Manta Industries Ltd. v. Paul P. Law

Background

Manta Industries filed a second amended complaint alleging that insiders of companies owing Manta Industries money transferred the companies’ assets to themselves and others. The opinion states that a judgment had previously been entered against Rich Kids Jean Corp., Dani Max Design, Inc., Fashion Development Group, and Foldom Industries Ltd., and that the judgment debtors had not paid it.

Paul P. Law and Lourdes Law’s answer was stricken for violating discovery orders. Yogesh M. Anand and Kum S. Casanova’s answer was also stricken for violating discovery orders and the rules governing defaults. The court then held a hearing under Federal Rule of Civil Procedure 55(b)(2) to determine the amount of damages. Paul Law and Lourdes Law attended through counsel and personally; Yogesh Anand and Kum Casanova did not attend.

Evidence and findings

Manta’s financial-fraud expert reviewed bank records, wire-transfer records, checks, bank statements, and charts summarizing the transactions. The court admitted the bank records and charts after overruling objections from counsel for Paul Law and Lourdes Law, who had not shown that the records were untrustworthy.

The evidence showed that $1,330,454.40 was transferred from a Rich Kids Jean Corp. account to Hang Seng Bank in Mainland China. It also showed that $2,543,466.99 was later transferred from banks in China to a JPMorgan Chase account owned by Fashion Industries, Ltd. The court found that Fashion Industries provided no value in exchange for the money and that all four defendants—Paul Law, Lourdes Law, Yogesh Anand, and Kum Casanova—had control over the transferred funds.

The court did not credit Lourdes Law’s testimony that checks payable to cash were used to pay vendors. The court found that the four defendants worked together, knew about the allegedly fraudulent transfers, substantially assisted one another, and financially benefited from them.

Legal conclusions

The court explained that a default admits well-pleaded allegations, but allegations about the amount of damages are not automatically accepted. The court therefore had to determine the proper damages rule and assess Manta’s evidence with reasonable certainty.

Manta sought recovery for actual fraudulent transfers under New York’s Debtor and Creditor Law and also alleged a conspiracy to make fraudulent transfers. The court concluded that Manta established liability for an actual fraudulent transfer and that the four individual defendants were jointly and severally liable under the conspiracy claim. The opinion refers to New York Debtor and Creditor Law § 273(a)(1) when stating that liability was established and to § 276(a) when describing the available remedies.

Damages and disposition

The court awarded Manta Industries $2,543,466.99 against Paul Law, Lourdes Law, Yogesh Anand, and Kum Casanova, jointly and severally. This means Manta may enforce the award against any of those defendants, subject to the judgment’s terms, rather than receiving more than the total amount awarded.

The court also ordered nine-percent simple yearly interest under New York Civil Practice Law and Rules § 5004, calculated from May 1, 2017. The parties were ordered to confer and submit a proposed judgment consistent with the findings and conclusions by December 12, 2025.