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California Central District CourtCase No. 8:08-cv-00668UNITED STATES OF AMERICA v. Comco ManagementCorporation et alDocument 15
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Neil A. Goteiner (State Bar No. 83524\nsoteinerfôfbnì.com
Deeþak cqpÞ (State Bar No. 226991)dùupta(ò,fbm.com
Fare'llá Brãun & Martel LLP235 Montgomery Street, 17th FloorSan Francisco. CA 94104Telephone: (415) 954-4400Facsimile (415) 954-4480
Attornevs for DefendantsCOMCO MANAGEMENT CORPORATION:CONCORD FUNDING CO.. LLC: METCOMANAGEMENT CORPORATIOÑ: MONEXCREDIT CO.: MONEX DEPOSIT CO.:NEWPORT SERVICE CORP.
RUFUS VONTHULEN RHOADESP.O. Box 7068Pasadena, CA 91109-7068Telephone: (62û 683-4566Facsimile : (626)' 7 92-0195
Attornev for DefendantPCCE. INC.
LINITED STATES DISTRICT COIIRT
CENTRAL DISTzuCT OF CALIFORNIA
SOUTFIERN DIVISION
LINITED STATES OF AMEzuCA,
Plaintiff.
VS.
COMCO MANAGE,MENTCORPORATION: CONCORDFLINDING CO., LLC; METCOMANAGEMENT CORPORATION:MONEX CREDIT CO.: MONEXDEPOSIT CO.: NEWPORTSERVICE CORP.: AND PCCE.INC.,
Defendants.
DEFENDANTS' MOTION TO DISMISSCase No. SACVO8-00668 JVS (MLGx)
Case No. SACV08-00668 JVS (MLGx)
DEFENDANTS'NOTICE OFMOTION, MOTTON TO DISMISSAI\D MEMORANDUM OF POINTSAND AUTHORITIES IN SUPPORT
Date: October 19.2009Time: 1:30 p.m.Ctrm: Hon.James V. Selna
PRETzuAL CONFERENCE ANDTRIAL DATE,S: NOT SET
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Case 8:08-cv-00668-JVS-RNB Document 15 Filed 08/24/09 Page 1 of 39 Page ID #:77
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NOTICE OF MOTION
TO PLAINTIFF AND ITS ATTORNEYS OF RECORD:
PLEASE TAKE NOTICE that pursuant to the Parties' stipulation and this
Court's order thereto, on October 19,2009 at 1:30 p.ffi., or as soon thereafter as the
matter may be heard, before the Honorable James Selna in Courtroom 10(c) of the
United States District Court of the Central District of California, Southern Division,
Defendants, will move the Court (1) pursuant to Fed. R. Civ. P. 12(bX6) and 9(b)
for an order dismissing certain of Plaintiffls claims for failure to state a claim on
which relief may be granted, or in the altemative, (2) pursuant to Fed. R. Civ. P.
Iz(e) and (f), for an order requiring a more definite statement and striking portions
of the Complaint.
This motion is made following the conference of counsel pursuant to L.R. 7-
3. which defendants initiated on August 19, 2009 and continued on August 24,
2009 to accommodate trial counsel's schedule.
Dated: Ausust 24.2009 FARELLA BRALI|I & MARTEL LLP
By: /s/ Neil GoteinerNeil GoteinerAttorneys for Defendants
Dated: August 24,2009
Bv: /s/ Rufus T. Rhoades-
Attorney for Defendant PCCE, Inc.
DEFENDANTS' MOTION TO DISMISSCase No. SACV08-00668 JVS (MLGx) - I -
23432U026643.2
Case 8:08-cv-00668-JVS-RNB Document 15 Filed 08/24/09 Page 2 of 39 Page ID #:78
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TABLE OF CONTENTS
Page
MEMORANDUM OF POINTS AND AUTHORITIES ...........1
I. INTRODUCTION ...........1
il. STATEMENT OF FACTS ..............2
A. Procedural History ................2
B. The Govemment Sues The Assessed Entitv And Asks ThisCourt To Disregard The Separateness Of Six Other CorporateEntities To Co1Iect.............. ...................2
C. The Four Counts In The IRS' Complaint .............3
M. LEGAL PLEADING STANDARDS ............,.5
ry. ARGUMENT.......... .........6
A. Plaintiffls Complaint Fails Rule 9 And Rule 8 Bv LumpineDe fenla4ts, An'd Om itti ng Indi vi dua lized A I I egáti ons A gain stEach Defendant. ............. ..:...................6
B. The Fraudulent Transfer Claim Fails to Plead "'What," "'When"And "How" With Particularity........... ...................9
l. The Few Assets Noted Do Not Identifu With Suff,rcientParticularity "What"'Was Allegedly Ïransferred. .................... 1 0
a. The "Monex Enterprise" Is Not Described WithSufficient Particulárity to Survive Rule 9(b)Scrutiny.............. ............. l0
b. 'lEmployees" Are Not Property For Purposes OfcrrËrA. ..........r2
c. Thoueh The IRS Alleees A "Location" WasTransTerred It Manifeítlv Does Not Alleee ThatAny Real Property Was lransferred. ..... :......... ............. 12
2. The IRS Has Failed To ldentiñ, With Particularity"'When" The Alleged Fraudulent Transfers Took Place........... 13
3. Plaintiff Has Failed To Provide The "How" Of TheAlleged Fraudulent Transfers. ............ ......13
C. Plaintiffls Demand For Judement Against Each Of "The NewMonex Entities" Fails Beca-use Such-Relief Is Not AvailableUnder Fraudulent Conveyance Law. ..................14
v. CONCLUSION .............15
DEFENDANTS' MOTION TO DISMISSCase No. SACV08-00668 JVS (MLGx) -ll-
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TABLE OF AUTHORITIES
Page
FEDERAL CASES
Arikat v. JP Morgan Chase & Co.,430 F. SupÞ. 2d 1013 G\r.D. CaL.2006).............. .............6
Atchison v. Brown &. Bryant.159 F.3d 358 (9ttí Cir. 1 997\ ........ .................r2
B lv- Masee v. Californía.' 2j6 F.3d lÕt+ çSthCir. 2001).............. ...6,8,9
In re Brun.360 B.R. 669 (Bankr. C.D. CaL2007).. . ......... ......13,14
Elliott v. Glushon.390 F.zd 514 (9th Cir. 1967\........ ................. 14
Ellisonv. American Image Motor Co.,36 F. Supp. 2d 628 (S.D.N.Y. r'999) ...........5, 6
Forum Insurance Co. v. Devere Ltd..151F. Supp.2dll45 (C.D. Cal.200I)............. .9,11,14
Gauvin v. Trombatore.682 F. Srrpp. 1067 (N.D.Cal. 1988)... ......... ..................5
General-Probe, Inc. v. Amoco Corp.,926 F. Supp. 948 (S.D. Cal.-1996) ........ ..........s
Grewal v. Choudhurv.2007 u.s. Disi.'LEXIS 81856 (N.D. Ca1.2007). ... ....... 6, 13
IUE AFL-CIO Pension Fund v. Herrmann.9 F.3d 1049 (2d Cir. 1993)....................... .......9
Mannv. GTCR Golder Rauner, LLC,483 F. Supp. 2d884 (D. Ariz. 2007) ...............9
Neubronner v. Mílken.6 F.3d 666 (gth'Cir. 1993) ...............6
Odyssey Re (London) Lld u_, $tir!í4g Cooke Brown Holdings Ltd.," 8s F. Supp. 2ó,282 (S.D.N.\õ2000) ...............5
Ro I o v. C ity I ay e,s lin g_ Ç o. !íq ryi lqt ing Trus t,15s F.3d 644Od Cir. 1998)........ ....................9
In re Stac Electríc Sec. Litigation,89 F.3d 1399 (9th Cíi. 1996)........ ...................9
DEFENDANTS' MOTION TO DISMISSCase No. SACV08-00668 JVS (MLGx) - ril -
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Sunnvside Development Co., LLC. v. Cambridse Displav Tech. Ltd..- 2008 U.S. Dist. LEXTS 748s0 CN.D. CaI zOOS)......................:..............5,6,7
Super Visíon Internatíonal, Inc. v. Mega Internationøl Committee Bank Co.,- 534 F. Supp. 2d 1326 (S.D. Fla. 2008)..... ........ ..............9
Vqn Dyke Ford, Inc. v. Ford Motor Co..399F. Supp. 277 (8.D. Wis. 197s)........ .....5,7
Vess v. Ciba-Geísv Corp. USA.317F.3d IA97 Q7hCir.2003).............. .7,9,13
CONSTITUTIONS
[J.S. ConstitutionAmendment XIII... ...........IAmendment XV.... ...........8
FEDERAL RULES
Federal Rules of Civil Procedure
STATE STATUTES
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DEFENDANTS' MOTION TO DISMISSCase No. SACV08-00668 JVS (MLGx) -lv-
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MEMORANDUM OF POINTS AND AUTHORITTES
I. INTRODUCTION
Plaintiff IRS's fraudulent conveyance claim fails to meet fundamental
pleading requirements of Fed. R. Civ. Pro. 8 and 9(b), and should be dismissed.
The Complaint avers that Defendants - which the Complaint styles "New Monex
Entities" - are alter egos, successors and fraudulent transferees of Monex
International, Ltd., a company against whom ataxwas assessed in 1998. Plaintiff s
fraudulent transfer theory is that Monex International Ltd. fraudulently and
intentionally transferred assets to these "New Monex Entities." The IRS does not
specifu which "New Monex Entities" received what property items, or the timing of
the transfer to any defendant. Instead, the IRS lumps all of these defendants
together and states vaguely that assets were transferred to these entities as a
collective group. Rules 8 and 9(b) prohibit such lumped pleading of actual
fraudulent allegations because defendants are unable to determine what allegations
pertain to them individually, and which defendants had what alleged intent to
defraud. They are left unable to meaningfully respond to such a complaint.
