Kyko Global seek a temporary restraining order to enjoin Defendants Prithvi Information Solutions

PLAINTIFFS’ MOTION FOR TEMPORARYRESTRAINING ORDER AND EXPEDITED DISCOVERY

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SLINDE NELSON STANFORD

601 Union Street, Suite 4400Seattle, WA 98101

p. 206-237-0020; f. 503.417.4250

UNITED STATES DISTRICT COURT

WESTERN DISTRICT OF WASHINGTON

AT SEATTLE

KYKO GLOBAL, INC., a Canadiancorporation, and KYKO GLOBAL GMBH, aBahamian corporation,

Plaintiffs,

v.

PRITHVI INFORMATION SOLUTIONS,LTD., a Pennsylvania corporation, PRITHVICATALYTIC, INC., a Delaware corporation,PRITHVI SOLUTIONS, INC., a Delawarecorporation, PRITHVI INFORMATIONSOLUTIONS INTERNATIONAL, LLC, aPennsylvania limited liability company,INALYTIX, INC., a Nevada corporation,INTERNATIONAL BUSINESSSOLUTIONS, INC., a North Carolina,corporation, AVANI INVESTMENTS, INC., aDelaware corporation, ANANYA CAPITALINC., a Delaware corporation, MADHAVIVUPPALAPATI AND ANANDHANJAGARAMAN, husband and wife and themarital community composed thereof, GURUPANDYAR AND JANE DOE PANDYAR,husband and wife and the marital communitycomposed thereof, and SRINIVAS SISTAAND JOHN DOE SISTA, husband and wifeand the marital community composed thereof,DCGS, INC., a Pennsylvania company, EPP,INC., a Washington corporation, FINANCIALOXYGEN, INC., a Washington corporation,HUAWEI LATIN AMERICAN SOLUTIONS,INC., a Florida corporation, L3C, INC., a

Case No.

PLAINTIFFS’ MOTION FORTEMORARY RESTRAINING ORDERAND EXPEDITED DISCOVERY

Case 2:13-cv-01034 Document 2 Filed 06/17/13 of 25


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p. 206-237-0020; f. 503.417.4250

Washington corporation.

Defendants.I. INTRODUCTION

Plaintiffs Kyko Global, Inc. and Kyko Global GmbH (collectively, hereinafter “Kyko”)

seek a temporary restraining order to enjoin Defendants Prithvi Information Solutions, Ltd.

(“PISL”) and its affiliates, officers, directors and certain individuals acting in concert from

moving, transferring or otherwise dissipating assets subject to Kyko’s secured claims.

Defendants have engaged in a calculated scheme of deception and subterfuge to defraud, deceive

and/or misrepresent the existence of certain customer account receivables pledged or sold to

Plaintiffs as security for certain advances made to PISL under a factoring arrangement.

Defendants’ collective conspiracy to defraud Plaintiffs out of over $17 million involved the

creation of fictitious, counterfeit customers and associated verifications of accounts receivable,

which, in turn, induced Kyko to advance the funds. As a result of such wrongful conduct and by

misrepresenting the true nature of their counterfeit operations, Defendants concealed the fact that

the customer accounts receivables did not exist, and, more significantly, hid the fact that Kyko

would never be paid back more than $17 million.

Plaintiffs seek a temporary restraint on transfer of assets without prior notice to

Defendants because Defendants have engaged in a pattern of deception and prior schemes to

transfer assets among multiple shell entities formed by Defendants (both in the United States and

foreign countries). Not only have Defendants admitted to transfer of assets to evade creditors in

the past, but Defendants have also admitted to doing so with respect to some customer account

receivables pledged to Kyko. And, with respect to existing customer account receivables that are

not counterfeit, Defendants are diverting these funds from payment to Kyko as required under



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p. 206-237-0020; f. 503.417.4250

the parties’ factoring agreement and the guarantees. Therefore, there is ample evidence that

Defendants will likely transfer, dissipate or hide the assets again if given the chance to do so.

Plaintiffs seek a temporary injunction pending a hearing on a preliminary injunction in

order to safeguard monies derived from legitimate accounts receivables and any other assets

where they are located. Plaintiffs seek to maintain the status quo of Defendants’ assets in order

to protect any ability to recover pending the Court’s adjudication on the merits.

II. FACTUAL BACKGROUND

A. Kyko’s Business Relationship for Factoring Services with Defendant PISL,Security for Monies Advanced, and the Verification Process on the AccountsReceivable.

Kyko and PSIL entered into a factoring agreement in November 2012. Declaration of

Kiran Kulkarni (“Kulkarni Decl.”) at ¶¶2-4. PISL and its officer and directors represented that

PISL was a growing, vibrant and successful information technology (“IT”) services company

that served many large, brand-name customers based in the United States, including customers

such as Microsoft, Huawei, Dicks Sporting Goods, Enterprise, and many more. Id. at ¶ 3.

The business relationship between Kyko and PISL, which is typical of such factoring

arrangements, had multiple steps in order to ensure Kyko would receive payment on legitimate

customer accounts receivables directly from the customer. Id. First, PISL would identify certain

customer accounts receivable for IT services and would authorize direct payment on these

customer accounts receivable to be made to Kyko in exchange for a portion of the amount

outstanding from its customers to be paid immediately by Kyko. Id. Then, before advancing the

monies to PISL, Kyko would send the invoice to the actual customer, and obtain the customer’s

signed acknowledgement back by email verifying that the services were provided by PISL and



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p. 206-237-0020; f. 503.417.4250

that the invoices were both legitimate and accurate. Id. Kyko would also confirm with the

customer that payments should be made to Kyko rather than PISL. Id.

