Legal Newsline

Wednesday, July 17, 2019

Company's conversion lawsuit against investor, law firms is dismissed

By John Sammon | Dec 22, 2017

LOS ANGELES (Legal Newsline) – The California Court of Appeals, 2nd Appellate District Division One on Nov. 16 upheld a decision of the Los Angeles Superior Court dismissing allegations of fraudulent conversion and transfer of funds in a case that has gone on since 2003 in both state and federal courts, as well as courts in Switzerland.

Optional Capital Inc. a Korean venture capital firm, alleged that one of its investors, DAS Corp. - a Korean company that does business in California manufacturing, distributing and selling auto parts - as well as Erica and Christopher Kim tried to gain control of the company by transferring $35 million of its funds into another entity.

Optional sued DAS Corp. and its legal representation Akin Gump Straus Hauer & Feld LLP, Parker Schumaker Mills LLP, David Parker and William Mills. Optional alleged that DAS and the Kim parties conspired to take control of the company by converting more than $35 million of Optional’s funds.

The Kims allegedly created a California corporation, Alexandria Investments Inc., and according to the court's opinion, transferred money misappropriated from the plaintiff into bank accounts under the name Alexandria in a United Commercial Bank in Rowland Heights, California.

In 2003, Alexandria allegedly transferred more than $15 million of the plaintiff’s converted money into a bank account at Credit Suisse in Geneva, Switzerland.

The lawsuit and opposing motions took many tangled legal twists over a period of 14 years in courts in the U.S. and Europe.

The defendants sought to dismiss the claims against them by filing anti-SLAPP notion, or Strategic Lawsuit Against Public Participation, laws designed to prevent malicious or frivolous lawsuits and to allow for early dismissal of meritless claims. The defendants argued that their petitions and arguments were protected under the anti-SLAPP laws and that the plaintiff could not demonstrate a probability of prevailing in court.

The trial court granted the defendants’ motion for dismissal.

On appeal, the plaintiffs countered that the defendants’ alleged misconduct was not protected under the anti-SLAPP legislation and that even if it were, the plaintiffs had presented sufficient evidence to establish a probability of prevailing on the merits of their claims.

However the California appeals court disagreed, noting that the plaintiffs had not shown a probability of prevailing and that allegations the defendants’ engaged in an illegal conspiracy to convert the plaintiff’s funds were “unpersuasive.”

The appeals court affirmed the trial court’s judgment for dismissal.      

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California Second District Court of Appeal