Just as the Complaint fails to identiff the "who" of the alleged fraudulent
conveyances, it fails to state with particularity the "what," "when" and "how" of the
alleged fraudulent conveyances. For instance, the IRS claims "employees" were
transferred. But employees are not properly under the controlling California
Uniform Fraudulent Transfer Act, California Civil Code $$ 3439 et seq. (the
"CtlFTA"). Similarly, while the Complaint alleges a "location" was transferred,
conspicuously absent is any allegation that any lease holds or interest in real
property was transfened to the New Monex Entities. These allegations are
necessary under Rule 9(b) and are important to put defendants on notice of the type
of relief that the IRS is seeking. A proper fraudulent transfer claim alleges that a
valuable asset that would have been available to satisfu a creditor's claim has been
improperly transferred with actual or constructive fraudulent intent to put the asset
DEFENDANTS' MOTION TO DISMISS ICase No. SACV08-00668 JVS (MLGx) - I -
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beyond the reach of the creditor. Relief for a fraudulent transfer means that the
transferee either returns the improperly transferred asset to the transferor, or pays
the value of the transferred asset at the time of the improper transfer. It's therefore
critical that the IRS put defendants on notice of what assets the IRS contends were
fraudulently transferred, to whom, and when.
At the very least, if the IRS want to proceed with their CIIFTA claim, Rules
8, 9(b) and 12(e) require the IRS to state a more specif,rc, definite and detailed claim
against each defendant so that each defendant can respond to the IRS complaint.
II. STATEMENT OF FACTS
A. Procedural History
The IRS sued seven separate defendants on June 13,2008 in this action to
reduce to judgment a federaltaxassessment entered in 1998. Compl. t| l.t The
parties conducted limited informal discovery for several months while requesting
continuances to serve the complaint. Dkts 3, 8 and 9. Defendants attempted to
piece together the narrative of relevant events, which was more difficult given that
the IRS waited ten years to file its complaint. The IRS served the Complaint on
June 5, 2009. Dkt 11. The parties stipulated to an extension of time to respond or
otherwise answer the complaint until JuIy 24, 2009 and then until August 24,2009.
Dkt 13.
B. The Government Sues The Assessed Entitv And Asks This CourtTo lisregard The Separateness Of Six Other Corporate EntitiesTo Colleðt
The IRS bases its action to reduce to judgment on what it alleges is a June
15, 1998 tax assessment for tax years 1980-84; the IRS and defendant Monex
International had previously stipulated to the assessment. T'1T 17 , 42-43. The IRS
complaint seeks not only to reduce that assessment to judgment against Monex
' Reference to paragraphs of the Complaint hereafter shall be in the form "'1T-."
DEFENDANTS'MOTION TO DISMISS 1Case No. SACVO8-00668 JVS (MLGx)
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International's alleged successor, PCCE, Inc., but also asks the Court to disregard
the corporate separateness of six additional entities and hold them liable for the
same assessment. The IRS's claim during its ten year delay has now ballooned to
ß378,237,162.42, with interest and penalties. 124.
C. The Four Counts [n The IRS' Complaint.
Count I - Reducine to Judement Aeainst PCCE. Count 1 of the
complaint seeks to reduce the 1998 assessment to judgment against PCCE, who the
IRS claims is the successor of Monex International. The complaint alleges that
Monex International was merged into Monex Corporation, whose name was then
changed to PCCE, Inc. fllf 16-24.
Count 2 - Alter Eso/Sinsle Enterprise. In addition to PCCE, the
Complaint seeks to impose liability for the assessment amount on separate
companies styled the "New Monex Entities." They are alleged "alter egos" and are
averred to constitute a "single-enterprise" with Monex International. fl 26. The
term "New Monex Entities" is defined as Comco Management Corporation,
Concord Funding, LLC, Metco Management Corporation, Monex Credit Company,
Monex Deposit Company and Newport Service Corporation. fl 14.
In Count 1, the IRS alleges that "the Principals of the Monex Enterprise
transferred the operation of the Monex Fnterprise from Monex International to the
New Monex Entities in an effon to avoid exposure of the proceeds from the Monex
Enteqprise to outstanding federal tax liabilities." n 47. "The Monex Enterprise" is
elsewhere defined as "the collective activity of [the New Monex Entities along with
Monex International, Ltd. and its alleged successor PCCE] in the leveraged sale of
precious metals to the public." T 13. In effect, the IRS is alleging that the old
Monex International's business of leveraged sale of precious metals was transferred
to a new set of entities and therefore the new entities should pay Monex
International' s old tax liabilitv.
DEFENDANTS' MOTION TO DISMISSCase No. SACV08-00668 JVS (MLGx) - r -
23432U026643.2
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As supporting allegations, the IRS states that "[b]eginning in 1988,
employees of Monex International were shifted to Newport Service Corporation.
1l57. These employees were then shifted to Monex Deposit Corporation. fl 59.
The IRS states that the "[t]he Monex Enterprise used the same telephone numbers
both before and after the shift," and the same "office space." tTtT60-61. Further, it
alleges that goodwill was transferred from Monex International to the New Monex
Entities. tT 63.
The Complaint quotes statements from the Monex.com website allegedly
indicating that Monex Deposit Company has tried to "capitalize" onthe history of
Monex Intemational, Ltd. '1TT 65-70.
Coqnt 3 - Successor-in-Interest Liability. In Count 3, Plaintiff alleges that
the "New Monex Entities assumed the Monex Enterprise, and its employees,
location, phone numbers, and goodwill during the late 1980s and early 1990s
without providing fair consideration to Monex International." n73. Therefore, the
IRS alleges, it is left without recourse against Monex International and is entitled to
judgment against the New Monex Entities. 1174.
Count 4 - Fraudulent Conveyee Liability. This count, which is the subject
of this motion, alleges that "The New Monex Entities are liable to the United States
for the assets received from Monex International and their proceeds because the
New Monex Entities are the fraudulent conveyees of the Monex Enterprise, and its
employees, location, phone numbers, and goodwill from Monex International, Ltd."
fT 78. 2 Plaintiff alleges the fraudulent transfer was intentional. n 79 ("with the
'Defendants do not view the complaint as asserting the fraudulent conveyanceclaim against defendant PCCE. The Complaint, however, can be read to beambiguous as to whether the alter ego theory swells the fraudulent conveyanceclaim to reach PCCE, the alleged successor of Monex International Ltd. In a meetand confer today, the AUSA declined to stipulate that the Complaint's fraudulentconveyance claim did not reach PCCE. Accordingly, to err on the side of caution,PCCE is joining this motion to the extent that Plaintiff contends that Count IVshould be regarded as containing allegations in regard to Monex International Ltd,whom the Plaintiff alleges is PCCE's predecessor in interest.
DEFENDANTS' MOTION TO DISMISS A
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intent to prevent the United States from reaching the assets and income of the
Monex Enterprise.") The IRS further states "reasonably equivalent value" was not
received in return for the relevant assets and that the Monex principals "believed or
reasonably should have believed" that Monex International would be without
resources to pay the outstanding federal tax liability due to the transfer. fl 80. The
IRS asks for'Judgment" against the New Monex Entities and"attaching the assets
transferred and their proceeds" in satisfaction of the Government's claim. tT 82.
III. LEGAL PLEADING STANDARDS
A complaint may not lump together allegations against multiple defendants.
Though the notice pleading standard of Rule 8 is liberal, where a plaintiff sues
multiple defendants and sets forth multiple causes of action, he "must allege the
basis of his claim against each defendant to satisff Federal Rule of Civil Procedure
8(a)(2), which requires a short and plain statement of the claim to put defendants on
sufficient notice of the allegations against them." Gauvìn v. Trombatore,682F.
Supp. 1067,1071 G\f.D. Cal. 1988). Even absent otherpleading deficiencies, such
"confusion of which claims apply to which defendants would require that the
complaint be dismissed with leave to file an amended complaint." Gen-Probe, Inc.
v. Amoco Corp.,926 F. Supp.948,961 (S.D. Cal. 1996)(citingGauvin,682F.
Supp. at I07l). "Specific identification of the parties to the activities alleged is
required . . . to enable the defendantfs] to plead intelligently." Van þke Ford, Inc.
v. Ford Motor Co. , 399 F. Supp. 277 , 284 (E.D. Wis. I 97 Ð.3
' Similar to Rule 8, Fed. R. Civ. P. (9Xb) also prohibits a plaintiff from lumpingtogether multiple defendants under a collective fraud theory, and therebysidestepping particularized claims against individual defendants. Rule 9(b)"requires that aplaintiff plead with sufficient particularity attribution of the allegedmisrepresentations or omissions to each defendant." See Sunnyside Dev. Co., LLC,v. Cambrídge Display Tech. Ltd.,2008IJ.S. Dist. LEXIS 74850 G\f.D. Cal. 2008);see also Odyssey Re (London) Ltd. v. Stirling Cooke Brown Holdings Ltd.,85 F.Supp. 2d282,294 (S.D.N.Y. 2000), a.ff'd,242F.3d366 (2d Cir.2001) ("fw]henfraud is alleged against multiple defendants, a plaintiff must plead with particularityby setting forth separately the acts or omissions complained of by each defendant.")Put simply, "Rule 9(b) is not satisfied by a complaint in which defendants are
DEFENDANTS' MOTION TO DISMISSCase No. SACV08-00668 JVS (MLGx) - ) -
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While Plaintiff relies heavily on its alter ego theory apparently to side step
Rule 8, there is no alter ego exception to the Rule's requirement of individualized
allegations In Gen-Probe, Inc., the court required a plaintiff alleging multiple
defendants were alter egos of one another to plead individual allegations regarding
patent infringement as to each of the alleged alter ego defendants. Id. at951,960-
62. See also Arikat v. JP Morgan Chase & Co.,430 F. Supp. 2d l0l3,I02I-22
(N.D. CaL.2006) (alter ego accusations not withstanding "allegations fwere]
insufficient in that they [were] ascribed to defendants collectively rather than to
individual defendants.")
