Court Documents
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
DYNEGY MARKETING and TRADE, a
Colorado Partnership, )
Plaintiff, )
) No. 02 C 7446
v. )
) Judge Nordberg
MULTIUT CORPORATION, an Illinois
Corporation and NACHSHON DRAIMAN, )
an Illinois Resident, FUTURE ASSOCIATES, )
an Illinois General Partnership, )
Defendants. )
THIRD AMENDED COMPLAINT
Dynegy Marketing and Trade ("Dynegy"), by its attorneys, complains of Multiut Corporation ("Multiut"), Nachshon Draiman ("Draiman"), and Future Associates, as follows:
THE PARTIES
1. Dynegy is a Colorado general partnership with its principle place of business in Houston, Texas. The only partners of the partnership are Dynegy GP, Inc., a Delaware corporation which maintains its principle place of business in Texas, and DMT Holdings, LP, a Delaware limited partnership (f7k/a NGC GP, Inc.).
2. The only partners of DMT Holdings LP are (1) DMT G.P., LLC, a Delaware limited liability company and (2) DMT L.P., LLC, a Delaware limited liability corporation.
3. The sole member of DMT G.P., LLC is DMT Holdings, Inc., a Delaware corporation which maintains its principle place of business in Texas.
4. The sole member of DMT L.P., LLC is DMT Holdings, Inc., a Delaware corporation which maintains its principle place of business in Texas.
5. Multiut is an Illinois corporation with its principle place of business located in Cook County, Illinois.
6. Future Associates has its principal place of business located in Cook County, and is, upon information and belief, an Illinois general partnership.
7. Draiman is an individual residing in Cook County, Illinois.
JURISDICTION
AND VENUE
8. This Court has jurisdiction, under 28 U.S.C. § 1332(a)(l), because the matter in controversy exceeds the sum or value of $75,000, exclusive of interest and costs, and is between citizens of different states.
9. Venue is proper, under 28 U.S.C. § 1391(a), because the defendants reside in and a substantial part of the events or omissions giving rise to the claim occurred in this judicial district.
COUNTI (Breach of Agreement)
10. On or about January 1, 1994, Multiut signed a Natural Gas Sales Agreement with Natural Gas Clearinghouse ("NGC") for the purchase and sale of natural gas (the "Agreement"). A true and correct copy of the Agreement, with Exhibits A and B, is attached as Exhibit 1.
11. On July 7, 1998, NGC changed its name to Dynegy Marketing and Trade.
12. Under the Agreement, Multiut "[acted] as the duly authorized agent and representative of ultimate consumers and users of natural gas delivered to Multiut under the Agreement." (Agreement, page 1.)
13. Under the Agreement, Multiut is "responsible for collecting payment from its principals. The payment to [Dynegy] by Multiut on behalf of Multiut's principals shall be due on
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the twentieth (20th) day of the month, or as to statements delivered after the tenth (10th), within ten (10) days after receipt of such statements." (Agreement, page 5, Article V-A (2).)
14. For natural gas Dynegy delivered to Multiut through December 2000, there existed an outstanding balance owed to Dynegy by Multiut of $1,664,501.06 (after offsets for payments made by Multiut through March 1, 2001).
15. Dynegy sent and/or Multiut received monthly invoices for the purchase and sale of natural gas under the Agreement from January 1, 2001 through December 31,2002 (the "Invoices").
16. Multiut breached the Agreement by failing and/or refusing to pay the Invoices in full when due.
17. As of April 30,2003, the unpaid principal balance due to Dynegy under the Invoices, after application of payments in accordance with Article V-A(3) of the Agreement, is $12,504,912.51 (the "Unpaid Principal Balance").
18. Under the Agreement, "Should Multiut fail to pay all of the amount of any bill when the same becomes due, Multiut shall pay [Dynegy] a late charge on the unpaid balance that shall accrue on each calendar day from the due date at a rate equal to two percent (2%) above the then-effective monthly prime commercial lending rate per annum announced by The Federal Reserve Bulletin from time to time . . . . " In addition, "the late charge . . . shall compound monthly." (Agreement, page 5, Article V-A (3).)
19. Under the-Agreement, "If either principal or late charges are due, any payments thereafter received shall first be applied to the late charges due, then to the previously outstanding principal due and lastly, to the most current principal due." (Agreement, page 5, Article V-A (3).)
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2Q. As of April 30, 2003, the amount of interest due, in accordance with Article V-A(3) of the Agreement, is $593,997.74 (the "Interest").
21. Dynegy has performed all of its obligations under the Agreement.
WHEREFORE, Dynegy requests entry of a judgment in its favor and against Multiut, for $12,504,912.51, plus interest, through the date of judgment, in an amount in excess of 5593,997.74, and such other relief as the Court deems appropriate.
COUNT II
(Breach of Guaranty)
22. Dynegy repeats and reasserts the allegations of paragraphs 1 through 21, inclusive, as paragraph 22.
23. On or about October 31,1995, Draiman and Multiut executed a Guaranty (the "Guaranty"). A true and correct copy of the Guaranty is attached as Exhibit 2.
24. Under the Guaranty, Draiman and Multiut, jointly, severally, and unconditionally "[guaranteed] the payment to NGC promptly when due, or upon demand thereafter, pursuant to the terms of the Agreement, the full amount of all obligation or indebtedness due to NGC under the Agreement."
25. Draiman and Multiut are jointly and severally liable for their obligations under the Guaranty.
26. Draiman and Multiut breached the Guaranty by failing to pay after demand, when due, the Unpaid Principal. Balance and the Interest.
WHEREFORE, Dynegy requests entry of a judgment in its favor and against Multiut, for $12,504,912.51, plus interest, through the date of judgement, in an amount in excess of $593,997.74, and such other relief as the Court deems appropriate.
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COUNT III
(Fraudulent Transfer In Law- Multiut)
27. Dynegy repeats and reasserts the allegations of paragraphs 1 through 26, inclusive, as paragraph 27.
28. At all relevant times, Draiman has been a director, officer and/or control ling shareholder of Multiut.
29. At all relevant times, Draiman has been a general partner in Future Associates or otherwise had authority and/or control over the business affairs of Futures Associates or an entity that had authority over the business affairs of Futures Associates.
30. Since at least January 1999, Multiut failed to make timely payment, when due, for some or all of the natural gas delivered by Dynegy.
31. On March 7, 2001, Ginger Wright of Dynegy and Lenore Kamien of Multiut ' agreed that Multiut owed Dynegy approximately $11,000,000, excluding interest.
32. On September 5, 2001, Dynegy representatives Pete Pavluk and Mark Ludwig met with Multiut representatives Lenore Kamien and/or Nachshon Draiman at Multiut's offices to discuss the amount owed by Multiut.
33. At that meeting, Mr. Draiman said that Multiut did not have funds sufficient to pay the debt owed and that Multiut would propose a payment plan by September 17, 2001.
34. In a September 17, 2001 letter, Multiut proposed a payment plan by which it would make monthly payments, from October 2001 through March 2002, in order to pay down the amount owed to Dynegy. The proposed payments ranged from $600,000 in some months to $1,800,000 in other months. According to Mr. Draiman, Multiut was, "insurefd] [sic] an additional annual profit of $2,000,000" and that, "in the meantime, [Multiut] was working on bank financing as well as funds from private sources for capital infusion."
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35 . In an October 4, 2001 letter to Multiut, Dynegy responded to Multiut's September 17, 2001 proposal by asking for "a detailed formal plan by no later than Wednesday, October 10, 2001 that outlines bringing your account balance current by no later that [sic]-January 15, 2002."
36. In an October 12, 2001 letter, Multiut responded to Dynegy's October 4, 2001 letter by proposing "weekly payments for October through January." The weekly payments proposed by Multiut totaled $7,700,000.
37. Multiut did not make all the weekly payments described in its October 12, 2001
letter.
38. Multiut's check , dated August 23, 2001, made payable to Dynegy for $300,000, was returned for insufficient funds.
39. Multiut's check, dated October 26, 2001, made payable to Dynegy for $150,000, was returned for insufficient funds.
40. Multiut's check, dated November 9, 2001, made payable to Dynegy for $200,000, was returned for insufficient funds.
41. Multiut check no. 1946, made payable to Dynegy for $200,000 and deposited on December 7, 2001, was returned twice due to insufficient funds.
