Skatteforvaltningen v. The Stor Capital Consulting LLC 401K Plan

CourtDistrict Court, S.D. New York
DecidedJune 26, 2024
Docket1:18-cv-04434
StatusUnknown

This text of Skatteforvaltningen v. The Stor Capital Consulting LLC 401K Plan (Skatteforvaltningen v. The Stor Capital Consulting LLC 401K Plan) is published on Counsel Stack Legal Research, covering District Court, S.D. New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Skatteforvaltningen v. The Stor Capital Consulting LLC 401K Plan, (S.D.N.Y. 2024).

Opinion

DOCUMENT ELECTRONICALLY FILEL UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK DG weer eee ee ee ee ee ee ------ x DATE FILED: _ 6/26/2024 In re CUSTOMS AND TAX ADMINISTRATION OF THE KINGDOM OF DENMARK (SKAT) TAX REFUND 18-md-2865 (LAK) LITIGATION This document applies to: Cases listed in Appendix A ce eee ee ee ee ee ee ee ee ee eee eee eH HH KH HX

MEMORANDUM OPINION

Appearances: Marc A. Weinstein William R. Maguire Neil J. Oxford HUGHES HUBBARD & REED LLP Attorneys for Plaintiff Thomas E.L. Dewey Sean K. Mullen DEWEY PEGNO & KRAMARSKY LLP Elliot R. Peters Julia L. Allen KEKER, VAN NEST & PETERS LLP Attorneys for Defendant Michael Ben-Jacob Sharon L. McCarthy KOSTELANETZ & FINK, LLP Attorney for Defendants John van Merkensteijn, LIT, Elizabeth van Merkensteijn, Azalea Pension Plan, Basalt Ventures LLC Roth 401(K) Plan, Bernina Pension Plan, BerninaPension Plan Trust, Michelle Investments Pension Plan, Omineca Pension Plan, Omineca Trust, Remece Investments LLC Pension Plan, Starfish Capital Management LLC Roth 401(K) Plan, Tarvos Pension Plan, Voojo Productions LLC Roth 401(K) Plan, Xiphias LLC Pension Plan

2 Alan E. Schoenfeld WILMER CUTLER PICKERING HALE AND DORR LLP Attorney for Defendants Richard Markowitz, Jocelyn Markowitz, Avanix Management LLC Roth 401(K) Plan, Batavia Capital Pension Plan, Calypso Investments Pension Plan, Cavus Systems LLC Roth 401(K) Plan, Hadron Industries LLC Roth 401(K) Plan, RJM CapitalPension Plan, RJM Capital Pension Plan Trust, Routt Capital Pension Plan, Routt Capital Trust David L. Goldberg Michael M. Rosensaft Zhanna A. Ziering KATTEN MUNCHIN ROSENMAN LLP Attorneys for Defendants Robert Klugman, RAK Investment Trust, Aerovane Logistics LLC Roth 401K Plan, Edgepoint Capital LLC Roth 401K Plan, Headsail Manufacturing LLC Roth 401K Plan, The Random Holdings 401K Plan, The Stor Capital Consulting LLC 401K Plan LEWIS A. KAPLAN, District Judge. Before the Court are two motions for the issuance of a request for international judicial assistance, commonly termed a “letter rogatory.”1 For the reasons explained below, both motions are denied. Facts This multidistrict litigation (“MDL”) includes more than one hundred actions brought by the Customs and Tax Administration of the Kingdom of Denmark (“SKAT”) in a number of districts throughout the country to recover funds allegedly obtained from it by fraud. SKAT alleges 1 Dkts 979, 983, 989. Unless otherwise noted, all docket citations are to 18-md-2865. that the defendant pension plans and their agents and representatives engaged in a fraudulent tax refund scheme or “trading strategy” whereby they “falsely represented that the plans owned shares in Danish companies, that taxes had been withheld on the dividends, and as tax-exempt entities, they were entitled to refunds.”” SKAT alleges further that, in consequence of these false representations, it paid to defendants over 12.7 billion Danish Kroner, the equivalent of approximately $2.1 billion U.S. dollars, to which they had no legitimate claim. The Judicial Panel on Multidistrict Litigation transferred all of the cases brought by SKAT in other districts to this Court.’ In a November 2021 pretrial order, the Court set a deadline of December 3, 2021 for all fact discovery to be completed and a deadline of April 8, 2022 for all expert discovery to be completed.* The Court established also a procedure for motions for summary judgment in seven “bellwether” cases. Among other things, the Court ordered that the bellwether defendants and plaintiff file a joint Rule 56.1 statement of the material facts as to which there was no genuine dispute.’ In that joint Rule 56.1 statement, which was filed in April 2022, the parties set out, among other things, the mechanics of the trading strategy at the center of this case.° Subsequently, the Court denied the bellwether defendants’ motion for summary judgment in a Dkt 1 at 1. Dkt 1. The fifty-three actions brought by SKAT in this district previously were consolidated for pretrial purposes. Dkt 924 at 5 & n.8 Yn re Customs & Tax Admin. of the Kingdom of Denmark (SKAT) Tax Refund Litig., No. 18-cv-04051, 2023 WL 8039623, at *2 & n.8 (S.D.N.Y. Nov. 20, 2023)]. Dkt 675. Dkt 675. Dkt 790.

