Ahmet Sandikci Court Transcript

This transcript is from the court hearing in Tampa, Florida on November 29th, 2012. 

It is the transcript verbatim.

IN THE UNITED STATES BANKRUPTCY COURT FOR THE MIDDLE DISTRICT OF FLORIDA TAMPA DIVISION

 

– – – – – – – – – – – – – – – x

IN RE: :

:

AHMET SANDIKCI : Case No. 8:11-bk-07915-MGW

: Chapter 7

Debtor :

– – – – – – – – – – – – – – -x

:

DeJAMES BUILDERS OF FLORIDA, :

INC., et al :

Plaintiff :

vs. : Adversary 8:11-ap-01151

:

AHMET SANDIKCI :

Defendant :

 

– – – – – – – – – – – – – – – x U.S. Courthouse

801 N. Florida Avenue

Tampa, Florida

November 29, 2012

9:42 A.M.

 

TRANSCRIPT OF HEARING

 

[Re: 8:11-ap-01151] Court’s Oral Ruling Trial on Complaint

 

 

 

 

 

 

 

B E F O R E: THE HONORABLE MICHAEL G. WILLIAMSON United States Bankruptcy Judge

 

 

PROCEEDINGS DIGITALLY RECORDED BY COURT PERSONNEL.

TRANSCRIPT PRODUCED BY TRANSCRIPTION SERVICE

APPROVED BY ADMINISTRATIVE OFFICE OF U.S. COURTS

 

 

 

 

JOHNSON TRANSCRIPTION SERVICE

7702 Lake Cypress Drive

Odessa, Florida 33556

(813) 920-1466

2

 

 

A P P E A R A N C E S:

 

For the Debtor: JOEL TREUHAFT, Esquire

Palm Harbor Law Group, P.A.

2977 Alternate 19, Suite B

Palm Harbor, Florida 34683

(727) 797-7799

Joel@PalmHarborLaw.com

 

For DeJames

Builders of Florida,

Inc., Dennis Detrie;

Robert Detrie, Sr.;

Robert Detrie, Jr.;

Detrie Construction,

Inc., Detrie

Builders, Inc.;

Montana, Inc., and

Daniel Schmidt: GREGORY S. WEISS, Esquire

(via telephone)

Leopold Kuvin, P.A.

2925 PGA Boulevard, Suite 200

Palm Beach Gardens, Florida 33410

(561) 515-1400

gweiss@leopoldkuvin.com

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

JOHNSON TRANSCRIPTION SERVICE – (813) 920-1466

3

 

1 P R O C E E D I N G S

 

2 (Whereupon, the hearing commenced at 9:42 a.m.)

 

3 THE COURTROOM DEPUTY: Case No. 11-7915, Ahmet

 

4 Sandikci; Adversary 11-1151.

 

5 Judge, we have Gregory Weiss attending by

 

6 telephone.

 

7 THE COURT: Okay. Mr. Weiss, do you want to make

 

8 your appearance?

 

9 MR. WEISS: Yes, Your Honor. Greg Weiss on behalf

 

10 of the Plaintiffs, and I appreciate the Court allowing me to

 

11 appear by telephone.

 

12 THE COURT: Certainly.

 

13 MR. TREUHAFT: Joel Treuhaft on behalf of Ahmet

 

14 Sandikci.

 

15 THE COURT: Thank you.

 

16 And, Marti, is this CourtCall or is this —

 

17 THE COURTROOM DEPUTY: Yes.

 

18 (Discussion off the record.)

 

19 THE COURT: Okay. Very well. The Court has

 

20 before it —

 

21 (The Court requested courtroom to become quiet.)

 

22 THE COURT: Okay. Very well. The Court has

 

23 before it a final ruling in this case. The case was tried

 

24 by the Court and very well-presented by both sides. I

 

25 considered very carefully the evidence presented and took

 

 

 

 

 

4

 

1 careful notes and considered the testimony of the witnesses

 

2 and their demeanor and credibility of the various witnesses.

