Victim Impact Statement: USA v. Scott Meyrowitz

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Case 9:18-cr-80216-DMM Document 33 Entered on FLSD Docket 02/19/2019 Page 1 of 24
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PaulS.Hugel
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February 4,2019
H on.D onald M .M iddlebrooks

United StatesDistrictJudge
PaulG .RogersFederalBuilding and U .S.Courthouse
701 Clem atisStreet
W estPalm Beach,Florida 33401
Re: USA v.ScottM eyrow itz

18-cr-80216-D M M -1
DearJudgeM iddlebrooks:
W earetheattorneysforM ellen,lnc.(ttM el1en''),aNew York based family-owned
diam ond dealerwhich w asthevictim ofScottM eyrow itz'sfraud. Iam writing to provide
the Courtw ith a victim im pactstatem enton behalfofM ellen and to inform the Court
regardingM eyrowitz'slong history offraud and perjury,which includesfalsestatements
he m ade under oath to yourH onorduring hisplea allocution in thiscase.
Athischange ofplea hearing,M eyrow itz soughtto portray hisfraud against

M ellen as an aberrationalact.H efalsely stated hehad neverintentionally defrauded
M ellen oranyone else.The reality isthatM eyrow itz is a serialfraudster. H ehas a well-
documented history offraud dating back 15 years.W heneverM eyrow itzhasbeen caught,
hisresponsehasbeen to fabricateelaboratestoriesand blameothers(including his
victims)forhiswrongdoing.Itisclearfrom hisstatementsatthechangeofpleahearing
thatM eyrow itz iscontinuing thatpattern here.
M eyrow itz'sFraud AgainstM ellen
ln late 2014,M eyrow itzknew from anotherdealerthatM ellen ow ned a 4.05 carat
internallyflawlessheart-shaped bluediymond (RtheDiam ondn).M eyrowitzcontacted
theownerofBiltm oreLoan and Jewelry (KBiltmoren),apawnshop in Arizona,about
pawning the Diam ond.M eyrow itz told Biltm ore'sowner thata friend ofhisin M innesota
namedJoseph Gutekunstowned theDiamond and thatGutekunstwished to pawn itto
raisem oney forhisbusiness.
ï, H on. Donald M .M iddlebrooks
February4,2019
Page2
AfterBiltm ore'sownerexpressed interestin thepawn transaction, M eyrow itz

duped M ellen into sending the Diam ond to him by claim ing he had a potentialcustom er
interested in buying it.M eyrowitz signed an agreem entw ith M ellen, custom ary in the
diam ond trade,in w hich M eyrow itz agreed thathe would notsell, pledgeorencum ber
the Diam ond and thathe would return itto M ellen on dem and. Based upon M eyrow itz's
execution ofthisagreem ent,M ellen shipped the Diam ond to M eyrow itz forM eyrowitz's
Prospective Ctlstom er to inspect.
As soon asM eyrow itzreceived the D iam ond from M ellen,he sentitto Biltm ore,
whereGutekunst,posing astheDiam ond'sowner,pawned itin exchangefora $1million
loan.Gutekunstimmediatelywired almosta11ofthismoneyto M eyrowitz A few m onths
.
later,M eyrowitzarranged with Gutekunstto selltheDiam ond to Biltm orefor$1.3

million (i.e.the$1million alreadypaid plusan additional$300,000).Gutekunstwired
these additionalfundsto M eyrow itz also.
Severalw eeksafterhesentthe Diam ond to M eyrow itz,M ellen'sowner began

calling and em ailing M eyrow itzforupdateson hisprospective custom er. Even though he
had already pawned the Diam ond,M eyrow itz repeatedly told M ellen thathe was
w orking w ith hissupposed custom er and needed m ore tim e to m ake the deal.W hen
M ellen dem anded thatM eyrow itz return the Diam ond,M eyrowitz prom ised to send it
back,butnever did. Eventually M eyrow itz stopped responding to M ellen's
com m unicationsaltogether.
M ellen then retained our 1aw firm to recoverthe D iam ond from M eyrow itz. O ur
investigation ofM eyrow itz turned up num erouslegalclaim sagainsthim by other dealers
fornotreturning diamondsand jewelry theyentrusted to him.Based upon M eyrowitz's
history ofsim ilarconductand hisactionshere,we quickly concluded thatM ellen had
been thevictim ofa con.W ereported M eyrowitz'stheftoftheD iam ond to the N ew York
County DistrictAttorney'sO ffice and to the United StatesAttorney'sO ffice in M iam i.
In Septem ber2015,M ellen broughtsuitagainstM eyrow itz in Florida state court.

M eyrow itz'sresponse to the lawsuitw asto stonew alland delay. H e refused to provide
any inform ation aboutthe Diam ond. H e filed frivolousm otions. H e m ade bizarre
assertionsofconvoluted conspiracies. H efiled pleadingsaccusing M ellen ofsuing him in
bad faith to tryto stealhisfictitiousclient.(Exh.A).Afterseveralmonthsofthis,the
judgeordered M eyrowitzto providesworn testimony aboutthelocation oftheDiamond
underpenalty ofcontem pt.ln response,M eyrow itz filed an affidavitstating thathis
friend,Joseph Gutekunst,washoldingtheDiamond forsafekeeping atM eyrowitz's
requestin a safedepositbox atW ellsFargo Bank in M innesota.(ExhibitB).M eyrowitz
provided thisaffidavitto the Florida courtnearly a yearafterthe D iam ond had been
pawned and two m onthsafterithad been sold to Biltm ore.
Based upon M eyrowitz'sfalse affidavit,M ellen com m enced a second law suitin
U.S.DistrictCourtin M innesota againstM eyrowitz and G utekunst. M ellen obtained a
# Hon.DonaldM .M iddlebrooks
February 4,2019
Page 3
TRO freezing Gutekunst'ssafe depositbox and an order to have the safe depositbox
opened and inspected.Atthatpoint,M ellen learned thatthe Diam ond w asnotin there
(and in facthad neverbeen in M innesota). W ethen deposedM eyrowitz, who invoked his
Fifth Amendmentprivilegein responseto allquestionsabouttheDiamond.
Subsequently,the New York County D istrictAttorney'sO ffice inform ed usthatit

had located the Diam ond and thatitwasin Biltm ore'spossession in Arizona. After
Biltm ore refused to return the Diam ond,M ellen com m enced a lawsuitagainstBiltm orein
U.S.D istrictCourtin Arizona.Thisresulted in two m ore yearsoflitigation. The case in
Arizonaculminated in ajudgmentdirectingBiltm oretoreturn theDiamond to M ellen .
M ellen,Inc.z.BlltmoreLoan & lewelrn scottsdale,ZzG 247F.Supp.3d 1084 (D Ariz. .
2017).W hileM ellen ultimatelyrecovered theDiamond,itrequired threeyearsof

litigation and theexpenditurebyM ellen of$567,400 in legalfeesand expenses .
M eyrowitz'sH istory ofFraud
M eyrowitzhasbeen defrauding peoplein thediam ond tradeformorethan 15

years.ln orabout2004,M eyrowitztook $1m illion in diam ondsfrom aTexasdealer
named W illiam N oble fora transaction heclaim ed to benegotiating in N ew York After
.
the supposed dealcollapsed,M eyrow itzneitherreturned the diam ondsnorpaid forthem .
In reScottB.M eyr
zowvèz,CaseNo.06-31660,DktN o.74 (N.D.Tex.Bankr.2006).
W hen a Texasstatecourtordered M eyrow itz to return thediam ondsto N oble,
M eyrowitzclaim ed thathe could notbecause Kforeign purchasers''had absconded with
them and he filed for bankruptcy.Id
In the bankruptcy proceeding,itbecam e clearthatN oble was notM eyrowitz's

only victim . Asstated by the bankruptcy court,
M eyrowitz'largestcreditorsin hisbankruptcy casew ere partiesw ho

had been involved in jewelrytransactionswithhim prepetition.
Thosecreditorsw ere harsh in theircriticism sofhim and accused him
ofdishonestyin hisjewelrytransactionswith them.Severalwere
<m issing'rare gem sthatthey had provided to M eyrow itzto broker,
and they believed him to bein possession ofthosegem s.Severalhad
been involved in prepetition litigation with him regarding those
issues.
Id DktNo.327 (OrderGranting M otionsforContemptand Sanctionsagainst

M eyrowitz), Duringhisbankruptcyproceeding,thecourtand theUnited StateTrustee
castigated M eyrow itz fordisobeying courtordersand for lying abouthisincom e and
assets.Seee.g.Id.Dkt.N os. 327,416,417 and 426.Aftera decade ofgam esm anship
and broken prom isesby M eyrow itz,the United StatesTrustee m oved to dism isshis
bankruptcy petition w ithoutdischarging hisdebts,on the groundsthatM eyrowitzhad
tçwillfullyfailed to perform underthetermsofhisconfirm ed plan,''Rfailged)to becandid
H on.Donald M .M iddlebrooks
February 4,2019
Page4
with theCourtabouthisincomeand hiscurrentassetskand)exhibited bad faith in the

execution ofhisPlan.'' 1d.DktN o.#T#'pp 1, 5. The bankruptcy courtgranted the
Trustee'sm otion.Id D ktN o.444.
W hile hisbankruptcy casew aspending,and atthevery sam e tim e he w as

defrauding M ellen,M eyrowitzw asengaged in schem esto defraud others. In 2016 a
wom an in Arizona nam ed Sarah Pappassued M eyrowitz fordefrauding heroutof
$650,000,which shehad given to him to investin diamonds M s.Pappasobtained a$2.7
.
million judgmentagainstM eyrowitz based on allegationsoffraud and racketeering.l In

