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NEW MEDIA HOLDING COMPANY L.L.C.,
Plaintiff,
- against -
KONSTANTIN KAGALOVSKY, IOTA LP, ASPIDA VENTURES LTD., AND SERAGILL HOLDINGS LTD.,
Defendants.
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To:
KONSTANTIN KAGALOVSKY IOTA LP Stanley House 500 Kings Road London S W 10 OUA United Kingdom
ASPIDA VENTURES LTD. Solonos 20 P.C. 3035 Limossol, Cyprus
Index No.
Date Purchased: Dec. 14,2009
Plaintiff designates New York County as place of trial.
SUMMONS 0 9 6 0 3 7 4 2 Venue is proper pursuant to CPLR 6 503(a) because Plaintiff has chosen to file in New York County.
SERAGILL HOLDINGS LTD. '*W Arch. Makariou C, 155 Proteas House, 5th F1. P.C. 3026 Limossol, Cyprus
You are hereby summoned to answer the complaint in this action and to serve
a copy of your answer, or if the complaint is not served with this summons, to serve a notice
of appearance on the Plaintiff's attorneys within 20 days after the service of this summons,
exclusive of the day of service (or within 30 days after the service is complete if this
summons is not personally delivered to you within the State of New York); and in case of
your failure to appear or answer, judgment will be taken against you by default for the relief
demanded in the complaint.
Dated: New York, New York December 1 1,2009
COVINGTON & B U h dl LLP
BY: + C. William P i
David Z. Pinsky Christopher Y. L. Yeung The New York Times Building 620 Eighth Avenue New York, New York 10018 (212) 841-1000
Attorneys for Plaintiff
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SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK
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NEW MEDIA HOLDING COMPANY L.L.C., : IndexNo.
Plaintiff,
- against - : COMPLAINT
KONSTANTIN KAGALOVSKY, IOTA LP, ASPIDA VENTURES LTD., AND SERAGILL HOLDINGS LTD.,
De fendants.
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New Media Holding Company L.L.C. (“New Media Holding”), by its
undersigned attorneys, for its Complaint against Defendants Konstantin Kagalovsky
(“Kagalovsky”), Iota LP (“Iota”), Aspida Ventures Ltd. (“Aspida”), and Seragill Holdings Ltd.
(“Seragill”), alleges upon knowledge as to itself and its own acts, and upon i E d t i & a n
belief as to all other matters:
Nature of the Action
1. This complaint describes how Defendants conspi
belief as to all other matters:
Nature of the Action
1. This complaint describes how Defendants conspired, through a se&
improper actions in breach of their fiduciary and contractual duties, to seize control of and steal ’ ‘
the TVi Channel, a television network in Ukraine. This action seeks the return of that property.
2. New Media Holding is a Delaware limited liability company, owned and
controlled by Vladimir Gusinski, that owns a controlling stake in a leading producer of Russian-
language media and in one of the world’s largest Russian language film libraries. In late 2007,
Mr. Gusinski and Mr. Kagalovsky, long-time social acquaintances, agreed to create and to
manage a new television network in Ukraine, later named TVi. The two men agreed to form a
partnership for the purpose of creating and owning that network.
3. Mr, Gusinski brought to their partnership his unique knowledge and
experience in setting up and operating television networks, as well as the availability of his
media rights and assets owned by his family of companies (which included Some of the most
popular television series in Russia) and experienced technical and operating personnel. His
friend Mr. Kagalovsky, a Russian citizen living in London, had no television or media
experience, but was an experienced investor who took principal responsibility for organizing the
legal and financial structure of the partnership.
4. Mr. Gusinski and Mr. Kagalovsky agreed to be 50/50 partners and that the
appointment of TVi’s top managers would be jointly approved. In addition, the two partners
decided that there would be no mandatory capital calls to fund the partnership. The partners’
agreement governing the terms of their investment was reflected in a revised partnership
agreement for their partnership, called Iota Ventures LLP (hereafter, the “Partnership”), a
Delaware limited liability partnership.
5 . Separately, in a series of meetings held in New York City and in Mr.
