Jack Richter v. KRG Trading, Inc.

• Court: District Court, C.D. California
• Decided: September 3, 2024
• Docket: 2:24-cv-03622
• Status: Unknown

Opinion

2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT

9 CENTRAL DISTRICT OF CALIFORNIA

11 JACK RICHTER, an individual, and Case No. 2:24-cv-03622-MWF(SKx) REAL EQUITIES, INC., an Illinois 12 corporation, ORDER GRANTING PRELIMINARY INJUNCTION

13 Plaintiffs, 14 vs. [FILED UNDER SEAL PURSUANT 15 TO ORDER OF THE COURT DATED KRG TRADING INC., a California 16 corporation; BLUESKY GROUP JULY 23, 2024]

TRADING INC., a California 17 corporation; LONESTAR GROUP LLC, 18 a California limited liability company; KAI-JHEN HUANG, an individual; 19 ROYAL CHRONOS LIMITED, a 20 California corporation; JUNCHAO DUAN, an individual; Z&Q 21 INTERNATIONAL TRADING CO. 22 LTD., a California corporation; ZHENGXIN ZHOU, an individual; 23 DLAB MAX LIMITED, a California 24 corporation; JIEXIN LIN, an individual; 25 WEALTH USA, INC., a New York corporation; AE PAY, INC., a New 26 York corporation; PARETONE 27 CAPITAL (CAYMAN) LTD., a Cayman Islands exempted company; 28 PARETONE CAPITAL FUND LP, a 1 Delaware limited partnership; PARETONE CAPITAL LLC, a 2 California limited liability company; 3 WEI “VINCENT” WANG, an individual; XUEJIN TRADING LLC, a 4 New York limited liability company; 5 XUEJIN LIN, an individual; QUEEN W INVESTMENT, LLC., a California 6 limited liability company; QUN WANG, 7 an individual; APEX SKY LIMITED, a California Corporation; MENGQI LI, an 8 individual; and DOES 1-20, inclusive, 9 Defendants. 10

