Ocean Thermal Energy Corp V C Robert Coe III Et Al Cacdce 19 05299 0040.0

Case 2:19-cv-05299-VAP-JPR Document 40 Filed 04/06/20 Page 1 of 51 Page ID #:771
James Kennedy, Esq. (pro hac vice pending)

1 jkennedy@kennedyberg.com
KENNEDY BERG LLP
2 401 Broadway Suite 1900
New York, NY 10013
3 Telephone: (212) 899-3400
Facsimile: (212) 899-3401
4
Jeffrey H. Reeves, Esq. (State Bar No. 156648)
5 jreeves@tocounsel.com
Bradley Dugan, Esq. (State Bar No.271870)
6 bdugan@tocounsel.com
THEODORA ORINGHER PC
7 535 Anton Boulevard, Ninth Floor
Costa Mesa, California 92626-7109
8 Telephone: (714) 549-6200
Facsimile: (714) 549-6201
9
Attorneys for Intervenor
10 Sterling Financial & Realty Group, Inc.
11 UNITED STATES DISTRICT COURT
12 CENTRAL DISTRICT OF CALIFORNIA, WESTERN DIVISION
13
STERLING FINANCIAL & REALTY
14 GROUP, INC;
Case No. 2:19-cv-05299-VAP-JPR
15 Intervenor Plaintiff,
16 v. COMPLAINT IN INTERVENTION
17 OCEAN THERMAL ENERGY
CORPORATION, TRADE BASE
18 SALES, INC., MIGRATION
PARTNERS, LLC and BRETT REGAL
19
Intervenor Defendants,
20
-and-
21
DION TULK and OPHIR
22 COLLECTION, LLC,
23 Additional Intervenor
Defendants.
24
25
26 Intervenor plaintiff Sterling Financial & Realty Group, Inc. (“Sterling”), by
27 its undersigned counsel, as and for its complaint against intervenor defendants
28
1 Case No. 2:19-cv-05299-VAP-JPR
COMPLAINT IN INTERVENTION
1 Ocean Thermal Energy Corporation (“OTEC”), plaintiff in the existing action, and
2 Brett M. Regal (“Regal”), Migration Partners LLC (“Migration”) and Trade Base
3 Sales, Inc. (“TBS”) (collectively, “Regal Parties”), defendants in the existing action
4 (OTEC and the existing defendants being referred to below as the “Parties”) and
5 additional intervenor defendants, Dion Tulk (“Tulk”) and Ophir Collection, LLC
6 (“Ophir”) (collectively, “Tulk Parties”), alleges as follows:
7 INTRODUCTION
8 1. This action, brought by OTEC against the Regal Parties and others, is
9 the culmination of a scam. In July 2019, the Parties misled this Court into
10 appointing a Receiver to sell about 350,000 pounds of gold ore concentrate owned
11 by Sterling (“Concentrate”) and 43 world-unique gems and mineral specimens
12 owned by TBS and known as the Ophir Collection (“Collection,” and together with
13 the Concentrate, “Collateral”), in violation (A) of Sterling’s rights under a Consent
14 Judgment issued by a Florida state court and (B) Sterling’s first priority lien on the
15 Collateral – and on the Regal Parties’ other personal property – as perfected under
16 the Uniform Commercial Code (“UCC”) and upheld by the Florida Judgment
17 (“Perfected Lien”).
18 2. A copy of the Florida Judgment, entered on May 6, 2019, is attached
19 hereto as Exhibit 1. Sterling domesticated the Florida Judgment in California on
20 August 23, 2019, as reflected in Exhibit 2. Sterling’s Perfected Liens, filed in Ohio
21 and California, are attached as Exhibit 3.
22 3. In their Joint Receivership Application, the Parties coyly referenced a
23 “purported judgment creditor” without identifying the Florida Judgment or
24 describing its terms. The non-disclosure was deliberate: the Florida Judgment
25 forbade the Regal Parties from seeking the relief contained in the Receivership
26 Order. It barred the Regal Parties from transferring ownership and possession the
27 Collateral to anyone and even from encumbering the Collateral, except to pay $9.5
28
1 million (plus interest and collection costs) owed to Sterling (“Sterling Debt”)
2 pursuant to the Florida Judgment.
3 4. Ignoring these and other critical facts, the Parties claimed in their Joint
4 Receivership Application that a receiver was critically needed to enforce an $8
5 million Tennessee federal district court judgment entered in favor of OTEC and
6 against the Regal Parties (“Agreed Judgment”). That was not true.