Kagalovsky’s London home, the partners agreed upon the responsibilities for the operations of
TVi. Mr. Gusinski and his team of experienced media advisers (which included Yevgeny
Kiselyov, a prominent Russian journalist and the former CEO of NTV, Russia’s largest
independent television network; Igor Malashenko, a former general director of Channel One,
Russia’s largest television network, and a founder of NTV; and Yevgeny Yakovich, a former
head of NTV Plus, a prominent Russian satellite direct broadcasting company) were responsible
for the media operations of TVi. Mr. Kagalovsky and his representative, a Russian economist
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named Andrei Dementiev, were responsible for supervising the creation of the financial and legal
structures of the network. The partners agreed that the budget and financial decisions for the
network ( e g , disbursements to third parties) would be jointly approved,
6. Mr. Kagalovsky supervised and controlled the creation of an elaborate
ownership structure for TVi. The network was to be owned by a Ukrainian company,
Teleradiocompany TeleRadioSvit LLC (“TRS”), which in turn was held through a series of other
companies organized in Ukraine and in Cyprus. All of these intermediate subsidiaries were
owned, directly or indirectly, by the Partnership. Thus, through their 50 percent interests in the
Partnership, Mr. Kagalovsky (through his personal limited partnership, Iota) and Mr. Gusinski
(through his principal U.S. investment vehicle, New Media Holding) owned and controlled TRS
and TVi, the principal operating assets of the Partnership. The partners agreed to make equal
capital and voluntary contributions to the Partnership and ultimately each contributed $1 2
million to it.
7. TVi commenced broadcasting over Ukrainian airwaves in March 2008.
At the outset, TVi did not yet have its own broadcasting facilities; the programming content was
composed and integrated by personnel and in the New York City facilities of Overseas Media,
Inc., another media company managed by Mr. Gusinski, and transmitted, on the basis of a
mutually beneficial contract with Overseas Media, Inc., via satellite to Ukraine.
8. The partners began to disagree over operations in late spring or early
summer of 2009, leading Mr. Gusinski to propose a buy-out provision, amending the partnership
agreement, in order to resolve any deadlock between the partners. Mr. Kagalovsky initially
agreed to the solution, but then reneged and took matters into his own hands.
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9. In late September 2009, Mr. Kagalovsky - suddenly and without any
notice - unilaterally seized control of TVi’s operations, (upon information and belief) causing
Mr. Gusinski’s designated representative to be physically barred from the network and stopping
all payment of contractually required license fees for the television series previously purchased
from Mr. Gusinski’s production company, New Media Distribution Company L. L,C,
(“NMDC”), Network and Partnership personnel would not, or were not allowed to, provide
information discussing these decisions. The Partnership stopped paying license fees to NMDC
even while TVi continued to broadcast the licensed programming.
10. The reason for the network coup and infomation embargo became clear
over the Thanksgiving holiday in 2009. At that time New Media Holding discovered that two
months earlier, in September, contemporaneously with the physical ouster of Mr. Gusinski’s
representative fi-om TVi, TRS’s charter capital had been unilaterally increased and distributed to
outside parties, in secret and without authorization. As a result, the Partnership ’s ownership
stake in TRS and TVi - its principal operating assets - was reduced to less than one percent
while two non-Partnership entities headquartered in Cyprus became 99 percent owners of these
assets. This illegal conduct took place without the knowledge or consent of Mr. Gusinski or
New Media Holding. The new controlling owners of TRS and TVi have been identified as
Defendants Aspida and Seragill.
1 1. Although the beneficial ownership of those companies is secret, only Mr.
Kagalovsky, acting in concert with Iota and representatives of its subsidiaries, could have
effected these surreptitious actions. To complete the theft, on or around October 14,2009, the
Partnership executed an agreement assigning its rights to the trademarks associated with TVi to
TRS. In other words, the Partnership, without Mr. Gusinski’s or New Media Holding’s
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n
knowledge or consent, had not only given away its principal operating assets but had assigned its
rights to the TVi trademarks to an to an entity no longer controlled by the Partnership, The
Partnership could not have assigned these rights without Mr. Kagalovsky’s authorization, Mr.
Kagalovsky has acknowledged his knowledge and participation in the transfer.
12. In short, acting in concert and in breach of fiduciary and contractual
duties, Mr. Kagalovsky and the other Defendants surreptitiously caused the wrongful removal of
the operation and ownership of TRS and TVi, the principal assets of the Partnership. Without
the knowledge or any authorization of New Media Holding, more than 99 percent of the
Partnership’s interest in TRS and TVi has been transferred to third parties owned and controlled
(upon information and belief) by Mr. Kagalovsky. New Media Holding brings this action to
restore its rights in TRS and TVi, to stop any further liquidation of its ownership interests, and
for damages caused by Defendants’ improper actions.