42. On January 8, 2002, Multiut claimed it could not pay the amounts owed to Dynegy because of slow payment by the government in connection with Mr. Draiman's nursing homes.
43. On January 31, 2002, Multiut told Dynegy that it would make a $200,000 payment while it worked to raise cash through a factoring company and while it attempted to arrange a line of credit with Bank Leumi.
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44. Multiut never raised cash through a factoring company or arranged a line of credit with Bank Leumi in 2002 or 2003.
45. In 2002 and 2003, Multiut did not have cash sufficient to pay the Invoices when due.
46. During 2000 and 2001, Multiut had creditors, in addition to Dynegy, to whom it did not make payments when due in the normal course of its business.
47. On June 19, 1998, Multiut entered into a Natural Gas Sales Agreement with WPS Energy Services, Inc. (“WPS”) for the purchase and sale of natural gas.
48. By June 2000, Multiut was indebted to WPS in the amount of $1,625,472 for natural gas delivered to Multiut prior to May 2000.
49. On September 27, 2000, Multiut gave WPS its promissory note in the amount of $1,570,337.87 (the “WPS” Promissory Note).
50. The WPS Promissory Note was a reaffirmation by Multiut of its debt to WPS incurred under the terms of the Natural Gas Sales Agreement between WPS and Multiut.
51. In the summer and fall of 2001, Multiut did not make payments, when due, in accordance with the WPS Promissory Note.
52. On September 27, 2001, WPS filed a lawsuit against Multiut alleging that Multiut defaulted on its obligation under the WPS Promissory Note by failing to make the required payments due on July 10, 2001, August 10, 2001 and September 10, 2001.
53. According to Multiut’s 2002 tax return, Multiut transferred approximately $2,000,000 (or more) to Future Associates, Draiman and/or other entities, including Draiman’s nursing home, hotel and/or other business ventures, at some time during 2001 when Multiut was indebted to Dynegy.
54. Multiut did not receive reasonably equivalent value for the transfer described in paragraph 53.
55. In the years 1999 through 2003, Multiut transferred cash or other assets to Future Associates, Draiman and/or other entities, including Draiman's nursing home, hotel or other business interests when Multiut was indebted to Dynegy.
56. Multiut did not receive reasonably equivalent value for the transfers desciibed in paragraph 55.
57. When Multiut made the transfers described in paragraphs 53 and 55 (the "Transfers"), Multiut was insolvent and/or became insolvent as a result of the Transfers.
58. The Transfers were fraudulent conveyances in violation of applicable laws.
WHEREFORE, Dynegy requests entry of an order granting judgment in its favor and against Multiut, for $12,504,912.51, plus interest, through the date of judgment, in an amount in excess of $593,997.74; voiding the fraudulent transfers and returning the Transfers to Multiut to be used to satisfy the debt to Dynegy; and such other relief as this Court deems appropriate.
COUNT IV (Fraudulent Transfer In Fact- Multiut)
59. Dynegy repeats and reasserts the allegations of paragraphs 1 through 58, inclusive, as paragraph 59.
60. The Transfers were made with actual intent to hinder, delay or defraud Dynegy, a creditor of Multiut and as-such constituted fraudulent conveyances in violation of applicable laws.
WHEREFORE, Dynegy requests entry of an order granting judgment in its favor and against Multiut, for $12,504,912.51, plus interest, through the date of judgment, in an amount in excess of $593,997.74; voiding the fraudulent transfers and returning the money to Multiut to be
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used to satisfy the debt to Dynegy; punitive damages and such other relief as this Court deems
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appropriate.
COUNT V
(Fraudulent Transfer in Law- Future Associates)
61. Dynegy repeats and reasserts the allegations of paragraphs 1 thorough 58, inclusive, as paragraph 61.
62. Future Associates accepted the Transfers of the assets without having provided adequate consideration for the Transfers.
WHEREFORE, Dynegy requests entry of order granting judgment in. its favor and against Future Associates, voiding the fraudulent transfers and returning the money to Multiut to be used to satisfy the debt to Dynegy; and such other relief as this Court deems appropriate.
COUNT VI (Fraudulent Transfer in Law- Diraiman)
63. Dynegy repeats and reasserts the allegations of paragraphs 1 through 58, inclusive, as paragraph 63.
64. Draiman accepted the Transfers without having provided adequate consideration or reasonably equivalent value for the Transfers.
WHEREFORE, Dynegy requests entry of order granting judgment in its favor and against Nachshon Draiman, voiding the fraudulent transfers and returning the money to Multiut to be used to satisfy the debt to Dynegy; and such other relief as this Court deems appropriate.
COUNT VII
(Breach of Fiduciary Duty)
65. Dynegy repeats and reasserts the allegations of paragraphs 1 through 58, inclusive, as paragraph 65.
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66. When Multiut purchased natural gas from Dynegy in 2001 and 2002, Multiut was
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insolvent.
67. Because Multiut was insolvent, Draiman, as a director and officer of Multiut, owed a fiduciary duty to Dynegy, as a creditor of Multiut.
68. Draiman breached his fiduciary duty to Dynegy by causing Multiut to take natural gas from Dynegy when Draiman knew that Multiut did not intend to and/or could not pay for it. Draiman also breached his fiduciary duties to Dynegy by making and/or authorizing the Transfers.
WHEREFORE, Dynegy requests entry of an order granting judgment in its favor and against Draiman, for $ 12,504,912.51, plus interest, through the date of judgment, in an amount in excess of $593,997.74, and for punitive damages and any further relief that this Court deems appropriate.
DYNEGY MARKETING and TRADE
Barry S. Hyman (#6188142)
Helen Wilson
SCHIFF HARDIN & WATTE
6600 Sears Tower
Chicago, IL 60606
(312)258-5500 End
CIRCUIT COURT OF COOK COUNTY, ILLINOIS COUNTY DEPARTMENT, LAW DIVISION
Israel Discount Bank, Ltd., a foreign company, ) Filed January 20, 2004
) Hon. Stuart A. Nudelman
Plaintiff, )
v. )
)
Nachshon . Draiman, ) 2004 L 000663
Defendant. ) JURY DEMANDED
COMPLAINT AT LAW
Plaintiff, Israel Discount Bank, Ltd. ("IDB") by and through its attorneys Peter B. Carey and Diana R. Lamphiere, for its Complaint against Defendant Nachshon . Draiman ('"Draiman"), states as follows:
1. Plaintiff IDB is a foreign company registered in the sovereign Nation of Israel and authorized to conduct business therein. IDB is a commercial bank that, among other things, extends credit to businesses for commercial purposes.
2. Nachshon . Draiman os a citizen of the United States of America and, on
information and belief, a resident of Cook County, Illinois. At all times material to this
Complaint, Draiman was an officer and agent for an Illinois corporation known as Jerusalem
Enterprises, Inc. On information and belief, Defendant Draiman was also the owner of
Jerusalem Enterprises, Inc., and controlled its operations in Israel through his actions and
those of other agents.
3. Jerusalem Enterprises, Inc. ("JEI") is an Illinois corporation that, among other things, was in the business of constructing improvements on real estate, including hotels, in the country of Israel.
4. From time to time during the 1990's Plaintiff IDE, at the special request of the Defendant Draiman, extended credit to JEI and provided banking services to it in Israel. In the beginning of 1999, JEI's debt to Plaintiff IDB equaled approximately $43,000,000.00.
5. From time to time, the Defendant Draiman, caused JEI to pledge certain security of Plaintiff IDB to secure the payment of the debts of JEI to IDB.
6. On or about July 31, 1998, and again on or about August 5, 1998, Defendant Draiman caused JEI to pledge $2,000,000.00 to IDB as security for its debts to IDB. Said $2,000,000.00 was in the form of three checks totaling $2,000,000.00 payable on United States bank accounts of JEI. On information and belief, Defendant Draiman caused the checks to be drawn, to be made payable to JEI, to be executed by JEI's agent in Israel, Elitzur Draiman, and to be delivered to the Plaintiff IDB as security for the debts of JEI.
Copies of the checks are attached hereto as Exhibits A, B and C, respectively.
7. At the time that Defendant Draiman caused these checks to be prepared,
signed and delivered to Plaintiff IDB, Defendant Draiman representedto Plaintiff IDB that
the checks were drawn on valid, existing bank accounts that contained sufficient funds to cover those checks at that time and would contain sufficient funds for as long as a balance on the JEI loans remained outstanding.
