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09-18-2018, 02:00 PM #1
Itria Ventures just went H.A.M. on a bunch of stackers
This is a huge (sized) filing so, I'm just going to cut through the excess fat here and give you the highlights...
Long story short - Itria Ventures claims to have true first position rights to all receivables and applicable collateral, so although stackers may have acted first in attempting to collect on a defaulted merchant - Itria says "NUH - UH! Our Money!" Chase even told Itria "No" over a deposit account that a stacker got first, so Itria said Oh Yeah? Well then, F.U.! We'll just sue everyone!!!!!!!!!
Looks like they even claim to have right to receive over everyone, even the merchant's NextGear floor plan.
Reminds me of the SBTL v. Pearl (Or SBFS? Idk) in Maryland - but I think that one ended with a settlement (chime in if you know?)
SO - It'll be very interesting to see how this one turns out, especially if it sets precedent for future RTR claims between funders/creditors in this space & and in New York.
YOU CAN READ THE FULL DOCUMENT FILING HERE!
Itria Ventures v.
JPMORGAN CHASE BANK, NA;
RELIANCE MOTORS LLC;
FIRST HOME BANK;
NEXTGEAR CAPITAL INC.;
PRIVATE MORTGAGE INVESTMENTS LLC SERIES 3;
US CAPITAL PARTNERS INC.;
1 WEST CAPITAL LLC;
BUSINESS MERCHANT FUNDING;
EMPIRE FUNDING;
WORLD GLOBAL CAPITAL, LLC D/B/A YES FUNDING;
YELLOWSTONE CAPITAL WEST LLC;
GTR SOURCE, LLC;
ACE FUNDING SOURCE, LLC;
and RICHARD J. PAGNOTTAOn or about November 23, 2016, Itria entered into two separate agreements
(the “November 2016 FRSAs”) with a California limited liability company known as
Reliance Motors, LLC (“Reliance”), pursuant to which Itria agreed to purchase Reliance’s
future accounts receivable at a discount. Under the first agreement, Itria agreed to purchase
Reliance’s future accounts receivable valued at $384,000 for a purchase price of $300,000.
Under the second agreement, Itria agreed to purchase Reliance’s future accounts receivable
valued at $256,000 for a purchase price of $200,000.
Subsequently, on or about November 9, 2017, Itria entered into an agreement
to purchase the future receivables of Reliance (along with certain of affiliated entities) (the
“November 2017 FRSA”), pursuant to which Itria agreed to purchase Reliance’s future
accounts receivable valued at $650,000 for a purchase price of $500,000.
Subsequently, on or about March 28, 2018, Itria entered into a fourth
agreement to purchase the future receivables of Reliance (along with certain of affiliated
entities) (the “March 2018 FRSA”), pursuant to which Itria agreed to purchase Reliance’s
future accounts receivable valued at $750,000 for a purchase price of $600,000.Thereafter, in or about July 2018, Reliance defaulted under the November 2016
FRSAs, the November 2017 FRSA, and the March 2018 FRSA by failing to deliver the
purchased percentage of receivables due to Itria as required thereunder.
As a consequence thereof, Itria filed the affidavits in support of confessions of judgment against Reliance with
the Supreme Court of New York, County of Richmond. On August 1, 2018, that Court
entered judgment in favor of Itria and against Reliance (and others, where applicable) in the
amount of:
(a) $202,207.80 in connection with the first of the November 2016 FRSAs
(Index No. 151977/2018);
(b) $85,572.37 in connection with the second of the November 2016 FRSAs
(Index No. 151979/2018);
(c) $311,141.27 in connection with the November 2017 FRSA (Index No.
151978/2018); and
(d) $538,427.98 in connection with the March 2018 FRSA (Index No.
151981/2018).
Pursuant to the foregoing judgments, Reliance owes Itria the sum of
$1,137,349.42, plus accrued and accruing post-judgment interest.Following the entry of the foregoing judgments, Itria took steps to enforce same
against Reliance’s assets, including funds maintained by Reliance in a deposit account at
Chase Bank. On or about August 2, 2018, the New York City Marshal served a Levy and
Demand (the “Levy and Demand”) on Chase Bank in execution of each of Itria’s judgments.
Chase Bank has acknowledged receipt of each Levy and Demand, but has
declined to turn over to the Marshal any funds maintained by Reliance in a deposit account
at Chase Bank because another creditor has apparently levied on such funds as well. In
addition to Itria, four creditors recently obtained judgments against Reliance, as follows:
(a) on August 1, 2018, Ace Funding Source, LLC (“Ace”) obtained
judgment against Reliance in the amount of $943,321.25;
(b) on August 2, 2018, World Global Capital, LLC d/b/a Yes Funding
(“Yes Funding”) obtained judgment against Reliance in the amount of $1,018,741.88;
(c) on August 2, 2018, Yellowstone Capital, LLC (“Yellowstone”)
obtained judgment against Reliance in the amount of $371,812.50; and
(d) on August 3, 2018, GTR Source, LLC (“GTR”) obtained judgment
against Reliance in the amount of $1,472,705.00.Itria believes that Ace, Yes Funding, Yellowstone, and/or GTR is the creditor
which has also levied on the funds maintained by Reliance in its deposit account at Chase Bank.