Parties
13. New Media Holding is a Delaware limited liability company that does
business in Greenwich, Connecticut. New Media Holding owns 50 percent of the Partnership.
New Media Holding is owned and controlled by Mr. Gusinski, who owns and operates the
largest Russian language media group outside Russia, including several television networks and
film and television production companies.
14,
15.
Mr. Kagalovsky is a Russian citizen residing in London, England.
Iota is an Isle of Jersey limited partnership with a principal place of
business in Jersey. Along with New Media Holding, Iota is an equal partner in the Partnership.
Upon information and belief, Mr. Kagalovsky exercises complete dominion and control over
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Iota, including, but not limited to, owning 100 percent of its ownership interests through various
investment entities.
16.
17.
18.
Aspida is a company that is incorporated in Cyprus.
Seragill is a company that is incorporated in Cyprus.
Upon information and belief, Aspida, and Seragill are corporate and
limited partnership shells that are owned and controlled by, and have been used by, Mr.
Kagalovsky for his personal investment objectives. Each was used as part of the conspiracy to
effect the improper and surreptitious dilution of the Partnership’s interests in TRS and TVi, to
deprive New Media Holding of its ownership interest in TRS and TVi.
Jurisdiction and Venue
19. This Court has personal jurisdiction over Iota and Mr. Kagalovsky
pursuant to Civil Practice Law and Rule 302(a) because New York was the location for many of
the negotiations and discussions that led to the Partnership Agreement and the agreements and
discussions that followed to implement it, from which this action arises. This Court has personal
jurisdiction over Aspida and Seragill as co-conspirators and beneficiaries of the illegal dilution
and transfers of New Media Holding’s ownership interests.
20. Venue is proper in this Court pursuant to Civil Practice Law and Rule
503(a) because, although none of the parties reside in New York, plaintiff has chosen to file in
New York County.
21. New York law governs this case because the Partnership Agreement
specifically provides for its application.
Factual Background
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...
.*
The Formation of the Partnership.
22, Starting in 2007, Mr. Gusinski and Mr. Kagalovsky, who had known each
other socially nearly twenty years, began discussions about developing and operating a television
network in Ukraine, Mr. Gusinski and Mr. Kagalovsky agreed to form a joint venture to develop
this investment and, on April 14,2008, executed an amended and restated partnership agreement
for Iota Ventures LLP (the “Partnership Agreement”). Under this agreement, there is no
mandatory capital hnding of the Partnership. Instead, the Partnership is funded by equal and
voluntary loans to the Partnership pursuant to jointly approved budgets. To date each of the
partners has extended approximately $12 million in loans to the Partnership.
23. In their discussions, held in person and by telephone in Mr. Gusinski’s
offices in New York City and in Mr, Kagalovsky’s London home, the two men agreed that their
joint business - the television network - would be operated jointly, with each partner taking
responsibility for the area of his expertise. Because of his broad experience in the television and
media industry, Mr. Gusinski became responsible for the creative and programming aspects of
the television network and Mr. Kagalovsky became principally responsible for the organizational
and financial structure of the business. The parties further agreed that all strategic, financial, and
management decisions concerning the operation of the business, including appointment and
termiliation of top managers and key personnel of TRS and TVi, would be made by them by
consensus.
24. Mr. Kagalovsky proposed, and the partners agreed, to a corporate structure
using existing entities he had responsibility for setting up in Delaware, the British Virgin Islands,
Cyprus, and the Isle of Jersey, that were then (upon information and belief) owned and
controlled by Mr. Kagalovsky: the Partnership (and its predecessor entity Iota Ventures LLC),
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Iota (and the predecessor entity that previously owned Iota’s interest in the Partnership, Petal
Capital Holdings Ltd., a British Virgin Islands company (“Petal”)) and Winslow Enterprises
Limited, a Cyprus company (“Winslow”). The Ukrainian companies International Media
Company (“IMC”) and International Media Technologies (“IMT”) were then set up under the
supervision of Mr. Kagalovsky, Under the final investment structure, the Partnership owned 100
percent of Winslow, which in turn indirectly owned a 99 percent beneficial interest in TRS
through IMC. IMT owned the remaining one percent beneficial interest in TRS. Winslow had a
99.9 percent interest in IMT, with the Partnership owning 0.1 percent.
