Zohar CDO 2003-1, Ltd., Zohar II 2005-1, Ltd., and Zohar III, Ltd. v. Patriarch Partners, LLC; Patriarch Partners VIII, LLC; Patriarch Partners XIV, LLC; Patriarch Partners XV, LLC; Octaluna LLC; Octaluna II LLC; Octaluna III LLC; Ark II CLO 2001-1, LLC; Ark Investment Partners II, L.P.; and Lynn Tilton

On January 17, 2017, plaintiffs Zohar CDO 2003-1, Ltd., Zohar II 2005-1, Ltd., and Zohar III, Ltd. filed a complaint against defendants Patriarch Partners, LLC; Patriarch Partners VIII, LLC; Patriarch Partners XIV, LLC; Patriarch Partners XV, LLC; Octaluna LLC; Octaluna II LLC; Octaluna III LLC; Ark II CLO 2001-1, LLC; Ark Investment Partners II, L.P.; and Lynn Tilton. The complaint was filed in the United States District Court for the Southern District of New York. The case has been assigned case number 17-cv-00307.

The Zohar plaintiffs are represented by Michael Carlinsky, Jonathan Pickhardt, Ellison Ward Merkel, and Blair Adams of Quinn Emanuel Urquhart & Sullivan, LLP. No appearance has yet been made by counsel to any of the defendants.

A copy of the complaint is embedded below.

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Case 1:17-cv-00307 Document 1 Filed 01/16/17 Page 1 of 84

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
——————————————————– X
ZOHAR CDO 2003-1, LTD.; ZOHAR II
:
2005-1, LTD.; and ZOHAR III, LTD.,
:
:
Plaintiffs,
:
:
-v:
:
PATRIARCH PARTNERS, LLC;
:
PATRIARCH PARTNERS VIII, LLC;
:
PATRIARCH PARTNERS XIV, LLC;
:
PATRIARCH PARTNERS XV, LLC;
:
OCTALUNA LLC; OCTALUNA II LLC;
:
OCTALUNA III LLC; ARK II CLO 2001-1, :
LLC; ARK INVESTMENT PARTNERS II,
:
L.P.; and LYNN TILTON,
:
:
Defendants.
——————————————————– X

17 Civ. ______
COMPLAINT

Plaintiffs Zohar CDO 2003-1, Ltd. (“Zohar I”), Zohar II 2005-1, Ltd. (“Zohar II”), and
Zohar III, Ltd. (“Zohar III,” and together with Zohar I and Zohar II, the “Zohar Funds”), by and
through their undersigned counsel, allege as follows:
INTRODUCTION
1.

This case concerns an egregious fraudulent scheme among Defendants Lynn

Tilton and numerous entities created and dominated by her to abuse certain of those entities’
roles as fiduciaries for the Plaintiff Zohar Funds in order to pillage more than a billion dollars in
cash and valuable assets that have lined Ms. Tilton’s pockets while leaving the Zohar Funds on a
collision course to default on obligations to their own investors. Plaintiffs bring this action
seeking, among other relief, a declaration of their rights in the assets that they properly own as
well as treble damages in recompense for the Defendants’ fraudulent and illegal scheme
implemented through a pattern of racketeering activity.

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2.

Ms. Tilton’s fraudulent scheme, conducted at her direction by and through the

other Defendants, emanated from the management of the Plaintiff Zohar Funds, three special
purpose vehicles that were created by Ms. Tilton in 2003, 2005, and 2007. The Zohar Funds
were created to raise money through selling a form of notes called collateralized loan obligations
(“CLOs”) to investors that was then used to extend loans to dozens of distressed mid-size
companies (the “Portfolio Companies”), often in connection with the acquisition of those
companies out of bankruptcy under the guise of “restructuring” them. In many (if not most)
instances, in connection with the extension of credit, the Zohar Funds took substantial equity
positions in the Portfolio Companies, which Ms. Tilton has touted as being more valuable to the
Zohar Funds than the loans they extended to the Portfolio Companies. The Zohar Funds raised
more than $2.5 billion from CLO note investors to fund these loan and equity positions, with the
investors entitled to repayment on their CLO notes from the proceeds from Portfolio Company
loans and any distributions on, or ultimate monetization of, the Portfolio Company equity.
3.

While the Portfolio Companies are owned largely or entirely by the Zohar Funds,

Ms. Tilton fraudulently asserted ownership over the equity of those companies, relying on that
fictitious assertion of ownership to install and maintain herself or entities that she owned in
multiple fundamentally conflicted roles with respect to the Zohar Funds. For example, Ms.
Tilton routinely appointed herself as chief executive and sole director or managing member of
the Portfolio Companies, thus acting on behalf of the Zohar Funds’ contractual counterparties
under numerous loan and equity agreements. At the same time, Defendants Patriarch Partners
VIII, LLC, Patriarch Partners XIV, LLC, and Patriarch Partners XV, LLC (together, the
“Patriarch Managers”) were appointed to act as collateral managers responsible for overseeing
and managing the Zohar Funds’ investments for Zohar I, Zohar II, and Zohar III, respectively.

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The Patriarch Managers—which were empowered by Collateral Management Agreements
(“CMAs”) to enter into agreements and otherwise generally act as agents on behalf of the Zohar
Funds—were subject to express fiduciary and contractual duties to exercise their management
authority in the best interests of the Zohar Funds and their investors. Likewise, Patriarch
Partners Agency Services (“PPAS”) was appointed as the Zohar Funds’ agent in administering
its loan agreements with the Portfolio Companies, imbued with substantial authority over the
Zohar Funds’ loan assets. Meanwhile Patriarch Partners Management Group (“PPMG”) was
hired for lucrative management consulting roles at the Portfolio Companies. The roles that Ms.
Tilton assumed for herself were so extensive and conflicted that the Zohar Funds would routinely
enter into agreements where Ms. Tilton would be the single signatory executing on behalf of
every party to the agreement.
4.

Taking advantage of this fundamentally conflicted structure, Ms. Tilton has

engaged in a longstanding campaign to divert to herself massive amounts of money and other
valuable assets that, absent the wrongdoing described herein, would have been retained for the
benefit of the Zohar Funds and their investors. For example, as part of this scheme, for the
purpose of benefitting herself at the expense of the Zohar Funds, Ms. Tilton, both individually
and through her controlled entities:

Used capital provided by the Zohar Funds to obtain equity in the Portfolio Companies
in the names of the Zohar Funds, including majority or total ownership stakes in
numerous Portfolio Companies, and then falsely asserted ownership over that
equity—going so far as to sue one of the Zohar Funds, accusing it of attempting to
steal its own equity, when it sought to auction off the equity following default;

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Sought to abscond with the equity holdings of the Zohar Funds by disguising or
misrepresenting those equity interests as “owned” by Ms. Tilton (or Octaluna LLC,
Octaluna II LLC, or Octaluna III LLC (“the Octaluna Defendants)) even though the
equity holdings were unambiguously owned by and in the names of the Zohar Funds,
and, in one notable instance, selling a company Defendants had acknowledged was
owned by Zohar II and keeping the approximately $300 million in profits for herself;

Misappropriated tens of millions of dollars or more in equity distributions on those
equity interests, which belonged to the Zohar Funds;

Extracted over $700 million in collateral management fees and preference share
distributions from the Zohar Funds notwithstanding that the Patriarch Managers were
faithless fiduciaries who routinely served to facilitate Ms. Tilton’s interests over the
interests of the Zohar Funds’ investors;

Caused the Patriarch Managers to falsely report the creditworthiness of the Portfolio
Companies in order to manipulate the results of certain “overcollateralization” tests
that were used to determine eligibility for performance-based collateral management
fees, thereby procuring hundreds of millions of dollars in fees to which they were not
entitled;

Mischaracterized restructurings of Portfolio Company loans from the Zohar Funds so
as to avoid triggering events of default that would have caused the removal of the
Patriarch Managers, and halted Ms. Tilton’s lucrative fee income, not to mention her
ongoing misappropriation of fund assets;

Extracted hundreds of millions of dollars in fees from the Portfolio Companies, funds
that otherwise could have been used to make payments on outstanding debt, in

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supposed exchange for Ms. Tilton’s corporate management services, notwithstanding
that under her management, many of the Portfolio Companies underperformed with
numerous Companies ultimately defaulting and closing down;

Routinely caused the Zohar Funds to waive, forbear, or restructure amounts owed to
them under loan agreements (1) even where the borrower Portfolio Company was still
required to pay onerous fees for Ms. Tilton’s corporate management services, and (2)
so that Ms. Tilton could then siphon that money in the form of distributions on equity
interests that were owned by the Zohar Funds;

Extracted tens of millions in fees from the Portfolio Companies for the provision of
“administrative agent” services that included little more than the periodic ministerial
generation of invoices to the Portfolio Companies of amounts owed under loan
agreements;

Caused the Zohar Funds to consent to valuable control rights over their equity
holdings being irrevocably transferred to certain of the Defendants without any
consideration provided in exchange, in an effort to render Ms. Tilton immune from
removal from her lucrative positions as sole director or managing member of the
Portfolio Companies; and

Caused the Zohar Funds to consent to amendments to credit agreements that solely
benefited other investment funds owned by Ms. Tilton, including Defendants Ark II
CLO 2001-1, LLC and Ark Investment Partners II, L.P., such as through granting
them priority liens on Portfolio Company assets ahead of the Zohar Funds.

5.

Thus, rather than manage the Zohar Funds in the Funds’ best interest so as to

maximize recoveries for them and their investors, Ms. Tilton blatantly abused her control over

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the Zohar Funds to illegally siphon cash and other assets from the Zohar Funds for the ultimate
benefit of herself and the Defendants that she owned and controlled.
6.

In furtherance of this scheme, Ms. Tilton has also sought to misrepresent, obscure,

and conceal the full extent of the Zohar Funds’ assets so that the Zohar Funds and their
noteholders and other interested parties would not be able to detect her looting activities. For
example, following the Patriarch Managers’ resignations as collateral managers for the Zohar
Funds in February 2016, the Patriarch Managers refused to turn over essential Zohar Fund
records to the subsequent collateral manager. The concealed documents included the records of
the Zohar Funds’ full collateral portfolio, including records as to their equity positions (which
records would have revealed illegal distributions to Ms. Tilton on equity interests belonging to
the Zohar Funds, illegal attempted transfers of the Zohar Funds’ equity rights to Ms. Tilton and
her companies, and other wrongdoing). At the same time that she was concealing these
documents, however, Ms. Tilton was also publicly proclaiming, including through multiple legal
proceedings, that she and her entities were the rightful owners of Portfolio Company equity
positions while the Zohar Funds held only limited, undefined, and undocumented “equity upside
interests.” When the Patriarch Managers were ultimately found at trial to be in breach of their
duties to the Zohar Funds and ordered to turn over the concealed Zohar Funds’ records, those
records began to reveal the truth that Ms. Tilton’s representations regarding her ownership of the
equity positions were falsehoods intended as part of her overall scheme to abscond with the
Zohar Funds’ property. Beyond obscuring the Zohar Funds’ holdings, Ms. Tilton’s obfuscations
have further necessitated multiple expensive litigations to protect the Zohar Funds’ interests,
including this Action, costing the Zohar Funds enormous sums in legal fees, and delaying their
ability to fully manage and monetize their own assets.

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7.

Through this toxic mix of fraud, theft, and mismanagement, Ms. Tilton has

plundered the Zohar Funds, leaving them bereft of liquid assets sufficient to timely satisfy the
billions of dollars in obligations they owe to their investors. In November 2015, Zohar I
defaulted on the obligations to repay its investors when their CLO notes matured. Similarly,
Zohar II will shortly default on obligations to repay its investors when their CLO notes mature in
January 2017. And, without a change to the status quo through this and related litigation, Zohar
III will similarly face significant challenges to repay its investors when their CLO notes mature
in 2019. Thus, while Ms. Tilton has made herself famously wealthy, she has left nothing but
losses in her wake for the Zohar Fund investors who trusted in her integrity and promises.
8.

The Zohar Funds therefore seek to remedy the injuries they have suffered at the

hands of Ms. Tilton and her entities by bringing this action alleging a continuous, ongoing, and
fraudulent scheme, carried out over the course of years by the Defendants, to abuse their
positions of control over the Zohar Funds for the purpose of pilfering cash and other valuable
assets worth more than a billion dollars, which the Zohar Funds should rightfully have been able
to use to repay their investors. This scheme was a flagrant violation of the Defendants’
contractual and fiduciary obligations, and amounts to theft, conversion, and fraud that constitutes
a pattern of racketeering activity prohibited by federal law. The Zohar Funds therefore seek a
declaration of their rights in the assets to which they are properly entitled, disgorgement of
benefits that have been improperly conferred on Ms. Tilton and her controlled entities, damages
for the Defendants’ breaches of contract and fiduciary duties, and treble damages for Ms.
Tilton’s conduct in violation of the Racketeer Influenced and Corrupt Organizations Act.

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PARTIES
A.

Plaintiffs

9.

Plaintiff Zohar I is a Cayman Islands exempted company. Through an auction of

of Zohar I’s assets conducted in December 2016, non-party MBIA Insurance Corporation
(“MBIA”) became the beneficial and equitable owner of Zohar I’s assets.
10.

Plaintiff Zohar II is a Cayman Islands exempted company.

11.

Plaintiff Zohar III is a Cayman Islands exempted company.

B.

Defendants

12.

Defendant Patriarch Partners, LLC (“Patriarch Partners” and together with the

Patriarch Managers, “Patriarch”) is a Delaware limited liability company, with its principal place
of business in New York, New York. Upon information and belief, the only member of
Patriarch Partners is Defendant Lynn Tilton.
13.

Defendant Patriarch Partners VIII, LLC (“Patriarch VIII”) is a Delaware limited

liability company with its principal place of business in New York, New York. Until March 2,
2016, Patriarch VIII was the collateral manager for Plaintiff Zohar I. Upon information and
belief, the only member of Patriarch VIII is Defendant Lynn Tilton.
14.

Defendant Patriarch Partners XIV, LLC (“Patriarch XIV”) is a Delaware limited

liability company with its principal place of business in New York, New York. Until March 2,
2016, Patriarch XIV was the collateral manager for Plaintiff Zohar II. Upon information and
belief, the only member of Patriarch XIV is Defendant Lynn Tilton.
15.

Defendant Patriarch Partners XV, LLC (“Patriarch XV”) is a Delaware limited

liability company with its principal place of business in New York, New York. Until March 2,
2016, Patriarch XV was the collateral manager for Plaintiff Zohar III. Upon information and
belief, the only member of Patriarch XV is Defendant Lynn Tilton.
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16.

Defendant Octaluna LLC (“Octaluna I”) is a Delaware limited liability company

with its principal place of business in New York, New York. Ms. Tilton has represented that she
owns and controls Octaluna I.
17.

Defendant Octaluna II LLC (“Octaluna II”) is a Delaware limited liability

company with its principal place of business in New York, New York. Ms. Tilton has
represented that she owns and controls Octaluna II.
18.

Defendant Octaluna III LLC (“Octaluna III”) is a Delaware limited liability

company with its principal place of business in New York, New York. Ms. Tilton has
represented that she owns and controls Octaluna III.
19.

Ark II CLO 2001-1, LLC (“Ark II”) is a Delaware limited liability company with

its principal place of business in New York, New York. Upon information and belief, the only
member of Ark II is Defendant Lynn Tilton.
20.

Ark Investment Partners II, L.P. (“AIP II”) is a Delaware limited partnership with

its principal place of business in New York, New York. Upon information and belief, the only
partner of AIP II is Defendant Lynn Tilton.
21.

Defendant Lynn Tilton is a resident of Florida. She is the principal and, upon

information and belief, sole member of Patriarch Partners, the Patriarch Managers, the Octaluna
Defendants, and Ark II; she is the principal and, upon information and belief, sole partner of AIP
II.
JURISDICTION AND VENUE
22.

This Court has subject matter jurisdiction over the Zohar Funds’ claims under 28

U.S.C. § 1331 and 18 U.S.C. §§ 1964, 1965.
23.

This Court has subject matter jurisdiction over the Zohar Funds’ claims under 28

U.S.C. § 1332.
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24.

This Court also has supplemental jurisdiction over the Zohar Funds’ common law

claims pursuant to 28 U.S.C. § 1367.
25.

This Court has personal jurisdiction over Patriarch Partners, the Patriarch

Managers, the Octaluna Defendants, Ark II, and AIP II because their principal places of business
are in New York County, New York and because it has personal jurisdiction over Lynn Tilton,
the sole member or partner of these Defendants. This Court has personal jurisdiction over Lynn
Tilton because she has offices, and regularly transacts business, in New York County, New
York.
26.

Venue in the Southern District of New York is appropriate under 28 U.S.C.

§ 1391(b) because it is the district in which a substantial part of the actions giving rise to the
claims occurred, and it is the district in which property that is the subject of the action is situated.
Zohar Fund Indentures, § 10.1(b).
BACKGROUND
A.

Patriarch Conceives, Structures, And Markets The Zohar Funds.

27.

Patriarch Partners is an investment firm, owned and directed by Ms. Tilton, that

claims to, among other things, restructure and rebuild struggling and distressed companies into
profitable businesses. Since 2000, Patriarch Partners claims to have had ownership in and/or
restructured more than 240 companies with combined revenues in excess of $100 billion.
28.

In addition to its private equity and turnaround business, Patriarch Partners has

designed and sponsored CLO transactions. At the center of a CLO transaction is a special
purpose vehicle that issues notes of varying priority to investors and uses the proceeds of the
sales of CLO notes to purchase or make loans and other investments that serve as the collateral
for the repayment of principal and interest on the notes. Because the special purpose vehicle

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typically has no employees, a collateral manager, like the Patriarch Managers, selects the loans
and other assets to be included in the collateral pool and manages them once they are in the pool.
29.

The Zohar Funds are CLO transactions that Ms. Tilton and Patriarch Partners

created and marketed to investors for the ostensible purpose of investing in distressed debt. The
first Zohar fund, Zohar I, launched in November 2003, raising approximately $530 million from
the sale of notes; Zohar II and Zohar III followed in January 2005 and April 2007, respectively,
each raising approximately $1 billion from the sale of notes.
30.

Each Zohar Fund had a separate Patriarch collateral manager, each of which was

provided with employees, office space, and other valuable operating services by Patriarch
Partners: Patriarch VIII was Zohar I’s collateral manager, Patriarch XIV was Zohar II’s collateral
manager, and Patriarch XV was Zohar III’s collateral manager.
31.

As discussed further below, the Zohar Funds were each governed by a set of

documents that include an Indenture (the “Indentures”), a CMA, and a Collateral Administration
Agreement (the “CAAs”) for each Fund.1 The roles and obligations of the collateral manager
were set out in the CMAs, which granted the Patriarch Managers the power to act for and on
behalf of the Zohar Funds in managing the loans and other assets of the Zohar Funds, subject to
certain limitations set forth in the CMAs.2 The Patriarch Managers’ powers were also limited by
the terms of the Indenture for each of the Zohar Funds, which govern the rights and obligations
of the Zohar Funds vis-à-vis the noteholders, Credit Enhancer, and Controlling Party; the

1

The Indentures, CMAs, and CAAs are substantially identical, and will be cited in the singular
herein, except where there are relevant differences between the documents.

2

The CMAs are expressly made subject to the terms of the Indenture, with provisions of the
Indenture controlling over conflicting provisions in the CMAs. See Zohar I and Zohar II
CMAs, §7.14; Zohar III CMA, § 7.13.

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Patriarch Managers also assumed certain obligations under the Indentures. For example, the
Patriarch Managers were tasked with:

“determin[ing] … the specific Collateral to be acquired, originated, restructured,
exchanged, held or disposed of by the [Zohar Funds]”;

“effectuat[ing] the acquisition, origination, restructuring, exchange or disposition
of Collateral on behalf of the [Zohar Funds]”;

“monitor[ing] the Collateral on an ongoing basis”;

“mak[ing] determinations with respect to the exercise or enforcement of any and
all rights by the [Zohar Funds] … or rights or remedies in connection with the
Collateral …”; and

“negotiat[ing] on behalf of the [Zohar Funds] with prospective purchasers of the
Collateral [and] with any Person in connection with the possible workout,
amendment or restructuring of the Collateral or any obligor … thereon … .”

Zohar II and Zohar III CMAs, § 2.2 (a), (b), (c), (d), and (f).3 The Zohar Funds authorized the
Patriarch Managers to “execute and deliver all necessary, desirable and appropriate documents
and/or instruments in the name and on behalf of the [Zohar Funds] as [their] attorney-in-fact with
respect thereto.” CMAs, § 2.5. As a practical matter, the Patriarch Managers, under the
direction and control of Ms. Tilton, made every single investment decision on behalf of the
Zohar Funds, and exercised control over the Zohar Funds’ investment and collateral management
activities.

3

The Zohar I CMA similarly provides that the Collateral Manager is tasked with
“determin[ing] … the specific Collateral to be purchased, restructured, exchanged, held, or
disposed of by the [Zohar Funds]”; “effectuat[ing] the purchase, restructuring, exchange or
disposition of Collateral on behalf of the [Zohar Funds]”; “monitor[ing] the Collateral on an
ongoing basis”; “mak[ing] determinations with respect to the exercise or enforcement of any
and all rights by the [Zohar Funds] … or remedies in connection with the Collateral …”; and
“negotiat[ing] on behalf of the [Zohar Funds] with prospective purchasers of the Collateral
[and] with any Person in connection with the possible workout, amendment or restructuring
of the Collateral or any obligor … thereon … .” Zohar I CMA, § 2.2 (a), (b), (c) (d), and (f).

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32.

In light of the significant responsibility granted to the Patriarch Managers, their

actions for and on behalf of the Zohar Funds were subjected to express fiduciary standards. The
Patriarch Managers agreed that, “in rendering [their] services as Collateral Manager,” they would
“use reasonable care and the same degree of skill and attention (a) that the Collateral Manager
(i) exercises with respect to comparable assets that it manages for itself and its Affiliates and (ii)
exercises with respect to comparable assets that it manages for others and (b) exercised by
institutional investment managers of national standing generally in respect of assets of the nature
and character of the Collateral and for clients having similar investment objectives and
restrictions … .” Id. § 2.4.
33.

