Legal Briefs

SEC, Ruderman Heading to Settlement

The Securities and Exchange Commission’s motion for summary judgment against Carl Ruderman for his role in the 1 Global Capital case is likely to be stayed as the parties head toward a settlement.

On June 14, the SEC informed the Court that “as a result of mediation and ensuing discussions, the Commission staff and Defendant Carl Ruderman have agreed on a proposed settlement of all claims and relief the Commission seeks against Ruderman.” The settlement has to be approved, however, by the five SEC Commissioners. “If the Commissioners approve Ruderman’s signed settlement agreement, it will resolve the Commission’s litigation against him,” the SEC contends.

The SEC is asking for a 90-day stay.

MCA Company Files 15 COJs Against a Medical Practice, Dispute Arises Over Alleged Forgery

A New Jersey physician was one day going about his usual business, and the next day found himself an unwitting judgment debtor for almost $2,000,000 based on more than a dozen forged Confessions of Judgment (COJs) of which he had no knowledge. That’s the scenario described in papers by the physician’s attorney suing New York-based Itria Ventures, LLC. Itria is a subsidiary of its more well known parent company Biz2Credit.

In the span of 19 months, Itria funded a medical practice 19 times (an average of once a month), putting the practice on the hook for millions of dollars in purchased receivables. In March 2017, Itria declared one of those agreements to be in default and filed a COJ in the Supreme Court of New York, successfully securing a judgment in the amount of $245,114. Despite this, Itria continued to enter into at least 3 more funding contracts with them after defaulting.

The relationship would sour as Itria attempted to enforce its New York judgment in New Jersey with vigor. According to Court papers filed in Bergen County, Itria sought to have a judgment debtor, a doctor, arrested after he allegedly did not respond to an information subpoena or attend a deposition. In September 2018, a judge denied Itria’s application for an arrest warrant as the parties were reportedly in discussions to resolve.

When those discussions failed, Itria claimed that 14 more of the 19 contracts were also in default as they went ahead and filed 14 new COJs against the medical practice parties in March 2019. All told, Itria’s judgments add up to around $1.9 million. And just as Itria had previously, they began the procedure to enforce them.

But there’s a twist. The COJs and the contracts might have forged signatures for one of the parties.

On April 18th, Itria Ventures was sued by the very same doctor they sought to have arrested.

“Those confessions of judgment appear to bear my signature and have been filed against me but are fraudulent and forgeries because I did not sign them and the signature on them is not mine,” the plaintiff argued. Itria is a co-defendant alongside several entities that make up the medical practice, two notaries, Itria’s attorneys, and the plaintiff’s own brother, who is also a doctor.

Plaintiff’s claims of forgeries are onerous given that notaries were present, but the evidence is compelling given that on several contracts a notary attested that he appeared before her to sign it when there is surprisingly no signature there at all.

“This is a fraud even the most sophisticated lawyers would have trouble spinning in their favor. This fraud is shocking to the conscience,” the plaintiff’s attorney argued.

In instances where plaintiff’s signature is present, plaintiff alleges that his brother forged his signature and that the notaries fraudulently went along with it. In addition to the alarming variations in his signature, the plaintiff’s attorney pointed out an instance where a signature appears to be not only forged but a photocopied forgery.

Accordingly, the plaintiff is seeking to have all the judgments as they pertain to him personally, vacated.

Itria wasn’t convinced the allegations held weight given that it was the first time forgery had been raised in 2 years of communications. Documents filed appear to show there have been discussions to resolve for some time. They separately pressed forward on May 13th to have a Court appoint a post-judgment receiver over the medical practice.

Itria has relayed to deBanked that their enforcement efforts have been in compliance with all laws and court rules and that they’ve worked with these debtors in a cooperative fashion to attempt to provide them with the opportunity to resolve their financial difficulties. For example, Itria says they (a) provided these debtors with a reduced/modified payment plan, (b) provided them, for an extended period of time, with a de facto forbearance from enforcement to allow them to ‘catch their breaths,’ and to attempt to resolve their financial difficulties by seeking financing elsewhere or otherwise , and (c) at the debtor’s request, assisted them in attempting to obtain alternate financing for many of their business needs, not just to make Plaintiffs whole.

On May 29th, the judge ordered a preliminary injunction enjoining Itria from enforcing the 15 judgments against the plaintiff only and any other judgments “purportedly executed by plaintiff.” The catch is that the plaintiff must post a $1.3 million bond by June 7th. If it’s ultimately determined that the injunction was not warranted, the plaintiff will be responsible for all of Itria’s costs and damages related to the injunction. Itria is not enjoined, however, from enforcing the judgments against any of the plaintiff’s co-defendants.

The case is listed under Index Number 154067/2019 in The New York County Supreme Court.

Injunction Sought Against MCA Company, NYC Marshal

Update 6/24: The matter between the parties resulted in a settlement

Update 5/29: Itria now contends to the Court that the petitioner’s lien was actually terminated on October 25, 2018, thus relinquishing petitioner’s security interest. Consequentially, Itria requests that Blue Elephant withdraw its “improperly obtained” TRO as it is Itria that is the true superior lienholder, according to a letter and new cross-motion filed with the Court.

Update Late 5/16: Blue elephant was successful in obtaining a temporary restraining order.

Blue Elephant Financing, LLC is seeking an injunction and a temporary restraining order against Itria Ventures, LLC (a subsidiary of Biz2Credit) and New York City Marshal Stephen Biegel, according to court records.

In February, Itria Ventures entered a confession of judgment in Kings County, New York against an out-of-state business. Itria Ventures is a merchant cash advance company. In March, Itria relied on New York City Marshal Stephen Biegel to attempt to enforce the judgment and seize funds owed to the small business that were being held by a company with a New York office.

The funds the Marshal tried to seize, however, were collateral belonging to Blue Elephant Financing, LLC, the petitioner claims. Blue Elephant alleges that Itria willfully and maliciously tortiously interfered with its Senior Secured Creditor’s priority and senior secured rights by directing a New York City Marshal to levy its collateral and that it refused to withdraw the levy despite notice and demand of its perfected, senior first priority security interest.

“Respondent Itria Ventures LLC has wrongfully directed the City Marshal to levy upon the Collateral even though it knew that the Judgment Debtor was not the true owner,” the petitioner states. “Respondent Itria Ventures LLC failed to and refused to withdraw the Levy and Demand despite notice and demand by Petitioner Senior Secured Creditor.”

The petition was filed in the New York Supreme Court under Index number: 154941/2019