After the verification process with the customer was complete, Kyko would then advance

PISL a portion of the invoice amount by transferring the money via wire transfer to PISL. Id.

When the invoice became due, PISL’s customers would make payment directly to Kyko. Id.

Kyko would then pay the balance of the invoiced amount to PISL less Kyko’s interest and

certain fees. Id. If the customer did not ultimately pay Kyko, PISL remained obligated to repay

Kyko for the total amount of the customer account receivable. Id. at ¶ 5. In other words, Kyko

was financing PISL’s business, but was not agreeing to provide insurance to PISL or in any way

taking on the risk for a customer’s nonpayment. Id..

B. Guarantees Are Executed by Defendants to Secure PISL’s Obligations toKyko And Kyko Seeks Verification of Five Large Customer AccountReceivables.

To further secure PISL’s obligations to Kyko under the factoring agreement, Kyko

requested and obtained certain guarantees from PISL and its affiliated companies, officers and

directors. Id. at ¶ 6. PISL, its affiliated U.S. company, Prithvi Catalytic, Inc. (“Catalytic”), and

Madhavi Vuppalapati (“Madhavi”) executed separate guarantees in November and December

2011 promising that:

[T[he Guarantor, absolutely, irrevocably and unconditionally, guarantees asthe primary obligor and not merely as a surety, to the Trade Financier [KykoGlobal, Inc.] the punctual and complete payment and satisfaction when due(whether at stated maturity, by acceleration or otherwise), and at all timesthereafter, of each of the Obligations.

Id. at Exs. A, B & C, §1.1 at p. 1. Madhavi is an officer and/or director of a number of PISL

affiliated companies located in the United Sates, including PISL, Prithvi Information Solutions

International, LLC (“PISI”), and Prithvi Solutions, Inc. Id. at ¶ 7.



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p. 206-237-0020; f. 503.417.4250

Throughout late 2011 and early 2012, PISL and its officers, including Madhavi,

Defendant Guru Pandyar (“Pandyar”) and other representatives, represented to Kyko that it had

substantial relationships with several multi-billion dollar US-based customers. Id. at ¶ 8. PISL

over the next few months offered five specific customers whose receivables it wanted to factor

with Kyko: (i) Dick’s Sporting Goods, a national retailer with over 600 stores, (b) Enterprise

Products Partners, a publicly listed U.S energy asset company, (c) Financial Oxygen, a large U.S.

financial services company, (d) Huawei, a global networking and telecommunications company,

and (e) L3 Communications, a U.S. publicly listed defense contractor (the “Five Customers”).

Id.; see also id. at Ex. D.

As part of the verification process the parties had agreed upon, Kyko requested

acknowledgements signed by each of the Five Customers verifying that each customer would

make payments directly to Kyko. Id. at ¶ 9. Kyko also requested from Madhavi, Pandyar, and

other PISL representatives that Kyko be put in touch directly with each of the Five Customers to

verify the accounts receivables were legitimate. Id. In response, Madhavi, Pandyar, and other

representatives of PISL specifically represented that this should not be done because it might

jeopardize their ongoing IT services relationships with these customers. Id. Instead, Madhavi,

Pandyar and other PISL representatives offered to obtain and provide whatever documents that

would be required by Kyko to verify the legitimacy of the accounts receivable for these Five

Customers. Id. PISL then presented Kyko with signed acknowledgements from the Five

Customers. Id. at Ex. E. Once these Five Customers had been verified through the signed

acknowledgment process, PISL then issued invoices to each customer and sent a copy to Kyko

for review. Id. at Ex. F. Kyko then sought acknowledgment using the email addresses provided



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p. 206-237-0020; f. 503.417.4250

to Kyko by PISL for each of the Five Customers to verify that the Five Customers had actually

approved the PISL invoices. Id. at ¶ 10, Ex. G.

Defendants also provided Kyko with security agreements and UCC-1 registrations to

secure their obligations. Id. at Ex. H. Pursuant to the UCC-1 registrations, Kyko was secured in

the debtors property, including: “all present and future acquired assets of debtor, including,

without limitation, all inventory, accounts, equipment chattel paper, documents and

instruments.” Id. at p. 1.

In February 2012, as part of an expansion of the parties’ existing relationship with Kyko

Global GmbH, further guarantees were entered by Catalytic, PISL and Madhavi with Kyko

Global GmbH, each again promising to irrevocably and unconditionally guarantee certain

obligations to Kyko Global GmbH. Id. at Ex. I, J & K.

C. PSIL’s Purported Five Customers Stop Making Payments to Kyko on theAccounts Receivables.

PISL’s purported Five Customers made payments on the revolving balance owed for

accounts receivables up until February 15, 2013. Id. at ¶13. After that date, each of the Five

Customers stopped making payments to Kyko. Id. In response, Kyko contacted PISL and was

told that PISL had been sued by a Japanese company, Sojitz Corporation (“Sojitz”), which had

led to garnishment of PISL’s bank accounts, and that Sojitz had instructed the Five Customers to

stop making payments. Id. However, in late February 2013, Madhavi, Pandyar and other PISL

representatives personally assured Kyko that the matter related to Sojitz would be resolved, that

PISL intended to resume providing services to the Five Customers in a short time period, and

that payments would again be made within a few weeks’ time by these customers. Id.



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p. 206-237-0020; f. 503.417.4250

After a few weeks passed and no further payments had been made, Kyko advised

Madhavi, Pandyar and PISL’s other representatives that Kyko intended to contact the legal

departments of each of the Five Customers in order to confirm whether or not they were going to

pay the monies owed to Kyko and to offer that such payments be made into a lawyer’s trust

account to avoid any concerns such customers might have regarding collection on a judgment

entered against PISL by Sojitz. Id.