The Patriarch Managers further covenanted “not [to] take any action which [they]

know[] or should be reasonably expected to know in accordance with prevailing market practices
would … adversely affect the interests of the Holders of the Securities [i.e., the Notes and
Preference Shares issued by the Zohar Funds] in any material respect.” The Zohar I and Zohar II
CMAs provided that “all purchases, exchanges and sales of Collateral by the Collateral Manager
on behalf of the Company and/or the Zohar Subsidiary … will be effected on arm’s-length
terms.” Zohar I and Zohar II CMAs, § 2.9. Zohar I and II CMAs, § 2.6.4 And while Patriarch
XV was permitted to effectuate transactions between Zohar III and affiliates of the Patriarch
Managers, such transactions were to be “at arms’ length, for fair market value and in compliance
with applicable law.” Zohar III CMA, §6.2 (d).
34.

Finally, like all investment advisers, the Patriarch Managers owed implied general

fiduciary duties of care and loyalty to the Zohar Funds in providing advisory services and acting
4

The Zohar III CMA provides that it will not take any action that would “materially adversely
affect” these interests. Zohar III CMA, § 2.6.

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as the Zohar Funds’ agent and attorney-in-fact in administering the Zohar Funds’ investment
activities. These common law and statutory fiduciary duties are in addition to the specific duties
of care set forth in the CMAs.
35.

The CMAs acknowledged that the assets to be acquired were often distressed,

which would require some flexibility on the part of the Patriarch Managers to manage them.
They also acknowledged the potential for conflicts of interest to arise from the “overall advisory,
investment and other activities of the Collateral Manager” and all of its affiliates, and provided
that the Patriarch Managers and their affiliates may hold several roles related to the Zohar Funds’
investments, such as consultant or manager. CMA § 6.2. However, as described above, the
CMAs also explicitly stated the Patriarch Managers’ obligations to, among other things, ensure
compliance with the Indentures and applicable laws, avoid actions that would adversely affect
the Zohar Funds’ noteholders, avoid intentional actions that they knew would cause an Event of
Default, ensure that their actions were in accordance with customary and reasonable business
practices, ensure that all purchases and sales be effected on arm’s-length terms, and to act with
skill, attention, and reasonable care. They also expressly acknowledged the Patriarch Managers’
fiduciary duties and that they would be subject to liability for any conduct constituting fraud, bad
faith, willful misconduct, gross negligence, or breach of fiduciary duty. Zohar I and II CMA,
§§ 2.2(n), 2.4, 2.6, 2.9, 4.4, 4.5(a); Zohar III CMA, §§ 2.2(l), 2.4, 2.6, 2.9, 4.4, 4.5(a). Investors
in the Zohar Funds therefore had every expectation that the Patriarch Managers would act in
accordance with these requirements on their behalves.
36.

Information about the Zohar Funds—including current assets (defined in the

Indenture as “Collateral”), their performance, and numerous other critical data points—was
required to be communicated to noteholders, rating agencies, and others via Monthly Reports

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and quarterly Note Valuation Reports, whose contents were prescribed by the Indentures. These
reports were prepared by the Collateral Administrator—a role played by the same entity that
provides Trustee services to the Zohar Funds—based on information provided by the Patriarch
Managers. The Patriarch Managers were contractually obligated to “review and verify the
contents of the [] reports” and, “[t]o the extent any of the information in such reports … conflicts
with data or calculations in the records of the [Portfolio] Manager, the [Portfolio] Manger shall
promptly notify the Collateral Administrator of such discrepancy and use reasonable efforts to
assist the Collateral Administrator in reconciling such discrepancy.” See, e.g., Zohar I and III
CAAs, § 2(h).5
37.

Other entities owned and controlled by Ms. Tilton held additional, distinct, and

inherently conflicted roles relating to the Zohar Funds’ assets. For example, PPAS (which is in
the business of providing agency services to lenders) acted as the Zohar Funds’ agent under their
loan agreements with the Portfolio Companies, responsible for invoicing, collecting, and
disbursing payments, and receiving Portfolio Company financial information on behalf of the
Zohar Funds.6 PPMG, which is in the business of financial and management consulting,
provided “management and consulting services” to the Portfolio Companies, which principally
5

The Zohar II CAA provides that “The [Portfolio] Manager shall review and verify the
contents of the Monthly Collateral Report” and “[t]o the extent any of the information in the
Monthly Collateral Report conflicts with data or calculations in the records of the [Portfolio]
Manager, the [Portfolio] Manager shall promptly notify the Collateral Administrator of such
discrepancy and use reasonable efforts to assist the Collateral Administrator in reconciling
such discrepancy.” Zohar II CAA, § 2(c).

6

PPAS was terminated as agent by the Zohar Funds on June 14, 2016, effective June 17, 2016,
but has refused to cede that role to its replacement, and has refused to provide the Zohar
Funds with access to the Portfolio Companies’ financial information in the interim. PPAS’s
refusal to accept termination of its agency is the subject of another action currently pending
in this district. Patriarch Partners Agency Services v. Zohar CDO 2003-1 Ltd. et al., No. 16
Civ. 4488 (S.D.N.Y.) (VM) (KHP).

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included Ms. Tilton serving as director or managing member, in exchange for management fees.
Patriarch entities also retained ownership over preference shares issued by the Zohar Funds.
38.

Ms. Tilton also owned and managed the other Defendant entities, the Octaluna

Defendants, Ark II, and AIP II. These entities were formed for varying purposes, but ultimately
came to be used as personal investment vehicles by Ms. Tilton. In particular, Ms. Tilton from
time to time used Ark II and AIP II to take or assert debt and equity positions in the Portfolio
Companies alongside the Zohar Funds, while Ms. Tilton used the Octaluna Defendants as a
vehicle to hold preference share rights or interests. Ms. Tilton has recently asserted that the
Octaluna Defendants are “owners” of valuable equity interests that in fact belong to the Zohar
Funds.
39.

Zohar I and Zohar II also had a Credit Enhancer, MBIA, which was responsible

for providing insurance to the senior noteholders in case of a default by these Funds. Upon the
occurrence of certain interruptions to the flow of payments to the senior noteholders, the Credit
Enhancer would become responsible for paying off the senior notes in full. The Credit Enhancer
is also referred to in the Indentures as the Controlling Party for Zohar I and Zohar II, with the
ability to direct certain limited actions on behalf of the Funds, particularly following an Event of
Default under the Indentures.
40.

The Zohar Funds were formed to invest in or originate loans extended to

distressed companies, and could also receive equity in connection with the acquisition of a
company, the extension of a new loan, or the restructuring of an existing loan. Under the terms
of the Indentures, all such assets, regardless of how they were acquired by the Zohar Funds, are
deemed “Collateral” of the Zohar Funds, which was defined under the Indentures in the broadest
possible terms to effectively include “all [] property of any type or nature owned by [the Zohar

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Funds].” The Collateral secured the repayment of principal and interest on the notes and, upon
payment by MBIA under its policies, MBIA’s guaranty of the Zohar Funds’ note payment
obligations.
B.

The Zohar Funds Acquire Substantial Equity Positions In The Portfolio
Companies, Which Defendants Exploit For Their Own Benefit.

41.

One of the most valuable types of assets owned by the Zohar Funds are their

equity holdings in the Portfolio Companies. These holdings are particularly important because
the Portfolio Companies are distressed investments and many have failed to repay their loans—
which were generally acquired at par—to the Zohar Funds. By holding equity in addition to
loans, for those Portfolio Companies that do succeed, the Zohar Funds have the potential to
obtain not only repayment on their loans, but also equity returns that could help offset the losses
on loans to the Portfolio Companies that failed. In fact, however, the Defendants have
repeatedly sought to deny the Zohar Funds the proper benefit of their equity investments, either
by attempting to abscond with the equity investments themselves, by improperly diverting the
benefit of those equity holdings for their own use, or by outright stealing the distributions on the
equity.
42.

As background, the Zohar Funds’ equity holdings were acquired by the Zohar

Funds in a number of different contexts. The Zohar Funds’ equity holdings were sometimes
acquired when they provided funds that constituted at least part of the capital or financing that
was used to acquire a Portfolio Company. For example, in December 2007, Ms. Tilton formed a
company named RM Acquisition, LLC (“RM Acquisition”), for the purpose of acquiring Rand
McNally & Company, a well-known purveyor of maps that was in financial distress at the time.
She arranged for the Zohar Funds each to extend loans to RM Acquisition, which were expressly
to be used to finance the purchase of Rand McNally and to provide operating capital. Within

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days of the credit agreements being executed, the Zohar Funds also received equity interests in
RM Acquisition pursuant to its Operating Agreement, in recognition that their loans had been
used as funding to acquire ownership of the company. Similarly, in February 2005, a company
called Snelling & Snelling was acquired using capital that was provided through loans provided
by Zohar I and II under loan agreements executed on the same day as the Securities and Asset
Purchase Agreement through which Snelling was acquired. Zohar I and II subsequently received
equity interests in Snelling Holdings, LLC, in the form of common shares.
43.

When extending loans to a Portfolio Company, even after it was acquired, the

Zohar Funds were sometimes provided with equity interests in the company in recognition of the
distressed nature of the loans. These equity interests provided additional value to the Zohar
Funds, over and above expected repayments on the loans. For example, at the time Zohar II was
formed, it purchased loans to 27 companies from another Tilton-controlled fund, Ark CLO 20001, Ltd., and simultaneously received equity interests in 23 of those companies as part of the
transaction. The governing documents for the Zohar II transaction prepared by Patriarch
described these equity interests as providing “additional value in realizing par recoveries” on the
overall portfolio of purchased loans. In sworn testimony, Ms. Tilton later described these equity
interests as “attached to the loan[s]” purchased by Zohar II and as equity interests that Zohar II
had “paid for.”
44.

In yet other instances, the Zohar Funds obtained equity in connection with

restructurings of existing loans to Portfolio Companies. For example, on June 15, 2007, Zohar II
agreed to amend its credit agreement with another Portfolio Company, Fetco Home Décor, Inc.
(“Fetco”), as part of a debt restructuring in which the outstanding balances on certain outstanding
loans were increased to capitalize unpaid interest, a new term loan was extended, and interest

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rates on all of the loans were decreased while maturity dates were extended by three years.
Resolutions by the Fetco board of directors contemporaneously approved the issuance of 33,737
shares of common stock and 12,199 shares of preferred stock to Zohar II as express
“consideration” for Zohar II agreeing to this restructuring of Fetco’s debt. Corresponding stock
certificates were issued that identified Zohar II as the “owner” of the issued shares. Similarly, an
October 12, 2006, Stockholders Agreement for another Portfolio Company, Acme International
Enterprises, Inc., stated that pursuant to a contemporaneous “Restructuring Agreement,” Zohar II
had “agreed to waive certain rights as a lender … in exchange for, among other things … the
issuance by the Company to Zohar of 13,500 Series A Shares … and 150 Series C Shares … .”
Ms. Tilton has provided sworn written testimony of another instance, concerning the parent
company of IMG Fragrance Brands, LLC, where “[o]n October 17, 2008, Zohar I, Zohar II, and
Zohar III obtained, collectively, 75% of the shares of IMG Holdings, Inc. … in exchange for
agreement by the Zohar funds to withdraw a loan acceleration based on the borrowers’ default.”
(Notably, in that same affidavit, Ms. Tilton testified that “Patriarch does not own (nor has it ever
owned) any such equity”; Ms. Tilton now claims precisely the opposite.)
45.

These are just examples of numerous such transactions over the years in which

the Zohar Funds received equity interests either in connection with loans used to finance the
acquisition of a Portfolio Company, the extension of a loan to a Portfolio Company, or in
exchange for restructuring outstanding loans to Portfolio Companies. Through these and other
instances, each of the Zohar Funds has obtained substantial equity interests titled their names in
many of the Portfolio Companies—some in form of preferred or common stock and others in the
form of LLC membership interests—in exchange for valuable consideration.

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46.

At various times, in largely confidential contexts or recent court filings,

Defendants have conceded the significant breadth and substantial value of these equity
investments owned by the Zohar Funds. For example, Ms. Tilton stated in court filings that, as
of 2007, the Zohar Funds together held a majority interest in 23 Portfolio Companies, including
100% stakes in seven of those companies. She further claimed that the “vast majority” of returns
from the Zohar Funds were projected to come from equity returns. Similarly, in February 2007,
a Patriarch rating agency presentation projected equity returns of over $1.5 billion for Zohar II
alone from approximately 40 different Portfolio Companies, and approximately $500 million for
Zohar III from more than a dozen Portfolio Companies. In another presentation from 2009,
under the heading “The Zohar CDOs Benefit from Valuable Equity,” Patriarch touted equity
ownership percentages by the Zohar Funds in 43 separate Portfolio Companies, including 14
companies in which the Zohar Funds owned 100% of the equity. Indeed, Ms. Tilton has testified
that the “portfolio strategy” for the Zohar Funds was to “loan-to-own or [] own-to-loan”
(apparently unable to recall which of these was actually the strategy) because “the only way to
get beyond the face value of the loan is to have that equity upside.”
47.

Notwithstanding these admissions as to the Zohar Funds’ extensive equity

holdings, Defendants have sought to obscure and conceal the extent of the Zohar Funds’ equity
holdings from noteholders and the Credit Enhancer. For example, the Zohar Funds’ Monthly
Reports, which were noteholders’ primary source of information about the deals, and which the
Patriarch Managers were required to review and verify, contained sections that were intended for
the reporting of equity interests. However, the Zohar I Monthly Reports routinely misreported
and substantially underreported that Fund’s true equity holdings, while the Zohar II and III
Monthly Reports rarely, if ever, reported any equity interests for the Funds at all. Likewise, the

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Zohar Funds were required to produce quarterly financial statements, in compliance with
generally accepted accounting principles, which are attached to an Officer’s Certificate and
provided to noteholders among others. None of these financial statements ever reported the
Zohar Funds’ equity interests, even though the Indentures required that they “present[] fairly, in
all material respects, the [Zohar Funds’] financial position.” Indentures, § 7.9.
48.

These steps by the Defendants to obscure the details of the Zohar Funds’ equity

holdings appear designed to conceal from the Zohar Funds’ noteholders and Credit Enhancer that
Defendants have been engaged in a longstanding scheme to convert most of the value of the
Zohar Funds’ equity holdings for Ms. Tilton’s own benefit. The Defendants were uniquely
situated to engage in such a scheme because of their multiple roles that allowed them to control
both the Portfolio Companies and the Zohar Funds. This meant that they were often the only
parties determining and documenting what equity interests were received by the Zohar Funds
and how those interests were protected and enforced. Indeed, in many cases, the governing
agreements memorializing the Zohar Funds’ equity holdings and rights were signed by Ms.
Tilton on behalf of all of the respective parties. This placed Defendants in a position where they
could abuse their control over the Zohar Funds and the Portfolio Companies to deprive the Zohar
Funds of their rightful equity interests in order to line Ms. Tilton’s own pockets. This scheme
has been implemented through numerous means.
49.

First, upon information and belief, while the Zohar Funds’ funds were used as

part of the capital or financing to acquire Portfolio Companies, equity received in exchange for
those Funds was allocated not just to the Zohar Funds, but also to certain Defendants, granting
those Defendants a concrete benefit that was paid for by the Zohar Funds, for nothing in
exchange. In light of Ms. Tilton’s role managing and directing these companies, this also created

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rampant opportunities for the Defendants to obtain their ownership shares in the Companies
without making any contributions, or with only disproportionate or minimal contributions.
50.

Second, as to the equity interests that were allocated to the Zohar Funds, the

Defendants have repeatedly stolen the ongoing financial benefit of those equity holdings.
Specifically, where the Portfolio Companies in which the Zohar Funds hold equity interests have
paid dividends or otherwise made distributions to their equity owners, Ms. Tilton has absconded
with those payments rather than allowing them to properly be paid to the Zohar Funds’ trustee
for ultimate distribution to the Zohar Funds’ noteholders. Indeed, tax filings recently obtained
by the Zohar Funds going back to at least 2006 show that dividend and equity distributions made
by Portfolio Companies, which are located in a variety of different states, to the Zohar Funds in
New York, were intercepted by Ms. Tilton who wrongfully claimed these distributions as her
personal property. These stolen amounts are substantial. In fact, based upon court filings by Ms.
Tilton, they are believed to have been in the tens of millions of dollars or more.
51.

Third, in other instances, the Defendants appear to have taken equity interests

originally allocated to the Zohar Funds and simply transferred them back to themselves. For
example, in multiple presentations to Moody’s, including one in 2009, Patriarch disclosed that
Zohar II owned 100% of HVEASI Holding BV (“HVEASI”) and had expected returns on its
equity ownership in that company of $199 million. However, when HVEASI was sold in 2012
for more than $300 million, Zohar II did not receive a penny from the sale. When confronted
with this fact at a recent trial in Delaware that is discussed below, Ms. Tilton claimed that she
had been the true owner of HVEASI and denied that Zohar II had ever owned any interest in the
company. She claimed the contrary representation to Moody’s had simply been a mistake—
notwithstanding that the representation was made in multiple presentations and HVEASI was

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identified as the most valuable of the 40 equity positions owned by Zohar II at the time of the
2009 Moody’s presentation. Patriarch has failed to provide any evidence to substantiate Ms.
Tilton’s claim of a mistake, raising the specter that HVEASI represents yet another instance of
Ms. Tilton pilfering the Zohar Funds’ equity interests for her own.
52.

Fourth, even when not attempting to steal the Zohar Funds’ equity interests

outright, the Defendants have engaged in efforts to steal the voting and other rights associated
with those equity interests. Specific efforts to do so in late 2015 on the eve of Defendants
relinquishing control of the Zohar Funds are discussed in Section D below. These efforts were
intended to deprive the Zohar Funds of the ability to exercise ownership control over the
Portfolio Companies—including through a sale of the companies—or to remove Ms. Tilton from
the lucrative management positions she holds.
53.

In particular, Ms. Tilton often installed herself as chief executive and always

installed herself as a—and often the sole—managing member or director of the Portfolio
Companies. In connection with those appointments, Ms. Tilton caused the Portfolio Companies
to enter into Management Services Agreements with PPMG to provide “general executive,
professional, and management consulting services,” “finance functions,” and “human resource
functions,” among others. These agreements, in turn, require the Portfolio Companies to pay
onerous corporate management fees to PPMG for, in effect, having Ms. Tilton and her entities
provide management services. Based upon review of one of these agreements, which is believed
to be representative of others, they were structured to terminate when Patriarch no longer owned
or controlled at least 30% of the company’s outstanding equity. Nonetheless, in breach of this
term, PPMG purports to continue to manage the Portfolio Companies and collect management
fees, despite Patriarch’s resignation as collateral manager of the Zohar Funds, which terminated

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Patriarch’s control over the equity positions held by the Zohar Funds, leaving Patriarch
controlling less than 30% in most or all of the Portfolio Companies. Moreover, because of
Defendants’ efforts to abscond with the voting rights associated with the Zohar Funds’ equity
holdings, they have deprived the Zohar Funds of the ability to exercise their rights as equity
owners to remove Ms. Tilton from her management roles and terminate the PPMG agreements
(or enforce their existing termination provisions).
54.

Finally, and more recently, Defendants have engaged in a campaign to place a

cloud over all of the Zohar Funds’ equity holdings by making specious contentions, discussed in
Section E below, that none of those equity holdings are actually owned by the Zohar Funds but
are rather all owned by Ms. Tilton, either directly or indirectly through other Defendants.
Defendants have made these claims notwithstanding that the equity holdings are reflected in
agreements and instruments—such as stock certificates titled in the Zohar Funds names—that
unambiguously reflect the Zohar Funds’ ownership of these equity interests. These recent efforts
appear intended to further the Defendants’ longstanding scheme to misappropriate the benefits of
the Zohar Funds’ equity holdings by both providing a fig leaf justification for their prior illegal
conduct—such as stealing equity distributions—as well as to resist the Zohar Funds’ efforts to
enforce their true ownership rights over the Portfolio Companies.
C.

Patriarch Manipulates The Zohar Funds To Fraudulently Inflate
Management Fees And Retain Control.

55.

While the Patriarch Managers were given the authority, in the Indentures and the

CMAs, to manage the Zohar Funds’ Collateral with the goal of maximizing recovery for the
Funds, there were several important checks on that authority. Certain of these checks looked to
the performance of the assets in the Zohar Funds’ portfolios, and created consequences when
their performance sunk below acceptable levels.

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56.

For example, as part of the protections for noteholders built into the Zohar Funds’

Indentures, each quarter the Zohar Funds are required to calculate the results for an
Overcollateralization Test (“OC Test”) which gets reported in the Monthly Report and Note
Valuation Report. The OC Test is calculated as a ratio between the outstanding amounts due on
the loans held in the particular Zohar Fund portfolio, adjusted to take into account certain credit
risks on those loans, against the outstanding principal balances on the outstanding senior notes.
The general purpose of the OC Test is to confirm that the Zohar Funds are likely to be able to
collect sufficient amounts on their outstanding loans to meet their obligations to senior
noteholders. To pass, the OC Test result must be above specified amounts under the Indentures
in excess of 100%, reflecting that there is more collateral than needed to meet noteholder
obligations (i.e., there is “overcollateralization”). Failure of the OC Test triggers a number of
consequences under the Indentures intended to conserve funds, including diverting or suspending
a number of payments.
57.

Collateral management fees are one of the types of payments that are impacted by

an OC Test failure. Under the Zohar Funds’ Indentures, the collateral manager is potentially
entitled to both a senior management fee and a subordinated management fee, each calculated as
1% of the outstanding principal amount of assets held by the Zohar Fund (including unfunded
loan amounts and excluding principal that represents previously deferred or capitalized interest
except in limited circumstances), excluding any equity securities, for a maximum of a 2% total
management fee. However, when the OC Test fails, pursuant to the Indentures’ priority of
payments, the subordinated management fee is cut off during the pendency of the failure, cutting
the fees paid to the collateral manager in half. The priority of payments also cuts off payments
made to preference share holders—the Octaluna Defendants—when the OC Test fails.

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Additionally, under the Zohar I and Zohar II Indentures, if the OC Test is failed, the Controlling
Party gains control of the Fund’s Collateral.
58.

Since 2009 at the very latest, properly calculated, the OC Test under the Zohar

Funds’ Indentures should have been failing due to significant deterioration in the Funds’ loan
portfolios. However, rather than reporting failing OC Test results, the Monthly Reports and
Note Valuation Reports consistently reported passing test results due to fraudulent manipulations
of those results by Patriarch, under Ms. Tilton’s direction. These manipulations took multiple
forms.
59.

