June 21,2013, Re: Order Granting Temporary Restraining Order Freezing Assets Against Defendants Frith Information Solutions, Lid, Prithvi Catalylc, Inc, Prithvi Solutions, Ine, Frithvi Information Solutions International, LLC, Inalytx, Inc, International Business Solutions, lac, Avani Investments, Ins Ananya Capita, Inc, Madhavi ‘Vuppalapati and Anandhan Jagaraman, Guru Pandyar ard Jane Doc Pandyar, Srinivas Sista and John Doe Sista, DCGS, Inc, EPP, Inc, Financial Oxygen, In, Fluawei Latin American Solutions Ic. and LC, Ine. ATTENTION - FOR IMMEDIATE REVIEW To whom it may concen [Enclosed isa copy ofthe ORDER GRANTING TEMPORARY RESTRAINING ORDER FREEZING ASSETS ofthe above referenced Defendants. The United States District Court forthe Westen District of Washington hs issued an order restraining the above referenced parties from, in relevant pat “transfering, iquicting, converting, ‘neumbering, pledging, loaning, selling, concealing, dissipating, disbursing, assigning, withdrawing, ‘granting len or security interest or other interest no otherwise disposing of any asset or any Interest therein...” See Enclosed Order Granting Temporary Restrabning Order Freezing Asset tp. 10,41 “This Onder freezing the assets of Defendants also aplisto third parties, uch as banks a oer {nancial isttuscn, as “persons or entities inactive concer or participation withthem who receive actual notice ofthis Order by personal service or otherwise.” Jd stp. 11,42. Defendants are also ordered to maintain the status quo of record and depots of customer receivables lease take all appropriate steps to comply with the Order enclosed herewith as soon as possible, Pease covtact me as soon as possible o let me know if there is anything further you need or if you have any furier questions or concerns. I can be reached by email at chi by phone at (206) 777-7546, Sincerely Cbvristina Pani eng: teaen (Christina Haring fect Attomey for Kyko Global, Inc. and Kyko Ghbal GmbH Enclosure ‘LINDE NELSON STANFORDal 2 2 Case 2:19-cv-01034-MJP Ducumen 11 Filed 08/19/13 Page 1 of 1 UNITED STATES DISTRICT COURT WESTERN DISTRICT OF WASHINGTON ‘AT SEATTLE. KYKO GLOBAL, INC, a Canadian CASENO. 13-ev-1034 corporation, and KYKO GLOBAL GMBH, Bahamian corporation, ‘ORDER GRANTING TEMPORARY RESTRAINING ORDER FREEZING ASSETS AND DENYING MOTION FOR EXPEDITED DISCOVERY nits, PRITHVI INFORMATION SOLUTIONS, LTD,, a Pennsylvania corporation eta, Defendants ‘This matter comes before the Cour on Plaintiffs ex parte motion fora temporary restraining order ("TRO"), (Dkt. No.2) Plaintiff’ proposed TRO requests the Court ieee Defendants’ ases, thus preventing dsipation of those arses, and for expedited discovery. Having reviewed the motion and all reatd papers, the Court GRANTS the motion in prt and DENIES in par. The Court GRANTS the motion fora TRO, Issuance ofthe TRO. however is ‘ORDER GRANTING TEMPORARY [RESTHAINING ORDER FREEZING ASSETS [AND DENYING MOTION FOR EXPEDITED DISCOVERY-1Case 2:13-cv-01034-MJP Document 11. Filed 06/19/13 Page 2 of 11 1 | contingent of Plainsts posting a security bond. The Court DENIES, without prejudice, 2 | Plains’ motion for expedited discovery. 3 Background 4 Plaintifs Kyko Global, Inc., and Kyko GMBH (together "Kya" provide factoring secvces, typeof financial arrangement. (Complaint, Dt No. 1, at 6} Generally, Kyoko 6 | provides funds up-eon as an advance on amounts owing on certain estomer account 7 | receivables andthen eceives payment diel rom the customer wher dus. (Kiran Kulkarni 8 | Declaration, Dit. No.4 a2.) Beginning in Novernber 2011, Kyko provided factoring services to 9 | Defendant Pri Information Solutions, Lx ("PSL"), a Pennsylvanis company. (KL) During 10 | the Parties several year lationship, Kyko provide significant up-fo: funds on PISL's account 11 J receivables. To further sccue PISL.'s obligation under the ftoring agreement, Kyko obtined 12 guarantees fron: PISL and its afilited companies offices, and directors (.) 