On March 9, 2013, Kyko met with representatives of PISL, Satish Vuppalapati

(“Satish)”, Madhavi’s brother and the Managing Director of the Indian parent company of PISL,

regarding the outstanding $17 million owed to Kyko and the fact that payments on the customer

accounts receivables had not resumed. Id. at ¶15. At this meeting, PISL informed Kyko that it

was in the process of transferring customer contracts from PISL to other affiliated companies it

controlled in the U.S. so that Sojitz would not be able to find the assets in the U.S., or collect on

its judgment. Id. PISL’s representative, Satish, explained that “we had frustrated Sojitz with it’s

efforts to collect through the Indian court system but we did not realize that they will go to the

United States to enforce the judgment.” Id. Kyko refused to participate in further discussions of

how to divert contracts or assets from a judgment entered against PISL. Id. PISL then offered to

replace the receivables of the Five Customers that suddenly stopped paying with other customer

accounts receivables from its other affiliated U.S. companies. Id. According to PISL, the

assignment of replacement customers (“Replacement Customers”) would eliminate the need to

make contact with any of the Five Customers. Id., see also id. at Ex. M (identifying affiliated

companies).

At that point in time, to further secure PISL’s obligations to Kyko, Defendants offered

and executed additional guarantees to Kyko, Id. at Ex. N. Defendants irrevocably promised and



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guaranteed to pay up to $30,000,000 U.S., further attempting to provide Kyko with assurances

that its relationship with PISL remained secure and that the financing advanced to PISL would

be repaid via certain replacement customers in a short period of time. Id. Additionally, in March

2013, Defendants issued Kyko a series of ten “Guarantee Cheques,” written for $2,000,000 U.S.

each. Id. at Ex. O. Defendants and their representatives also provided Kyko with written

Certificates verifying the amounts outstanding on specific customer account receivables. Id. at

Ex. P. Defendants signed sworn affidavits that the Five Customers accounts receivable were

properly owed and not in dispute. Id. at Ex. Q.

D. Kyko Discovers PISL’s Customer Account Receivables Pledged or Sold toKyko Were Fictitious, Counterfeit Entities Set-Up and Controlled byDefendants in Order to Deceive Kyko into Advancing Additional Monies.

While attempting to collect on the amounts outstanding, in March 2013, Kyko also began

further investigating PISL and its customers. Id. at ¶18. Kyko directed its lawyer, Sonal

Thomas, to begin investigating the Five Customers pledged under the factoring agreement with

PISL. Id.; see also Declaration of Sonal Thomas (“Thomas Decl.”) at ¶5. What she found was

not only surprising, but also demonstrated the calculated intentional manipulation by Defendants

of email, websites, entity-formation, and customer contact information provided by PISL to

further build up the façade set-up by Defendants that the account receivables were legitimate

customer invoices owed for PISL’s IT services. Kulkarni Decl. at ¶18. Kyko discovered that

PISL’s relationships with each of the Five Customers and several other businesses were a

complete sham. Id.

Kyko’s counsel conducted a search of corporate records and discovered that PISL had

created fictitious invoices designed to make their purported business relationships with each of

the Five Customers appear legitimate. Id. at ¶ 20. Kyko learned that for each of the Five

Customers, Defendants had set up a phantom corporation made to look like that real company.



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p. 206-237-0020; f. 503.417.4250

a. Instead of Dick’s Sporting Goods, Defendants had created DCGS, Inc., which

sent funds by wire transfer to Kyko using a bank account registered to Madhavi’s address set

forth on the personal guarantee checks. Thomas Decl., Ex. 1.

b. Instead of Enterprise Property Partners, Defendants had created EPP, Inc., which

was formed by Madhavi in July 2012. Id. at Ex. 2.

c. For Financial Oxygen, Defendants had created Financial Oxygen, Inc., a

Washington Company registered to Defendant Srinivas Sista (“Sista”), who was also listed as the

president of the company. Id. at Ex. 3.

d. For making payments under the name Huawei, Defendants created a Florida

company called Huawei Latin American Solutions, Inc., and Sista was the president of that

company as well. Id. at Ex. 4. Kyko received payments from Huawei Latin American Solutions,

Inc., which used the same address as Defendant Sista’s address for its bank account. Id.

e. Instead of L3 Communications, Defendants had created L3C Inc., which was

formed by Defendant Pandyar in July 2012. Id. at Ex. 6. Payments that Kyko supposedly

received from the billion-dollar company L3 Communications actually came from Defendant

Pandyar’s company, L3C. Id.

Kyko’s counsel also contacted three of the Five Customers through their legal

departments, and concluded that Defendants had instead set-up five companies and related bank

accounts, which were intended to look like the Five Customers that purportedly did business

with PISL, but were actually counterfeit, fake accounts. Id.

On March 8, 2013, Kyko’s counsel directly contacted a lawyer from the Dick’s Sporting

Goods legal department to follow up on unpaid invoices from Dick’s Sporting Goods and to

investigate its business relationship with Defendants. Id. at ¶ 6. Dick’s Sporting Goods’ counsel

informed Kyko’s counsel that PISL had not done work for Dick’s Sporting Goods since 2004

and that there was no current or former company employees with the names provided by PISL to

Kyko associated with the account receivable. Id. Ex. 7.



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p. 206-237-0020; f. 503.417.4250

On March 8, 2013, Kyko’s counsel also spoke with L-3 Communications’ legal

department. Id. at ¶7. L-3 Communication’s counsel told Kyko’s counsel that there was no one

by the name of PISL’s purported customer contact given to Kyko for that company and further

advised that there was no record of any money owed to Defendants. Id.

On March 19, 2013, Kyko’s counsel spoke with Enterprise Property Partners’ legal

department, providing her with the invoice numbers of the outstanding invoices owed to Kyko.