IV. ARGUMENT
A. Plaintiffls Complaint Fails Rule 9 And Rule 8 Bv LumpingDefenda4ts,_AniI Omitting Individualized Allegãtions ÄgaìnstEach Defendant.
DEFENDANTS' MOTION TO DISMISSCase No. SACV08-00668 JVS (MLGx) - o -
In addition to Rule 8, Plaintiff s fraudulent conveyance claim against the
"New Monex Entities" must adhere to the heightened pleading standard of Rule 9,
because the claim alleges actual fraudulent intent. Compl. 1179. Rule 9(b) is
directly applicable to actual fraudulent conveyance claims. See, e.g., Sunnyside
Dev. Co., LLC, v. Cqmbridge Display Tech. Ltd.,2008 U.S. Dist. LEXIS 74850,
*23 (N.D. Cal. 2008).4 "fD]efendants accused of defrauding the federal government
have the same protections as defendants sued for fraud in other contexts." Bly-
Magee v. Caliþrnia,236 F.3d 1014 (9th Cir. 2001) (and applying Rule 9(b) in
False Claims Act case). The IRS failed to make individualized allegations against
lumped together in vague allegations." Ellisonv. Amerícan Image Motor Co.,36F. Supp. 2d 628,640 (S.D.N.Y. 1999) (citation and quotation marks omitted.)o Und"t Rule 9(b), claims of actual intent to fraudulently transfer "must specifusuch facts as the times, dates, places, benef,rts received, and other details of thealleged fraudulent activity"). See also, Grewal v. Choudhury,2007 U.S. Dist.LEXIS 8 1 856 (N.D. Cal. 2007) (citing Neubronner v. Milken, 6 F .3d 666, 67 I-72(eth Cir. 1ee3)).
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each defendant regarding the alleged actual fraudulent transfers, which fails the
Rule 8 requirement as well as the Rule 9(b) "who, what, when, where, and how"
requirement. See Vess v. Cíba-Geíg Corp. USA,317 F.3d 1097,1103-04, 1 106
(9th Cir. 2003) (Rule 9(b) requires that "the circumstances constituting fraud or
mistake shall be stated with particularity," and the allegations "must be
accompanied by 'the who, what, when, where, and how' of the misconduct
charged.").5
Count IV of the complaint alleges only that assets were transferred generally
to the "New Monex Entities." See ll78 ("New Monex Entities are fraudulent
conveyances of the Monex Enterprise..."); fl 81 ("New Monex Entities assumed the
Monex Enterprise..."). Such generalized allegations fundamentally violate the
requirement under Rule 8 and the similar requirement under Rule 9(b) that
averments-particularly those of fraud-be individu alized against all defendants.6
This is particularly true of fraudulent transfer claims where a transferee is generally
only liable for the value of the property transferred to it, measured at the time of the
transfer. Cal. Civ. Code $ 3a39.07(c).
The remainder of the Complaint similarly lacks the required individualized
allegations. While the alter ego count claims allegations of supposed asset
s To the extent Plaintiff may have pled constructive fraud in the alternative, thatdoes not eliminate the need for it to plead actual fraud with particularity. Vess,3l7F.3d. at 1103-04 (plaintiff choosing to allege actual fraud even where not a"necessary element" must "satisff the particularity requirement" for "claim as awhole" or at least to averments of fraud); Sunnyside, 2008 U.S. Dist. LEXIS 74850,at*23-24,28.u Su", e.g., Van 4k" Ford, Inc. v. Ford Motor Co., 399 F. Supp. 277 ,284 (E.D.Wis. 1975) (holding under Rule 8, "Specific identification of the parties to theactivities alleged is required . . . to enable the defendant[s] to plead intelligently.");Sunnyside Dev. Co., LLC, v. Cambridge Dßplay Tech. Ltd.,2008 U.S. Dist. LEXIS74850 (N.D. Cal. 2008) (under Rule 9(b) requiring particular pleading to individualdefendants of actual fraudulent transfer claims; "plaintiff s failure to differentiatebetween the various CDT entities (when it has so punctiliously done so in otherpleadings) means that plaintiff 'has failed to plead with suffrcient particularityattribution of the alleged misrepresentations or omissions to each defendant'.")
DEFENDANTS' MOTION TO DISMISSCase No. SACV08-00668 JVS (MLGx) - t -
23432U026643.2
Case 8:08-cv-00668-JVS-RNB Document 15 Filed 08/24/09 Page 12 of 39 Page ID #:88
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transfers, those transfers of telephone numbers and office space are also general to
the "New Monex Entities." This lumping still fails to notiff the individual
defendants of their involvement, making it impossible for them to respond
meaningfully. See ]ltl60, 6l and 63.7
As Plaintiff has not seriously alleged cognizable transfers to defendants
individually, defendants are not on reasonable notice of the fraudulent transfer
claims against them and are in no position to answer the Complaint's averments.
This form of pleading fails "to give defendants notice of the particular misconduct
which is alleged to constitute the fraud charged so that they can defend against the
charge and not just deny that they have done anything wrong." Bly-Magee,236
F.3d at 1019.
Individualized pleading under Rule 9(b) is of particular importance "to deter
the filing of complaints as a pretext for the discovery of unknown wrongs, to
protect fdefendants] from the harm that comes from being subject to fraud charges,
and to prohibit plaintiffs from unilaterally imposing upon the court, the parties and
' There is a specific allegation of "employee" transfers to Newport ServiceCorporation and a subsequent transfer to Monex Deposit Company, but employeesare not property, and their transfers are therefore not cognizable under CUFTA,which only permits recovery for transfers of "assets" which are defined as interestsin "property," which is in tum def,rned as things capable of ownership. ,See Cal.Civ. Code $$ 3439.01(e) and (h). Employees cannot be owned. U.S. Const.Amendment XIII and XV. Further, even if "employee" transfers to two of the"New Monex Entities" could support a claim under CUFTA (they cannot) there arenevertheless no individualized allegations of asset transfers to the other "NewMonex Entities" - Comco Management Co., Concord Funding Co., MetcoManagement Corp. or Monex Credit Corp.- in the Complaint. See l]'{l|48-55(alleging no specif,rc transfers to these entities.) As a matter of public record, forexample, Concord Funding Co. LLC was not even formed until 1995, long aftermost of the complained of alleged conduct occurred and the only allegation tying itto any transfer is that it is owned by two of the other entities and is somehow"integrally tied" to the "Monex Enterprise" because it entered into contractualagreements of some kind "in 1995 and 2002." In 52,53.
DEFENDANTS'MOTION TO DISMISS O
Case No. SACV08-00668 JVS (MLGx) - o -23432U026643.2
Case 8:08-cv-00668-JVS-RNB Document 15 Filed 08/24/09 Page 13 of 39 Page ID #:89
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society enoÍnous social and economic costs absent some factual basis." In re Stac
Elec. sec. Litig., 89 F.3d 1399,1405 (9th Cir. 1996).8
The IRS' lumped pleading also runs afoul of fraudulent transfer pleading
requirements. Any relief may be had only against the specific transferee of the
particular asset transferred. Forum Ins. Co. v. Devere Ltd.,15l F. Supp. 2d II45(C.D. CaL200l), off'd.62Fed. App*. 151 (9th Cir.2003) (relief against alleged co-
conspirator limited solely to any specific assets transferred). In Forum Insurance
the Central District of Califomia expressly rejected a request to hold liable an
accountant for allegedly "conspiring" in an alleged fraud under CUFTA. Any
recourse against the accountant was limited to a transferred asset. Thus, holding the
IRS to the "no lumping" standard is not only required by the Federal Rules, but
CUFTA as well.e
B. The Fraudulent Transfer Claim Fails to Plead'6What," "When"And'oHow" With Particularitv.
Even apart from lumping defendants, which fails the "who" criterion of
pleading with particularity, Plaintiff also failed to satisff the "what", "when" and
"how" prongs of Rule 9(b) . See Vess,317 F.3d at 1106; Bly-Magee v. Califurnia,
236 F .3d af 1014 ("defendants accused of defrauding the federal government have
t S"u also Rolo v. Cíty Investing Co. Liquidating Trust,l55 F.3d 644, 658 (3d Cir.1998) ("The purpose of Rule 9(b) is to provide notice of the 'precise misconduct'with which defendants are charged and to prevent false or unsubstantiatedcharges."); IUE AFL-UO Pension Fund v. Herrmann,9 F.3d 1049, 1057 (2d Cir.1993) (Rule 9(b)'s heightened pleading requirement alerts defendants to specificfacts upon which a fraud claim is based and safeguards a "defendant's reputationand goodwill from improvident charges of wrongdoing").n Sæ also Super Vision Int'1, Inc. v. Megø Int'l Comm. Bank Co.,534 F. Supp. 2d1326 (S.D. Fla. 2008) (under the similar UFTA in Florida, there is no cause ofaction against aparty who assists or aids or abets a fraudulent transfer where theparty does not come into possession of the property transferred); Mann v. GTCRGolder Rauner, LLC,483 F. Supp. 2d884 (D. Ariz. 2007) (there is no independentcause of action for aiding and abetting a fraudulent transfer under the similarArizona UFTA.)
DEFENDANTS' MOTION TO DISMISSCase No. SACV08-00668 JVS (MLGx) - 9 -
23432U026643.2
Case 8:08-cv-00668-JVS-RNB Document 15 Filed 08/24/09 Page 14 of 39 Page ID #:90
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the same protections as defendants sued for fraud in other contexts," and applying
Rule 9(b) in False Claims Act case). Plaintiff devotes little attention to the
particulars of the alleged fraud beyond conclusory statements that a fraudulent
transfer occurred.