7 5. Before filing the application, OTEC traded away its right to enforce the
8 $8 million Agreed Judgment in favor of the Regal Parties’ agreement to pay OTEC
9 $17.5 million pursuant to a May 26, 2019 Settlement Agreement resolving a dubious
10 “prospective” fraud claim that OTEC had threatened to bring against the Regal
11 Parties, as well Robert Coe (“Coe”) and David Large (“Large”), named defendants
12 who have not appeared in this action (“Fraud Settlement”).
13 6. OTEC also agreed in the Fraud Settlement to rebate the $17.5 million
14 Settlement Amount back to the Regal Parties if OTEC recovers over $60 million in
15 fraud claims against Coe and Large. In fact, the Fraud Settlement is a mechanism to
16 provide OTEC with a litigation war chest of proceeds from a court-ordered sale of
17 the Collection on the pretext that OTEC is a deserving judgment creditor seeking to
18 play by the rules.
19 7. To make matters worse, four years after Ophir – a limited liability
20 company managed by Tulk -- sold the Collection to TBS free and clear of any liens
21 and encumbrances, Tulk, a musician and world traveler who gradually acquired the
22 stones and created the Collection, has emerged from the woodshed. He now claims
23 that Ophir never transferred ownership of the Collection to TBS at all. In
24 communications with the Successor Receiver, he also claims that TBS never paid
25 the $20 million purchase price for the Collection; instead, the Regal Parties’ bought
26 his silence by incrementally increasing the price from $20 million to $35 million
27 and allegedly promising to pay Ophir that amount.
28
1 8. In an email exchange with Tulk dated February 26, 2020, the Successor
2 Receiver observed that the Tulk Parties’ claim of ownership is “directly
3 contradicted” by “convoluted” agreements and other documents containing Tulk’s
4 notarized signature. Still, the Successor Receiver, Blake Alsbrook, Esq., assured the
5 Tulk Parties they would be paid $35 million from the proceeds of any Court ordered
6 sale.
7 9. Even more inexplicably, in an email dated March 20, 2020, Mr.
8 Alsbrook gave the Tulk Parties “confirmation that Regal and Ocean Thermal will
9 agree to put you first in line.” Explaining away his failure to have communicated
10 with Sterling about any of this, he wrote, “I have not reached out to Sterling’s
11 counsel yet because of some difficult early conversations.”
12 10. As a result, Sterling’s efforts to collect on the Sterling Debt by
13 enforcing the Florida Judgment and the Perfected Lien are stuck in the mud.
14 Through no fault of this Court, the Successor Receiver and this Court are wasting
15 time and resources in trying -- without a hint of success -- to sell the Collection for
16 at least $120 million in order to pay the Sterling Debt (at this point, exceeding $10
17 million), the OTEC Fraud Settlement of $17.5 million and another $35 million to
18 the Ophir (in satisfaction of Tulk’s long dormant claim).
19 11. Sterling could not make this up if it tried. The $120 million purchase
20 price set forth in the Receivership Order is a pipe dream, as there is no readily
21 available market for the Collection, and the Successor Receiver lacks the experience
22 and contacts to sell such a unique asset. The time has come for this Court to end the
23 chaos, vacate its Receivership Order, remove Mr. Alsbrook in any event as biased
24 against Sterling and order a foreclosure sale of the Collection.
25 12. Sterling asserts eight causes of action. Sterling is entitled to a
26 declaration of its rights in the Collateral pursuant to the Florida Judgment (entitled
27 to the Full Faith and Credit of the U.S. Constitution) and the Perfected Lien. See
28
1 Counts I and III, infra. Even if TBS did not own the Collection when Sterling
2 perfected its Lien in May 2018 (in Ohio) and June 2018 (in California), the Tulk
3 Parties should be estopped from denying the validity of the Perfected Lien by
4 reasons of their fraudulent misrepresentations and omissions to Sterling, on which
5 Sterling relied to its detriment. See Count VII, infra. .
6 13. The Florida Judgment enforces a Settlement Agreement dated April 29,
7 2019 (“Settlement Agreement”) pursuant to which Sterling and the Regal Parties
8 agreed to a Consent Judgment resolving about $15 million in claims that Sterling
9 had brought against the Regal Parties, who (unbeknownst to Sterling at the time)