First, Patriarch routinely misreported the credit risk classification for Portfolio

Companies. One of the critical components of the OC Test calculation are metrics used to
determine the likelihood of a Portfolio Company repaying its loan. Under the Zohar I and II
Indentures, to make those determinations, each asset is assigned to a numerical category between
1, reflecting non-performing high-credit-risk companies, and 4, reflecting performing low-creditrisk companies. These numerical categories, which are also reported in the Monthly Reports, in
turn, determine the amount of that Portfolio Company’s outstanding loan balance that is included
in the numerator of the OC Test calculation. Under the Zohar I and II Indentures, an asset cannot
qualify as a Category 4 if there are “negotiations, at the time of measurement, to restructure
(either in or outside of a bankruptcy or reorganization proceeding) the financial obligations” of
the relevant Portfolio Company, or if the Portfolio Company has defaulted on a principal or
interest payment, “without regard to any applicable grace period or any waiver of such default …
but only so long as such default has not been cured.” Zohar I and II Indentures, § 1.1. Under the
Zohar III Indenture, assets are categorized as either “Collateral Investments” (i.e., a Category 4)
or “Defaulted Investments” (i.e., a Category 1). Under these definitions, an asset is a Defaulted

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Investment if, among other things, “a default as to the payment of principal and/or interest has
occurred, but only so long as such default has not been cured.” Zohar III Indenture, § 1.1.
60.

The Portfolio Company classifications are determined by the collateral manager,

applying certain standards set forth in the Indentures. While the Indentures and CMAs at certain
points gave the Patriarch Managers limited abilities to waive or otherwise forbear payments that
were owed by Portfolio Companies to the Zohar Funds, they did not make the categorizations
discretionary, and indeed required that Portfolio Companies be downgraded in the event that they
defaulted on a payment of principal or interest, regardless of whether it had been waived.
However, Patriarch routinely ignored the mandated objective standards that were supposed to
determine these classifications under the Indentures, instead regularly classifying nonperforming loans as a “Category 4” or “Collateral Investment” solely on the basis of Ms. Tilton’s
supposed subjective intention to support the company, without regard to how likely (or
inevitable) that company’s default was, and even after that company had defaulted on numerous
interest payments due to the Zohar Funds, without cure. By applying this amorphous and
subjective classification, in breach of the Indentures and CMAs, Patriarch inflated the Zohar
Funds’ OC Test results, and by extension the collateral management fees that were paid to the
Patriarch Managers.
61.

As just one example, Zohar III extended loans under a revolving credit line to a

Portfolio Company named Gorham Mill Acquisition (“Gorham”). From 2013 to 2015, Gorham
paid Zohar III less than 10% of the interest that was properly due under the revolving credit
agreement, falling more than $4 million in arrears. Notwithstanding the fact that Gorham was
plainly failing to perform on its loan obligations, Patriarch classified Gorham as a “Collateral
Investment” during the entire period, thereby allowing the entirety of Gorham’s loan to be

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included in the numerator of the OC Test calculation. Ultimately, as part of a massive effort to
steal value from the Zohar Funds (which will be discussed further below), Patriarch reduced the
interest rate on Gorham’s loans from 10% to just 0.5%. Any such changes to loan terms should
themselves have independently required changes to a Portfolio Company’s classification under
the Indentures, which require a re-categorization for any asset that has been restructured.
62.

Likewise, notwithstanding that multiple Portfolio Companies, such as American

LaFrance and RapidRack, appeared to be in severe financial distress, and may even have ceased
operations before being restructured into new, ostensibly performing companies, both the
original and the restructured companies were rated as Category 4 by Patriarch.
63.

Second, Patriarch frequently took debt that had been purchased at a significant

discount and wrote it up to par for purposes of calculating the OC Test under the Indentures.
While the Indentures permit the collateral manager some flexibility in determining whether
purchased debt should be valued at par, the fact that debt had just been acquired at a substantial
discount to par was objective evidence that the value of these assets was impaired. Moreover,
upon information and belief, these assets did not meet the other requirements set forth in the
Indentures as conditions for assigning a par valuation to an asset purchased at a discount.
Nonetheless, Patriarch consistently reported the value of those assets at par, with the result once
again that the Patriarch Managers’ fees were fraudulently inflated.
64.

For example, in 2005, Zohar II purchased at least $29.6 million of debt issued by

Intera Group for approximately $5.3 million—reflecting an 82% discount to par. Yet,
notwithstanding the highly distressed nature of Intera’s debt as reflected in this massive discount,
Patriarch used the full face amount of $29.6 million for reporting its outstanding principal
balance and treated it as a Category 3 loan, meaning that it was being restructured and this full

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amount could be used for purposes of calculating the OC Test and its fees. After restructuring
the Intera debt, Patriarch upgraded its categorization to Category 4 notwithstanding that it was
failing to make the required interest payments. Seven months after being restructured, it
defaulted.
65.

By manipulating the OC Test results in this manner, Ms. Tilton and Patriarch

facilitated the Patriarch Managers and the Octaluna Defendants receiving hundreds of millions of
dollars in management fees and preference share distributions to which they were not entitled
and would not have otherwise received, and prevented the Controlling Party from gaining control
over the Zohar Funds’ Collateral. This included a substantial part of the more than $700 million
in collateral management fees and other distributions Defendants received over the life of the
Zohar Funds.
66.

Moreover, under the Zohar Indentures, a severe failure of the OC Test (below the

“Adjusted Event of Default Overcollateralization Ratio”) is an Event of Default, which gives the
Controlling Party (with respect to Zohar I and II) or Controlling Class (with respect to Zohar III)
cause to terminate the collateral manager (thereby, of course, also terminating senior and
subordinated management fees). Accordingly, by fraudulently inflating the OC Test, Patriarch
also extended the period of time during which it was able to engage in its fraudulent scheme by
preventing investors from having the opportunity to terminate the Patriarch Managers when they
should rightfully have had that choice.
67.

On March 30, 2015, following an extensive investigation into the OC Test

manipulations, the SEC issued an Order Instituting Administrative and Cease-and-Desist
Proceedings against Ms. Tilton, Patriarch Partners, and the Patriarch Managers, alleging that they
had “defrauded” the Zohar Funds and their investors “by providing false and misleading

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information, and engaging in a deceptive scheme, practice and course of business, relating to the
values they reported for these funds’ assets” by inflating the Zohar Funds’ assets’ classifications,
as set out in this section. The SEC alleged that the Defendants had made “false and misleading”
statements about the fair value of the loans in the Funds. Trial on the SEC’s charges was held in
October and November 2016 in front of an SEC administrative law judge, who has not yet
rendered judgment.
68.

The SEC’s case was premised in large part on violations of the Investment

Advisers Act that are not precisely aligned with the claims made here and did not include the
breach of contract or other claims specific to the Zohar Funds that are made here. Despite these
differences, the evidence adduced at trial supports and supplements the Zohar Funds’ allegations.
For example, Ms. Tilton testified at trial that the Patriarch Managers had a fiduciary duty to the
Zohar Funds and an obligation to manage their investments according to the Indentures. And,
she acknowledged that Patriarch had not reduced the categorization of investments (from a
“Category 4” to a “Category 1” or from a “Collateral Investment” to a “Defaulted Investment”)
to reflect their declining credit quality—as required by the Indentures—and instead had only
reduced their categorization when the likelihood of any recovery on the investment had dropped
to nearly zero. As a result, the OC Test was shown as passing—and the Patriarch Managers
were paid their subordinated management fees, the Octaluna Defendants received preference
share distributions, and Ms. Tilton avoided an Event of Default—when, under the plain terms of
the Indentures, the OC Test was failing and the Patriarch Managers and Octaluna Defendants
should have received none of those benefits.

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D.

Defendants Transfer Assets And Rights To Themselves Out Of The Zohar
Funds.

69.

Notwithstanding the Patriarch Managers’ fiduciary and contractual duties to the

Zohar Funds, they have repeatedly consented to modifications of their loans to Portfolio
Companies that reduced the value of those loans to the Zohar Funds and increased the likelihood
that the Zohar Funds would default on payments to their noteholders. For example, in numerous
instances, the Patriarch Managers consented to extensions of maturity dates for loans from the
Zohar Funds past the scheduled maturities of the Zohar Funds’ obligations to their own
noteholders. Extending repayment on the loans past the Zohar Funds’ own maturity dates was
both a violation of the Indentures and rendered it a virtual certainty that the Zohar Funds would
be forced to default on their obligations to their investors because the principal repayment of the
loans was the primary source of funds that would be available to the Zohar Funds to repay the
notes. This is precisely what happened with respect to Zohar I and II.
70.

Likewise, the Patriarch Managers repeatedly agreed to provisions in the Zohar

Funds’ contracts that would give Defendants and other Patriarch entities control over the Zohar
Funds’ assets without any apparent benefit provided to the Zohar Funds. For example, the
Patriarch Managers agreed to transfer restrictions in credit agreements, requiring PPAS’s consent
to any loan assignments, without any apparent consideration provided to the Zohar Funds for
relinquishing their right to unilaterally sell their loans. In effect, these transfer restrictions
purport to shift key rights of ownership held by the Zohar Funds to an entity owned and
controlled by Ms. Tilton that has no ownership interest whatsoever in the underlying loans to
which they relate, all for nothing in return.
71.

As the note maturity dates of the Zohar I and II notes neared and the likelihood

that the Zohar Funds would repay their noteholders became increasingly remote, disputes

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between Patriarch and the Controlling Parties that had begun early in the Zohar Funds’ history
were exacerbated. By mid-2015, Ms. Tilton concluded that MBIA, which was the Controlling
Party for Zohar I and Zohar II, and the investors that constituted the Controlling Class for Zohar
III, were looking to replace the Patriarch Managers as collateral manager for the Zohar Funds.
72.

Facing fraud charges from the SEC and recognizing that, upon the removal of the

Patriarch Managers, Defendants would no longer be able to exercise control over the Zohar
Funds, Defendants accelerated their campaign to secretly grant themselves valuable assets and
rights at the Zohar Funds’ expense while they still could.
73.

In particular, beginning in mid-2015, Ms. Tilton executed dozens of amendments

to the loan agreements between the Zohar Funds and the Portfolio Companies, which (if they
were effective) substantially reduced the value of the Zohar Funds’ debt holdings, for the benefit
of Ms. Tilton’s own personal funds. For example, numerous amendments purported to
subordinate the Zohar Funds’ loans to loans made by Ark II and/or AIP II7 and to reduce or
eliminate the interest to be paid on the Zohar Funds’ loans.8 Other amendments increased the
Zohar Funds’ loan commitments to Portfolio Companies, extended maturity dates, and removed
financial covenants that the Portfolio Companies had been required to meet.9 Through these
7

These include amendments to the credit agreements for Duro Textiles LLC (dated July __,
2015), Gorham Paper and Tissue, LLC (dated June 24, 2015), Silverack, LLC (dated May 8,
2015), Spiegel, LLC (dated October 2, 2015), and Galey & Lord Industries, LLC (dated
January 23, 2016).

8

These include amendments to the credit agreements for Red Shield Acquisition LLC (dated
May 21, 2015), Petry Television Inc. (dated November 4, 2015), and Iconic American
Trucks, LLC (dated February 25, 2016).

9

These include amendments to the credit agreements for 180s Inc. (dated September 1, 2015
and October 29, 2015), ACME International Enterprises,Inc. (dated September 1, 2015 and
October __, 2015), Best Textiles Acquisition, LLC (dated August 7, 2015 and September 1,
2015), Croscill Home LLC (dated September 1, 2015), Denali Incorporated (dated November

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amendments, Defendants gave away enormous value owned by or owed to the Zohar Funds,
transferring that value either to the Portfolio Companies over which they exercised control, or to
investment funds that Ms. Tilton owned directly.
74.

In September 2015, Ms. Tilton executed a series of legal documents purportedly

transferring the Zohar Funds’ voting and other rights in its equity holdings to entities owned
directly by Ms. Tilton. These documents, which took the form of irrevocable proxies or
amendments to LLC or stockholder agreements, purported to transfer equity voting rights,
including the rights to change directors or managing members or to effect a sale of the company,
from the Zohar Funds to Defendants, often the Patriarch Managers, or to provide the Defendants
with veto rights over any attempt to exercise such rights. At least 35 such proxies or
19, 2015), Dura Operating LLC and Dura Automotive Systems (dated November 19, 2015),
Duro Textiles LLC (dated July __, 2015), East Alliance Limited (dated September 1, 2015),
eMag Solutions, LLC (dated September 1, 2015 and October __, 2015), Galey & Lord
Industries, LLC (dated July 8, 2015, September 1, 2015, October 29, 2015, and November 3,
2015), Global Automotive Systems, LLC (dated May 31, 2015 and September 1, 2015),
Gorham Paper and Tissue, LLC (dated June 24, 2015 and September 1, 2015), Hartwell
Industries, Inc. (dated September 1, 2015), Heritage Aviation, Ltd. (dated September 1,
2015), Iconic American Trucks, LLC (dated November 19, 2015), Inter-Marketing Group,
Inc. and Dana Classic Fragrances, Inc. (dated June 24, 2015 and September 1, 2015), Intrepid
U.S.A., Inc. (dated November 19, 2015), Jewel of Jane LLC (dated July 30, 2015, September
1, 2015, and November 19, 2015), LVD Acquisition, LLC (dated September 1, 2015 and
November __, 2015), MD Helicopters, Inc. (dated September 1, 2015), Mobile Armored
Vehicles, LLC (dated September 1, 2015), Natura Water, LLC (dated September 1, 2015 and
October __, 2015), NetVersant Solutions, LLC (dated September 1, 2015 and November 19,
2015), RM Acquisition, LLC (dated November 19, 2015), Remco Maintenance, LLC (dated
June 8, 2015, October 28, 2015, and November 19, 2015), Scan-Optics, LLC (dated
September 1, 2015 and October 28, 2015), Silverack, LLC (dated May 8, 2015, September 1,
2015, and September __, 2015), Snelling Staffing, LLC (dated September 1, 2015, October 2,
2015, October 8, 2015, October 22, 2015, November 5, 2015, November 18, 2015, and
November 19, 2015), Spiegel, LLC (dated September 1, 2015 and November 19, 2015), Stila
Styles, LLC (dated August 14, 2015), Transcare Corporation (dated September 1, 2015),
Vulcan Engineering Co. (dated November 19, 2015), and White Mountain Tissue, LLC
(dated September 1, 2015). In many cases, these amendments were not signed by the
borrowers, but were signed only by Ms. Tilton.

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amendments were executed by Ms. Tilton over a two-day period.10 The Zohar Funds received
no consideration in return for their purported forfeiture of critical ownership rights in the
Portfolio Companies’ equity to entities owned and controlled by Ms. Tilton.
75.

In November 2015, when the notes issued by Zohar I matured and it defaulted on

its payment obligations to its investors, Ms. Tilton executed another series of amendments to the
credit agreements on behalf of the Zohar Funds that purported to restructure outstanding loans to
waive or restructure unpaid interest or commitment fees; waive the Zohar Funds’ ability to
declare an Event of Default based on prior missed payments; waive other existing Events of
Default; grant sole discretion to waive any Event of Default under the credit agreements to
PPAS; and require consent from PPAS for any amendment, modification, termination or waiver
10

These include irrevocable proxies relating to 180s Inc. (dated September 21, 2015), Fetco
Home Décor, Inc. (dated September 21, 2015), Glenoit LLC (dated September 21, 2015),
Hartwell Industries, Inc. (dated September 21, 2015), Inter-Marketing Group, Inc. (dated
September 21, 2015), MD Helicopters, Inc. (dated September 21, 2015), Performance
Designed Products LLC (dated September 21, 2015), and UI Holdings (dated September 21,
2015), and voting rights amendments to LLC Agreements of ACME International
Enterprises, Inc. (dated September 21, 2015), American LaFrance, LLC (dated September
22, 2015), Best Textiles Acquisition, LLC (dated September 22, 2015), Black Mountain
Door, LLC (dated September 22, 2015), Croscill Home LLC (dated September 22, 2015),
Denali Incorporated (dated September 22, 2015), Dura Automotive Systems (dated
September 22, 2015), Duro Textiles LLC (dated September 22, 2015), eMag Solutions, LLC
(dated September 22, 2015), Galey & Lord Industries, LLC (dated September 22, 2015),
Global Automotive Systems, LLC (dated September 22, 2015), Gorham Paper and Tissue,
LLC (dated September 22, 2015), Iconic American Trucks, LLC (dated September 22, 2015),
Jewel of Jane LLC (dated September 22, 2015), Libertas Copper, LLC (dated September 22,
2015), LVD Acquisition, LLC (dated September 22, 2015), Mobile Armored Vehicles, LLC
(dated September 22, 2015), Netversant Solutions, LLC (dated September 22, 2015), Remco
Maintenance, LLC (dated September 22, 2015), RM Acquisition, LLC (dated September 22,
2015), Scan-Optics, LLC (dated September 22, 2015), Silverack, LLC (dated September 22,
2015), Snelling Staffing, LLC (dated September 22, 2015), Spiegel, LLC (dated September
22, 2015), Stila Styles, LLC (dated September 22, 2015), White Mountain Tissue, LLC
(dated September 22, 2015), and Xinhua (dated September 22, 2015). Patriarch has
previously attempted to make voting rights amendments to the LLC Agreements of certain
portfolio companies, like Amweld International, in May 2011.

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of any provision of the credit agreement, among other changes.11 On November 19, 2015 alone,
Patriarch entered into at least thirty different credit agreement amendments giving PPAS sole
discretion to waive Events of Default by the Portfolio Companies, requiring PPAS consent to
any amendment, modification, termination or waiver of the credit agreement, and waiving any
Events of Default then existing under the credit agreements.12
76.

In February 2016, Ms. Tilton executed an additional round of amendments,

making some of the amendments stated above for additional Portfolio Companies,13 and making
additional amendments that gave Ark II “sole and absolute discretion” to make revolving credit

11

These include amendments to the credit agreements for 180s Inc. (dated November 3, 2015),
Duro Textiles LLC (dated November 3, 2015), Global Automotive Systems, LLC (dated
October 31, 2015), Heritage Aviation, Ltd. (dated November 3, 2015), Inter-Marketing
Group, Inc. and Dana Classic Fragrances, Inc. (dated November 3, 2015), Jewel of Jane LLC
(dated November 3, 2015), LVD Acquisition, LLC (dated November __, 2015), MD
Helicopters, Inc. (dated November 3, 2015), Natura Water, LLC (dated November 3, 2015),
Scan-Optics, LLC (dated November 3, 2015), Spiegel, LLC (dated November 3, 2015), and
Transcare Corporation (dated November 3, 2015).

12

These include amendments to the credit agreements for 180s Inc., ACME International
Enterprises, Inc., Best Textiles Acquisition, LLC, Croscill Home LLC, Denali Incorporated,
Dura Operating LLC and Dura Automotive Systems, Duro Textiles LLC, East Alliance
Limited, eMag Solutions, LLC, Fetco Home Décor, Inc., Galey & Lord Industries, LLC,
Global Automotive Systems, LLC, Hartwell Industries, Inc., Heritage Aviation, Ltd., Iconic
American Truck, LLC, Inter-Marketing Group, Inc. and Dana Classic Fragrances, Inc.,
Intrepid U.S.A., Inc., Jewel of Jane LLC, Libertas Copper, LLC, LVD Acquisition, LLC,
MD Helicopters, Inc., Mobile Armored Vehicles, LLC, Natura Water, LLC, NetVersant
Solutions, LLC, RM Acquisition, LLC, Remco Maintenance, LLC, Scan-Optics, LLC,
Silverack, LLC, Snelling Staffing, LLC, Spiegel, LLC, Transcare Corporation, and Vulcan
Engineering Co.

13

These included amendments to the credit agreements for ACME International Enterprises,
Inc. (dated February 5, 2016), Best Textiles Acquisition, LLC (dated February 5, 2016),
Gorham Paper and Tissue, LLC (dated February 5, 2016), Inter-Marketing Group, Inc. and
Dana Classic Fragrances, Inc. (dated February 5, 2016), Jewel of Jane LLC (dated February
5, 2016), Silverack, LLC (dated February 5, 2016), and Snelling Staffing, LLC (dated
February 5, 2016).

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loans14 and reducing the commitment fees being paid by many Portfolio Companies to the Zohar
Funds.15
77.

Thus, over the life of the Zohar Funds but accelerating in 2015 and 2016,

Defendants absconded with valuable interests of the Zohar Funds by amending loan agreements
to reduce the value of the Zohar Funds’ debt holdings through various changes in terms, and
amending equity agreements to transfer any conceivable control right that the Zohar Funds might
have had through their equity holdings to the Patriarch Managers or another one of the
Defendants. In doing so, as discussed above, Ms. Tilton sought to ensure that she would
maintain control of the Portfolio Companies, that PPMG’s lucrative contracts with the Portfolio
Companies would remain in force, and that she would retain maximal control over Portfolio
Company funds regardless of what happened to the Zohar Funds.
E.

Defendants Fraudulently Conceal And Assert Ownership Over The Zohar
Funds’ Stolen Collateral.

78.

As described above, for years Defendants worked to conceal the extent of the

Zohar Funds’ equity holdings from their investors and Credit Enhancer, secretly reaping the
benefits of cash dividends and distributions on that equity while allowing the Trustee to issue

14

These included amendments to the credit agreements for ACME International Enterprises,
Inc. (dated February 5, 2016), Best Textiles Acquisition, LLC (dated February 5, 2016),
Galey & Lord (dated February 5, 2016), Gorham Paper and Tissue, LLC (dated February 5,
2016), Inter-Marketing Group, Inc. and Dana Classic Fragrances, Inc. (dated February 5,
2016), Jewel of Jane LLC (dated February 5, 2016), Silverack, LLC (dated February 5,
2016), and Spiegel, LLC (dated February 5, 2016).

15

These included amendments to the credit agreements for ACME International Enterprises,
Inc. (dated February 5, 2016), Best Textiles Acquisition, LLC (dated February 5, 2016),
Gorham Paper and Tissue, LLC (dated February 5, 2016), Inter-Marketing Group, Inc. and
Dana Classic Fragrances, Inc. (dated February 5, 2016), Jewel of Jane LLC (dated February
5, 2016), Silverack, LLC (dated February 5, 2016), and Spiegel, LLC (dated February 5,
2016).

