This case was last updated from Los Angeles County Superior Courts on 01/02/2020 at 17:56:37 (UTC).

LIU AIFANG ET AL VS FRANK ZENG ET AL

Case Summary

On 04/15/2016 LIU AIFANG filed an Other lawsuit against FRANK ZENG. This case was filed in Los Angeles County Superior Courts, Stanley Mosk Courthouse located in Los Angeles, California. The Judges overseeing this case are ERNEST HIROSHIGE, RUTH ANN KWAN, ANTHONY MOHR and JAMES C. CHALFANT. The case status is Pending - Other Pending.

Case Details Parties Documents Dockets

 

Case Details

  • Case Number:

    ****7312

  • Filing Date:

    04/15/2016

  • Case Status:

    Pending - Other Pending

  • Case Type:

    Other

  • Court:

    Los Angeles County Superior Courts

  • Courthouse:

    Stanley Mosk Courthouse

  • County, State:

    Los Angeles, California

Judge Details

Presiding Judges

ERNEST HIROSHIGE

RUTH ANN KWAN

ANTHONY MOHR

JAMES C. CHALFANT

 

Party Details

Plaintiffs and Petitioners

BIXIA JIN

JINGBO ZHU

AIFANG LIU

YAN SU

YANTING TAN

TSUI-HUA LU

BIN XING

XIAOYE GOU

HAO XIAN

HONGMEI WANG

QING TAO

JING XU

XIAOYAN CHEN

JINLIANG GAO

Defendants and Respondents

FEI PANG

DOES 1-25

ZENG HILDA

REO PROPERTY GROUP LLC

ZENG FRANK

CHAN ANTHONY

Attorney/Law Firm Details

Plaintiff and Petitioner Attorneys

ATKINSON ANDELSON LOYA RUUD & ROMO

HO EDWARD COSMO

Defendant and Respondent Attorneys

LAW PHILIP C. ESQ.

BECKER TODD B. ESQ.

PRATA ROBERT J

 

Court Documents

Declaration - DECLARATION OF PHILIP C. LAW AND OF FRANK ZENG

6/12/2019: Declaration - DECLARATION OF PHILIP C. LAW AND OF FRANK ZENG

Summons - SUMMONS ON COMPLAINT (3RD)

8/7/2019: Summons - SUMMONS ON COMPLAINT (3RD)

Declaration - DECLARATION OF PHILIP LAW IN OPPOSITION TO PLAINTIFFS' MOTION FOR SUMMARY ADJUDICATION

10/2/2019: Declaration - DECLARATION OF PHILIP LAW IN OPPOSITION TO PLAINTIFFS' MOTION FOR SUMMARY ADJUDICATION

Proof of Personal Service

10/4/2019: Proof of Personal Service

Notice of Application and Hearing for Writ of Attachment (CCP 484.040)

10/22/2019: Notice of Application and Hearing for Writ of Attachment (CCP 484.040)

Notice - NOTICE OF ERRATA

10/24/2019: Notice - NOTICE OF ERRATA

Notice of Continuance - Notice of Continuance of Motion for Summary Judgement, or in the alternative, Summary Adjudication

11/14/2018: Notice of Continuance - Notice of Continuance of Motion for Summary Judgement, or in the alternative, Summary Adjudication

Opposition - Opposition to Motion for Summary Judgment/Adjudication

1/11/2019: Opposition - Opposition to Motion for Summary Judgment/Adjudication

Objection - Objection in Support of Opposition to Motion

1/14/2019: Objection - Objection in Support of Opposition to Motion

Declaration - Declaration OF PIDLIP C. LAW IN SUPPORT OF REPLY TO OPPOSITION TO MOTION FOR SUMMARY JUDGMENT/ADJUDICATION

1/24/2019: Declaration - Declaration OF PIDLIP C. LAW IN SUPPORT OF REPLY TO OPPOSITION TO MOTION FOR SUMMARY JUDGMENT/ADJUDICATION

NOTICE OF MOTION AND MOTION TO STRIKE PORTIONS OF COMPLAINT BY DEFENDANT PANG FEI

8/15/2016: NOTICE OF MOTION AND MOTION TO STRIKE PORTIONS OF COMPLAINT BY DEFENDANT PANG FEI

SUMMONS CROSS-COMPLAINT

9/19/2016: SUMMONS CROSS-COMPLAINT

PLAINTIFFS' NOTICE OF MOTION AND MOTION TO STRIKE CROSSCOMPLAINANTS' REQUEST FOR PUNITIVE DAMAGES; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT THEREOF

11/4/2016: PLAINTIFFS' NOTICE OF MOTION AND MOTION TO STRIKE CROSSCOMPLAINANTS' REQUEST FOR PUNITIVE DAMAGES; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT THEREOF

PLAINTIFFS' NOTICE OF MOTION AND MOTION TO STRIKE CROSS-CLAIMS UNDER THE CALIFORNIA ANTI-SLAPP STATUTE, CODE OF CIVIL PROCEDURE SECTION 425.16; MEMORANDUM OF POINTS AND AUTHORITIES

11/28/2016: PLAINTIFFS' NOTICE OF MOTION AND MOTION TO STRIKE CROSS-CLAIMS UNDER THE CALIFORNIA ANTI-SLAPP STATUTE, CODE OF CIVIL PROCEDURE SECTION 425.16; MEMORANDUM OF POINTS AND AUTHORITIES

CROSS-COMPLAINANTS' NOTICE OF OPPOSITION AND OPPOSITION TO PLAINTIFFS' DEMURRER TO FIRST AMENDED CROSS COMPLAINT

6/15/2017: CROSS-COMPLAINANTS' NOTICE OF OPPOSITION AND OPPOSITION TO PLAINTIFFS' DEMURRER TO FIRST AMENDED CROSS COMPLAINT