8. At the time that Defendant Draiman made the above representations of fact to
Plaintiff IDB, said representations were material to the continued extension of credit by the
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Plaintiff IDB to Defendant Draiman's company JEI, and Defendant Draiman knew this. Said representations, at that time, were false in that with respect to the check drawn on Bank Leumi, the account had been closed on the date the check was drawn or was soon to be closed by Mr. Draiman and, in the case of the two checks drawn on the Success Bank of Lincolnwood Town Center, the bank account contained insufficient funds to cover those checks.
9. At the time these false material representations were made by Mr. Draiman to the Plaintiff IDB, Defendant Draiman knew that each representation was false. He also knew that the Plaintiff IDB was relying upon the truth of those representations in continuing to extend credit to his company, JEI.
10. At the time Defendant Draiman made the above described false representations, the Plaintiff IDB relied upon them as true and continued to extend credit to Mr. Draiman's company JEI in forbearance of any other rights that it then had against said company.
11. In January of 1999. when the debt of JEI to IDB was in default, IDB attempted to negotiate the above described checks given to it by Mr. Draiman as security for the debt of his company JEI.
12. Thereafter, in late January of 1999, Plaintiff learned that the above checks had
been dishonored, discovering for the first time that the representations made by Defendant
Draiman to Plaintiff IDB in July and October of 1998 were false. REG EIV E D
JAN 2 4 2006
7 MJCHAEL W, DOBBINS
6UERK, U.S. DISTRICT COUR>
13. As a direct result of the false representations made by Defendant Draiman to Plaintiff IDB, Plaintiff has been damaged to the extent of $2,000,000.00 plus interest since January of 1999 to the present.
14. At the time Defendant Draiman made the false representations described above to Plaintiff IDB, he did so deliberately and maliciously and with the intent to cause loss and harm to the Plaintiff IDB.
PLAINTIFF DEMANDS TRIAL BY JURY.
WHEREFORE, the Plaintiff Israel Discount Bank, Ltd. prays that judgment be entered against the Defendant Nachshon Z. Draiman in the amount of $2,000,000.00 plus interest, and punitive damages in the amount of $10,000,000.00.
Israel Discount Bank
Peter B. Carey, Esq.
Diana Lamphiere, Esq.
Law Offices of Peter B. Carey
11 South LaSalle Street, Suite 1600
Chicago, Illinois 60603
(312)541-0360
Attorney No. 53033 END
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Dynegy Mkg & Trade v. Multiut Corp, Nachshon Draiman et al 1:02-cv-07446. |
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Court: |
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United States District Court Northern District of Illinois - |
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Case Title: |
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Dynegy Mkg & Trade v. Multiut Corp, Nachshon Draiman et al |
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Case Number: |
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1:02-cv-07446 |
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Judge: |
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Hon. John A. Nordberg |
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Filed On: |
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10/16/2002 |
SUMMARY
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Case Number: |
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1:02-cv-07446 |
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Referred To: |
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Honorable Michael T. Mason |
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Jury Demand: |
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Defendant |
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Demand: |
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$9999000 |
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Nature of Suit: |
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Contract: Other (190) |
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Jurisdiction: |
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Diversity |
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Cause: |
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28:1332 Diversity-Breach of Contract |
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Case Updated: |
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01/20/2005 |
NAMES
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Party Name: |
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Multiut Corporation an Illinois Corporation, |
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Party Type: |
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Defendant |
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Attorney(s): |
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Paul Thaddeus Fox |
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(312) 456-8400 |
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Firm Name: |
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Greenberg Traurig, LLP. |
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Firm Address: |
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77 West Wacker Drive |
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Suite 2500 |
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Chicago, IL 60601 |
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Alan Jay Mandel |
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847-329-8450 |
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Firm Name: |
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Alan J Mandel Ltd |
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Firm Address: |
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7520 North Skokie Blvd |
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Skokie, IL 60077 |
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Ira P. Gould |
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(312) 456-8400 |
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Firm Name: |
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Greenberg Traurig, LLP. |
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Firm Address: |
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77 West Wacker Drive |
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Suite 2500 |
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Chicago, IL 60601 |
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Ronald F. Labedz |
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(312) 456-8400 |
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Firm Name: |
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Greenberg Traurig, LLP. |
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Firm Address: |
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77 West Wacker Drive |
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Suite 2500 |
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Chicago, IL 60601 |
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Steven C. Coberly |
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(312) 456-8400 |
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Firm Name: |
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Greenberg Traurig, LLP. |
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Firm Address: |
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77 West Wacker Drive |
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Suite 2500 |
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Chicago, IL 60601 |
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Party Name: |
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Nachshon Draiman an Illinois Resident |
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Party Type: |
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Defendant |
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Attorney(s): |
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Paul Thaddeus Fox |
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Firm Address: |
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(See above for address) |
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Alan Jay Mandel |
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Firm Address: |
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(See above for address) |
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Ira P. Gould |
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Firm Address: |
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(See above for address) |
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Ronald F. Labedz |
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Firm Address: |
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(See above for address) |
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Steven C. Coberly |
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Firm Address: |
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(See above for address) |
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Party Name: |
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Future Associates an Illinois General Partnership |
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128 |
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01/10/2005 |
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MINUTE ORDER of 1/10/05 by Honorable Michael T. Mason : As stated on the reverse of this order, plaintiff's motion to compel financial documents [124-1] and for sanctions is granted in part and denied in part. [124-2] Defendant's request for reconsideration is denied. (See reverse of minute order.) Notices mailed by judge's staff (hp) (Entered: 01/10/2005) |
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Order Document for Later Delivery |
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126 |
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01/04/2005 |
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BRIEF by Dynegy Mkg & Trade in opposition to defendants' motion for reconsideration and in support of Dynegy's motion to compel [95-1] (Attachments). (vmj) (Entered: 01/06/2005) |
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Order Document for Later Delivery |
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125 |
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12/23/2004 |
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MINUTE ORDER of 12/23/04 by Honorable Michael T. Mason : Plaintiff's reply to its motion to compel financial documents [124-1] and in response to defendant's motion for reconsideration to be filed by 01/03/05. Mailed notice (hp) (Entered: 12/27/2004) |
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Order Document for Later Delivery |
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124 |
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12/20/2004 |
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MOTION by plaintiff to compel financial documents and for sanctions (Attachments); Notice. (hp) (Entered: 12/27/2004) |
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Order Document for Later Delivery |
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86 |
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06/22/2004 |