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reports month after month that failed to report (or accurately report) the equity owned by the
Zohar Funds, even as Defendants touted the value of those very interests to rating agencies.
Once they had sought to transfer the equity and/or equity rights from the Zohar Funds,
Defendants doubled down on their efforts to hide what they had done.
79.

Following the default of Zohar I, knowing that through the Fall 2015 amendments

they had plundered the Zohar Funds’ valuable interests in favor of various Patriarch entities, the
Patriarch Managers agreed in February 2016 to resign as collateral manager for the Zohar Funds.
After managing the Zohar Funds since Zohar I’s inception in 2003, the Patriarch Managers
ceased to be the collateral managers as of March 2, 2016. Alvarez & Marsal Zohar Management
(“AMZM”) was appointed to replace them as collateral manager for the Zohar Funds.
80.

Upon its appointment as collateral manager of the Zohar Funds, AMZM requested

that Patriarch provide AMZM with the Zohar Funds’ books and records that the Patriarch
Managers had used to fulfill their duties as collateral managers, including, among several other
categories of documents, (1) a full listing of the Zohar Funds’ collateral; (2) documentation
relating to the Zohar Funds’ loans; (3) documentation related to the Zohar Funds’ equity
interests; and (4) up-to-date financial reports for each of the Portfolio Companies.
81.

While the Patriarch Managers were required to provide this information under the

CMAs, Patriarch instead embarked on a course of conduct that was intended to give nothing
more than the appearance of cooperation. For example, after providing AMZM with an initial
production that was comprised largely of loan agreements and amendments, Patriarch declared
its production complete, and represented to AMZM and the Zohar Funds that it had provided all
of the documents related to the Zohar Funds’ collateral.

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82.

Yet, contrary to these representations, the materials that Patriarch provided lacked

the most critical information that AMZM had requested and needed in order to fulfill its duties as
the Zohar Funds’ collateral manager, such as a complete list of collateral owned by the Zohar
Funds, or any documentation related to the Zohar Funds’ equity ownership, such as stock
certificates, LLC agreements, or stockholder agreements.
83.

As a result of Patriarch’s deficient responses, AMZM was forced to initiate a

lawsuit in the Delaware Court of Chancery (the “Delaware Action”), seeking the documents
from the Patriarch Managers that would allow AMZM to, among other things, determine what
assets the Zohar Funds own—and what rights it has in respect of those assets—so that it could
attempt to recover value from these holdings. In the course of that lawsuit, Patriarch made a
series of convoluted assertions that the Zohar Funds’ equity interests—which were memorialized
in stock certificates and LLC Agreements naming the Zohar Funds as the holders of equity—
were not actually the Zohar Funds’ equity interests. Rather, Patriarch asserted, they belonged to
Ms. Tilton and entities under her control, who had simply gifted the upside of those equity
interests to the Zohar Funds while leaving the actual ownership of them vested with Ms. Tilton.
84.

Ms. Tilton asserted in her testimony that she had created this structure because the

Zohar Funds’ Indentures prohibited the ownership of equity interests, and that such interests
were therefore not “Collateral” of the Zohar Funds. But, in fact, equity falls squarely within the
definition of Collateral under the Indentures and the equity interests here appear to have been
acquired in ways that were permitted under the Indentures. In any event, whether or not the
Indentures permitted the collateral manager to acquire certain equity interests on behalf of the
Zohar Funds, there was no prohibition on owning it. Once that equity was owned in the Zohar

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Funds’ name, regardless of how it was obtained, it was their property, and constituted
“Collateral” under the Indentures.
85.

Patriarch also fought production of presentations it had made to rating agencies on

behalf of the Zohar Funds, aware that those presentations revealed the Zohar Funds’ ownership
of the very valuable equity interests that Ms. Tilton was seeking to claim as hers. The
presentations that Patriarch sought to conceal included the presentations discussed above in
which Patriarch had represented to the ratings agencies that Zohar II owned 100% of the equity
in HVEASI, even though it would receive none of the more than $300 million received when it
was sold by Defendants in 2012.
86.

After a full trial on the merits, on October 26, 2016, the Delaware Court of

Chancery ruled that Patriarch had breached the CMAs by failing to turn over books and records
to the Zohar Funds and ordered immediate production of those documents. Patriarch responded
by appealing and seeking an emergency stay to prevent the Zohar Funds from receiving their
own documents. Patriarch’s requested emergency stay was denied, and an appeal is now pending
before the Delaware Supreme Court. In the interim, however, the Zohar Funds have begun to
receive documents from Patriarch that have permitted them to begin to piece together the puzzle,
set out here, of the Defendants’ fraudulent misconduct and outright theft, although the
production is far from complete.
87.

The brazen fraudulent scheme described above was, by its very nature, impossible

for the Zohar Funds to discover prior to March 3, 2016, because until that time they were fully
controlled by Patriarch (which was controlled by Ms. Tilton), which actively sought to conceal
its wrongdoing from noteholders, the Controlling Parties, and any other interested parties.
Indeed, even after appointment of a new collateral manager for the Zohar Funds, that collateral

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manager could not have discovered the extent of this wrongdoing until Patriarch was finally
ordered by the court in Delaware to produce the evidence of the fraudulent scheme, some of
which was produced as late as December 2016, and much of which Patriarch is still withholding.
As just a few examples, no documents have been turned over that relate to ownership of
HVEASI, tax documents turned over have been redacted to conceal the full extent of the equity
distributions and dividends stolen by Defendants, and Patriarch has refused to turn over the
transaction documents for loans and equity acquisitions made by the Zohar Funds themselves,
which would fully reveal the terms on which the Zohar Funds acquired those interests.
88.

Moreover, notwithstanding the Delaware Action, Defendants have adopted a

litigation strategy through which they continue to affirmatively misrepresent and assert their
ownership over the Zohar Funds’ equity interests. In particular, on September 12, 2016,
Octaluna I and Patriarch XV brought a lawsuit challenging the procedures being used by the
Zohar Funds’ Trustee to auction collateral belonging to Zohar I (although the auction was being
conducted pursuant to specific provisions of the Indenture). In their briefing, Octaluna I and
Patriarch XV accused MBIA of trying to “steal equity” that Octaluna I and Patriarch XV claimed
belongs to Octaluna I. Octaluna I and Patriarch XV asserted that including the equity in the
auction would “put a cloud over Octaluna and its affiliates’ equity holdings in the Portfolio
Companies at a critical time,” and contended that Defendants were the only parties entitled to
sell those equity interests, or to sell the Portfolio Companies themselves by virtue of those
interests.
89.

On November 14, 2016, in a filing in connection with an involuntary bankruptcy

proceeding that Patriarch XV filed and later withdrew with respect to Zohar I, Patriarch XV (at
Ms. Tilton’s direction) objected to efforts by a Zohar III investor to obtain documents from the

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proceeding related to the Zohar Funds’ equity holdings, contending in support that “[c]ertain
Patriarch affiliates,” and not the Zohar Funds, were the “ultimate equity owner” of the Portfolio
Companies.
90.

On November 23, 2016, in response to an effort by the Zohar Funds to appoint

new directors for three Portfolio Companies as to which they own a majority stake, Defendants
refused to recognize their slate of appointed directors, asserting in a letter and then in subsequent
court filings that the Octaluna Defendants “are the owners of the equity in the Companies.”
91.

Thus, years of Defendants improperly manipulating the Zohar Funds, breaching

contractual and fiduciary duties to the Zohar Funds, breaching Indenture and CMA provisions to
inflate payments from the Zohar Funds, and engaging in fraud and outright theft of valuable
Zohar Fund assets, gives rise to a number of causes of action, as set forth below.
CAUSES OF ACTION
COUNT I – DECLARATORY JUDGMENT
(Against All Defendants)
92.

Plaintiffs incorporate the foregoing allegations as if fully set forth here.

93.

The Zohar Funds are record holders and owners of equity interests that are

memorialized in the form of, among other documents, stock certificates and LLC agreements.
The Zohar Funds received these interests for good and valuable consideration, generally in
connection with providing financing for the acquisition of Portfolio Companies, extending loans
to Portfolio Companies, or in exchange for agreeing to restructure loans to Portfolio Companies.
94.

The stock certificates are valid securities issued in the names of the Zohar Funds

and declare the Zohar Funds “owners” of shares of stock.
95.

The LLC agreements list the Zohar Funds as parties, include the Zohar Funds as

signatories, and list the Zohar Funds as members entitled to membership interests.

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96.

Nonetheless, the Defendants have repeatedly asserted, including in several court

proceedings, that the Zohar Funds do not own this equity, but rather have been gifted “upside” in
the equity, which, Defendants assert, is actually owned by Ms. Tilton and the Octaluna
Defendants. Indeed, Defendants have even accused the Zohar Funds of “stealing” by lawfully
attempting to assert their equity ownership rights.
97.

Accordingly, a justiciable controversy exists among the parties with regard to the

ownership over and rights in equity interests in Portfolio Companies.
98.

The Zohar Funds therefore seek a declaration that they are the legal owners of the

equity interests issued or otherwise created in their names, with the relevant equity rights and
interests to be established at trial.
COUNT II – DECLARATORY JUDGMENT
(Against All Defendants)
99.

Plaintiffs incorporate the foregoing allegations as if fully set forth here.

100.

As set forth above, each of the Zohar Funds is party to an Indenture, which is

explicitly referenced and incorporated into the relevant CMAs for each Zohar Fund. The
Indentures are valid and enforceable contracts under which the Zohar Funds have fully
performed.
101.

Section 1.1 of the Indentures (“Definitions”) defines “Collateral” as “All Money,

instruments, accounts, payment intangibles, general intangibles, letter-of-credit rights, chattel
paper, electronic chattel paper, deposit accounts, investment property and other property and
rights subject or intended to be subject to the lien of this Indenture for the benefit of the Secured
Parties as of any particular time.” The Granting Clause of the Indentures states, in turn, that
“The Issuer hereby Grants to the Trustee, for the benefit and security of the Secured Parties, a
continuing security interest in, and lien on, all of its right, title and interest in, to and under, in

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each case, whether now owned or existing, or hereafter acquired or arising, all accounts, payment
intangibles, general intangibles, letter-of-credit rights, chattel paper, electronic chattel paper,
instruments, deposit accounts, investment property (each, as defined by the UCC), and any and
all other property of any type or nature owned by it … .” Indentures, p. 1 (emphasis added).
102.

The Zohar Funds are record holders and owners of equity interests that are

memorialized in the form of, among other documents, stock certificates and LLC agreements.
The stock certificates are valid securities issued in the names of the Zohar Funds and declare the
Zohar Funds “owners” of shares of stock. The LLC agreements are valid and enforceable
contracts that list the Zohar Funds as parties, include the Zohar Funds as signatories, and list the
Zohar Funds as members entitled to membership interests. Accordingly, all of these equity
interests are Collateral as that term is defined under the Indentures.
103.

Nonetheless, the Defendants have asserted in several court proceedings, including

in this Court, that the Zohar Funds’ equity interests do not constitute Collateral under the
Indentures, and for that reason cannot be owned by the Zohar Funds.
104.

Accordingly, a justiciable controversy exists among the parties regarding whether

the Zohar Funds’ equity interests constitute Collateral.
105.

The Zohar Funds seek a declaration that the equity interests issued or otherwise

created in their names (with the relevant equity interests to be established at trial) are Collateral,
as that term is defined under the Indentures.
COUNT III – DECLARATORY JUDGMENT
(Against All Defendants)
106.

Plaintiffs incorporate the foregoing allegations as if fully set forth here.

107.

The Zohar Funds are record holders and owners of valuable equity and loan

interests that are memorialized in the form of, among other documents, stock certificates, LLC

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agreements, and loan agreements. The Zohar Funds received these interests for good and
valuable consideration.
108.

The relevant agreements are valid and enforceable.

109.

Nonetheless, the Defendants have purported to execute proxies, other documents,

or amendments to existing documents, in order to transfer value from the Zohar Funds to one or
more of the Defendants, including by granting voting rights, transfer restriction rights, priority of
payments, or the right to veto an Event of Default, as set out in more detail above.
110.

These amendments, proxies, and other documents or provisions were executed

outside of the scope and authority of the Patriarch Managers’ entitlement to act on behalf of the
Zohar Funds, because their actions were required to be taken in good faith, at arm’s length, done
according to a standard of care, and comport with applicable laws and prevailing market
standards.
111.

Moreover, execution of many of these amendments, proxies, and other documents

or provisions breached the Indentures by purporting to transfer Collateral subject to the
Indentures’ lien, which secures the interests of noteholders and the Credit Enhancer.
112.

The Defendants, on information and belief, contend that each of the documents

was validly enacted within the proper scope and authority of the Patriarch Managers. Ms. Tilton
purported to sign each such document on behalf of every party thereto, and has asserted in a
declaration to a court of law that certain of these documents had successfully transferred the
Zohar Funds’ right to vote shares in certain companies and to consent to the election or removal
of the directors of those companies.
113.

Accordingly, a justiciable controversy exists as to the enforceability of the

amendments, proxies, and other documents or provisions.

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114.

The Zohar Funds therefore seek at a minimum a declaration that these

amendments, proxies, and other documents or provisions were void ab initio and are deemed
unenforceable.
COUNT IV – ACCOUNTING
(Against The Patriarch Managers)
115.

Plaintiffs incorporate the foregoing allegations as if fully set forth here.

116.

Under the CMAs, the Patriarch Managers contracted to provide investment and

advisory services to the Zohar Funds, were tasked with managing the Zohar Funds’ investments,
and were designated power to act on behalf of the Zohar Funds, including to execute all
“necessary, desirable and appropriate documents and/or instruments in the name and on behalf
of” the Zohar Funds. CMAs, § 2.5.
117.

As collateral managers, the Patriarch Managers held a position of confidence and

trust with respect to the Zohar Funds, which the Patriarch Managers knew of and accepted, and
were obligated to act as agents on behalf of the Zohar Funds in good faith and with due regard to
the Zohar Funds’ interests.
118.

The Patriarch Managers owed fiduciary duties of loyalty, which obligated them to

put the interests of the Zohar Funds ahead of their own self-interest, and to refrain from
exploiting the relationship for their own personal benefit. The Patriarch Managers also owed
fiduciary duties prohibiting them from self-dealing and conflicts of interest, and to disclose
material facts.
119.

The Patriarch Managers were obligated by the Indentures and the CMAs to

supervise and account for the Zohar Funds’ collateral, including money or property, but have
failed and refused to account to the Zohar Funds or to the Trustee under the Indentures, despite
demand for same, for equity interests owned by the Zohar Funds and equity distributions

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thereon. The Patriarch Managers have obscured these equity interests from the Zohar Funds’
investors and other interested parties and have provided incorrect and incomplete information to
the Trustee for inclusion in monthly reports. This failure and refusal is without excuse.
120.

Accordingly, the Zohar Funds are entitled to a prompt accounting of the equity

interests owned by the Zohar Funds and the cash distributions that have been paid on that equity.
The Zohar Funds demand that the Patriarch Managers be directed to account to the Zohar Funds
for the equity interests owned by the Zohar Funds and the dividends and distributions paid
thereon.
121.

The Zohar Funds have no adequate remedy at law for the relief sought hereby.
COUNT V – BREACH OF CONTRACT
(Against The Patriarch Managers)

122.

Plaintiffs incorporate the foregoing allegations as if fully set forth here.

123.

As set forth above, each of the Patriarch Managers entered into a CMA by which

it agreed to act as collateral manager for the Zohar Funds. Patriarch Partners VIII entered into a
CMA with Zohar I, Patriarch Partners XIV entered into a CMA with Zohar II, and Patriarch
Partners XV entered into a CMA with Zohar III.
124.

The CMAs provide that the Patriarch Managers:

“shall not … direct or effect the acquisition or disposition of the Collateral
Investments [or Collateral Debt Obligations] or any other item included in the
Collateral except in accordance with the requirements of the Indenture …”;

“shall not take any action which it knows or should be reasonably expected to
know in accordance with prevailing market practices would … adversely
affect the interests of the Holders of the Securities … in any material respect
…”;

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Ensure that “all purchases, exchanges and sales of Collateral by the Collateral
Manager on behalf of the Company … shall be in accordance with reasonable
and customary business practices of the relevant market and in compliance
with applicable laws and all purchases and sales of the Collateral will be
effected on arm’s-length terms …”;

“covenant[] that [they] shall comply in all material respects with all laws and
regulations applicable to it in connection with the performance of its duties
under this Agreement and the Indenture”; and

“shall, in rendering its services as Collateral Manager, use reasonable care and
the same degree of skill and attention (a) that the Collateral Manager (i)
exercises with respect to comparable assets that it manages for itself and its
Affiliates and (ii) exercises with respect to comparable assets that it manages
for others and (b) exercised by institutional investment managers of national
standing generally in respect of assets of the nature and character of the
Collateral and for clients having similar investment objectives and restrictions,
in each case except as otherwise expressly provided in the Indenture.”

Zohar I and II CMA, §§ 2.2(n), 2.4, 2.6, 2.9; Zohar III CMA, §§ 2.2(l), 2.4, 2.6, 2.9.
125.

The CMAs contain an exculpation provision, but it provides that the Patriarch

Managers will be liable “by reason of acts or omissions constituting fraud, bad faith, willful
misconduct, gross negligence or breach of fiduciary duty in the performance, or reckless
disregard, of the obligations of the Collateral Manager hereunder and under the terms of the
other Transaction Documents to which it is a party.” CMAs, § 4.4.

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126.

The CMAs are valid and enforceable contracts. The Zohar Funds have complied

with all material terms of the CMAs.
127.

The Patriarch Managers have knowingly and intentionally breached the CMAs by

failing to obtain for the Zohar Funds all equity interests to which they were entitled and which
interests are held by other Defendants, consenting on behalf of the Zohar Funds to the transfer of
debt and equity rights and holdings from the Zohar Funds to other Defendants, and reducing the
Zohar Funds’ priority as creditors, reducing the amount of interest owed to the Zohar Funds, and
making other changes detrimental to the Zohar Funds’ interests. These self-dealing transactions
adversely affected the Zohar Funds and their noteholders, violated customary business practices
and applicable law, and violated the Patriarch Managers’ standard of care under the CMAs.
128.

As a result of the Patriarch Managers’ breaches of the CMAs, the Zohar Funds

have suffered economic loss and damages in an amount to be proven at trial, and are entitled to
be placed in the same situation as if the CMAs had not been violated. The Zohar Funds seek
rescission of the transactions executed by the Patriarch Managers in breach of the CMAs or, in
the alternative, damages in the amount of losses caused by the Patriarch Managers’ breaches of
the CMAs.
COUNT VI – BREACH OF CONTRACT
(Against The Patriarch Managers)
129.

Plaintiffs incorporate the foregoing allegations as if fully set forth here.

130.

As set forth above, each of the Zohar Funds is party to an Indenture, which is

explicitly referenced and incorporated into the relevant CMA for each Zohar Fund. The
Indentures are valid and enforceable contracts under which the Zohar Funds have fully
performed.
131.

The Zohar I and II Indentures provide that:

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[u]pon the acquisition of each Collateral Debt Obligation by the Issuer, the
Collateral Manager shall designate (in a writing delivered to the Trustee and the
Credit Enhancer) each such Collateral Debt Obligation as falling within Category
1, Category 2, Category 3 or Category 4. After the acquisition of each Collateral
Debt Obligation by the Issuer and/or the Zohar Subsidiary, to the extent that the
characterization of such Collateral Debt Obligation shall change, the Collateral
Manager shall redesignate (in a writing delivered to the Trustee and the Credit
Enhancer) each such Collateral Debt Obligation as falling within Category 1,
Category 2, Category 3 or Category 4 or as a Workout Obligation.
Zohar I and II Indentures, § 12.1(b).
132.

Section 1.1 of the Zohar I and II Indentures sets out definitions for each of these

categories, which include objective criteria for determining a particular asset’s classification,
most of which are tied to the likelihood of repayment on that asset. An asset is a Category 4
asset only if it meets the definition of “Current,” meaning that it is not a “Defaulted Obligation,”
or an obligation that has “previously deferred and/or capitalized as principal any interest due.” A
Category 1 asset is a “Defaulted Obligation,” “with respect to which a default as to the payment
of principal and/or interest has occurred (without regard to any applicable grace period or any
waiver of such default) but only so long as such default has not been cured.”
133.

Likewise, the Zohar III Indenture provides that a “Defaulted Investment” is an

investment
as to which the Collateral Manager believes, that (A) a default has occurred and is
continuing with respect to such Collateral Investment that in the sole judgment of the
Collateral manager will likely result in a default as to the payment of principal and/or
interest on such Collateral Investment or (B) a default as to the payment of principal
and/or interest (beyond any applicable grace period) has occurred and is continuing on
another obligation of the same issuer that is senior or pari passu in right of payment … .
Zohar III Indenture, § 1.1. By contrast, a Collateral Investment is an “outstanding loan or
obligation” that is not a Defaulted Investment. Id.
134.

Under the Indentures, in order to calculate the Class A Overcollateralization Ratio

Test, Category 4 or Collateral Investment assets are typically valued at their principal amounts,

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while Category 1 or Defaulted Investment assets are valued at a lower amount, generally either
the market value of that asset, or a substantially impaired value dictated by the asset’s Moody’s
rating.
135.

The Zohar II Indenture further provides that the Principal Balance of any

Collateral Debt Obligation that was acquired at a discount, for “less than 95% of the outstanding
principal amount of such obligation on such origination date,” must be equal to the “outstanding
principal amount thereof (including, for the avoidance of doubt, the discounted portion thereof)
plus any unfunded commitment,” (emphasis added) as long as the Discounted Loan met certain
requirements. But, in the event that Discounted Loans were more than 10% of the Maximum
Investment Amount or did not meet other requirements, “the Principal Balance of such
Discounted Loan shall be deemed to equal the outstanding principal amount thereof (excluding
the discounted portion thereof) plus any unfunded commitment …” (emphasis added). Zohar II
Indenture, § 1.1.
136.

Under the Indentures, “the Collateral Manager … agrees to perform any

provisions of this Indenture applicable to the Collateral Manager.” Indentures, § 14.4.
137.