25. Pursuant to the Partnership Agreement, New Media Holding acquired a 50
percent interest in the Partnership. Petal owned the other 50 percent, which Petal eventually
transferred to Iota. The Partnership was thus the indirect owner of TVi, through several layers of
subsidiaries:
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0.1% lW?
26, Mr. Gusinski and Mr. Kagalovsky further agreed that each would have a
representative on the network’s premises to oversee the day-to-day operations of TVi. The
representative for New Media Holding was Mr. Yakovich, who became the Executive Director
of TRS and TVi with the function of a Chief Operations Officer. Mr. Dementiev represented
Mr. Kagalovsky as a consultant with the function of a Chief Financial Officer. Together these
two representatives acted as co-managers of TVi and TRS, with a third individual, Nikolai
Knyazhitskiy, jointly appointed to act as CEO of TRS.
27. The partners’ representatives worked together to submit to Mr.
Kagalovsky and to Mr. Gusinski monthly and quarterly budgets for the television network’s
... .
income and expenses, After approval, these budgets were used to prepare payment schedules
and Partnership funding requests, which also were approved by both Mr. Kagalovsky and Mr.
Gusinski, At the conclusion of this process Mr, Dementiev (Mr. Kagalovsky’s representative)
submitted the final payment instructions to the Partnership’s manager for payment.
TVi Licenses Programming from NMDC.
28. The partners agreed that TRS would obtain licenses to broadcast Russian-
language television programming from NMDC, which owned the distribution rights to several of
the highest rated television series in Russia. Mr, Kagalovsky knew that Mr. Gusinski owned a
majority interest in NMDC prior to the Partnership’s decision to negotiate and sign licensing
agreements with NMDC, Indeed, Mr. Gusinski’s extensive media experience and media
holdings, including the holdings NMDC, were a central reason that Mr. Kagalovsky, through
Petal and later Iota, entered into the Partnership, Access to NMDC’s film library was a
substantial incentive for Mr. Kagalovsky and a substantial contribution by Mr. Gusinski to the
Partnership and joint business.
29. Mr. Kagalovsky was personally involved in the negotiation of the
licensing agreements and reviewed and approved all material terms of the licensing agreements.
With Mr. Kagalovsky’s full knowledge and approval of all terms of the agreements, the
Partnership signed licensing agreements with NMDC dated January 1,2009, January 14,2009,
and April 10, 2009 (collectively, the “Licensing Agreements”).
30. Pursuant to the Licensing Agreements, the Partnership acquired
distribution rights to Russian-language programming at market and below-market rates, Mr.
Kagalovsky personally screened the television series offered by NMDC for licensing, selected
the series for TVi’s audience and discarded those he did not want. Mr. Gusinski and Mr.
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Kagalovsky also discussed acquiring content from other, third-party distributors. Following
those discussions, TRS signed a substantial number of licensing agreements with third-party
distributors.
Kagalovsky Seizes Control.
3 1, Beginning in the late spring or early summer of 2009, the partners began
to have various disagreements over the operation of TVi. The Partnership Agreement did not
provide for a mechanism for resolving a deadlock between the partners, Accordingly, Mr.
Gusinski proposed to resolve deadlock situations by amending the Partnership Agreement to
include a buyhell option mechanism, pursuant to which one partner could cause the other to buy
or sell his interests in the Partnership. Although Mr. Kagalovsky agreed to the buylsell option
mechanism in meetings with New Media Holding representatives, he subsequently reneged on
the agreement and took things into his own hands in a series of illegal actions.
32. On September 30,2009, shortly after New Media Holding had extended to
the Partnership another tranche of financing in the amount of $850,000, Mr. Kagalovsky
(through his representatives) seized control of TVi. Without explanation, notice or the consent
of Mr. Gusinski, Mr. Gusinski’s representative, Mr. Yakovich, was physically barred from the
premises of TVi and denied access to TVi’s and TRS’s business information. The power of
attorney Mr. Yakovich had been granted to conduct TVi business was revoked. No explanation
was given for the ouster. Upon information and belief, Mr, Kagalovsky ordered the removal of
MI-. Yakovich from the premises, the denial of his access to TVi’s and TRS’s business
information, and the revocation of his power of attorney.
33. Contemporaneously with Mr. Yakovich’s abrupt ouster, the Partnership
wrongfully stopped its payments to NMDC for licensed television programming. These
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payments already had been authorized in the budgets approved by Mr. Gusinski and Mr.
