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AMERICAN NATIONAL BANK AND TRUST CO. v. ALPS ELECT.

February 20, 2004.

AMERICAN NATIONAL BANK AND TRUST COMPANY OF CHICAGO,
v.
ALPS ELECTRIC CO., LTD., NIT HOLDINGS LIMITED, MATHIAS BURLET, and DONALD WEST, Defendants



The opinion of the court was delivered by: BLANCHE MANNING, District Judge

MEMORANDUM AND ORDER

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.

I. Background

  A. Local Rules

  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. Page 2

  B. Facts

  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 Bank.

  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 Page 3 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, West Page 4 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 ...


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