Id. at ¶8. However, Enterprise Property Partners’ counsel also advised that she also had no

record of any outstanding invoices. Id.

Kyko’s investigation of the customer’s websites provided by PISL also revealed that each

of the Five Customer’s website’s were designed and registered domain names to look like it

belonged to one of the real entities identified as the Five Customers as follows:

a. The legitimate website Dick’s Sporting Goods is www.dickssportinggoods.com.

The sham website is www.dcsginc.com. The sham domain name for that site was registered on

January 12, 2012. Kulkarni Decl. at ¶28

b. The legitimate website of Enterprise Product Partners is

www.enterpriseproducts.com. The sham website is www.eppcorporate.com. The sham domain

was registered on March 28, 2012. Id.

c. The legitimate website of Financial Oxygen is www.financialoxygen.com. The

sham website is financialoxygen.net. This sham domain name was registered on July 14, 2011.

Id.

d. The legitimate website for Huawei is www.huawei.com. The sham website is

www.huawei.com.ag. Id.

e. The legitimate website of L3 Communications is www.l3com.com. The sham

website is www.lthreecommunications.com. That sham domain name was registered on March

28, 2012. Id.



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p. 206-237-0020; f. 503.417.4250

The sham websites were designed to incorporate information from the real company’s

website, making it look like the sham website is that of the legitimate business. Id. at ¶ 22. This

allowed Defendants to send and receive email correspondence from email accounts associated

with the sham web domains, further misleading Kyko into believing that Defendants’ purported

business relationships with the Five Customers were real. Id. For example, Kyko wrote to Alves

Oilveira at [email protected] requesting confirmation of Defendants’ invoices,

which Oilveira then provided through the same email address. Id. at Ex. R. Kyko has since

confirmed that no such person at Huawei in Brazil existed and thus, it is likely one of the

Defendants were operating the email address and website the entire time. Id. at ¶ 23.

Kyko also discovered that many of the servers that hosted the various sham websites

were located in the same place. Id. The server locations are determined by Internet Protocol

Address (IP Address) which is a unique four-part number which identifies the precise location of

the server. Id. Based on an investigation by an internet consultant retained by Kyko, Kyko

discovered the IP address for the sham websites associated with each of the Five Customers, as

well as sham websites associated with proposed Replacement Customers, were the same three

server locations. Id. Thus, servers hosting the sham sites for Dick’s Sporting Goods and

Enterprise were at the same location, and also hosted 12 other sham customer websites. Id.

Similarly, the servers hosting the sham websites for Huawei and L3C also shared a location, and

hosted six other sham websites. Id.

After the Five Customers stopped paying, Defendants provided Kyko with an additional

estimated forty customers (the “Replacement Customers”) for assignment and verification of

accounts receivable. Id. at ¶ 28, Exs. U & V. While Kyko was still in search of payment and

still in the process of uncovering Defendants’ scheme, Defendants were pitching Kyko with

several potential Replacement Customers. Id. at ¶ 26. More specifically, by late May, 2013,

Defendants sent Kyko email correspondence regarding a potential Replacement Customer called

Process Map, Inc. Id. at Ex. S. PISL had represented that it had collected the entire outstanding


mailto:[email protected]


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p. 206-237-0020; f. 503.417.4250

receivable for Process Map before PISL’s representatives (Madhavi, Pandyar, and Satish) were

deposed in the Sojitz matter. Id. at Ex. S. PISL advised that it had moved the contract from PISL

to one of the companies owned by Madhavi, Prithvi Information Solutions International, LLC,

obviously in order to avoid judgment. Id. at ¶ 26. PISL represented that the receivable was

$1.24 Million, and provided a breakdown of invoices. Id. To verify, Kyko contacted Mr. Jagan

Garimella of Process Map, requesting an acknowledgement that the amounts owing to Prithvi

Information Solutions International, LLC, would be paid to Kyko. Id. at ¶ 27, Ex. T. However,

Mr. Garimella reported that Process Map had not worked with PISL since 2003, and did not owe

the company any money. Id.

In addition to its investigation of the Five Customers, Kyko investigated email addresses

and corporate identities of the Replacement Customers and found that, although some of the

Replacement Customers, such as Agadia and Microsoft were likely real customers, the rest of the

Replacement Customers were also fake accounts dressed up to look like legitimate businesses

that would provide Kyko reliable receivables. Id. at ¶ 29.

E. Defendants’ Wrongful Acts Have Defrauded Other Companies and FinancialInstitutions and Demonstrates that Defendants Have and Likely Will in thisCase Transfer and Hide Assets in an Effort to Evade Recovery.

Defendants fraudulent scheme of creating and corresponding as fictitious customers with

accounts receivable and transferring monies to avoid collection is not a new one -- Defendants

have been sued previously and subject to judgment for similar conduct. See Declaration of

Christina Haring-Larson (“Haring-Larson Decl.”), ¶¶ 6-7, Exs 1-2. This includes a lawsuit

filed by international finance companies Sojitz Corporation (“Sojitz”) and a legal proceeding by

Deutsche Bank AG in India. Id. at Exs 1-2. These lawsuits show that Defendants not only have

the ability, but the actual intent and wherewithal to quickly transfer assets to new entities in order

to avoid paying their creditors.