2017,aman inTexasnamed Greg Brendelobtained a$1million judgmentagainst
M eyrowitz,also based upon a fraudulentdiam ond investm entschem ez.
There isreason to believethatM eyrow itz hasdefrauded otherpeoplew ho have

notpursued legalclaimsagainsthim (perhapsbecausetheylacked thefinancialresources
to do so orassumed itwould befutile).In an arbitration award to M r.Bendel(which was
confirmed by afederalcourtin Texas)thearbitratorstatedthat:
(M eyrowitzlcommitted amultitudeofegregiousacts,any oneofwhich

w ould havebeen actionable by them selves.First,Claim antw astold by M r.
M eyrow itzhe and M r.M eyrowitzw ould be partnersand split50/50 the
profitson the sale ofdiam ondsM r.M eyrow itz would obtain in Sierra
Leone.The problem wasM r.M eyrow itz m ade the sam e dealw ith three
otherpeople.So ifM r.M eyrowitz purchased a large valuable diam ond or
severaldiam ondsand sold them ,Claim antw ould notbe splitting the profits
50/50 w ith M r.M eyrow itz who w ould sprinklethe profitsashe feltlike
am ong a1ltheinvestors.The beauty ofthisschem e forM r.M eyrowitz w as
thathe could continue taking in investors'm oney,enhancing hispersonal
and businessw ealth and sim ply dividing any profitson any diam onds
am ong m ore and m ore people,cheating each ofthem who had the sam e
dealas Claim antoutofw hatthey believed w asgoing to be a
50150 splitofany profitson the saleofany diam onds.
In theM atter of.Greg Brendel z.ScottM eyrowitz,Am erican Arbitration Association

CommercialArbitration TribunalCase# 01-16-0000-7519atp.13 (availableonlineat
l4ttp://tinyurl.coe ykzfh7zvf).
1 Pappas z.M eyrowitz,CaseN o. CV2016-005499,Arizona SuperiorCourt,M aricopa

County
2 Brendelz.M eyrowkz,15-cv-01928,DocketN o. 86.(N .D.Tex.M arch 30,2017)
Hon.DonaldM .M iddlebrooks
February 4,2019
Page.5
The arbitratorin M r.Brendel'scase also observed:
Trying to follow M r.M eyrowitz'contradictory and conflicting statem entsin

thevariouscourtproceedingsand related docum entsw aslike being caught
in a labyrinth ofinconsistenciesifnotoutrightlies ashe seem ed to say
whateverw ould suithim bestin each situation regardlessofthe truth and
conflictsw ith statem entsm ade atothertim esin otherplaces.
Id p IA
W hileM ellen w asfortunate to recover theproperty thatM eyrow itz stole from
him ,hisothervictim sthatw e know abouthave notbeen so fortunate. Although
M eyrowitzobtained $1.3 million from Biltmorethrough thepawn ofM ellen'sdiam ond
and stole$900,000from M s.PappasandM r.Brendelthrough hisfraudulentinvestment
schem es,littleifany ofthatm oney hasbeen recovered. Thisisperhapsexplained by the
website ofLawrence A.Caplan,an attorney who recently appeared in the Southern
DistrictofFlorida on behalfofM eyrowitz.M r.Caplan'swebsite statesthathe specializes
in uoffshore AssetProtection''and thathe advisesclientson how to transferassets ttto an
offshoretrusteethatisnotsubjecttothegeneraljurisdiction ofU.S.courts,whileatthe
sam etime providing ready accessto those sam eassets.''3
M eyrowitz'sPerjury DuringHisChangeofPleaHearing
A consistentpattern in M eyrow itz'sfraud ishispanache forfabricating elaborate
storiesblaming othersforhismisdeeds.Hedid thiswhen M ellen sued him (claimingthat
thelawsuitwasaploy by M ellen to stealM eyrowitz'sclient). Hedid thisthroughouthis
Texasbankruptcy proceeding (whereatasinglehearingheblamedrepeated violation of
courtorderson hisCPA'Shealth,hisaccounts being frozen and an Ebola outbreak in
Africal.4Hedid thisduringhisarbitration with Brendel.(ççgM r.M eyrowitztook no
responsibility forthe com plicationswhich heclaim ed to besethim .H econtinually blam ed
othersforeach problem .''Id 40). Hehascontinued thispattern beforethisCourt.
3 l
attp://wwur.seûlucliatrtlst.coln M r.Caplan recently represented M eyrowitz in a case in
thiscourtbeforeJudgeM arra,Akyrowitz z.Brendej 16-cv-81793-KAM . In thatcase,
both M r.M eyrowitz and M r.Caplan w ere sanctioned underRule 11 forûtw illful
litigation m isconduct''and foractionsthatKw ere undertaken in bad faith,were
vexatious,and unnecessarilymultiplied thislitigation.''(DktNo.98 atp.23).
4 See,In re ScottB Afeyrowitz,CaseNo.06-31660,DktNo.416 (N.D.Tex.Bankr.)
.
H on.D onald M .M iddlebrooks
February 4,2019
Page 6
Athischangeofplea hearing,M eyrow itz tried to m inim ize hisw rongdoing by

stating thathehasalw aysbeen an honestperson butthathe was a victim of
circum stanceswhich forced him to unintentionally defraud M ellen.s
There isa lotofcircum stancesthatcam e into this that1did w hat1did. Therew ere
othercircum stances.Ihave --Iam ow ed a trem endousam ountofm oney thatI
havejudgmenton.EverybodyIdealtwith wasa 30-yearclientorfriend.ltwasn't
30 m inutes;itw asn't,like,1'm going to go outand rip everybody off. Ihavenever
done a bad thing in m y life.
l'm owed m illionsand m illionsand m illionsofdollars. Iw asnevergoing to

intentionally defraud som ebody,butIam --ldid w hatldid, and l'm notgoing to
sithere and waste yourtim e.So 1'm guilty ofw hatIdid, whatIdid.
TranscriptofM eyrow itz Change ofPlea Hearing D ec. 13,2018 atpp.8 and 12.
W hen the Courtasked M eyrow itz ifhe had com m itted thecrim e alleged by the
Governm ent,M eyrowitz launched in a ram bling and com pletely false story blam ing
M ellen forhiscrim e.
Q.M r.M eyrowitz,you haveheard theprosecutordescribewhatshewould prove

attrial,did you do that?
A.1did that,butlalso which Idon't--Isentfive checks,checks 1716 through

1720,to M r.Littman overnightFederal--overnightmail,$200,000 acheck,and
they gotthe checksand w ere supposed to putin a check every w eek to two w eeks
and decided they didn'tw antthechecks.So 1wasw illing to pay forthe stone, and
M r.M ellon --
Q.W ho isLittm an,theowner--

A.Yes,sir.
Q.--thatyou wereselling for?

A.Iw asselling for M ichaelLittm an,w ho wasa long-tim e friend and business
acquaintance,been in the businesslongerthan lhave;and M r.M ellon w asthe
ow nerofthe stonew ho sentitto M r.Littm an to send to m e. 1have m em oson that
and everything,and ldid overnightchecksand Ihave a letterto that;and they
didn'tw antthe checksso Iwasputinto a quandary there.
5 M eyrow itz'snon-acceptance ofresponsibility athischange ofplea hearing w asthe

subjectoflocalpresscoverage.SeePalm Beach Post,Boynton AreaDlàm ond r/wèf '
Iam
Gullty'ButH earM y PalhsDec 13,2018 available athttp://tinyurl.com/ybbgykx6
H on.Donald M .M iddlebrooks
February 4,2019
Page 7
Q.So afteryou did this,you tried to pay them back,isthatwhatyou aresaying?

A.N o,Itried to pay for the stone.
Q.Afteryoum adetheserepresentationsand afteryou pawned itand gotthe

m oney back --som e m oney from the pawn shop,isthatw hatyou are saying?
A. Yes,sir.
N o portion ofwhatM eyrow itz told the Courtistrue.M ellen ow ned the Diam ond
and sentitdirectly to M eyrow itz afterM eyrow itz signed an agreem entw ith M ellen
prom ising to return the Diam ond on dem and.M eyrowitznevertried to m ake any
paym entto M ellen fortheD iam ond. H isonly responseto M ellen'srepeated dem ands
thathe return orpay forthe Diam ond wasto 1ie to him , 1ie to him som e m ore,and to
then stop responding altogether.W hen M ellen sued him , M eyrowitz resum ed lying to
M ellen and to the court.
Even ashe pleaded guilty,M eyrow itzlied to the Courtin an attem ptto garner
sympathy and to m inim ize responsibility forhisvenaland outrageousbehavior. H e isan
unrepentantcareercrim inalwho deservesno sym pathy.Thenature and extentofhisfalse
statem ents to the Courtamply warrantdenialofcreditforacceptance ofresponsibility at
hissentencing.
Very truly yours
PaulS.H ugel
cc: M r.H arry M arcelin

U .S.Probation D ept.
t Filing # 36974883 E-Filed 01/25/2016 05:53:38PM
IN THE CIRCUIT CO URT OF THE FIFTEEN TH JUD ICIA L CIRCUIT

IN A ND FOR PA LM BEA CH CO UN TY,FLO RIDA
MELLEN INC., CaseNo.:502015CA0l0908XXXXMB(AJ)

Honorable:JaimieGoodman
Plaintiff,
V.
SCOTT B .M EY RO W ITZ and

SSB IN TERN ATION AL,LLC,
Defendants.
DEFEND ANTS'A NSW ER AN D A FFIRM ATIV E D EFEN SES
COM ES NOW the Defendants, SCOTT B.M EYROW ITZ and SSB IN TERN A TIONAL,
LLC,by and through the undersigned counsel,and hereby files this,their Answer and A ffinnative
Defensesto the Plaintiff sComplaint,asfollows:
AIlallegations contained in paragraph one (l)ofthe Complaint,along with alIinferences

which m ightbe drawn therefrom,are denied,and Defendantsdem and strictproofthereof.
AIlallegations contained in paragraph two (2)ofthe Complaint,along with allinferences

which m ightbe drawn therefrom ,are denied,and Defendantsdem and strictproofthereof.
3. AIlallegationscontained in paragraph three(3)ofthe Complaint,along with allinferences

