RECEIVER'S EMERGENCY MOTION TO EXPAND RECEIVERSHIP

VALERIE CAPRONI, District Judge.

Andrew K. Levi, the court-appointed Receiver for 5BARZ International Inc. ("BARZ" or the "Receivership Defendant"), through undersigned counsel, respectfully moves pursuant to the February 18, 2020 Order appointing Receiver (ECF No. 123) for an order expanding the Receivership to include Cubera International, Inc., Cubera Management, Inc., and any other Cubera-affiliated entities (collectively "Cubera"). The relief requested is necessary and appropriate because the Receiver's ongoing investigation has indicated that the Receivership Defendant (and its affiliated entities) and the Cubera Entities are operated as one collective enterprise without due regard for corporate formalities. The Receivership Defendant and Cubera use the same office, and have the same employees and directors. Additionally, Cubera pays for the Receivership Defendant's expenses it wants to pay for and the Receivership Defendant owns part of Cubera.

The Cubera entities are either successors to the Receivership Defendant or the same entity as the Receivership Defendant's entity. More specifically, one of the Cubera entities is the same company as one of the Receivership Defendant's related entities, as it merely changed its name in October 2019, two months after Plaintiff Blue Citi moved to appoint a Receiver. Accordingly, it is appropriate to immediately expand the receivership to include Cubera to preserve their assets and bring them under the Receiver's control.

BACKGROUND

I. The Judgment Against the Receivership Defendant

On September 19, 2019, this Court awarded Plaintiff Blue Citi LLC ("Blue Citi") a judgment in the amount of $180,204.36 in damages, $116,950.00 in prejudgment interest, and $5,837.12 in attorneys' fees, totaling $302,991.48. (ECF Nos. 78-79). The Court then awarded additional attorney's fees in the sum of $5,552.50 by Order dated December 20, 2019, (see ECF No. 118), thereby increasing the judgment amount to $308,543.98 plus any applicable interest (the "Judgment").

II. The Court Appointed a Receiver over the Receivership Defendant

Blue Citi then moved for an order appointing a Receiver to administer, collect, or sell any real or personal property in which Defendant-Judgment Debtor BARZ has an interest and to do any other acts required to satisfy the Judgment. (ECF No. 105). The Court granted Blue Citi's motion on December 20, 2019 (ECF No. 118).

On February 18, 2020, this Court entered its Order appointing Andrew K. Levi as Receiver "of all of the real and personal property of BARZ ... (collectively, the "Receivership Assets")" (the "Receiver Order") (ECF No. 123). The Receiver Order authorizes the Receiver to "take over immediate custody, possession, and control of BARZ, to collect any of BARZ's accounts, ... to obtain control of bank accounts, leases, security deposits, and keys necessary to collect BARZ's assets, and to take any appropriate actions to satisfy the Judgment, including but not limited to obtaining copies of all books and records of any type or nature relating to or evidencing BARZ's interests or rights in any Receivership Assets, including any entities in which BARZ has an interest, including any entities that are identified after the date hereof and BARZ's interests, equity, shares of stock, and accounts receivable including those identified by BARZ in response to the information subpoena served upon it. . ." Id. At 2. (emphasis added). In its response to the information subpoena, BARZ identified various entities it owns shares of, including 5Barz Technology Holdings. (Receiver Decl., ¶ 3; ECF No. 103-1 at Answer to #9).

The Receiver Order also provides that the Receiver is "to identify by its review of the relevant books and records, and any other source of information, any entity in which BARZ has an interest, whether partial or impartial, and whether direct or indirect, and to include any such entity as part of the Receivership Assets." (ECF No. 123 at 3). The Receiver Order further provides that "the Receiver may at any time apply to this Court for further instructions and orders related to this Order and for additional powers necessary to enable the Receiver to perform the Receiver's duties properly at any time on noticed motion..." (ECF No. 123 at 5).

