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Ilani v. Abraham

United States District Court, D. Nevada

July 5, 2017

EZRA ILANI and CATHY ILANI, individuals, Plaintiffs,
v.
SIMON S. ABRAHAM, an individual; KDA HOLDINGS, LLC, a domestic limited-liability company; KING SOLOMONS TREASURES, LLC, a domestic limited-liability company; 777 HOLDINGS INTERNATIONAL LTD., LLC, a domestic limited-liability company; AMASIAN GEM CORPORATION OF NEVADA, a domestic corporation; LE SIMONE JEWELRY LTD., a domestic corporation; KING DAVIDS RIVER OF GOLD LLC, a domestic limited-liability company; JEWELRY JUDGE OF LAS VEGAS, LLC, a domestic limited-liability company; LAS VEGAS JEWELRY BROKERS, LLC, a domestic limited-liability company; JOEL LACKEY, an individual; DOE Defendants I through X, inclusive; and ROE CORPORATIONS A through Z, inclusive, Defendants.

          ORDER GRANTING IN PART PLAINTIFFS' APPLICATION FOR ENTRY OF DEFAULT JUDGMENT (ECF NO. 27)

          ANDREW P. GORDON UNITED STATES DISTRICT JUDGE.

         Plaintiffs EZRA ILANI and CATHY ILANI Gointly "Plaintiffs") filed an Application for Default Judgment against defendants SIMON S. ABRAHAM; KDA HOLDINGS, LLC; KING SOLOMONS TREASURES, LLC; 777 HOLDINGS INTERNATIONAL LTD., LLC; AMASIAN GEM CORPORATION OF NEVADA; LE SIMONE JEWELRY LTD.; and KING DAVIDS RIVER OF GOLD LLC (collectively "Defendants"). ECF No. 27. Defaults were previously entered against those Defendants. The plaintiffs have demonstrated that those Defendants are not in the military service of the United States and are not infants or incompetent persons.

         I have considered the evidence and argument in Plaintiffs' Application for Default Judgment, and good cause appears to grant the Application in part. Plaintiffs have not offered sufficient evidence to support entry of judgment on all of their claims against all of those Defendants. But I will grant the Application with regard to some of the claims against some of the Defendants.

         I. FINDINGS OF FACT

         1. Defendant Simon Abraham is a managing member of defendant KDA. ECF No. 1 at ¶ 17. Abraham and KDA are merchants in the jewelry industry. Id. at ¶ 23.

         2. Plaintiffs and KDA entered into a contract for a collateralized loan on May 13, 2016 (the "Agreement"). ECF No. 27-2.

         3. Under the terms of the Agreement, Plaintiffs provided a loan in the amount of $2, 000, 000 (the "Loan") payable upon execution of the Agreement.

         4. Under the terms of the Agreement and as consideration for making the Loan, KDA was to pay fees in the amount of $500, 000 (the "Loan Fees") payable upon maturity.

         5. KDA was required to repay the Loan on or before 60 days from the receipt of the Loan proceeds in addition to paying the Loan Fees.

         6. As security for the Loan, KDA pledged a set of seven red corundum gemstones which were appraised at $3, 610, 800 by co-Defendant Joel Lackey (the "Collateral").

         7. Adrian Cazares ("Cazares") was named the third-party liaison in the Agreement. ECF No. 27-2. His responsibilities were to ensure the Collateral remained in the proper chain of custody for the duration of the Agreement.

         8. After the Collateral was appraised by Lackey, it was deposited in a safe deposit box at Bank of Nevada.

         9. Under the terms of the Agreement, the ownership rights to the Collateral were to transfer from KDA to the Plaintiffs in the event of a default. If KDA defaulted on its obligation, then Cazares was required to tender the safe deposit box keys and safe deposit box receipt within 10 days of receipt of a Notice of Intent to Take Possession.

         10. Plaintiffs performed under the Agreement by wiring $2, 000, 000 to Abraham's account on May 18, 2016.

         11. KDA defaulted on its obligation on June 17, 2016. The default transferred ownership of the Collateral to Plaintiffs.

         12. Plaintiffs provided KDA and Abraham with the requisite 10 days' Notice of Intent to Take Possession of the Collateral on November 18, 2016.

         13. Plaintiffs took possession of the Collateral on January 9, 2017.

         14. On or about January 16, 2017, an independent gemologist (Steve Rubinstein of New York Jewelers in Chicago, Illinois) verified authenticity of the Collateral and advised Plaintiffs to obtain an official appraisal.

         15. Thomas Tashey, Jr. of Professional Gem Sciences Laboratory appraised the Collateral. He estimated the value of the Collateral as between twenty-five and thirty-five dollars per carat ($25-$35/carat), resulting in a total value, at retail, of approximately $15, 000.

         16. KDA and Abraham knew or should have known the true value of the Collateral pledged under the Agreement. Defendants' material misrepresentation is evidence of fraudulent conduct.

         17. Defendants have failed to respond to Plaintiffs' Complaint. A default was entered against the ...


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