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The Order entered in the proceeding filed by Deutsche Bank in December 2011 reflects

that PISL’s Indian parent company has a history of defrauding companies in exchange for

financial services:

As the petitioner [Deutsche Bank] did not receive any payments on the respectivedue dates from the foreign purchasers, it addressed letters to T-Mobile USA,John’s Hopkins Hospital, [and] Starpoint Solutions LLC, calling upon them tomake payments in respect of the invoices raised by the company. The petitioner[Deutsche Bank] received letter dated 24-4-2009 from Starpoint Solutions LLC,wherein it is stated that the documentation produced by the company is fraudulentand that it never entered into the business relationship with the respondentcompany [PISL]. M/s. John’s Hopkin’s under [sic] letter dated 7-5-2009 deniedof entering into contract with the respondent-company [PISL]. T-Mobile USAorally informed to Deutsche Bank AG, New York office that is has not executedany notice of assignment as projected by the representatives of the respondent-company.

Haring-Larson Decl. at Ex. 2 at p. 2 ¶ 2. Because PISL obtained the financing by producing

forged and fabricated documents in respect to various foreign transactions, PISL admitted

liability. Id. The Court also stated that PISL has been declared a “willful defaulter” and attached

the accounts of PISL, finding that PISL had “defrauded the petitioner [Deutsche Bank] by

assigning bogus receivables.” Id. at Ex. 2. p. 6 ¶¶ (c)-(d).

In another case, Sojitz brought suit and attached prejudgment certain assets in

anticipation of an arbitration award against PISL. Id. at Ex. 1. However, when payments were

not made, Sojitz entered its judgment in the amount of $33.7 million for enforcement against

PISL. Id. Thereafter, in May 2013, Sojitz unsuccessful sought to garnish the PNC Bank account

(one of the same bank’s used by PISL for payments on the guarantee checks to Kyko): “Sojitz is

now left to try and enforce that judgment against any assets of Prithvi it can find, a task that

Prithvi is making extremely difficult by its failure to fully and timely respond to Sojitz’s post-

judgment discovery requests.” Id. (See Pltf’s Reply in Support of Motion to Compel Discovery in

Aid of Execution at p. 2, ¶ 1 (W.D. Pa. Dkt. 28 dated May 6, 2013)). PISL’s actions in that

proceeding show it has a history of evading discovery on its banking and financial information



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and somehow successfully managed to transfer or conceal significant sums of money from

collection efforts. See id. at p. 7, ¶ 1 (“[T]he bank statements reveal that approximately $120

million has passed through one of Prithvi’s accounts with PNC Bank in the past two years,

despite Prithvi’s consistent refrain that it is suffering financial troubles.”).

These unsuccessful efforts to collect by other parties supports the conclusion that PISL

transferred such funds to evade its lawful creditor, just as PISL had initially informed Kyko that

it would do at their meeting in March 2013. See Kulkarni Decl. ¶ 15. Thus, there is a pattern of

fraudulent conduct and a history of diverting assets to avoid collection efforts if notice of

litigation is provided to Defendants.

III. LEGAL ARGUMENT

A. Standard for Temporary Restraining Order And Preliminary InjunctiveRelief.

The purpose of preliminary injunctive relief is to preserve the status quo and to protect

the rights of the parties pending trial on the merits. Chalk v. United States Dist. Ct. Cent. Dist. of

Calif., 840 F.2d 701, 704 (9th Cir. 1988). The standards governing issuance of a temporary

restraining order are substantially the same as for issuance of a preliminary injunction. Stuhlbarg

Int’l Sales Co. v. John D. Brush & Co., 240 F.3d 832, 839 n.7 (9th Cir. 2001).

Under Federal Rule of Civil Procedure 65, a party may be granted preliminary injunctive

relief if the party shows that: (1) it is likely to succeed on the merits of its claims; (2) it is likely

to suffer irreparable harm if an injunction is not granted; (3) the balance of equities tips in its

favor; and (4) an injunction is in the public interest. Winter v. Natural Res. Def. Council, 129 S.

Ct. 365, 374 (2008); Am. Trucking Ass’ns, Inc. v. City of Los Angeles, 559 F.3d 1046, 1052 (9th

Cir. 2009). As a corollary to this test, the Ninth Circuit has also found that “‘serious questions

going to the merits and a hardship balance that tips sharply toward the plaintiff can support



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issuance of an injunction, assuming the other two elements of the Winter test are also met.”

Alliance for the Wild Rockies v. Cottrell, 632 F.3d 1127, 1131–32 (9th Cir. 2011).

A federal court has inherent power to grant an asset freeze order for purposes of

preserving the federal court’s ability to grant effective final equitable relief. See Reebok

International Ltd. v. Marnatech Enterprises, Inc., 970 F. 2d 552, 559. (9th Cir. 1992).

Moreover, in In re Estate of Ferdinand Marcos, Human Rights Litig., 25 F.3d 1467 (9th Cir.

1994), the Ninth Court concluded the district court did not abuse its discretion in granting

temporary injunction, even though case sought only money damages. “In determining whether

to grant a preliminary injunction which freezes assets against a potential recovery, we apply the

standard test used in this circuit to evaluate claims for preliminary injunctive relief.” FTC v.

Evans Products Co., 775 D. 2d 1084, 1088 (9th Cir. 1995).

A temporary restraint on the transfer or disposing of the Defendants’ assets is appropriate

under Rule 65. See e.g. FTC v. H.N. Singer, Inc., 668 F. 2d 1107, 1111 (9th Cir. 1982); FTC v.

JK Publications, Inc., 99 F. Supp. 2d 1176, 1179 (C.D. Cal. 2000) (district court granted

temporary restraining order that “froze the defendants assets and required, inter alia, that the

defendants be temporarily enjoined from conducting certain business practices and [that] the

defendants disclose all assets held by them, for their benefit or under their direct or indirect

control.”) In In Republic of Philippines v. Marcos, 862 F. 2d 1355, 1358 (9th Cir. 1988), the

Ninth Circuit affirmed a preliminary injunction that enjoined the defendants from “disposing of

any of their assets save for the payment of attorney fees and normal living expenses” pending a

trial on the merits of plaintiff’s claim. The Ninth Circuit upheld the preliminary injunction

entered to prevent Marcos (and subsequently, his Estate) from transferring or dissipating assets.