Kagalovsky through the end of 2009. Upon information and belief, Mr. Kagalovsky ordered the
Manager of the Partnership to refuse to pay NMDC, even though the payments had been
previously approved and funded and were required under the applicable Licensing Agreements.
34, NMDC tried to persuade the Partnership to resume the payments owed
under the Licensing Agreements and, when the default continued, served a Notice of Default and
gave the Partnership the opportunity to cure. When the payments continued to be withheld,
NMDC brought suit in US . District Court for the Southern District of New York for breach of
contract.
Kagalovsky Steals TRS and TVi.
35. In September 2009 - contemporaneous with Mr, Kagalovsky’s seizure of
TVi’s operations and the exclusion of New Media Holding’s representative - (upon information
and belief) Mr, Kagalovsky surreptitiously caused TRS to increase its charter capital, which
diluted the Partnership’s ownership stake in TRS and TVi from 100 percent to less than one
percent. This change in TRS’s ownership structure resulted in independent entities associated
with and (upon information and belief) controlled by Mr. Kagalovsky taking a greater than 99
percent ownership stake in TRS and TVi.
36. Specifically, approximately 92 percent of IMC’s interest in TRS was
transferred to a company by the name of Seragill and about 90 percent of Winslow’s interest in
IMC was transferred to a company by the name of Aspida. Both Seragill and Aspida are entities
incorporated in Cyprus. Upon information and belief, Seragill and Aspida are owned, controlled,
and operated for the benefit of Mr. Kagalovsky. Upon information and belief, Mr. Kagalovsky
caused this transfer of ownership as part of his effort to steal from New Media Holding all rights
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to TVi. Mr. Kagalovsky has acknowledged that he accomplished this change in the ownership
structure and did not inform the Partnership or its Manager, all in violation of the Partnership
Agreement. New Media Holding received no consideration in return for its interest in TRS.
37. The following chart shows the ownership structure of TVi after the illegal
dilution TRS’s ownership interests took place:
7.4% 1
I J
I
38. Additionally, on or around October 14,2009, the Partnership and TRS
signed an agreement assigning the TVi trademark from the Partnership to TRS, at the behest and
upon the authorization of Mr. Kagalovsky’s personal representative, Mr. Dementiev. On or
around November 3,2009, an application was filed with the Ukrainian Patent and Trademark
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Authority seeking to register the assignment of the TVi trademark from the Partnership to TRS.
Both the application and the assignment were made without Mr. Gusinski’s or New Media
Holding’s knowledge or consent. The ownership of the TVi tradernark thus has been illegally
transferred, in effect, from the Partnership to an entity in which the Partnership now owns less
than one percent.
39. Upon information and belief, Mr. Kagalovsky caused the assignment of
rights and the filing of the application. With the re-assignment of the TVi trademark from the
Partnership to TRS - of which the Partnership now owns less than one percent - Mr.
Kagalovsky effectively will have stolen everything of value from the Partnership.
40. On or around October 21,2009, the National Council of Ukraine for
Television and Radio Broadcasting passed a resolution on re-issuing the broadcasting license to
TRS due to changes in its ownership structure, editorial board, and editorial board members’
addresses. Thus, the broadcast license for the network is now controlled by an entity in which
the Partnership owns less than one percent.
41. Neither New Media Holding nor Mr. Gusinski had any contemporaneous
knowledge of these any of transactions or transfers, nor did they approve of them.
FIRST CLAIM FOR RELIEF (Breach of Fiduciary Duty Against Iota)
42. Plaintiff repeats and realleges the preceding allegations of this Complaint
as if fully set forth.
43. The Partnership was formed for the purpose of owning and operating a
Ukrainian television network - ultimately, TVi, as set forth above.
44. As a co-partner in the Partnership, Iota owed New Media Holding
fiduciary duties.
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45. In dereliction of its respective fiduciary duties, Iota, with the assistance of
others and at the direction of Mr. Kagalovsky, enabled TRS to increase its charter capital, This
caused the Partnership’s ownership stake in TRS and TVi - its principal operating assets - to
be diluted to less than one percent and handed a 99 percent ownership stake in the assets to non-
Partnership entities incorporated under the laws of Cyprus. Upon information and belief, the
transaction was self-interested in that Mr. Kagalovsky, alone or through Iota or other corporate
entities, is the indirect andor beneficial owner of those entities.