The CMAs contain an exculpation provision, but it provides that the Patriarch

Managers will be liable “by reason of acts or omissions constituting fraud, bad faith, willful
misconduct, gross negligence or breach of fiduciary duty in the performance, or reckless
disregard, of the obligations of the Collateral Manager hereunder and under the terms of the
other Transaction Documents to which it is a party.” CMAs, § 4.4.
138.

The Patriarch Managers have knowingly and intentionally breached the

Indentures by incorrectly categorizing the Zohar Funds’ assets, and falsely inflating their assets’
Principal Balances in violation of the Indentures. By virtue of the Zohar Funds’ OC Tests being

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reported as passed when they were actually failing and by being calculated based on an inflated
valuation of the Zohar Funds’ assets, the Patriarch Managers obtained collateral management
fees and the Octaluna Defendants obtained preference share payments to which neither were
entitled and Patriarch retained control over the Zohar Funds for longer than they would have
otherwise.
139.

As a result of the Patriarch Managers’ breaches of the Indentures, the Zohar

Funds have suffered economic loss and damages in an amount to be proven at trial. The Zohar
Funds have also incurred reasonable out-of-pocket expenses, including legal fees, to enforce and
protect their rights under the Indentures.
COUNT VII – CONVERSION
(Against All Defendants)
140.

Plaintiffs incorporate the foregoing allegations as if fully set forth here.

141.

As set forth more fully above, the Zohar Funds are the owners of equity interests

issued or otherwise created in their names (with the relevant equity interests to be established at
trial), and of debt memorialized by a series of loan agreements between the Zohar Funds and
Portfolio Companies.
142.

Ms. Tilton has intentionally interfered with the property rights of the Zohar Funds

by diverting and exercising dominion and control over the dividends and distributions on these
equity interests into her own personal accounts, thereby depriving the Zohar Funds of the use of
that property.
143.

Additionally, Defendants have intentionally interfered with the Zohar Funds’

equity rights and interests by selling the companies in which the Zohar Funds owned equity
without paying the Zohar Funds any compensation. For example, in the case of HVEASI,

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Defendants represented that Zohar II owned 100% of the company, but then sold the company
for more than $300 million without giving Zohar II a penny of those proceeds.
144.

Additionally, in 2015, the Defendants intentionally interfered with the property

rights of the Zohar Funds by executing a series of loan agreement amendments and irrevocable
proxies that were designed to strip the Zohar Funds of their valuable rights in that property and
transfer them to Defendants, thereby unlawfully exercising dominion and control over the Zohar
Funds’ property and depriving the Zohar Funds of the use of that property.
145.

The Defendants subsequently exacerbated this interference by actively concealing

the agreement amendments and irrevocable proxies from the Zohar Funds and their replacement
collateral manager, AMZM, by refusing to turn over documents that would evidence these
transactions.
146.

As a direct and proximate result of the conduct of the Defendants, the Zohar

Funds have suffered substantial damages in an amount to be proven at trial.
COUNT VIII – BREACH OF FIDUCIARY DUTY
(Against The Patriarch Managers)
147.

Plaintiffs incorporate the foregoing allegations as if fully set forth here.

148.

Under the CMAs, the Patriarch Managers contracted to provide investment and

advisory services to the Zohar Funds, were tasked with managing the Zohar Funds’ investments,
and were designated power to act on behalf of the Zohar Funds, including to execute all
“necessary, desirable and appropriate documents and/or instruments in the name and on behalf
of” the Zohar Funds. CMAs, § 2.5.
149.

As collateral managers, the Patriarch Managers held a position of confidence and

trust with respect to the Zohar Funds, which the Patriarch Managers knew of and accepted, and

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were obligated to act as agents on behalf of the Zohar Funds in good faith and with due regard to
the Zohar Funds’ interests.
150.

The Patriarch Managers owed fiduciary duties of loyalty, which obligated them to

put the interests of the Zohar Funds ahead of their own self-interest, and to refrain from
exploiting the relationship for the benefit of themselves and other entities owned by Ms. Tilton.
The Patriarch Managers also owed fiduciary duties prohibiting them from self-dealing and
conflicts of interest, and to disclose material facts.
151.

The Patriarch Managers violated their fiduciary duties continually since the

inception of the Zohar Funds by, among other things, failing to obtain equity interests for the
Zohar Funds to which they were properly entitled and wrongfully consenting on behalf of the
Zohar Funds to the purported transfer of valuable interests, including debt and equity interests
owned by the Zohar Funds, to themselves or other Defendants, in acts of self-dealing and
exploitation of their position of power and control with respect to the Zohar Funds. Through this
conduct, the Patriarch Managers placed the Defendants’ own interests above those of the Zohar
Funds, and caused economic damages to the Zohar Funds and their noteholders.
152.

As a direct and proximate result of the conduct of the Patriarch Managers, the

Zohar Funds have suffered damages in an amount to be proven at trial.
COUNT IX – FAITHLESS SERVANT
(Against The Patriarch Managers)
153.

Plaintiffs incorporate the foregoing allegations as if fully set forth here.

154.

Since the inception of the Zohar Funds, they have paid the Patriarch Managers

hundreds of millions of dollars in collateral management fees in exchange for the Patriarch
Managers’ services as the Zohar Funds’ fiduciaries and agents.

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155.

By reason of their breaches of their fiduciary duties owed to the Zohar Funds, the

Patriarch Managers are faithless servants, and are required to forfeit all money that they received
from the Zohar Funds as of the first day that they breached their duties.
COUNT X – AIDING AND ABETTING BREACH OF FIDUCIARY DUTY
(Against Patriarch Partners And Tilton)
156.

Plaintiffs incorporate the foregoing allegations as if fully set forth here.

157.

At all relevant times, Patriarch Partners and Ms. Tilton owned and/or controlled

the Patriarch Managers, directed their actions, and/or acted on their behalves.
158.

Under the CMAs, the Patriarch Managers contracted to provide investment and

advisory services to the Zohar Funds, were tasked with managing the Zohar Funds’ investments,
and were designated power to execute all “necessary, desirable and appropriate documents
and/or instruments in the name and on behalf of” the Zohar Funds. CMAs, § 2.5. As collateral
managers, the Patriarch Managers held positions of confidence and trust with respect to the
Zohar Funds, which the Patriarch Managers knew of and accepted, and were obligated to act in
good faith and with due regard to the Zohar Funds’ interests.
159.

The Patriarch Managers owed fiduciary duties of loyalty, which obligated them to

put the interests of the Zohar Funds ahead of their own self-interest, and to refrain from
exploiting the relationship for their own personal benefit. The Patriarch Managers also owed
fiduciary duties prohibiting them from self-dealing and conflicts of interest, and to disclose
material facts.
160.

Ms. Tilton and Patriarch Partners were aware of the Patriarch Managers’ fiduciary

161.

The Patriarch Managers violated their fiduciary duties continually since the

duties.

inception of the Zohar Funds by, among other things, failing to obtain equity interests for the

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Zohar Funds to which they were properly entitled and wrongfully consenting on behalf of the
Zohar Funds to the purported transfer of valuable interests including debt and equity interests
owned by the Zohar Funds to themselves or other Defendants, in acts of self-dealing and
exploitation of their position of power and control with respect to the Zohar Funds. Through this
conduct, the Patriarch Managers placed the Defendants’ own interests above those of the Zohar
Funds, and caused economic damages to the Zohar Funds and their noteholders.
162.

Patriarch Partners and Ms. Tilton induced this violation by exerting control over

the Patriarch Managers and causing them to take all of the actions that violated these duties, and
provided the personnel and resources that were required to violate these duties.
163.

As a direct and proximate result of the conduct of Tilton and Patriarch Partners,

the Zohar Funds have suffered damages in an amount to be proven at trial.
COUNT XI – UNJUST ENRICHMENT
(Against ARK II, AIP II, The Octaluna Defendants, And Tilton)
164.

Plaintiffs incorporate the foregoing allegations as if fully set forth here.

165.

As a result of Defendants’ misconduct, ARK II, AIP II, the Octaluna Defendants,

and Ms. Tilton have been enriched at the Zohar Funds’ expense.
166.

ARK II and AIP II have been enriched directly by, among other things, the

granting to ARK II and AIP II of a priority over the Zohar Funds’ liens on the Portfolio
Companies and the transfer of valuable interests from the Zohar Funds to ARK II and AIP II.
167.

The Octaluna Defendants and Ms. Tilton have been enriched directly by, among

other things, misappropriating dividends and distributions on equity interests owned by the
Zohar Funds, asserting ownership over equity interests owned by the Zohar Funds, and otherwise
taking valuable rights in the Portfolio Companies belonging to the Zohar Funds for themselves or
companies Ms. Tilton owns and controls.

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168.

Ms. Tilton, and ARK II, AIP II, and the Octaluna Defendants, through their

owner, Ms. Tilton, knew of and played an active role in the Defendants’ scheme to transfer
valuable rights in the Portfolio Companies and valuable equity distributions away from the Zohar
Funds.
169.

The circumstances are such that it would be against equity and good conscience to

permit ARK II, AIP II, the Octaluna Defendants, and Ms. Tilton to retain their ill-gotten gains
from the Zohar Funds. ARK II, AIP II, the Octaluna Defendants, and Ms. Tilton have an
obligation to the Zohar Funds to make restitution for their ill-gotten gains. ARK II, AIP II, the
Octaluna Defendants, and Ms. Tilton have failed to make restitution to the Zohar Funds for their
ill-gotten gains.
170.

Restitution should therefore be made by ARK II, AIP II, the Octaluna Defendants,

and Ms. Tilton to the Zohar Funds in an amount to be proven at trial.
COUNT XII – VIOLATION OF RICO, 18 U.S.C. § 1962(c)
(Against Lynn Tilton)
171.

Plaintiffs incorporate the foregoing allegations as if fully set forth here.

172.

At all relevant times, the Zohar Funds were and are “persons” within the meaning

of 18 U.S.C. § 1962(c) and 18 U.S.C. § 1961(3).
173.

At all relevant times, Ms. Tilton was and is a “person” within the meaning of 18

U.S.C. § 1962(c) and 18 U.S.C. § 1961(3).
174.

At all relevant times, Ms. Tilton was, and is, a person that exists separate and

distinct from the RICO enterprise, described below. Ms. Tilton is the sole owner of the other
members of the enterprise, but each member is a legally different entity from Ms. Tilton, with
different legal rights, obligations, powers, and privileges from Ms. Tilton. Ms. Tilton
incorporated each of the other Defendants to fulfill a particular purpose, and each of the

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Defendants is in a distinct line of business and plays a different role as part of the enterprise: the
Patriarch Managers act as collateral managers; Patriarch Partners provides employees and
services to entities within the enterprise; the Octaluna Defendants are investment vehicles that
hold preference shares in the Zohar Funds; Ark II and AIP II are Ms. Tilton’s personal
investment funds; PPAS provides Administrative Agent services under credit agreements; and
PPMG provides corporate management services to the Portfolio Companies.
175.

Ms. Tilton violated 18 U.S.C. § 1962(c) by the acts described in the prior

paragraphs, and as further described below.
The Patriarch Enterprise
176.

Taken together, Patriarch, the Octaluna Defendants, Ark II, AIP II, PPAS, and

PPMG (hereinafter, the “Patriarch Enterprise”) constitute an ongoing criminal enterprise that is
owned and directed by Ms. Tilton, the RICO person. Through a pattern of fraud, theft,
conversion, and breach of contractual and fiduciary duties, the members of the enterprise
associated together to engage in a common scheme of fraudulent misrepresentations, selfdealing, breaches of trust and fiduciary duty, and outright theft or attempted theft for the
common purpose of misusing and misappropriating hundreds of millions of dollars of the Zohar
Funds’ assets, seeking to benefit from and potentially transfer those assets and making it difficult
or impossible for the Zohar Funds or their noteholders or other interested parties to identify and
trace those assets.
177.

The Patriarch Enterprise was set up for the purpose of providing a variety of

different asset management, investment, and administrative financial and investment services,
and thus has an ascertainable structure separate and apart from the pattern of racketeering

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activity in which the Defendants engaged. Each of the Defendants has a distinct corporate
identity and engages in a specific and distinct line of business.
178.

This association-in-fact constitutes an “enterprise” within the meaning of 18

U.S.C. § 1962(c) and 18 U.S.C. § 1961(4), and it was or is engaged in, and/or its activities
affected, interstate and/or foreign commerce.
179.

Ms. Tilton directly or indirectly benefited from the Zohar Funds’ assets by,

among other things: (1) exercising or asserting ownership over equity belonging to the Zohar
Funds, including the ability to manage, control, or sell the Portfolio Companies in which the
Zohar Funds hold equity interests; (2) misappropriating dividends or distributions on equity
holdings of the Zohar Funds from those Portfolio Companies; (3) earning management fees from
Portfolio Companies that are contingent upon ongoing ownership and control of Portfolio
Company equity; (4) benefitting from priority as against the Zohar Funds’ debt holdings in the
Portfolio Companies, and as managers of the Portfolio Companies, from forgiveness or
restructuring of that debt; and (5) earning inflated collateral management fees from providing
hopelessly conflicted and ultimately fraudulent collateral management services.
180.

The Patriarch Enterprise’s repeated, continuous, and flagrant violations of law

constitute a “pattern of racketeering activity” in violation of RICO, 18 U.S.C. § 1961, et seq.
Their racketeering activities, both individually and collectively, have been ongoing since at least
2006 and pose a serious threat of continuing criminal conduct into the foreseeable future.
181.

The Patriarch Enterprise’s common purpose came into existence as early as 2006

or before, and no later than 2009, by which time the Patriarch Enterprise set up by Ms. Tilton
had stolen significant equity distributions and had so thoroughly manipulated the categorizations
of the Zohar Funds’ assets that, absent those manipulations, control over at least Zohar I and II

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would have passed to their Controlling Party. By virtue of this ongoing control, the participants
in the Patriarch Enterprise were able to extract significant benefit from the Zohar Funds, as set
out above, without detection by noteholders, the Controlling Party, or others.
182.

The Patriarch Enterprise is a cohesive group with specific, distinct, and assigned

responsibilities and a command structure operating in, and directed from, the United States. The
Enterprise is structured as follows:
a)

Defendant Ms. Tilton, the RICO person, is the central and controlling

figure in the Patriarch Enterprise, and has been responsible for oversight of the scheme
to defraud the Zohar Funds, and through her ownership of and positions of authority in
the other Defendants, she has directed the other Defendants to take actions necessary to
accomplish the overall aims of the Patriarch Enterprise. She is the central participant in
the orchestration, planning, and execution of the Patriarch Enterprise’s scheme to
defraud the Zohar Funds. She also ultimately was a primary beneficiary of the
scheme’s extraction of fees and assets from the Zohar Funds.
b)

Defendants the Patriarch Managers are distinct entities that are owned and

directed by Ms. Tilton. Until March 2, 2016, the Patriarch Managers acted as collateral
manager for one of the Zohar Funds. In that capacity, the Patriarch Managers were
imbued with contractual and fiduciary duties to the Zohar Funds, which they breached
and abandoned by fraudulently misclassifying the Zohar Funds’ assets and engaging in
a series of self-dealing transactions designed to strip value from the Zohar Funds and
transfer that value to members of the Patriarch Enterprise. Directly and through their
agent officers, directors, and employees, the Patriarch Managers have conducted and
participated in the management and operation of the Patriarch Enterprise, including the

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orchestration, planning, and execution of the scheme to defraud the Zohar Funds. The
Patriarch Managers have benefited from the Patriarch Enterprise’s scheme to extract
fees and assets from the Zohar Funds by receiving valuable, fraudulently inflated
collateral management fees and coordinating the transfer or purported transfer of
valuable rights and interests away from the Zohar Funds.
c)

Defendant Patriarch Partners is a distinct entity that is owned and directed

by Ms. Tilton. Patriarch Partners provides employees, knowledge, facilities, and other
resources to the other Defendants in order to facilitate the carrying out of the Patriarch
Enterprise’s scheme. Directly and through its agent officers, directors, and employees,
Patriarch Partners has conducted and participated in the management and operation of
the Patriarch Enterprise, including the orchestration, planning, and execution of the
scheme to defraud the Zohar Funds. Patriarch Partners has benefited from the Patriarch
Enterprise’s scheme to extract fees and assets from the Zohar Funds.
d)

The Octaluna Defendants are distinct entities that are owned and directed

by Ms. Tilton. The Octaluna Defendants own certain interests in the Zohar Funds and
purport to hold and receive distributions on valuable equity interests in the Portfolio
Companies, notwithstanding that those interests are issued in the names of the Zohar
Funds. Directly and through their agent officers, directors, and employees, the Octaluna
Defendants have conducted and participated in the management and operation of the
Patriarch Enterprise, including the orchestration, planning, and execution of the scheme
to defraud the Zohar Funds. The Octaluna Defendants have benefited from the
Patriarch Enterprise’s scheme to extract fees and assets from the Zohar Funds by

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receiving purported transfers of valuable equity rights and interests and distributions
thereon.
e)

Defendants ARK II and AIP II are distinct entities that are owned and

directed by Ms. Tilton. ARK II and AIP II have purportedly made certain investments in
the Portfolio Companies, and now hold preferential rights in those Companies at the
expense of the Zohar Funds. Directly and through their agent officers, directors, and
employees, ARK II and AIP II have conducted and participated in the management and
operation of the Patriarch Enterprise, including the orchestration, planning, and execution
of the scheme to defraud the Zohar Funds. ARK II and AIP II have benefited from the
Patriarch Enterprise’s scheme to extract fees and assets from the Zohar Funds by
receiving purported transfers of valuable rights from the Zohar Funds.
f)

PPAS is a distinct entity owned and directed by Ms. Tilton that played a

role in the Patriarch Enterprise. PPAS acted as Administrative Agent to the Zohar Funds
under their loan agreements with Portfolio Companies, and in so doing has consented to
many of the Defendants’ efforts to transfer valuable rights away from the Zohar Funds.
Directly and through its agent officers, directors, and employees, PPAS has conducted
and participated in the management and operation of the Patriarch Enterprise, including
the orchestration, planning, and execution of the scheme to defraud the Zohar Funds.
PPAS has benefited from the Patriarch Enterprise’s scheme to extract fees and assets
from the Zohar Funds by receiving valuable agency fees.
g) PPMG is a distinct entity owned and directed by Ms. Tilton that played a role
in the Patriarch Enterprise. PPMG acted as a management consultant to the Portfolio
Companies, and in so doing has siphoned valuable cash and assets away from the Zohar

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Funds. Directly and through its agent officers, directors, and employees, PPMG has
conducted and participated in the management and operation of the Patriarch Enterprise,
including the orchestration, planning, and execution of the scheme to defraud the Zohar
Funds. PPMG has benefited from the Patriarch Enterprise’s scheme to extract fees and
assets from the Zohar Funds by receiving valuable management fees.
183.

Ms. Tilton knew of the existence of, and conducted the operation and

management of the Patriarch Enterprise and its affairs.
184.

Actions taken by Ms. Tilton, acting through the Patriarch Enterprise, in

furtherance of the scheme include, but are not limited to (1) exercising or asserting ownership
over the Zohar Funds’ equity interests; (2) stealing cash dividends and distributions on those
equity interests; (3) attempting to hide the existence of the Zohar Funds’ equity interests from
noteholders and the Zohar Funds themselves; (4) attempting to steal the Zohar Funds’ equity and
debt interests; (5) modifying loan payment obligations in order to benefit Defendants at the
expense of the Zohar Funds; and (6) inflating the categorization of the Zohar Funds’ assets and
manipulating those assets in order to pass OC Tests, retain control, and obtain inflated
management fees.
185.

The Patriarch Enterprise was predominately domestic in nature, as it was

conceived of and orchestrated in the United States, and carried out predominately if not entirely
in the United States.
186.

At all relevant times, the Patriarch Enterprise was engaged in, and its activities

affected, interstate commerce within the meaning of 18 U.S.C. § 1962(c). The Enterprise
participated in multi-billion dollar lending to distressed companies in a variety of industries and
regions, caused those loans to be made and transferred payment and debt and equity ownership

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stakes and distributions across state lines, and held and transferred funds and assets using
national financial institutions.
The Pattern of Racketeering Activity
187.

The Patriarch Enterprise is a continuing enterprise engaged in a pattern of

racketeering activity, as defined by 18 U.S.C. § 1961(1) and (5) and in violation of 18 U.S.C.
§ 1962(c), consisting of multiple acts of racketeering by members of the enterprise that are
interrelated, not isolated, continued since at least 2006 and perpetrated for the same or similar
purposes by the same persons on the same victims.
188.

The actions undertaken by Ms. Tilton from at least 2006 to the present were

inherently unlawful, they were her regular way of operating, and the nature of her acts clearly
implies a threat of continued wrongful activity.
189.

Ms. Tilton engaged in a pattern of racketeering, including, but not limited to mail,

wire, and bank fraud, and receipt and transportation of stolen property across state lines, as set
out below:
Predicate Acts: Mail, Wire, and Bank Fraud, Violations of 18 U.S.C. §§ 1341, 1343, 1344, In
Obtaining Inflated Management Fees
190.

The Patriarch Enterprise engaged in a massive, and egregious, scheme to defraud

the Zohar Funds in order to ensure that Ms. Tilton extracted substantial management fees from
the Zohar Funds through the Patriarch Managers, regardless of whether they had fulfilled their
contractual and fiduciary duties to the Zohar Funds (which, as set out below, they had not). The
ultimate aim of the scheme was to defraud and deceive the Zohar Funds not only to extract
substantial unearned fees, but also to retain virtually unchecked control over the Zohar Funds,
when in reality the poor performance of the Zohar Funds’ Collateral dictated that Ms. Tilton and
the Patriarch Managers be removed from control of the Zohar Funds and the Portfolio

63

Case 1:17-cv-00307 Document 1 Filed 01/16/17 Page 64 of 84

Companies. Ms. Tilton achieved this goal by causing the Defendants to regularly and
systematically misrepresent the performance of the Zohar Funds’ Collateral, and thereby
fraudulently inflating calculations based on the performance of those assets. The Patriarch
Enterprise’s pattern of racketeering included mail fraud in violation of 18 U.S.C. § 1341, wire
fraud in violation of 18 U.S.C. § 1343, and/or bank fraud in violation of 18 U.S.C § 1344.
191.