DECLARATION OF PHILIP C. LAW WITH APPENDIX OF EXHIBITS IN SUPPORT OF MOTION FOR LEAVE TO SERVE THE SECRETARY OF STATE OF CALIFORNIA AS SUBSTITUTED SERVICE UPON VELOCITY VIII LIMITED PARTNERSHIP

9/12/2017: DECLARATION OF PHILIP C. LAW WITH APPENDIX OF EXHIBITS IN SUPPORT OF MOTION FOR LEAVE TO SERVE THE SECRETARY OF STATE OF CALIFORNIA AS SUBSTITUTED SERVICE UPON VELOCITY VIII LIMITED PARTNERSHIP

NOTICE RE: CONTINUANCE OF HEARING

10/12/2017: NOTICE RE: CONTINUANCE OF HEARING

Minute Order -

11/28/2017: Minute Order -

251 More Documents Available

 

Docket Entries

  • 03/23/2020
  • Hearing03/23/2020 at 10:30 AM in Department 96 at 111 North Hill Street, Los Angeles, CA 90012; Jury Trial

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  • 01/29/2020
  • Hearing01/29/2020 at 09:00 AM in Department 96 at 111 North Hill Street, Los Angeles, CA 90012; Further Status Conference

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  • 01/29/2020
  • Hearing01/29/2020 at 09:00 AM in Department 96 at 111 North Hill Street, Los Angeles, CA 90012; Hearing on Motion for Summary Judgment

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  • 01/29/2020
  • Hearing01/29/2020 at 09:00 AM in Department 96 at 111 North Hill Street, Los Angeles, CA 90012; Hearing on Motion for Summary Judgment

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  • 01/07/2020
  • Hearing01/07/2020 at 13:30 PM in Department 85 at 111 North Hill Street, Los Angeles, CA 90012; Hearing on Application for Writ of Attachment (CCP 484.040)

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  • 01/07/2020
  • Hearing01/07/2020 at 13:30 PM in Department 85 at 111 North Hill Street, Los Angeles, CA 90012; Hearing on Application for Writ of Attachment (CCP 484.040)

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  • 01/07/2020
  • Hearing01/07/2020 at 13:30 PM in Department 85 at 111 North Hill Street, Los Angeles, CA 90012; Hearing on Application for Writ of Attachment (CCP 484.040)

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  • 01/07/2020
  • Hearing01/07/2020 at 13:30 PM in Department 85 at 111 North Hill Street, Los Angeles, CA 90012; Hearing on Application for Writ of Attachment (CCP 484.040)

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  • 12/30/2019
  • DocketOpposition (TO PLAINTIFFS? APPLICATIONS FOR RIGHT TO ATTACH ORDERS AND ORDERS FOR ISSUANCE OF WRITS OF ATTACHMENT; DECLARATION OF FRANK ZENG); Filed by REO Property Group, LLC (Defendant); Frank Zeng (Defendant); Hilda Zeng (Defendant) et al.

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  • 12/18/2019
  • Docketat 09:15 AM in Department 96, Anthony Mohr, Presiding; Hearing on Motion for Summary Judgment - Not Held - Rescheduled by Court

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487 More Docket Entries
  • 07/20/2016
  • DocketPROOF OF SERVICE SUMMONS & COMPLAINT

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  • 07/20/2016
  • DocketPROOF OF SERVICE SUMMONS & COMPLAINT

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  • 07/15/2016
  • DocketRESPONSIVE PAPERS TO ORDER TO SHOW CAUSE RE FAILURE TO COMPLY WITH CRC 3.110 (SERVICE OF COMPLAINT)

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  • 07/15/2016
  • DocketMiscellaneous-Other; Filed by Plaintiff/Petitioner

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  • 06/14/2016
  • DocketORDER TO SHOW CAUSE HEARING

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  • 06/14/2016
  • DocketOSC-Failure to File Proof of Serv; Filed by Clerk

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  • 04/19/2016
  • DocketSUMMONS

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  • 04/19/2016
  • DocketSummons; Filed by Plaintiff/Petitioner

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  • 04/15/2016
  • DocketCOMPLAINT FOR: 1. CONSTRUCTIVE FRAUDULENT TRANSFER; ETC

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  • 04/15/2016
  • DocketComplaint; Filed by Liu Aifang (Plaintiff); Xing Bin (Plaintiff); Jin Bixia (Plaintiff) et al.

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Tentative Rulings

Case Number: BC617312    Hearing Date: January 07, 2020    Dept: 85

Liu Aifang, et al. v. Frank Zeng, et al., BC617312

Tentative decision on applications for right to attach orders: granted against Top Property only

Plaintiffs Liu Aifang, Jin Bixia, Su Yan, Zhu Jingbo, Xu Jing, Gao Jinliang, Gou Xiaoye, Wang Hongmei, Xin Bin, Tan Yanting, Tao Qing, Lu Tsui-Hua, Chen Xiaoyan, Chen Jianxiu, Zhou Jun, and Xian Hao, apply for right to attach orders against Defendants Frank Zeng (“Frank”), Hilda Zeng (“Hilda”) (collectively, the “Zengs”), REO Property Group, LLC (“REO”), and TOP Property Group, LLC (“Top Property”) in the amount of $5,500,000.

The court has read and considered the moving papers,[1] opposition, and reply, and renders the following tentative decision.

A. Statement of the Case

1. Complaint

Plaintiffs commenced this action against on April 15, 2016 against Defendants Frank, Hilda, REO, Top Property, Pang Fei, and Anthony Chan. The operative pleading is the Third Amended Complaint (“TAC”), alleging causes of action for (1) voidable transfer (related to Plaintiffs’ investments), (2) conversion, (3) aiding and abetting fraud, (4) aiding and abetting conversion, (5) voidable transfer (related to Defendants’ internal transfers), and (6) unjust enrichment. The TAC alleges in pertinent part as follows.