46. In further dereliction of their respective duties, Iota enabled the
Partnership to assign the Partnership’s rights to the TVi trademark to TRS, of which the
Partnership now owns less than one percent. This transaction was also self-interested, insofar as
TRS is owned or controlled by Mr. Kagalovsky or Iota as a result of the dilution of shares
described above.
47. The share dilution and trademark assignment were intentional, grossly
negligent and reckless, and are unsupportable by any legitimate business reason. Upon
information and belief, they served no legitimate purpose for and conferred no benefit upon the
Partners hip.
48. The share dilution and trademark assignment were made without the
Partnership’s or New Media Holding’s knowledge or consent. In fact, Iota made no attempt to
disclose any details concerning these transactions to the Partnership or to New Media Holding
and instead took affirmative measures to keep the transactions a secret, as alleged above.
49. The ouster of Mr. Yakovich from his role in TRS was an effort to conceal
this misconduct from New Media Holding and breached fiduciary duties owed to New Media
Holding,
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50. New Media Holding has been, and continues to be, damaged by Iota’s
breaches of fiduciary duty. Without ownership or control over TRS or the rights to the TVi
trademarks, New Media Holding has been left without any substantial ownership or managerial
authority over the business in which it invested time, energy, and money to develop and grow.
Indeed, the entire objective of the Partnership has been frustrated, and New Media Holding is left
with essentially nothing in return.
SECOND CLAIM FOR RELIEF (Breach of Contract Against Iota)
5 1. Plaintiff repeats and realleges the preceding allegations of this Complaint
as if fully set forth.
52. The purpose of the Partnership Agreement between New Media Holding
and Iota was the formation and operation of a Ukrainian television network.
53. The surreptitious transfer of the Partnership’s ownership interests in TRS
and TVi and in TVi’s trademark rights to third parties owned and controlled, directly or
indirectly, by Mr. Kagalovsky and the seizure of control of the operations of TRS and TVi from
Mr. Gusinski breached the express and implied terms of the Partnership Agreement.
54. New Media Holding has been, and continues to be, damaged by Iota’s
breach of the Partnership Agreement. Without ownership or control over TRS and TVi or the
rights to the TVi trademarks, New Media Holding has been left without any substantial
ownership or managerial authority over the business that is the primary reason for the
Partnership and the Partnership Agreement.
THIRD CLAIM FOR RELIEF (Aiding and Abetting Breach of Fiduciary Duties Against
Kagalovsky, Aspida, and Seragill)
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55 .
as if fully set forth.
Plaintiff repeats and realleges the preceding allegations of this Complaint
56. Iota owes fiduciary duties to its partner, New Media Holding.
57. Mr. Kagalovsky, Aspida, and Seragill were aware of the partnership
relationship between New Media Holding and Iota and therefore of the fiduciary obligations
owed by Iota to New Media Holding.
58. Defendants Mr. Kagalovsky, Aspida, and Seragill aided and abetted Iota’s
breach of fiduciary obligations to New Media Holding by substantially assisting Iota and Mr.
Kagalovsky to transfer ownership and trademark rights away from the Partnership or entities
owned by the Partnership, as described in detail above.
59. New Media Holding has suffered damages as a result of the concerted
efforts to misappropriate partnership assets. In addition to the monetary harm caused by the theft
of TVi and TRS described above, New Media Holding will suffer irreparable harm if Defendants
succeed in their effort, described above, to misappropriate assets and TVi trademark rights.
FOURTH CLAIM FOR RELIEF (Tortious Interference with Contract
Against Kagalovsky)
60. Plaintiff repeats and realleges the preceding allegations of this Complaint
as if fully set forth.
61, Mr. Kagalovsky had knowledge of the purpose of the Partnership
Agreement between New Media Holding and Iota and was aware that its purpose was the
formation and operation of a Ukrainian television network,
62. Upon information and belief, Mr. Kagalovsky caused Iota to breach the
Partnership Agreement by improperly and surreptitiously causing the transfer of ownership
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interests to independent companies under his control, removing 99 percent of the ownership of
the network from the Partnership; by unilaterally removing Mr. Yakovich from his managerial
role in the Partnership and TRS and preventing him from all business information and decisions
regarding the operations of TRS and TVi; and by causing the transfer of TVi trademark rights to
unknown third parties, out of the control of the Partnership.