For the reasons set forth below, Itria’s perfected security interests and liens hold
priority over the liens of all other creditors with respect to the funds maintained by Reliance
at Chase Bank. As a result, by this Petition Itria requests turnover of the funds as presently
maintained by Reliance in the Chase Bank deposit account
Generally speaking, the rights to an asset which is the subject of competing
claims of judgment creditors is governed by the “first in time” doctrine. That is, a levying
judgment creditor will take priority over a subsequent levying creditor.
However, that analysis changes when secured creditors are implicated.
Under New York law, a levying judgment creditor is subordinate to the rights of a prior perfected secured
creditor.
Section 9-327 of the N.Y. UCC governs the priority of security interests in a
“deposit account,” as that term is defined in N.Y. UCC § 9-102(29). That section provides
generally that a creditor holding a security interest perfected by “control” over a deposit
account – as that term is defined in N.Y. UCC § 9-104 -- will have priority over creditors with
security interests not perfected by “control”.
Here, none of the creditors competing for priority with respect to Reliance’s
deposit account at Chase Bank has “control” over such account in accordance with N.Y.
UCC § 9-104, and thus the priorities set forth in N.Y. UCC § 9-327 are not applicable.
However, that circumstance does not diminish the fact that Itria has a perfected security
interest in the funds maintained in the Chase Bank account by way of other perfection
mechanismsAs duly noted above, Itria purchased Reliance’s future accounts receivable
pursuant to the November 2016 FRSAs, the November 2017 FRSA, and the March 2018
FRSA. Accounts receivable fall within the definition of “payment intangible,” i.e., “a general
intangible under which the account debtor's principal obligation is a monetary obligation”,
The sale of a payment intangible is granted automatic perfection upon
“attachment,” that is, when the security interest becomes enforceable against the debtor.
As also duly noted above, Itria’s security interest in Reliance’s accounts
receivable extends to the “proceeds” of such accounts receivable. N.Y. UCC 9-102(64)
defines “proceeds” as “[w]hatever is acquired upon the sale, lease, license, exchange, or other
disposition of collateral [and] whatever is collected on, or distributed on account of,
collateral.”
Accordingly, by virtue of Itria’s perfection of its interest in Reliance’s accounts
receivable, Itria’s security interest in the “proceeds” of such accounts receivables is also
properly perfected. Furthermore, Itria’s perfected security interest in
the proceeds of Reliance’s accounts receivable includes the identifiable “cash proceeds” of
such accounts resident in any “deposit account” maintained by Reliance.
In other words, although Itria’s perfected security
interest in the traceable proceeds of Reliance’s accounts maintained in any deposit account
held by Reliance at Chase Bank may be subordinate to the interests of a secured creditor
holding “control” over such deposit account pursuant to N.Y. UCC § 9-327, it is superior to
the security interests of all other creditors who perfected their security interests in the accounts
or proceeds of the accounts of Reliance subsequent in time to that of Itria.
In addition, and as noted above, Itria’s perfected security interest is superior to
all subsequent judgment lien creditors.
According to a lien
search conducted by Itria, the following creditors filed UCC-1 financing statements to perfect
their security interests in the accounts of Reliance, but all post-dated the filing by Itria:
(a) First Home Bank filed a UCC-1 financing statement on March 3, 2016;
(b) NextGear Capital, Inc. filed a UCC-1 financing statement on June 22,
2016;
(c) Private Mortgage Investments LLC Series 3 filed a UCC-1 financing
statement on February 3, 2017;
(d) US Capital Partners Inc. filed a UCC-1 financing statement on
November 16, 2017;
(e) 1 West Capital LLC filed a UCC-1 financing statement on July 6, 2018;
and
(f) Business Merchant Funding/Empire Funding filed a UCC-1 financing
statement on August 1, 2018.Last edited by ADiamond; 09-18-2018 at 02:04 PM.
Anthony Diamond
Underwriter
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09-18-2018, 02:44 PM #2
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Good find!
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09-18-2018, 04:58 PM #3Karen37aGuest
I am not a lawyer but in order to prove tortious interference a few things must exsist
1) the existence of a valid contract between the plaintiff and a third party;
(2) defendant’s knowledge of that contract;
(3) the defendant’s intentional procurement of the third-party’s breach
without justification;
(4) actual breach of the contract; and
( 5) damages resulting therefrom
From what I know of that case the merchants committed extensive p[urposful fraud from the onset and never planned on using the money for purposes intended (and itria ventures proved those things by stopping them from discharging the debt in bankruptcy)
In their own words in the bankruptcy proceedings, they said they took the money to the casino and paid personal bills and the sons bills, also the son wasn't present in the business 70% of the time and was on a globe trotting adventure
** it is my guess that the original money was spent long before they ever received additional monies ( then they did a mini "Ponzi" scheme on themselves)
The Defendant offered no explanation on why the funds from itria were squandered on gambling junkets, school tuition, school expenses, personal insurance premiums, food, restaurants, and how and why substantial monie found their way into defendant's personal bank account. The defended cold not refute overwhelming evidence from Itria to establish fraud and a failure to maintain financial records
Add ** I wouldn't have blocked the discharge by * proveing extensive fraud to try to get blood from a turnip ...I would have blocked ti though**
Judical Estoppel ...another one of those Estoppels in its most generic form, prevents
a party from asserting a position in one legal proceeding that directly contradicts a position taken by that same party in an earlier
proceeding because now the arguments they made for themselves can be used against them
I was asked to write forensic reports for and against foreclosure during the housing crash...eg had 3 jobs could afford the payment... took the 3 jobs just to "pad" the bank account , lost 2 jobs one week after closing, went to vegas bought a mercedes etc, therefore the investor is not liable...(not my gig though, I helped temporarily, i am a proud telemarketer/boiler room) being sarcastic about the telemarketer/boiler room..