In furtherance of this scheme, and as described herein, Ms. Tilton transmitted, or

caused to be transmitted, by means of (1) placing or causing matters and things to be placed in
any post office or authorized depository, or depositing or causing to be deposited matters and
things to be sent or delivered by a private or commercial interstate carrier and/or (2) wire
communications in interstate or foreign commerce, emails, telephone calls, writings, signs,
signals, pictures, and sounds, including, but not limited to, the following:
a)

Emails, telephone calls, and other communications by wire and mail to the

Trustee of the Zohar Funds, conveying fraudulent classifications of the Zohar Funds’
assets;
b)

Emails, telephone calls, and other communications by wire and mail to the

Trustee of the Zohar Funds, conveying fraudulent and inflated principal balances of the
Zohar Funds’ assets;
c)

Emails, telephone calls, and other communications by wire and mail to the

Trustee of the Zohar Funds, calculating OC Test levels based on fraudulent and inflated
classifications and principal balances of the Zohar Funds’ assets;
d)

Emails, telephone calls, and other communications by wire and mail to the

Trustee of the Zohar Funds, calculating management fees due and owing on the basis of
fraudulent and inflated classifications of the Zohar Funds’ assets; and

64

Case 1:17-cv-00307 Document 1 Filed 01/16/17 Page 65 of 84

e)

Publication in Monthly Reports and Note Valuation Reports, which were

transmitted through the mail and wires to noteholders, of fraudulent and inflated
classifications of the Zohar Funds’ assets, and the OC Test and management fee levels
based on those inflated numbers.
192.

The Zohar Funds incorporate by reference the attached Appendix A, Appendix B,

and Appendix C, which set forth examples of Monthly Reports and Note Valuation Reports that
report fraudulent and inflated classifications; miscalculated OC Test results; and miscalculated
management fees, which were transmitted through the mail and wires to noteholders on or about
the relevant publication date. In order to produce each of the reports listed on Appendix A,
Appendix B, and Appendix C, acting through the Patriarch Enterprise, Ms. Tilton communicated
fraudulent classifications to the Trustee prior to publication, and at a minimum confirmed the
miscalculated OC Test results and management fees, as her controlled entities were required to
do by contract, if she did not provide those numbers to the Trustee directly. These numbers were
included in each respective Monthly Report or Note Valuation Report, as set out in Appendix A,
Appendix B, and Appendix C.
193.

Each of the transmissions described above constitutes a separate fraudulent use of

the mail or wires by Ms. Tilton. The Zohar Funds relied on the information contained in these
transmissions, and were induced thereby to permit the Patriarch Managers to continue exercising
control over the Zohar Funds, and to pay copious management fees to the Patriarch Managers.
194.

The Trustee for the Zohar Funds, U.S. Bank N.A. is a financial institution as that

term is defined by 18 U.S.C. § 20.
195.

Ms. Tilton also engaged in a scheme to obtain moneys, funds, credits, assets,

securities or other property under the custody or control of a financial institution by means of

65

Case 1:17-cv-00307 Document 1 Filed 01/16/17 Page 66 of 84

false or fraudulent pretenses, representations, or promises, including, but not limited to, the
following:
a)

Communications to the Trustee of the Zohar Funds, conveying fraudulent

and inflated classifications of the Zohar Funds’ assets;
b)

Communications to the Trustee of the Zohar Funds, conveying fraudulent

and inflated principal balances of the Zohar Funds’ assets;
c)

Communications to the Trustee of the Zohar Funds, calculating OC Test

levels based on fraudulent and inflated classifications and principal balances of the Zohar
Funds’ assets; and
d)

Communications to the Trustee of the Zohar Funds, calculating

management fees due and owing on the basis of fraudulent and inflated classifications
and principal balances of the Zohar Funds’ assets.
196.

Such communications were made in connection with each of the Monthly Reports

and Note Valuation Reports identified in Appendix A, Appendix B, and Appendix C.
197.

As a direct result of these efforts, Ms. Tilton, through the Patriarch Managers, was

paid management fees that were not earned, based on improperly inflated asset classifications, by
the Zohar Funds’ Trustee, U.S. Bank, which otherwise maintained such funds under its custody
and control.
198.

Each of the transmissions set out herein constitutes a separate fraudulent use of

the mails and/or wires by Ms. Tilton. The Zohar Funds reasonably relied on Ms. Tilton’s false
and misleading statements in agreeing to pay Defendants fraudulently inflated management fees
and preference share disbursements on each pay period and in permitting U.S. Bank to pay these
amounts.

66

Case 1:17-cv-00307 Document 1 Filed 01/16/17 Page 67 of 84

199.

Ms. Tilton, through her control of the Patriarch Enterprise, sent or caused to be

sent wire and/or mail communications, or acted with knowledge that wire and/or mail
communications would be made in the ordinary operation of the Patriarch Enterprise, or could
reasonably have foreseen that the wires or mails would be used in the ordinary course of business
as a result of the Patriarch Enterprise’s acts, and would be used for the purpose of extracting
funds under bank custody and control in the form of collateral management fees from the Zohar
Funds. Accordingly, Ms. Tilton, acting through the Patriarch Enterprise, committed numerous
acts of mail, wire, and bank fraud in violation of 18 U.S.C. § 1341, 18 U.S.C. § 1343, and 18
U.S.C. § 1344. Ms. Tilton also engaged in additional and similar acts of mail, wire, and bank
fraud in furtherance of the Patriarch Enterprise’s scheme, which will be proven at trial.
200.

Ms. Tilton participated in the scheme or artifice knowingly, willfully, and with

the specific intent to deceive and/or defraud the Zohar Funds into paying exorbitant management
fees, to obtain those fees from a financial institution, and to retain control over the Zohar Funds.
The scheme was successful because Ms. Tilton was able to extract hundreds of millions of
dollars in unearned fees and retain the role of collateral manager for years, causing the Zohar
Funds substantial damages. These damages were contemplated and intended by Ms. Tilton.
201.

Due to Ms. Tilton’s fraud and concealment of her wrongdoing, the Zohar Funds

could not have discovered the acts alleged herein prior to, at the earliest, March 30, 2015, when
the SEC filed its Order Instituting Administrative and Cease-and-Desist Proceedings. Moreover,
no action could be taken with respect to Ms. Tilton’s wrongdoing by the Zohar Funds because,
due to the ongoing fraudulent scheme, Defendants retained total control over the Zohar Funds
until the Patriarch Managers finally resigned their position as collateral manager, effective
March 3, 2016.

67

Case 1:17-cv-00307 Document 1 Filed 01/16/17 Page 68 of 84

Predicate Acts: Mail and Wire Fraud, Violations of 18 U.S.C. §§ 1341, 1343, In Attempting To
Steal Equity And Equity Distributions
202.

Ms. Tilton, through the Patriarch Enterprise, engaged in a separate, egregious

criminal scheme to defraud the Zohar Funds in order to attempt to illegally obtain their valuable
equity interests and outright steal the cash distributions on those interests. The ultimate objective
of Ms. Tilton’s scheme or artifice was to defraud the Zohar Funds into acquiescing to Ms.
Tilton’s assertion of ownership over the Zohar Funds’ equity interests and theft of the
distributions thereon by clouding or outright hiding the fact of the Zohar Funds’ equity
ownership, and Ms. Tilton’s theft thereof. Ms. Tilton achieved this goal by misrepresenting, or
causing the Defendants to regularly and systematically misrepresent, the ownership of the Zohar
Funds’ equity interests. Ms. Tilton’s pattern of racketeering included mail fraud in violation of
18 U.S.C. § 1341 and/or wire fraud in violation of 18 U.S.C. § 1343.
203.

In furtherance of the scheme, and as described herein, Ms. Tilton transmitted, or

caused to be transmitted, by means of (1) placing or causing matters and things to be placed in
any post office or authorized depository, or depositing or causing to be deposited matters and
things to be sent or delivered by a private or commercial interstate carrier and/or (2) by means of
wire communications in interstate or foreign commerce, emails, telephone calls, writings, signs,
signals, pictures, and sounds, including, but not limited to, the following:
a)

Publication in Monthly Reports and financial statements, which were

transmitted through the mail and wires to noteholders, of false and misleading
information concerning the Zohar Funds’ equity interests, wrongfully omitting many
equity interests rightfully owned by the Zohar Funds, causing the Patriarch Managers to
violate the requirement the requirements under the CMAs and CAAs that they monitor

68

Case 1:17-cv-00307 Document 1 Filed 01/16/17 Page 69 of 84

and report the Zohar Funds’ collateral, and ensure the accuracy and completeness of the
Monthly Reports;
b)

Emails, telephone calls, and other communications by wire and mail, on

April 1, 2016 and May 20, 2016 and in other instances, to the Zohar Funds, representing
that Patriarch had provided the Zohar Funds with all documents relating to their
Collateral, even though they had not yet produced a scrap of evidence of the Zohar
Funds’ equity holdings, or any related documents that the Zohar Funds were entitled to,
that would have permitted them to ascertain their true ownership levels in the Portfolio
Companies or the cash distributions received thereon;
c)

Court filings, transmitted by wire and mail, including:
1.

A September 12, 2016 complaint and motion for a temporary
restraining order, removed to the Southern District of New York,
in which Defendants asserted that the Zohar Funds were trying to
“steal equity” rightfully owned by the Octaluna Defendants, and
that they intended to sell those Portfolio Companies by virtue of
those interests;

2.

A November 14, 2016 filing in the Bankruptcy Court for the
Southern District of New York, asserting that the Octaluna
Defendants are the “ultimate equity owners” of the Portfolio
Companies; and

3.

A December 20, 2016 Answer and Counterclaims filed in the
Delaware Court of Chancery, seeking declaratory relief and other

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Case 1:17-cv-00307 Document 1 Filed 01/16/17 Page 70 of 84

remedies asserting Ms. Tilton’s and the Octaluna Defendants’
ownership of equity in three portfolio companies.
d)

Correspondence, transmitted by wire and mail, including:
1.

A November 23, 2016 letter from Defendants to AMZM stating
that the Octaluna Defendants are “the owner[] of the equity in the
Companies”; and

2.

Representations by Ms. Tilton, in or about late November 2016, to
a prospective purchaser of Portfolio Company MD Helicopter, that
she was full and sole owner of MD Helicopter.

204.

The Zohar Funds incorporate by reference the attached Appendix A, Appendix B,

and Appendix C, which set forth examples of Monthly Reports and Note Valuation Reports that
report inaccurate, misleading, and fraudulent information about the Zohar Funds’ equity
holdings. In order to produce each of the reports listed on Appendix A, Appendix B, and
Appendix C, Ms. Tilton communicated fraudulent information to the Trustee prior to
publication, and at a minimum failed to provide the Trustee with information her controlled
entities were obligated to provide. These misrepresentations were included in each respective
Monthly Report or Note Valuation Report, as set out in Appendix A, Appendix B, and Appendix
C.
205.

Each of the transmissions described above constitutes a separate fraudulent use of

the mail or wires by Ms. Tilton. The Zohar Funds relied on the information contained in these
transmissions, and were induced thereby to permit Ms. Tilton to retain control over the Portfolio
Companies and to otherwise acquiesce to her assertions of equity ownership.

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Case 1:17-cv-00307 Document 1 Filed 01/16/17 Page 71 of 84

206.

As a direct result of these efforts, Ms. Tilton has purported to retain valuable

equity ownership interests that she does not own and is not entitled to, and to receive dividends
and distributions on those interests, free from recovery efforts employed by the Zohar Funds
since they had no idea of their true holdings or what was purported to have been transferred
away.
207.

Each of the transmissions set out herein constitutes a separate fraudulent use of

the mails and/or wires by Ms. Tilton. The Zohar Funds reasonably relied on Ms. Tilton’s false
and misleading statements in delaying any recovery efforts since they had no idea of their true
holdings or what was purported to have been transferred away.
208.

Ms. Tilton, through her control of the Patriarch Enterprise, sent or caused to be

sent wire and/or mail communications, or acted with knowledge that wire and/or mail
communications would be made in the ordinary operation of the Patriarch Enterprise, or could
reasonably have foreseen that the wires or mails would be used in the ordinary course of business
as a result of the Enterprise’s acts. Accordingly, Ms. Tilton, acting through the Patriarch
Enterprise, committed numerous acts of mail and wire fraud in violation of 18 U.S.C. § 1341 and
18 U.S.C. § 1343. These violations are ongoing. Ms. Tilton also engaged in additional and
similar acts of mail and wire fraud in furtherance of the Patriarch Enterprise scheme, which will
be proven at trial.
209.

Ms. Tilton participated in the scheme or artifice knowingly, willfully, and with

the specific intent to deceive and/or defraud the Zohar Funds into acquiescing to the theft of their
equity interests, causing the Zohar Funds substantial damages. These damages were
contemplated and intended by Ms. Tilton.

71

Case 1:17-cv-00307 Document 1 Filed 01/16/17 Page 72 of 84

210.

No action could be taken with respect to Ms. Tilton’s wrongdoing by the Zohar

Funds because, thanks to Ms. Tilton’s ongoing fraudulent scheme, she retained total control over
the Zohar Funds until the Patriarch Managers resigned their positions as collateral managers,
effective March 3, 2016. Moreover, thanks to Ms. Tilton’s fraud and concealment of her
wrongdoing, the Zohar Funds could not have discovered the acts alleged herein prior to July
2016, at the earliest, when an incomplete set of documents evidencing some of the Zohar Funds’
equity holdings were first produced by Patriarch, in connection with the Delaware Action and
under threat of a court order, or prior to December 2016, when an additional (but still
incomplete) set of documents was produced under court order. The Zohar Funds are still seeking
additional documentation that Patriarch continues to withhold.
Predicate Acts: Transportation And Receipt Of Stolen Property, Violations of 18 U.S.C.
§§ 2314, 2315
211.

Ms. Tilton, through the Patriarch Enterprise, engaged in a separate, egregious

criminal scheme to receive and transport across state lines stolen property, in the form of cash
distributions belonging to the Zohar Funds. An ultimate objective of Ms. Tilton’s scheme or
artifice was to steal cash belonging to the Zohar Funds. Ms. Tilton’s pattern of racketeering
included receipt of stolen property in violation of 18 U.S.C. § 2315 and/or transportation of
stolen property across state lines in violation of 18 U.S.C. § 2314.
212.

Ms. Tilton, acting through the Patriarch Enterprise, devised a fraudulent scheme

(set out in more detail above), beginning at least in 2006, by which Ms. Tilton, acting as the
manager, director, and/or CEO of the Portfolio Companies, caused equity distributions to be paid
to the Zohar Funds, care of the Patriarch Managers, understanding that Ms. Tilton would be able
to fraudulently take possession of and assert ownership over those funds, which in reality
belonged to the Zohar Funds. In so doing, Ms. Tilton caused these stolen equity distributions to

72

Case 1:17-cv-00307 Document 1 Filed 01/16/17 Page 73 of 84

be transported across state lines, from the Portfolio Companies, which are located in a variety of
different states across the United States, to Ms. Tilton and certain of her controlled entities, in
New York. Upon information and belief, Ms. Tilton then caused these funds to be transferred to
other accounts also located across state lines.
213.

As a result of and through this fraudulent scheme, beginning at least in 2006, Ms.

Tilton received the equity distributions on equity interests in the Portfolio Companies that were
owned by, and titled in the names of, the Zohar Funds. Those equity distributions, which were
paid in cash, were documented by K-1 tax forms issued to the Zohar Funds, for whom those
distributions were intended.
214.

At the time Ms. Tilton received these equity distributions, Ms. Tilton was well

aware that they belonged to the Zohar Funds, and had been stolen, converted, and taken by fraud
from the Zohar Funds, from whom Ms. Tilton and other entities within the Patriarch Enterprise
had fraudulently hidden the Funds’ own equity interests. Indeed, in her role as manager,
director, and/or CEO of the Portfolio Companies she caused the distributions to be paid out, in
the names of the Zohar Funds, care of the Patriarch Managers, entities that she owned and
controlled, thereby facilitating their theft. Ms. Tilton received and took possession of these
funds knowing that they were stolen property belonging to the Zohar Funds.
215.

The stolen property belonging to the Zohar Funds that was transported and

received by Ms. Tilton was worth tens of millions of dollars or more.
Continuity of Conduct
216.

Ms. Tilton’s extensive violations of state and federal law through the Patriarch

Enterprise and its members acting at her direction, each of which directly and proximately
injured the Zohar Funds, constituted a continuous course of conduct in the United States
beginning in at least 2006 and continuing today, which was intended to obtain money and
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Case 1:17-cv-00307 Document 1 Filed 01/16/17 Page 74 of 84

valuable equity and other interests through false representations, fraud, deceit, and other
improper and unlawful means. Therefore, said violations were a part of pattern of racketeering
activity under 18 U.S.C. §§ 1961(1) and (5).
The Patriarch Enterprise Caused Injury to the Zohar Funds
217.

The Zohar Funds, as the original and rightful owners of the relevant equity

interests and contract rights and the parties responsible for paying collateral management fees to
the Patriarch Managers, have been injured in their business or property as a direct and proximate
result of Ms. Tilton’s violations, described above, of 18 U.S.C. § 1962(c), including injury by
reason of the predicate acts constituting the pattern of racketeering activity.
218.

The Zohar Funds’ injuries are clear and definite and include the loss of tens of

millions of dollars or more in cash, as well as the loss of $700 million in collateral management
fees and preference share payouts, and the loss of other valuable rights and interests.
The Zohar Funds’ Entitlement to Treble Damages
219.

As a result of the violations of 18 U.S.C. § 1962(c) by Ms. Tilton, the Zohar

Funds have suffered substantial damages in an amount to be proven at trial.
220.

Pursuant to 18 U.S.C. § 1964(c), the Zohar Funds are entitled to recover treble

their general and special compensatory damages, plus interest, costs, and attorneys’ fees incurred
by reason of Ms. Tilton’s violations of 18 U.S.C. § 1962(c).
PRAYER FOR RELIEF
WHEREFORE, Plaintiffs respectfully request that this Court enter judgment in favor of
Plaintiffs and against Defendants and:

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Case 1:17-cv-00307 Document 1 Filed 01/16/17 Page 75 of 84

(a)

Issue declaratory judgment that the Zohar Funds are the legal

owners of the equity interests issued or otherwise created in their names, with the
relevant equity interests to be established at trial;
(b)

Issue declaratory judgment that the equity interests issued or

otherwise created in the Zohar Funds’ names (with the relevant equity rights and
interests to be established at trial) are Collateral, as that term is defined under the
Indentures;
(c)

Issue declaratory judgment that amendments, proxies, and other

documents concerning the assets and interests of the Zohar Funds entered into by
Defendants outside the scope of their authority were void ab initio and are
deemed unenforceable;
(d)

Direct a prompt accounting of the equity interests owned by the

Zohar Funds and cash distributions paid thereon and issue Declaratory Judgment
as to the ownership of those amounts in favor of the Zohar Funds;
(e)

Award damages to the Zohar Funds in an amount to be determined

(f)

Award restitution to the Zohar Funds in an amount to be

at trial;

determined at trial;
(g)

Order forfeiture of all collateral management fees paid to

Defendants since inception of the Zohar Funds;
(h)

Award treble damages pursuant to 18 U.S.C. § 1964(c);

(i)

Award the costs of this action, including the Zohar Funds’

attorneys’ fees; and

75

Case 1:17-cv-00307 Document 1 Filed 01/16/17 Page 76 of 84

(j)

Dated:

Grant to the Zohar Funds whatever further relief is just and proper.

January 16, 2017

Respectfully submitted,
QUINN EMANUEL URQUHART
& SULLIVAN, LLP

By:
Michael Carlinsky
Jonathan Pickhardt
Ellison Ward Merkel
Blair Adams
51 Madison Avenue, 22nd Floor
New York, NY 10010
Telephone: (212) 849-7000
Attorneys for Plaintiffs Zohar CDO 20031, Ltd.; Zohar II 2005-1, Ltd; and Zohar
III, Ltd.