III. Corporate Records Confirm Cubera Entities are Either the Same as the Receivership Defendant or Successor Entities.

Immediately after his appointment, the Receiver commenced investigating the Receivership Defendant's affairs and discovered that the Receivership Defendant and Cubera are related entities, are operated as one collective enterprise without due regard for corporate formalities, and have the same employees and directors. (Receiver Decl., ¶ 5).

The Receiver's review of the public corporate records for the Receivership Defendant showed that the Receivership Defendant was incorporated in Nevada on November 14, 2008. (Id., ¶¶ 6-7). The Nevada corporate records show that the registered agent of the Receivership Defendant in Nevada is Nevada Business Services, located at 1805 N. Carson Street, Suite X, Carson City, NV, 89701, and that the registered agent individuals with authority to act are Ellen Ramsey and/or Clinton Reeves. (Id., ¶ 8). The Receivership Defendant was registered in Florida on March 6, 2014. (Id., ¶ 9). When the Receivership Defendant was registered in Florida on March 6, 2014, it listed Gil Amelio and Daniel Bland as directors, and Daniel Bland as president, secretary, and treasurer. (Id., ¶ 10). The last filed corporate document for the Receivership Defendant in Florida is dated June 13, 2019, and shows that its principal place of business and current mailing address is located at 78 SW 7th Street, Ste. 09-149, Miami, Florida 33130, and that Gil Amelio and Daniel Bland are directors, and Daniel Bland is CEO and CFO. (Id., ¶ 11).

The Receiver also reviewed the public corporate records for the Cubera entities. (Id., ¶ 12). Cubera International, Inc. was formed in Nevada on December 17, 2019, four months after Blue Citi moved to appoint a receiver, and a mere three days before this Court granted the motion to appoint a receiver. (Id., ¶ 13). The current directors of Cubera International, Inc. are Daniel Bland, Gil Amelio, and Samartha Nagabhushanam, and Daniel Bland is the current president. (Id., ¶ 14). The current addresses for these directors according to Cubera International, Inc.'s corporate filing is 78 SW 7th Street, Suite 09-149, Miami, Florida 33130. (Id., ¶ 15). While a Florida office address (the same as the one for the Receivership Defendant) is provided for Cubera International, Inc.'s directors, Cubera International, Inc. is not registered to do business in Florida. (Id., ¶ 16).

The Receiver found another Cubera entity: Cubera Management Inc. (Id., ¶ 17). Cubera Management Inc. was formed in Nevada on March 7, 2016. (Id., ¶ 18). Daniel Bland is Cubera Management, Inc.'s director, president, secretary and treasurer. (Id., ¶ 19). The Nevada corporate records show that the registered agent of Cubera Management, Inc. is Nevada Business Services, located at 1805 N. Carson Street, Suite X, Carson City, NV, 89701, and that the registered agent individuals with authority to act are Ellen Ramsey and/or Clinton Reeves. (Id., ¶ 20). A corporation by the same name (Cubera Management, Inc.) was incorporated as a Florida corporation on June 28, 2017. (Id., ¶ 21). The Articles of Incorporation for Cubera Management, Inc. show that the corporation was originally named 5Barz Technology Holdings Inc., and had a principal place of business address listed at 1805 N. Carson Street, Suite X, Carson City, NV 89701. (Id., ¶ 22). The Articles of Incorporation listed Mark Geoghegan as its registered agent and director, and Daniel Bland as its CEO. (Id.). 5Barz Technology Holdings, Inc. changed its name to Cubera Management, Inc. on October 29, 2019. (Id., ¶ 23). The amendment lists Cubera Management, Inc.'s principal and mailing addresses at 78 SW 7th Street, Suite 09-149, Miami, Florida 33130. (Id.). The amendment is signed by Daniel Bland as CEO and director. (Id.). The last report filed by Cubera Management, Inc. lists 78 SW 7th Street, Suite 09-149, Miami, Florida 33130 as its principal place of business, mailing address, and address of its registered agent Mark Geoghegan, and lists Daniel Bland as CEO, Mark Geoghegan as CFO, and Gil Amelio as chairman. (Id., ¶ 24).

