The following e-filed documents, listed by NYSCEF document number (Motion 005) 132, 133, 134, 135, 136, 137, 138, 139, 140, 141, 142, 143, 144, 145, 146, 147, 148, 149, 150, 151, 152, 153, 154, 155, 157, 158, 159, 160, 161, 162, 163, 164, 165, 166, 167, 168, 169, 170, 171, 172, 173, 174, 175, 176, 177, 178, 179, 180, 181, 182, 183, 184, 185, 186, 187, 188, 189, 190, 191, 192, 193, 194, 195, 196, 197, 198 were read on this motion to/for SUMMARY JUDGMENT(AFTER JOINDER). DECISION ORDER ON MOTION Upon the foregoing documents, and for the reasons set forth below, Adam Chodos’ motion for summary judgment dismissing the complaint pursuant to CPLR §3212 following the completion of discovery is denied in its entirety. I. The Relevant Facts and Circumstances This is a case about a lawyer’s involvement in a complex fraud perpetrated by William Jack Frost (aka Bill Frost), an investor in a fashion and lifestyle magazine known as Z!NK (founded in 2002), on its founders, Isabelle Sabourin and Sheriff Ishak (collectively, Z!NK’s Founders). Although the fraud dates back to 2008, the facts surrounding the lawyer’s involvement are alleged to have been unknown until discovery in the 2013-14 Arbitration (hereinafter defined). More specifically, in 2007, Mr. Frost agreed to invest a total of $8 million in Z!NK Magazine in exchange for a 25 percent equity stake in a new joint venture known as I.T. Global Media, LLC (ITGM), which took ownership over Z!NK Magazine and its intellectual property rights. Up until the 2013-14 Arbitration, Z!NK’s Founders understood Mr. Chodos’ role to be that of merely representing Mr. Frost in the negotiations leading up to the deal and later representing ITGM (Chodos Aff., 6). The relationship between Mr. Frost and Z!NK’s Founders got off to a rocky start. After Mr. Frost defaulted on his initial funding obligations within the first 30 days, Mr. Ishak told Mr. Frost the deal was off and removed him as a manager. But when Mr. Frost was able to come up with the first $2 million, Mr. Ishak agreed to revive the deal. One of Mr. Frost’s companies, F4 Capital Management, LLC (F4), provided an additional $2 million between late 2007 and early 2008, including $1 million obtained by Mr. Chodos from an undisclosed source and transferred into F4′s accounts from an account controlled by Mr. Chodos. The source of the funds and Mr. Chodos’ involvement in the transfer were not disclosed to Z!NK’s Founders. In June 2008, Mr. Frost provided Z!NK’s Founders with a $6 million check drawn on an account in Mr. Frost’s father’s name. Mr. Frost claimed that his father was a majority equity holder and Chairman of the Board of Synovus Bank in Florida, and that ITGM could earn 1.5 percent more in interest with Synovus Bank than at any other bank. Z!NK’s Founders agreed to deposit the $6 million check into an account at Synovus Bank. Mr. Frost indicated that he would take care of opening the account and depositing the check, and he subsequently presented Mr. Ishak with forged account statements showing a balance of $6 million. In August 2008, when Ms. Sabourin sought to transfer funds from the Synovus Bank account to ITGM’s Commerce Bank account to cover operating expenses, Mr. Frost intervened, stating that he would take care of it instead. The next day, Mr. Frost transferred $230,000 to ITGM’s Commerce Bank account. What Z!NK’s Founders did not know, however, was that Mr. Frost had not transferred the money out of the account at Synovus Bank that was supposed to have been created for ITGM. Instead, he had transferred the money out of his then wife Jennifer R. Frost’s account. In September 2008, when Mr. Ishak attempted to withdraw money from the Commerce Bank account for payroll, he learned that there were insufficient funds in the account and that he had been removed as an authorized person on the account. Next, he tried to access ITGM’s account at Synovus Bank only to learn that the Synovus Bank account did not exist. This was all part of what Z!NK’s Founders allege to be a scheme by Messrs. Frost and Chodos to wrest control of the Z!NK business and loot its assets. They allege that, between 2008 and 2010, Mr. Frost, with substantial assistance from Mr. Chodos, engaged in a campaign of misrepresentations and forgeries in an attempt to take over Z!NK Magazine. For example, Mr. Frost, with the assistance of Mr. Chodos, created a document that purported to reflect Sheriff Ishak’s resignation as a manager of ITGM (NYSCEF Doc. No. 145). Mr. Frost demanded that his employee, Amy Walko, notarize the document even though Mr. Ishak had not signed it, and then Mr. Frost forged Mr. Ishak’s signature (Walko Tr at 64:4-22). In September 2008, using the fraudulent resignation letter of Mr. Ishak, Messrs. Frost and Chodos took full control over ITGM, terminated its employees, stopped payment to all vendors, and closed all of its bank accounts. On October 8, 2008, Mr. Chodos sent an email (the October 8th Email) to Mr. Ishak informing him that Mr. Frost had been hospitalized due to metal poisoning from his time in Macedonia, and he was taking over the reins of ITGM in Mr. Frost’s