1. The Few Assets Noted Do Not Identifv With SufficientParticularity "What" Was Alleeedly lransferred.
Regarding what was transferred, the IRS has failed to identiff with
particularity any assets that Monex International transferred to any specific alleged
transferee. The complaint alleges: "The New Monex Entities are liable to the
United States for the assets received from Monex International and their proceeds
because the New Monex Entities are the fraudulent conveyees of the Monex
Enterprise, and its employees, location, phone numbers, and goodwill from Monex
International, Ltd." f 78.
a' 5,Ï¡oi#;l;;*iffiçli'ä's,ll-gi,Ìnä'}öf0$11",,"".
The IRS alleges that the "Monex Enterprise" was an asset transferred to the
"New Monex Entities" within its claim for fraudulent conveyance liability. tT78.
The amorphous concept of the "Monex Enterprise" fails to comply with the
requirement under Rule 9(b) that the "what" of a fraudulent transfer be identified
with particularity.
The complaint defines the Monex Enterprise to include the "collective
activity" of the "New Monex Entities" and PCCE "in the leveraged sale of precious
metals to the public." tTT 13, 14. There is no indication as to what "collective
activity" means, and why this unspecified "activity" is the "property" of Monex
International as the CI-IFTA defines property. See Civil Code $ 3439.01(i),
$ 3439.01(a), $ 3439.01(h) (CUFTA provides that only transfers of "assets", which
are in tum defined as "property" are subject to avoidance, and property is that
which is "subject to ownership").
DEFENDANTS' MOTION TO DISMISSCase No. SACV08-00668 JVS (MLGx) - ru -
23432U026643.2
Case 8:08-cv-00668-JVS-RNB Document 15 Filed 08/24/09 Page 15 of 39 Page ID #:91
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The Complaint's allegations about the undifferentiated "Monex Enterprise"
raise serious doubts as to whether fraudulent conveyance law is even applicable.
For example, in relation to defendant Concord Funding, the IRS alleges that it had
"agreements" with some of the other entities and is therefore "integrally tied" to the
other entities. 1l1l 52-53. Regardless of whether such an allegation could support
liability under an alter ego theory, a mere "agreement" does not support a claim
under fraudulent transfer law. Fraudulent conveyance relief is limited to assets
transferred. Cf. Forum Ins. Co., 151 F. Supp. 2d ll45 (relief against alleged co-
conspirator limited to specific assets transferred.)
The "Monex Enterprise" transfer narrative is also irreparably circular. The
"Monex Enterprise" is defined to include the "New Monex Entities" themselves.
Compare tTlT 13 and 14 (Monex Enterprise def,ined to include each of the "New
Monex Entities"). Apparently, the IRS is alleging a transfer of collective activity in
whole or in part, from the New Monex Entities to themselves. Such an internal
self-transfer is by definition not a transfer at all. This circularity is grounds for
requiring a more definite statement under Rule lz(e) or dismissal under Rule 9(b).
Cf, Sunnyside at*23-24 (contradictory averment as to whether lawsuit filed before
or after transfer agreement reached fails 9(b) scrutiny).
The IRS' vague description of a transfer of the "Monex Enterprise" is similar
to the plaintiff s insuffrcient fraud allegation in Sunnysíde That "all or almost all" of
a company's assets were transferred for little or no consideration. Sunnyside held
that this allegation standing alone did not pass muster under Rule 9(b). Sunnyside
at *24.10
l0 Plaintiff s allegation of an enterprise transfer appears to be a restatement of itsalter ego claim for liability. Plaintiff should be required to distinguish these legaltheories.
DEFENDANTS' MOTION TO DISMISSCase No. SACV08-00668 JVS (MLGx) - I I -
23432U026643.2
Case 8:08-cv-00668-JVS-RNB Document 15 Filed 08/24/09 Page 16 of 39 Page ID #:92
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'lEmployees" Are Not Properfy For Purposes OfCUF'TA:
The IRS improperly alleges that the transfer of employees to the "New
Monex Entities" was a fraudulent transfer. But employees do not constitute assets
the transfer of whom can be a cognizable basis for relief under the CUFTA.
CUFTA defines assets as "property" ($ 3439.01(a)) that can be owned
($ 3439.01(h)). Employees are not properry assets that can be owned . See footnote
7 above. Accordingly, the employee transfer portion of Plaintiff s complaint is
immaterial and impertinent and should be stricken.
To the extent plaintiff wishes to argue that the transfer of employees is
indicative of a goodwill transfer, the allegation should be clarified under Rule
12(e). Notably, Plaintiffls threadbare allegations that "employees" and "many
employees" were shifted do not even begin to present with particularity the indicia
required for such an argument under Rule 9(b). See, e.g., Atchison v. Brown &
Bryant,l59 F.3d 358,361,365 (9th Cir. 1997) (rejecting argumentthat fraudulent
transaction exception to rule against successor liability should apply due to
employee migration, where acquiror "hired all" Pest Control Advisors, but acquiror
"merely offered employment", and there was "no agreement" requiring
employment).rr
c. Though The IRS Alleges A "Location" Was
l;äiÞfJ{;lrtl,illtil'"TlïP.l't.*"'o"-*"tn"'o"tTheIRSaVerS't'.,ffiaudulenttransferofa..location.,,1T78.Upon
closer scrutiny of the complaint, however, what is conspicuously absent is any
claim that there was a transfer of real property. In actuality, the IRS is alleging that
It Plaintiff s allegation that employees were fraudulently transferred furtherevidences the government's mixing and matching of fraudulent transfer and alterego concepts. Regardless of whether such employee "transfers" might be evidenceof interconnectedness for the IRS' alter ego theory, the employees are simply not"property" for purposes of fraudulent transfer law.
DEFENDANTS' MOTION TO DISMISS ,1Case No. SACV08-00668 JVS (MLGx) - 'L'
23432U026643.2
Case 8:08-cv-00668-JVS-RNB Document 15 Filed 08/24/09 Page 17 of 39 Page ID #:93
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the New Monex Entities use the same office space as Monex International. fl$ 60-
61 (alleging use of same office space). Regardless of whether an allegation of
continuity of worþlace may support a claim of alter ego/single enterprise liability,
it does not support a claim for fraudulent transfer. Use of the office space does not
mean any ownership interest in that property was transferred-e.9., âs when an
office space is being rented.
2. The IRS Has Failed To ldentifv With Particularity "When"The Allesed Fraudulent TransTers Took Place.
The IRS must state with particularity the "times, [and] dates" when the
allegedly fraudulent transfer occurred. See e.g. Grewal, 2007 Ll.S. Dist. LEXIS
81856 at 5; Vess, 3I7 F.3d at 1 106 ("when" required). This is necessary under
CUFTA because (1) it is essential to prove a knowingacÍ" designed to prevent
access to the assets at issue, and (2) because the value of any asset transferred is
measured as of the time of transfer. See, e.g.,CaI. Civ. Code $ 3439.04(b)(a) and
(10) (timing of transfer probative of intent); In re Brun,360 B.R. 669,672 (Bankr.
C.D. Cal. 2007) ("moving creditor may recover a judgment for the value of the
'asset' transferred at the time of the transfer, or the amount necessary to satisfo the
creditor's claim, whichever is less."); $ 3439.08(c) (judgment for "value at the time
of transfer" subject to adjustment for equity).
Here, the IRS selected a vague time period spanning what approaches a
decade as the "when" of its alleged fraudulent transfer. Seel79 ("Iate 1980s and
early 1990s..."). This time period is too coarse to pass muster under Rule 9(b).'t
3. Plaintiff Has Failed To Provide The "How" Of The AllegedFraudulent Transfers.
Plaintiff s nebulous allegation that some set of assets was transferred to the
"New Monex Entities" generally, fails to satisff the "how" requirement under Rule
12 At least one of the "New Monex Entities" was not even in existence in the "early1990s." Concord Funding was not formed until 1995 . See also, $ 53 (allegingagreements with ConcorõFunding starting in 1995).
DEFENDANTS' MOTION TO DISMISSCase No. SACV08-00668 JVS (MLGx) -13-
23432U026643.2
Case 8:08-cv-00668-JVS-RNB Document 15 Filed 08/24/09 Page 18 of 39 Page ID #:94
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9(b). The allegation fails to inform defendants of whether the IRS is alleging some
New Monex Entities are f,rrst transferees and others are subsequent transferees.
This is necessary because the law treats transferees and subsequent transferees
differently. Compare, e.9., ç 3439.08(b)(1) and (2).
C. Plaintiffls Demand For Judgment Against Each Of "The NewMonex Entities" Fails Becaùse SuchRelief Is Not Available UnderFraudulent ConveYance Law.
An overarching problem with Count IV is that the IRS seeks judgment
against all of the "New Monex Entities," when in fact remedies under fraudulent
transfer theories of liability are limited to equitable relief against the specífic
transferee of the specific asset at issue. See ll82 (asking for the sweeping remedy
of a judgment against all of the New Monex Entities for fraudulent conveyance).
Remedies under fraudulent transfer law do not extend to all entities who may have
participated or profited as a result of a transfer. Cf, Elliott v. Glushon,390 F . 2d
514 (9th Cir. 1967) (nojoint and several liability for all those allegedly involved in
asset dissipation; legislative theory is one of "cancellation" of the transfer at issue);
Forum Ins. Co. v. Devere Ltd., 15l F. Srpp. 2d ll45 (C.D. Cal.200I), aff'd 62
Fed. Appx. 15 1 (9th Cir. 2003). Just as in Forum Insurance there was no remedy
against an alleged co-conspirator (regardless of whether they were operating within
the same enterprise as a transferee), here too any remedy will be limited to
equitable relief of the return of the specific asset received by the specific transferee,
or its value at the time of the transfer. A sweeping request for judgment against all
the "New Monex Entities" beyond the specific asset transfers at issue is accordingly
unavailable as a matter of law.