The EB-5 visa program, also known as the Immigrant Investor Program, was created to stimulate the U.S. economy through job creation and capital investment by foreign investors. Under a pilot program enacted in 1992, EB-5 visas were available for foreign investors who invested in Regional Centers designated by the United States Citizenship and Immigration Services based on proposals for promoting economic growth. To obtain the visa, individuals are required to invest at least $500,000 in a “Targeted Employment Area” (an area with high unemployment or a rural area), creating or preserving at least ten jobs for U.S. workers excluding the investor and their immediate family. Often, foreign investors are introduced to EB-5 projects through EB-5 agents who serve as intermediaries between Regional Centers and foreign investors.

Defendants, either directly or through their representatives or EB-5 agents, represented to Plaintiffs that they were seeking a $500,000 investment by each investor in Velocity VIII Limited Partnership (“Velocity 8”) as part of an EB-5 visa program in which: (a) Plaintiffs would be part of a group of Chinese and Taiwanese investors, with each investing $500,000 in Velocity VIII, a total of $25,000,000; (b) Velocity 8 would loan the $25,000,000 to Defendant REO Property, which would use to renovate, operate and manage the Indio Fashion Mall (the “Project”) on real property that it owned and which was debt free, located at 82227 U.S. Highway 111, Indio, California (the “Property”).

These oral and written representations to Plaintiffs contained untrue statements of material facts and omitted necessary material facts. The structure of the investment was modified without Plaintiffs knowledge and the true facts were concealed from them. Under the modified structure, a new entity, REO Group Properties, LLC (“REO Group”), formed with a name confusingly similar to REO, would purchase the Property from REO and the new entity (REO Group) would renovate and manage the Property, using investment funds to be loaned by Velocity 8.

Much of the $25,000,000 in investment funds to be loaned by Velocity 8 to REO Group was diverted, misappropriated, and never provided to REO Group. Investment funds were also used to acquire title to the Property, which was heavily encumbered by debt and essentially worthless. The Property was never substantially renovated or leased and instead the investment funds were misappropriated.

Plaintiffs were told that their investment funds would be deposited into an attorney trust account in the name of Velocity 8 bearing account number 3100142651 at California Bank & Trust (“CBT”). Plaintiffs were informed that the funds would be released from the trust account and loaned to purchase and develop the Project only after their visas were approved. Although the account was represented to be an “attorney trust account” in which the monies would be held in trust until Plaintiffs received approval of their immigration visa (I-526), the account was never treated as an attorney trust account. Plaintiffs’ visas were never approved, the investment funds should not have been disbursed from the account, and the funds should have been returned to Plaintiffs.

Velocity 8 and/or REO Group transferred portions of Plaintiffs’ investment to Defendants and used portions of Plaintiffs’ investment to pay down loans incurred by Defendants. Velocity 8 and/or REO Group assumed loan obligation to Frank Zeng, Hilda Zeng, REO Property Group, LLC, and/or Top Property. Velocity VIII and/or REO Group (1) did so with actual intent to hinder, delay, or defraud and/or (2) did not receive reasonably equivalent value in exchange.

Defendants intentionally and substantially interfered with Plaintiffs’ property by taking possession of some or all of such funds, preventing Plaintiffs from having access to some or all of such funds, and refusing to return Plaintiffs’ investment funds, syndication fees, and attorney’s fees, which return Plaintiffs demand.

2. Cross-Complaint

On November 14, 2016, Defendants filed the First Amended Cross-Complaint (“FACC”) against Plaintiffs and Velocity 8, alleging causes of action for (1) conversion, (2) intentional interference with contractual relations, (3) fraud, (4) breach of contract, and (5) unjust enrichment.

Plaintiffs and Velocity 8 subsequently brought an anti-SLAPP motion on the first and fifth causes of action in the FACC, which the court granted in its entirety on January 24, 2017. On June 29, 2017, the court sustained Plaintiffs’ demurrer to the remainder of the FACC.

On July 14, 2017, Defendants filed the Second Amended Cross-Complaint (“SACC”), alleging causes of action for (1) breach of contract, (2) fraud, (3) negligence, and (4) conversion (II), and seeking the remedy of declaratory relief. On November 1, 2017, the court sustained Plaintiff’s demurrer to the SACC without leave to amend.

3. Course of Proceedings

On August 22, 2019, Defendants Zeng and Defendant REO filed an Answer to the TAC. On September 18, 2019, Defendant TOP filed an Answer to the TAC.

B. Applicable Law

Attachment is a prejudgment remedy providing for the seizure of one or more of the defendant’s assets to aid in the collection of a money demand pending the outcome of the trial of the action. See Whitehouse v. Six Corporation, (1995) 40 Cal.App.4th 527, 533. In 1972, and in a 1977 comprehensive revision, the Legislature enacted attachment legislation (CCP §481.010 et seq.) that meets the due process requirements set forth in Randone v. Appellate Department, (1971) 5 Cal.3d 536. See Western Steel & Ship Repair v. RMI, (12986) 176 Cal.App.3d 1108, 1115. As the attachment statutes are purely the creation of the Legislature, they are strictly construed. Vershbow v. Reiner, (1991) 231 Cal.App.3d 879, 882.