Similar to the claims in this case, the Republic of the Philippines had brought a RICO suit and



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fraud claims against the Marcoses, claiming that the Marcoses had converted public property to

their own use. Id.at 1364.

Here, Kyko easily satisfies the four elements for a temporary restraining order under Rule

65 and there is ample evidence that Defendants may transfer assets outside the jurisdiction or to

other shell companies to evade Plaintiffs’ recovery. There is also an imminent risk of dissipation

of assets from which Plaintiffs can recover and, therefore, an asset freeze is appropriate.

B. Plaintiffs Are Likely to Succeed on the Merits.

Kyko is likely to succeed on the merits of its claims because Defendants’ conspiracy

went to great lengths to commit fraudulent, intentional acts to deceive Plaintiffs. Defendants not

only created false acknowledgments that the accounts receivable were legitimate and due, but

also went to great lengths to verify the receivables on behalf of the sham customer by creating

and propagating sham websites as well as customer emails and contact information for customers

who did not exist. Kulkarni Decl., ¶¶ 16-26. When Kyko contacted three of the Five Customers

via their legal department, the companies responded that they did not have any dealings with

PISL for many years and did not owe PISL any monies on existing accounts receivables. Thomas

Decl., ¶¶ 6-8. Defendants are engaged in a massive and brazen fraud. Defendants have

repeatedly impersonated multi-billion dollar businesses to induce Kyko and other businesses to

provide them factoring services, knowing all along that the money would never be repaid.

Defendants have created an elaborate web of shell companies across multiple states and

countries and are capable of making money disappear very quickly. Defendants have even told

Kyko directly about their intentions of hiding money from other judgment creditors. Kulkarni

Decl. at ¶¶ 15, 26. Thus, Plaintiffs are likely to succeed on their fraud, RICO, misrepresentation,

conversion and unjust enrichment claims against all Defendants.

Likewise, Plaintiffs are likely to succeed on the merits of the breach of the guarantee

claim asserted against the Defendant-Guarantors. Each of the Defendant-Guarantors promised



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irrevocably and unconditionally to pay Kyko upon demand for the amounts outstanding, but

failed to do so when demand for approximately $17 million was made.

Finally, not only are Defendants on the hook for breach of the guarantees, but many of

the Defendants have also granted Plaintiffs a security interest in all of their assets. See Kulkarni

Decl, Ex. H. Plaintiffs’ request for an injunction against transfer of these same assets is in effect,

duplicative of the rights under the General Security Agreements, which provide that Plaintiffs, as

a Secured Party, “may take possession of, collect, demand, sue on, enforce, recover and receive

Collateral …. [and] may sell, lease, or otherwise dispose of Collateral. . . .” see e.g. Id. at Ex. H,

p. 20, 12(c) (General Security Agreement at p. 9). In other words, Plaintiffs are simply asking

the Court to maintain the status quo for the very assets that Plaintiffs have the clear legal right to

take possession of and otherwise recover against.

C. Irreparable Harm is Inevitable in the Absence of a Temporary RestrainingOrder and Preliminary Injunction.

Kyko can show that it will certainly suffer immediate, irreparable harm if there is no

injunctive relief because the Defendants have already stated their intent to evade, deplete or

dissipate assets owed to their creditors through transfers to multiple, inter-affiliated companies

which defendants have created or formed to facilitate their fraudulent conspiracy on Plaintiffs.

Kulkarni Decl. at ¶¶15, 26. Defendants have also likely done so in the past to evade a judgment

by Sojitz and efforts to collect by Deutsche Bank. Defendants cannot be trusted to act in good

faith and any amount of delay will allow them further opportunity to hide and abscond with

Kyko’s money, and victimize other companies like Kyko in the future. The likelihood of

recovery against those assets upon notice to the Defendants would be very minimal, given

Defendants pattern of wrongful conduct. Plaintiffs face a very real inability to recover any

monetary damages whatsoever if temporary injunctive relief is not granted and there is a very

real threat of irreparable harm given the various shell entities set up by defendants to perpetrate

their fraud. Any funds will likely be transferred immediately outside of the jurisdiction if there

is no injunction in place.



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1. Defendants’ Fraudulent Acts to Transfer Funds Through a Series ofShell-Entities Will Likely Occur in the Absence of TemporaryInjunctive Relief and Kyko Will Immediately Lose Any Chance ofRecovery.

Kyko has direct familiarity with Defendants’ pattern and practice of hiding money from

their judgment creditors. Specifically, as stated in the Kulkarni declaration, Defendants

previously approached Kulkarni, asking for his cooperation in a scheme to transfer assets and

conceal them from Sojitz Corporation. Kulkarni Decl. at ¶15. Defendants then attempted to bait

Kulkarni into participating by providing him assurances that it would help accelerate

Defendants’ payments to Kyko. Yet, Defendants continued to offer yet again new Replacement

Customers and even more recently, with respect to Process Map, Inc., Defendants have shown

their intent to transfer customer account receivables to new entities and to fabricate that such

receivables exist. Id. at ¶¶17-18, 26. In the absence of injunctive relief, Defendants’ fraudulent

scheme will continue as it moves monies from some legitimate customer account receivables,

such as Agadia and Microsoft, in order to avoid collection efforts by Kyko. Id. at Ex. X.