 

3 I reviewed the extensive documentary evidence and

 

4 considered carefully the post-trial submissions, both of

 

5 which were excellent, on the issues involved. And based on

 

6 that, I’m prepared and will now make my findings of fact and

 

7 conclusions of law.

 

8 This case involves the not unusual situation of a

 

9 fairly complicated series of transactions done without the

 

10 assistance of counsel at any stage of the parties’ dealings.

 

11 In such cases, a Court must analyze the facts established by

 

12 the evidence and determine the legal consequences of the

 

13 parties’ actions.

 

14 And, here, the facts regarding the parties’

 

15 transactions really are not in material dispute. In fact,

 

16 the Defendant admits in his answer that he’s indebted to the

 

17 Plaintiffs collectively in the amount of $3,691,000, subject

 

18 to certain unspecified setoffs.

 

19 The parties have also stipulated that from

 

20 November 2, 2007 and March 1, 2008, Dennis and Robert Detrie

 

21 transferred $500,000 to the Debtor for the purchase and sale

 

22 of rare currency. Between March 26th, 2008 and August —

 

23 excuse me, October 26th, 2008, Dennis and Robert Detrie,

 

24 either individually or through entities they owned,

 

25 transferred an additional 1.2 million to the purchase and

 

 

1 sale of rare currency. Daniel Schmidt also transferred

 

2 $200,000 to the Debtor for the purchase and sale of rare

 

3 currency during that same period.

 

4 Some of the funds that Dennis Detrie transferred

 

5 to the Debtor were used to buy rare currency for a retail

 

6 currency store that Dennis Detrie, DeJames Builders and the

 

7 Debtors opened on Worth Avenue in Palm Beach, Florida, in

 

8 April 2008. DeJames Builders paid for the material to build

 

9 out the store and also performed the labor.

 

10 The Debtor repaid Detrie the initial 500,000 that

 

11 was transferred to him, along with some profit, but the

 

12 Plaintiffs were never repaid the additional $1.2 that they

 

13 transferred, nor do they have any of the currency that was

 

14 supposedly purchased with their money.

 

15 It is now up to the Court to sift through the

 

16 facts to determine what legal construct is most appropriate

 

17 for the relationship between these parties. The parties

 

18 dispute the nature of the relationship. The Plaintiffs say

 

19 they had a joint venture with the Debtor. The Debtor says

 

20 that the money the Plaintiffs transferred to him were merely

 

21 a series of loans.

 

22 Determining whether the transfer of funds was part

 

23 of a joint venture or merely a loan or a series of loans is

 

24 critical because it affects whether the debt owed to the

 

25 Plaintiffs is dischargeable under Section 523(a)(4).

 

 

 

 

JOHNSON TRANSCRIPTION SERVICE – (813) 920-1466

6

 

1 523(a)(4) excepts from discharge any debt for fraud or

 

2 defalcation while acting in a fiduciary capacity, and

 

3 embezzlement or larceny.

 

4 There are no allegations of larceny. So the debt

 

5 owed to the Plaintiffs is non-dischargeable: (1) if the

 

6 Debtor committed fraud or defalcation while acting in a

 

7 fiduciary capacity; or (2) if the debt resulted from

 

8 embezzlement. The Plaintiffs can satisfy the fiduciary

 

9 requirement by proving the existence of a joint venture.

 

10 And, here, the evidence is overwhelming that the parties

 

11 were part of a joint venture or a series of joint ventures.

 

12 To begin with, this issue was previously litigated

 

13 in State Court in connection with a motion to appoint a

 

14 Receiver and for injunctive relief. And the State Court

 

15 specifically determined that the Debtor solicited DeJames

 

16 Builders’ involvement as a joint venture partner in retail

 

17 rare currency business.

 

18 The State Court found that: (1) The parties

 

19 agreed that the Debtor would provide the rare currency

 

20 expertise and DeJames would provide the capital; (2) The

 

21 parties opened a bank account solely for the joint venture

 

22 and DeJames funded the opening of the operating account; and

 

23 (3) Dennis Detrie was the sole partner onsite operating the

 

24 joint venture.