A writ of attachment may be issued only in an action on a claim or claims for money, each of which is based upon a contract, express or implied, where the total amount of the claim or claims is a fixed or readily ascertainable amount not less than five hundred dollars ($500). CCP §483.010(a). A claim is “readily ascertainable” where the amount due may be clearly ascertained from the contract and calculated by evidence; the fact that damages are unliquidated is not determinative. CIT Group/Equipment Financing, Inc. v. Super DVD, Inc., (2004) 115 Cal.App.4th 537, 540-41 (attachment appropriate for claim based on rent calculation for lease of commercial equipment).

If the action is against a defendant who is a natural person, an attachment may be issued only on a commercial claim which arises out of the defendant’s conduct of a trade, business, or profession. CCP §483.010(c). Consumer transactions cannot form a basis for attachment. CCP §483.010(c); Kadison, Pfaelzer, Woodard, Quinn & Rossi v. Wilson, (1987) 197 Cal.App.3d 1, 4 (action involving trust property was a commercial, not a consumer, transaction).

The plaintiff may apply for a right to attach order by noticing a hearing for the order and serving the defendant with summons and complaint, notice of the application, and supporting papers any time after filing the complaint. CCP §484.010. Notice of the application must be given pursuant to CCP section 1005, sixteen court days before the hearing. See ibid.

The notice of the application and the application may be made on Judicial Council forms (Optional Forms AT-105, 115). The application must be supported by an affidavit showing that the plaintiff on the facts presented would be entitled to a judgment on the claim upon which the attachment is based. CCP §484.030.

Where the defendant is a natural person, the description of the property must be reasonably adequate to permit the defendant to identify the specific property sought to be attached. CCP §484.020(e). Although the property must be specifically described, the plaintiff may target for attachment everything the individual defendant owns. Bank of America v. Salinas Nissan, Inc., (1989) 207 Cal.App.3d 260, 268.

A defendant who opposes issuance of the order must file and serve a notice of opposition and supporting affidavit as required by CCP section 484.060 not later than five court days prior to the date set for hearing. CCP §484.050(e). The notice of opposition may be made on a Judicial Council form (Optional Form AT-155).

The plaintiff may file and serve a reply two court days prior to the date set for the hearing. CCP §484.060(c).

At the hearing, the court determines whether the plaintiff should receive a right to attach order and whether any property which the plaintiff seeks to attach is exempt from attachment. The defendant may appear the hearing. CCP §484.050(h). The court generally will evaluate the attachment application based solely on the pleadings and supporting affidavits without taking additional evidence. Bank of America, supra, 207 Cal.App.3d at 273. A verified complaint may be used in lieu of or in addition to an affidavit if it states evidentiary facts. CCP §482.040. The plaintiff has the burden of proof, and the court is not required to accept as true any affidavit even if it is undisputed. See Bank of America, supra, at 271, 273.

The court may issue a right to attach order (Optional Form AT-120) if the plaintiff shows all of the following: (1) the claim on which the attachment is based is one on which an attachment may be issued (CCP §484.090(a)(1)); (2) the plaintiff has established the probable validity of the claim (CCP §484.090(a)(2)); (3) attachment is sought for no purpose other than the recovery on the subject claim (CCP §484.090(a)(3); and (4) the amount to be secured by the attachment is greater than zero (CCP §484.090(a)(4)).

A claim has “probable validity” where it is more likely than not that the plaintiff will recover on that claim. CCP §481.190. In determining this issue, the court must consider the relative merits of the positions of the respective parties. Kemp Bros. Construction, Inc. v. Titan Electric Corp., (2007) 146 Cal.App.4th 1474, 1484. The court does not determine whether the claim is actually valid; that determination will be made at trial and is not affected by the decision on the application for the order. CCP §484.050(b).

Except in unlawful detainer actions, the amount to be secured by the attachment is the sum of (1) the amount of the defendant’s indebtedness claimed by the plaintiff, and (2) any additional amount included by the court for estimate of costs and any allowable attorneys’ fees under CCP section 482.110. CCP §483.015(a); Goldstein v. Barak Construction, (2008) 164 Cal.App.4th 845, 852. This amount must be reduced by the sum of (1) the amount of indebtedness that the defendant has in a money judgment against plaintiff, (2) the amount claimed in a cross-complaint or affirmative defense and shown would be subject to attachment against the plaintiff, and (3) the value of any security interest held by the plaintiff in the defendant’s property, together with the amount by which the acts of the plaintiff (or a prior holder of the security interest) have decreased that security interest’s value. CCP §483.015(b). A defendant claiming that the amount to be secured should be reduced because of a cross-claim or affirmative defense must make a prima facie showing that the claim would result in an attachment against the plaintiff.

Before the issuance of a writ of attachment, the plaintiff is required to file an undertaking to pay the defendant any amount the defendant may recover for any wrongful attachment by the plaintiff in the action. CCP §489.210. The undertaking ordinarily is $10,000. CCP §489.220. If the defendant objects, the court may increase the amount of undertaking to the amount determined as the probable recovery for wrongful attachment. CCP §489.220. The court also has inherent authority to increase the amount of the undertaking sua sponte. North Hollywood Marble Co. v. Superior Court, (1984) 157 Cal.App.3d 683, 691.

C. Statement of Facts[2]

1. Plaintiff’s Evidence[3]

a. Background

Plaintiffs are 16 individuals who are citizens of China or Taiwan. Ho Decl. Exs. 38, ¶2; 1, ¶8. Between 2012 and 2013, each plaintiff invested no less than $500,000 in Velocity 8, an EB-5 investment fund in the hope of obtaining a permanent U.S. visa or green card. Ho Decl. Ex. 38, ¶3. Under the EB5 program directed by the U.S. Citizenship and Immigration Services, permanent visas are available to foreigners who invest in a “Targeted Employment Area” that creates or preserves a certain number of jobs. 8 U.S.C. § 1153(b)(5).