2. Monies will Likely Be Transferred Overseas Outside the U.S.Jurisdiction to Avoid Collection.

Kyko will also be irreparably harmed if a temporary restraining order is not entered that

freezes Defendants’ assets because Defendants are more than likely to transfer or dissipate the

millions of dollars owed to Kyko outside of the jurisdiction and/or to other unknown, recently

formed entities. PISL’s parent company is in India and PISL has demonstrated its intent to avoid

collection whenever possible by making sure the monies are not subject to collection. See

Haring-Larson Decl., Exs. 1-2; Kulkarni Decl. at ¶¶ 15-26. Kyko has legitimate reason to fear

that any notice to Defendants will only assist them in concealing their assets and ensuring that a



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judgment will be unrecoverable. Not only have most of the entities identified thus far been

formed recently, but it seems unlikely that these Defendant shell-entities have any real tangible

assets from which to collect from other than customer accounts receivable and monies derived

from legitimate customers in exchange for IT services. Moreover, Defendant Madhavi is a

citizen of India and appears to reside in a rented apartment in Bellevue, Washington. Therefore,

Madhavi could quickly leave the jurisdiction to India or elsewhere if necessary. And, if the

experience of Sojitz’s collection efforts on its judgment is any indication, any cash flow, such as

$120 million that flowed through PISL’s PNC account, can be quickly transferred outside of the

existing bank account and jurisdiction. See Haring-Larson Decl. at Ex. 1. Defendants’ own

stated willingness to transfer assets to avoid collection in its dealings with Kyko also indicate

that Defendants are able and likely to quickly transfer monies to new entities or accounts when

legal action is commenced to preclude any recovery. Kulkarni Decl. at ¶¶ 15, 26. To avoid such

irreparable harm, injunctive relief must be granted.

D. The Balance of Equities Tips in Plaintiffs’ Favor.

The balance of hardships also tips decidedly in Kykos’ favor. Without an injunction,

Kyko will likely lose any customer revenues that provided Kyko status as secured creditor on the

millions of dollar it advanced. Kyko loses not only the security provided through legitimate

customer account receivables, but also any chance to recover against any other assets on the

Guarantees or otherwise. Defendants, on the other hand, will not be harmed if an injunction is

issued. Defendants will continue to be able to receive payments from customers in the ordinary

course of business and deposit such funds in their existing accounts. The only change is that

those monies will be safeguarded and Defendants will be prevented from dissipating any funds



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received from legitimate customers. The magnitude of the Defendants’ fraudulent plan and the

significant $17 million dollars outstanding also weigh heavily in Plaintiffs’ favor.

E. Issuing an Injunction is in the Public’s Interest.

An injunction also serves the public interest. There is a significant risk to others of

further fraudulent acts if the injunction is not granted based on the fraudulent acts of Defendants.

Defendants’ actions are difficult to detect and the perceived liabilities being created by these

false companies could result in defrauding other companies, governments, and financial

institutions in Washington, the United States and other foreign countries. Moreover, with

regards to the other sham customers referenced throughout Defendants’ dealings with Kyko,

many of those customers exist as public companies, but simply have no existing relationship

with PISL or its affiliated entities (e.g. Dick’s Sporting Goods). See e.g. Thomas Decl., Ex. 7.

Thus, there is a very real public interest in ending the misconception and danger of further fraud

created by Defendants’ brazen acts of creating false and fictitious customers in order to obtain

financing. Defendants’ actions of creating, impersonating and corresponding to obtain monies

from Plaintiffs, as well as other financial institutions, should put to a stop now before others are

entrapped in the fraudulent scheme.

It is also in the public interest that Defendant be held accountable for such deceptive and

wrongful acts and not permitted to further their fraudulent acts by transferring monies to evade

creditors’ lawful enforcement of their rights, either outside this jurisdiction or overseas. The

public is benefited by an injunction that maintains the status quo and preserves any remaining

funds are held for the benefit of satisfying the debts guaranteed by Defendants.

F. An Asset Freeze is Necessary to Preserve Funds for Plaintiffs’ Recovery.



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In addition to the standards for an injunction under Rule 65, “[a] party seeking an asset

freeze must show the likelihood of dissipation of the claimed assets, or other inability to recover

monetary damages, if relief is not granted.” Johnson v. Coururier, 572 F. 3d 1067, 1085 (9th Cir.

2009) (citing Conn. Gen. Life Ins. v. New Images of Beverly Hills, 321 F. 3d 878, 881 (9th Cir.

2003). Even where the ultimate relief sought is money damages, federal courts have found

equitable injunctions appropriate where it has been shown that the defendant intended to frustrate

any judgment on the merits by transferring assets. Walczak v. EPL Prolong, Inc., 198 f. 3d 725

(1999); In re Estate of Marcos, 25 F. 3d 1467, 1479 (1994) (in RICO, fraud, and conversion

cases, federal courts have found preliminary injunctions appropriate where defendant intended to

frustrate any judgment on merits by transferring assets out of jurisdiction) (citing cases therein).

In Johnson, the Ninth Circuit upheld an asset freeze because plaintiffs had established

that they were “likely to succeed in proving that [defendant] impermissibly awarded himself tens

of millions of dollars,” and because:

Such an individual is presumably more than capable of placing assets inhis personal possession beyond the reach of a judgment. Accordingly,[defendant’s] own prior conduct establishes a likelihood that in theabsence of an asset freeze and accounting, Plaintiffs will not be able torecover the improperly diverted funds and will thus be irreparably harmed.