 

25 Ordinarily, the findings by the State Court would

 

 

 

 

JOHNSON TRANSCRIPTION SERVICE – (813) 920-1466

7

 

1 be collateral estoppel. The Debtor is precluded from re-

 

2 litigating that same issue before this Court. But even if

 

3 it weren’t, this Court comes to the same conclusion as the

 

4 State Court.

 

5 The evidence is clear that the parties engaged in

 

6 a series of joint ventures in which each would invest in a

 

7 joint enterprise to buy rare currency and resell it at a

 

8 substantial profit. The Debtor contributed his alleged

 

9 expertise and would perform the service of purchasing the

 

10 currency in bulk. And the Plaintiffs provided investment

 

11 capital. They would invest in the purchase of rare

 

12 currency; it would be resold; the initial capital would be

 

13 returned to the Plaintiff; and the parties could split the

 

14 profits.

 

15 The opening of the Palm Beach store was just

 

16 another step in this series of joint ventures. And as part

 

17 of that transaction, Dennis Detrie provided the capital, not

 

18 only for acquisition of inventory, but for the start-up

 

19 costs and build-out of the Worth Avenue store. Dennis also

 

20 executed the first and second addendum to the lease for the

 

21 Worth Avenue store, although that evidence overwhelmingly

 

22 supports a finding of a joint venture.

 

23 And the reality is, there is no evidence the

 

24 parties’ relationship was anything other than a joint

 

25 venture. To be sure, the parties did sign a series of

 

 

 

 

JOHNSON TRANSCRIPTION SERVICE – (813) 920-1466

8

 

1 promissory notes as part of the initial transfers of funds.

 

2 But the Court does not give much weight to that, considering

 

3 that, as mentioned at the outset, none of the parties were

 

4 represented by counsel. These notes were simply executed to

 

5 reflect that money had been transferred and the Plaintiffs

 

6 needed some evidence of that.

 

7 How the parties framed their pleadings in the

 

8 previous State Court filings is also not determinative of

 

9 their relationship. Even if it had some bearing on what the

 

10 Plaintiffs really thought, it certainly does not outweigh

 

11 the overwhelming evidence of a joint venture.

 

12 So, for all of those reasons, the Court concluded

 

13 that the parties were engaged in a joint venture. And

 

14 because the parties were part of a joint venture, the Debtor

 

15 was acting in a fiduciary capacity in his dealings with the

 

16 Plaintiffs.

 

17 The Court must now turn to whether the Debtor

 

18 committed a fraud or defalcation while acting in a fiduciary

 

19 capacity. And the evidence is likewise overwhelming that he

 

20 did.

 

21 The evidence at trial showed that the Debtor

 

22 befriended the Plaintiffs; he visited them at their homes;

 

23 he invited them to his home for social occasions. He even

 

24 went so far as to buy one of the Plaintiffs’ daughters a

 

25 birthday present.

 

 

 

 

JOHNSON TRANSCRIPTION SERVICE – (813) 920-1466

9

 

1 And once he befriended them, he engaged in a

 

2 pattern of misrepresentations at every turn in his dealings

 

3 with them. He misrepresented his expertise in the rare

 

4 currency area. For instance, he told them he was the most

 

5 knowledgeable expert in the field of currency trading in the

 

6 United States. In fact, he had only recent experience in

 

7 the field.

 

8 He misrepresented — when he said he was using

 

9 their money to buy currency, to the contrary there is no

 

10 currency to show for the enormous investment made by the

 

11 Plaintiffs, only unfulfilled promise.

 

12 And he lied with respect to specific transactions

 

13 in which he overstated the price he paid for rare currency.

 

14 And as a consequence, the Plaintiffs overpaid for the

 

15 currency they acquired for the Palm Beach store.

 

16 Perhaps the most egregious transaction was the

 

17 $2-1/2 Indian Head coin transaction. In that one, the

 

18 Debtor represented that the Indian Head coin could be

 

19 purchased for 310,000, and that he needed a hundred thousand

 

20 from Dennis to match the hundred thousand he was investing

 

21 and a hundred thousand that his friend, Mr. Raneire

 

22 (phonetic), would be investing. It was represented that

 

23 those coins had a value of $550,000.