Velocity 8 was a California LP, with an entity named Velocity Regional Center as its general partner. Ho Decl. Exs. 38, ¶¶ 9-10; 10. Velocity 8’s key operatives were Michael Wang (“Wang”), Christine Guan (“Guan”), Wendy Ko, and her sister Lily Ko. Ho Decl. Ex. 11, ¶¶ 7, 20, 35. Unbeknownst to Plaintiffs, Velocity 8 was part of a scheme that resulted in each Plaintiff losing their entire investment without obtaining a green card. See, e.g., Ho Decl. Ex. 38, ¶¶ 6, 8. Wang and the Ko sisters have fled the country. Ho Decl. Ex. 11, ¶35.

In October 2013, in SEC v. Wang the SEC sued Wang, Wendy Ko, and entities affiliated with them (Velocity Investment Group, Inc. and investment funds Bio Profit Series I-V and Rockwell Realty Management, Inc.) for defrauding investors by running a Ponzi-like investment scheme. Ho Decl. Ex. 12, p.1. The SEC v. Wang court entered judgment on the merits against the defendants in November 2016. Ho Decl. Exs. 12-13. The Ponzi-like enterprise extended to Velocity 8, including millions being taken from Velocity 8 and distributed to other entities in the scheme. See, e.g., Ho Decl. Ex. 14.

b. Defendants’ Involvement with Velocity 8

The Zengs used REO to conduct their real-estate investment business. Ho Decl. Ex. 17, p. 4. The Zengs have always been REO’s sole members, with Frank managing and controlling REO. Ho Decl. Exs. 17, p.2; 34, ¶1. Frank is Hilda’s agent for REO matters. Ho Decl. Exs. 17, p.2; 18, p.2.

In 2012, Defendants, through REO, agreed to sell the Property to Velocity 8 so that Velocity 8 superficially could qualify as an EB-5 project. Ho Decl. Exs. 15; 16, p.3; 9, p.6; 19, p.5. In 2013, Defendants completed the sale of the Property to REO Group, an affiliate of Velocity 8, which is similarly named but distinct from REO. Ex. 16 p.3.

This sale of the Property to Velocity 8/REO Group was one of several business deals Defendants conducted with Velocity 8’s principals over the years. In 2011, Defendants sold a piece of real property in Highland California to Bio Profit Series I, one of the entities sued by the SEC. Ho Decl. Ex. 19, p.12. Later, Defendants helped Bio Profit try to sell the property. Ho Decl. Ex. 20. In 2011, Frank was an agent of Velocity Investment Group—another entity sued in SEC v. Wang — for its $3.4M purchase of a bank loan. Ho Decl. Ex. 21. As recently as October 2017, Defendants continued to seek business with Velocity 8 operatives, well after the 2013 SEC v. Wang and the lawsuits surrounding Velocity 8. Ho Decl. ¶28, Ex. 22.

Defendants forced the sale of the Property to Velocity 8 despite knowing, among other things, that Velocity 8’s principals treated separate investment entities as a single enterprise, commingled assets across entities, and used money from other entities to pay for Velocity 8’s purchase of the Property. Ho Decl. Ex. 9, pp. 14-17, 23. Defendants encouraged them to do so by instructing Velocity 8’s principals to use other funds and the assets of other entities to pay for escrow on the Property sale. Ho Decl. Exs. 9, p.24; 23.

Defendants prolonged the scheme by, among other things, providing cashless financing so that escrow on the Property sale could close. Ho Decl. Exs. 24, pp. 2-3; 25. Through the financing Defendants obtained deeds of trust that gave them senior security interests in the Property. Ho Decl. Exs. 24, pp. 2-3; 25. Defendants ultimately received millions from Velocity 8 (Ho Decl. Ex. 35, p.2), and when Velocity 8 collapsed they repurchased the Property on a credit bid at a foreclosure sale. Ho Decl. Exs. 27; 34, ¶15. Defendants later sold the Property a second time for a profit. Ho Decl. Ex. 9, pp. 25-27. In total, Defendants made about $10,000,000 from their multiple transactions concerning the Property. Ho Decl. Exs. 9, pp. 25-27; 19, p.8; 35, p.2.

c. The Federal Court Suit

In September 2014, the plaintiffs, including ultimately the 16 Plaintiffs in this action, sued Velocity 8, their principals, and others in a federal case Aifang v. Velocity 8. Ho Decl. ¶6. Plaintiffs asserted claims against Velocity 8, Velocity Regional Center, the agents and principals of Velocity 8, including Michael Wang, Christine Guan, Wendy Ko, Lily Ko, and other parties. Ho Decl. ¶6. At the time, the plaintiffs were represented by different attorneys than they are now. Ho Decl. ¶6. Those former attorneys recused themselves from the representation of the plaintiffs around late-May/early-June 2015 because of a conflict. Ho Decl. ¶6.

When the federal lawsuit was filed, the plaintiffs asserted claims against REO and Frank, who are defendants in this action. Ho Decl. ¶7. The plaintiffs filed a dismissal of REO and Frank without prejudice in November 2014. Ho Decl. Ex. 2.

On May 3, 2016, plaintiffs moved for leave to file an amended complaint that would have re-asserted claims against REO and Frank and added claims against Hilda. Ho Decl. ¶9. The plaintiffs’ motion was denied because the federal court did not find good cause for amending the court’s scheduling order under Federal Rule of Civil Procedure 16. Ho Decl. ¶9.