13] According to Kyko, PISL represented it had substan reltioniips wit sveral ml 14 | bition dollar US. based tints whose receivables it waned to factor with Kyko. These 15 | identified clients include Dick's Sporting Goods, Enterprise Products, Financial Onygen, 16 | Huawei and L3 Communications. (id at.) Kyko’s claims largely revolve around factoring 17 | services connected to thes ive customers. Kyko vette the fvecurtners, wth PISL sctng as 18 an intermediary. (ld) All ive customers appeared to have signed acknowledgements of tie 19| arrangement, wherein verified payments would be made irectly to Kyko, (Id; Ex.) For 20) several months, the arrangement appeared fo be working: PISL issued invoioes, its customer 21 | acknowledged those invoices, Kyko advanced funds o PISL and Kyo received direct payments 22) from the five customers. (Id at 6) 2B ‘ORDER GRANTING TEMPORARY RESTRAINING ORDER FREEZING ASSETS [AND DENYING NOTION FOR EXPEDITED Discovery-21s 16 ” 20 2 2 23 Case 2:13-cv-01034-MJP Document 11. Filed 06/19/13 Page $ of 11 ‘After Febuary 15,2013, Kyk alleges the fve customers stoped paying their invoices (Gd) Pian offers no explanation for the stopped payments, excep around that dat it Isred PISL's bank account ha been samished in connection with diferent Iau involving Soft. Corporation (“Soj". ‘Concerned wit th lack of payment, Kyko told PSL ofits itention 0 contac the legal departments ofthe five companies, (dt 4.) PISL dissuaded Kyo from contacting them and instead offered sworn affidavits purportedly fom representatives ofthe five compas. (dt x.) Kyko alleges during a meeting in March 2013, PISL sai it was transfering customer contacts to affiliated companies to prevent garnishment of assets by Sot, who sought to collet on an oustanding judgment. (Id at 12.) Jn March 2013, Kyko began investigating the five customers. (Sonal Thomas Declaration, Dkt No, Sat 3.) Kyko allege it discovered PSL's relationship with the five customers was a sham. (i) Kyko alleges “Defendants ha setup fve companies and related nk acount, which wer intended to ook like the Five Customers that purportedly did business with PISL, but were actually counterfeit fake accounts setup to deosive Kyko with advancing monies." (dat 3.) These shams companies had corporate websites with informsion similar tothe five legitimate companies, (Kulkarni Del at 8) For example, the legitimate website for Financial Oxygen is itp: fnancialoxygen com, but the sham domain name ‘eas p/w fnanialoxvgen nt (id) The IP adres for maay of the sham websites were fen dential, indicating hosting atthe same location, (Ida 11.) Kyo also alleges it iscovered that although PII. had provided IT services fr some ofthe ive customers years befor, these companies denied current contracts andor that any money was owing. (Thomas Dec. at 3-4) ‘ORDER GRANTING TEMPORARY RESTRAINING ORDER FREEZING ASSETS [AND DENYING MOTION FOR EXPEDITED DIScOvERY-32 3 4 20 2 2 2 m4 Case 2:13-cv-01034.MJP Document 11 Filed 08/19/13 Page 4 of 11 In an apparent efor to remedy and replace the recsivables ofthe five customers, Kyko alleges PISL offered several replacement customers all also large customers, (Kulkarni Del. t 12) According to Kyko, these too were apparently sham companies, with the legitimate corporations having no curren business relationship with PISL, (ld; Thomas Del. at 4-5.) Further, PISL issued Kyko ten “Guarantee Check,” each for $2,000,0€0. (Kulkarni Del. at Ex 0) Acconding to Kyko, it is owed $17,077,395, which Defendants refute to pay. (Ud at 16.) Additionally, legitimate customers continue to make payments to PISL. (Id) Kyko alleges some ofthese funds belong toi, yet PISL has not remitted this money, (Id at 16+ ) Kyko sues asserting a claim of taud, negligent misrepresentation, conversion, breach of, jolation ofthe civil RICO statute, vo