4. Allallegationscontained in paragraph four(4)ofthe Complaint,along with allinferences

5. AIlallegationscontained in paragraph five (5)ofthe Complaint,along with allinferences

w hich m ightbe drawn therefrom ,are denied,and Defendants dem and strictproof thereof.
DefendantsfurtherassertthatthisCourtlacksjurisdictionovertheclaim assertedinCount1,
asthe resatissue isnotIocated within the State ofFlorida.
Andrew M .Schwartz,#.,d.
4755 Technolou rfW.y,Suite103
Boca Raton,FL 33431
Exh.A.
As the Defendants'eighth separate and distinctaffirm ative defense, the Defendants assert
that Plaintiff's failure to prove a prim a facie claim for relief entitles the Defendants to
judgmentintheirfavor.
9. As the Defendants' ninth separate and distinct affirmative defense, the Defendants assert
factualim possibility.
l0. A s the Defendants'tenth separate and distinct affirmative defense, the Defendants assert
fraud.
As the Defendants'eleventh separate and distinctaffirm ative defense, the Defendants assert
lack ofjurisdiction. Specifically,thisCourthasnojurisdictionto entertain the Plaintiff's

actionforReplevin,and assuch theDefendantsareentitled tojudgmentin theirfavorin
accordance therew ith.
l2. ln supportofthe foregoing affirm ative defenses,the Defendantsassertasfollow s:
DefendantSCOTT M EYROW ITZ entered into an agreementw ith the Plaintiffto procure a
buyerforthe res(i.e.,thering)atissue,inconformancewith a prioragreementbetweentheparties

(which the Plaintiffdid notsee fitto attach to its Complaint).ln conformance therewith,SCOTT
M EYROW ITZ took delivery ofthe ring atissue,along w ith the lnvoice attached hereto as Exhibit
$t1'' which indicated thatSCOTT M EYROW ITZ would be the purchaser ofthe ring atissue fora
contractpurchaseprice of$2,200,000.00. SCOTT M EYROW ITZ procured a$1,000,000.00 deposit

from an investor who was assisting in funding the purchase of the ring in conform ance w ith the
Invoice attached hereto, and thereafter the Plaintiff wrongfully repudiated the purchase and sale
agreem ent, dem anded disclosure of SCOTT M EY ROW ITZ'S investor, and upon information and
belief intended to end-around SCOTT M EYROW ITZ entirely and contact SCO'TT
M EYROW ITZ'S investor for purposes of wrongfully interfering with SCOTT M EYRO W ITZ'S
advantageous business relationships w ith his existing clients and investors and to prevent SCOTT
M EYROW ITZ from receiving a substantialcomm ission he was to receive in connection w ith the
Andrew M .Schwartz,#.z4.
4755 Technolov p'ay,Suite 103
BocaRaton,FL 33431
closing ofthe transaction noted in the attached lnvoice. The Defendants believe thatatalltim esthe
Plaintiffentered into the foregoing agreement in bad faith,based upon false representations oftheir
intention to consummate the purchase transaction (while actually intending notto perform when
representations regarding future performance were made),and took action solely to discoverthe
identity of SCOTT M EYROW ITZ'S investors and clients,for purposes of seeking to contact said
partiesdirectly and thereby tortiously interfere with SCOTT M EYROW ITZ'S advantageousbusiness
relationships.
Further factual support for the foregoing defenses willbe obtained via discovery in this
proceeding,and as such the Defendantsretain the rightto supplem enttheirAffirmative Defensesas
discovery in thiscauseprogresses.
W H EREFOR E having responded to the claim s of the Plaintiff,the Defendants dem and
judgment in theirfavor,thatthe Plaintiff obtain nothing from these Defendants,and thatthe

Defendants be awarded such other and further reliefasthis Courtmay deem justand proper
(includingbutnotlimitedtoarecoveryofprevailingparty attorney'sfeesand litigation costs).
DEM AND FOR JURY TRIA L:
Defendantsdemandatrialbyjuryonallmatterssotriablebyright.
CERTIFICATE O F SERVICE
l H EREBY C ER TIFY that a true and correct copy of the foregoing has been
electronically tsled and furnished to:G ary A .W oodseld,Esq.,Haile,Shaw & Pfaffenberger,
660 U .S. H ighw ay O ne, 3rd Floor, North Palm Beach, Florida 22408
(-
ç'w'oodGeldrzhaileshaw.coln and bpetroniral,l
nailesllaw.coml (Counselfor Plaintifg, Seth
Langer R osenberg,Esq.and PaulS.H ugel,Esq.,Claym an & Rosenberg,LLP,305 M adison
Avenue,Suite 1301,New York,NY l0165 (roselxbery.i
và,clayro.conxand hugelf
- .ilclayro.com)
t
(Co-counselforPlaintiffperMotiontoAppearProHac Vice)onthis251ndayofJanuary,2016.
AN DR EW M .SCH W AR TZ,P.A .
4755 Technology W ay,Suite 103
Boca Raton,Florida 33431
(561)347-6767-Telephone
(561)347-6768-Facsimile
By: /s/ Andrew M .Schw artz.Esq.
Andrew M Schwartz,#.zl.
4755 Technolov l'
F/y,Suite 103
Boca Raton,FL 33431
9
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'leyrowitz.herebystatesttnderpenaltyofperjul-
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1. Pursuantto the Court-sJanuary 11.2016 Orderlhefeby state thatthe 4.05 carat
bluediamond ring thatisthe subiectofthisaction (the --Ring*')ispresently in the possession of
Joseph Gutekunst.who holdsthe Ring on my behalfand atmy direction. -l'lw ring iscurrently
locatcd at:W'
ellsFatgo.2220 Commerce l)1vd.-M ound.'
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1N 55364.
2. lreprtsentto the Couftthatthe Ring wasand isbeing keptsatk and secure.and

thatlwillnottranslkr.sell.dispose of.orpledgethe Ring untilfurtherOrderoftheCottrt.
3. Irepresentto theCourttttattht Ring willrenlainwhert itiscurrently Iocated(ina

satk depositbox atthc above nAentioned address)untilthe resolution ofthe pending Replevin
action.
ScottB .N
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leyrow itz
FURTHER AFFIANT SAYETH NAI.

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'HT SW ORN.
Before n1t the undersigned authority this day of n - x2()l6.

personally appeared Scott Nleyrow itzs hvho upon being tsrst duly sw orn according to lau.
depost!sand saysthatlle/she executed tlw lbregoing and thatthe infbrmation settbnh thercin is
trtte and eorrectto the bestofhis/herknow ledge and belief.
ln svitnesswhereof,1hefeunto setmy hand and atl

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Page 2 of2
M ellen.Inc.v.Biltm ore Loan & Jewelry-scottsdale.LLC

United StatesDistrictCourtforthe D istrictofArizona
M arch 24,2017,D ecided;M arch 27,2017,Filed
N o.CV -16-00648-PHX -DLR
Reporter
247F.Supp.3d 1084*;2017U.S.Dist.LEXIS44522**;92U.C.C.Rep.Serv.2d(Callaghan)303;2017W L
l133031
Andrew Tim chak,LEAD ATTO RNEY,Dennis1ra
W ilenchiksW ilenchik & BartnessPC,Phoenix,
M ellen,lnc.,a New York corporation, AZ;ThomasM cM urray Baker,Baker& Baker,
Plaintiff/counterdefendant,v.Biltm ore Loan and Phoenix,AZ.
Jewelry-scottsdale,LLC,an Arizona lim ited
ForJoseph Gutekuntz,an individual,Thirdpal'ty
liability com pany, Defendant,CrossClaim ant:John Alan Doran,Lori
Defendant/counterclaim ant.Biltm ore Loan and
W rightK effer,LEA D ATTO RNEYS,Shennan &
Jew elry-scottsdale,LLC,an Arizona lim ited
liability com pany,Third-party,Plaintiff,v.SSB H ow ard LLC -Scottsdale,AZ,Scottsdale,AZ;
Jack Pierce,Benzick Lifson PA,M inneapolis,M N .
lnternational,aFlorida lim ited liability company;
ScottM eyrow itz,an individual;and Joseph Judges:Douglas L.Rayes,United StatcsDistrict
Gutekunst,an individual,Third-party,D efendants. Judge.
SubsequentHistory:Reconsideration denied by O pinion by:DouglasL.Rayes
M ellen,lnc.v.BiltlnoreLoan & Jewelry-
Scottsdale.LLC.2017 U.S.Dist.LEXIS 159633 O pinion
(D.Ariz.,Apr.5.2017)
Affirm ed by M ellenslnc.v.Biltm ore Loan &
Jewellry -Scottsdale Llc,2018 U .S.App.LEXIS (*1087) W O
15997(9th Cir.Ariz.sJune 14s2018)
O R DER
PriorH istory:M ellen lnc.v.Biltmore Loan &
Jewelrv -Scottsdale LLCS2016 U .S.D ist.LEXIS This case w asbroughtto deterluine ownership ofa
73407(D.Ariz..June3,2016) four-caratblue diamond worth nearly $2 million.
Plaintiff M ellen,Inc.boughtthe diam ond in 2013.
Counsel: (**1)ForMellenlncorporated,aNew Two years later, D efendant Biltm ore Loan and
York corporation,Plaintiff,CounterDefendant: Jewelry obtained the diam ond through a pawn
Craig Solom on Ganz,M ichaelStephen M yers, transaction and subsequentpurchase.
LEAD ATTORNEYS,Ballard SpahrLLP -
Phoenix,AZ,Phoenix,AZ;PaulS Hugel,LEAD On M arch 8,2016,M ellen filed a com plaintagainst
A TTORNEY ,Seth LangerRosenberg,Claym an & Biltmore asserting g**21 claims for declaratory
Rosenberg LLP,New York,NY. judgment, replevin, and conversion. (Doc. l.)
Biltm ore has alleged slander and tortious
ForBiltm ore Loan and Jewelry -Scottsdale LLC,
an Arizona lim ited liability com pany,Defendant, interference counterclaims. (Doc. 61.) ln June
Thirdparty Plaintiff,CounterClaimant:David 2016, the Court issued a preliminary injunction
enjoining the sale or transfer of the diamond
Page2 of 12
247F.Supp.3d 1084,*1087;20l7 U.S.Dist.LEXIS 44522,**2
pending resolution of this case. (Doc. 54. ) The California.