The federal action ended in October 2016 (save for some post-judgment matters), with the plaintiffs having judgment against Velocity 8, REO, Michael Wang, Y&C Builders, Inc. (an entity controlled by Lily Ko), and the Ko sisters. Ho Decl. ¶10. The federal court did not pass judgment on the merits of the plaintiffs’ proposed claims against Defendants. Ho Decl. ¶9.

d. The State Court Suit

In Mingqi Wang, et al v. Velocity Regional Center et al., (“Minqi”) Case No. EC062283, Velocity 8 investors filed suit in April 2014. Ho Decl. ¶12. In May 2015, the Mingqi plaintiffs filed a third amended complaint naming REO and the Zengs as defendants. Ho Decl. Ex. 3, p.2. REO and the Zengs were dismissed without prejudice on June 19, 2015. Ho Decl. ¶12, Exs. 3 p.2; 4. They were then promptly re-named as Defendants in a fourth amended complaint filed on or about July 15, 2015. Ho Decl. ¶12; Exs. 3; 5.

REO and the Zengs remained defendants in the Mingqi case until at least May 2016, and perhaps as late as November 2017, when they apparently were again dismissed without prejudice pursuant to a stipulation. Ho Decl. Exs. 7; 36, p.2.

e. Formation of Top Property

Defendants formed Top Property on June 18, 2015, just after they were first named as defendants in the Mingqi case and while Aifang v. Velocity 8 was active. Ho Decl. Ex. 28, p.1. Top, like REO, is solely owned by the Zengs. Ho Decl. Ex. 28, p.1. The two companies share the same address, have the same CEO (Frank), have the same agent for service of process (Frank), and conduct the same “Real Estate Business.” Ho Decl. Ex. 28.

REO capitalized Top Property. Ho Decl. Ex. 37, p.3. Since its formation, the proceeds from the sales of other properties owned by REO or the Zengs have gone to Top Property, which has used those funds to buy other properties. Ho Decl. Ex. 37, pp. 4, 7. Only Top Property has purchased properties for the Zengs since its formation. Ho Decl. Ex. 37, p.7.

Defendants run Top Property as a continuation of the real-estate business conducted by REO. Defendants treat properties separately owned by REO and Top Property as being part of the same enterprise in soliciting potential business partners. Ho Decl. ¶35, Ex. 29. Defendants applied for bank accounts for Top Property under REO’s existing banking relationship and with REO as the bank customer. Ho Decl. Ex. 30.

REO wire transferred $3,880,000 cash to Top Property on July 29, 2015, two weeks after REO and the Zengs were re-named as defendants in Mingqi and only a month after Top Property was formed. Ho Decl. Ex. 31.

By August 4, 2015, REO had transferred an additional $705,000 to Top Property in the form of an escrow deposit made for Top Property’s acquisition of certain property. Ho Decl. Ex. 32.

Before the year ended, REO paid Top Property a further $943,500, again in the form of escrow deposits for the purchase of property. Ho Decl. Ex. 33. The payment was expressly “not a loan” and the funds were “treated as [Top Property’s] funds and to be used unconditionally according to [Top’s] instructions to escrow.” Ho Decl. Ex. 33, p.3. Defendants do not dispute the transfers were made. Ho Decl. Ex. 40.

f. Procedural Background

In April 2019, Plaintiffs discovered that REO transferred the approximately $3.9 million to Top Property in 2015. Ho Decl. ¶4. Plaintiffs subsequently moved in June 2019 for leave to file the TAC, which the court granted on July 23, 2019. Ho Decl. ¶4. The TAC asserts a count against all Defendants, including Top Property, for voidable transfer related to the transfer of assets from REO to Top. Ho Decl. Ex. 1, ¶¶ 208-14.

Plaintiffs’ other claims against Defendants are (1) another claim for voidable transfer related to Defendants’ interactions with Velocity 8; (3) conversion; (4) aiding and abetting fraud; (4) aiding and abetting conversion; and (5) unjust enrichment. Ho Decl. Ex. 1, ¶¶ 185-207, 215-18.

2. Defendants’ Evidence[4]

Plaintiffs’ applications seek to attach various business and personal property of Defendants, including, but not limited to, the deposit accounts of Frank and Hilda at East West Bank, Royal Business Bank, and Eastern Bank. Frank Decl. ¶2.

Several of the accounts encompassed within Plaintiffs’ applications are necessary for the support of Frank and Hilda, including their payment of day-to-day living expenses such as mortgage and other loan repayments, gasoline, groceries, etc. Frank Decl. ¶3. This includes their accounts at East West Bank with account numbers ending in 0642, 0979, and 0316. Frank Decl. ¶3.

3. Reply Evidence[5]

As recently as November 2019, REO has made payments to municipalities in which Top Property owns property. Ho Reply Decl. Ex. 1 (reflecting payments by REO to the cities of Woodland, Victorville, and Tustin). Top Property recently liquidated some of its real estate holdings and entered into an agreement to sell property in Woodland. Ho Reply Decl. Ex. 2. The sale apparently closed in September 2019. Ho Reply Decl. Ex. 3.

D. Analysis

Plaintiffs seeks a right to attach order against Defendants Zeng and REO in the amount of $5,500,000.

1. Procedural Issue

Defendants argue that the court should exercise its discretion to continue the hearing of the instant matter because Plaintiffs’ motion for summary adjudication and Defendants’ motion for summary judgment are currently scheduled to be heard on January 29, 2020. Opp. at 13. Defendants assert that the resolution of those motions may obviate the need for the hearing the instant applications, and the interests of judicial economy and conservation of the parties’ resources therefore support a continuance. Opp. at 13.

Plaintiffs argue that a continuance is unnecessary because attachment law already has provisions to address any change in circumstances that may arise subsequent to a court ruling on an application. Reply at 8. Plaintiffs also assert that continuance would also give Defendants more time to dissipate and shelter assets from Plaintiffs. Reply at 8.

The court declines to continue the hearing and will address the merits.