11 Before the Court is an Order to Show Cause (“OSC”) Why a Preliminary 12 Injunction Should Not Issue. 13 The OSC was noticed to be heard on August 28, 2024. The Court read and 14 considered the papers on the OSC and heard arguments from Plaintiffs’ counsel. 15 This action commenced on May 1, 2024. Plaintiffs filed a First Amended 16 Complaint on July 30, 2024. In their Complaint, Plaintiffs allege that Defendants 17 participated in a romance and investment scheme known as “pig butchering.” (First 18 Amended Complaint ¶ 2). From the actions arising out of the scheme, Plaintiffs 19 allege eight causes of actions: fraud, conspiracy to commit fraud, conversion, unjust 20 enrichment, a constructive trust and disgorgement, violations of 18 U.S.C. § 1962(c) 21 and 18 U.S.C. § 1962(d) and request for injunction. 22 On August 14, 2024, the Court filed an Order Granting Plaintiffs’ Ex Parte 23 Application for Order (1) Temporarily Sealing Court File and Docket; and (2) 24 Lifting Temporary Seal on Fourteenth Business Day After Entry of TRO (Docket 25 No. 57). 26 The Court, finding good cause, issued an Order Granting Plaintiffs’ Ex Parte 27 Application for Temporary Restraining Order for Asset Freeze and Order to Show 28 1 Cause (“OSC”) Why a Preliminary Injunction Should Not Issue and Expedited 2 Discovery and Order Waiving Notice Requirements (the “TRO/OSC”, Docket No. 3 57). The Court set an OSC hearing for August 28, 2024, which was held with only 4 counsel for Plaintiffs appearing remotely. 5 A party seeking a preliminary injunction must establish the following: (1) that 6 he is likely to succeed on the merits; (2) he is likely to suffer irreparable harm in the 7 absence of preliminary relief; (3) the balance of the equities tips in his favor; and (4) 8 an injunction is in the public interest. See Toyo Tire Holdings of Ams. Inc. v. Cont’l 9 Tire N. Am., Inc., 609 F.3d 975, 982 (9th Cir. 2010) (citing Winter v. Nat. Res. Def. 10 Council, 555 U.S. 7 (2008)). 11 “A preliminary injunction is an extraordinary remedy never awarded as of 12 right.” Winter, 555 U.S. at 24. It may take two forms. “A prohibitory injunction 13 prohibits a party from taking action and preserves the status quo pending a 14 determination of the action on the merits.” Marlyn Nutraceuticals, Inc. v. Mucos 15 Pharma GmbH & Co., 571 F.3d 873, 878 (9th Cir. 2009) (internal alterations and 16 quotation marks omitted). A mandatory injunction orders a party to take action. Id. 17 at 879. Because a mandatory injunction “goes well beyond simply maintaining the 18 status quo pendente lite [it] is particularly disfavored.” Id. (internal alterations 19 omitted). 20 “In general, mandatory injunctions ‘are not granted unless extreme or very 21 serious damage will result and are not issued in doubtful cases or where the injury 22 complained of is capable of compensation in damages.’” Id. (quoting Anderson v. 23 United States, 612 F.2d 1112, 1115 (9th Cir. 1979)). 24 The Court determines that the reasons initially justifying the issuance of a 25 TRO are sufficient to justify the issuance of a preliminary injunction. Therefore, the 26 Court concludes that Plaintiffs have established that they are likely to prevail on the 27 merits of their claims. The Court further determines that Plaintiffs have met their 28 1 | burden to establish that they will suffer irreparable harm if an injunction is not 2 | issued, that the balance of equities favors the issuance of an injunction, and that an 3 | injunction is in the public interest. 4 Accordingly, the Court determines that all four Winter factors weigh in favor 5 | of issuing a preliminary injunction replacing the TRO that will remain in effect for 6 | the rest of this action, unless ordered otherwise by the Court at the ORDER TO 7|SHOW CAUSE HEARING on SEPTEMBER 20, 2024, at 3:00 p.m. as to why 8 | the ordered preliminary injunction should not remain in effect for the rest of this 9] action. Defendants shall file a response or oppose the applicability of the 10 | preliminary injunction by September 17, 2024. 11 Plaintiffs must perfect service, including service of this Order, on all 12 | Defendants. Plaintiffs shall inform the Court when they have been able to serve 13 | Defendants. Such notice must be filed as soon as possible, and no later than the next 14 | court day after Plaintiffs learn a Defendant has been served. 15 IT IS SO ORDERED. = HM 2 17 | Dated: September 3, 2024 | : 8 MICHAEL W. FITZG D United States District Judge 19 20 21 22 23 24 25 26 27 28 4. ORDER GRANTING PRET IMINARY INTUNCTION

1 PROOF OF NON-SERVICE

2 I, Staci Black, declare that:

3 I am a resident of the County of Sedgwick, Kansas. I am over the age of 4 eighteen years and not a party to the within entitled action; my business is Harris Sliwoski LLP, 600 Stewart Street, Suite 1200, Seattle, WA 98101. On August 30, 5 2024, I declare that the attached: 6 EX PARTE TEMPORARY RESTRAINING ORDER FOR ASSET FREEZE 7 AND ORDER TO SHOW CAUSE WHY A PRELIMINARY INJUNCTION 8 SHOULD NOT ISSUE AND EXPEDITED DISCOVERY AND ORDER WAIVING NOTICE REQUIREMENTS 9

10 [FILED UNDER SEAL PURSUANT TO ORDER OF THE COURT DATED JULY 23. 2024] 11 has not been served on any party or counsel in this matter. 12 Party/counsel 13 BY U.S. MAIL: By placing a true copy thereof enclosed in a sealed envelope, 14 with postage thereon fully prepaid following ordinary business practices, for 15 deposit with United States Postal Service at my place of business as set forth above, addressed to the person(s) listed above. I am readily familiar with this business 16 practice for collection and processing of correspondence for mailing within the 17 United States Postal Service. In the ordinary course of business, such correspondence would be deposited with the United States Postal Service that same 18 day. 19 BY EMAIL: I transmitted a copy of such document(s) via email to the email address(es) set forth above. 20 BY PERSONAL SERVICE: I delivered a true copy thereof by hand to the 21 addressee(s). BY FEDERAL EXPRESS: I caused such envelopes to be delivered to Federal 22 Express for overnight courier service to the office(s) of the addressee(s). 23 I declare under the penalty of perjury under the laws of the State of California 24 that the foregoing is true and correct, and that this declaration was executed on August 25 30, 2024, in Wichita, Kansas. 26 s/ Staci Black 27 Staci Black 28