guarantees, ion ofthe financial instttion fand statute, sod ujusterichment. (Dt. No.1.) Kyko als scks a Temporery Restraining Order ("TRO") and primary injunction. (Dk Nos. 1,23) Analysis ‘The “standard for atung a temporary restraining order is extent the same a8 that for issuing preliminary injunetion.” Beaty v Brewer, 649 F.3d 1071, 1072 (thi. 2011). “A Pit scting a preiminary injunction must esablis [I] tat ei ikely to succeed onthe merits, [2] that he is ikly to suffer irreparable harm inthe absence of preiminay rele, [3] that the balance of equities tip in his favor, nd [4] that an injunction is inthe public interest” Winter v. Natural Res. Defense Council, nc, 555 U.S, 7,21 (2008). A party can stil the fst and third elements ofthe tet by raising serious questions going to themerits ofits ease and a balance of hardships that tips sharply in its favor. Alliance forthe Wild Rockies v. Cotell, 632 F.34 1127, 1131, (9th Cit. 2011). The primary difference between a prcliminary injunction and a RESTRAINING ORDER FREEZING ASSETS [AND DENYING MOTION FOR EXPEDITED DISCOVERY. 4Case 2:13-cv-01934-MJP Document 11 Filed 06/19/12 Page S of 11 1 J TRO, like te one at issue here, i that a cour can issue a TRO without noice to the adverse 2] pany. Fed RCiv.P, 6500) A). 3] 1, Issuance of TRO without Notice to Defendants 4{| Motion for temporary restraining orders without atice to and an opportunity tobe heard by the advene party ae disfavored and wil rely be granted” LCR 6S(OXI). Bore a court 6 | may ism a emporary restraining without writen or oral notice tothe adverse party, Rule 65 of 1) te Federal Rules of Civil Procedure ("Rae 65° requires the moving ary to se forth “specific 8 | facts in an aidavit or veried complain (that clesly show that immediate and ireprsble 9 J injury, oss, a damage wil esul tothe movant before tbe adverse party can be herd in 10 opposition." Fed R.Ci.P.6S(HXIN(A). Additonal, the movact’satmey must provide a 1} cerited statment explaining the efforts undertake o give native andthe reasons why notice 12 | should not bs requized inthe particular ease. Id. at 6500X1B) 13] Because ofthe seingent restrictions imposed by Rule 650), couts have generally confined 14 | ex pare injunctive relief t two situations. Reno Air Racing Assn Inc v. McCord, 452 F.3d 15 ]1126, 1131 (0th Cit. 2006). First, a plaintiff may obtain ex parte relief where notice to the| 16 | adverse pary is impossible either becuse the identity of the adverse party is unknown or 17 [cause a snows party cannot be located in time for a hearing. Id, Second, courts have 18 Jecopnized a “very narrow band of cases in which ex parte orders are proper because notice to 19 | he dofendne would render rites the Further prosecution ofthe action." ld. (quoting Am. Can 20) Co. . Mansukhani, 742 F-24314, 322 (Tt Ci. 1984), 21) Plains move for an ex parte TRO on the grounds “any notice will only assist them| 22] [defendants] in concealing their asets and ensuring a judgment is unrecoverable” (Dit. No, 3 at 234) To support its motion for an ex parte TRO, Plaintiffs offer the following evidence: 1) 4 ‘ORDER GRANTING TEMPORARY [RESTRAINING ORDER FREEZING ASSETS AND DENYING MOTION FOR EXPEDITED Discovery-s20 2 2 2 Case 2:13-cv-01034-MJP Document 11. Filed 06/19/13 Page 6 of 11 Defendants’ prior fraudulent conduct inthis case and ability to create shellsham companies; 2) statements by PISL indicating an intent to evade Sojit's efforts in collecting that judgment; and 3) records ftom proceedings in wo other courts (including Sojit2's) to show a Wkelthond nent will be transferred andlor Defendants will atempt to evade any enforcement aston, (See Kulkarni Del, at 9-16; Christina Haring-Larson Declaration, Dkt, No 3, at Ex. 1-2.) ‘The Court finds ths case falls within the narrow exception where no notice is required befor issuance of a TRO. Plaintiffs offer specific and concrete evidence showing