diam ond presently is stored by Biltm ore in a safe
On January 23,2015,M ellen and a diam ond dealer
depositbox atalocalbank.(Docs.85,9l.) from Florida, Scott M eyrow itz, entered into a
Before the Courtare cross m otions for sum m ary m em orandum agreem ent concerning a potential
judgment.(Docs.123,126.)Themotionsare ftllly future sale of the diam ond.Pursuant to its term s,
briefed.(Docs. 135, 139, 141, 149.) The Court the diam ond w asgiven to M eyrowitz ''on m em o,'
heard oralargumenton March 22, 2017.(Doc. which isa custom ary practice in the diam ond trade.
15l.)For reasons thatfollow,Mellen's motion is (See Doc. 54 at2 n.1.) The memo provides,in
granted in partand Biltm ore'sm otion isdenied.pertinentpal4(Doc.lat9):
The m erchandise described below,is delivered
SUM M ARY JUDG M ENT STANDAR D to you on memorandum ...(andj only for
exam ination and inspection by prospective
Summaryjudgmentisappropriate iftheevidence, purchasers,g**41 upon the express condition
viewed in the light m ost favorable to the that a11 such m erchandise shall rem ain the
nonm oving party,show s ''that there is no genuine property of(Mellen),and shallberetumed on
dispute as to any m aterial fact and the m ovant is dem and, in full in its original form .. ..You
entitled tojudgmentasa matteroflaw.''Fed.R. acquire no right or authority to sell, pledge,
Civ.P.56(a).Thepartyseekingsummaryjudgment hypothecate or otherwise dispose of the
''alw ays bears the initialresponsibility ofinform ing m erchandise, or any pal. t thereof, by
the district courtof the basis for its m otion,and lnem orandum or othenvise....A sale ofallor
identifyingthose (*10881 portionsofgtherecord! any portion ofthe m erchandise shalloccuronly
which it believes dem onstrate the absence of a if and when w e agree and you shall have
genuine issue of material fact.''g**3q Celotex received from usaseparateinvoice....(Thisis
Corp. v. Catrett.477 U .S. 317, 323. l06 S. Ct. NOT anINVOICE orBILL ofSale).
2548,91 L.Ed.2d 265 (19861.Substantive law M eyrow itz received the diam ond on January 26,
detenuines w hich facts are m aterial, and only 2015.
disputes ''over facts that m ight affect the outcolne
of the suit under the governing 1aw willproperly Abouttw o m onths earlier,M eyrowitz had reached
preclude the entry of summary judgment.'' out to the owner of Biltm ore, D avid Goldstein,
J?7c..477 U.S.242.248, regarding a potential $1 million loan with the
Anderson v.LibertvLobbv,.
106 S.Ct.2505,91L.Ed.2d202(19864.A factual diam ond as collateral. M eyrow itz thereafter
dispute is genuine ''if the evidence is such that a introduced G oldstein to Joe Gutekunst, who
reasonable jury could return a verdict for the purported to own the dialnond and expressed
nonm oving party.''1d. interestin pawning itfor$1 million.Goldstein and
Gutekunst spoke about the pawn transaction the
sam e day M eyrow itz entered into the m em o with
BACK GR O UN D M ellen.
For purposes of the summary judgmentmotions, The transaction between Goldstein and Gutekunst
the follow ing facts are not genuinely disputed. was com pleted on M arch 2, 20l5, the term s of
M ellen is a wholesale diam ond dealer specializing w hich are set forth in a pawn ticket signed by
in colored and otherhigh-quality diam onds.ln June G utekunst. Biltm ore w ired the $ 1 m illion to
2013,M ellen acquired the diamond atissue - a Gutekunstthenextday,andhe(**5) il nmediately
tlawless,four-carat blue heart-shaped stone - by transferred $955,000 to M eyrowitz. Biltmore
purchasing it from another diam ond dealer in bought the diam ond outright from G utekunst on
Page 3 of12
247F.Supp.3d 1084,*1088;20l7U.S.Dist.LEXIS44522,**5
November 18, 2015, for a sale price of $l.3 Relying on the good faith purchaser rule,Biltm ore
m illion.This suitfollow ed severalm onths later to arguesthatithasgood title to the diam ond because
determine law fulownership ofthe diam ond. M eyrowitz obtained voidable title through a
''transaction ofpurchase''underU.C.C.j 2-403(1).
Thatsection provides,in pertinentpart:
D ISC USSIO N A person w ith voidable title has power to
transfergood title to a good faith purchaser for
lt is undisputed that M ellen owned the diam ond value.W hen goodshave been delivered undera
when itwas given to M eyrow itz on mem o.M ellen transaction ofpurchase the purchaser has such
argues that neither M eyrow itz nor Gutekunst pow er even though . . . the delivery was
acquired any ownership rights in the diam ond,and
Biltm ore cannotshow thatitobtained good title to procuredthroughfraudg.)
the diam ond as a good faith purchaser forvalue or U.C.C.j2-403(1)(d).M ellen argues,correctly,that
through an entrustm ent or consignment under the k 2-40341) does not apply because neither
Unifonu Commercial Code (U.C.C.). Mellen M eyrowitz nor Gutekunst obtained the diam ond
further argues that Biltlnore's counterclaim s for underatransaction ofpurchase.
slander and tortious interference failas a m atter of
1aw (*1089) becauseMellen isthetrueownerof A transaction of purchase is lim ited to those
the dialuond. situations in which a person delivers goods
''intending forthe subsequentsellerto be the owner
Biltm ore initially asserted that the dispute is ofthegoods.''Touch ofClas. %Leasing v.Mercedqj kz
governed by Article 2 ofthe U .C.C.,which covers #cnz Credit.248 N. J.Super.426,591 A.2d 661.
transactions in goods by m erchants. Biltm ore 667 (N.J.Super.Ct.App.Div. 19911.''Applying
argued that ithad good title to the diam ond under that definition(**7j to the case at bar, no
both the ''good faith purchaser rule'' provided in 'transaction ofpurchase'occurred because itisclear
U.C.C.j 2-403(1) and the ''entrustmentnlle''set from the record that gMellenj never intended for
forth in j2-403(21.Biltmorenow takestheposition (Meyrowitzq to become the owner of the
thatArticle 9 ofthe U.C.C.,w hich covers secured (dqiamond.' ' Zaretsky v. William Goldber?
transactions, governs the dispute. Biltm ore argues Diamond Corp..820 F.3d 513,525 (2d Cir.2016).
that Mellen's delivery of the diamond tog**6q Rather,M ellen gave it to M eyrow itz ''on mem o,''
M eyrowitzconstitutesaconsignmentunderj9-201 and the expressterm s ofthe agreem entpreclude the
and Biltm ore therefore has good title to the finding that M eyrowitz w as to have an ownership
diam ond as a purchaser for value ofgoods from a interestin the diam ond.
consignee under i 9-319. Despite taking the
position that Article 9 controls,Biltm ore does not The diam ond was given to M eyrow itz ''cm ly for
waive any prior argulnents made under Article 2. exam ination and inspection by prospective
The Court therefore w ill address the argum ents purchasers,upon the expresscondition thatal1such
m adeundereach article.l luerchandiseshallremain theproperty of(M ellenj.''
Meyrowitz''acquiregdqno rightorauthority tosell,
pledge, hypothecate or otherwise dispose of the
1.Biltm oreD id NotO btain G ood Title to the gdiamondl,orany pa14 thereof,by memorandum or
Diam ond UnderU.C.C.$ 2-403(1) otherwiseg.j''A sale of the diamond could occur
''only if and when gMellenj agreegd) and
gM eyrowitzj shallhave received from gM ellenja
'Arizona, where Biltmore is located, has adopted the relevant separate invoice.'
provisionsoftheU.C.C.atissueinthiscase,ashasNew Yorkwhere
'The diamond w as to be returned
Mellenresides.See/5.
,
.44,5.
,..j.
k..
42::7.
-
49-1.47n2102(A)(7-%,47.
s2 )#; to M ellen ''on dem and,in fullin its originalform .''
,:.
N.
s.
Y.UCC âk2-403,9-1024204,?. -..
7.
12.
Pagc4 of 12
247F.Supp.3d l084,#1089;2017U.S.Dist.LEXIS 44522,**7
The m em o concludes by m aking clear that it ''is purchase.''Am. Standard. 643 F.2d at 268. The
NOT an INVOICE orBILL ofSalel.j''(Doc 1 at record show s that in giving the diam ond to
9.) M eyrowitz on m em o, M ellen never intended for
M eyrowitz (orGutekunst)to becomethe ownerof
ln short,the m emo could notbe m ore explicitthat the diam ond, and M ellen reserved unilateral
the transaction betw een M ellen and M eyrowitz w as
authority to determ ine whether a future sale ofthe
not one of ''purchase.'' Stated differently, in diam ond w ould occur.This is clear on the face of
delivering the diam ond to M eyrowitz on m em o, the m em o,and courts interpreting sim ilar language
Mellenneverg**8)intendedforhim tobecomethe have found that it precludes a ''transaction of
owner (*l090j of the diamond.Thus,even if purchase'' in the w holesale diam ond m arket. See
Biltm ore was a good faith purchaserforvalue,any Zaret skv,820 F.3d at525 (finding thatbecausethe
title M eyrowitz mighthave had in the diam ond was m em o stated that the possessor of the diam ond
void,notvoidable,and good title could notpass to ' 'acquiregd) no rightor authority to sell,pledge,
Biltmoreunderj2-403411.SeeZaretslq.820F.3d hypothecate orotherwise dispose''ofthe diam ond,
at525. no transaction of purchase occurred and he ''could
not pass good title to subsequent bona fide
The Fifth Circuit m ade this clear in American purchasers for val ue under section 2-403(11''), .
Standard Credit,lnc.v.NationalCement Co.,643 Kim berly tfrEuropean D iamonds,lnc.v.Burbank.
F.2d248(5th Cir.1981).Thecourtexplained thata 684 F.2d 363.366 (6th Cir. 1982) (m emo stating
''transaction of purchase'' occurs where the
thatthe possessorofthe diamond ''acquiregd)no
deliverer of the goods intended, how ever right or authority to sell, pledge, hypothecate or
m isguidedly, that the subsequent seller would otherwise dispose''ofthe diam ond show s that she
bccom e thc owner of the goods.643 F.2d at 268. ''had no title,nordid she have authority to passtitle
Thus, ''the con artist who fraudulently induces a
m anufacturer to delivergoodsto him by m eansofa
togthesubsequent(**10)buyerl'').
forged check hasvoidable title because he obtained Because M eyrowitz did not obtain the diam ond
delivery through a transaction ofpurchaseg.l''1d. through a ''transaction of purchase,'' he had only
Under j 2-403(1),''the defects in the con artist's void title to the stone and could notpass good title
voidable title would be cured by a sale to a good to Biltm ore even itw as a good faith purchaser for
faith purchaser for value, and the good faith value.Thus,Biltmore's'
'attemptto shoehorn gitsq
purchaserwouldobtaincleartitlel.j'' case within the confines ofsection 2-403(11 fails.''
Zaretslqv,820 F.3d at526.
W here thecon artist,however,''m erely convertsthe
goods to his own use after having obtained
possession of them in som e m anner other than II.Biltm ore Did NotO btain G ood Title to the
through a transaction ofpurchase,he doesnoteven Diam ond UnderU.C.C.1 2-403(2)
have voidable title;instea4 he has void title,and
cannot pass good title even to a good faith Section 2-403(2) of the U.C.C. is known as the
purchaserforvalue.''1d.(emphasisadded).Thisis ''entnzstmentrule.''Thesectionprovidesthat''gajny
becauseag**9j ''purchaserofgoodsacquires(only entrusting of possession of goods to a m erchant
theqtitlewhichhistransferorhad orhad powerto w ho deals in goodsofthatkind gives him powerto
transferg.l''U.C.C.j2-403(11. transfer allrights of the entruster to a buyer in the
ordinary course of business.''IJ.C.C.j-2-403(2).
ldere,there is no genuine dispute that M eyrowitz The entrustm ent rule ''is designed to enhance the
obtained possession of the diam ond via ''som e reliability ofcommercialsalesby merchants(who
m anner other than through a transaction of dealwi th thekind ofgoodssold on a regularbasis)
Page 5 of 12
247F.Supp.3d 1084,*1090)2017U.S.Dist.LEXIS 44522,**l0
while shifting the risk of loss g*l09lj through buy thediam ond in the ordinary course ofbusiness.
fraudulenttransfer to the owner ofthe goods,who Biltm ore does not dispute that M ellen never
can select the m erchant to whom he entnlsts his entrusted the diam ond to G utekunst,or that he is
Property.'' Porter v. Wertz, 53 N .Y .2d 696. 421 not a diamond merchant (Biltmore was told that
N.E.2d 500.500-01,439 N.Y.S.Zd 105 (N.Y.Ct. Gutekunst was in the vitam in supplem entbusiness
App.1981).In order for the buyer to have good buthe in factsellsallergy drops).(Docs.129,142
title under j 2-403(21, three conditions must be !! 11-13.
) Rather, Biltmore contends that these
met:(1)thegoodsmustbe entrustedto amerchant, factsare irrelevantbecause M eyrowitz wasthe one
(2)the merchantmustdealin goodsofthatkind, who sold the diam ond to Biltm ore through a
and (3)thebuyermustpurchasethegoodsfrom the purported agency relationship with G utekunst.
m erchantin theordinary course ofbusiness.U.C.C. Biltm ore asserts that M eyrow itz's alleged transfer
j24 0342). of the diam ond to Biltm ore through his agent
Gutekunstisprotected by the entrustm entrule.The
For example,ifg**11) the OW IICr of a new car Courtdisagrees.
takes it back to the dealership for service and the
dealer puts it on the car 1ot and sells it to an The plain language of the rule provides that
unsuspecting buyer, the entrustm ent nlle would entrusting goods''to a m erchantw ho deals in goods
give good title to the buyer.The originalowner,of of that kind gives him the pow er to transfer''the
course, would have various claim s for dam ages goods to a buyer. U. C.C. k 2-403(2) (emphasis
against the dealership, but the owner would bear added).The entnstmentrul e''ismeanttosafeguard
the risk of lossby entrusting possession ofthe car unsuspecting buyers who purchase goods from
to the dealership.The innocentbuyer,by contrast, m erchants in good faith.'' Great Am. lns. Co. v.
would not suffer the loss given his reasonable Nextdav Network H ardware Corp.,73 F.Supp.3d
expectation thatthe dealership had clear title to the 636,640 (D.M d.2014)(emphasisadded).Thesal e
car and the right to sell it because the dealership of goods from t
he m erchanthi m sel fis an essential
regularly ''dealsin goodsofthatkindl.q''U.C.C.j underpinning of the entnlstment nlle. This is
2-403421. because the rule's purpose is to ''facilitate the free
flow of goods based on a buyer's reasonable
The resultwould be different,how ever,ifthebuyer expectationthatamerchant(**13q in possessionof
bought the car from the salesm an at a vacant goods it ordinarily sells has title to them .''Lakes
parking 1ot not know ing he was em ployed by the Gas Co.v.Clark OiITradin. t Co.,875 F.Supp.2d
dealership. lt is ''well settled that ô 2-40342) 1289,1305 (D.Kan.20124.Thispurposewould be
protects 'only persons who buy in the ordinary defeated if,as Biltm ore contends,the entrustm ent
course outof inventor/''from a merchant who rule were to protect the purchase of a rare $2
deals in goods ofthatkind.Evergreen M ar.Corp. m illion diam ond from an apparent vitam in
p.Six ConsignmentsofFrozenScallops,4F.3d90, salesm an.
97n.8(1stCir.1993)(quotingj2-403(2)cmt.3). The narrow detinition of a ''merchantthatdeals in
goods of that kind'' supports (*10921 this
A .TheD iam ond W as NotEntrusted to conclusion. Unlike the general definition of
G utekunstand H e ls Nota M erchant ''merchant'' in j 2-1Q4, which includes the
m erchant's own skill or knowledge that might not
M ellen argues that Biltm ore's claim to good title be apparentto a buyer,the concern of j 2-403(2)is
under the entrustm ent nlle fails because M ellen with a nan-ower class of m erchants based on
neverentrusted the diam ond to Gutekunst,he isnot appearances.''An individualbuying a productfrom
adiamond merchant,and Biltmoredid(**12q not an apparent dealer in such goods expects to get
Page 6 of12
247 F.Supp.3d 1084,*1092;2017 U.S.Dist.LEXIS 44522,##l3
good title.'' 1d. (citation omitted). Thus, one from M eyrow itz,to whom the stone w as entrusted,
''expectsto getgood title when buying a shiny new nor did Biltm ore buy the diamond from som eone it
carfrom aGeneralMotorsdealer,gbutjonebuying knew to be an agent of M eyrow itz. G oldstein
goods from a m ere warehousem an trying to recover testified thathe believed M eyrowitz w asbrokering
storage costs knows thatthe seller is dealing w ith the sale ofthe diam ond forGutekunst,notthe other
som ebody else's goods.''16i The entrtlstm ent nlle way around. (Doc. 24-2 !( 6. ) M eyrowitz told
would notapply even if,unbeknownstto the buyer, Goldstein that Gutekunst wanted to sell the
the car in factbelonged to the dealership and w as diam ond to get m oney to expand his vitam in
sold by thewarehousem an atitsrequest. business.(f#.)Goldstein madedearthattheinitial
paw n transaction w as with Gutekunst, not
ln short,j2-403(2)''enablesa merchanttotransfer
M eyrowitz (id.! 9),and Goldstein wired the $l
rights to an entrusted good only ifthe person is a m illion loan directly to Gutekunst's bank account
'merchant'who'dealsingoods(**14) ofthatkind,' (Doc.127-1 at236-37).Goldstein furthertestified
in thiscase diamondsorotherhigh-endjewelry.'' thathe later purchased the diam ond outrightfrom
Zaretsky 820 F.3d at 520.Biltm ore'
s purchase of
Gutekunstfor$1.3 million (Doc.24-2! 10),and
the diamond from Gutekunstis notprotected by j again the money was sentdirectly his way (Doc.
.
2-403(24.Biltmore should have known thata four-

