CARVALHO, ESQ. JOHN SIEGAL, ESQ. LAWALL & MITCHELL, LLC Attorney for the Defendant GENEVER 162 E. 64th Street New York, New York 10065 BY: AARON A. MITCHELL, ESQ. FILED: NEW YORK COUNTY CLERK 06/01/2021 04:48 PM INDEX NO. 652077/2017 NYSCEF DOC. NO. 833 RECEIVED NYSCEF: 06/01/2021 Case 22-50073 Doc 440-18 Filed 05/25/22 Entered 05/26/22 15:30:37 Page 3 of

BY:

ESQ.

FILED: NEW YORK COUNTY CLERK 06/01/2021 04:48 PM INDEX NO. 652077/2017 NYSCEF DOC. NO. 833 RECEIVED NYSCEF: 06/01/2021 Case 22-50073 Doc 440-18 Filed 05/25/22 Entered 05/26/22 15:30:37 Page 4 of 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 THE COURT: All right. Mr. Moss, this is your motion. MR. MOSS: Good afternoon, your Honor. We have two requests in our motion. One is compel discovery in response to a subpoena and the other is to modify the Court's restraining order. So I thought I would start with the subpoena. Your Honor, this might be the most straightforward issue that I've argued in front of this Court on this case. CPLR 5223 permits a broad range of discovery on any third party to request information that is relevant - relevant to enforcement of a judgment. As the Court knows, we've been forced -- my client has been forced to serve subpoenas on several third parties trying to find Mr. Kwok's assets because he doesn't hold them in his own name. Perhaps the most important subpoena Pacific Alliance served was a subpoena on an entity called Golden Springs. Golden Springs is a so-called family office for Mr. Kwok's family, but in reality, it is just Mr. Kwok's principal front. It's an entity that he funded entirely with his own money. It's an entity that pays all of the expenses for his lavish lifestyle. Every single expense by their own admission. It pays legal fees for a host of FILED: NEW YORK COUNTY CLERK 06/01/2021 04:48 PM INDEX NO. 652077/2017 NYSCEF DOC. NO. 833 RECEIVED NYSCEF: 06/01/2021 Case 22-50073 Doc 440-18 Filed 05/25/22 Entered 05/26/22 15:30:37 Page 5 of 20

Mr.

3 party.

others.

8 apartment.

Mr.

10 responses.

Honor. 12 Mr.

expenses.

Judge?

CPLR?

judgment?

20 here.

Springs.

them.

Mr.

filings.

documents.

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forum.

employees.

3 Kwok.

business.

security.

Mr.

him.

10 company.

Mr.

people.

fees.

maintenance.

Mr.

money.

papers is that Golden Springs is a third party and so we should only be entitled to information about assets that it holds for or transactions that it has conducted with Miles Kwok. 20 21 22 23 24 25 That's basically like saying it's a bank; right. You get that we subpoena the bank which we've done. We get Mr. Kwok's information, but we don't get information about the bank itself. We don't get information about the bank's other customers. That's a nice argument for a bank, but it completely ignores the context that Golden Springs is not a FILED: NEW YORK COUNTY CLERK 06/01/2021 04:48 PM INDEX NO. 652077/2017 NYSCEF DOC. NO. 833 RECEIVED NYSCEF: 06/01/2021 Case 22-50073 Doc 440-18 Filed 05/25/22 Entered 05/26/22 15:30:37 Page 7 of 20

1 2 3 4 5 third party. It is the entity that holds Mr. Kwok's money, and it is the entity that pays his legal expenses. So it's assets are his assets. It's transactions are his transactions. And it's financial information is his financial information.

The suggestion in the papers that Mr. Kwok and Miss Wang and all of his people should be able to pick and choose and determine which information at Golden Springs relates to Mr. Kwok and which doesn't is a recipe for disaster here, Judge.

Mr. Kwok denies even being involved with Golden Springs. He denies being involved with the entity that owns the boat that we all know he owns because he said he owns the boat on YouTube, the boat which, by the way, is still out of the jurisdiction 15 days incurring \$500,000 a day.

Mr. Kwok is the same guy who denies owning his apartment that Miss Wang says -- told the Court under oath that he owns it.

So the limitation that they're trying to put in here, only things relating to Mr. Kwok, that's nonsense in this case, and it's just a recipe for us to get nothing.

22 23 24 25 Golden Springs also argues on the subpoena that we have to prove alterego to get discovery into it's assets. Well, that's just made up. There is no case to support that. FILED: NEW YORK COUNTY CLERK 06/01/2021 04:48 PM INDEX NO. 652077/2017 NYSCEF DOC. NO. 833 RECEIVED NYSCEF: 06/01/2021 Case 22-50073 Doc 440-18 Filed 05/25/22 Entered 05/26/22 15:30:37 Page 8 of 20

standard.

2 standard.

banks.

alteregos.

4 alterego.

information.

Mr.

8 information.

easier.

expenses.

motion.

scope.

times.

astounding.

blunderbuss.

expedition.

