Banco Nacional Ultramarino, S.A. v. Chan

• Decision Date: 14 March 1996
• Citation: 169 Misc.2d 182,641 N.Y.S.2d 1006
• Parties: BANCO NACIONAL ULTRAMARINO, S.A., Plaintiff, v. Maria F. CHAN et al., Defendants.
• Court: New York Supreme Court

Page 1006

641 N.Y.S.2d 1006

169 Misc.2d 182

BANCO NACIONAL ULTRAMARINO, S.A., Plaintiff, v. Maria F. CHAN et al., Defendants.

Supreme Court, New York County.

March 14, 1996.

Epstein, Becker & Green, New York City (Peter Altieri, of counsel), for Money Center Trust Co., Ltd., defendant.

Lawrence H. Schoenbach, New York City, for Steve Global Services, defendant.

Dorsey & Whitney, New York City (Jonathan M. Herman and Bruce R. Ewing, of counsel), for plaintiff.

LORRAINE MILLER, Justice.

Introduction

The tangled threads of intrigue and complex financial transactions concerning $6,580,150 in stolen funds from the plaintiff span two oceans and four continents, Interpol, IRS, U.S. Secret Service, U.S. Customs Service, the FBI, and the U.S. Drug Enforcement Agency, federal and foreign tribunals and banking institutions all over the globe. This motion involves approximately $1,000,000 of those funds in New York.

Defendant Money Center Trust Co., Ltd. seeks, inter alia, to dismiss the complaint against it pursuant to CPLR 3211(a)(1), (7), (8) and CPLR 327, to vacate the existing TRO, and to secure a denial of the attachment of part of that money in New York City banks sought by the Plaintiff in a cross motion. Defendant Steve Global Services, a New Jersey corporation, with a Bronx, N.Y. post office box, moves to stay the litigation because of a federal criminal indictment pending in New Jersey against it for conspiracy in conducting an unlicensed money transmitting business in violation of Title 18 U.S.C. 1956.

Background

Defendant Maria Fatima Chan ("Chan") was employed in Macau by plaintiff, Banco Nacional Ultramarino, S.A., ("BNU"), a Portuguese government bank, as Manager of Trade Finance Operations. Between January and June 1995, Chan allegedly stole $6,580,150 by transferring funds from various BNU accounts in Macau into the accounts of Brigette Trading and Luen Hin Fat whose principals were part of the conspiracy perpetrating the alleged fraud. Those funds were then wired out of Macau to several locations throughout the world. It is undisputed that nineteen of the wired transfers were processed through the Bank of New York ("BONY"), Citibank, and Bankers Trust Co. in New York City. Accounts maintained by defendants Money Center Trust Co., Ltd. ("Money Center"), a Nigerian company, and Steve Global Services (Steve's), at BONY and Citibank, respectively, received deposits of $637,000 and $400,000 respectively from Brigette Trading and another entity called Keymon International, both of which are controlled/owned by one David Lok. In addition to the $400,000 in BNU funds transferred to the Money Center account via the wire transfers, Steve's then transferred $100,000 of the BNU funds held in its Citibank account into Money Center's BONY account in February, 1995. The complaint alleges that Steve's and Money Center were part of the conspiracy to defraud BNU, and that they converted the stolen BNU funds. The complaint also alleges a cause of action for unjust enrichment against these defendants as well as consequential and punitive damages, etc. In its decision and order of July 24, 1995, this Court extended a temporary restraining order pertaining to Steve's Citibank account # 46929376, up to $637,000, and Money Center's BONY account # 6300581135, up to $400,000. The court reserved decision, pending further information, on plaintiff's request for an order of attachment with respect to those accounts.

Concurrent with the diversion of funds from BNU an investigation of Steve's operations by the U.S. Department of Justice was underway. Two weeks after the hearing before this court on BNU's motion for a TRO on the funds in the accounts in New York City, the U.S. Attorney filed an indictment against Steve's principals, Steve Wangboje and Azie Guice, in the U.S. District Court in New Jersey. The indictment charged that they had engaged in "money laundering" of funds from narcotic operations, wire fraud and conspiracy. The affidavits of the U.S. Drug Enforcement Agency personnel in support of the orders for the interception of wire communications among the defendants indicated that the money laundering scheme was related to drug trafficking activities by car dealerships located in Nigeria. One such dealership was Skymit Motors, Ltd. in Lagos, Nigeria to which Steve's shipped luxury vehicles and parts. Communications intercepted from Wangboje's home with the other defendants "reflect that the Subject[s] themselves are actively involved in fraudulent schemes ... and have customers who were/are engaged in drug trafficking." The wiretaps also revealed that Skymit attempted to impede the investigation in Nigeria by, inter alia, instructing Steve's to manufacture and alter documents, and "stonewall" the investigators.