Furthermore, Plaintiff seeks recovery not just of the asset at issue but also all
"proceeds" from the asset. Such proceeds are unavailable in a fraudulent transfer
case. The value recoverable is the value of the asset at the time of the alleged
fraudulent transfer. In re Brun,360 B.R. at 672 ("To the extent a transfer is
voidable, the moving creditor may recover a judgment for the value of the 'asset'
DEFENDANTS' MOTION TO DISMISS 1À
Case No. SACV08-00668 JVS (MLGx) - r1'23432U026643.2
Case 8:08-cv-00668-JVS-RNB Document 15 Filed 08/24/09 Page 19 of 39 Page ID #:95
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transferred at the time of the transfer, or the amount necessary to satisff the
creditor's claim, whichever is less."); Cal. Civ. Code $ 3439.08(c) fiudgment
limited to "value at the time of the transfer" subject to equity). Accordingly the
IRS may not seek the value of anything obtained by any defendant in a business
using one of the assets.
V. CONCLUSTON
For the reasons stated above, Defendants respectfully request that the Court
dismiss the IRS' Count IV for fraudulent conveyance. In the alternative
Defendant requests a more definite statement of this Count, or that the Court strike
those portions of the claim that fails to support a claim for relief.
Dated: August 24,2009 FARELLA BRALiN & MARTEL LLP
By: /s/ Neil GoteinerNeil Goteiner
Attorneys for DefendantsCOMCO MANAGEMENTCORPORATION: CONCORD FUNDINGCO., LLC; METCO MANAGEMENTCORPORATION: MONEX CREDIT CO.;MONEX DEPOSIT CO.: NEWPORTSERVICE CORP.
Respectfully submitted,
Bv: /s/ Rufus T. Rhoades"
Attornev for Defendant PCCE. Inc.
Dated: August 24,2009
DEFENDANTS' MOTION TO DISMISSCase No. SACVO8-00668 JVS (MLGx) - 15 -
23432U026643.2
I
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Case 8:08-cv-00668-JVS-RNB Document 15 Filed 08/24/09 Page 20 of 39 Page ID #:96
EXHIBIT A
EXHIBIT A
Case 8:08-cv-00668-JVS-RNB Document 15 Filed 08/24/09 Page 21 of 39 Page ID #:97
Case B:08-cv-00668-JVS-MLG Document 1 Filed 06i1 3t2o,o8 t"fftfry PY\, \l
UNITED srArEs DIsrRIcr coullð9msr" DlsrRlcr oF cALfFoRNIA
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422 Appal2S158
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¿41 Voling442 Employrl|ent443 Houslny'Acco.
mmoda¡ions{44
.Wclfare
445 Amcricôn'¡¡¡úDlsEblllt¡es 'Employarnt
446 Arnã¡csn wírh.D¡ssbílili€s.Othcr
440 O¡herClvilRígïti
610 Agriculturo620 O¡hc¡Food &
Drug6Zi Drug Rclatcd' Scl¿uic ol"
Prop€rty2l USC88t.
630 Liguor laws640 RR. & Truck650 Air¡inc Rcgs
6ó0 OccupationalSafcty /Hca¡tb
690 Oth€r
vf l. NATURE OF SUIT (Ptace sn X ln one box orly.)
400
B 480tr 490D 8loD 8s0
û t75 Customc¡ ChalloSs t2usc 3410
O 890 Other Stsfutory Actfons
E 891 Agriculturat ActEl 89? EeonomÌc St¿bilizalíon
AcfE 893 EnvironrncnlEl Msl(ers! E94 EnergyÂllocât¡on AclO 895 Frædomoflnfo. ActD 900 Appøl of Fec Dctenni'
nalion Under EqualÀccess ¡o.Juslice
Û 950 Constitutionality ofStatc Stalulcs
StBte REapponiönnenlAntitn¡stBanks and BankingCommacdfCCRatcs/elc.DeponEtionREckct€cr lnßocnccdand ConuptOrgmìzationsConsumcr CrcditCsbldSaiTVSolæ¡lve SeniceSecuri¡iclCommoditiæÆxchange
710 Fs¡tláborStsndúd¡Act
720 t¡Þor/Ìvlgml.Rchdons
730 tåbor/Mgmt.Reponing &Disc¡osuro,lct
7{0 ReílwayteborAct790 Othø t¡bor
U¡lg8l¡otr791 Ëmpl. Rel. lnc'
AçI
CoP),rlghtr830 P¡tcnl
Trademsrk
Hr.A (t 395fÐBl¡ck Lu¡g (923)
DI\VC/D¡WW(40s(s))SSID Tillc XVI
Taxe,t {US' Plsior Dcfcod¡nt)
t7t IRS:ThirdPåtyzúusc 7ó09
tr 410tr 430tr 450
Ê 460tr 470
I
8619Áa
eÁì
864
Ul¡tul, ¡OÈñilCÁt CASES: Hås rhis Ectîon bccn pr¿v¡oûtly fllcd urd dísmis:ed ¡crnanded ot closcd?
tfyes,¡istcÊscnumbc{(s): ¡ ,- . * \ ! |
C.v'71 (07,05)
Exhibit A
tr Yes
Case 8:08-cv-00668-JVS-RNB Document 15 Filed 08/24/09 Page 22 of 39 Page ID #:98
Case 8:08-cv-00668-JVS-MLG Document 1 Filed 06/13/2008 Page 2 of 18
UNITED STATES DISTRICT COURT, CENTRÁL DISTRI& OF CÀL¡FORNIACIVILCOVERSHEET
Vlll(b). RELATED CASES: Have any casæ becr prwiously fild thot arc rcfatcd to ihc præcnt c¿se? dNo O Ycs
lfycs, list case number(s):
Clyll cáset i re deemed rel¡ßd If ¡ Prevlous¡y fl¡ed s¡sc anü the Prcse|}t c¡te:(Check all boxcs thir apply) tr d Arisc from-tbi same ôr closcly relatcd transactions, hBpp€nints, or evsflt$ or
EB. CEII fordetfiñinsdonoftlrcs6rÍeorsubstentiallyrclttedorsÌrnilarqucslionsoflawandfact;or
, . E C. For orhgr æ¡sons \ì.ould enlail substgr¡tial dupliqation of hbor Íf hcard þ different judgcs; or
B.D. lnvolvé the same pateat, tndcma* or cop¡íght, g¡flono of tho lactors idcnlif¡cd abovc ín a, b or c ds is præenl.
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ix, venue l I-isr ih" culiloriu coñflor s-rur. if orhrr rhan CaltfomiE, in which EÄCH named plaintiflrcsídes (usc an additional s]Ët if óecçssary)
úCheck h6c if lhc U.S. govcm¡nent, its ogørcis or emplo¡tcs is a namod ploinliff.
Los Angeles County
Llsr rhe Cslifomia Coun{y, or Slale iforhø than C¡lifomia, in which EACH n¡mcd dcfend¡nt resides' (Use an a¿ditional shoct if nccssary).
ú Check he¡e if the U.S. govemmcnl, fts agcrcies or cmplo¡rcs is a namcd dcfcndant'
Orange County
LljtthcC¡[fornl¡Coünty,ór SratcifofhertbanCalifomia,inwhiçhÊACHclaimarosc, (Useanadditlorialstrcelifnccessary)
Nolc¡ In land condemna(ion cases, use lhe lot¡lion of thq ¡r8ct of ¡ond involvcd'
Orange County
X. SIGNÀTURE OF ATTORNEY (OR PRO PER):prr- {,y<.13Øo-Ê
Notlce to Coun¡eVParllesl TheCV-?l (JS44)
or olher papc¡s ûs rcquircd by las. Thìs form, approvcd
lrlcd but is uscd by theCletk ofahecourt forthoshcs.)
Kcy to Statistical codes reloting lò SocíofSæerity cascs:
N¡tur€ ofSult Code Àbbrcvltt¡on
86t HlÀ
862
DTWC
DIWW
SSID
msrion contshêd hsrcln ncithcr replace nof supplcrisrt thc flliog and scrviceofpleadlngs
lce ofths Un¡tod slales tn Scptc;k l9?4, is toquircd pursuanl to locål Rule ]J ls nol
initlating thc civildocket shect. (FormorcdÊlailed inslfùct¡oDq scascpa¡alc lnslfuct¡ons
BL
ofC¡u¡s of^ctlon
All claims forhcalrh lnsurancc brÍcfits (Mcdic6rc) und(f Title | 8, Part À ofthc Social Sccuríty Act' as amcndcd.
Àfo, lnct¡dc ch¡ms by hsspìtats. skillcá nursing iacilities, etc., fot ccl¡ficatlon as proví&re ofscwíccs und€r thc
program. (42 U.S.C. l935FF(bD
All claims for.'Blcck L¡ng" bcncfìrs undcr Tillc 4, Part B, ofthe Fcdenl Coal MinÈ Hcalth and Safcly Act of l9ó9'
(30 u.s.c. 923)
All ilaíms filed by insured r+,o¡kers for dßability insuroncc be¡efits unde¡ Ti!le 2 ofthc Social Søuri¡y Act, as
ar¡rcnded;plusaliclafrnsfilcdforchild'sinsu¡anccb¿ncI¡tsbascdondisrbllity. (42U.S.C''105(e))
All claims l¡ted for widorys orwldowcn insu¡anccbcnefits ùEs€d on disabit¡ty undcr Titlc2 ofùc Soclat ScÉurtty
Act, as amcridcd. (42 U.S.C.405G))
Àli clairns for supplçmcnr¡l s€Éurity incomc paymf,ts bassd upo¡ dlsabiliry frlcd r¡ndc¡ Titls | 6 ofthc Soci¡l
Sæurity Act. ¿¡ amc¡rdod,
Allcfairnsfor¡ctirs¡cnt(oldagc)rndsu¡vivorÉcncfitsunderT|tlc2oÍthcSocial SÉcurityful,astmc¡dd. (42
u.s.c (Ð)
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Case 8:08-cv-00668-JVS-RNB Document 15 Filed 08/24/09 Page 23 of 39 Page ID #:99
Case 8:08-cv-00668-JÊrtr" Document 1 Filed OEtGt2OOe Page 3 of 18t¡.
