COMPLAINT TO AVOID FRAUDULENT TRANSFERS FOR VALUE - Doc 1 extract
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COMPLAINT TO AVOID FRAUDULENT TRANSFERS FOR VALUE
Plaintiff, Emerson C. Noble, trustee, by and through his undersigned attorney, hereby files this Complaint To Avoid Fraudulent Transfers And For Value against Roy Thomas Kidd and Joan Lowder Kidd and shows:
JURISDICTION
1. Jurisdiction is based on 28 U.S.C. §1334(a).
2. Venue is based on 28 U.S.C. §1409(a).
PARTIES
3. Emerson C. Noble, trustee, plaintiff (“Plaintiff”) is the duly qualified and acting trustee in this case.
4. Roy Thomas Kidd is the debtor in the main bankruptcy case and is married to Joan Lowder Kidd, the co-defendant herein.
5. Joan Lowder Kidd is the wife of Roy Thomas Kidd, the co-defendant herein and is thus an insider as defined by 11 U.S.C. §101(31).
FACTUAL BACKGROUND
6. Roy Thomas Kidd, debtor (“Debtor”), filed a petition under Chapter 7 of Title 11, United States Code, on August 27, 2011.
7. On July 18, 2005, a Final Judgment was entered in the New Jersey Superior Court against the Debtor in favor of YA Global Investments, LP f/k/a Cornell Capital Partners, L.P. (“YA Global”) in the principal amount of $342,000 plus costs and interest at a rate of 12% per annum.
8. YA Global registered the Final Judgment in the State of Florida on March 30, 2007, pursuant to the Florida Enforcement of Foreign Judgment Act in the action styled Cornell Capital Partners, L.P. v. Tom Kidd a/k/a Roy Thomas Kidd in the Circuit Court for the Ninth Judicial Circuit in and for Orange County, Florida (Case No. 2007-CA- 003672).
9. The Debtor and Joan Lowder Kidd married in October, 2007.
10. Shortly thereafter, the Debtor transferred shares of Stock in Sportsquest, Inc. and Greensworldwide, Inc. to himself and Joan Lowder Kidd as Tenants by the Entireties.
11. On March 26, 2008, YA Global and the Debtor entered into a Settlement Agreement (“Agreement”) whereby the Debtor agreed to pay $342,000 to YA Global.
12. Pursuant to the terms of the Agreement, the Debtor and Joan Lowder Kidd transferred 6,474,050 shares of Sportsquest, Inc. stock and 4,918,910 shares of Greens Worldwide, Inc. stock to YA Global as collateral for the Debtor’s payment of the amount owed YA Global under the terms of the Agreement.
13. At the time of the transfer of the stock referenced in paragraph no. 12 above, Joan Lowder Kidd signed a letter to YA Global stating that she was pledging all of her interest in shares in Sportsquest, Inc. stock and Greens Worldwide, Inc. stock to Y.A. Global.
14. Unbeknownst to YA Global, the Debtor and Joan Lowder Kidd retained significant shares of stock in Sportsquest, Inc. and Greens Worldwide, Inc.
15. In 2007, the Debtor became Chief Executive Officer (“CEO”) of Domark International, Inc. (“Domark”).
16. While the Debtor’s tenure as CEO of Domark, the remaining Sportsquest, Inc. and Greens Worldwide, Inc. stock was surrendered by the Debtor and Joan Lowder Kidd in exchange for Domark stock held by the Debtor and Joan Lowder Kidd, as Tenants by the Entirety.
17. The Debtor did not receive any compensation for his services provided to Domark.
18. In August, 2009, the Debtor resigned as CEO of Domark.
19. At the time of the Debtor’s resignation as CEO of Domark, the Debtor had previously defaulted under the terms of the Agreement with YA Global.
20. The Debtor filed a Schedule 13D with the United States Securities And Exchange Commission dated September 29, 2009 whereby he disclosed that he, individually owned 3.5 million shares of 310 Holdings, Inc. and had sole power to dispose of said shares.
21. Pursuant to a Form 8 – K filed with the United States Securities And Exchange Commission dated November 22, 2009, Domark disclosed that it had reached a Debt Settlement Agreement with the Debtor whereby, in part, the Debtor was paid $150,000.00 and received 3.5 million shares in 310 Holdings, Inc.
22. The Form 8 – K disclosure was signed by Scott Sieck, who replaced the Debtor as CEO of Domark in August, 2009.
23. In September, 2009, Domark issued five (5) cashier’s checks payable to the Debtor in the total amount of $120,000.00 as partial compliance of its obligations under the Debt Settlement Agreement between the Debtor and Domark.
24. Despite the statements to the contrary filed with the United States Securities And Exchange Commission, the Debtor and Joan Lowder Kidd, surrendered their Domark stock to 310 Holdings, Inc. and received, in exchange 310 Holdings, Inc. stock as part of the Debt Settlement Agreement.
25. Joan Lowder Kidd was neither mentioned as a party to the Debt Settlement Agreement nor disclosed as an owner of 310 Holdings, Inc. stock in the United States Securities And Exchange Commission filings.
26. Joan Lowder Kidd was never employed by Domark, nor did she ever provide any services to Domark.
27. Despite the lack of disclosure of Joan Lowder Kidd’s interest in the 310 Holdings, Inc. stock, the 310 Holdings, Inc. stock was registered as being owned by the Debtor and Joan Lowder Kidd as Tenants by the Entirety.
28. The 310 Holdings, Inc. stock was subsequently converted to JBI, Inc. stock which was registered as being owned by the Debtor and Joan Lowder Kidd as Tenants by the Entirety.
29. The JBI, Inc. stock was placed into a Brokerage Account with Maxim Group, LLC.
30. On or about August 20, 2010, YA Global obtained a temporary restraining order from the Superior Court of New Jersey, Hudson County as to JBI, Inc. stock held in the the Maxim Group Brokerage Account.
31. On or about August 20, 2010, YA Global obtained a Writ of Execution from the Superior Court of New Jersey, Hudson County against the JBI, Inc. stock held in the Maxim Group Brokerage Account.
32. The Maxim Group Brokerage Account currently holds in excess of $1.3 million in cash and a substantial number of JBI, Inc. stock.
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