Aleksandr Palatkevich & BPVN Techs., Inc. v. Michael Choupak, Anastasia Koroleva, Stanacard, LLC
| Decision Date | 24 January 2014 |
| Docket Number | No. 12 Civ. 1682 (CM),No. 12 Civ. 1681 (CM),12 Civ. 1681 (CM),12 Civ. 1682 (CM) |
| Parties | ALEKSANDR PALATKEVICH and BPVN TECHNOLOGIES, INC., Plaintiffs, v. MICHAEL CHOUPAK, ANASTASIA KOROLEVA, STANACARD, LLC, INTERMEDIA NET, INC. Individually and as the Successor to INTERMEDIA NET, LLC and INTERMEDIA, INC., UNISON TECHNOLOGIES, INC., Individually and as Successor to UNISON TECHNOLOGIES, LLC, VICTORIAN MANAGEMENT, LLC, KEKU, INC., Individually and as Successor to KEKU, LLC, STANACARD, LTD., and EDUARD ROMANOV, Defendants. ARTUR NATAN ZAYTSEV and ANZFS, INC., Plaintiffs, v. MICHAEL CHOUPAK, ANASTASIA KOROLEVA, STANACARD, LLC, INTERMEDIA NET, INC., UNISON TECHNOLOGIES INC., VICTORIAN MANAGEMENT, LLC, KEKU, LLC, STANACARD, LTD. and EDUARD ROMANOV, Defendants. |
| Court | U.S. District Court — Southern District of New York |
Plaintiffs in these two consolidated actions—former employees of Defendant Stanacard, LLC—allege that Stanacard, LLC, its officers and employees, and certain related entities defrauded them and infringed their intellectual property rights. They bring claims for copyright and trademark infringement, 17 U.S.C. § 501 and 15 U.S.C. § 1114, and related New York state law claims. They also seek civil damages under the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. § 1964(c).
Defendants move to dismiss all claims pursuant to, inter alia, Rules 9(b) and 12(b)(6) of the Federal Rules of Civil Procedure. Defendants' motions to dismiss are granted in part and denied in part.
The Amended Consolidated Complaint ("Complaint") in this case is a mess. It has been difficult to tease out Plaintiffs' specific claims and factual allegations from the disorganized and scattershot statements masquerading as a pleading. In addition, the RICO case statement is among the least helpful I have ever seen; it includes a litany of accusations that bear no resemblance to anything in the Complaint. This is what I have managed to discern.
At the time of the events in question, Defendants Stanacard, LLC, Stanacard Ltd., Intermedia.net, Inc. ("Intermedia"),1 Unison Technologies, Inc. ("Unison"),2 VictorianManagement, LLC ("Victorian"), and Keku, Inc. ("Keku")3 (collectively, "the Corporate Defendants") were related companies with common ownership and management.4 These companies were in the business of selling "Voice Over Internet Protocol" ("VoIP") services to users, which enabled the users to place phone calls over the internet at rates that were lower than those charged by phone companies. See Compl. at ¶¶ 40, 68, 71.
Defendant Michael Choupak was the founder, Chairman, Managing Member, and controlling shareholder of each of the six Corporate Defendants. See id. at ¶¶ 15-26, 77. Defendant Anastasia Koroleva—Choupak's wife—was the CEO and a shareholder of Stanacard, LLC; the "Vice President, Legal" of Intermedia (a position in which she supposedly performed no services); and a co-founder, Managing Member, and shareholder of Keku. See id. at ¶¶ 34-36; Palatkevich RICO Case Statement at 6. Defendant Eduard Romanov was a minority shareholder and an "employee and/or officer" of Stanacard, LLC. See Compl. at ¶¶ 38, 57.
In 2006 and 2007, Choupak hired each of the Plaintiffs to work for Stanacard, LLC.
Plaintiffs allege that Defendants engaged in a "theft of services" scheme from about 1995 until 2010, pursuant to which Defendants would hire employees for start-up companies, induce them to provide services by promising them equity interests in those companies, and then deprive the employees of their vested shares. See id. at ¶¶ 268-70; Palatkevich RICO Case Statement at 1-2, 5. Plaintiffs were brought on board pursuant to this scheme. They were promised equity interests but, according to Plaintiffs, Defendants never intended to give them equity in the start-ups; rather, Defendants defrauded Plaintiffs into believing that they would receive equity in the start-ups in order to induce Plaintiffs to work for Defendants. TheComplaint generally alleges that Defendants employed the same "theft of services" scheme to deprive 23 other employees of equity interests, including non-parties Igor Balk, Constantin Filin, Dan Jangigian, and Vladimir Rivkin. See Compl. at ¶¶ 269, 323.
According to the Complaint, Plaintiffs Aleksandr Palatkevich and BPVN Technologies, Inc. ("BPVN")—an entity wholly owned by Palatkevich—entered into a contract with Stanacard, LLC in May 2006 to provide software coding services. Palatkevich agreed to serve as the company's Chief Technology Officer ("CTO"). See id. at ¶ 41. Plaintiffs state that, in return, Stanacard, LLC agreed to provide monetary compensation to Palatkevich and BPVN and to give Palatkevich a ten percent share in Stanacard, LLC. See id. at ¶¶ 94-97.