Significantly, in response to the Information Subpoena, the Receivership Defendant stated it owned shares of 5Barz Technology Holdings. (Id., ¶ 25; ECF No. 103-1 at Answer to #9). Since 5Barz Technology Holdings changed its name to Cubera Management, Inc. on October 29, 2012 (two months after Blue City moved to appoint the Receiver), the result is that the Receivership Defendant now owns shares of Cubera Management, Inc., and Cubera Management, Inc. is a receivership asset. (Receiver Decl., ¶ 25). The corporate records show the intricate web formed by the Receivership Defendant and its related entities, and Cubera. (Id., ¶ 26, Exhibit K).

Additionally, internet chatter relating to the Receivership Defendant and Cubera raises concerns. Five days after appointment of the Receiver, the internet chatter describes Receivership Defendant shares that are being exchanged for Cubera shares (Receiver Decl., ¶ 27):

Additionally, Cuberatech India Private Limited appears to be related to 5Barz India Private Limited. (Id., ¶ 28). An individual named Padmanbharao is a director of both Cuberatech India Private Limited and 5Barz India Private Limited. (Id.). 5Barz India Private Limited is owned, in whole or in part, by the Receivership Defendant as admitted by the Receivership Defendant in its response to the subpoena. (Id., ¶ 29).

IV. The Receivership Defendant and Cubera Use the Same Office, have the Same Employees and Directors, the Receivership Defendant Owns Part of Cubera and Cubera Pays Receivership Defendant's Expenses.

On February 24, 2020, the Receiver interviewed Mark Geoghegan who stated he was a financial consultant for the Receivership Defendant,1 and Veronika Turaeva who stated she was a consultant, bookkeeper, and internal accountant for the Receivership Defendant. (Id., ¶ 30). During the interview, Mr. Geoghegan and Ms. Turaeva stated the following:

According to the Receivership Defendant's records, from December 23, 2019 to February 11, 2020, Cubera paid over $60,000 of expenses for the Receivership Defendant, including: (Id., ¶ 32).

As shown above, Cubera and the people who control it (the same people who control the Receivership Defendant) pick and choose which Receivership Defendant's expenses Cubera pays. These payments further confirm that the Cubera entities are both the same entity as one of the Receivership Defendant's entities, and the successor entities to the Receivership Defendant.

ARGUMENT

The Receiver seeks to expand the receivership to include Cubera, so that the Receiver may take possession and control over Cubera's records and assets. The inclusion of Cubera in the receivership estate will facilitate the administration of the assets and, importantly, will allow the Receiver to preserve and improve the assets for the benefit of the Judgment Creditor.

Notably, this Court's Receiver Order contemplates the expansion of the receivership. The Order expressly states the Receiver is "to identify ... any entity in which BARZ has an interest, whether partial or impartial, and whether direct or indirect, and to include any such entity as part of the Receivership Assets" and "the Receiver may at any time apply to this Court for further instructions and orders related to this Order and for additional powers necessary to enable the Receiver to perform the Receiver's duties properly at any time on noticed motion..." (ECF No. 123 at 3, 5). As explained above, one of the Cubera entities owned by the Receivership Defendant (Cubera Management, Inc.) is a receivership asset that merely changed its name. The other Cubera entities and the Receivership Defendant are operated as one collective enterprise without due regard for corporate formalities and should be part of the Receivership estate.

It is well-settled that upon a motion of a receiver, a district court may order entities to be consolidated or brought into an existing receivership, notwithstanding purported corporate formalities at the entities' creation. See SEC v. Elmas Trading Corp., 620 F.Supp. 231, 232-241 (D. Nev. 1985) (receivership expanded to include numerous corporations where there was extensive commingling, personal use of corporate assets, inadequate records, common control and shared business addresses), aff'd, 805 F.2d 1039 (9th Cir. 1986). The key goal behind a proposed receivership expansion should be "to ensure that all available assets are brought within the Receivership and may then be properly distributed to creditors." Id. at 234.

A corporate entity may be disregarded under federal law "in the interests of public convenience, fairness, and equity..." Id. Although piercing the corporate veil principles may be considered in determining whether to expand a receivership, "[f]ederal analysis gives less respect to the corporate form than does the strict common-law alter ego doctrine."6 Id.