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RESPONSE by defendants to Dynegy's motion to compel [85-1] or for sanctions [85-2] and motion for protective order (Attachment). (hp) (Entered: 06/23/2004) |
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Order Document for Later Delivery |
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85 |
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06/17/2004 |
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MOTION by plaintiff Dynegy Marketing and Trade, to compel or for sanctions for failure to respond to discovery (Attachments); Notice. (hp) (Entered: 06/23/2004) |
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Order Document for Later Delivery |
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79 |
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05/13/2004 |
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MINUTE ORDER of 5/13/04 by Honorable Michael T. Mason: Status hearing held and continued to 9:00 a.m. on 6/29/04. Plaintiff has until 6/4/04 to answer or otherwise plead to defendant's first amended counterclaims. Fact discovery cutoff is extended to 7/19/04. Defendant's disclosure of expert and expert report by 8/2/04. Deposition of defendant's expert to be completed by 9/1/04. Plaintiff's disclosure of expert and expert report by 10/1/04. Deposition of plaintiff's expert to be completed by 10/15/04. Dispositive motion filing deadline of 8/16/04 is stricken. Plaintiff's motion for sanctions is granted in part and denied in part [78-1]. Defendants are ordered to respond to plaintiff's discovery requests by 5/27/04. Plaintiff's request for attorneys fees is denied. Mailed notice (air) (Entered: 05/14/2004) |
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Order Document for Later Delivery |
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77 |
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05/12/2004 |
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MINUTE ORDER of 5/12/04 by Hon. John A. Nordberg : Defendants' motion to dismiss is denied. [44-1] Defendants' motion for leave to file the first amended answer is granted. [72-1] (See reverse of minute order.) Mailed notice (hp) (Entered: 05/13/2004) |
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Order Document for Later Delivery |
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76 |
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05/12/2004 |
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RESPONSE by defendants to plaintiff Dynegy's motion for sanctions [59-1] [65-1] (hp) (Entered: 05/13/2004) |
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Order Document for Later Delivery |
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78 |
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05/10/2004 |
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MOTION by plaintiff for sanctions (Attachment); Notice. (air) (Entered: 05/14/2004) |
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Order Document for Later Delivery |
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68 |
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03/18/2004 |
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MINUTE ORDER of 3/18/04 by Honorable Michael T. Mason : Motion hearing held. Plaintiff's second motion for sanctions is granted in part and denied in part. [65-1] Defendant is ordered to turn over any unproduced damage requests, invoices and related volumes for 2002 by 03/22/04. Plaintiff's request for dismissal of defendant's affirmative defenses and counterclaims and request for attonrey's fees are denied. Mailed notice (hp) (Entered: 03/19/2004) |
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Order Document for Later Delivery |
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67 |
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03/15/2004 |
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AMENDED NOTICE of motion by plaintiff regarding motion for sanctions [65-1] (Attachments). (hp) (Entered: 03/19/2004) |
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Order Document for Later Delivery |
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64 |
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03/08/2004 |
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AMENDED NOTICE of motion by plaintiff regarding second motion for sanctions (hp) (Entered: 03/09/2004) |
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Order Document for Later Delivery |
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65 |
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03/05/2004 |
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SECOND MOTION by plaintiff for sanctions (Attachments); Notice (hp) (Entered: 03/11/2004) |
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Order Document for Later Delivery |
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61 |
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02/17/2004 |
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MINUTE ORDER of 2/17/04 by Honorable Michael T. Mason : Status hearing held and continued to 03/09/04 at 9:00 a.m. Plaintiff's motion for sanctions is granted in part and denied in part. [59-1] Plaintiff's request for an order dismissing the defendants' affirmative defenses and counterclaims is denied. Defendants to respond to outstanding written discovery regarding the breach of contract claims by 02/24/04. Defendants to respond to outstanding written discovery regarding the fraudulent transfer claims by 03/08/04. Plaintiff's request for attorneys fees incurred in bringing the motion for sanctions is granted. Fact discovery to close on 05/07/04. Expert discovery to close on 06/21/04. Dispositive motions to be filed by 07/21/04. No further extensions. Mailed notice (hp) (Entered: 02/18/2004) |
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Order Document for Later Delivery |
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60 |
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02/13/2004 |
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ADDENDUM by plaintiff to their motion for sanctions (Attachments) [59-1]; Notice (hp) (Entered: 02/18/2004) |
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Order Document for Later Delivery |
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59 |
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02/12/2004 |
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MOTION by plaintiff for sanctions against defendants for failure to comply with discovery (Attachments); Notice (hp) (Entered: 02/18/2004) |
|
|
|
|
|
Order Document for Later Delivery |
END
Nachshon Draiman and Multiut charged with a $15 million judgment for fraud - $21 million with interest
Dynegy vs Multiut, Nachshon Draiman Case No.: 1:02−cv−07446
Honorable John A. Nordberg: Enter Memorandum Opinion and Order.
For the reasons set forth above, defendants motion for summary judgment is granted, and judgment is granted to plaintiff Dynegy, and against defendants Multiut and Nachshon Draiman, Future Associates
Case 1:02-cv-07446 Document 228 Filed 06/11/2008 Page 1 of 1
UNITED STATES DISTRICT COURT
FOR THE Northern District of Illinois − CM/ECF LIVE, Ver 3.2.1
Eastern Division
Dynegy Marketing and Trade
Plaintiff,
v. Case No.: 1:02−cv−07446
Hon. John A. Nordberg
Multiut Corporation, Nachshon Draiman, Future Associates, et al.
Defendant.
NOTIFICATION OF DOCKET ENTRY
This docket entry was made by the Clerk on Wednesday, June 11, 2008:
MINUTE entry before the Honorable John A. Nordberg: Enter Memorandum
Opinion and Order. For the reasons set forth above, defendants motion for summary judgment is granted, and judgment is granted to plaintiff, and against defendants Multiut and Nachshon Draiman, Future Associates on Counts I and II of plaintiffs amended complaint, in the amount of
$15,348,244.72 plus interest accruing from October 1, 2004. Judgment is granted for plaintiff and against defendants Nachshon Draiman, Multiut, Future Associates on Counts I through VI of defendants
ATTENTION: This notice is being sent pursuant to Rule 77(d) of the Federal Rules of Civil Procedure or Rule 49(c) of the Federal Rules of Criminal Procedure. It was generated by CM/ECF, the automated docketing system used to maintain the civil and criminal dockets of this District. For scheduled events, motion practices, recent opinions and other information, visit our web site at www.ilnd.uscourts.gov.
CONCLUSION
For the reasons set forth above, defendant's Nachshon Draiman motion for summary judgment is granted, and judgment is granted to plaintiff - Dynegy, and against defendants Multiut and Nachshon Draiman, Future Associates on Counts I and II of plaintiff's amended complaint, in the amount of $15,348,244.72 plus interest ($21 million) accruing from October 1, 2004. Judgment is granted for plaintiff and against defendants on Counts I through VI of defendants' counterclaims.
FN1. Dynegy has also filed several fraudulent transfer counts alleging that Nachshon Draiman caused Multiut to transfer over $21 million to himself, his family, and related business entities and that most of this money came from the sale of gas delivered by Dynegy. But the present summary judgment motion does not address these counts. (with interest it is $21 million as of October 1, 2008 and increasing by $115,000 every month)
N.D.Ill.,2008.
Dynegy Marketing and Trade v. Multiut Corp., Nachshon Draiman, Future Associates
Slip Copy, 2008 WL 2410425 (N.D.Ill.)
See: www.nachshondraiman.net
Nachshon Draiman aka Nachson Draiman aka N Draiman
Multiut Corp., Multiut LLC, Future Associates, Future Associates LLC, LCF
END OF DOCUMENT
Nachshon Draiman, Chicago – nursing home administrator license (044001323). revoked
|
File Format: PDF/Adobe Acrobat - View as HTML
Nachshon Draiman, Chicago – nursing home administrator license (044001323). revoked and fined $2000 for misrepresenting information in his application ... providing false college diploma
www.idfpr.com/Forms/DISCPLN/0108_dis.pdf - Similar pages |
See: www.nachshondraiman.net
www.nachshondraiman.org
www.draiman.net
www.illinoisantidefamation.org
1. Minute Orders 12/23/04
No notice 1:02-cv-07446 Dynegy Mkg & Trade-v-Multiut Corp, et al Docket Date: 12 /27/04 MINUTE ORDER of 12/23/04 by Honorable Michael T. Mason : Plaintiff's ...
www.ilnd.uscourts.gov/MinOrds/1223.htm - 65k - Cached - Similar pages
2. Minute Orders 01/10/05
No notice 1:02-cv-07446 Dynegy Mkg & Trade-v-Multiut Corp, et al Docket Date: 01 /10/05 MINUTE ORDER of 1/10/05 by Honorable Michael T. Mason : As stated on ...
www.ilnd.uscourts.gov/MinOrds/0110.htm - 145k - Cached - Similar pages
New
IN THE CIRCUIT COURT OF COOK COUNTY, ILLLNQIS
COUNTY DEPARTMENT - LAW DIVISION STATE FINANCIAL BANK, successor by
merger with Hawthorn Bank,
Plaintiff, v.
No. 04 L 008129
EMBASSY CARE ASSOCIATES, LP; NACHSHON DRAIMAN and RAM PERLSTEIN,
Amount Claimed: S4 17, 1 19.85 plus interest, attorney's fees and costs
COMPLAINT
NOW COMES the Plaintiff, STATE FINANCIAL BANK, successor by merger with Hawthorn Bank ("State Financial"), by its attorneys, JONES & JACOBS, and for its Complaint against the Defendants, EMBASSY CARE ASSOCIATES, LP; NACHSHON DRAIMAN and HAIM PERLSTEIN, states as follows:
1. Plaintiff, State Financial, is a banking association organized and existing under the laws of the State of Illinois, with its principal place of business 161 N. Delany Road, Gurnee, Illinois.
