INDEX NO. 655061/2017 FILED: NEW YORK COUNTY CLERK 07/27/2017 12:54 PM NYSCEF DOC. NO. 2 RECEIVED NYSCEF: 07/27/2017 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK ------------------------------------------------------------------------X GUY AROCH COMPLAINT ON PROMISSORY NOTE Plaintiff, -against- Index No.: JEFFREY YOHAI, Defendants. -------------------------------------------------------------------------X Plaintiff Guy Aroch (“Plaintiff” or “Aroch”), by his attorney, Joshua E. Abraham, Esq., as and for his complaint against Defendant Jeffrey Yohai (“Yohai”) alleges as follows: JURISDICTION AND VENUE 1. The Court has jurisdiction over this action pursuant to CPLR §§ 301, 302. 2. Venue is proper in this district pursuant to CPLR § 503. PARTIES 3. Aroch is an individual residing in the County of New York, State of New 4. Upon information and belief, Yohai is an individual residing in the County York. of New York, State of New York. AS AND FOR A CAUSE OF ACTION 5. This is an action to collect on a promissory note for which Yohai is in default. 6. The promissory note was executed by Yohai to personally guaranty certain investments made by Aroch in entities operated and controlled by Yohai. C OMPLAINT ON P ROMISSORY N OTE   P AGE 1 1 of 8 INDEX NO. 655061/2017 FILED: NEW YORK COUNTY CLERK 07/27/2017 12:54 PM NYSCEF DOC. NO. 2 RECEIVED NYSCEF: 07/27/2017 7. In order to understand the consideration paid for this promissory note, it is necessary to understand the relevant background to Aroch’s claim herein. 8. Yohai operates a web of LLCs and other entities throughout the United Stated, which purport to invest in real estate and other ventures in New York and California. As the son-in-law of Paul Manafort – Donald Trump’s former campaign manager – Yohai, upon information and belief, has had the opportunity to meet numerous public figures, some of whom – including the family of Dustin Hoffman – he has successfully convinced to invest in these businesses. 9. Upon information and belief, Yohai promises his investors a quick and large return on their investments. When this promised financial performance fails to materialize and investors express their concern, Yohai simply recruits new investors and repays his earlier investors with these incoming funds. In this regard, Yohai is believed to be operating a Ponzi scheme. 10. In or around January 26, 2015, Aroch – an internationally acclaimed photographer – purchased an interest in 391 Broadway Condominium LLC for $2 million, an entity operated by Yohai which Yohai falsely claimed owned the real property located at 391 Broadway in Manhattan. Yohai fraudulently induced Aroch to make this investment by claiming that he needed the money to finalize construction of the property, which would be completed in a matter of months. 11. In addition, on or about February 29, 2016, Plaintiff entered into an Assignment and Assumption Agreement (the “154 Spring Agreement”) for the purchase of a condominium unit from 154 Spring St. Partners LLC (“154 LLC”). The 154 Spring Agreement states that Aroch and his wife Anna would purchase the unit for a deposit of C OMPLAINT ON P ROMISSORY N OTE   P AGE 2 2 of 8 FILED: NEW YORK COUNTY CLERK 07/27/2017 12:54 PM NYSCEF DOC. NO. 2 INDEX NO. 655061/2017 RECEIVED NYSCEF: 07/27/2017 $900,000. The managing member signing the 154 Spring Agreement on behalf of 154 LLC was Yohai. Per Yohai’s instructions, Aroch remitted $900,000 in connection with this agreement to another entity operated by Yohai, Yohai REI LLC. 12. Yohai fraudulently induced Aroch to wire this $900,000 as part of a claimed effort to repay Aroch on his original $2 million investment in 391 Broadway. Yohai claimed that he would provide Aroch with an additional $2 million needed to close on the Spring Street unit. But after Aroch wired the $900,000 to Yohai REI LLC, Yohai failed to come up with the $2 million, as promised. Aroch lost these funds to Yohai, and upon information and belief, the subject Spring Street unit was ultimately sold to another buyer. 13. Upon information and belief, Yohai converted and used some or all of the above-referenced funds for (i) personal travel; (ii) lavish purchases; and/or (iii) undisclosed and unauthorized speculative real estate ventures. Yohai has been accused of similar misconduct in proceedings pending in the United States Bankruptcy Court for the Central District of California, Case No. 8:16-bk-15171-CB (the “California Action”). In that case, an entity called DJ Blue Jay Way, LLC – which reportedly is operated by the Hoffman family, and which also invested in a real estate project with Yohai in Los Angeles – accused Yohai of withdrawing funds from a joint operating account without authorization. See California Action, Dkt. No. 53, p. 4. This entity also accused Yohai of making an unlawful preference payment to himself in the amount of $720,000. See id., Dkt. No. 93, p. 4. 