 

24 In fact, the coins were never graded, which is

 

25 significant in the coin industry. Grading is required to

 

 

 

 

JOHNSON TRANSCRIPTION SERVICE – (813) 920-1466

10

 

1 determine the value of any coin. And there was absolutely

 

2 no basis upon which the Debtor could make the representation

 

3 of value that he made.

 

4 He also deceived the Plaintiffs by creating a

 

5 catalogue in which he listed rare currency that he either

 

6 owned or had previously sold as having a value of over

 

7 $1 billion. He induced the Plaintiffs to continue investing

 

8 with him by representing that the market was booming.

 

9 The Eleventh Circuit has previously stated that

 

10 defalcation refers to a failure to produce funds entrusted

 

11 to a fiduciary. Although, the Court acknowledged that the

 

12 precise meaning of “defalcation” for purposes of Section

 

13 523(a)(4) has never been entirely clear. More recently, the

 

14 Eleventh Circuit has held that defalcation under 523(a)(4)

 

15 requires a showing of

 

16 recklessness.

 

17 The Plaintiffs have more than satisfied that

 

18 standard here. The Debtor’s conduct was plainly fraudulent

 

19 under Section 523(a)(4). At a minimum, it was grossly

 

20 negligent.

 

21 As a consequence, the Court concludes that the

 

22 Debtor committed a fraud or defalcation while acting in a

 

23 fiduciary capacity. Accordingly, the Court concludes that

 

24 the debt owed to the Plaintiffs is nondischargeable.

 

25 Though the Court is focused on whether the Debtor

 

 

 

 

JOHNSON TRANSCRIPTION SERVICE – (813) 920-1466

11

 

1 committed a fraud or defalcation while acting in a fiduciary

 

2 capacity, there is an additional basis for determining the

 

3 debt owed to the Plaintiffs as being nondischargeable.

 

4 As mentioned earlier, Section 523(a)(4) excepts

 

5 from discharge any debt for embezzlement. “Embezzlement” is

 

6 defined as the fraudulent appropriation of property by a

 

7 person to whom such property has been entrusted or into

 

8 whose hands it has lawfully come.

 

9 The evidence is overwhelming that the Plaintiffs

 

10 entrusted the Debtor with a substantial investment for the

 

11 purchase of rare currency. At the end of the day, the

 

12 Debtor has not repaid the Plaintiff, nor has he produced any

 

13 of the inventory that was in the Palm Beach store.

 

14 So the Court concludes the debt is

 

15 nondischargeable for the additional reason that it arose out

 

16 of the Debtor’s embezzlement. Having concluded that the

 

17 debt owed to the Plaintiffs is nondischargeable, the Court

 

18 must now turn to the amount of the nondischargeable debt.

 

19 At the outset, the Court notes that the parties

 

20 expressly consented at the beginning of trial to this Court

 

21 entering a final judgment and liquidating the amount of any

 

22 nondischargeable debt. The Debtor admits in his answer that

 

23 he’s indebted to the Plaintiffs collectively in the amount

 

24 of $3,691,000. And a party is bound by their own

 

25 admissions, including admissions in pleadings. That

 

 

 

 

JOHNSON TRANSCRIPTION SERVICE – (813) 920-1466

12

 

1 admission establishes the Plaintiff’s prima facie case

 

2 regarding the amount of the debt.

 

3 Nonetheless, the Debtor contends that he’s

 

4 permitted to rebut that prima facie showing or establish his

 

5 affirmative defense of setoff, which would ultimately reduce

 

6 the amount of the nondischargeable debt. Even if the Debtor

 

7 is permitted to rebut the prima facie showing or establish

 

8 his setoff defense, the Court has reviewed its notes from

 

9 the trial and the exhibits introduced into evidence and

 

10 finds no competent substantial evidence of any payments to

 

11 the Plaintiffs.