an immediste and| imepsrable injury, loss, oF damage will result if PISL were to receive notice. ‘The evidence indicates Defendants have engaged in a pater and practice of creating fictitious entities forthe appearance of imitating legitimate business transactions and companies. Given this conde, the (Court finds ireparable injury would result if the stats quo is not maintined, King v, Saddleback Junior College Dis, 425 F 24 426 (0 Ci. 1970), Further, because the relief sought by Plaintiffs enisely concerns money, the distpation of Defendants’ funds would render further prosecution ofthe case useless. ‘The Court tums next othe other requirements for esuanoe of & TRO under Rule 6. 2. Plaintiffs Meot TRO Requirements ‘The Court must view the merits of Plain" claims through the prism ofthe laws they invoke forrelie€ Although Kyko asserts several different claims, the moving papers mainly focus on the likely success ofits’ faud claim. (Dit. No 4 at 14.) To sueceed on that claim ‘under Washington law, Plaintiff must prove nine elements: (1) representation ofan existing ‘act (2) materiality of this representation; (3) falsity ofthe representation; (4) the speaker's knowledge ofits falsity or ignorance ofits tah; (5) intent tat the representation be acted on; (6) ‘ignorance of ts falsity by the person to whom the representation is made; (7) reliance on the ‘ORDER GRANTING TEMPORARY [RESTRAINING ORDER FREEZING ASSETS ‘AND DENYING MOTION FOR EXPEDITED DISCOVERY 6“ 1s 16 20 a1 2 23 4 Case 213-cv-01934.MJP Document 11 Filed 06/19/13 Page 7 of 11 teuth ofthe representation; (8) aright to rely on the representation; and (9) consequential damages. Kirkham v. Smith, 196 Wo. App. 177,23 P.3d 10, 13 (2001), The Court finds Pinte has established, fr purposes ofthe TRO only prima facie case of aud: Defendants ‘conspire to deceive Kyo int believing the five companies had contracted fr factoring services, By these representations and by creating an elaborate scheme of sham companies, Plaiosits were induced to provide these services and suffered a significant loss as result Likewise, based onthe record before it Plait claims agains the guarantors wil also likely be success. The guarantors promised o unconditionally pay Kyko forthe amounts outstanding from the five clients. ‘The guarantors have not pid, even afer Kyko issued demands forpayment. Accordingly, Plaintifs have established sufcieoly high ikcihood of sucess om the merits of hi lain oo ‘Thetis ls a suicient likelihood of ireparble injury ifthe requested reliefs not fyasted, According othe moving papers, Kyko woud suffer an immediate and imepaabl arm if Defendants are not enjoined fom transferring oF disipating assets. (Dit, No.4.) Given he nature ofthe elins at ise, Defendants apparent ability to move signin finds trough and by sham entities, the stated willingness of PISL to evade collection by creditors by transfering funds to interseated and affiliated entities, an the experience ober litigants in collecting iudements, there is reason to belive Paints wil be ireparably and immediately injured if this case proceeds without a temporary restaning order ‘A balancing ofthe hardships weighs in favor of Kyko, To determine whether the b ot hardships favors the moving arty, courts must “balance the interest of all parties and weigh ‘he damage to each” Stormans, Inc. v. Selecky, 571 F.3d 960,988 (Sth Cir. 2008), Prohibiting Defendants from transferring or dissipating funds without Court approval—at least util they can ORDER GRANTING TEMPORARY RESTRAINING ORDER FREEZING ASSETS [AND DENYING MOTION FOR EXPEDITED DISCOVERY.Case 2:13-ev.01034.MJP Document 11 Filed 06/19/13 Page 8 of 11 | beheard on the mater in the next tn days—is nota burdensome condition given that 2 | Defendants were not wholly engugedin a eitimate, lawl busines. Thus th isk weighs 3 | more heavily in favor of Plt 4| The Courtatso finds an onde preserving the status quo and preventing Defendants from 5 | ransterring or dissipating funds will advance the public interest. Defendants alleged fraud 6 | involves fasely representing itself as numerous multi-billion dollar companies an in-ura 7 | deceiving Pains. Preserving the satus quo unt a more through veting of Pint’ claims 8 J can occurs in thisinstane, in the interes ofthe public, See Federal Sa, and Loan Com 9 | Eesm, 1989 WL 88415, *5 (Oth Ci. 1989)inding evidence of aud sufficient to show public. 