14. Despite due demand, Yohai has failed to substantiate to Aroch his actual use of the funds invested by Aroch. Instead, Yohai commenced a year-long campaign of C OMPLAINT ON P ROMISSORY N OTE   P AGE 3 3 of 8 FILED: NEW YORK COUNTY CLERK 07/27/2017 12:54 PM NYSCEF DOC. NO. 2 INDEX NO. 655061/2017 RECEIVED NYSCEF: 07/27/2017 delay and obfuscation – including well-documented fraudulent lulling statements – in an effort to avoid his repayment obligations to Aroch. 15. For example, throughout 2016, Yohai continuously claimed by text message that he would repay Aroch. Yohai even showed Aroch what are now believed to be falsified images of bank checks and wire confirmations in the amount of $2 million in order to demonstrate that repayment is imminent. But Yohai never delivered on these repeated promises of repayment. 16. investments. In September 2016, Aroch confronted Yohai once again concerning his In response, Yohai agreed to sign a promissory note, personally guarantying repayment of Aroch’s $2.900,000 investment in the above-referenced LLCs by a date certain (the “Note”). 17. A true and correct copy of the Note is attached hereto as Exhibit A. 18. Pursuant to the terms of the Note, Yohai promised to pay Aroch the principal amount of $2,900,000 on or before October 31, 2016. 19. The Note was made for valuable consideration – i.e., the $2,900,000 that Aroch had remitted to LLCs operated and controlled by Yohai. 20. The Note was executed by Yohai on September 27, 2016, and delivered to Aroch on September 27, 2016. 21. Yohai confirmed the binding nature of the Note in several emails and text messages with Aroch, where Yohai told Aroch that because of the Note, “[w]ell now u can take me [to] court and win.” 22. On October 31, 2016, Yohai defaulted in the payment of the Note. Yohai has also failed to make payment on the Note to date. C OMPLAINT ON P ROMISSORY N OTE   P AGE 4 4 of 8 INDEX NO. 655061/2017 FILED: NEW YORK COUNTY CLERK 07/27/2017 12:54 PM NYSCEF DOC. NO. 2 RECEIVED NYSCEF: 07/27/2017 23. In accordance with the terms of the Note, Aroch is due the total unpaid principal in the amount of $2,900,000 together with applicable statutory interest thereon from November 1, 2016. 24. Under the terms of the Note, Aroch is also entitled to recover from Yohai all reasonable attorneys’ fees and other expenses incurred in exercising Aroch’s rights and remedies upon default. 25. Yohai has no defense to his repayment obligations under the Note. In a proceeding filed by Aroch against Yohai in the United States District Court for the Southern District of New York, Case No. 1:16-cv-08954-LLC (the “SDNY Action”), Yohai filed an affidavit, under oath, claiming that the Note has been repaid: “While I have defenses to that claim, which will be asserted at the appropriate time if this matter is brought in a appropriate court, the claim itself is that simple: I signed a note and did make payment.” SDNY Action, Dkt. No. 7-1, ¶ 5. This assertion by Yohai was false and perjurious. The Note has not been repaid. 26. Yohai also testified during jurisdictional discovery taken in the SDNY Action that he owns – either personally or through various entities – seven luxury cars, including Range Rovers and a Porsche. Upon information and belief, Yohai wrongfully used some of the funds invested by Aroch and others to purchase these cars. 27. The SDNY Action was dismissed for lack of federal diversity jurisdiction. However, there can be no dispute that this Court has jurisdiction over Yohai. 28. Aroch demands a jury for the trial of this matter. WHEREFORE, by reason of the foregoing, there is due to the Plaintiff from the Defendant the sum of $2,900,000 with interest thereon at the statutory default rate of 9% C OMPLAINT ON P ROMISSORY N OTE   P AGE 5 5 of 8 INDEX NO. 655061/2017 FILED: NEW YORK COUNTY CLERK 07/27/2017 12:54 PM NYSCEF DOC. NO. 2 RECEIVED NYSCEF: 07/27/2017 per annum from the 1st day of November 2016, plus reasonable attorneys’ fees and other collection expenses. Dated: New York, New York July 27, 2017 Respectfully submitted, JOSHUA E. ABRAHAM, ESQ. ___________________________________ 477 Madison Avenue, Suite 1230 New York, New York 10022 P: (646) 245-6710 F: (646) 201-4454 josh@joshabrahamlaw.com Attorney for Plaintiff Guy Aroch C OMPLAINT ON P ROMISSORY N OTE   P AGE 6 6 of 8 FILED: NEW YORK COUNTY CLERK 07/27/2017 12:54 PM NYSCEF DOC. NO. 2 INDEX NO. 655061/2017 RECEIVED NYSCEF: 07/27/2017       Exhibit  A   7 of 8 FILED: NEW YORK COUNTY CLERK 07/27/2017 12:54 PM NYSCEF DOC. NO. 2 INDEX NO. 655061/2017 RECEIVED NYSCEF: 07/27/2017 8 of 8