63. Mr. Kagalovsky tortiously interfered with the Partnership Agreement and
with New Media Holding’s ability to enjoy the benefits of that agreement by causing the
breaches of contract by Iota described above.
64. Mr. Kagalovsky acted without authority and without any legal justification
in taking these actions to deprive New Media Holding of its ownership interest in TRS and TVi.
Upon information and belief, Mr. Kagalovsky’s foregoing acts have been, 65.
and continue to be, willful and deliberate.
66. New Media Holding has been, and continues to be, damaged by Mr.
Kagalovsky’s tortious interference with the Partnership Agreement.
FIFTH CLAIM FOR RELIEF (Conspiracy to Breach Fiduciary Duties
Against Kagalovsky, Iota, Aspida, and Seragill)
67, Plaintiff repeats and realleges the preceding allegations of this Complaint
as if fully set forth.
68, Upon information and belief, Mr. Kagalovsky, Iota, Aspida, and Seragill,
conspired to breach fiduciary duties by agreeing to secretly transfer, and actually transferring the
Partnership’s ownership interest in TRS and TVi, and by agreeing to assign, and causing the
assignment of the Partnership’s rights to the TVi trademarks, all in breach of fiduciary duties, as
alleged above.
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69. Among other things, (upon information and belief) upon Mr.
Kagalovsky’s authorization and direction, Winslow agreed to, and actually did, transfer over 90
percent of its interest in IMC to Aspida, and TRS agreed to, and actually did, transfer an over 92
percent stake in its operations to Seragill, as alleged above.
70. Mr. Kagalovsky and Iota furthered this conspiracy by making efforts to
conceal it from the Partnership and New Media Holding. Mr. Kagalovsky organized and
coordinated the conspirators, including by laying the foundation for the conspiracy by creating
and implementing the corporate ownership structure that formed the mechanism for the secret
share dilution and trademark assignments, as alleged above.
71. Upon information and belief, Mr. Kagalovsky, Iota, Aspida, and Seragill
all had knowledge that Mr, Kagalovsky and Iota owed fiduciary duties to New Media Holding
and the Partnership, and that accomplishing the conspiracy’s objectives - to essentially steal
away the Partnership’s principal assets and goodwill - were in violation of these fiduciary
duties.
72. New Media Holding has been, and continues to be, damaged by this
conspiracy. Without ownership or control over TRS or the rights to the TVi trademarks, New
Media Holding has been lefi without any managerial authority over business that it invested
time, energy, and money to develop and grow. Indeed, the entire objective of the Partnership has
been frustrated, and New Media Holding is left with nothing in return.
SIXTH CLAIM FOR RELIEF (In the Alternative, Unjust Enrichment
Against Kagalovsky, Aspida, and Seragill)
73. Plaintiff repeats and realleges the preceding allegations of this Complaint
as if fully set forth.
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74. As described above, Mr. Kagalovsky surreptitiously and illegally caused
the transfer of more than 99 percent of the ownership of TVi and its parent company, TRS, to
defendants Aspida and Seragill, Mr. Kagalovsky, through his representatives, also caused the
assignment of TVi trademark rights from the Partnership to Aspida and Seragill. New Media
Holding’s ownership interests in these assets has been reduced to less than one percent. Upon
information and belief, Mr. Kagalovsky directly or indirectly owns and controls Aspida and
Seragill.
75. As a result of these illegal transfers and transactions, Mr. Kagalovsky,
Aspida, and Seragill have obtained a substantial benefit without adequate compensation to New
Media Holding.
WHEREFORE, Plaintiff seeks judgment as follows:
A.
B.
ordering the return of the Partnership’s beneficial interest in TRS;
barring the transfer of TVi’s trademark rights or, in the alternative,
ordering their return;
C. barring Mr. Kagalovsky from future involvement in the operation of the
Partnership;
D.
E.
awarding Plaintiff damages in an amount of not less than $20 million;
awarding Plaintiff its reasonable costs and attorneys fees incurred in this
litigation; and
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F.
and proper.
granting Plaintiff such other and further relief as the Court may deem just
Dated: New York, New York December 11,2009
COVING ON ND BURLING LLP At7
David Z. Pinsky Christopher Y. L. Yeung The New York Times Building 620 Eighth Avenue New York, New York 10018 Telephone: (2 12) 84 1 - 1000
Attorneys for Plaintiff
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