10 | interest in preventing forte injury) u ‘Where Plaintiffs eek an asset fez, they mus lo show “the likeinood of dissipation 12] ofthe claimed asses, or oie inability to recover monetary damages, felis not granted” 15 | Johnson v Coumrier, $72 F-31067, 1085 (th Cit 2009). In the present cae, the likely 14 | cisipation of claimed assets and ater nity of Plaintiffs to collect on any money damages 15 | goes han sand wit th elim and evidence presented in suppor ofthe TRO, (DK No.2 at 16] 21-22) Plants sek ocavery of $17 milion dollars in account receivables. Pint lege 17| and he record before the Court supports he notion that Defeadans are in possesion ofthese 18 | funds, Furey, ike Johnsen, Defendans' conducts permeated wit rad and inciudes requests 19 that Plintifis assist in evading the collection of the Soft judgment. As previously discussed in 20 | the context ofthe ex parte nature of this motion, his record shows likelihood tat without a 21 | freeze, Defendants may disipste or transfer the claimed ase 2 ‘The Court, however, disagrees with Plaintif” request that no security bond be required, 23 | Federal Rule of Civil Procedure 65(¢) requires the posting of security by a plintif in such sum Fy ORDER GRANTING TEMPORARY RESTRAINING ORDER FREEZING ASSETS [AND DENYING MOTION FOK EXPEDITED DISCOVERY-#a 2 2B Py Case 2:13-cv-01034.MIP Nocument 11 Filed 08/19/12 Pago 9 of 11 the cout deems proper, forthe payment of such cost and damages as may be incurred or suffered by any party whois found to have been wrongly enjoined or estsined." The Ninth Circuit has no steadfast ul sto the amount ofa bond asa result ofthe issuance oa temporary restraining oder. Generally, the bond aroun shouldbe sufficient to protect is adversary fom oss inthe event hat fate proceedings prove that the injunction fasued wrongfly.” Edgar v. ‘MITE Com, 457 US. 624, 649 (1982). Contrary to Plant argument, the amount of he ood is signcanr because the sum posto i often determinative ofthe lit that may be recovered by a wrongflly esained party. Nintado of Am, Inc. v. Lewis Galo Toxs. Ine. 16.34 1032, 1036-1037 (0h Ci. 1994) recovery based on amount posted in scuty by ‘movant purpose of le sto discourage fvolous ad improper motions for injunctive rele), ‘Squaxn land Tribe v, Washinton, 781 F.2d 715,724 (9 Cir, 1986) (award of money damages was vacated and defendant allowed to colet security posted; amount recoverble for | smages was limited vo security). The Cour is mindful that by considering this ex pate motion, Defendant lacked an opportunity to preset evidence regarding the posible damage to their business should this TRO issue. With hese de process considerations in mind the Court orders Kyko to posta $1,000,000 bond to protect Defeadans interests. Proof ofthe bond must be filed withthe order forthe temporary restraining order oss. 3. Expedited Discovery Plaintifs also move for expedited discovery. Rule 26 ofthe Federal Rules of Civil Procedure generally probit apart fom seeking isovery Gn ay source before the pares have conferred as required by Rule 26(). Inthe Ninth Circuit, cours use the “good cause” standard to determine wheter discovery shold be allowed to proceed prio toa Rule 26() conference. UMG Recordings, Ine, v. Doe, 2008 WL 4104214, *4 (N.DCal 2008). Good cause ‘ORDER GRANTING TEMPORARY [RESTRAINING ORDER FREEZING ASSETS AND DENYING MOTION FOR EXPEDITED