 

12 Perhaps most telling, the Debtor’s own memorandum

 

13 on judicial admissions or, for that matter, his closing

 

14 argument, does not cite to a single exhibit reflecting

 

15 payments by the Debtor to the Plaintiffs which would serve

 

16 as a basis for a setoff. It appears, from the Debtor’s

 

17 memorandum, that the sole support for the Debtor’s setoff

 

18 defense is his testimony that he repaid Plaintiffs with

 

19 significant cash payments.

 

20 Without specificity, that is not the kind of

 

21 substantial competent evidence that would support this

 

22 affirmative defense. Frankly, the Court did not find the

 

23 Debtor’s testimony credible at all, much less on that

 

24 particular issue.

 

25 The Court also takes judicial notice of its oral

 

 

 

 

JOHNSON TRANSCRIPTION SERVICE – (813) 920-1466

13

 

1 ruling in the discharge action the U.S. Trustee filed

 

2 against the Debtor. In its ruling, the Court found that the

 

3 Debtor had lost hundreds of thousands of dollars gambling at

 

4 the Seminole Hard Rock Casino.

 

5 That finding formed a substantial basis for the

 

6 Court’s ruling denying the Debtor his discharge. And the

 

7 Court thinks it provides some explanation of what really

 

8 happened to the money that the Plaintiffs invested with the

 

9 Debtor. It was not repaid to them in cash. The Debtor

 

10 simply spent it.

 

11 Accordingly, the Court concludes that the total

 

12 owed to the Plaintiff in the amount of $3,691,000 is

 

13 nondischargeable. That will be apportioned for each

 

14 Plaintiff in the amount set forth in paragraph 4 of the

 

15 complaint in either a separate or one final judgment in

 

16 favor of each of the Plaintiffs in those respective amounts

 

17 will be entered.

 

18 Mr. Weiss, if you could prepare a form of final

 

19 judgment and reciting it’s for the reasons stated orally and

 

20 recorded in open court, which shall constitute the Court’s

 

21 findings of fact and conclusions of law for purposes of Rule

 

22 52. And then also in that, enter judgment by separate

 

23 paragraph in favor of each Plaintiff for the respective

 

24 amounts cited in paragraph 4; and finding that all of those

 

25 debts are nondischargeable in this bankruptcy case.

 

 

 

 

JOHNSON TRANSCRIPTION SERVICE – (813) 920-1466

14

 

1 Again, this case was well-tried. I have to deal

 

2 with the facts as they’re presented. And facts are stubborn

 

3 things. And no matter what our inclinations or view of the

 

4 evidence at the end of day, make the decision, and that’s

 

5 how I see this set of transactions and that will be my

 

6 finding.

 

7 Is there anything else we can cover at this point?

 

8 (No response.)

 

9 THE COURT: Okay. Very well. Thank you. This

 

10 Court is —

 

11 MR. WEISS: Thank you, Your Honor.

 

12 THE COURT: Thank you, Mr. Treuhaft.

 

13 MR. TREUHAFT: Thank you, Your Honor.

 

14 (Whereupon, the hearing concluded at 9:56 a.m.)

 

15

 

16

 

17

 

18

 

19

 

20

 

21

 

22

 

23

 

24

 

25

 

 

 

 

JOHNSON TRANSCRIPTION SERVICE – (813) 920-1466

15

 

C E R T I F I C A T E STATE OF FLORIDA )

COUNTY OF HILLSBOROUGH )

 

I, Kimberley S. Johnson, Certified Verbatim

 

Reporter Master, and Notary Public, do hereby certify that the foregoing proceeding was transcribed by me and that the foregoing pages constitute a true and correct copy of my transcription.

I FURTHER CERTIFY that I am not a relative, employee, attorney or counsel of the parties, nor a relative or employee of such attorney or counsel, nor financially interested in the foregoing action.

WITNESS my hand this 30th day of November, 2012,

 

at Tampa, Hillsborough County, Florida.

 

 

 

 

 

 

 

 

Kimberley S. Johnson, CVR-M Certified Verbatim Reporter Master Notary Commission No. DD0910133

Commission Expiration: 8/29/13

 Image

 

 

 

 

 

 

 

 

Advertisements