The opinion of the court was delivered by: BLANCHE MANNING, District Judge
Alps Electric and Seishin's cross-claims against Donald West are the
only pending claims left in this convoluted interpleader action. Alps and
Seishin have filed an unopposed motion for summary judgment as to those
claims. For the following reasons, the motion is granted.
Under the local rules, a party seeking summary judgment must file "a
statement of material facts as to which the moving party contends there
is no genuine issue and that entitle the moving party to a judgment as a
matter of law." Local Rule 56.1(a)(3). "All material facts set forth in
the statement required of the moving party will be deemed admitted unless
controverted by the statement of the opposing party." Local Rule 56.1(b).
Here, West has failed to respond to Alps and Seishin's motion for summary
judgment. Accordingly, all properly supported facts in Alps and Seishin's
Rule 56 statements are deemed admitted for the purposes of the pending
motion for summary judgment.
Alps is a publicly traded company that produces and sells electronic
components throughout the world. Early in 1999, Yoshiaki Ichiyama (Alps'
director of finance) and Hiroshi Aihara (the manager of Alps' Finance
Department) retained Toshimasa Yamada as a consultant to pursue potential
investments for Alps in bond trading programs in Europe. In connection
with his consulting work, Yamada (an obviously very trusting person) met
with Al Grillo, who told him about Perry Hammer, a bond trader who could
provide a 200% profit per month.
In July of 1999, Yamada met twice with Hammer and Donald West, an
attorney. Hammer and West told Yamada that they represented Northgold
International Trust, a company involved in a bond trading program in
Europe. They told Yamada that Northgold could buy bonds with a fixed
interest rate from top banks in Europe at a large discount and then
immediately resell them for profit. They also told him that a special
condition of the program was that Northgold had to give 30% of its
profits to either a charity or a public works project. Finally, they told
him that Alps could participate in this bond trading program by
depositing funds in an account in Alps's name and then having the bank
issue a "bank guarantee," which Northgold would use to obtain a line of
credit to conduct the trading program. A key part of the program was that
Alps' funds would not need to leave Alps' account at the Anglo Irish
Yamada signed a joint venture agreement with Northgold Trust on behalf
of Alps so that Alps could participate in the program. West subsequently
told Yamada that Alps needed to transfer funds from its Anglo Irish Bank
account to a client fiduciary account in West's name at the American
National Bank and Trust Company in Chicago. West assured Yamada that he
would hold the funds as a fiduciary of Alps and Northgold Trust in a
segregated account. He
also told Yamada that only attorneys, such as he, could open such
an account, and that such an account imposed very strict obligations,
including personal liability for misuse of the funds.
Based on these representations, Yamada agreed to transfer $12 million
from Alps's Anglo-Irish Bank account to an account in the name of "Donald
W. West CFA Northgold" at the American National Bank. As a precaution,
Yamada wrote to West and asked him to agree to return the money to Alps's
account at the Anglo-Irish Bank if trading did not commence within seven
days of the transfer. West wrote back and agreed to do this. Alps
subsequently needed the money back and thus had one of its shareholders
(Seishin, formerly known as Seto Industry) deposit money into its account
with the understanding that Seishin would be the beneficiary of any
return on that investment. Thus, $12M belonging to Seishin was
transferred by Alps to the American National Bank account.
The next morning, West changed the client name on the American National
Bank account from Northgold Trust to NIT Holdings and began to make wire
transfers from the account to entities including the West Family trust
and West's creditors. The timing and nature of the transfers made
American National Bank suspicious and after an investigation, it froze
the account. At about the same time, West misled Yamada by telling him
that the first trade had taken place and that Alps would be receiving a
$308,000 profit shortly. West intended to send Alps $308,000 of its own
money to make it believe that the trading program was legitimate and to
give West time to abscond with the remaining money in the account.
West failed to give Alps the purported "profit" so Yamada asked West to
return the $12M. Unsurprisingly, West did not return the money. In the
meantime, based on American National Bank's investigation and its belief
that something suspicious was going on with the account, American
National Bank filed an interpleader action with this court. Eventually,
told American National Bank to return the money. It did not do so
as the money had, by that time, already been deposited with the court.
Pursuant to the court's order resolving the parties' cross-motions for
summary judgment regarding entitlement to the money in the American
National Bank, Seishin received $10,792,063.99.
Alps and Seishin seek a judgment against West for $1,207,934.01 (the
difference between the $12M it put in the American National Bank account
and the amount it got back) plus prejudgment interest. They contend that
West defrauded them and breached his contractual agreement with Alps to
return the money if no trades took ...