76

Case 1:17-cv-00307 Document
1 Filed
APPENDIX
A 01/16/17 Page 77 of 84

Source: Zohar I Reporting Dates & Trustee Reports provided by US Bank and Patriarch

Zohar 1 – Trustee Reports Database – w/ OC Ratio and Category Pages

Deal
Zohar I
Zohar I
Zohar I
Zohar I
Zohar I
Zohar I
Zohar I
Zohar I
Zohar I
Zohar I
Zohar I
Zohar I
Zohar I
Zohar I
Zohar I
Zohar I
Zohar I
Zohar I
Zohar I
Zohar I
Zohar I
Zohar I
Zohar I
Zohar I
Zohar I
Zohar I
Zohar I
Zohar I
Zohar I
Zohar I
Zohar I
Zohar I
Zohar I
Zohar I
Zohar I
Zohar I
Zohar I
Zohar I
Zohar I
Zohar I
Zohar I
Zohar I
Zohar I
Zohar I
Zohar I
Zohar I
Zohar I
Zohar I

Report Type
NVR
Monthly
Monthly
NVR
Monthly
Monthly
NVR
Monthly
Monthly
NVR

Report Year
2004
2004
2004
2004
2004
2005
2005
2005
2005
2005

Report Month
08
09
10
11
12
01
02
03
04
05

Monthly
Monthly
NVR

2005
2005
2005

06
07
08

Monthly
Monthly
NVR

2005
2005
2005

09
10
11

Monthly
Monthly
NVR

2005
2006
2006

12
01
02

Monthly
Monthly
NVR

2006
2006
2006

03
04
05

Monthly
Monthly
NVR

2006
2006
2006

06
07
08

Monthly
Monthly
NVR

2006
2006
2006

09
10
11

Monthly
Monthly
NVR

2006
2007
2007

12
01
02

Monthly
Monthly
NVR

2007
2007
2007

03
04
05

Monthly
Monthly
NVR

2007
2007
2007

06
07
08

Monthly
Monthly
NVR

2007
2007
2007

09
10
11

Monthly
Monthly
NVR

2007
2008
2008

12
01
02

Monthly
Monthly
NVR

2008
2008
2008

03
04
05

Monthly
Monthly

2008
2008

06
07

Payment
Date
8/20/2004

Overcollateralization
Ratio Page(s)

Administrative Fees /
Collateral Manager
Fee Page(s)

Collateral Debt
Obligation
Report Page(s)

Defaulted
Collateral Detail
Report Page(s)

Equity
Securities Page(s)

1
1
47
1
1

N/A
N/A
10 & 13 of PDF
N/A
N/A

22-24
24-26
14-17 of PDF
23-26
22-24

47
47
18 of PDF
48
47

48
48
No Equities Report
49
48

1
1
48

N/A
N/A
2&5

24-27
22-25
15-18

50
46
19

51
48

5/20/2005

Trustee
US Bank
US Bank
US Bank
US Bank
US Bank
US Bank
US Bank
US Bank
US Bank
US Bank

As of Date
N/A – NVR only 6 pages
9/30/2004
10/29/2004
11/9/2004
12/31/2004
1/31/2005
N/A – NVR only 6 pages
3/31/2005
4/29/2005
5/9/2005

8/22/2005

US Bank
US Bank
US Bank

6/30/2005
7/29/2005
8/10/2005

1
1
47

N/A
N/A
2&4

22-25
22-25
13-16

47
48
17

11/21/2005

US Bank
US Bank
US Bank

9/30/2005
10/31/2005
11/8/2005

1
1
46

N/A
N/A
2&4

23-26
23-26
13-16

49
49
17

2/21/2006

US Bank
US Bank
US Bank

12/30/2005
1/31/2006
2/8/2006

1
1
47

N/A
N/A
2&4

22-25
22-25
13-16

48
48
17

5/22/2006

US Bank
US Bank
US Bank

3/31/2006
4/28/2006
5/9/2006

1
1
47

N/A
N/A
2&4

22-25
22-25
13-16

48
49
17

8/21/2006

US Bank
US Bank
US Bank

6/30/2006
7/31/2006
8/9/2006

1
1
47

N/A
N/A
2&4

22-25
22-25
13-16

48
48
17

11/20/2006

US Bank
US Bank
US Bank

9/29/2006
10/31/2006
11/8/2006

1
1
47

N/A
N/A
2&4

22-25
22-25
13-16

48
48
17

2/20/2007

US Bank
US Bank
US Bank

12/29/2006
1/31/2007
2/7/2007

1
1
47

N/A
N/A
2&4

22-25
22-25
13-16

48
48
17

5/21/2007

US Bank
US Bank
US Bank

3/30/2007
4/30/2007
5/9/2007

1
1
48

N/A
N/A
2&4

22-25
23-26
13-16

50
46
17

8/20/2007

US Bank
US Bank
US Bank

6/29/2007
7/31/2007
8/8/2007

1
1
48

N/A
N/A
2&4

22-25
22-25
13-16

46
48
17

11/20/2007

US Bank
US Bank
US Bank

9/28/2007
10/31/2007
11/7/2007

1
1
47

N/A
N/A
2&4

22-25
22-25
13-16

46
46
17

2/20/2008

US Bank
US Bank
US Bank

12/31/2007
1/31/2008
2/7/2008

1
1
49

N/A
N/A
2&4

22-25
22-25
13-16

47
48
17

5/20/2008

US Bank
US Bank
US Bank

3/31/2008
4/30/2008
5/7/2008

1
1
50

N/A
N/A
2&4

22-25
22-26
13-17

49
50
18

US Bank
US Bank

6/30/2008
7/31/2008

1
1

N/A
N/A

22-25
22-25

49
49

11/22/2004

2/22/2005

Equities Report not attached (as indicated on page 1)
48
49
Equities Report not attached (as indicated on page 8)
50
50
Equities Report not attached (as indicated on page 8)
49
49
Equities Report not attached (as indicated on page 8)
49
50
Equities Report not attached (as indicated on page 8)
49
49
Equities Report not attached (as indicated on page 8)
49
49
Equities Report not attached (as indicated on page 8)
49
49
Equities Report not attached (as indicated on page 8)
51
47
Equities Report not attached (as indicated on page 8)
47
49
Equities Report not attached (as indicated on page 8)
47
47
Equities Report not attached (as indicated on page 8)
48
49
Equities Report not attached (as indicated on page 8)
50
51
Equities Report not attached (as indicated on page 8)
50
50

Case 1:17-cv-00307 Document 1 Filed 01/16/17 Page 78 of 84

Zohar 1 – Trustee Reports Database – w/ OC Ratio and Category Pages

Deal
Zohar I
Zohar I
Zohar I
Zohar I
Zohar I
Zohar I
Zohar I
Zohar I
Zohar I
Zohar I
Zohar I
Zohar I
Zohar I
Zohar I
Zohar I
Zohar I
Zohar I
Zohar I
Zohar I
Zohar I
Zohar I
Zohar I
Zohar I
Zohar I
Zohar I
Zohar I
Zohar I
Zohar I
Zohar I
Zohar I
Zohar I
Zohar I
Zohar I
Zohar I
Zohar I
Zohar I
Zohar I
Zohar I
Zohar I
Zohar I
Zohar I
Zohar I
Zohar I
Zohar I
Zohar I
Zohar I
Zohar I
Zohar I
Zohar I
Zohar I
Zohar I
Zohar I
Zohar I
Zohar I
Zohar I

Report Type
NVR

Report Year
2008

Report Month
08

Monthly
Monthly
NVR

2008
2008
2008

09
10
11

Monthly
Monthly
NVR

2008
2009
2009

12
01
02

Monthly
Monthly
NVR

2009
2009
2009

03
04
05

Monthly
Monthly
NVR

2009
2009
2009

06
07
08

Monthly
Monthly
NVR

2009
2009
2009

09
10
11

Monthly
Monthly
NVR

2009
2010
2010

12
01
02

Monthly
Monthly
NVR

2010
2010
2010

03
04
05

Monthly
Monthly
NVR

2010
2010
2010

06
07
08

Monthly
Monthly
NVR

2010
2010
2010

09
10
11

Monthly
Monthly
NVR
Monthly
Monthly
NVR
Monthly
Monthly
NVR
Monthly
Monthly
NVR
Monthly
Monthly
NVR
Monthly
Monthly
NVR
Monthly
Monthly
NVR
Monthly
Monthly
NVR
Monthly
Monthly
NVR

2010
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2012
2012
2012
2012
2012
2012
2012
2012
2012
2012
2012
2012
2013
2013

12
01
02
03
04
05
06
07
08
09
10
11
12
01
02
03
04
05
06
07
08
09
10
11
12
01
02

As of Date
8/8/2008

Overcollateralization
Ratio Page(s)
49

Administrative Fees /
Collateral Manager
Fee Page(s)
2&4

Collateral Debt
Obligation
Report Page(s)
13-16

Defaulted
Collateral Detail
Report Page(s)
17

11/20/2008

US Bank
US Bank
US Bank

9/30/2008
10/31/2008
11/6/2008

1
1
53

N/A
N/A
2&4

22-25
22-25
13-17

50
50
18

2/20/2009

US Bank
US Bank
US Bank

12/31/2008
1/30/2009
2/9/2009

1
1
54

N/A
N/A
2&4

22-26
22-26
13-17

52
52
18

5/21/2009

US Bank
US Bank
US Bank

3/31/2009
4/30/2009
5/7/2009

1
1
54

N/A
N/A
2&4

22-26
22-26
13-17

52
52
18

8/20/2009

US Bank
US Bank
US Bank

6/30/2009
7/31/2009
8/10/2009

1
1
54

N/A
N/A
2&4

22-26
22-26
13-17

52
52
18

11/20/2009

US Bank
US Bank
US Bank

9/30/2009
10/30/2009
11/6/2009

1
1
54

N/A
N/A
2&4

22-24
22-26
13-17

46
52
18

2/22/2010

US Bank
US Bank
US Bank

12/31/2009
1/29/2010
2/8/2010

1
1
54

N/A
N/A
2&4

22-26
22-26
13-17

52
52
18

5/20/2010

US Bank
US Bank
US Bank

3/31/2010
4/30/2010
5/7/2010

1
1
54

N/A
N/A
2&4

22-26
22-26
13-17

52
52
18

8/20/2010

US Bank
US Bank
US Bank

6/30/2010
7/30/2010
8/10/2010

1
1
54

N/A
N/A
2&4

22-26
22-26
13-17

52
52
18

11/22/2010

US Bank
US Bank
US Bank

9/30/2010
10/29/2010
11/8/2010

1
1
54

N/A
N/A
2&4

22-26
22-26
13-17

52
52
18

US Bank
US Bank
US Bank
US Bank
US Bank
US Bank
US Bank
US Bank
US Bank
US Bank
US Bank
US Bank
US Bank
US Bank
US Bank
US Bank
US Bank
US Bank
US Bank
US Bank
US Bank
US Bank
US Bank
US Bank
US Bank
US Bank
US Bank

12/31/2010
1/31/2011
2/9/2011
3/31/2011
4/29/2011
5/9/2011
6/30/2011
7/29/2011
8/10/2011
9/30/2011
10/31/2011
11/7/2011
12/30/2011
1/31/2012
2/8/2012
3/30/2012
4/30/2012
5/9/2012
6/29/2012
7/31/2012
8/8/2012
9/28/2012
10/31/2012
11/7/2012
12/31/2012
1/31/2013
2/6/2013

4
4
6
4
4
6
4
4
4
4
4
4
4
4
14
4
4
4
4
4
4
4
4
4
4
4
4

N/A
N/A
66 & 68
N/A
N/A
65 & 67
N/A
N/A
2 & 4 of PDF
N/A
N/A
2 & 4 of PDF
N/A
N/A
2 & 4 of PDF
N/A
N/A
2 & 4 of PDF
N/A
N/A
2 & 4 of PDF
N/A
N/A
2 & 4 of PDF
N/A
N/A
2 & 4 of PDF

10-12
10-13
10-13
10-13
10-13
10-13
10-13
10-13
10-13
10-13
10-13
10-13
10-13
10-13
20-23
10-12
10-12
10-12
10-12
11-13
11-13
11-13
11-13
11-13
11-13
11-13
11-13

38
39
39
39
39
39
39
39
39
39
39
39
39
39
49
38
38
38
38
39
39
38
38
38
38
38
38

Payment
Date
8/20/2008

Trustee
US Bank

2/22/2011

5/20/2011

8/22/2011

11/21/2011

2/21/2012

5/22/2012

8/20/2012

11/20/2012

2/20/2013

Equity
Securities Page(s)
Equities Report not attached (as indicated on page 8)
51
51
Equities Report not attached (as indicated on page 8)
53
53
Equities Report not attached (as indicated on page 8)
53
53
Equities Report not attached (as indicated on page 8)
53
53
Equities Report not attached (as indicated on page 8)
48
53
Equities Report not attached (as indicated on page 8)
53
53
Equities Report not attached (as indicated on page 8)
53
53
Equities Report not attached (as indicated on page 8)
53
53
Equities Report not attached (as indicated on page 8)
53
53
Equities Report not attached (as indicated on page 8)
39
40
40
40
40
40
40
40
40
40
40
40
40
40-41
50-59
39-40
39-40
39-40
39-40
40-41
40-41
39-40
39-40
39-40
39-40
39-40
39-40

Case 1:17-cv-00307 Document 1 Filed 01/16/17 Page 79 of 84

Zohar 1 – Trustee Reports Database – w/ OC Ratio and Category Pages

Deal
Zohar I
Zohar I
Zohar I
Zohar I
Zohar I
Zohar I
Zohar I
Zohar I
Zohar I
Zohar I
Zohar I
Zohar I
Zohar I
Zohar I
Zohar I
Zohar I
Zohar I
Zohar I
Zohar I
Zohar I
Zohar I
Zohar I
Zohar I
Zohar I
Zohar I
Zohar I
Zohar I
Zohar I
Zohar I
Zohar I
Zohar I
Zohar I
Zohar I
Zohar I
Zohar I
Zohar I

Report Type
Monthly
Monthly
NVR
Monthly
Monthly
NVR
Monthly
Monthly
NVR
Monthly
Monthly
NVR
Monthly
Monthly
NVR
Monthly
Monthly
NVR
Monthly
Monthly
NVR
Monthly
Monthly
NVR
Monthly
Monthly
NVR
Monthly
Monthly
NVR
Monthly
Monthly
NVR
Monthly
Monthly
NVR

Report Year
2013
2013
2013
2013
2013
2013
2013
2013
2013
2013
2014
2014
2014
2014
2014
2014
2014
2014
2014
2014
2014
2014
2015
2015
2015
2015
2015
2015
2015
2015
2015
2015
2015
2015
2016
2016

Report Month
03
04
05
06
07
08
09
10
11
12
01
02
03
04
05
06
07
08
09
10
11
12
01
02
03
04
05
06
07
08
09
10
11
12
01
02

Payment
Date

5/21/2013

8/20/2013

11/20/2013

2/20/2014

5/20/2014

8/20/2014

11/20/2014

2/20/2015

5/20/2015

8/20/2015

11/20/2015

2/22/2016

Trustee
US Bank
US Bank
US Bank
US Bank
US Bank
US Bank
US Bank
US Bank
US Bank
US Bank
US Bank
US Bank
US Bank
US Bank
US Bank
US Bank
US Bank
US Bank
US Bank
US Bank
US Bank
US Bank
US Bank
US Bank
US Bank
US Bank
US Bank
US Bank
US Bank
US Bank
US Bank
US Bank
US Bank
US Bank
US Bank
US Bank

As of Date
3/29/2013
4/30/2013
5/8/2013
6/28/2013
7/31/2013
8/8/2013
9/30/2013
10/31/2013
11/7/2013
12/31/2013
1/31/2014
2/7/2014
3/31/2014
4/30/2014
5/7/2014
6/30/2014
7/31/2014
8/8/2014
9/30/2014
10/31/2014
11/6/2014
12/31/2014
1/30/2015
2/6/2015
3/31/2015
4/30/2015
5/7/2015
6/30/2015
7/31/2015
8/10/2015
9/30/2015
10/30/2015
11/19/2015
12/31/2015
1/29/2016
2/8/2016

Overcollateralization
Ratio Page(s)
4
4
4
4
4
4
4
4
4
4
4
4
4
4
4
4
4
4
4
4
4
4
4
4
4
4
4
4
4
4
4
4
4
4
4
4

Administrative Fees /
Collateral Manager
Fee Page(s)
N/A
N/A
2 & 4 of PDF
N/A
N/A
2 & 4 of PDF
N/A
N/A
2 & 4 of PDF
N/A
N/A
2 & 4 of PDF
N/A
N/A
2 & 4 of PDF
N/A
N/A
3 & 5 of PDF
N/A
N/A
4 & 6 of PDF
N/A
N/A
4 & 6 of PDF
N/A
N/A
4 & 6 of PDF
N/A
N/A
4 & 6 of PDF
N/A
N/A
3 & 5 of PDF
N/A
N/A
3 & 5 of PDF

Collateral Debt
Obligation
Report Page(s)
11-13
11-13
11-13
11-13
11-13
11-13
11-13
11-13
11-13
11-13
11-13
11-13
11-13
11-13
11-13
11-13
11-13
11-13
11-13
11-13
11-13
11-13
11-13
11-13
11-13
11-13
11-13
11-13
11-13
11-13
11-13
11-13
11-13
11-13
11-13
11-13

Defaulted
Collateral Detail
Report Page(s)
37
37
37
38
38
38
37
37
38
37
37
37
37
37
37
37
37
37
37
36
36
36
36
36
35
35
35
35
35
35
33
33
33
33
33
33

Equity
Securities Page(s)
38-39
38-39
38-39
39-40
39-40
39-40
38-39
38-39
39-40
38-39
38-39
38-39
38-39
38-39
38-39
38-39
38-39
38-39
38-39
37-38
37-38
38-39
37-38
37-38
36-37
36-37
36-37
36-37
36-37
36-37
35-35
34-35
34-35
34-35
34-35
34-35

Case 1:17-cv-00307 Document
1 Filed
APPENDIX
B 01/16/17 Page 80 of 84

Source: Zohar II Reporting Dates 2005-2017 & Trustee Reports provided by US Bank and Patriarch.

Zohar II – Trustee Reports & Key Page Numbers

Deal
Zohar II
Zohar II
Zohar II
Zohar II
Zohar II
Zohar II
Zohar II
Zohar II
Zohar II
Zohar II
Zohar II
Zohar II
Zohar II
Zohar II
Zohar II
Zohar II
Zohar II
Zohar II
Zohar II
Zohar II
Zohar II
Zohar II
Zohar II
Zohar II
Zohar II
Zohar II
Zohar II
Zohar II
Zohar II
Zohar II
Zohar II
Zohar II
Zohar II
Zohar II
Zohar II
Zohar II
Zohar II
Zohar II
Zohar II
Zohar II
Zohar II
Zohar II
Zohar II
Zohar II
Zohar II
Zohar II
Zohar II
Zohar II
Zohar II
Zohar II
Zohar II
Zohar II

Report
Type
NVR
Monthly
Monthly
NVR
Monthly
Monthly
NVR
Monthly
Monthly
Monthly
NVR
Monthly
Monthly
NVR
Monthly
Monthly
NVR
Monthly
Monthly
NVR
Monthly
Monthly
NVR
Monthly
Monthly
NVR
Monthly
Monthly
NVR
Monthly
Monthly
NVR
Monthly
Monthly
NVR
Monthly
Monthly
NVR
Monthly
Monthly
NVR
Monthly
Monthly
NVR
Monthly
Monthly
NVR
Monthly
Monthly
NVR
Monthly
Monthly

Report Year Report Month
2005
07
2005
08
2005
09
2005
10
2005
11
2005
12
2006
01
2006
01
2006
02
2006
03
2006
04
2006
05
2006
06
2006
07
2006
08
2006
09
2006
10
2006
11
2006
12
2007
01
2007
02
2007
03
2007
04
2007
05
2007
06
2007
07
2007
08
2007
09
2007
10
2007
11
2007
12
2008
01
2008
02
2008
03
2008
04
2008
05
2008
06
2008
07
2008
08
2008
09
2008
10
2008
11
2008
12
2009
01
2009
02
2009
03
2009
04
2009
05
2009
06
2009
07
2009
08
2009
09

Payment Date
7/20/2005

10/20/2005

1/20/2006

4/20/2006

7/20/2006

10/20/2006

1/22/2007

4/20/2007

7/20/2007

10/22/2007

1/22/2008

4/21/2008

7/21/2008

10/20/2008

1/20/2009

4/20/2009

7/20/2009

Trustee
LaSalle
LaSalle
LaSalle
LaSalle
LaSalle
LaSalle
LaSalle
LaSalle
LaSalle
LaSalle
LaSalle
LaSalle
LaSalle
LaSalle
LaSalle
LaSalle
LaSalle
LaSalle
LaSalle
LaSalle
LaSalle
LaSalle
LaSalle
LaSalle
LaSalle
LaSalle
LaSalle
LaSalle
LaSalle
LaSalle
LaSalle
LaSalle
LaSalle
LaSalle
LaSalle
LaSalle
LaSalle
LaSalle
LaSalle
LaSalle
LaSalle
LaSalle
LaSalle
LaSalle
LaSalle
LaSalle
LaSalle
LaSalle
LaSalle
LaSalle
LaSalle
LaSalle

As of Date
7/8/2005
8/31/2005
9/30/2005
10/7/2005
11/30/2005
12/31/2005
1/10/2006
1/31/2006
2/28/2006
3/31/2006
4/6/2006
5/31/2006
6/30/2006
7/10/2006
8/31/2006
9/30/2006
10/10/2006
11/30/2006
12/31/2006
1/9/2007
2/28/2007
3/31/2007
4/10/2007
5/31/2007
6/30/2007
7/10/2007
8/31/2007
9/30/2007
10/10/2007
11/30/2007
12/31/2007
1/9/2008
2/29/2008
3/31/2008
4/9/2008
5/31/2008
6/30/2008
7/9/2008
8/31/2008
9/30/2008
10/7/2008
11/30/2008
12/31/2008
1/7/2009
2/28/2009
3/31/2009
4/8/2009
5/31/2009
6/30/2009
7/8/2009
8/31/2009
9/30/2009

Overcollateralization
Ratio Page(s)
10
7
7
11
10
10
15
10
10
10
15
10
10
15
10
10
15
10
10
15
10
10
15
10
10
15
10-11
10-11
15-16
10-11
10-11
15-16
10-11
10-11
15-16
10-11
10-11
15-16
10-11
10-11
15-16
10-11
10-11
15-16
10-11
10-11
15-16
10-11
10-11
15-16
10-11
10-11

Administrative Fees /
Collateral Manager Fee
Page(s)
4
N/A
N/A
4
N/A
N/A
9
N/A
N/A
N/A
9
N/A
N/A
9
N/A
N/A
9
N/A
N/A
9
N/A
N/A
9
N/A
N/A
9
N/A
N/A
9
N/A
N/A
9
N/A
N/A
9
N/A
N/A
9
N/A
N/A
9
N/A
N/A
9
N/A
N/A
9
N/A
N/A
9
N/A
N/A

Performing /
Categorization
Page(s)
36-41
30-35
31-36
36-42
34-37
34-37
40-43
37-41
38-42
37-41
42-46
37-41
37-41
42-46
37-41
37-41
42-46
37-41
37-41
42-46
37-41
33-37
38-42
34-38
34-38
39-43
31-34
30-33
35-38
30-33
30-33
35-38
30-33
30-33
35-38
30-33
30-33
35-38
30-33
30-33
35-38
32-36
31-34
35-38
30-33
31-35
36-40
31-35
31-35
36-40
31-35
31-35

Defaulted & Non
Performing &
Defaulted Page(s)
12
10
10
14
14
14
19
14
14
14
19
14
14
19
14
14
19
14
14
19
14
14
19
14
14
19
15
15
20
15
15
20
15
15
20
15
15
20
15
15
20
15
15
20
15
15
20
15
15
20
15
15

Equity
Securities Page(s)
5 (summary page)
2 (summary page)
2 (summary page)
3 (summary page)
13
13
18
13
13
13
18
13
13
18
13
13
18
13
13
18
13
13
18
13
13
18
14
14
19
14
14
19
14
14
19
14
14
19
14
14
19
14
14
19
14
14
19
14
14
19
14
14