The extensive wiretap notes and summaries of the communications demonstrated that Wangboje knew that the wire transfers of money from Macau were illegal and that Skymit was implicated not only in the Macau fraud but in a Nigerian bank fraud known locally as a "419" scheme (see, N.Y. Times, 10/12/95, p. A4). In June, 1995 the Nigerian authorities shut Skymit down. The foregoing is but a brief outline of some of the facets of the various and complicated criminal activities involving Nigerian nationals and others that impact on the instant case.

Jurisdiction

The first issue raised by this motion is whether a basis exists for this court to exercise personal jurisdiction over Money Center. It is undisputed that this defendant is a finance company licensed by the Central Bank of Nigeria. Its principal place of business is in Lagos, Nigeria, and Money Center states that its sole nexus to New York and its sole asset here is the aforementioned BONY account through which it receives and disburses U.S. currency.

BNU argues that Money Center is subject to "long-arm" jurisdiction pursuant to CPLR 302(a)(2) which provides that a court may exercise personal jurisdiction over a nondomiciliary who in person or through an agent, "commits a tortious act within the state ...". Superimposed on all CPLR 302 "long-arm" jurisdiction inquiries is the requirement that to exercise such jurisdiction the nonresident defendant must at least have minimum contacts with the forum state "so that maintenance of the ... suit" does not offend notions of "fair play and substantial justice." International Shoe Co. v. Wash. Office of Unemployment Compensation and Placement, 326 U.S. 310, 320, 66 S.Ct. 154, 90 L.Ed. 95 [1945].

In the instant case, it is undisputed that Money Center's BONY commercial checking account was the conduit through which the fraudulent scheme advanced for two years. During that time numerous transactions took place in furtherance of Money Center's financial services business although it contends that it did not conduct any foreign exchange transaction with any entity in New York. It did, however, elect to utilize a New York banking institution and it admits that it directed Skymit to wire to its New York account the U.S. dollars it was purchasing from Skymit. This afforded defendant, Money Center, the protection of New York's Banking Law and access to the extensive communications network available in this financial center which make transfers of foreign currency by wire possible and routine. Additionally, that account is directly related to the causes of action asserted by plaintiff. Thus, in this court's view sufficient contacts exist so that the constraints of the International Shoe Co. case, are satisfied.

The allegation that Money Center used its BONY account to receive and transfer the stolen funds, thus converting the money, satisfies the statutory requirement that the tort occur within the state. However it is contended that New York courts previously interpreted CPLR 302(a)(2) to require that in addition to committing the tortious act in New York, defendant, or his agent, must be physically present in the State. (see, Feathers v. McLucas, 15 N.Y.2d 443, 261 N.Y.S.2d 8, 209 N.E.2d 68 [1965]; McLaughlin, Practice Commentaries, McKinney's Consol. Laws of New York, Book 7B, CPLR C302:17, p. 103-104). Money Center further argues that New York courts have not sustained jurisdiction where defendants made misrepresentations in letters mailed from without the state. (see, Bauer Indus. v. Shannon Luminous Materials Co., 52 A.D.2d 897, 383 N.Y.S.2d 80 [1976].

There are two distinguishing factors which make Feathers, supra, inappropriate and inapplicable in the view of this court. First, assuming the truth of the allegations, Money Center is accused of having committed an affirmative act in New York, money laundering, via instructions conveyed to BONY. (see, Pilates, Inc. v. Pilates Inst., 891 F.Supp. 175 [S.D.N.Y.1995]. Second, to allow a defendant to conspire and direct tortious activities in New York, in furtherance of that conspiracy, and then avoid jurisdiction because it directs those activities from outside the state or country, is to ignore the reality of modern banking and computer technology in the end of the twentieth century! A defendant with access to computers, fax machines, etc., no longer has to physically enter New York to perform a financial transaction which may be criminal or tortious, i.e conversion. He may secrete himself and/or direct activities from locations where jurisdiction may be impossible to acquire, including a boat beyond the three mile limit. Thus, the emphasis should be on the locus of the tort, not whether defendant was physically here when the tortious act occurred. Once the court finds that the tort occurred within the state, it should look at the totality of the circumstances, to determine if jurisdiction should be exercised under CPLR 302(a)(2) (see, Parke-Bernet Galleries, Inc. v. Franklyn, 26 N.Y.2d 13, 308 N.Y.S.2d 337, 256 N.E.2d 506 [1970]--which held that a telephone call during an auction from a buyer outside New York was sufficient to create an agency...