10 had defrauded Sterling into a series of failed business deals. The Settlement
11 Agreement is incorporated into the Florida Judgment and included within Exhibit 1.
12 14. The Florida Judgment (A) awards Sterling $9.75 million, plus interest
13 and Sterling’s collection/attorneys’ fees; (B) recognizes Sterling’s ownership of the
14 Concentrate and its first priority Perfected Line in the Collateral and in the Regal
15 Parties’ other property (“Other Regal Property”); (C) forbids the Regal Parties
16 from transferring ownership and control of the Collateral; (D) allows the Regal
17 Parties to monetize or sell the Collection only for the purpose of satisfying the
18 Florida Judgment; and (E) otherwise enforces the terms of the Settlement
19 Agreement.
20 15. The Florida Judgment and the Perfected Lien grant Sterling the right to
21 recover the Concentrate from the Regal Parties and to foreclose on the Collection.
22 Sterling, alone, owns the Concentrate and it, alone, has a Perfected Lien in and to
23 the Collateral. Sterling, therefore, also seeks a decree ordering the return of the
24 Concentrate to Sterling and a foreclosure sale of the Collateral. See Counts II and
25 IV, infra.
26 16. Sterling also asserts fraud claims against the Regal and Tulk Parties
27 arising from their repeated misrepresentations and omissions to Sterling about the
28
1 ownership of the Collection and the agreement by which Ophir sold the Collection,
2 in February 2016, to TBS, free and clear of any liens and encumbrances. See Counts
3 V and VI, infra.
4 17. In August 2017, Sterling entered into a failed business deal with Regal
5 affiliate Migration. In December 2017, Regal proposed to Sterling’s principal, Jeff
6 Hackman (“Hackman”), that they enter into a Consulting Agreement to compensate
7 Sterling for the broken Migration deal. Hackman did not realize that Regal was a
8 scam artist playing a shell game.
9 18. Regal and his TBS affiliate induced a Sterling affiliate to enter into a
10 Consulting Agreement, dated January 15, 2018 (“Consulting Agreement”),
11 appointing Sterling as TBS’ exclusive representative to monetize the Collection
12 (purportedly valued at about $1 billion) by representing to Hackman that TBS had
13 purchased the Collection for $20,000,000 from Ophir and that TBS owned the
14 Collection free and clear of any liens and encumbrances. A copy of the Consulting
15 Agreement is attached hereto as Exhibit 4.
16 19. To prove TBS’ ownership of the Collection, Regal, TBS and Coe
17 provided Sterling with a copy of an Asset Purchase Agreement (“APA”) dated
18 February 6, 2016 (copy attached as Exhibit 5) (“Ophir APA”), by which Ophir had
19 sold the Collection to TBS in exchange for $20 million worth of ownership
20 interests in two mining companies owned in part by Coe and Large (“Solauro
21 Entities”). At the time, Tulk was the President of one of those entities, Solauro
22 Industries, Inc.
23 20. As it turns out, the Ophir APA differs significantly from the APA the
24 Parties later filed in support of the Joint Receivership Application (“Filed APA”,
25 copy attached as Exhibit 6). Under the Filed APA, Ophir agreed to sell the
26 Collection to TBS in exchange for $20 million in cash, payable in monthly
27 installments in the amount of $500,000.00.
28
1 21. The Tulk Parties empowered Regal and TBS to defraud Sterling in the
2 first place and they misled Sterling as well. Among other things, on March 22,
3 2018, Tulk sent Regal a sworn Affidavit – knowing that Sterling or an unnamed
4 party to a transaction with Regal and TBS would rely on the Affidavit – in which he
5 represented under oath that Ophir had sold the Collection to TBS and that TBS
6 owned the Collection free and clear of any liens or encumbrances (“Ophir
7 Affidavit”, copy attached as Exhibit 7).
8 22. Tulk has recently confirmed in conversations with Hackman that Tulk
9 signed such an affidavit – just not the version he sent to Regal to relay to Hackman.
10 Of course, in March 2018, Sterling and Hackman had not seen the yet to be Filed
11 APA and had no idea that Ophir had purportedly sold the Collection in February
12 2016 for cash but had not been paid.