From May 2006 to July 2009, Palatkevich and a BPVN employee named Alexander Volkov developed software for Stanacard, LLC that implemented the company's VoIP technology. See id. at ¶¶ 96-97, 101-02. The Complaint states that this software "transformed the company into a viable producer and merchant of internet-based telephony." Id. at ¶ 102. Stanacard, LLC's VoIP system "went from being able to handle simultaneous transmission of 10 calls out of a customer base of 1100 subscribers, to simultaneous transmission of approximately 2,000 calls, with a client database of approximately 220,000 subscribers." Id. at ¶ 120. Plaintiffs state that, as a result, monthly revenues increased from $4,760 per month in September 2006 to approximately $1 million per month in 2009. See id. Thus, Palatkevich and BPVN assert that they performed under their contract with Stanacard, LLC.
Initially, Stanacard, LLC paid Palatkevich and BPVN the agreed-upon monetary compensation for their work. In June 2009, however, Choupak and Koroleva allegedly told Palatkevich that Stanacard, LLC was in dire financial condition and that the company wouldhave to drastically reduce his salary or terminate his employment as CTO. See id. at ¶¶ 130-35. According to Plaintiffs, BPVN's operating costs made it impossible for Palatkevich to work for Stanacard, LLC for less money, and Palatkevich was "forced to resign" in July 2009. See id. at ¶¶ 136-37.
On March 31, 2010, Choupak and Koroleva commissioned a valuation of Stanacard, LLC from MFA Cornerstone Consulting ("MFA"), a business appraisal firm. See id. at ¶¶ 139-42. The Complaint alleges that Choupak, Koroleva, and Romanov provided false information to MFA in order to obtain a below-market valuation of the company. MFA valued a ten percent share in Stanacard, LLC at only $32,000, despite the company's $1 million per month revenue stream. In 2009, Koroleva had previously obtained a higher valuation of the company from a different appraisal firm, but it was "discarded." See id. at ¶ 142. Choupak, Koroleva, and Romanov used the low-ball MFA valuation to try to coax Palatkevich into selling his shares for $32,000, but Palatkevich refused. See id. at ¶¶ 141-43.
On August 12, 2010, Choupak unilaterally executed a "First Amended and Restated LLC Agreement" for Stanacard, LLC. See id. at ¶ 144. The document listed Palatkevich as a ten percent shareholder. However, the amendment provided that a shareholder whose employment terminated for any reason automatically forfeited any unvested equity interests, and forfeited vested shares if the company terminated his employment for cause. Palatkevich alleges that he had vested shares and was not terminated for cause. See id. at ¶¶ 144-48.
Nevertheless, Choupak, Koroleva, and Romanov "reassigned" Palatkevich's shares to themselves. See id. at ¶¶ 147-48. As a result, Palatkevich did not ultimately receive a ten percent equity interest in Stanacard, LLC.
The Complaint asserts that Plaintiff Artur Natan Zaytsev and Defendant Choupak reached an agreement in December 2007 that Zaytsev would act as the Chief Financial Officer ("CFO") of Stanacard, LLC and provide financial services. Choupak, who was allegedly acting in his capacity as Chairman and Managing Member of Stanacard, LLC, agreed to compensate Zaytsev with a salary and a ten percent share in the company. See id. at ¶¶ 154-58. Zaytsev entered into the contract on behalf of both himself and Plaintiff ANZFS, Inc. ("ANZFS"), an entity wholly owned by Zaytsev. See id. at ¶¶ 8, 160, 177. The Complaint states that Zaytsev later confirmed his ten percent share of Stanacard, LLC with Choupak in a "written communication" dated March 17, 2008. See id. at ¶ 179. This communication is not appended to the pleading.
From September 2007 to November 2009, Zaytsev provided financial and accounting services to Stanacard, LLC and its related entities. The Complaint states that there were no books, records, or accounts dedicated to Stanacard, LLC prior to Zaytsev's time as CFO. He implemented mechanisms for allocating costs among the six Defendant entities and for complying with the Generally Accepted Accounting Principles on revenue recognition. Zaytsev also established lines of credit for Stanacard, LLC and reduced the company's cost of credit card processing by renegotiating its merchant banking contracts. As a result of Zaytsev's efforts, Stanacard, LLC allegedly obtained a "steady cash flow" through credit card payments by VoIP customers and achieved overall "financial stability." See id. at ¶¶ 160-64.
Stanacard, LLC, Unison, and Victorian paid Zaytsev's salary via transfers to ANZFS. See id. at ¶ 168. However, Zaytsev did not ultimately receive an equity interest in Stanacard, LLC, either.
On December 29, 2008, Stanacard, LLC's General Counsel presented Zaytsev with four documents: (1) a revised limited liability company agreement ("LLC agreement") for Stanacard, LLC, (2) a "Joinder" to the LLC agreement, which confirmed Zaytsev's...
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