14 flagrant.

substance.

all.

server. 19 Nothing.

much.

discussion.

scope.

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there is an actual burden. I want to just end on one particular argument on the subpoena point because I expect Mr. Alter will focus on it. We ask -- we do. He's right. We ask for information about 60 people and entities, no one knowing to be associated with Kwok.

Mr. Alter quips in the brief, well, known by whom? Known by whom? Known by us, Judge. Known by us based on spending a lot of money and lot of time to dig through public records, court filings, social media accounts because that's the game Mr. Kwok has forced us to play.

12 13 14 15 16 17 18 19 20 21 22 23 The reason we have to ask for this information is because Golden Springs is the hub. We can't spend the rest of our lives chasing 100 entities. I mean, my grandkids would be doing this. Golden Springs is the entity that has the information. It's produced documents relating to Shiny Times, the entity that was involved in the underlying case. It has the documents. It is the hub of the empire. If it doesn't have information about a couple of these entities, if we're wrong about one or two, okay, fine. Then they should run the search and tell us they don't have it and not produce it. But run the search terms, collect the ESI and provide the documents.

24 25 THE COURT: All right, Mr. Moss. I understand your argument. I also understand that Mr. Kwok is incurring FILED: NEW YORK COUNTY CLERK 06/01/2021 04:48 PM INDEX NO. 652077/2017 Case 22-50073 Doc 440-18 Filed 05/25/22 Entered 05/26/22 15:30:37 Page 10 of

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penalties.

Mr.

play.

Springs. 5 MR. ALTER:

Honor.

muddied.

Mr.

Springs.

opposite.

office.

14 that.

Mr.

Springs.

that.

his.

this.

COURT:

Mr.

Mr.

antics.

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NYSCEF DOC. NO. 833 RECEIVED NYSCEF: 06/01/2021 20 Proceedings funded seven-figure payments to facilitate Mr. Kwok's lifestyle, and Mr. Kwok leads a rather extravagant lifestyle, purports to have zero assets whatsoever. So the plaintiff is a judgment creditor. The plaintiff knows that Golden Springs is funding expenses for Mr. Kwok. Not minor inconsequential expenses. Major expenses. And the judgment creditor is entitled to have discovery of the entity that is funding Mr. Kwok's expenses. The judgment creditor is also entitled to an order directing Golden Springs not to transfer, dispose or otherwise dissipate whatever assets Golden Springs has because the best evidence that has been made available to the Court compellingly suggests that any assets that Golden Springs has were provided to Golden Springs by Mr. Kwok. Now if the discovery that the judgment creditor is seeking from Golden Springs disproves that, well, then we have a different situation than the situation we now have. Under the CPLR, a judgment creditor is entitled to discovery of third parties of which in this case may well be

alteregos of Mr. Kwok, but it's not necessary for the judgment creditor to establish that Golden Springs is an alterego of Mr. Kwok.

23 24 25 MR. ALTER: You know, your Honor, we haven't - that's not our position. That's the straw man that has been presented.

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COURT:

entirety.

Mr.

7 that.

here. 8 MR. ALTER:

record.

COURT: Yes.

record. 12 MR. ALTER: Okay.

Honor.

creditors.

appropriate.

provides.

Mr.

Mr.

Mr. Kwok;

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1 2 3 4 5 6 Well, you know, your Honor, that's called piercing the corporate veil, and it's our position that if they want documents independent of the judgment debtor where they make no connection or efforts to make a connection whatsoever, then, yes, they do have to pierce the corporate veil, but that isn't the sum total of our argument.

Our argument is that the requests are exceedingly overbroad and that they are irrelevant. And in fact, let's go for a moment to the facts that Mr. Moss says are overwhelming in this case.

If you look at the submission that was actually presented on this motion, there is absolutely no facts presented with regard to the 64 nonparties for which they seek discovery having nothing to do with the judgment debtor. Just -- not even having anything to do with Golden Spring. They just want discovery to 64 nonparties.

17 18 19 20 21 22 23 24 Now your Honor, we heard Mr. Moss say that he knows there is a connection. Well, wouldn't it be enlightening for the Court to know what that connection is before there is a ruling that Golden Spring has to produce documents that otherwise are clearly irrelevant. So that's why we assert that those documents should not be discovered unless and until Mr. Moss and PAX comes forward with actual proof that there is a connection. We don't have that.

And with regard to the proof, the overwhelming

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Mr.

Mr.

company.

that.

expenses.

okay.

family.

company.

office.

requests.

Mr.

Mr.

injunction.

party.

constrained.

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not grant prejudgment asset freezes, and that is exactly what PAX is trying to do now. They are trying to enjoin Golden Spring from expending any of it's own assets for any purpose, and that is contrary to the law.

5 6 7 8 9 10 11 12 13 14 Now, they argue that your Honor has a power to enforce restraining orders. Of course you do. And Golden Spring was served with a restraining order, and Golden Spring acts at it's peril if it transfers any property with which Mr. Kwok -- in which Mr. Kwok has an interest, but a Court's enforcement of a restraining notice is not the tantamount to an injunction. It's an after-the-fact litigation based upon allegations that there had been a violation of the notice. They're two entirely separate things.