2.. Defendant, Embassy Care Associates, LP ("Borrower"}' is a limited partnership
organized and existing under the laws of the State of Illinois with its principal of business at
7514 N. Skokie Blvd., Skokie, Illinois.
3. Defendants, Nachshon Draiman and Haim Perlstein ("Co-Borrowers") are citizens and residents of the State of Illinois, with their principal place of residence at 7520 N. Skokie Blvd.. Skokie, Illinois and 243 Kubbaro Road, Wiimstte, Illinois, respective!}'.
4. On or about September 25. 2003, Plaintiff made a loan to the Borrower and Co-
Borrowers in the principal amount of 2494,744.00 ("Loan").
5. The Lear; is evidenced by the Promissory Note dated September 25, 2002. made by
Borrower and Co-Borrowers payable to Plaintiff in the principal amount of S494.744.00 ("Note"), a
true and correct copy of which is attached hereto as Exhibit "A". -^
6. The maturity date of the Note was extended from Mach 25, 2004 to June 25, 2004
pursuant to the terms of the Change in Terms Agreement dated March 25, 2004, a true and correct
copy of which is attached hereto as Exhibit "B".
7. Default has occurred and exists under the terms of the Note, as extended by the Change in Terms Agreement, in that the Note fully matured and became due and payable on June 25, 2004, and has not been paid.
8. By reason of the foregoing defaults, Plaintiff has elected to declare the entire remaining balance of principal, interest and other charges to be immediately due and payable.
9. Tnere remains a principal balance due in the amount of $416.356.53, plus accrued interest to July 6, 2004 in the amount of $763.32. with per diem interest thereafter at the rate of $69.39 per day, plus late charges as provided for in the Note.
10. Pursuant to the terms of the Note, Plaintiff is entitled to recover its reasonable attorney's fees and costs herein.
WHEREFORE, Plaintiff, STATE FINANCIAL BANK, successor by merger with Hawthorn Bank, respectfully requests that this court enter judgment in its favor and against the Defendants, EMBASSY CARE ASSOCIATES, LP; NACHSHON DRAIMAN and HAM PEKLSTEIN, jointly and several!}', in the aggregate amount of principal, interest. late charges, attorney's fees and costs, and grant such other and further relief as may be just in the premises.
STATE FINANCIAL BANK, successor by merger with Hawthorn Bank,
|
TINA M-JACOBS One of Its Attorneys |
Richard C. Jones, Jr.. Esq.
Tina M. Jacobs, Esq.
Tonya M. Parravano, Esq.
JONES & JACOBS
77 W. Washington Street
Suite 1615
Chicago, Illinois 60602
(3121 419-0700
Attorney No. 34274
C'XDOCUME—1 WquinnVLOCALS—1 \Temp\iNotsE Web AccessComplainuooc^
0 END
IN THE CIRCUIT COURT OF COOK COUNTY, ILLINOIS MUNICIPAL DEPARTMENT, 2ND DISTRICT
MULTIUT CORPORATION, An Illinois Corporation. Defendant.
04M2001804
NOW COMES the Plaintiff, ROBERT LUBIN by and through his attorney, PAUL GOODMAN, of PAUL GOODMAN & ASSOCIATES and as and for his Comlaint against the Defendant, MULTIUT CORPORATION, states as follows:
1 . That on September 7. 2002. the Plaintiff. ROBERT LUBIN -entered into
contract with MULTIuT CORPORATION for the sale of natural cas. See-Conlract
attached as Exhibit "A". !
. That the contract in paragraph 2 states as follows:
"MULTFJT hereby agrees to ship natural gas to CONSUMER according to the following Pricing Option: £.04 Percentage of Index Savings. Shipments may be subject to a $.02 per therm delivery charge." See
Contract attached as Exhibit "A". UNITED STATES BANKRUPTCY COURT
NORTHERN OISTR1CT OF IILINOIS
JUL I I 2005
KENNETH S. GARDNER, CLERK PUBLIC SERVICE COUNTER
fThis form replaces CCMD 063~-2 thru 6)
IN THE CIRCUIT COURT OF COOK COUNTY, ILLINOIS
2- —— MUNICIPAL DISTRICT
| ORDER
This matter having come before the court, the court having jurisdiction as being fully advised in the premises:
IT IS ORDERED AS FOLLOWS:
4219 B C
4001 "SC XP Default Judgment for Plaintiff For $ $25,771.82 plus costs .
9293 3 Assess costs
4002 Q XP Default Judgment for Defendant For S __
4219 Q (on counter complaint or third party complaint)
4293 3 4293 Assess costs _______________
4001 D XP Default Judgment For Plaintiff
4301 Q XP Default Judgment for specific Litigant
4219 Q
8001 a Judgment for Plaintiff after trial for S ______
9207 D Payment Plan Q yes U no.
4293 G Assess costs
and Costs.
UNITED STATES BANKRUPTCY COURT NORTHER* DISTRICT Of ILLINOIS
JUL I I 2005
ENNETH S. GARDNER, CLERK PUBLIC SERVICE COUN i tR
and Costs.
8002 D Judgment for Defendant after Trial
£301 Q Judgment for Specific Litigant after Trial ie favor of
_________________________ For S
2 See Attached Order
Atty. No. 22821
Name: Paul Goodman.
Attorney For: Plaintiff Address: _555 Skokie Blvd.-T
City/Zip: Northbrook, IL. 60062
_
DOROTHY BROWN, CLERK OF THE CIRCUIT COURT OF COOK~COUNTY, ILLINOIS
END
Jan 30 '03 13:55 P. 01
FROM :SHERWIN MANOR NURS. CTR. FAX NO. :773 2740152 . Jan. 30 20S3 1B:38P^ PI
"V "
Jan. 29, 2003 via fax and airborne express
Multiut Corporation 7514N. Skokie Blvd
Skokie, IL 60077
Fax #(847)382-0991
To Whom it May Concern:
Pursuant to ray conversation with Jean, credit for overpayment all for December 2002 did not appear on our January statement. After initial review of our bills, indication of over-billing appears.
, based on our conversation, all extra gas therms billed to Sherwin Manor are put into a "storage bank" for future use.
We hereby request a full reconciliation of all charges? billed to Sherwin Manor, actual usage, and all gas therms put into our "bank" for our future use, from your initial start of our service in February of 1991.
No future payments will be issued until this recompilation is received by Sherwin Manor.
Thank you for your assistance.
Sincerely,
Devora Osina
7350 North Sheridan Road Chicago, HHnoie 6O638
(773) 274-1OOO
Fax f7T3) 274-23S3 r" a P- ttvv
|
Qreentierg Traurig CHI 1 ; Page FUTURE ASSOCIATE |
|
THE
ECUMENICAL INSTITUTE
4750N.ShfiJadan.Rd.
Chicago, IL. 60640
(773)769-6363 |
9-26-01
To: Multiut Corporation Re: Taxes paid on gas bills To Whom It May Concern:
As you are aware, The Ecumenical Institute has been a Multiut gas client for many years. In fact, we have been customers for so long that we should have taxes collected and paid for, that were collected at a time when it was not known whether taxes would be collected on gas accounts. As far as I am aware, the decision has come down, some years ago, that there arc no taxes collected on gas bills. 1 would appreciate it if you would review your records and credit us for the amount collected for such taxes that turned out not to be owed. I am not sure exactly how much money this will come out to, but I believe it should be m the neighborhood of $ 1 0,000.00.
In addition, if there are any taxes that we are still paying, we would like to make it well known, That we are a tax exempt organization and are a non-profit, 501 C3 organization. We are also not in the best of financial positions and always seem to be somewhat behind. We do get audited regularly and the auditors could be asked to figure out what we are actually owed, but they would charge us to do this and you should have this readily on record. It would be greatly appreciated if you could see a way to promptly review and credit our account for any of the monies that should be credited, as well as any interest due on such monies. Please contact me, or Larry Schwartz, as soon as possible, to let me know what the status of this account is.
Your assistance in this matter is greatly appreciated. Sincerely.-
Ken Otto, Facility Engineer
CC: Larry Schwartz:, Leased Space Manager, Mr. Bob Maganuco, Attorney, Board of Directors, Paula Philbrook Otto, Finance Department
ROWELL INCORPORATED
From the desk of Kara Gould, CMCA, AMS
1871 Hicks Road Rolling Meadows, IL 60008 847-991-6000, fax 847-991-6122 Email - RowelH973@aol.com web site • rowellmanagement.com
February 23, 2001
|
To: Rita - MultiUt
Fr: Kara Gould
Re: Windhaven |
Rita, . ' :
I have several questions about Windhaven as it relates to the gas bills. I've .done an analysis of Windhaven's bills, and wonder if you could explain why the Association was charged to store the gas at .51/therm yet we are only being credited at;3215/therm when it's deducted?