2. Merits

a. A Claim Based on a Contract

Plaintiffs’ claim is based on their voidable transaction claim related to the transfers from REO to Top Property in 2015. App. at 11, 19.

As Plaintiffs correctly note, attachment is a statutorily proscribed remedy for voidable transfer under the Uniform Voidable Transactions Act (“UVTA”). App. at 11. In an action for relief against a transfer or obligation a creditor may obtain an attachment or other provisional remedy against the asset transferred. Civil Code §3439.07(a)(2). A plaintiff who suspects that the defendant-debtor has fraudulently transferred assets in order to become judgment proof may also enforce its claim against the transferred property by way of a writ of attachment. Whitehouse v. Six Corporation, (1995) 40 Cal.App.4th 527, 533.

This is a claim on which attachment can be based.

b. An Amount Due That is Fixed and Readily Ascertainable

A claim is “readily ascertainable” where the damages may be readily ascertained by reference to the contract and the basis of the calculation appears to be reasonable and definite. CIT Group/Equipment Financing, Inc. v. Super DVD, Inc., (2004) 115 Cal.App.4th 537, 540-41. The fact that the damages are unliquidated is not determinative. Id. But the contract must furnish a standard by which the amount may be ascertained and there must be a basis by which the damages can be determined by proof. Id. (citations omitted).

Neither party directly address this issue. Plaintiffs’ claim in the amount of $5,500,000 is based on three transfers from REO to Top Property in July, August, and December 2015. App. at 19. Plaintiffs provide bank records showing that REO transferred to Top Property $3,880,000 in July 2015, $705,000 in August 2015, and $943,500 in December 2015, all in the form of escrow deposits made for Top Property’s purchase of property. Ho Decl. Exs. 31-33. The total amount transferred was $5,528,500.

The amount due based on the transfers from REO to Top is fixed and readily ascertainable.

c. Probability of Success

Plaintiffs assert a probability of success on its claim for voidable transfer, arguing they can establish each element of the claim. App. at 12; Reply at 2-3.

Under the UTVA, a transfer made by a debtor is voidable as to a creditor if the debtor made the transfer or incurred the obligation “with actual intent to hinder, delay, or defraud any creditor of the debtor” and “without receiving a reasonably equivalent value in exchange for the transfer or obligation.” Civ. Code §3439.04(a).

In determining whether a transfer was made “with actual intent to hinder, delay, or defraud any creditor” the court may consider: (1) whether the transfer or obligation was to an insider; (2) whether the debtor retained possession or control of the property transferred after the transfer; (3) whether the transfer or obligation was disclosed or concealed (4) whether before the transfer was made or obligation was incurred, the debtor had been sued or threatened with suit; (5) whether the transfer was of substantially all the debtor’s assets; (6) whether the debtor absconded; (7) whether the debtor removed or concealed assets; (8) whether the value of the consideration received by the debtor was reasonably equivalent to the value of the asset transferred or the amount of the obligation incurred; (9) whether the debtor was insolvent or became insolvent shortly after the transfer was made or the obligation was incurred; (10) whether the transfer occurred shortly before or shortly after a substantial debt was incurred; and (11) whether the debtor transferred the essential assets of the business to a lienor that transferred the assets to an insider of the debtor. Civ. Code §3439.04(b).

Plaintiffs assert that they have established by a preponderance of the evidence that Defendants made the transfers with an intent to hinder, delay, or defraud Plaintiffs because eight of 11 statutory “badges of fraud” are present. Civil Code §3439.04(b). App. at 13-16; Reply at 5.

The evidence supports Plaintiffs claim that Defendants made the transfers with an intent to hinder, delay, or defraud Plaintiffs. Defendants formed Top Property in the middle of Velocity 8 litigation. It is undisputed that the transfers from REO to Top Property occurred. Ho Decl. Ex. 40. The transfers were made without consideration. Ho Decl. Exs. 31-33. The transfers were to an insider, as REO and Top Property have identical ownership and management, conduct the same business, and operate out of the same address. Ho Decl. Ex. 28. Defendants did not disclose the transfers from REO to Top Property, and Plaintiffs only discovered them through discovery. Ho Decl. ¶4. Defendants transferred substantial portions of REO’s assets, leaving it with insufficient assets to meet Plaintiffs’ claims. Defendants transferred the equity value of REO’s property holdings to Top Property. Ho Decl. Ex. 37, p.3. Based on the most recent information, REO currently has only about $390,000 cash in various bank accounts. Ho Decl. ¶44, Ex. 39. Defendants made the transfers at a time during which they had been or were threatened with suit, and in fact formed Top Property during litigation. Ho Decl. Ex. 28, p.1.

Defendants do not address their intent in making the transfers, and instead argue that Plaintiffs have not established that they are creditors of Defendants as required by Civil Code section 3439.04(a). Defendants also assert that Plaintiffs are required to demonstrate that they are entitled to recover from Defendants to be considered creditors under the UTVA and Plaintiffs have made no such showing. Opp. at 10.

Defendants are wrong. A “creditor” under the UTVA is anyone with a claim, with a claim being broadly defined to mean a right to payment, whether or not the right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured, or unsecured. Civil Code §3439.01(b), (c). A “claim” under the UTVA is a right to payment, including those that are disputed. Civ. Code §3439.01(b). As Plaintiffs note and Defendants acknowledge, the relationship of debtor and creditor arises in a tort case the moment the cause of action accrues. Hansen v. Cramer, (1952) 39 Cal. 2d 321, 323. Plaintiffs have claims of fraud, conversion, and unjust enrichment, and became creditors of Defendants when those causes of action arose. Plaintiffs need not prove their right to payment on these claims to qualify as creditors under the UTVA. Plaintiffs have demonstrated the probable validity of their claim of voidable transfer for monies transferred from REO to Top Property.