127-1at255).
caratfancy blue diamond worth nearly $2 m illion
did not belong to a purported vitam in salesm an. This testim ony is consistentw ith express tenzzs of
Stated differently, Biltm ore had no reasonable the paw n ticket.The custom erlisted on theticketis
expectation that it was buying the stone from a ''Joe Gutekunst.'' ln pledging the diam ond as
diamond m erchant.lttherefore findsno safe harbor security for the loan, Gutekunst indicated that he
in the entrustm entrule. ''wasthe ownerofthe pledged goods free and clear
Biltmore contends that reliance on the partof the of all security interest liens.''(**l61 The pawn
ticket was signed by Gutekunst him self, not
buyerhas no place in the entrustm entrule,butthe
rule is specifically ''designed to enhance the Meyrowitz.(Doc.127-1at235.)Thepawn ticket,
com bined with Goldstein's own testim ony,
reliability of comm ercial sales by merchants who
undisputedly shows that Biltm ore believed it w as
deal with the kind of goods sold on a regular
buying the diamond g*1093) from a vitamin
basisl.l''Porter.421N.E.2d at500-01 (emphasis salesm an, not from a diam ond m erchant. Coul'ts
added).Forthisvery reason,theruleprotects'bonly have long held ''the ultim ate purchaser can
thosewhopurchaseh-om themerchantto whom the
propertywtzkçentrustedf.j''Kozarv.Christiej'demonstraterelianceand invoke gtheprotection of
,fnc..
109 A.D.3d 967. 971 N.Y.S.Zd 555. 555 (N.Y. k2-403424)onl y ifhebelievedhewasbuyingfrom
App.Div.2013)(quotingPorterj. a dealer .The proofhereiswholly lackingin gthisj
respect.''Atlas Atttp Rental Corp.v. Weisbergs54
- -
Biltm ore asserted at oral argulnent that it would M isc.2d 168.28l N.Y.S.Zd 400.404 (N.Y.Civ.
have been easy for Biltm ore to believe it was Ct.19674.
buying the diam ond from M eyrowitz because he
Biltm ore contendsthatitdoes notm atterthatitwas
was involved in the transaction,had dealings with
m isled into believing Gutekunst owned the
the Gemological lnstittlte ofAmerica (GlA),and diamond because in reality Gutekunst was
the pawn ticketstates thatGutekunstwaseitherthe
M cyrowitz's agent and Biltm ore therefore
ow ner of the diam ond or authorized to act on
purchased the diam ond from M eyrow itz.A lthough
the(**l5) owner'sbehalf (Doc.127-1at235.)But itm ay be true that the entrustm ent rule protects a
the undisputed evidence show s that Biltm ore did
buyerw ho reasonably knowshe is dealing with the
not actually believe it w as buying the diam ond
lawful agent or em ployee of a m erchant of goods
Page 7 of 12
247F.Supp.3d 1084,*1093;2017U.S.Dist.LEXIS 44522, **16
(such as a salesman car dealership), the sold.