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Ãiiiöfr,Ërfri:þïBþ (cA sBñ 2s4eo4)Assistant United States Attqrney
300 N. Los Angeles StreetFederal Buildiñe' Room 72\l-Lói Anselés. Cãfifornia 90012Teleohone: (213\' 89 4 - 65 5 tFacsimile: Ql3)'894-01_15 . .
B-mailï ândrewít.príb e@u s d oj . go-v
OMAS P. O'BRTENnited States AttorneyANDRA R. BRO'W}I
Assistant United States AttorneYChief. Tax Division
UNITED STATES OF AMERICA
Attorneys for the United States of America
LNITED STA]ES DISTRICT -C-QIBIcÉÑrR q.L DtStnict OLç4L^-FORNIA_SOÜTTIERN
DIVISION
Plaintiff,vs.
COMCO MANAGEÀ4EI'-IT- -Fffifi+êäb'5f85ffT8ñI-ÁÑAGENTENTCORPO-BÂTI9N;
#É:JåET,t,ÆPlËç'?bwy_.SBnWcn ÕoRP.; and PCCE, Inc.,
Case No.:
Complaint to Reduce- Federal IncomeTax Assessments to Judgment ang ro
mf ;.t#nlP"qgråf gIt'#åir¡¿;:aLiability.
Defendants.
The United States of America, Plaintiff, for its complaint against Comco
Management Corporation; Conoord Funding Co., LLC; Metco Managempnt
Corporation; Monex Credit Co.; Monex Deposit Co.; Newport Service Corp'; and
PCCE, Inc., Defendants, states:
Jurìsdìction & Venue
1. This is a civil action to reduce federal tax assessments to judgment
and to recover from entities liable for these unpaíd federal tax liabilities. This
court has jurisdiction under 26 u.s.c. Ë 7402 and 28 U'S.C, $$ 1331' 1340, and
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Case 8:08-cv-00668-JVS-RNB Document 15 Filed 08/24/09 Page 24 of 39 Page ID #:100
Case 8:08-cv-00668-JVS-MLG Document 1 Filed 06/13/2008 Page 4 of 18
UNITED STATES DISTRTCT COURTCENTRAL DISTRTCT OX' CALIFORNIA
NOTICE OF ASSIGNMENT TO I]NITED STÀTES MÀGISTRATE JTIDGE F'OR DISCOIIERY
Thjs case has been assigned to Dishiot Judge James V. Selna and the æsigned
discoveryMagisuate Judge is Marc Goldman,
The case number on all documents filed with the Court should read as follows:
SACVO8 - 668 ,fVS (Mi,Gx)
pursuant to General Order 05-07 of the United States Districi Coutt fol the Central
District of California, the Magistrate Judge has been designated to hear discovery related
motions,
Atl discovery related motions should be noticed on the calendar of tlre Magistrate Judge
:::::::::::::::^--^-*::::::----:::-:-::=::::::NOTICE TO COUNSEL
A copy of thts nolice must be seryed wlth the summons and complalnt on alt dafendants (lf a removal action is
liled, a copy of thls nÒtice musl be seved on all plalntlffs).
Subsequent documents must bs flled at the followlng location:
f I Wostorn Dlvlslon tXl Southern Dlvlsfon [l East€m Dlvlslon
" ãf z H. Sprlng St,, Rm. G:B '- ''
411West Fourth St., Rm. 1.053 - 3470 Twetfth St., Rm. 134
Los Angetes, CA S0012 santa Ana, cA 927014516 Rlverslde, cA 02501
. Fâ¡lure to fìle at the prcper focation wlll result in your documents being returned lo you.
cv-ls (03/06) NO'flCE OF ASSTGNMENT rO UNITEO STATES MAGISTRATE JUDGE FOR DTSCOVERY
i1Ii!!. :
lllr'illlI'!
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Case 8:08-cv-00668-JVS-RNB Document 15 Filed 08/24/09 Page 25 of 39 Page ID #:101
lii.lt,l1ì:lr:Case 8:08-cv-00668-JVS-MLG
United States Attorneyrs Omce
SANDRA BROWN, Chiel Tax Division
ANDREV/T. PRIBE, AUSA300 N. Los Angeles Street, Room 721I
Los Angeles, CA 90012
Document 1 Fited 06/13/2008 Page 5 of 18
JæcI)æO
UNITED STATES DISTRTCT COIJRTCDNTRAL DISTRICT OF CALIFORNIA
TINITED STATES OF AMERICA
I.AINTIFF(S)
Comco Managcment Corporation; Conco¡'d Funding
Co., LLC; Metco Management Corporation; Monex
Credit Co,; Monex Deposir Co.; Nervport Service
Corp.; and PCCE, Inc., DËFEND^Nr(s),
CASE NI,IMBER
SACY08-00668 JVS (MLGx)
SUMMONS
TO: THE ABOVE-NAMED DEFENDANT(S):
you ARE HEREBY SUMMONED and required to file rvith this court and serve upon plaintiffs attorney
ANDREWT. PRIBE rvhose address is:
United States Attorney's Office
300 North Los Angeles Stteet,
Room 721 I Tax Division
Los Angeles, CA 90012
Tel: (2 I 3) 894-655 I Fax: (2 I 3) 894-0 I I 5
an answef to the E complaint. I amended complaint E countetclaim fl cross-claim
rvhich is herelith ,.ru.d upon you tu¡ttlinj?q- days aftel service of this Summons upon you, exclusive
of the day of service. lf you faiíto do so, judgement by default rvill be taken against you for the relief
demanded in the complaint.
Clerk, U.S. District.Côult
JUN I 3 2.008Dated:
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Case 8:08-cv-00668-JVS-RNB Document 15 Filed 08/24/09 Page 26 of 39 Page ID #:102
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Case I :08-cv-00668-JVS*MLGI
Filed 06113/2008 Page 6 of 18t
Document 1
Ãñöfr,Ewi:Þ-RI-BE (cA sBN: 2s4eo4)Assistant United States,AttqrneY
300 N, Los Angelqs Strce,t^ - -pe¿erãt Buildiri'e, Roo¡n 1?l ] -Lóã Aneeies, Cã[ifo rni4 PP0I2Tèl-eóhò"ne : (ztt) 89 4' 6ts-rFãôümiie: (2t3)'8e4-0l1s . .
E-mail : andrew. t.pribe(gl'usooJ' gov
OMAS P. O'BRIENnited States AttorneYÁi'rDRÀ R. nnow¡t
ÃJsjstlnt Unlted States AttorneYChief, TaxDivisio-n-
LTNITED STATES OF AMERICA
Plaintifflvs'
coMco MANAGEMENT--
Attorneys for the United States of America
's4'.-#$ffi*#,ffiffi8ffi
F,ffisg$êE8ll,"s5trtr.a -îøÁñÁGÈuENr coRP oBAIi-çiïöi'är.x õnpbtr co. : MoNEXffiffiffitsffitøONBx CREDIT C-Q.IM
Case No.: SACV08-00668 JVS (MLcx)
Complaint to Reduce- Federal IncgmeTax Assessments to- Judgqent ano roImp ose Altpr pgo, Single,+rterplJ9 9LSuCcessor-in-Interest, and I ranslereeLiability.9N;
bBposlr co.;NEwEQBTSñRVfcE ÕoRP.; and PCCSER ÕÕRP.; and PCCE, Inc.,
.- Defendants.
The tlnited States of America, Plaintiff, for its complaint against Comco
Management Corporation; Concord Funding tt ,ltllMetco Management
corporation; Monex credit co.; Monex Deposit co.; Newport service corp'; and
PCCE, Inc., Defendants, states:
Jurisdiction &, Venue
1. This is a civil action to reduce Gderal tax assessments to judgment
and to ïecover from entities liable for these unpaid federal tax liabilities' This
courr has jurisdiction under26 U.S.C . ç7402 and}ïu.s'c. $$ 1331, i340, and
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Case 8:08-cv-00668-JVS-RNB Document 15 Filed 08/24/09 Page 27 of 39 Page ID #:103
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CaseB:08-cv-00668-JVS-MLG Documentl Filed 06113/2008 Page 7 of 1B
1345,
2. This action is brought at the direction of the Attorney General of the
united states and at the request and with thç authortzatíon of the chief counsel of
the Internal Revenue Service, a delegate ofthe Secretary ofthe Treasury, pul'suant
to 26 U.S,C. $$ 7401 and7403.
3. Venue for the action is within the Central District of California under
28 U.S.C. $$ 1391(b) and 1396 because all Defendants reside in this district for
purposes ofvenue.