Elmas is particularly instructive concerning the expansion of a receivership. In granting the receiver's motion to bring several entities into a Receivership, the Elmas court applied a flexible, yet comprehensive approach, and discussed the following considerations, among others: failure to observe corporate formalities, the insolvency of the debtor corporation at the time; the identity of the officers and directors of the two entities; the use of the corporate entity to procure labor or services for another entity; a similar business location; and utilizing the same address and keeping books and records at the same office. Id., at 233-40. In Elmas, the court stressed that the approach in determining whether the corporate entity should be disregarded was necessarily "flexible" where the primary objective was to "ensure that all available assets are brought within the Receivership and may then be properly distributed to creditors." Id.

Here, the Receivership Defendant and Cubera entities are operated as one collective enterprise without due regard for corporate formalities. The Receivership Defendant and Cubera use the same office, and have the same employees and directors. Additionally, Cubera pays for the Receivership Defendant's expenses it wants to pay for, and the Receivership Defendant owns part of Cubera. Notably, one of the Cubera entities is the same company as a Receivership Defendant's related entity, as it merely changed its name in October 2019, two months after Plaintiff Blue Citi moved to appoint a Receiver.

Because (1) the Court has the authority to expand the receivership to include Cubera, and (2) expansion of the receivership is necessary for the protection of the receivership estate, the Receiver respectfully requests that this Court modify the Receiver Order to expand the Receivership to include the Cubera entities.

Defendant must file a response by March 18, 2020 indicating why the Court should not modify the Receiver Order to expand the Receivership to include the Cubera entities.

SO ORDERED.

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK Case No. 16-CV-9027-VEC

DECLARATION OF RECEIVER ANDREW K. LEVI IN SUPPORT OF RECEIVER'S EMERGENCY MOTION TO EXPAND RECEIVERSHIP

ANDREW K. LEVI, hereby declares, under penalty of perjury in accordance with 28 U.S.C. § 1746, as follows:

1. My name is Andrew K. Levi. I am over twenty-one years of age. I submit this Declaration based on my own personal knowledge and documentary evidence in support of the Receiver's Emergency Motion to Expand Receivership.

2. On February 18, 2020, I was appointed by this Court as Receiver (the "Receiver") "of all of the real and personal property of" 5Barz International, Inc. ("BARZ" or the "Receivership Defendant") (ECF No. 123). The Receiver Order authorizes the Receiver to "take over immediate custody, possession, and control of BARZ, to collect any of BARZ's accounts, ... to obtain control of bank accounts, leases, security deposits, and keys necessary to collect BARZ's assets, and to take any appropriate actions to satisfy the Judgment, including but not limited to obtaining copies of all books and records of any type or nature relating to or evidencing BARZ's interests or rights in any Receivership Assets, including any entities in which BARZ has an interest, including any entities that are identified after the date hereof and BARZ's interests, equity, shares of stock, and accounts receivable including those identified by BARZ in response to the information subpoena served upon it. . ." Id. At 2. (emphasis added).

3. In its response to the information subpoena, BARZ identified various entities it owns shares of, including 5Barz Technology Holdings. (ECF No. 103-1 at Answer to Question #9).

4. The Receiver Order also provides that the Receiver is "to identify by its review of the relevant books and records, and any other source of information, any entity in which BARZ has an interest, whether partial or impartial, and whether direct or indirect, and to include any such entity as part of the Receivership Assets." (ECF No. 123 at 3). The Receiver Order further provides that "the Receiver may at any time apply to this Court for further instructions and orders related to this Order and for additional powers necessary to enable the Receiver to perform the Receiver's duties properly at any time on noticed motion..." Id. at 5.

5. Immediately after my appointment as Receiver, I commenced investigating the Receivership Defendant's affairs. I discovered that the Receivership Defendant and various entities named Cubera, including Cubera International, Inc. and Cubera Management (collectively "Cubera") are related entities, are operated as one collective enterprise without due regard for corporate formalities, and have the same employees and directors.