evidence in this case - even when construed in
Biltm ore's favor- does notsupporta finding that M oreover, the court in Canterra distinguished a
Biltlnore knew itwaspurchasing the diam ond from case similarto the one athand,(**l81 Qlin Corp.
M eyrow itz through hisagent. v.Cargo Carriers,fac..673 S.W .2d 2l1 (Tex.Ct.
App. 19844. ln Olin, a superintendent of Cargo
Rather, the undisputed evidence show s that Caniers'fertilizerw arehouse,Jerry Dollar,entered
Biltm ore did notknow aboutthe purported agency into a schem e to provide fertilizer to his co-
relationship, nor did it otherwise believe (**l7) conspirator,Charles Flow ers,who pretended to be
thatitwasbuying the diam ond from M eyrowitz. A s the ow ner of the product and sold it to an
explained above,the entnlstm ent rule is meant to unsuspecting buyer, Pat Ragsdale. Canterra
protect a buyer w here there is a ''reasonable distinguished Olin asfollows:
expectation''thathe isbuying from a m erchantwho
actually trades in the goodsbought.fakes Gas Co.n These circum stances are m aterially different
875 F.Supp.2d at 1305.This is whatprom otesthe from the instant case. Flowers, Ragsdale's
''reliability of commercial sales by gsuch) seller,w as notan em ployee of Cargo Carriers
m erchants.''Porter.421 N .E.2d at 500.The fact butan outside party.Ofeven m ore significance
that Biltm ore did not believe, reasonably or is the court's finding that Flower's was not a
otherwise, that Gutekunst was acting as m erchant. Under those circum stances, the
M eyrowitz's agcnt, precludes a finding that (*10941 entnzstment doctrine of Section 2-
Biltm ore bought the diamond from a ''m erchant 403. U .C .C.,wasinapplicable.
whodealsin goodsofthatkind'
'underj2-403(21.2 Canterra, 4l8 N .W .2d at 272-73. Here, like the
Biltm ore's reliance on Canterra and Standard seller in Olin, Gutekunst was neither a diam ond
m erchant nor an em ployee of M ellen or
Leasing ismisplaced.(Doc.141at7-9.)ln each of M eyrowitz.3
those cases, goods were transferred to sham
corporations which reasonably appeared to be
m erchantsin the typesofgoodssold in the ordinary B.Biltm oreD id NotBuy the Diam ond in the
course ofbusiness.See Canterra Petro.,Inc.v. m Ordinary C ourse ofBusiness
Drillinz ut M ining sb/w/y',418 N.W .2d 267 (N.D.
1987)(oilpipelinesoldby ownerthrough sham oil The entrustment rule set forth in j 2-403(2) is
pipeline companyl;StandardLeasing Corp.v.Mo. lim ited to salesto a ''buyerin the ordinary courseof
Rock Co.,693 S.W .2d 232 (M o.Ct.App.1985) business.''A sale is not in the ordinary course of
(work truckssoldthrough sham leasingcorporation businessunless itis from a person ''in the business
fonred by ownerofconstnlction equipm entleasing of selling goods of thatkind.''U.C.C.j 1-201(9)
company). Neither case addressed the law of (emphasisadded).Asexplained above,Gutekunst
agency or applied the entrustm ent rule where the isnotin the businessofselling diam onds.
seller did notappearto be a m erchantofthe goods
3M ellen cited Olin for the tirst tim e atoralargumcnt. Biltmore