So your Honor, respectfully, there isn't either a jurisdictional basis for the injunction nor is there a compelling factual basis for one because they have the relief that the CPLR has provided for.

Now, if the Court is going to go ahead and enter certain orders as your Honor has described, I request a few things, a few clarification points.

22 23 24 25 First of all, we would request the Court post a bond. Order that PAX post a bond. They are seeking an injunction against Golden Spring from using any of it's assets. And pursuant to the CPLR 6312(b), a bond is FILED: NEW YORK COUNTY CLERK 06/01/2021 04:48 PM INDEX NO. 652077/2017 Case 22-50073 Doc 440-18 Filed 05/25/22 Entered 05/26/22 15:30:37 Page 16 of

NYSCEF DOC. NO. 833 RECEIVED NYSCEF: 06/01/2021 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 15 necessary. It's a necessary element for preliminary relief. So we would ask the Court direct that a bond be posted. We would also ask whether under this jurisdiction, Golden Spring is able to pay lawyers. Is it able to pay it's employees? Mr. Moss dismisses the fact that the company actually employs 16 employees and seven independent contractors. Are they not entitled to continue that? Do they need -- is this injunction going to close Golden Spring? We need that clarification because Golden Spring does not want to be in violation of your Honor's order. And finally, you know, your Honor, I would request respectfully a stay of the Court's order for a week so that we may seek appellate relief and seek a stay pending appeal. But given that this is, you know, a holiday weekend, we request that the Court stay because again, as I said, Golden Spring does not want to be in violation of this Court's order; but for all the reasons I've stated, honestly, your Honor, the relief requested is a function of facts that Mr. Moss has asserted as judge, jury and executioner. They haven't been presented. They haven't been adjudicated. They haven't been formally determined, all of which are necessary for the kind of relief for reaching into Golden Spring and setting aside it's individual identity and

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assets.

law.

Honor.

COURT:

right.

points.

Mr.

past.

Mr.

will.

11 bond.

p.m.

Mr. Moss.

17 concerns. 18 MR. ALTER:

concerns.

20 attorneys.

pay.

COURT:

issue.

24 them. 25 MR. ALTER: Okay. FILED: NEW YORK COUNTY CLERK 06/01/2021 04:48 PM INDEX NO. 652077/2017 NYSCEF DOC. NO. 833 RECEIVED NYSCEF: 06/01/2021 Case 22-50073 Doc 440-18 Filed 05/25/22 Entered 05/26/22 15:30:37 Page 18 of 20

COURT:

Mr.

5 transport.

million. 7 Mr.

10 courts.

heard? 12 MR. MITCHELL:

Mitchell.

defendants.

14 clarification.

apartment.

Mr.

record.

COURT:

22 clarification.

Mr.

Mr.

apartment. FILED: NEW YORK COUNTY CLERK 06/01/2021 04:48 PM INDEX NO. 652077/2017 NYSCEF DOC. NO. 833 RECEIVED NYSCEF: 06/01/2021 Case 22-50073 Doc 440-18 Filed 05/25/22 Entered 05/26/22 15:30:37 Page 19 of 20

1 Mr.

Mr.

orders.

But Golden Springs presumably will comply with the Court's order, and Golden Springs, you know, may seek a stay in the Appellate Division either tomorrow or today or on June 1. And if the Appellate Division stays the Court's order, then the Court's order will be stayed.

Otherwise, the Court expects Golden Springs to comply with the Court's orders subject to PAX's posting of \$500,000 bond in the event it's determined that there's any overreach here and subject to Golden Springs being able to pay identified lawyers and identified employees in accordance with the schedule.

MR. SARNOFF: Your Honor, this is Stuart Sarnoff. May I just ask one clarification?

THE COURT: Yes. 21 22 23 24 MR. SARNOFF: The obligation of PAX to post a bond, is that specifically in respect of the restraining order part of the -- of your decision today? THE COURT: Yes.

MR. SARNOFF: And separate -- so there is no --

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1 THE COURT: With respect to the restraining order. 2 MR. SARNOFF: So there is no -- there is no stay 3 with respect to the obligation of Golden Spring to comply 4 with the subpoena. Is that correct? 5 THE COURT: That's correct. 6 MR. SARNOFF: Thank you, sir. 7 THE COURT: Anything else from anybody else? 8 All right.

9 consistent with the transcript of the proceedings of today. 10 I would strongly urge counsel to order an expedited copy of 11 the transcript of proceedings of today so that in the event 12 Golden Springs seeks a stay from the the Appellate Division, 13 there is a clear record reflecting what the Court has 14 ordered. 15 Have a nice day and a nice weekend.

16 safe and thank you.

18 CERTIFIED TO BE A TRUE AND ACCURATE TRANSCRIPT OF THE ORIGINAL MINUTES TAKEN OF THIS PROCEEDING.