absence. In addition, in the October 8th Email, Mr. Chodos acknowledged that Mr. Frost and Mr. Ishak were partners, indicated that based on his experience as a former auditor the books had significant inconsistencies, and dissuaded Mr. Ishak from retaining an accountant to examine the inconsistencies and file the tax returns: The partnership between you and Bill regarding Zink cannot continue as it has. For the immediate term Bill has been advised by his physicians to have no travel and minimize workload. It is unfair to both Bill and Zink to put business affairs on hold for weeks or perhaps months. Secondly, as you may recall, I am a former auditor, and after speaking with Amanda and reviewing some of the accounting documents there are significant inconsistencies and accounting problems with Zink. Frost did not cause them and cannot be associated with them. I understand that you have been requesting documents so an accountant you know can file the returns before they are due next week. Given the complexity of the returns, and the host of accounting issues, it is not practical nor advisable to bring in an accountant we do not know. As Bill is the manager and the tax matters partner per the operating agreement, this is his function. (NYSCEF Doc. No. 176 at 4 [emphasis added]). On October 20, 2008, Mr. Chodos sent an email to Mr. Ishak firing him: [I]t has come to my attention that Jormic has been announcing to ITGM/Zink employees, vendors, etc. that Frost is “on medical leave”. Again, you have no authority per the operating agreement to remove the manager or put anyone on leave. The Commerce bank accounts have been abused by Jormic/you and no documentation has been provided despite multiple requests and will be closed as soon as possible. As you are actively damaging the business, F4 Capital Management LLC is the sole manager of ITGM, you are hereby notified that you are relieved of duty, effective immediately, as an officer or management of ITGM and are to relinquish all company information to me as counsel for the manager. As you have now reneged on your investor suggestions, F4 will actively market and sell the business. Any further misdeeds by Jormic or you will be prosecuted to the fullest extent. I have discussed with Frost that the manager has a duty to review all compliance and it appears there are department of labor, new york state sales tax, and internal revenue service issues (NYSCEF Doc. No. 176 at 2). Later that day, Mr. Frost sent Mr. Ishak a letter referring to the email sent from Mr. Chodos earlier in the day indicating that since Mr. Ishak’s “resignation” on March 29, 2007, he was an employee, and purporting to terminate his employment at Z!NK Magazine and accusing him of certain financial improprieties (NYSCEF Doc. No. 146). On November 6, 2008, Mr. Ishak purported to assign the trademark associated with Z!NK Magazine from ITGM back to Jormic Publishing Company, Ms. Sabourin’s company, which had originally owned the mark (NYSCEF Doc. No. 148). In December 2008, Mr. Chodos filed papers with the U.S. Patent and Trademark Office purporting to assign all of the rights, title and interest in the Z!NK trademark and U.S. Trademark registration number 3,057,318 from ITGM to Cavolino 430, LLC (Cavolino), a company owned by Mr. Frost, and prepared and submitted an agreement signed by Mr. Frost on behalf of ITGM ostensibly effectuating the transfer. Mr. Chodos also filed papers with the New York and Delaware Secretaries of State purporting to dissolve ITGM without so much as informing Z!NK’s Founders. As further discussed below, this was not known to Mr. Ishak or Ms. Sabourin until the 2013-14 Arbitration. Inasmuch as Mr. Ishak needed an account to continue Z!NK Magazine’s operations, he opened a new account at Commerce Bank. However, Mr. Chodos sent a letter, dated December 3, 2008, to Robert Jacobs at Commerce Bank, demanding that the new account be frozen. He followed up with an email the next day claiming that Mr. Ishak was a defendant in related litigation and threatened to inform the bank’s corporate headquarters and contact the state banking authority if the account was not closed (NYSCEF Doc. No. 186). On January 21, 2009, Mr. Chodos forwarded the forged resignation letter and other documents and asserted that Sheriff Ishak had no authority to act on ITGM’s behalf. As discussed more fully below, he sent additional emails threatening legal action against TD Bank on February 24, 2009, March 5, 2009, and March 23, 2009 (NYSCEF Doc. No. 187). On March 9, 2009, Mr. Chodos sent an email to Alexa Internet Customer service claiming that Cavolino was the owner of the domain www.zinkmag.com (NYSCEF Doc. No. 189). Mr. Chodos also drafted and notarized several promissory notes and security agreements purporting to evidence debts due in 2008 totaling approximately $4 million, and he caused ITGM’s accountants to file false tax returns on behalf of ITGM in February 2009 acknowledging the fraudulent debts and a Schedule K-1 Form showing that one of Z!NK’s Founders’ companies, Kashi International, LLC, had received $4 million in distributions in 2008 (Compl.,