Johnson, 572 F.3d at 1085. Further, where defendants’ business activities are permeated by

fraud, the Court may conclude that the defendants are likely to attempt to dissipate or conceal

assets while the action is pending and, to avoid this, grant an asset freeze. See e.g. SEC v. Manor

Nursing Centers, Inc., 458 F. 2d 1082, 1106 (2d Cir. 1972); SEC v. R.J. Allen & Assocs., Inc.,

386 F. Supp. 866, 881 (S.D. Fla. 1974). A defendant’s transfer of assets to offshore accounts

establishes a likelihood that without an asset freeze, the plaintiff will be unable to recover the

funds. SEC v. Affordable Media, 179 F. 3d at 1236 (likelihood of dissipation existed “[g]iven the



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[defendants’] history of spiriting their commissions away to a Cook Islands trust.”); FTC v.

Willms, 2011 WL 4103542 * 11-12 (W.D. Wa. Sept. 13, 2011) (unreported decision) (granting

preliminary injunction for asset freeze involving deceptive website marketing practices where

defendant moved substantial funds offshore through corporate holding company defendants and

their bank accounts).

Plaintiffs have demonstrated that Defendants’ assets would likely be dissipated or

transferred to one of Defendants’ related affiliated entities and that Plaintiffs would not

otherwise be able to recover if the injunction were not issued. Based on the over $17 million in

monies owed to Defendants and Defendants’ pattern of fraudulent conduct, including but not

limited to their express statements to Kyko about defrauding other judgment creditors by

transferring assets to affiliated companies, Kyko has ample good cause to seek a temporary

restraining order that freezes Defendants’ assets without allowing Defendants any more time to

transfer or dissipate the millions of dollars owed to Kyko by transferring assets out of the

jurisdiction and/or to other unknown, recently formed entities. Kyko has good cause and

legitimate reason to fear that any notice to Defendants will only assist them in concealing their

assets and ensuring that a judgment will be unrecoverable. Accordingly, no notice to Defendants

prior to issuance of Kyko’s requested temporary restraining order should be required.

Furthermore, due to the large number of entities created to propagate the fraud of sham

customers and accounts receivables in the past and Defendants’ self-professed ability to transfer

customer accounts to affiliated entities to avoid collection of judgments previously, there is a

likelihood that Defendants will engage in the same conduct here if Plaintiffs’ motion for

temporary relief to freeze assets is not granted. Defendants have engaged in a pattern of

improperly transferring corporate assets from one shell entity to another to evade judgments by



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Sojitz and collection efforts by Deutsche Bank. Thus, Defendants have already shown they are

more than capable of placing assets beyond the reach of a judgment and establishing new or

affiliated companies to transfer assets outside the reach of their creditors is likely based on

Defendants’ pattern of conduct. If injunctive relief is denied herein, Plaintiffs ability to recover

on their claims against the Defendant-Guarantors and the related PISL affiliated U.S. entities will

more than likely be completely frustrated. Like the bad actor in Johnson, Plaintiffs will not be

able to recover any improperly diverted funds in which they have a security interest. See

Johnson, 572 F. 3d at 1085; see also Kulkarni Decl. at Ex. H. By granting a preliminary

injunction, plaintiffs would be protected from the possible further dilution of assets.

G. Plaintiffs Seek Expedited Discovery From Defendants and Their BankingInstitutions To Identify Where the Customer Receivables Monies in Which ItHas an Interest Are Located.

PISL has a history of providing late and deficient banking information and will likely

delay in providing its financial information if sought in the usual process of discovery. Such a

delay in discovery of Defendants’ banking and other financial information will aid Defendants in

any efforts to transfer assets outside the United States and this jurisdiction in order to evade

collection efforts. Defendants will likely hide their funds -- if not pinned down with the

expedited discovery requested -- by transferring assets to newly formed or unknown shell

entities. Thus, Plaintiffs seek an order to obtain complete bank account statements and financial

information from Defendants on an expedited basis as well as a response from Defendants’

banking and other financial institutions directly. The information will directly provide

information on where the funds are going and if and where they have been already transferred.

H. The Bond Should Be Minimal, if Not Zero.



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Little or no bond should be required for the issuance of a temporary restraining order.

This is because Defendants would continue to receive payments under the existing status quo

into their accounts - only payments or transfers going out of Defendants’ accounts and sales or

transfers of assets would be limited. If Plaintiffs are unable to prevail on the ultimate merits of

their claims (which is unlikely), the Defendants will have the same assets available as they would

before this action was filed. Moreover, Defendants will not be harmed by the requested

temporary restraining order because they will be able to continue its business of providing IT

services, regardless of whether the Court grants Plaintiffs’ motion to freeze assets pending

resolution of the claims in this case. Plaintiffs are seeking to maintain the status quo by an asset

freeze in order that they can recover to the extent legitimate customers funds are being deposited

for IT services and improperly diverted from payment to Kyko.

IV. CONCLUSION

Based on the foregoing, Kyko’s request for temporary restraining order enjoining

transfers or sales of assets and seeking expedited discovery should be granted. Defendants

created an elaborate network of shell corporations with bank accounts, websites, email addresses,

and phantom representatives, which were designed to look like legitimate, successful businesses

that owed money to PISL. However, in reality, Defendants forged invoices, contacts, emails and

responses from those sham corporations as part of a scheme to convince Kyko to advance them

additional monies, knowing full well that there were no actual services provided to these

counterfeit customers, and hence no receivable or money that would ever be paid. Thus,

Plaintiffs’ request for a Temporary Restraining Order to enjoin any transfers or sales of assets

and freeze the monies held in Defendants’ bank accounts and any other financial institutions

should be granted.



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p. 206-237-0020; f. 503.417.4250

Dated this 16th day of June, 2013.


By: /s/ Christina Haring-Larson ____Christina Haring-Larson, WSBA No. 30121

Of Attorneys for Plaintiffs


Kyko Global seek a temporary restraining order to enjoin Defendants Prithvi Information Solutions

Documents

Transcript of Kyko Global seek a temporary restraining order to enjoin Defendants Prithvi Information Solutions