Also, I analyzed another property of mine that is with NICOR Energy and from June
through December of 2000, it appears that NICOR's per therm charge is less expensive,
Can you explain this, as these bills are obviously huge and if we can save money
elsewhere, I'll have to recommend that to my Board. '
Please respond in writing so that I don't lose anything of your explanation by taking my own notes. Thank you very much for your help and Hook forward to your answer.
Kara CORPORATE AMERICA SCANDAL SHEET
The Corporate Scandal Sheet
last updated in August
see references
|
Corporation/CEO |
Scandal |
Investigations |
Auditor |
Election Cycle 2002 Contributions (from corporation; from CEO) |
CEO Compensations |
Other |
|
|
|
Adelphia Communications/ John Rigas (quit) |
Under investigations by the SEC and two federal grand juries for multibillion dollar, off-balance-sheet loans to its founders, the Rigas family. Former CEO Rigas, his son and former CFO Timothy Rigas were arrested for securities fraud. |
SEC, 2 federal grand juries and an internal investigation. (legal action) |
Deloitte & Touche LLP |
to Democrats: $1,500; $0 CEO; to Republicans: $25,050; $52,250 CEO |
$1.4 M salary |
stock drop since 1/14/00:
-99.75% |
|
|
|
AES/ Dennis W. Bakke |
Use of secured equity-linked loans (SELL) that grossly inflated revenues and bolstered stock prices. These loans are not carried on the company expense sheets, since they are paid back by issuing stocks--further diluting value and ownership of company. |
|
Deloitte & Touche LLP |
data not available |
potential value of FYE options: $9,520,000 |
posted $445M loss so far this year |
|
|
|
AOL Time Warner/ Robert Pittman |
Accused of erroneously inflating advertisement revenue to keep stock prices inflated assuring greater stock price through mega-merger with Time Warner. (article) |
Class action lawsuit, SEC, DOJ |
Ernst & Young LLP |
to Democrats: $649,847; to Republicans: $114,678; CEO info not available |
$1,904,347; potential value of FYE options: $66,578,750 |
stock down 59% in 2002, stock at 52-week low |
|
|
|
Arthur Andersen LLP/ Joseph Berardino (quit); Company found guilty of obstruction of justice; David B Duncan, former partner, accused of ordering the destruction of Enron-related papers, plead guilty to obstruction of justice |
Obstructed justice in the Enron investigation. Other scandals include: 1. WorldCom (3.9 billion in hidden expenses), 2. Boston Market Trustee Corp (Agreed to pay $10.3M to in suit claiming a façade of corporate solvency), 3. Baptist Foundation of Arizona ($217M settlement), 4. Department 66 ($11M settlement), 5. Sunbeam ($110M settlement), 6. Colonial Reality ($90M settlement), 7. Waste Management ($75M settlement) |
SEC investigation, DOJ investigation. |
NA |
to Democrats: $177,221; CEO information not available; to Republicans: $413,517; CEO information not available |
More than $1 M in salary alone |
|
|
|
|
Bristol Myers/ Fred Schiff (resigned); Peter Dolan |
Accused of purposefully inflating sales by offering incentives to wholesalers--including warnings that it planned to raise prices--in order to meet last year's revenue expectations. |
SEC investigation. |
Pricewaterhouse Coopers LLP |
to Democrats: $216,341; $1,000 CEO; to Republicans: $1,136,262; $11,500 CEO |
|
lowest stock price since 1996 |
|
|
|
Cendant/ Henry Silverman |
Paid $2.83B to shareholders after internal audits revealed CUC Intl. (which merged with HFS to form Cendant) inflated income by $500M through fraud and accounting errors. |
|
Deloitte & Touche LLP |
to Democrats: $10,000; CEO information not available; to Republicans: $0; CEO information not available |
$40,056,773 in salary options and bonus |
|
|
|
|
Citigroup/ Sanford I. Weill |
Congressional investigators testified that CITIgroup helped Enron Corp and others set up "sham" transactions to alter their finances. These transactions included loans that allowed Enron to hide nearly $4B of debt. |
Senate Committee on Government Affairs. |
KPMG LLP |
to Democrats: $618,545; $3,027 CEO; to Republicans: $756,000; $2,379 CEO |
$26,694,959 in total compensation |
stock down 48% this year |
|
|
|
CMS Energy/ William T. McCormick Jr.,CEO (resigned); Rodger Kershner, general counsel and senior vice-president (resigned) |
Disclosed it overstated revenue by nearly $4.4B in 2000 and 2001 by using artificial "round trip" energy trades |
Class action lawsuit.SEC, CTFC, US Attorney's Office in Houston and NY |
Arthur Andersen LLP |
to Democrats: $122,775; $1,000 CEO; to Republicans:$169,890; $0 CEO |
$1,100,000 total compensation |
number of lost jobs: 50; stock drop since 1/14/00:
-56.78% |
|
|
|
Computer Associates/ Charles Wang |
Agreed to a $638,000 penalty in April to settle charges with the Justice Department that it violated pre-merger rules after announcing it would acquire Platinum Technology Inc. |
SEC investigation. |
KPMG LLP |
to Democrats: $19,250; $1,000 CEO; to Republicans: $108,450; $0 CEO |
$1.03M salary, options, grants |
stock drop since 1/14/00:
-73.58% |
|
|
|
Cornell Companies Inc./ Steven W. Logan (removed) |
Pending Class action suit claims Cornell and its officials of making misleading statements on behalf of shareholders. Arthur Andersen questions "unusual $3.7M retainer" to Lehman Bros Holdings Inc. |
Class action lawsuit. |
Arthur Andersen LLP |
information not available |
$505,000 total compensation |
stock down over 50% |
|
|
|
Dollar General/ Cal Turner |
Shares dropped 13% following reduced earnings report for last 2 years of nearly $200M; Took a fourth quarter charge of $162M to settle shareholder suits over accounting missteps. |
Settled litigation. |
Ernst & Young LLP |
to Democrats: Corporate information not available; $0 CEO; to Republicans: Corporate information not available; $7,500 CEO |
|
|
|
|
|
Duke Energy/ R. Priory |
Investigations into "round trip" energy trades with other energy producers to inflate volumes and revenues. These falsified trades added $1B to revenues over three years. |
SEC, the Commodity Futures Trading Commission and CA state regulators and attorney general class action lawsuit. |
Deloitte & Touche LLP |
to Democrats: $91,575; $0 CEO; to Republicans: $289,989; $1,000 CEO |
$8,831,475 in total compensation including stock option grants. |
|
|
|
|
Dynegy/ Chuck Watson (ousted) |
Tried to merge with Enron; target of several federal probes into alleged sham trades aimed at artificially pumping up revenue and volume. Dynegy’s longtime chief executive, Chuck Watson, resigned in May, and it has announced a major restructuring. |
SEC, the Commodity Futures Trading Commission and CA state regulators and attorney general. |
Arthur Andersen LLP |
to Democrats: $55,101; CEO information not available; to Republicans: $102,330; CEO information not available |
$1.5M salary, $5M bonus, 1.5M options |
stock drop since 1/14/00:
-64.97% |
|
|
|
El Paso/ William Wise |
Identified 125 "round trip" trades used to bolster revenues and market share. |
SEC, CFTC, Houston US Attorney's office |
Deloitte & Touche LLP |
to Democrats: $0; $0 CEO; to Republicans: $277,569; $8,558 CEO |
$39,286,780 salary stock option grants |
|
|
|
|
Enron/ Ken Lay (left company) |
Once the nation’s largest energy trader, collapsed into the largest-ever U.S. bankruptcy on Dec. 2 amid an investigation surrounding off-the-book partnerships that were allegedly used to hide debt and inflate profits. |
SEC and DOJ investigations; team of attorneys representing investors and employees in civil lawsuits; Senate Committee on Government Affairs. |
Arthur Andersen LLP |
to Democrats: $158,390; $0 CEO; to Republicans: $411,860; $13,710 CEO |
$67.4M salary and bonus, $70M in loans |
stock drop since 1/14/00:
-99.80% layoffs: 6,100 |
|
|
|
General Electric Corporation/Jack Welch (retired); Jeffrey Immelt |
1. GE Capital is a primary financial backer to WorlCom, providing a financial crutch to the corporation that would go on to file the largest bankruptcy claim in the history of the US; 2. Largest corporation to lack an independent board; 3. 77% of GE's 401k's was invested in company stock as of 2001; 4. GE paid its independent auditor 3 times as much for non-audit fees in 2000 |