2Citing allegations made in a related lawsuit against Gutekunst, rcspondedby filingasupplementalbricf(Doc.152),which Mellen
BiltmoreassertsthatMellen hasjudiciallyadmittedthatGutekunst hasmovcdto strike(Doc.153).ButtheCourtwasawareofOlin
agent.''(Doc.141 at4.)ButMellcn bcforeoralargument.Asexplained above,the casewasdiscusscdat
was acting as Meyrowitz's''
alleged only that Meyrowitz '' orchestrated'' the scheme and lcngth in Canterra. Thus, Mellen'
s discussion of Olin at oral
Gutekunstsoldthediamond 'onbehalfofMeyrowitz.''(Doc.142!p argumentwasnothing new to the Court.Nonetheless,thcCourthas
8,)Moreover,even ifthissomehow served asan admission ofan considered Biltmore's supplementalbrief addressing the case and
agcncy rclationship, there is no evidence that Biltmore had findsthatitdoesnotchangetheCourt 'sanalysis.Mellen'smotionto
knowledgeoftherelationshipwhen itpurchasedthediamond. strikeisdenied.
$*
Page 8 of12
247 F.Supp.3d 1084,#1094;2017 U .S.D ist.LEXIS 44522,#*l8
But even if Biltm ore had purchased the diam ond loan orrisk forfeiting the diam ond to B iltm ore after
believing Gutekunstg**l9) was M eyrowitz's the loan's 90-day m aturity date unless the
agent,the entrustm entnlle stillwould notapply.A redemption period was extended,as occurred here.
buyer in the ordinary course ofbusiness ''does not (1d.4 Gutekunst made multiple $40,000 interest
include a person thatacquiresgoods ...assecurity paymentsto ' '
keeptheloan/pawnopen.''(Doc.127-
for or in total or partial satisfaction of a m oney 1 at246.)M oreover,Goldstein - an experienced
debt.''1d.Biltm ore contends thatitdid notacquire diamond trader and pawnbroker has him self
the diamond in thismanner(Doc.l41 at 13),but test
ifi
ed that the paw n transaction was not
therecord show sotherwise. converted to a purchase until he forgave the $1
million loan onNovember18,2015.(Doc.24-2!1
Biltluore acquired the diam ond as security for the l1.
)Similarly,Biltmoreaffinnatively allegesin its
$1million loan itextended to Gutekunstaspal4of (*1095) third-party complaint that Gutekunst
the pawn transaction on M arch 2,2015.The pawn conspired to ' 'initially(**2lj pawn thediamond''
ticket's security interest provision m akes this and then later to ''convertthe pawn to an outright
abundantly clear(Doc.127-lat235): salestransaction.''(Doc.6lat18,!70.)
SECURITY INTEREST: To secure my Despite Biltluore's contention thatitpurchased the
paym entofthis Loan and Security Agreem ent, diam ond on M arch 2, 2015, the undisputed
I (Joe Gutekunst) hereby grant Lender evidence show s that the diam ond w as pledged as
(Biltmorej a security interestin the pledged security forthe $1million loan and Biltmore later
goodsdescribed herein ....1prom ise to pay to forgave the loan when it bought the diam ond
the Lender,on orbefore the M aturity D ate,the outright. These facts preclude a finding that
Am ountFinanced,plus allaccrued interestand Biltm oreboughtthe diam ond in the ordinary course
fees set forth in this Loan and Security
ofbusinessunderj2-403(21.
Agreem ent.
ln sum m ary, none of the conditions of the
W hen Biltm ore later purchased the diam ond entrustm entrule can be m etgiven thatthe diam ond
outright for $1.3 million, it paid an additional wasnotentrusted to Gutekunst,he isnota diam ond
$250,000andforgavethe$1million loan($50,000 m erchant,and the diam ond w as notbought in the
waswithheldasinterestontheloan).(Doc.24-2! ordinary courseofbusiness.U.C.C.i2-403(21.
1l.) Because a buyer in the ordinary course of
business doesg**20) not include someone who
acquires goods ''as security for or partial 111.Biltm oreDid NotO btain G ood Title to the
satisfaction of a m oney debt,'' Biltm ore does Diamond Under U.C.C.j9-319
qualify forprotectionunderj2-403(21.
Biltm ore argues that M ellen's transfer of the
Biltlnore claim s that it actually purchased the diam ond to M eyrowitz on m em o constitutes a
diam ond when G utekunst pawned it on M arch 2, consignment under U.C.C. j 9-102(1 420), and
2015,because the U .C.C.deem s a ''pledge''to be a M eyrowitz therefore transfen-ed good title to
purchase and pawn transactions are considered Biltmore as a consignee underIJ-.C.C.# 9-319(a).
purchases under Arizona law. (Doc. 14l at 13 Thatsection provides,with certain exceptions,that
(citing U.C.C.j l-20l(b)(29)-(30);A.R.S.j 44- a purchaser of goods ''from a consignee . is
1621(91.)Butthepawnticketundisputedlyincludes deem ed to have rights and title to the goods
a provision creating a security interest in the identicalto those the consignorhad orhad pow erto
diamond.(Doc.127-1at235.)Although Gutekunst transfer.''The purpose of kk %102(a)(20) and @--
had no obligation to fully redeem the pledged 3194@)is''toprotectgeneralcreditorsg**221 ofthe
diam ond, he prom ised to m ake paym ents on the
Page 9 of12
247 F.Supp.3d 1084,#1095;2017 U.S.Dist.LEXIS 44522,**22
consignee from claim s of consignors that have (*1096j Asexplained above,andpursuantto the
undisclosed consignm ent arrangem ents w ith the express terms ofthe memo (Doc.1 at9),M ellen
consignee thatcreate secretlienson the inventory.'' delivered the diam ond to M eyrow itz only for
Overton v.ArtFin.PartnersLLC. 166 F.Supp.3d ''exam ination and inspection'' by others, not
388.402 (S.D.N ,Y.20161. purchase.The diam ond atalltimes was to ''rem ain
thepropertyof(Mellenj''andhadtobereturned''in
f'
ull in its original fonu.''The m em o m akes clear
A .TheTransaction Between M ellen and that M eyrow itz acquired ''no right or authority to
M eyrowitz W asN ota C onsignm ent
sell...orotherwise dispose ofthediamond.''(/#.
The parties agree that the term s ''on m emo''and (emphasis addedl.
) Given these provisions within
the fourconzersofthe m em o which governs the
''consignm ent'' often are used interchangeably in transaction between M ellen and M eyrow itz - it
the diamond trade, and M ellen itself has referred
cannot reasonably be said that the diam ond was
generally to the transaction with M eyrow itz as a given to M eyrowitz ''for the purpose of sale.''See
''consignment.''Butthis use of ''the tel'm alone is Glenshaw Glass Co.n 67 F.3d at 476. , ln re
not 'm agical.'''ln re Citation Corp.,349 B.R.290.
Greenline,390 B.R.at579.
296 (Bankr. N.D. Ala. 20061. M ellen notes,
correctly,thatitsuse ofthe tenu isno substitute for lt is worth noting that the m em o contains an
the provisions of the m em o govem ing the integration clause,which provides thatthe term s of
transaction orthe legaldetinition of''consignm ent'' the m em o ''represent the entire contract with
in j9-102(a)(20),which requiresthatthe goodsbe respectthe gdiamond)and (**24) which cannotbe
delivered to the merchant ''for the purpose of varied by oral statem ents . . . or any contrary
salel-j'' custom of the trade.''(Doc.l at9.) Thus,even if
the transaction hasbeen called a ''consignm ent''and
Biltm ore contendsthateven though M eyrow itz had
the term isused interchangeably with ''on m em o''in
no authority to sellthe diam ond,itnonethelesswas the diam ond trade, this does not convel't the
given to him ''forthe pulpose of sale''because the
transaction to one for''thepurposeofsale''underj .
end goalofthe transaction was''the ultim ate sale of
9-102(a)(20).
thediamond.''(Doc.139at7.)Butitiswellsettled
thatthere isno consignmentunderj 9-102(a)(20) In summaly, the transaction wasnota consignm ent
where, as in this case, a merchant ''is merely under j 9-102(a)(20), and Biltm ore therefore does
entrusted with temporary possession of the not have good title to the diamond under k 9-
gowner'sjgoodsand hasno authority to sellthem.'' 319(aj,given thatM eyrowitz had no authority to
Glenshaw Glass Co. v. Ontario Grape Growers' sell the diam ond, title always rem ained w ith
M ldz. Bd.s 67 F.3d 470, 476 (3d Cir. 1995) M ellen, and M ellen m aintained the right to recall
(applyingthepredecessorg**23jtoj9-102(a)(20), the diamond atany time.Seeln re Citation,349
formerj2-326(34). ,seeEvergreen,4F.3dat97n.8 B.R. at 296-97 (finding no consignment given
(''ëW 1e join those courts which have held that similartermsin theagreementdespitethefactthat
tem porary entrustm ents of possession by a bailee, it contained ''som e fonu of the tenu consign 68
withoutmore,arenot' saleson consignm ent,'within times''l; see also ztwec/é'/c'
p. 820 F.3d at 516
the meaning of U.C.C. k 2-326.'' ) (citations (refeningto a memo asa''consignmentagreement''
omitted). Similarly, where the intention of the but finding that the subsequent seller had no
owner''wasfortheidenticalthing to bereturned in authority to sellortransfertitleto thediamondl4 .
the same or some altered form, it gisl not a

consignm ent.'' ln re Greenline E (
yt/ï/?., 1nc.% 390
B*R*5765579 (Bankr.N.D.M iss.20081.
...... . .. . . 4BiltmoreassertsthattheCourthasfoundthatMellendeliveredthe
diamondtoMeyrowitzforthepurposcofan''
anticipatedsale.'(Doc.
Page 10 of12
247 F.Supp.3d 1084,*1096;2017 U.S.Dist.LEXIS 44522,**24
R eplevin,and Conversion
B.Biltm oreD id NotBuy the Diam ond from a
Consignee In count one of its com plaint, M ellen seeks a
declaratoly judgment under 28 U.S.C. j 2201
The plain language of k 9-319(a) limits its declaring thatitisthe law fulownerofthe diam ond.
application to purchasers of goods from a (Doc.1 at6,!! 18-22.
)Section 220l(a)provides
''consignee,''which means ''a merchantto (whomj thatin a case ofactualcontroversy within g**261
goodsaredelivered in aconsignment.''U.C.C.j9- itsjurisdiction,afederalcourt,uponthefil ingofan
102(a)(19).Here,even if the transaction between appropriate pleading, 'may declare the rights and
M ellen and M eyrow itz constituted a otherlegalrelations ofany interested party seeking
consignment,(**25) Biltmore stillwould nothave such adeclarationl.l''ln itsreplevin claim asserted
obtainedgood titletothediamond underj 9-3l9(a) in counttw o,M ellen seeks an order for the return
because itboughtthe diam ond from Gutekunst- ofthe diamond.(1d.!!(23-27.)Mellen assel'ts a
not M eyrowitz, the ''consignee.'' Because the conversion claim in count three, seeking dam ages
evidence,even when construed in Biltm ore's favor, should Biltmore failto retul'n the diamond.(1d.!!
shows that diam ond was not delivered to 28-32.)
M eyrowitz on consignment under j 9-102(a)(20)
and Biltm ore did not otherwise buy the diam ond ln their summary judgment briefs, the parties
address issues concerning lawfulownership of the
from a consignee,Biltmore did notobtain good title
underj9-3194a).5 diamond and Biltm ore's affinuative defenses and
claim to good title under the Uniform Comm ercial
Code.Neitherside,how ever,addressed the specific
1V .Biltm oreD id NotObtain Good Title to the claim s asserted by M ellen in its complaint:
Diamond UnderU.C.C.:9-317 declaratory judgment, replevin, and conversion.
The Courttherefore directed the parties to address
Relying on its assertion that the transaction theseclaimsatoralargument.(Doc.l50.)
between M ellen and M eyrowitz was a
consignm ent,Biltm ore contends that it purchased The parties agreed that if the ow nership issue is
the diam ond free and clear ofany security interest resolved on summary judgment,the Courtmay
M ellen m ighthave had in the diamond underk 9- grant relief on the declaratory judgment claim
317, which (*10971 governs the priority of asseted in countone ofthe complaint(Doc.1!!
com peting security interests in goods.As explained 18-22) by declaring one of the parties to be the
above, however, the transaction w as not a lawful owner of the diamond.See 28 U.S. C. j
consignment.M oreover,M ellen is the rightfultitle 2201. Biltm ore m ade clear at oral argum ent that
ownerofthe dialnond,notone with a m ere security resol ution of the declaratory(**27) judgment
interestin the stone. claim would be dispositive as to w ho w ill obtain
possession ofthe diam ond going forw ard and there
therefore is no need to address the replevin claim
V.M ellen'sClaim sfor Declaratory Judgm ent, once law ful ownership is decided. M ellen
confirmed that it has elected the retul' n of the
diam ond as a remedy and doesnotseek a trialand
123at6.)TheCourtdidnoteinthepreliminaryinjunctionorderthat
M ellen delivercd thc diamond to Meyrowitz 'to display it to an award of dam ages on the replevin and
potcntialbuycrs'(Doc.54at8n.7),butthisisconsistentwiththe conversion clai
m s.See A.R.S.kk 12-1307,- 1310.
expresstermsofthememo and,asexplainedabovesdoesnotrender Based on these agreem ents and concessi
ons, and
thetransactionaconsignmentunder1..
%.l-
Q-
7..
(g.
1(70. forreasonsstated above,the Courtgrants summ al'
y
5Giventhisconcltlsion,thcCoultneednotreachMellen'sother judgment on the declaratoly judgment claim in
argtlmcntsrclating to.U.
-9-l02(a)(20)and9-319(a).
Page 1lof12
247F.Supp.3d 1084,*1097;2017 U.S.D ist.LEXIS 44522,**27
favor of M ellen,declares M ellen to be the law ful rem ained the property of M ellen,Biltm ore cannot
ownerofthe dialnond,orders thatM ellen is legally create a triable issue as to whether the statem ent
entitled to possession and return of the diam ond that the diam ond was stolen was either false or
from Biltm ore, and otherwise denies sum mary m ade with m alice orforan improperpurpose.
judgmenton the replevin and conversion claims
asserted by M ellen. The(**29j Court grants summary judglnent in
favorofM ellen on Biltm ore'scounterclaim s.
Vl.Biltm ore'sCounterclaim sfor Slander and