Defendønts, other relevønt entítíes, frnd terminology'
4. Cornco Management corporation is a california corporation and has
its principal place of business'at 4910 Birch streeL NewportBeach, california'
5. Concord Funding LtC is a California limited liabitity company with
its principal place of business at 4910 Birch Street, Newport Beach, California'
6. Monex credit company is a califomia limited pæ'tnership with its
principal place of business at 4gI0 Birch Street, Newport Beach, Califomia'
7. Monex Deposit company a california limited partnership with its
principal place of busines s at 4910 Birch street, Newport Beach, califomia"
_ 8. Monex International, Ltd,, was a catifornia corporation that merged
into Monex Corporation. Monex corporation changed its name to PCCE' Inc'
Monex International, Ltd., had its principal place of business at49l0 Bilch street'
Newpor'É B each, California'
g, Metco Management corporation is a caiifornia corporation and has
its principal place of business at 49\}Birch street, Newport Beach, california'
10.PCCE,Inc.,(f,ftclaMonexCorporation)istheSuccessorofMonex
International, Ltd., and has its principal place of business at either 4910 Birch
Street, Newport Beach, California, ot2|}2Busi¡ess Center Dtive,# 220L' Irvine'
California,
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Case 8:08-cv-00668-JVS-RNB Document 15 Filed 08/24/09 Page 28 of 39 Page ID #:104
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Case B:08-cv-00668-JVS-MLG Document 1 Filed 06/13/2008
1980 $35¡356587,7t $s,422,t1t'8s 925,934A15'52 $52E53'213'09
1981 $29,S00,45J.33 $o $29,800'455'33 $56'136348',s2
1982 $53,861,309.20 s0 $53'861',309'20 993'822'426'47
1983 $128,499.04 $0 s1l29'449'04 $50'482'49
1984 $24018,0S7'31 $0 $24,018'08?'3¡ $33¿45',880'30
Total outstanding balance (as of June 15' 2008):
-3-
Page I of 18
l l. Newport Service Corporation is a California corporation with its
principal place of business at4g|}Birch street, Newport Beach, califomia.
IZ. The term.,federal tax liabilities" ïefers to the tæc liabilities specified
in Count I and in parqgraph40 of Count IL
13. The term.Monex Enterpríse" refers to the collective activity ofthe
entities specified above in the leveraged sale of precious metals to the public'
14, The term "New Monex Entities" refers to comco Management
Corporation, Concord Funding LLC, Metco Management Corporation, Monex
credit company, Monex Doposit company, and Newport seryice corporation'
15, The term'?r'incipals of the Monex Enterprise" refers to Louis
Carabini and Michael Carabini. Other Prinoipals of the Monex Entèrprise are
beiieved to include Kimbrough Bassett, John Tate; and Gregory'walker'
ctaim ro reduce f.d.,çP#f,å.r**t. ro judgmenr
16'TheUnitedstatesreallegesparagraphltlu.oughl5.
l7 . On June 15, 1998, a delegate of the Secretary of the Treasury timely
mad.e assessments of federal income tax againstMonex International' Ltd'' for the
years 1980, 1981, 1982, 1983, and 7984' The total balance of those assessments'
plus statutory accruals, less credits, is:
Year Total Total 4ssessed Accrued Acorued ToFtAssessmenrs ôiÈat' sãruo.ó- rnreresr $äll*"* 3ilffi.J$:
PeialtY 2oo8)
s0 $83,787'628-91
$940,288.?5 $86,87?,092.60
sljrI,?38.?s 9r49,09sfi4.42
$2,568.50 $181,500.¡3
$1,03r,498.?5 s58,295,466'36
9378,237,L62,42
Case 8:08-cv-00668-JVS-RNB Document 15 Filed 08/24/09 Page 29 of 39 Page ID #:105
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ls.Properandtimelynoticeanddemandforpaymentofthesetax
assessments has been made on Monex International' Ltd'
19. Despite timely notice and demand for payment of these tax
assessments, Monex Intemational Ltd, has not fully paid the assessrnents'
20. Monex Intemational merged into Monex Corporation'
2|.ThroughthemergerofMonexlnternationalintoMonex.Corporation,
Monex corporation assumed the liabilities of Monex International'
22. Monex Corporation changed its named to PCCE' Inc'
23. As successor to Monex International, Ltd., PCCE, Inc., is liable for
the federal tax assessments'
24. The united states is entitled to judgment against PccE' Inc'' in the
amounfof$378,237,L62.42throughJune15,2008,plussubsequentstatutory
accrualsinoludinginterestandpenaltiespluscostsandexp'enses.
COUNT IIclaim to impose ulteùe"gõ isìf,fle-enterprise liability
GeneruI øllegations
25. Tlre United States realleges paragraphs I through 24'
26.TheNewMonexEntitiesareliablefortheunpaidfederaitax
assessments of Monex International, Ltd', because they are the alter egos of and
constitute a single enterprise with Monex Intemational' Ltd'
2T.TheNewMonexEntitiessharecommon.ownershipandinterestwith
MonexlnternationaibecauseLouisCarabiniownedandcorrtrolledMonex
International and owns and controls the New Monex Entities'
2S.RecognitionofthecoqporateseparafenessoftheNewMonexEntities
would be unjust as to tho United States because:
a. Principals of the Monex Enterprise began the New Monex
Entitiesirranattempttoescapeliabilityforthefederaltax
Case 8:08-cv-00668-JVS'MLG Document 1I
Filed 06/13/2008 Page 9 of 18
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CaseS:08-ov-00668-JVS-MLG Document 1 Filed 06/1312008 Page 10 of 1Bf
li abilities of Monex International ;
,
principals of the Monex Enterprise sought to divelt future
revenues of the Monex Enterprise away from Monex
lnternational and into the New Monex Entities in an attempt to
shieldsuchfuturelevenuesoftheMonexEnterprisefrom
exposwe to the federal tax liabilities;
In theil dealings with the general public, Principais of the
Monex Enterprise sought to blend together Monex
International md the New Monex Entities in an effort to
capitalizeon the name, history, and goodwill of Monex
International while using the purported oorporate separatgness
of the entities to shield proceeds from the Monex Enterprlse
û'om exposure to the federaltax liabilities'
Principals of the Monex Enterprise used the resources of
Monex International in furiherance of,the Monex Enterprise
whiledivertingtheproceedsoftheMonexBnterprisetothe
New Monex Entities.
Principals of the Monex Enterprise fragmented the Monex
Bnterprise into interdependent but separate entities in an effort
toshieldtheproceedsoftheMonexEnterprisefromexposure
to the federal tax liabilities'
S r.tpp o r tìn g all eg ati o ns
TheContínuingTaxLiabilítiesofMonexlnternatíonal
29..WhenthePrincipalsoftheMonexEn.terprisetransferredtheMonex
Enterprise from Monex lntetnational to the New Monex Entities' they were awal'e
of significant exposure for federal tax liability of Monex International'
30'FromlgS0tolgss,Monexlnternationalengagedinanabusivetax
b.
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Case 8:08-cv-00668-JVS-RNB Document 15 Filed 08/24/09 Page 31 of 39 Page ID #:107
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Case B:08-cv-00668-JVS-MLG Document'1 Filed 06/13 I2OOB Page 1 1 of 18
shelter by which they reported and paid less tax than was due.
31. In March !982, after an IRS audit, the IRS issued a notice of
proposed defrciency (commonly known as a "30-day letter") to Monex
Intemational for years tgz2thtough L975 for about $5.8 million (not including
interest and penalties).
32. In 1986, the United States Tax Court issued its deciÉion in Glass v'
Commíssioner,87 T.C. 10S7 (T'C' 1986)'
33. In Glass, the Tax court disallowed purporied losses on straddle
transactions on the London Metal Exchange because the transactions were shams
without economic substance.
34. The abusive tax-shelter t[ansactions engaged in by Monex
International in igg0 through 1gg4 were substantially similar to the abusive tax-
shelter ftansactions that were the subject of the Glass case.
35. In January 1988, aftel an IRS audit, the IRS issued a 30-day letter to
Monex International for years 197t6 to 7979 stating the IRs's determination that
Monex International had a federal tax defrciency of about $1'8 mïllion (not
including interest and penalties)'
36. In August. 1988, after an IRS audit, the IRS issued a31'dayietter to
Monex International for years 1980 and 1981 stating the IRS determination that
Monex International had. a federal tax deficiency of about $51'2 million (not
inctuding intet'est and penalties)'
37, In January lggl,the IRS issued a statutory notice of defioiency to
Monex International stating the IRS determination that Monex Internationalhad a
federal tax deficiency of about $6,3 million for the tax years l972thtough1979'
38. In April 1990, Monex International filed suit in the united states Tax
Court regarding the tgT2thlough 1979 deficiencies'
39. This 1990 Tax court suitwas notresolved until March L995'
40. Regarding the 1990 Tax court suit, the Goveil:¡rrent and the MÖnex
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International stþulated to a determination of deficienci.es for the 1974 and 1978
tax yearS. The Tax Court entered judgment pursuant to the stipulation and these
defrciencies were assessed in 1995'
4|, In August Iggz,the IRS issued a statutory notice of deficiency [o
Monex International stating the IRS determination that Monex Internationalhad a
federal tax deficiency of abovtslTl.4miilion (nót including interest and
penalties) for tax years 1980 througþ 1984'
42.InOctober'lggl,Monexlnternationalfiledsuitintheunitedstates
Tax Court regarding the 1980 through 1984 deficiencies'
43. This 1992 Tax court suit was not resolved untit Febl'uary 1998 when
the Govemment and Monexlnternational stipulated to a determination of
deficiencies fol the 1980 tkough 1984 tax years'
44'TheTaxCourtenteredjudgmentinFebruarylggSpursuanttothe
stipulation which resulted in the tax assessments for the 1980 through 1984 yeæs
which are atissue in this case'
45. A suit in the Tax court generally lesüains the IRS frotn assessing the
tax, levying on pl'operty, or filing suit to collect the deficiency'
i!:F;rcit#n;tffi ,#U";níï{if,"rtf í,titlf"fr"í,*ratestructuretoavoíd
46, The Monex Enterprise is e¡rgaged in the leveraged,sales ofprecious
metals to the general public. The Monex Enterprise makes money fi'om their
customers through commissions, fees, monthly interest, and service charges'
4T.Beginninginthelatelg80sandcontinuingtbroughtheearlylggOs,
the Principals of the Monex Enterprise transfeHed the operation ofthe Monex
Bnteqprise from Monex International to the New Monex Bntities in an effort to
avoid exposure of the proceeds from the Monex Enterprise to outstanding federai
tax liabilities,
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CaseS:08-cv-00668-JVS-MLG Documentl Filed 06/:13l20OB Page 13 of 18
48. Monex Deposit Compæry and Monex Credit Company are California
Limited Partnerships formed in 1987 and constitute the core of the New Monex
Entities.