Congressional inquiry into the lending practices of JP Morgan and Citigroup, both of which were partners with GE in lending to WorldCom |
KPMG LLP |
to Democrats: $170,859; $1,000 from former CEO Welch; to Republicans: $341,718; $10,500 CEO; $1,000 from former CEO Welch |
former CEO Welch: total compensation $18,893,720; CEO Immelt: compensation $6,592,771; potential value of FYE options $30,936,585 |
stock down 38% on the year |
|
|
|
Global Crossing/Leo Hindery, Gary Winnick |
Faces probes by the SEC and the FBI regarding its accounting practice and for allegedly engaging in network capacity swaps with other telecommunications firms to inflate revenue; CEO acknowledges that Global Crossing's actions "may in some fashion misled the market." NYT 3/22/02 |
SEC, DOJ; pending class action lawsuit; over 60 investor fraud lawsuits in total. |
Arthur Andersen LLP |
to Democrats: $754,716; $312,000 CEO; to Republicans: $429,204; $0 CEO |
|
stock drop since 1/14/00:
-99.87% |
|
|
|
Halliburton/ Dave Lesar |
Whether it improperly recorded revenue from cost overruns on big construction jobs |
SEC |
Arthur Andersen LLP |
to Democrats: $9,000; CEO information not available; to Republicans: $70,950; CEO information not available |
|
stock drop since 1/14/00:
-56.51% |
|
|
|
HPL Technologies, Inc./David Lepejian (former CEO, founder) |
Facing charges that corrupt accouting practices inflated stock prices following IPO, allowing executives to sell 85,500 shares at inflated prices. Also facing charges of violating Security Exchange Act of 1934. Company expects to restate profits for 2001 and 2002. |
Class action lawsuit pending. |
Pricewaterhouse Coopers LLP |
data not available |
$184,046 total compensation |
Company stock halted on NASDAQ since 7/26/02 following 72% drop |
|
|
|
IM Clone Systems Inc./ Samuel Waskal (arrested) Charged with insider trading |
Under investigation by a congressional committee to determine if it correctly informed investors that the U.S. Food and Drug Administration had declined to accept for review its experimental cancer drug; Samuel Waksal, former chief executive of ImClone, was arrested June 12 on insider trading charges. |
SEC, DOJ, Congressional litigation. Pending class action lawsuit. |
KPMG LLP |
to Democrats: $17,000; CEO information not available; to Republicans: $0; CEO information not available |
$550,000 salary, $450,000 bonus, 1.2M options |
stock drop since 1/14/00:
-52.34% |
|
|
|
JP Morgan Chase & Co./ William B. Harrison |
Congressional investigators testified that JP Morgan Chase helped Enron Corp and others set up "sham" transactions to alter their finances. These transactions included loans that allowed Enron to hide nearly $4B of debt. |
Senate Committee on Government Affairs. |
Pricewaterhouse Coopers LLP |
to Democrats: $260,830; $2,000 CEO; to Republicans: $204,938; $0 CEO |
$17,149,013 in total compensation |
|
|
|
|
Kmart/ Charles Conaway |
SEC investigating accounting and other practices. The company investigated whether it improperly accounted for vendor allowances and since changed its practices. |
SEC, and internal investigations headed by Skadden, Arps, Slate Meagher & Flom Law firm. (legal action) |
Pricewaterhouse Coopers LLP |
to Democrats: $136,000; CEO information not available; to Republicans: $244,942; CEO information not available |
$1,375,000; potential value of FYE options: $4,031,498 |
stock drop since 1/14/00:
-91.02% |
|
|
|
KPMG/ Michael J. Donahue |
SEC alleges accounting missteps by KPMG that allowed Xerox to post knowingly erroneous profits/earnings |
SEC investigations (1, 2). |
NA |
to Democrats: $0; to Republicans: $136,675 |
|
|
|
|
|
Lucent Technologies/ Henry Schact |
Adjusted 2000 revenues by $679 million, spurring SEC investigation. Also investigating whether vendor- financing played an improper role in sales. |
|
Pricewaterhouse Coopers LLP |
to Democrats: $39,550; to Republicans: $43,090 |
$21.56M salary, grant options |
stock drop since 1/14/00:
-93.39% |
|
|
|
Martha Stewart Living Omnimedia/ Martha Stewart Accused of insider trading obstruction of justice and providing false statements to the SEC |
Stewart is under investigation for possible insider trading, obstruction of justice and making false statements in IM Clone investigation. |
|
Arthur Andersen LLP |
to Democrats: information not available;$36,000 CEO; to Republicans: information not available; $0 CEO |
$900,000 salary, $1.16M bonus $647,737 other |
|
|
|
|
Merck & Co/ Raymond Gilmartin |
Recorded $12.4B in revenue from the company's pharmacy-benefits unit over the past three years that the subsidiary, Medco, never actually collected. |
Shareholder lawsuits alleging that Merck falsely inflated revenue by including retail co-payments. |
Arthur Andersen LLP |
to Democrats: $81,020; $0 CEO; to Republicans: $271,242; $25,000 CEO |
$28,024,762 total compensation |
|
|
|
|
Merrill Lynch & Co/ David H. Komansky |
Agreed to $100M settlement with NYS Attorney General regarding charges it tailored stock research to win investment banking business. Suspended 2 employees including Martha Stewart's broker after an internal probe relating to sale of IMClone shares. |
SEC; NY State Attorney General focusing on securing a $100M settlement after accusing Merrill Lynch of "hyping" stocks to win business for its banking unit |
Deloitte & Touche LLP |
to Democrats: $1,000; $2,000 CEO; to Republicans: $50,000; $0 CEO |
$16,127,527 total compensation |
|
|
|
|
MicroStrategy/ Michael J. Saylor |
Settled without admitting wrongdoing an SEC suit accusing it of backdating sales contracts to meet quarterly financial estimates and other improper revenue recognition practices. |
|
Pricewaterhouse Coopers LLP |
to Democrats: $1,000; CEO information not available; to Republicans: $1,000; CEO information not available |
$150,000 |
stock drop since 1/14/00:
-99.07% |
|
|
|
Network Associates/ George Samenuk |
Investigations regarding whether it hid expenses and overstated revenue from 1998 to 2000. |
SEC, NY attorney general's office |
Coopers & Lybrand LLP |
to Democrats: $400; $1000 CEO; to Republicans: $500; $0 CEO |
|
stock drop since 1/14/00:
-28.25% |
|
|
|
Peregrine Systems/ Stephen P. Gardener (left) |
The SEC is investigating the overstatement of revenues after the software company restated results on reports that sales were inflated by $100M in three years. |
SEC |
KPMG LLP (switched from Arthur Andersen LLP) |
Information not available |
$854,237 |
|
|
|
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Phar-Mor/ Abbey Butler and Melvyn Estrin |
In restated first quarter results, Phar-Mor is taking a $2.4 million charge to write down the value of its entire investment in Chemlink. Co-CEO's pursue over $320,000 in bonus pay during bankruptcy hearings. Auditor Pricewater House Cooper missed signs of fraud. |
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Pricewaterhouse Coopers LLP |
Information not available |
Butler: $525,439; Estrin: $525,439 |
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PNC Financial Services/ James E. Rohr |
Restated its 2001 results by $155 million after regulators raised concerns about how PNC accounted for a transfer of loans. |
Class action lawsuit, SEC investigation |
Ernst & Young LLP |
to Democrats: $18,200; CEO information not available; to Republicans: $47,500; CEO information not available |
$1.97M salary; $1.17M bonus |
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Pricewaterhouse Coopers/ Sam DiPiazza |
Accounting scandals include:
1. Phar-Mor: overestimation of profits; 2. Gazprom: suits over false and misleading statements; 3. Pinnacle Holdings: accounting violations; 4. Avon Products: accounting violations; 5. PwC Securities: independence standards |
SEC investigations: settled 3 investigations involving Pinnacle Holdings, Avon and PwC Securities with SEC with $5 million fine. |
NA |
to Democrats: $129,826;CEO information not available; to Republicans: $633,860;CEO information not available |
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Qwest Communications/ Joseph P. Nacchio (quit) |
Under investigations to determine if it inflated revenue for 2000 and 2001 through capacity swaps and equipment sales |
SEC investigations.