Zohar II – Trustee Reports & Key Page Numbers

Deal
Zohar II
Zohar II
Zohar II
Zohar II
Zohar II
Zohar II
Zohar II
Zohar II
Zohar II
Zohar II
Zohar II
Zohar II
Zohar II
Zohar II
Zohar II
Zohar II
Zohar II
Zohar II
Zohar II
Zohar II
Zohar II
Zohar II
Zohar II
Zohar II
Zohar II
Zohar II
Zohar II
Zohar II
Zohar II
Zohar II
Zohar II
Zohar II
Zohar II
Zohar II
Zohar II
Zohar II
Zohar II
Zohar II
Zohar II
Zohar II
Zohar II
Zohar II
Zohar II
Zohar II
Zohar II
Zohar II
Zohar II
Zohar II
Zohar II
Zohar II
Zohar II
Zohar II
Zohar II
Zohar II
Zohar II

Report
Type
NVR
Monthly
Monthly
NVR
Monthly
Monthly
NVR
Monthly
Monthly
NVR
Monthly
Monthly
NVR
Monthly
Monthly
NVR
Monthly
Monthly
NVR
Monthly
Monthly
NVR
Monthly
Monthly
NVR
Monthly
Monthly
NVR
Monthly
Monthly
NVR
Monthly
Monthly
NVR
Monthly
Monthly
NVR
Monthly
Monthly
NVR
Monthly
Monthly
NVR
Monthly
Monthly
NVR
Monthly
Monthly
NVR
Monthly
Monthly
NVR
Monthly
Monthly
NVR

Report Year Report Month
2009
10
2009
11
2009
12
2010
01
2010
02
2010
03
2010
04
2010
05
2010
06
2010
07
2010
08
2010
09
2010
10
2010
11
2010
12
2011
01
2011
02
2011
03
2011
04
2011
05
2011
06
2011
07
2011
08
2011
09
2011
10
2011
11
2011
12
2012
01
2012
02
2012
03
2012
04
2012
05
2012
06
2012
07
2012
08
2012
09
2012
10
2012
11
2012
12
2013
01
2013
02
2013
03
2013
04
2013
05
2013
06
2013
07
2013
08
2013
09
2013
10
2013
11
2013
12
2014
01
2014
02
2014
03
2014
04

Case 1:17-cv-00307 Document 1 Filed 01/16/17 Page 81 of 84
Payment Date
10/20/2009

1/20/2010

4/20/2010

7/20/2010

10/20/2010

1/20/2011

4/20/2011

7/20/2011

10/20/2011

1/20/2012

4/20/2012

7/20/2012

10/22/2012

1/22/2013

4/22/2013

7/22/2013

10/21/2013

1/21/2014

4/22/2014

Trustee
LaSalle
LaSalle
Bank of America
Bank of America
Bank of America
Bank of America
Bank of America
Bank of America
Bank of America
Bank of America
Bank of America
Bank of America
Bank of America
Bank of America
Bank of America
Bank of America
Bank of America
Bank of America
Bank of America
Bank of America
Bank of America
Bank of America
US Bank
US Bank
US Bank
US Bank
US Bank
US Bank
US Bank
US Bank
US Bank
US Bank
US Bank
US Bank
US Bank
US Bank
US Bank
US Bank
US Bank
US Bank
US Bank
US Bank
US Bank
US Bank
US Bank
US Bank
US Bank
US Bank
US Bank
US Bank
US Bank
US Bank
US Bank
US Bank
US Bank

As of Date
10/7/2009
11/30/2009
12/31/2009
1/7/2010
2/28/2010
3/31/2010
4/8/2010
5/31/2010
6/30/2010
7/8/2010
8/31/2010
9/30/2010
10/7/2010
11/30/2010
12/31/2010
1/7/2011
2/28/2011
3/31/2011
4/8/2011
5/31/2011
6/30/2011
7/8/2011
8/31/2011
9/30/2011
10/7/2011
11/30/2011
12/31/2011
1/9/2012
2/29/2012
3/31/2012
4/10/2012
5/31/2012
6/30/2012
7/10/2012
8/31/2012
9/30/2012
10/10/2012
11/30/2012
12/31/2012
1/9/2013
2/28/2013
3/31/2013
4/10/2013
5/31/2013
6/30/2013
7/10/2013
8/31/2013
9/30/2013
10/8/2013
11/30/2013
12/31/2013
1/8/2014
2/28/2014
3/31/2014
4/8/2014

Overcollateralization
Ratio Page(s)
15-16
10-11
10-11
15-16
10-11
10-11
15-16
10-11
10-11
15-16
10-11
10-11
15-16
10-11
10-11
15-16
10-11
10-11
15-16
10-11
10-11
15-16
10-11
10-11
15-16
10-11
10-11
15-16
10-11
10-11
15-16
10-11
10-11
15-16
10-11
10-11
15-16
10-11
10-11
15-16
10-11
10-11
15-16
10-11
10-11
15-16
10-11
10-11
15-16
10-11
10-11
15-16
12-13
12-13
17-18

Administrative Fees /
Collateral Manager Fee
Page(s)
9
N/A
N/A
9
N/A
N/A
9
N/A
N/A
9
N/A
N/A
9
N/A
N/A
9
N/A
N/A
9
N/A
N/A
9
N/A
N/A
9
N/A
N/A
9
N/A
N/A
9
N/A
N/A
9
N/A
N/A
9
N/A
N/A
9
N/A
N/A
9
N/A
N/A
9
N/A
N/A
9
N/A
N/A
9
N/A
N/A
11

Performing /
Categorization
Page(s)
36-40
31-35
31-35
36-40
32-36
32-36
37-41
32-36
32-36
37-41
32-36
32-36
37-41
32-36
32-36
37-41
32-36
32-36
37-41
32-36
32-36
37-41
32-36
32-36
37-41
32-36
32-36
37-41
31-35
31-35
36-40
32-36
32-36
36-40
31-35
31-35
37-41
31-35
31-35
36-40
31-35
31-35
36-40
31-35
31-35
36-40
31-35
31-35
36-40
31-35
31-35
36-40
33-37
33-37
38-42

Defaulted & Non
Performing &
Equity
Defaulted Page(s) Securities Page(s)
20
19
15
14
15
14
20
19
15
14
15
14
20
19
15
14
15
14
20
19
15
14
15
14
20
19
15
14
15
14
20
19
15
14
15
14
20
19
15
14
15
14
20
19
15
14
15
14
20
19
15
14
15
14
20
19
15
14
15
14
20
19
15
14
15
14
20
19
15
14
15
14
20
19
15
14
15
14
20
19
15
14
15
14
20
19
15
14
15
14
20
19
15
14
15
14
20
19
15
14
15
14
20
19
17
16
17
16
22
21

Zohar II – Trustee Reports & Key Page Numbers

Deal
Zohar II
Zohar II
Zohar II
Zohar II
Zohar II
Zohar II
Zohar II
Zohar II
Zohar II
Zohar II
Zohar II
Zohar II
Zohar II
Zohar II
Zohar II
Zohar II
Zohar II
Zohar II
Zohar II
Zohar II
Zohar II
Zohar II

Report
Type
Monthly
Monthly
NVR
Monthly
Monthly
NVR
Monthly
Monthly
NVR
Monthly
Monthly
NVR
Monthly
Monthly
NVR
Monthly
Monthly
NVR
Monthly
Monthly
NVR
Monthly

Report Year Report Month
2014
05
2014
06
2014
07
2014
08
2014
09
2014
10
2014
11
2014
12
2015
01
2015
02
2015
03
2015
04
2015
05
2015
06
2015
07
2015
08
2015
09
2015
10
2015
11
2015
12
2016
01
2016
02

Case 1:17-cv-00307 Document 1 Filed 01/16/17 Page 82 of 84
Payment Date

7/21/2014

10/20/2014

1/20/2015

4/20/2015

7/20/2015

10/20/2015

1/20/2016

Trustee
US Bank
US Bank
US Bank
US Bank
US Bank
US Bank
US Bank
US Bank
US Bank
US Bank
US Bank
US Bank
US Bank
US Bank
US Bank
US Bank
US Bank
US Bank
US Bank
US Bank
US Bank
US Bank

As of Date
5/31/2014
6/30/2014
7/9/2014
8/31/2014
9/30/2014
10/7/2014
11/30/2014
12/31/2014
1/7/2015
2/28/2015
3/31/2015
4/8/2015
5/31/2015
6/30/2015
7/8/2015
8/31/2015
9/30/2015
10/7/2015
11/30/2015
12/31/2015
1/7/2016
2/29/2016

Overcollateralization
Ratio Page(s)
12-13
12-13
17-18
12-13
12-13
17-18
12-13
12-13
17-18
12-13
12-13
17-18
12-13
12-13
17-18
12-13
12-13
17-18
12-13
12-13
17-18
12-13

Administrative Fees /
Collateral Manager Fee
Page(s)
N/A
N/A
11
N/A
N/A
11
N/A
N/A
11
N/A
N/A
11
N/A
N/A
11
N/A
N/A
11
N/A
N/A
11
N/A

Performing /
Categorization
Page(s)
33-37
33-37
38-42
33-37
33-37
38-42
32-35
32-34
37-40
32-34
32-35
37-40
32-35
32-35
37-40
32-35
32-35
37-40
32-35
32-35
37-40
32-35

Defaulted & Non
Performing &
Equity
Defaulted Page(s) Securities Page(s)
17
16
17
16
22
21
17
16
17
16
22
21
17
16
17
16
22
21
17
16
17
16
22
21
17
16
17
16
22
21
17
16
17
16
22
21
17
16
17
16
22
21
17
16

Case 1:17-cv-00307 Document
1 Filed
APPENDIX
C 01/16/17 Page 83 of 84

Source: Zohar III Reporting Dates 2007-2019 & Trustee Reports provided by US Bank and Patriarch

Zohar III – Trustee Reports & Key Page Numbers

Deal
Zohar III
Zohar III
Zohar III
Zohar III
Zohar III
Zohar III
Zohar III
Zohar III
Zohar III
Zohar III
Zohar III
Zohar III
Zohar III
Zohar III
Zohar III
Zohar III
Zohar III
Zohar III
Zohar III
Zohar III
Zohar III
Zohar III
Zohar III
Zohar III
Zohar III
Zohar III
Zohar III
Zohar III
Zohar III
Zohar III
Zohar III
Zohar III
Zohar III
Zohar III
Zohar III
Zohar III
Zohar III
Zohar III
Zohar III
Zohar III
Zohar III
Zohar III
Zohar III
Zohar III
Zohar III
Zohar III
Zohar III
Zohar III
Zohar III
Zohar III
Zohar III
Zohar III
Zohar III
Zohar III
Zohar III

Report
Read Only Type
No
Monthly
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No

NVR
Monthly
Monthly
Monthly
NVR
Monthly
Monthly
NVR
Monthly
Monthly
NVR
Monthly
Monthly
NVR
Monthly
Monthly
NVR
Monthly
Monthly
NVR
Monthly
Monthly
NVR
Monthly
Monthly
NVR
Monthly
Monthly
NVR
Monthly
Monthly
NVR
Monthly
Monthly
NVR
Monthly
Monthly
NVR
Monthly
Monthly
NVR
Monthly
Monthly
NVR
Monthly
Monthly
NVR
Monthly
Monthly
NVR
Monthly
Monthly
NVR
Monthly

Report
Month
200608

Report
Year
2006

Report
Month
08

200709
200709
200710
200711
200712
200801
200802
200803
200804
200805
200806
200807
200808
200809
200810
200811
200812
200901
200902
200903
200904
200905
200906
200907
200908
200909
200910
200911
200912
201001
201002
201003
201004
201005
201006
201007
201008
201009
201010
201011
201012
201101
201102
201103
201104
201105
201106
201107
201108
201109
201110
201111
201112
201201

2007
2007
2007
2007
2007
2008
2008
2008
2008
2008
2008
2008
2008
2008
2008
2008
2008
2009
2009
2009
2009
2009
2009
2009
2009
2009
2009
2009
2009
2010
2010
2010
2010
2010
2010
2010
2010
2010
2010
2010
2010
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2012

09
09
10
11
12
01
02
03
04
05
06
07
08
09
10
11
12
01
02
03
04
05
06
07
08
09
10
11
12
01
02
03
04
05
06
07
08
09
10
11
12
01
02
03
04
05
06
07
08
09
10
11
12
01

Payment Date

Trustee
LaSalle

9/18/2007

LaSalle
LaSalle
LaSalle
LaSalle
LaSalle
LaSalle
LaSalle
LaSalle
LaSalle
LaSalle
LaSalle
LaSalle
LaSalle
LaSalle
LaSalle
LaSalle
LaSalle
LaSalle
LaSalle
LaSalle
LaSalle
LaSalle
LaSalle
LaSalle
LaSalle
LaSalle
Bank of America
Bank of America
Bank of America
Bank of America
Bank of America
Bank of America
Bank of America
Bank of America
Bank of America
Bank of America
Bank of America
Bank of America
Bank of America
Bank of America
Bank of America
Bank of America
Bank of America
Bank of America
Bank of America
Bank of America
Bank of America
Bank of America
US Bank
US Bank
US Bank
US Bank
US Bank
US Bank

12/18/2007

3/18/2008

6/18/2008

9/18/2008

12/18/2008

3/18/2009

6/18/2009

9/18/2009

12/18/2009

3/18/2010

6/18/2010

9/20/2010

12/20/2010

3/18/2011

6/20/2011

9/19/2011

12/19/2011

As of Date

Overcollateralization
Ratio Page(s)

Administrative Fees /
Collateral Manager Fee
Page(s)

Performing /
Categorization
Page(s)

Defaulted & Non
Performing & Defaulted
Page(s)

8/31/2006
9/6/2007
9/30/2007
10/31/2007
11/30/2007
12/6/2007
1/31/2008
2/29/2008
3/6/2008
4/30/2008
5/31/2008
6/6/2008
7/31/2008
8/31/2008
9/8/2008
10/31/2008
11/30/2008
12/8/2008
1/31/2009
2/28/2009
3/6/2009
4/30/2009
5/31/2009
6/8/2009
7/31/2009
8/31/2009
9/8/2009
10/31/2009
11/30/2009
12/8/2009
1/31/2010
2/28/2010
3/8/2010
4/30/2010
5/31/2010
6/8/2010
7/31/2010
8/31/2010
9/8/2010
10/31/2010
11/30/2010
12/8/2010
1/31/2011
2/28/2011
3/8/2011
4/30/2011
5/31/2011
6/8/2011
7/31/2011
8/31/2011
9/7/2011
10/31/2011
11/30/2011
12/7/2011
1/31/2012

7
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
11
11
16
11
11
16
11
11
16
11
11
16
11
11
16
11
11
16
11
11
16
11
11
16
11
11
16
11
11
16
11
11
16
11
11
16
11
11
16
11
11
16
11
11
16
11

N/A
9
N/A
N/A
N/A
9
N/A
N/A
9
N/A
N/A
9
N/A
N/A
9
N/A
N/A
9
N/A
N/A
9
N/A
N/A
9
N/A
N/A
9
N/A
N/A
9
N/A
N/A
9
N/A
N/A
9
N/A
N/A
9
N/A
N/A
9
N/A
N/A
9
N/A
N/A
9
N/A
N/A
9
N/A
N/A
9
N/A

23
24-25
17-18
18-20
18-20
23-25
19-21
19-21
24-26
22-24
22-25
26-28
26-30
26-30
30-33
23-26
25-28
29-32
35-40
27-32
31-35
28-33
27-32
31-35
29-34
27-32
31-36
27-32
27-32
31-35
27-32
27-32
31-36
27-32
27-32
31-36
27-32
27-32
31-36
27-32
27-32
31-36
27-32
27-32
31-36
27-32
27-32
32-37
27-32
27-32
32-37
27-33
27-33
33-38
29-35

13
28
21
23
23
28
29
29
28
32
33
30
38
38
35
34
36
34
48
40
37
41
40
37
42
40
38
40
40
37
40
40
38
40
40
38
40
40
38
40
40
38
40
40
38
40
41
40
41
41
40
42
42
41
44

Equity
Securities Page(s)
Equities Report not mentioned
in Trustee Report
29
22
24
24
29
24
24
29
27
28
31
32
32
36
28
30
35
42
34
38
35
34
38
36
34
39
34
34
38
34
34
39
34
34
39
34
34
39
34
34
39
34
34
39
34
35
41
35
35
41
36
36
42
38

Case 1:17-cv-00307 Document 1 Filed 01/16/17 Page 84 of 84

Zohar III – Trustee Reports & Key Page Numbers

Deal
Zohar III
Zohar III
Zohar III
Zohar III
Zohar III
Zohar III
Zohar III
Zohar III
Zohar III
Zohar III
Zohar III
Zohar III
Zohar III
Zohar III
Zohar III
Zohar III
Zohar III
Zohar III
Zohar III
Zohar III
Zohar III
Zohar III
Zohar III
Zohar III
Zohar III
Zohar III
Zohar III
Zohar III
Zohar III
Zohar III
Zohar III
Zohar III
Zohar III
Zohar III
Zohar III
Zohar III
Zohar III
Zohar III
Zohar III
Zohar III
Zohar III
Zohar III
Zohar III
Zohar III
Zohar III
Zohar III
Zohar III
Zohar III
Zohar III

Report
Read Only Type
No
Monthly
No
NVR
No
Monthly
No
Monthly
No
NVR
No
Monthly
No
Monthly
No
NVR
No
Monthly
No
Monthly
No
NVR
No
Monthly
No
Monthly
No
NVR
No
Monthly
No
Monthly
No
NVR
No
Monthly
No
Monthly
No
NVR
No
Monthly
No
Monthly
No
NVR
No
Monthly
No
Monthly
No
NVR
No
Monthly
No
Monthly
No
NVR
No
Monthly
No
Monthly
No
NVR
No
Monthly
No
Monthly
No
NVR
No
Monthly
No
Monthly
No
NVR
No
Monthly
No
Monthly
No
NVR
No
Monthly
No
Monthly
No
NVR
No
Monthly
No
Monthly
No
NVR
No
Monthly
No
Monthly

Report
Month
201202
201203
201204
201205
201206
201207
201208
201209
201210
201211
201212
201301
201302
201303
201304
201305
201306
201307
201308
201309
201310
201311
201312
201401
201402
201403
201404
201405
201406
201407
201408
201409
201410
201411
201412
201501
201502
201503
201504
201505
201506
201507
201508
201509
201510
201511
201512
201601
201602

Report
Year
2012
2012
2012
2012
2012
2012
2012
2012
2012
2012
2012
2013
2013
2013
2013
2013
2013
2013
2013
2013
2013
2013
2013
2014
2014
2014
2014
2014
2014
2014
2014
2014
2014
2014
2014
2015
2015
2015
2015
2015
2015
2015
2015
2015
2015
2015
2015
2016
2016

Report
Month
02
03
04
05
06
07
08
09
10
11
12
01
02
03
04
05
06
07
08
09
10
11
12
01
02
03
04
05
06
07
08
09
10
11
12
01
02
03
04
05
06
07
08
09
10
11
12
01
02

Payment Date
3/19/2012

6/18/2012

9/18/2012

12/18/2012

3/18/2013

6/18/2013

9/18/2013

12/18/2013

3/18/2014

6/18/2014

9/18/2014

12/18/2014

3/18/2015

6/18/2015

9/18/2015

12/18/2015

Trustee
US Bank
US Bank
US Bank
US Bank
US Bank
US Bank
US Bank
US Bank
US Bank
US Bank
US Bank
US Bank
US Bank
US Bank
US Bank
US Bank
US Bank
US Bank
US Bank
US Bank
US Bank
US Bank
US Bank
US Bank
US Bank
US Bank
US Bank
US Bank
US Bank
US Bank
US Bank
US Bank
US Bank
US Bank
US Bank
US Bank
US Bank
US Bank
US Bank
US Bank
US Bank
US Bank
US Bank
US Bank
US Bank
US Bank
US Bank
US Bank
US Bank

As of Date
2/29/2012
3/7/2012
4/30/2012
5/31/2012
6/6/2012
7/31/2012
8/31/2012
9/6/2012
10/31/2012
11/30/2012
12/6/2012
1/31/2013
2/28/2013
3/6/2013
4/30/2013
5/31/2013
6/6/2013
7/31/2013
8/31/2013
9/6/2013
10/31/2013
11/30/2013
12/6/2013
1/31/2014
2/28/2014
3/6/2014
4/30/2014
5/31/2014
6/6/2014
7/31/2014
8/31/2014
9/8/2014
10/31/2014
11/30/2014
12/8/2014
1/31/2015
2/28/2015
3/6/2015
4/30/2015
5/31/2015
6/8/2015
7/31/2015
8/31/2015
9/8/2015
10/31/2015
11/30/2015
12/8/2015
1/31/2016
2/29/2016

Overcollateralization
Ratio Page(s)
11
16
11
11
16
11
11
16
11
11
16
11
11
16
11
11
16
11
11
16
11
11
16
12
13
18
13
13
18
13
13
18
13
13
18
13
13
18
13
13
18
13
13
18
13
13
18
13
13

Administrative Fees /
Collateral Manager Fee
Page(s)
N/A
9
N/A
N/A
9
N/A
N/A
9
N/A
N/A
9
N/A
N/A
9
N/A
N/A
9
N/A
N/A
9
N/A
N/A
9
N/A
N/A
11
N/A
N/A
11
N/A
N/A
11
N/A
N/A
11
N/A
N/A
11
N/A
N/A
11
N/A
N/A
11
N/A
N/A
11
N/A
N/A

Performing /
Categorization
Page(s)
28-34
33-38
30-36
29-35
34-40
28-34
28-34
32-38
28-34
28-34
32-38
28-34
28-34
32-37
28-34
28-34
32-37
28-34
28-34
32-37
28-34
28-34
32-37
29-35
30-36
34-39
30-36
30-36
34-39
30-36
30-36
34-39
30-35
30-35
34-39
30-35
30-36
34-39
30-35
30-35
34-39
30-36
30-35
34-39
30-36
30-35
34-39
29-34
29-34

Defaulted & Non
Performing & Defaulted
Page(s)
43
41
45
44
44
44
44
42
44
44
42
44
44
41
44
44
41
44
44
41
44
44
41
45
46
43
46
46
43
46
46
43
45
45
43
45
46
43
45
45
43
46
45
43
46
45
43
44
44

Equity
Securities Page(s)
37
42
39
38
45
38
38
43
38
38
43
38
38
42
38
38
42
38
38
42
38
38
42
39
40
44
40
40
44
40
40
44
39
39
44
39
40
44
39
39
44
40
39
44
40
39
44
38
38

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