( I can't wait for the Calif lawsuits to start flooding in)Last edited by Karen37a; 09-18-2018 at 05:30 PM. Reason: typos
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09-18-2018, 05:20 PM #4
@Karen37a - I don't believe tortious interference was ever the issue raised.. well at least never literally.
It's basically saying something similar though - The merchant sold me future receivables, I had them secured first before anyone, therefore we are going to collect before anyone. And any monies you have collected - they are owed to us because of this fact.
I understand how the two concepts are related, but it T.I. surprisingly was never brought into the argument.Anthony Diamond
Underwriter
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09-18-2018, 05:22 PM #5Karen37aGuest
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09-18-2018, 05:40 PM #6
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When you lose $1mm+ in RTR you'll pay lawyers to file on whatever they tell you you've got any chance at recovery at.
Really at its core this is just jockying between creditors here on non-secured assets. Itria is looking at a goose-egg here and is trying to be proactive.
Really the takeaway should be how about we just not do 7-figure stacked MCA deals on auto sales businesses to begin with???
If you are really worried about the state of the industry this is a prime example of the stupidity/desperation for deal flow going on right now.
Fund less for the time being and just let everyone else blow up in the next 9-24 months.
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09-18-2018, 05:48 PM #7
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09-18-2018, 05:49 PM #8Karen37aGuest
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09-18-2018, 05:51 PM #9Karen37aGuest
Because it looks like you are reaching for straws...toss everyone in and the kitchen sink...which takes away from the argument of a direct specific tortious interference that caused the initial breach or the initial money to be lost...not an ongoing ponzi pay yourself scheme
it makes the merchant look like a giant con artist and not the funders fault
( in my eyes)
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09-18-2018, 06:10 PM #10Karen37aGuest
Ps
Is this the same company that defaulted in the millions with the company in Florida that had the SEc and FBI take over?
And this is still on their website?
https://www.biz2credit.com/knowledge...eliance-motors
Reliance Motors, LLC
Reliance Motors, which buys cars from auctions, makes money by reselling the cars to local dealers. Despite successfully operating for more than four years, the company still encountered trouble getting a loan.
Ismail, an Indian immigrant, applied for financing at a handful of banks and was turned off by the time-consuming application process and the struggles of getting approved for a loan. That is, until he found Biz2Credit through a TV ad.
"Biz2Credit made the loan application process easy for us," explained Ismail, who received funding for a $1.4 million loan from (financing institute) through Biz2Credit within three days. "Our case manager, Kamal Minhas, was very knowledgeable and helpful through the entire process."
The funding was to supplement the company's cash flow and purchase inventory.
Biz2Credit always delivers on their promise of arranging a loan for us in a timely
manner -- Anwar Ismail, owner of Reliance Motors, LLC
Ismail is one of many repeat clients at Biz2Credit.
"They are truly a blessing," suggested Ismail. "Biz2Credit always delivers on their promise of arranging a loan for us in a timely manner. I would highly recommend them for any small business owners looking for funding."
__
Add ...Not to burst anyones bubble but my guess is the # 1 UCC on that deal is most likely the investors in the fraud on the 1st West Capital aka 1st Global Capital...IRS steps in second or vice versa but I doubt it
___Last edited by Karen37a; 09-18-2018 at 06:45 PM.
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09-19-2018, 01:22 PM #11
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so they are suing the merchant but have a testimonial from merchant on their website?
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09-19-2018, 11:56 PM #12
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09-20-2018, 12:10 AM #13
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09-20-2018, 09:53 AM #14
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even if they lose it will now be easy to sue itria when the reverse happens . meaning they gave second .
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09-20-2018, 10:03 AM #15Karen37aGuest
And with that logic, if the Ucc from the ( sec and FBI) is in the first position they will sue or arrest everyone who gets in their way to get the money back
No cost to someone personally, Govt regulated entities and their lawyers and their money and resources
Its called Regulation
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09-20-2018, 11:35 AM #16
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If you really think places like YSC GTR or ACE need deal flow and are desperate to get into a deal so have to fund "bad" million dollar deals you just dont know what is going on in the industry. All 3 mentioned have more deals than they can handle probably and this is just one bad one out of hundreds they fund per a month that you never hear about because they are paying.
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