Over $40 Million in Transfers Declared Fraudulent in Major Trial Victory

In 2015, Pillsbury’s client, a Hong Kong corporation, made a multimillion dollar loan to a U.S. company. The U.S. company never repaid the loan. Pillsbury won a lawsuit on behalf of the Hong Kong corporation for breach of contract – winning the entire amount of damages that were sought in the lawsuit, plus 14 percent interest as well as the fees and costs in bringing the lawsuit.

The U.S. company then failed to pay the judgment. In February 2018, as part of the effort to collect the judgment, the Hong Kong corporation brought a new action against the U.S. company and certain owners and insiders of the company. The new action alleged that the U.S. company had fraudulently transferred assets to owners and insiders to avoid collection of the judgment.

The fraudulent transfer action was filed in the U.S. District Court for the Western District of Missouri. In November 2019, the court conducted a bench trial regarding the Hong Kong corporation’s claims against the U.S. company and a sub-set of the owners and insiders. The four-day bench trial featured eight fact witnesses, four expert witnesses and hundreds of exhibits.

 On May 26, the court found in favor of the Hong Kong corporation on each of its causes of action. The 210-page decision begins by stating that the court’s decision closely follows Pillsbury’s post-trial brief, which provided “an excellent roadmap” for understanding the case. The court found:

• The individual defendants were indeed insiders of the U.S. company.
• The U.S. company had made over $40 million dollars of fraudulent asset transfers to its insiders, and every single one of these transfers was both intentionally fraudulent and constructively fraudulent.
• To frustrate the enforcement of the judgment, certain insiders of the U.S. company had colluded with the U.S. company to create a fraudulent lien and to conduct a fraudulent foreclosure on the remaining assets of the U.S. company.
• The defendants violated the Missouri Uniform Fraudulent Transfer Act and committed the tort of civil conspiracy.
• The defendants are responsible for paying money damages, fees and costs.
• In addition, a receiver will now take over what assets the U.S. company still has and sell off those remaining assets in order to help satisfy the judgment.

At the trial from Pillsbury were Geoffrey Sant, Ari Berman, Eric Epstein, Carol Lee, Michelle Ng, Daryl Kleiman and Patti Rothenberg.  Others who played key roles include Leo Crowley, Brian Beckerman, Roland Reimers, Fangwei Wang, Linlin Tian, Yang Wang and Sharlene Law-Phillip.