TortiousInterference V II.The M otionsto Exclude and Strike Expert
W itnessO pinionsand Reports
''Slanderof title requires proof of'the uttering and
publication of the slanderous w ords by the Biltm ore hasm oved to exclude the expertreportof
defendant, the falsity of the words, m alice and Richard M ellen (Doc.l3l),and hasmoved to strike
special dam ages.''' SWC Baseline (f Crimson the rebuttalreportofM ichaelTocicki(Doc.137).
lnvestors,L.L.C.v.Auzusta Ranch Ltd.P ' ship.228 Because the Courthasnotrelied on these reports in
Ariz.271.265 P.3d 1070. 1086 (Ariz.Ct.App. ruli
ng on the motionsforsulnmaryjudgment,the
2011) (citation omitted). Similar to the malice m otion to exclude and m otion to strike are denied
as m oot.
requirem ent for slander, a tortious interference
claim requires ''a show ing thatthe defendantacted
improperly.''Barrow v.Ariz.Bd.ofRezents.158 Vlll.Conclusion.
Ariz.7ls761P.2d 145,l52 (Ariz.Ct.App.19881.
M ellen argues that Biltm ore is without There is no triable issue asto whetherM ellen isthe
evidence(**28j to supportitscounterclaims.The lawful owner of the diamond. Biltmore has
Courtagrees. presented no evidence showing that M ellen m ade a
Bil slanderous statem ent or tortiously interfered with
tm ore's claim s for slander and tortious Bil ,
i tm ores business expectancy. The Court w ill
nterference are prem ised on the notion thatM ellen
''consigned and entrusted'' the diamond to grantsummaryjudgmentaccordingly.
M eyrow itz,and Biltm ore therefore is a ''good faith IT IS O RDERED :
purchaserforvalue ofthe diamond and (itsltrue
ownerg.j''(Doc.6115 39,56.)Butnone ofthisis 1. Defendant Biltm ore Loan and Jevvelry-
true.Theundisputed evidence g*1098j showsthat Scottsdale, LLC'S m otion for summary judgment
M ellenistherightfulownerofthediamond. (DOc.123)isDENIED.
Biltm ore alleges that M ellen m ade a slanderous 2. Plaintiff M ellen, lnc.'s motion for sum m ary
statem ent and tortiously interfered with Biltmore's judgment(Doc.126)isGRANTED IN PART and
ability to re-sell the diam ond because M ellen DEN IED IN PART. The Court grants summ ary
contacted the G 1A alleging that the diam ond had judgment in favor ofM ellen on the declaratory
been stolen,thereby causing the GlA to ''red flag'' judgement claim asserted in count one of the
thedialnond.(1d.!! 54,64.)M ellen,however,did com plaint,declares M ellen to be the lawfulow ner
no such thing.The evidence cited by Biltm ore itself of the diam ond, and orders that M ellen is
shows that M ellen's attorneys contacted 1aw legally (**30j entitled to possession and return of
enforcement who then notified the G lA that the the diam ond from Biltm ore. M ellen's m otion for
diamondhad been reported stolen.(Doc.l42! 32.) summary judgment is denied with respectto the
M oreover, given that M eyrowitz had no law ful claim s for replevin and conversion asserted in
authority to sell the diam ond and it at all tim es countstwo and three ofthe colnplaint.
*
Page 12 of 12
247F,Supp.3(11084,*1098;2017 U .S.Dist.LEXIS 44522,**30
3.Biltm ore's m otions to exclude and strike expert

opinionsandreports(Docs.l3l,137)areDENIED
as m oot.
4.Biltmore's motion to supplementbriefing (Doc.

152)isGRANTED andM ellen'smotion to strike
(Doc.153)isDENIED.
D ated this24th day ofM arch,2017.
/s/DouglasL.Rayes
D ouglasL.Rayes
United StatesD istrictJudge

Victim Impact Statement: USA v. Scott Meyrowitz

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Case 9:18-cr-80216-DMM Document 33 Entered on FLSD Docket 02/19/2019 Page 1 of 24

H on.D onald M .M iddlebrooks

Re: USA v.ScottM eyrow itz

Athischange ofplea hearing,M eyrow itz soughtto portray hisfraud against

M eyrow itz'sFraud AgainstM ellen

AfterBiltm ore'sownerexpressed interestin thepawn transaction, M eyrow itz

later,M eyrowitzarranged with Gutekunstto selltheDiam ond to Biltm orefor$1.3

Severalw eeksafterhesentthe Diam ond to M eyrow itz,M ellen'sowner began

In Septem ber2015,M ellen broughtsuitagainstM eyrow itz in Florida state court.

Subsequently,the New York County D istrictAttorney'sO ffice inform ed usthatit

M ellen,Inc.z.BlltmoreLoan & lewelrn scottsdale,ZzG 247F.Supp.3d 1084 (D Ariz. .

2017).W hileM ellen ultimatelyrecovered theDiamond,itrequired threeyearsof

M eyrowitz'sH istory ofFraud

M eyrowitzhasbeen defrauding peoplein thediam ond tradeformorethan 15

In the bankruptcy proceeding,itbecam e clearthatN oble was notM eyrowitz's

M eyrowitz'largestcreditorsin hisbankruptcy casew ere partiesw ho

Id DktNo.327 (OrderGranting M otionsforContemptand Sanctionsagainst

with theCourtabouthisincomeand hiscurrentassetskand)exhibited bad faith in the

W hile hisbankruptcy casew aspending,and atthevery sam e tim e he w as

million judgmentagainstM eyrowitz based on allegationsoffraud and racketeering.l In

There isreason to believethatM eyrow itz hasdefrauded otherpeoplew ho have

(M eyrowitzlcommitted amultitudeofegregiousacts,any oneofwhich

In theM atter of.Greg Brendel z.ScottM eyrowitz,Am erican Arbitration Association

1 Pappas z.M eyrowitz,CaseN o. CV2016-005499,Arizona SuperiorCourt,M aricopa

The arbitratorin M r.Brendel'scase also observed:

Trying to follow M r.M eyrowitz'contradictory and conflicting statem entsin

Athischangeofplea hearing,M eyrow itz tried to m inim ize hisw rongdoing by

l'm owed m illionsand m illionsand m illionsofdollars. Iw asnevergoing to

Q.M r.M eyrowitz,you haveheard theprosecutordescribewhatshewould prove

A.1did that,butlalso which Idon't--Isentfive checks,checks 1716 through

Q.W ho isLittm an,theowner--

Q.--thatyou wereselling for?

5 M eyrow itz'snon-acceptance ofresponsibility athischange ofplea hearing w asthe

Q.So afteryou did this,you tried to pay them back,isthatwhatyou aresaying?

Q.Afteryoum adetheserepresentationsand afteryou pawned itand gotthe

cc: M r.H arry M arcelin

IN THE CIRCUIT CO URT OF THE FIFTEEN TH JUD ICIA L CIRCUIT

MELLEN INC., CaseNo.:502015CA0l0908XXXXMB(AJ)

SCOTT B .M EY RO W ITZ and

DEFEND ANTS'A NSW ER AN D A FFIRM ATIV E D EFEN SES

Defensesto the Plaintiff sComplaint,asfollows:

AIlallegations contained in paragraph one (l)ofthe Complaint,along with alIinferences

AIlallegations contained in paragraph two (2)ofthe Complaint,along with allinferences

3. AIlallegationscontained in paragraph three(3)ofthe Complaint,along with allinferences

4. Allallegationscontained in paragraph four(4)ofthe Complaint,along with allinferences

5. AIlallegationscontained in paragraph five (5)ofthe Complaint,along with allinferences

lack ofjurisdiction. Specifically,thisCourthasnojurisdictionto entertain the Plaintiff's

l2. ln supportofthe foregoing affirm ative defenses,the Defendantsassertasfollow s:

buyerforthe res(i.e.,thering)atissue,inconformancewith a prioragreementbetweentheparties

contractpurchaseprice of$2,200,000.00. SCOTT M EYROW ITZ procured a$1,000,000.00 deposit

proceeding,and as such the Defendantsretain the rightto supplem enttheirAffirmative Defensesas

judgment in theirfavor,thatthe Plaintiff obtain nothing from these Defendants,and thatthe

CASE NO.502015CA01090#XXXXM BAJ

'. 7*,**.>1 y$ jp''

2. lreprtsentto the Couftthatthe Ring wasand isbeing keptsatk and secure.and

3. Irepresentto theCourttttattht Ring willrenlainwhert itiscurrently Iocated(ina

FURTHER AFFIANT SAYETH NAI.

Before n1t the undersigned authority this day of n - x2()l6.

ln svitnesswhereof,1hefeunto setmy hand and atl

M ellen.Inc.v.Biltm ore Loan & Jewelry-scottsdale.LLC

pending resolution of this case. (Doc. 54. ) The California.

2-403(24.Biltmore should have known thata four-

(such as a salesman car dealership), the sold.

3M ellen cited Olin for the tirst tim e atoralargumcnt. Biltmore

the same or some altered form, it gisl not a

Vl.Biltm ore'sCounterclaim sfor Slander and