However, Plaintiffs have no voidable transfer claim against the Zengs, who did not possess or receive the monies in question. A plaintiff may only obtain an attachment against the asset transferred or other property of the transferee. Civil Code §3439.07(a)(2); Whitehouse v. Six Corporation, supra, 40 Cal.App.4th at 533. The Zengs caused the transfer of monies from one of their companies to another, but they are not in the transfer chain. Plaintiffs’ moving and reply papers completely skirt this issue. While Defendants do not raise the issue either, Plaintiffs bear the burden of showing every element for attachment against each Defendant. They have not met this burden for the Zengs, and attachment cannot issue against them as transferees under the UTVA.[6]

E. Conclusion

It seems plain that the primary culprits in Plaintiffs’ loss were Velocity 8, Wang, Guan, and the Ko sisters. Plaintiffs now have theories of legal liability for REO, Top Property, and their owners, the Zengs. Defendants’ liability for damages has not been shown, but Plaintiffs have shown a UVTA claim against Top Property for fraudulent transfers from REO.

Plaintiffs’ application for a right to attach order against Defendant Top Property is granted in the amount of $5,500,000. No writ of attachment shall issue until Plaintiffs post a $10,000 bond. Plaintiffs’ applications for right to attach orders against Defendants Zeng are denied.


[1] Plaintiffs failed to provide exhibit tabs for their courtesy copies and are admonished to do so in all future motions.

[2] Plaintiffs filed Exhibits 15, 20-23, 25, 28-33, and 39 to the Ho Declaration and Exhibits 1-3 of the Ho Reply Declaration conditionally under seal pursuant to the Stipulated Protective Order in this matter. On October 24, 2019 and January 3, 2020 respectively, pursuant to CRC 2.551(b)(3), Plaintiffs gave Defendants notice of their duty to file a timely motion or application with the court if they wished to seek sealed status for the above exhibits. As Defendants have not sought sealed status for the exhibits, they will be placed unsealed in the court file pursuant to CRC 2.551.

[3] Plaintiffs request judicial notice of the following documents attached to the Ho declaration: (1) the TAC in this action (Ex. 1); (2) The Notice of Dismissal filed on November 7, 2014 in the Los Angeles federal action titled Liu Aifang et al. v. Velocity VIII Limited Partnership et al., (“Aifang v. Velocity 8”) Case No. CV 14-07060 SJO (MRWx) (Ex. 2), (3) Defendants’ FACC in this action (Ex. 11); (4) the Order re: Plaintiff’s Motion for Monetary Relief and Entry of Final Judgment against Yin Nan “Michael” Wang and Wendy Ko in the New York federal action styled SEC v. Yin Nan “Michael” Wang, et al, (“SEC v. Wang”) Case No. CV 13-07553-JAK-SS (Ex. 12); (5) the final judgment against Yin Nan “Michael” Wang and Wendy Ko filed in SEC v. Wang (Ex. 13); (6) the supplemental declaration of Dora M. Zaldivar in support of request for receiver in SEC v. Wang (Ex. 14); (7) the declaration of Frank Zeng in opposition to the demurrer to FACC in this action (Ex. 24); (8) the declaration of Frank Zeng in support of Defendants’ motion for summary judgment/summary adjudication, which the court heard and denied on January 31, 2019 (Ex. 34); (9) excerpts from the memorandum in support of Defendants’ motion for summary judgment/adjudication (Ex. 35); (10) excerpts from Defendants’ memorandum in opposition to the motion for summary adjudication made by 13 of the 16 Plaintiffs, scheduled to be heard on December 18, 2019 (Ex. 36); (11) 16 declarations submitted by Plaintiffs either in support of the motion for summary adjudication or in opposition to Defendants’ motion for summary judgment/adjudication (Ex. 38); and (12) excerpts from Defendants’ separate statement in opposition to the motion for summary adjudication made by 13 of the 16 Plaintiffs (Ex. 40).

There is no need to judicially notice documents in the instant case file (Exs. 1, 3, 24, 34, 35, 36, 38, 40), the judge can always review the file where a courtesy copy is provided. The existence of Exhibits 2, 12, 13, and 14, but not the truth of their contents, is judicially noticed. Evid. Code §452(d); Sosinsky v. Grant, (1992) 6 Cal.App.4th 1548, 1551 (judicial notice of findings in court documents may not be judicially noticed). See Fontenot v. Welss Fargo Bank, N.A., (2011) 198 Cal.App.4th 256, 264-65 (judicial notice of the existence and recordation, as well as the parties, dates, and legal consequences of, recorded documents may be judicially noticed).

[4] Defendants purport to cite evidence they submitted in connection with their pending motion for summary judgment set for hearing on January 29, 2020. Opp. at 3, n.3. This is improper. While anything in the court file may be relied upon, Defendants had the burden of providing courtesy copies of this evidence. The court is not required to scour the court file to look for supporting evidence. As this evidence is not properly before the court, it has not been considered.

[5] In support of their reply, Plaintiffs request judicial notice of (1) Plaintiffs’ motion for summary adjudication in this action and supporting evidence, (2) Plaintiffs’ opposition to Defendants’ motion for summary judgment/summary adjudication. As discussed ante, there is no need to judicially notice documents in the instant case file, which are attached as Exhibit 4 to the Ho reply declaration. However, Plaintiffs attempt to incorporate by reference the arguments in these summary judgment/summary adjudication papers, which is an improper effort to exceed the page limits of CRC 3.1113(d). Reply at 5. As such, the papers are irrelevant, and they have not been considered.

[6] The court need not consider whether the claim arises out of the Zengs’ conduct of a trade, business, or profession, whether their property is adequately described, or their necessities of life claim of exemption.