The Receivership Defendant

6. I reviewed public corporate records for the Receivership Defendant.

7. These records show that the Receivership Defendant was incorporated in Nevada on November 14, 2008. Attached hereto as Exhibit A is a true and correct copy of the entity information for the Receivership Defendant from the State of Nevada Secretary of State website.

8. The Nevada corporate records show that the registered agent of the Receivership Defendant in Nevada is Nevada Business Services, located at 1805 N. Carson Street, Suite X, Carson City, NV, 89701, and that the registered agent individuals with authority to act are Ellen Ramsey and/or Clinton Reeves. See Exhibit A.

9. The Receivership Defendant was registered in the State of Florida on March 6, 2014. Attached hereto as Exhibit B is a true and correct copy of the corporate registration information for the Receivership Defendant from the State of Florida Division of Corporations website.

10. When the Receivership Defendant was registered in Florida on March 6, 2014, it listed Gil Amelio and Daniel Bland as directors, and Daniel Bland as president, secretary, and treasurer. Attached hereto as Exhibit C is a true and correct copy of the registration document for the Receivership Defendant from the State of Florida Division of Corporations website.

11. The last filed corporate document for the Receivership Defendant in Florida is dated June 13, 2019, and shows that its principal place of business and current mailing address is located at 78 SW 7th Street, Ste. 09-149, Miami, Florida 33130, and that Gil Amelio and Daniel Bland are directors, and Daniel Bland is CEO and CFO. Attached hereto as Exhibit D is a true and correct copy of the document filed by the Receivership Defendant on June 13, 2019, from the State of Florida Division of Corporations website.

The Cubera Entities

12. I also reviewed the public corporate records for the Cubera entities.

a. Cubera International, Inc.

13. Cubera International, Inc. was formed in Nevada on December 17, 2019, four months after Blue Citi moved to appoint a receiver, and a mere three days before this Court granted the motion to appoint a receiver. Attached hereto as Exhibit E is a true and correct copy of the of the entity information for Cubera International, Inc. from the State of Nevada Secretary of State website. See also ECF No. 105 (Motion to Appoint Receiver filed on August 2, 2019); ECF No. 123 (Order appointing Receiver).

14. The current directors of Cubera International, Inc. are Daniel Bland, Gil Amelio, and Samartha Nagabhushanam, and Daniel Bland is the current president. See Exhibit E.

15. The current addresses for these directors according to Cubera International, Inc.'s corporate filing is 78 SW 7th Street, Suite 09-149, Miami, Florida 33130. See Exhibit E.

16. While a Florida office address (the same as the one for the Receivership Defendant) is provided for Cubera International, Inc.'s directors, Cubera International, Inc. is not registered to do business in Florida.

b. Cubera Management Inc. (Nevada)

17. I found another Cubera entity: Cubera Management Inc.

18. Cubera Management Inc. was formed in Nevada on March 7, 2016. Attached hereto as Exhibit F is a true and correct copy of the entity information for Cubera Management Inc. from the State of Nevada Secretary of State website.

19. Daniel Bland is Cubera Management, Inc.'s director, president, secretary and treasurer. See Exhibit F.

20. The Nevada corporate records show that the registered agent of Cubera Management, Inc. is Nevada Business Services, located at 1805 N. Carson Street, Suite X, Carson City, NV, 89701, and that the registered agent individuals with authority to act are Ellen Ramsey and/or Clinton Reeves. See Exhibit F.

c. Cubera Management, Inc. (Florida) (previously 5Barz Technology Holdings, Inc.)

21. A corporation by the same name (Cubera Management, Inc.) was incorporated as a Florida corporation on June 28, 2017. Attached hereto as Exhibit G is a true and correct copy of the entity information for Cubera Management, Inc. from the State of Florida Division of Corporations website. Florida assigned number P17000056779 to this corporation. See Exhibit G.