biscovery-92» a 2 2 Case 2:13-cv-01034-MJP Document 11 Filed 06/19/13 Page 10 of 11 | may be found where the need for expedited discovery in consideration ofthe administration of justice, outweighs the prejudice tothe responding arty. Semitool, Ine, v. Tokyo Elecron Am, Inc. 208 FRLD.273, 276 (N.D Cal. 2002). Here, nimi put the cart before the horse; the Court will not order expedited discovery in anticipation of what Plants predict will be tll tactics. The Court DENIES the motion without prejudice. Conclusion “The Court finds issuance ofa TRO, without notice to Defendant, proper because notice would render fruitless further prosceution ofthis action. Pants are require to post a 1,000,000 security bond. The Court DENIES, without prejutie, Pints request or iscovery. The Cour, therefore ORDERS 1. Asset Freeze, Defendant, whether acting ditty o through any compraion, partaership, ubsiiary, division, afilate, their servans, agents, employees, or any other entity oc person acting on their behalf o fo thir benefit, and al other persons or ents in active concert or patspation with them who ressve acts notice ofthis Order by personal service or otherwise, are hereby temporarily enjoined from: transfering, liquidating, converting, encumbering, pledging, loaning selling, concealing, dissipating, disbursing, assigning, withdrawing, granting lien or secuty interest or oter intrest ino otherwise disposing of ny asc, or any intrest therein, wherever loated, including outside the United Sates, that i owned by, controle by orn the seule constructive posession of, in whole rin pr, ny defendant or any other person or entity, ands so eld or controlled forthe benefit of, or subject to access by, o belonging to, any named defendant in this ation or any other corporation, partnership, tnt, foundation, or anyother entity direty or indirectly owned, managed, or controlled by, or uder common contro wit, any defendant, including, but nt limited to, ay ‘ORDER GRANTING TEMPORARY RESTRAINING ORDER FREEZING ASSETS [AND DENYING MOTION FOR EXPEDITED BISCOVERY=109 0 a 2 23 Case 2.15-vv-01034-MJP Document 11 Filed 06/19/13 Page 12 of 1. assets eld by or for any defendant in any account at any bank or savings and lan institution, or with any creditcard processing agent, or any credit unin, money market or mutual fund, tute, ot wit any broker dealer, escrow agent tile company, commodity trading company, or other financial insittion or depository of ea kind, whether within or outside the tersitoril United States, unless further allowed by order ofthis Cour. 2, Preservation of Records. Defendants must maintain the status quo of record and deposits of customer receivables, ITS FURTHER ORDERED that Defendants, whether sting recy ot indzetty through any comporation, prcership, subsidiary, division, efflate,or other entity or device, and thei officers, agent, servants, employees, attrey, and all persons or tits in active concert or patcipation with them who receive actual notice ofthis Order by personal service or otherwise ate hereby temporarily enjoined from: Divertng, canceling, concealing, altering, transferring, changing, or otherwise disposing of, in any manner, dzely or indirectly, any revenues, monies, or other assets derived from customer accounts receivables made inthe ordinary couse of business in defendants existing accounts that eatin any way to ne business practices or the business or personal finances of defendants; othe business Practices or finances of entities diel rine under the contol of defendants or tthe business practices o finances of ents directly o indirectly under common contrl with any her defendant ‘The cles ordered to provide copies ofthis order to all counsel, Heal Marsha J Pechman (Chief United States District Judge Dated this 19th day of ane, 2013. [ORDER GRANTING TEMPORARY. BRESTHAINING ORDER FREEZING ASSETS [AND DENYING MOTION FOR EXPEDITED DISCOVERY: 18