49. Monex Deposit company engages in the retail sale ofprecious
metals,
50. Monex Credit Company provides financing to customers of Monex
Deposit company in the leveraged purchase of precious metals.
5 1, Newport Service Corporation provides the other entities of the Monex
Enterprise with all adminTstrative, data processing, persorunel, accounting, legal'
purchasing and other operational services'
52. concord Funding co,, LLC, is a conhnlled entity ofMonex Deposit
Company and Monex Credit ComPanY'
53. concord Funding co., LLC, is integrally tied to the Monex Enterprise
ttu.ough various agteements enteted into by Concord Funding, Monex Deposit
Company, and Monex Credit Company in 1995 and2002'
54'ComcoManagementCornpanyisthegeneralpartnerofMonex
Deposit CornPanY.
55. Metco Management company is the generai pætner of Monex credit
Company.
56. Although Louis Caribani owned and controlled Monex International
and owns and controls the New Monex Entitiês, there wère no mutual equity
interests as between Monex Intetnational and the New Monex Entities'
57. Begiruring in 1988, employees of Monex International were shifted to
Newport Service CorPoration'
58. By 1990, Monex International had no employees'
59. During and around 1991 many of the employees were shifted from
NewportServiceCorporationtoMonexDepositCoiporation.
60. The Monex Enterprise used the same telephone numbers-800-854-
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Case 8:08-cv-00668-JVS-RNB Document 15 Filed 08/24/09 Page 34 of 39 Page ID #:110
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CaseB:08-cv-00668-JVS-MLG Documentl Filed 06/1312008 Page 14 of 1 I'I
3361 and (7t4) 752-14l0-both before and after the shift of the Monex
Enterprise frofr} Monex Intemational to the New Monex Entities'
61,. The Monex Enterprise used the SAme office space-4910 Birch
Street, Newport Beach, Califomia-both before and after the shift of the Monex
Enterprise from Monex Intemational to the NewMonex Entities'
62, The Principals of the Monex Enterprise controlled the assets of both
Monex Internatiorral and the New Monex Entities'
63. The Principals of the Monex Enterprise transfeffed the goodwill of
Monex International and the Monex Enteqprise to the New Moirex Entities'
64. In promotional matetials believed to have been used by the New
Monex Entities in June 1990, Monex credit company and Monex Deposit
Cornpany were identified as being "affiüate companies" of Monex International'
Lrd,
65. Since at least December Lggl,Monex Deposít Company-through its
website monex.corn-has sought lo capitaïize on the name' history' and goodwill
of the Monex Enterprise from long before the existence of the New Monex
Entities.
. 66. In Decemb er 1996,Monex Deposit Company on its website
represented that the "Monex group of companies have served the preoious metals
investing public since 1967." It stated: "Monex affiliated companies have'been
offering precious metals invesünents since tg67 ' Mott"* Deposit Company
(i\DC) and its affiliates have executed hansaction with customers totaling over
$i4 billion."
67, In August 2006, Monex Deposit Company repr.esented on its website:
,,Monex is the largest and oldest investment frm offering precious metals to the
individual investor and as such we havo products and programs that we believe æ'e
unique in the industry. Our 30-year history is a testimonial to the fact that we
know this business and provide a real service to the ínvesting public"'
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CaseS:08-cv-00668-JVS-MLG Documentl Filed 06/13i2008 Page 15 of 18
68. In August 20o6,Monex Deposit comp4y fepresented on its website:
"Monex has the experience, expertise and resources to setve most any precious
metals investorls needs, Since 1967,weIl over one hundred thousand investors
have purohased billions of dollars of gold, silver, platinum and palladium bullion
and builion coins from Monex.'t
69. In February 2007,Monex Deposit Company represented itself to the
public on its website as being "Amelica's most tlusted name in precious metals for
more than 30 Years."
T0,InFebruary200T,MonexDepositCompanyonitswebsite
represenied that the'Monex group of companies was founded by Louis E'
Carabini in 1961. . . ." 'For over 30 years, the Monex companies have been
America,s gold and precious metals investment leader." "Today, three generations
of the Carabini family are now working with the Monex companies, including
founder.Louis Carabini . . . his son, Michaol, . . ' and his daughter, Christina' In
addition, more than 20% of Monex employees have been with the cornpany for a
decade or more . ' . many of them for ovet' 25 yeats'"
71. The united states is entitled to judgment against comco Managernent
corp,; concord Funding, co. LLC; Metco Management corp'; Monex credit co';
Monex Deposit co.; and Newport selvice corp. in tJre amount of $378,237,162'42
through June i5, 20o8,p1us subsequent statutory accruals including interest and
penalties plus costs and expenses because they are the alter egos of and constitute
a single enterprise with Monex International' Ltd'
COUNT ITI
claimtoimposesuccessor.in-interestliabilify
T2,TheUnitedstatesreallegesparagraphslthroughTi'
73, The New Monex Entities ar.e liable for the unpaid federai tax
assessments against Monex Intemational, Ltd', because they ar.e the successOrs-in-
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Case 8:08-cv-00668-/VS-MLG Document'1 Filed 06llUZA08 Page 16 of 18
interest to Monex Internatiortal, Ltd.
74. The New Monex Entitíes assumed the Monex Enterprise, and its
employees, location, phone numbers, and goodwitl during the late 1980s and earþ
1990s withoui providing fair conÉideration to Monex Intemational'
75. Through the conveyance of the Monex Enterprise, the United States
is left without recourse against Monex International'
76. The United States is entitled to judgment against Comco Management
Corp.; Concord Funding, Co, LLC; Metco Management Co{p.; Monex Credit Co';
Monex Deposit Co.; and Neulport Service Corp. in the amount of 8378,237,762'42
through June 15, 2008, plus subsequent statutory accruals including intet'est and
penalties pius costs and expenses becausethey are the successors-in-interest of
Monex International, Ltd.
COUNT IV
Claim to imp o s e fraudulen t-conveyee lia bility
TT,TheUnitedStatesreallegesBalagraphslthroughT6.
7g. The New Monex Entities are liable to the United States for the assets
received fr'om Monex International and their proceeds because the New Monex
Entities are the frauduient conveyees of the Monex Enterprise, and its ernployees,
location, phone numbers, an<l goodwill from Monex International, Ltd'
79. The ttansfer of the Monex Entetprise, and its employees, location,
phone numbers, and goodwill during the late 1980s and earþ 1990s was made
with the intent to prevent the united states frorn reaching the assets and income of
the Monex EnterPrise
80. The transfer of the Monex Errterprise and its employees, location,
phone numbers, and goodwill was without receiving reasonably equivalent value
in return and while the Principals of Monex believed or reasonably should have
believed that Monex.Internationai would be without ¡esources to pay the
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Case 8:08-cv-00668-JVS-MLG Document 1 Fíled 06/13/2008 Page 17 of 18¡1
outstanding federal tax liability
81. The New Monex Entities assumed the Monex Enterprise, and its
employees, location, phone numbers, and goodwill during the late 1980s and earþ
1990s without providing fair consideration to Monex International'
82, The United States is entitled to judgment against Comco Management
corp.; concord. Funding, co,LLc;Metco Management corp.; Mbnex credit co';
Monex Deposit Co.; and Newpor[ Service Corp, as fraudulent conveyees of
Monex Intemation øJ,,Ltd.,and attaching the asseTs transferred and theit proceeds
in satisfaction of the Govemrnent's claim'
WHEREFORE, the united states of America.requests the court to:
(a) Enter judgment against PCCE, Inc., in the amount or.8378,237,162'42
as of June 15, 2008 plus subsequent statutory accruals including intefest and
penalties plus costs and exPenses;
(b) Find that Comco Managernent Corp.; Concord Funding Co,,LLc;
Metco Management corp.; Monex Credit co.; Monex Deposit co'; and Newport
service corp. aÍe the alter egos of and constituted a single entetprise with Monex
International, Ltd.;
(c)FindthatComcoManagementCo'p.;ConcordFundingCo,,LLC;
Metco,Management corp.; Monex credit co.; Monex Deposit co'; andNewport
S ervice C orp. are su cces sors- in-interest o f Monex Internation aI, Ltd';
(d)EnterjudgmentagainstComcoManagementCorp.;ConcordFunding
Co., LLC; Metco Management Corp.; Monex Credit Co,; Monex Deposit Co.; arrd
Newport service corp. in the amount of $378,237 ,162.42 plus subsequent
statutory accruals inoluding interest and penalties plus costs and expenses;
(") Fjnd that Comco Management Corp.; Concord Funding Co., LLC;
Metco Management Corp.; Monex Credit Co.; Monex Deposit Co'; and Newport
service corp. are fi'audulent conveyees of the Monex Enterprise from Monex
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Case B:08-cv-00668-JVS-MLG Document 1 Filed 06/13/2008 Page 18 of 18
International, Ltd.;
(Ð Enter judgment agairist comco Management corp.; concord Funding
Co.,LLC;Metco Management Corp.; Monex Credit Co.; Monex Deposit Co.; and
Newport Service Corp., for the assets transferred and their proceeds and attach
those assets and their proceeds in satisfaction of the Government's claim; and
(g) Order any further relief it deems just and appropriate'
DATED: June 13,2008 THOMAS P. O'BRIENUnited States AtËorneY
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