22. The articles of incorporation for the entity now-named Cubera Management, Inc. (entity number P17000056779) show that the corporation was originally named 5Barz Technology Holdings Inc., and had a principal place of business address listed at 1805 N. Carson Street, Suite X, Carson City, NV 89701. Attached hereto as Exhibit H is a true and correct copy of the Electronic Articles of Incorporation for 5Barz Technology Holdings, Inc., entity number P17000056779, from the State of Florida Division of Corporations website. The articles of incorporation listed Mark Geoghegan as its registered agent and director, and Daniel Bland as its CEO. See Exhibit H.

23. 5Barz Technology Holdings, Inc. changed its name to Cubera Management, Inc. on October 29, 2019. The amendment lists Cubera Management, Inc.'s principal and mailing addresses at 78 SW 7th Street, Suite 09-149, Miami, Florida 33130. The amendment is signed by Daniel Bland as CEO and director. Attached hereto as Exhibit I is a true and correct copy of the Articles of Amendment for entity number P17000056779, from the State of Florida Division of Corporations website.

24. The last report filed by Cubera Management, Inc., entity P17000056779, lists 78 SW 7th Street, Suite 09-149, Miami, Florida 33130 as its principal place of business, mailing address, and address of its registered agent Mark Geoghegan, and lists Daniel Bland as CEO, Mark Geoghegan as CFO, and Gil Amelio as chairman. Attached hereto as Exhibit J is a true and correct copy of the Florida Profit Corporation Amended Annual Report for Cubera Management, Inc. entity number P17000056779, from the State of Florida Division of Corporations website.

25. Significantly, in response to the Information Subpoena, the Receivership Defendant stated it owned shares of 5Barz Technology Holdings. (ECF No. 103-1 at Answer to #9). Since 5Barz Technology Holdings changed its name to Cubera Management, Inc. on October 29, 2012 (two months after Blue City moved to appoint the Receiver), the result is that the Receivership Defendant now owns shares of Cubera Management, Inc., and Cubera Management, Inc. is a receivership asset.

The Receivership Defendant and the Cubera Entities are Operated as One Enterprise

26. Attached is Exhibit K, which is a chart based on the publicly-available corporate records as described above. The chart summarizes the intricate web formed by the Receivership Defendant and its related entities, and the Cubera entities.

27. Five days after my appointment as Receiver, the internet chatter described Receivership Defendant shares being exchanged for Cubera shares. Attached hereto as Exhibit L is a composite of true and correct copies of postings I found on Investors Hub's website relating to the Receivership Defendant and Cubera:

28. I also found a website showing that Cuberatech India Private Limited appears to be related to 5Barz India Private Limited. Attached hereto as Exhibit M is a true and correct copy of snapshots of a website called INSTAFinancials. Further, an individual named Padmanbharao is a director of both Cuberatech India Private Limited and 5Barz India Private Limited. See Exhibit M.

29. 5Barz India Private Limited is owned, in whole or in part, by the Receivership Defendant as admitted by the Receivership Defendant in its response to the subpoena. (ECF No. 103-1 at Answer to Question #9).

30. On February 24, 2020, I interviewed Mark Geoghegan who stated he was a financial consultant for the Receivership Defendant,1 and Veronika Turaeva who stated she was a consultant, bookkeeper, and internal accountant for the Receivership Defendant. The interview took place in a conference room at the WeWork located at 78 SW 7th Street, Miami, Florida.

31. During the interview, Mr. Geoghegan and Ms. Turaeva stated the following:

32. Per my request, the Receivership Defendant provided me a list of payments made by Cubera Management, Inc. on behalf of the Receivership Defendant. Attached hereto as Exhibit N is a true and correct copy of the document provided to me by the Receivership Defendant. The document shows that from December 23, 2019 to February 11, 2020, Cubera has paid over $60,000 of expenses for the Receivership Defendant, including:

EXHIBIT A

EXHIBIT B

EXHIBIT C

EXHIBIT D

EXHIBIT E

EXHIBIT F

EXHIBIT G

EXHIBIT H

EXHIBIT I

EXHIBIT J

EXHIBIT K

EXHIBIT L

EXHIBIT M

EXHIBIT N