DOJ, FBI, Denver US Attorney's office |
Arthur Andersen LLP |
to Democrats: $247,681; $0 CEO; to Republicans: $394,514; $2000 CEO |
$1.17M salary, $1.15M bonus 7.25M options |
stock drop since 1/14/00:
-88.35% |
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Reliant Energy/ R. Steve Letbetter |
Admitted it inflated revenue by counting artificial "round trip" energy trades. Under SEC investigation for into accounting matters and energy trades relating to restatement of profits. |
SEC, CFTC |
Deloitte & Touche LLP |
to Democrats: $78,550; CEO info not available; to Republicans: $217,672; CEO information not available |
$5,543,555; potential value of FYE options: $2,028,120 |
number of lost jobs: 50 |
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Rite Aid/ Robret G. Miller |
Indicted for fraud after it inflated profits by $1.6B from 1997-1999. Scandal missed by auditor KPMG which resigns as auditor for company. |
SEC |
Deloitte & Touche LLP |
Information not available |
$8,504,149; potential value of FYE options: $582,879 |
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Sunbeam/ Al Dunlap (ousted) |
SEC files accounting fraud suit against 4 executives. Executive Albert J. Dunlap settles for $15M. Auditor Arthur Anderson settles shareholder suit for $110M. |
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Arthur Andersen LLP |
Information not available |
$2,701,511; potential value of FYE options: $806,462 |
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Tyco Intl. Ltd./ L. Dennis Kozlowski (quit and indicted on 11 felony counts) |
Under investigation into whether executives used corporate cash to buy art and a home. Tyco’s former chairman, Dennis Kozlowski, resigned June 3, a day before being indicted for evading about $1 million in sales taxes from art purchases. Accused of improperly creating "cookie jar" reserves that were supposed to cover merger costs but instead were drawn on to boost profits; and improperly "spring loaded" earnings from acquisitions by accelerating their pre-merger outlays. |
SEC, Manhattan District Attorney's office and company's internal investigation. (legal action) |
Pricewaterhouse Coopers: collected $37.9 million in consulting fees in 2001 |
to Democrats: $64,500; CEO information not available; to Republicans: $233,872; CEO information not available |
$1.65M salary, $4M bonus, $30.4 restricted stock awards 1.4M options |
stock drop since 1/14/00:
-55.15% layoffs: 11,000 |
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Vivendi Universal/ John-Marie Messier (forced to quit) |
May incur $1.1B charge as the result of off-balance sheet accounting. Attempted to add $1.5B in net profit in deal relating to sale of British Sky Broadcasting Group PLC (MSNBC 7/02/02). Moody's relegated Vivendi's credit rating to "junk bond status" (NYTimes 7/02/02) |
Class action lawsuit. |
Gutierrez & Co. |
to Democrats: $126,574; CEO information not available; to Republicans: $79,000; CEO information not available |
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Waste Management/ Maurice Myers |
Overstated income from 1992-1996 by more than $1B Anderson pays $7M fine to SEC for issuing false and misleading reports as well as part of $229M shareholder settlement. |
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Arthur Andersen LLP |
to Democrats: $0; CEO information not available; to Republicans: $117,300; CEO information not available |
$1,451,979; potential value of FYE options: $4,529,928 |
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WorldCom Inc./ Bernard Ebbers (quit; under fire for borrowing $408M from WorldCom to cover margin calls), John Sidgmore |
Hid $3.85 billion in expenses, allowing it to post net income of $1.38 billion in 2001, instead of a loss. Charged with fraud by SEC. NY State pension fund files $300M suit |
SEC investigation; NY State Comptroller filed a motion in Federal District Court saying NY state pension fund lost more than $300M because of fall in stock price; House Financial Services Committee subponea 4 executives to testify, and all take the fifth. |
Arthur Andersen LLP |
to Democrats: $508,625; CEO information not available; to Republicans: $510,055; CEO information not available |
$1M salary, 1.2M shares |
number of lost jobs: 17000 stock drop since 1/14/00:
-96.90% |
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Xerox/ Rick Thoman |
Xerox said June 28 it would restate five years of results to reclassify more than $6 billion in revenues. In April, the company settled charges that it used “accounting tricks” to defraud investors. |
SEC investigation |
KPMG LLP |
to Democrats: $27,950; CEO information not available; to Republicans: $29,575; CEO information not available |
$1.25M (2000 Salary and bonus for CEO Paul Allaire) Allaire also sold $16M in stock before earnings were recalculated and shares fell nearly 80% (NYTimes 4/7/02). |
number of lost jobs:1500 stock drop since 1/14/00:
-67. |
The Corporate Scandal Sheet: References
Corporate and CEO political contributions:
- Center for Responsive Politics
This site provides information relating to the 2002 election cycle and was downloaded from FEC on 6/3/02.
- "Political Contributions" 6/26/02 The Washington Post A10.
CEO compensation:
- AFL-CIO
- "Dennis the Menace" Daniel Eisenberg 6/17/02 Time.
- E-comp online
- "Executive Excess 2001" Sarah Anderson, Institute for Policy Studies and John Cavanagh, United for a Fair Economy.
- "Executive Compensation Scorecard" 4/15/02 Business Week.
- "Why the Bad Guys Of the Boardroom Emerged en Masse" 6/20/02 The Wall Street Journal.
Scandal information:
- "AOL's Pittman May Resign Today" 7/18/02 The New York Times.
- "Anderson Blames Client; Auditor's Role at Issue" 6/27/02 The Washington Post E5.
- "Creative Transactions Earned Team Rewards" 6/19/02 The Washington Post A1.
- "Dennis the Menace" Daniel Eisenberg 6/17/02 Time.
- "Did KPMG Stand Up, or Cave In, to Xerox?" 4/12/02 The New York Times.
- "Executive Pay: A Special Report; Tell the Good News. Then Cash In" 4/7/02 The New York Times.
- "Energy Firm Restates by $7.8 Billion" 7/6/02 The Washington Post.
- "Honcho Shuffle at AOL" 7/18/02 CNN/Money.
- "Merck Recorded $12.4 Billion in Revenue It Never Collected" 7/8/02 The Wall Street Journal.
- "Noteworthy Corporate Investigations" 7/2/02 Financial Times.
- "Regulators make Reliant probe formal" 6/21/02 The Houston Chronicle.
- "SEC eyes Bristol-Myers" 7/15/02 CNN/Money.
- "Shareholder In Gazprom Of Russia Sues Auditor" 4/16/02 The New York Times W1.
- "Table: Accounting Failures Aren't New-Just More Frequent" 1/28/02 Business Week Online.
- "Trouble Keeping the Scandals Straight?" 6/30/02 The Washington Post H3.
- "Unconventional Transactions Boosted Sales" 7/18/02 The Washington Post.
- "Vivendi's Chief Quits, and Shares Fall on Accounting Fear" 7/2/02 The New York Times.
- "Vivendi tanks on accounting jitters" 7/2/02 MSNBC.
- "Vivendi may face charge of $1billion" 5/2/02 The Orlando Sentinel.
- "WorldCom probe shifts to ousted CEO Ebbers" 7/2/02 MSNBC.
Investigation information:
Stock price changes:
- "Dennis the Menace" Daniel Eisenberg 6/17/02 Time.
- "Why the Bad Guys Of the Boardroom Emerged en Masse" 6/20/02 The Wall Street Journal.
Auditor information:
- Obtained from corporate SEC filings available from EDGAR.
- "Recomputing Earnings With Lawbook and Eraser" 7/2/02 The New York Times.
Layoffs/jobs lost:
- AFL-CIO
- "CMS to cut back energy unit" 7/2/02 Financial Times.
- "Executive Excess 2001" Sarah Anderson, Institute for Policy Studies and John Cavanagh, United for a Fair Economy.
- "Profiles in greed: Corporate titans cash in" 6/30/02 Billings Gazette.
MULTIUT - NACHSHON DRAIMAN -Perversion of Justice
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