November 2023 opinion.’ Earlier this year, the Court issued a pretrial order selecting a subset of cases to be tried in “Trial One.”* The Court subsequently set a number of pretrial deadlines, including for motions for summary judgment, and scheduled the trial to begin in January 2025.° Weeks after the Trial One scheduling order was issued, defendants filed the first of the motions for discovery now before the Court. That motion, which SKAT joined conditionally, sought issuance by this Court of a letter of request to obtain testimony from Sanjay Shah, a non- party witness and the alleged progenitor of the fraudulent scheme, in Denmark pursuant to the Hague Convention.’ Shah, an investment banker who, through his company Solo Capital, designed and executed the trading strategy, is currently on trial for tax fraud in Denmark, to which he was extradited from the United Arab Emirates (“UAE”) in December 2023.'' According to defendants, Shah testified in his Danish trial “in his own defense and. . . his testimony included explanations of the [t]rading [s]trategy.””” The Court held a pretrial conference to consider defendants’ motion and to seek

; Dkt 924. Dkt 961. Those cases are listed in Appendix A. Several of the bellwether defendants are defendants in Trial One. Dkts 978, 987. 10 Dkts 979, 980, 981. 11 Dkt 984 at 2-3. 12 Dkt 984 at 3.

5 clarification regarding several points. Among other things, the Court expressed its concern that, should it issue the requested letter and Denmark act favorably upon it, a delay in taking Shah’s testimony could be used by defendants to seek to delay the trial. Defendants declined to assure the Court that they would commit to proceeding to trial as scheduled regardless of whether Shah’s

testimony was taken.13 The Court also advised defendants to clarify certain points in their motion and to consider including in a revised letter of request a list of questions to be posed to Shah if the Danish court questioned him instead of permitting the parties’ counsel to do so.14 Thereafter, defendants filed a motion to amend/correct their motion for discovery.15 Though they stated that they had “no current intention of seeking to move the trial date” should they be unable to take Shah’s testimony before the start of Trial One, they declined to “categorically waive their right to do so.”16 In addition, defendants revised the proposed letter rogatory “to request the opportunity to submit to the Danish Court a list of questions to be posed to Shah in the event the examination is to be conducted by the Danish Court,” but they did not submit those questions to this Court.17 SKAT opposed the motion.18 Subsequently, defendants submitted a list of questions for

13 Dkt 1008. 14 Dkt 1008. 15 Dkt 983. 16 Dkt 984 at 1. 17 Dkt 984 at 8. 18 Dkt 992. 6 the Danish court to ask Shah, if necessary.19 The day after defendants filed their motion to amend/correct, SKAT moved for this Court to issue a letter of request to obtain testimony from Anthony Mark Patterson.20 Patterson, a former employee of Shah and Solo Capital, recently pled guilty to criminal tax fraud in Denmark

for activity arising from his involvement with the allegedly fraudulent scheme. Plaintiff stated that it “expects that Patterson will testify . . . that Shah and defendants’ ‘trading strategy’ was a fraudulent scheme comprised of fictitious, circular transactions that did not result in the defendant plans owning any Danish shares or receiving any dividends on Danish shares from which tax was withheld.”21 This motion was made contingent upon the Court issuing defendants’ proposed letter of request for Shah’s testimony.22 Defendants opposed SKAT’s motion.23

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Skatteforvaltningen v. The Stor Capital Consulting LLC 401K Plan, Counsel Stack Legal Research, https://law.counselstack.com/opinion/skatteforvaltningen-v-the-stor-capital-consulting-llc-401k-plan-nysd-2024.