13 23. In late February 2020, after Sterling had moved to intervene, Tulk
14 contacted the Successor Receiver, claiming that Ophir owned the Collection and that
15 many of the documents filed by the Parties are forgeries. He only recently advised
16 Hackman about Ophir’s claim of ownership over the Collection. That claim lacks
17 credibility, is contradicted by sworn documents (which Tulk calls forgeries) and is
18 belied by his ratifying the price increases that resulted in Regal agreeing in about
19 July 2019 to pay Ophir $35 million for the Collection, not $20 million. Title to the
20 Collection passed to TBS in February 2016.
21 24. Applying a double standard, Mr. Alsbrook has proven to be
22 unprofessional and biased against Sterling. In August 2019, after learning of this
23 Court’s issuance of the Receivership Order, Sterling contacted the predecessor
24 Receiver, David Pasternak, Esq., who then obtained the Parties’ acknowledgment
25 that Sterling owns the Concentrate and that Sterling’s Perfected Lien would be
26 satisfied in connection with any Court-approved sale of the Collection. Mr.
27
28
1 Alsbrook, appointed in about December 2019 after Mr. Pasternak died, has not
2 honored Mr. Pasternak and the Parties’ commitment to Sterling.
3 25. In late December 2019, believing he had found a buyer of the
4 Collection (for $220 million), Mr. Alsbrook and the Parties asked this Court to
5 approve a purchase and sale agreement (“PSA”), and later, an amended PSA,
6 without requiring that Sterling be paid the interest and collection costs to which it is
7 entitled by the Florida Judgment. See Dkt 18. This Court later cited Sterling’s right
8 to be paid such interest and collection costs as a reason for Sterling’s intervention.
9 26. Mr. Alsbrook brushed aside Sterling’s New York based counsel when
10 he raised concerns over the buyer – a mysterious South African entity – and pointed
11 to defects in the funding mechanisms of the amended PSA that rendered the
12 agreement illusory. In court filings, Mr. Alsbrook falsely accused Sterling’s counsel
13 of having been “abusive” in conversations with him. Apparently for that reason, he
14 has refused to speak with Sterling’s counsel since late January 2020 – and did not
15 even tell Sterling that the amended PSA had fallen apart. When Sterling’s counsel
16 complained to Mr. Alsbrook, he invited Sterling to move to intervene – only later to
17 oppose Sterling’s motion.
18 27. On March 5, 2020, this Court granted the intervention motion, finding,
19 among other things, that the Parties and Successor Receiver had not defeated
20 Sterling’s showing that its interest has not been adequately represented in this
21 action. Dkt 39 at 4.
22 28. Unbeknownst to Sterling, as Mr. Alsbrook was opposing Sterling’s
23 motion, he was secretly communicating with Tulk and the Parties about Ophir’s
24 alleged interest in the Collection. Rather than telling the Tulk Parties to move
25 intervene, as he had told Sterling, Mr. Alsbrook has assured Ophir that it will be
26 paid $35 million from any court approved sale of the Collection. He has confirmed
27
28
1 an agreement between OTEC and the Regal Parties to put the Tulk Parties’ “first in
2 line” for payment – in derogation of the Florida Judgment and the Perfected Lien.
3 29. Although Mr. Alsbrook’s posture is proven by his email exchanges
4 with Tulk, he accused Sterling’s New York counsel of making “many false
5 statements” in sending an April 1, 2020 email that confronted him with Sterling’s
6 understanding of these unfairly prejudicial developments. Behind Sterling’s back,
7 Mr. Alsbrook admitted to Tulk that he has kept Sterling out of the loop because of
8 purportedly “difficult” prior conversations with Sterling’s New York counsel.
9 30. In view of the foregoing, this Court should remove the Successor
10 Receiver and deny any request to pay his fees from a sale of the Collection.
11 31. Last, Sterling also asserts a tort claim against OTEC for wrongful
12 interference with contractual relations, arising from the illicit scheme by which
13 OTEC threatened fraud claims against the Regal Parties to order to induce them to
14 file a Joint Receivership Application that violates the Florida Judgment and
15 constitutes a breach of the Settlement Agreement incorporated into the Florida
16 Judgment. See Count VIII, infra.
17 PARTIES
18 32. Intervenor plaintiff Sterling is a Florida corporation with its principal
19 place of business in Palm Beach County, Florida. Hackman is its President.
20 33. Sterling engages in the business of processing, distributing, and selling
21 precious metals and rare gemstones.
22 34. Plaintiff OTEC is a Nevada corporation with its principal place of
23 business in Lancaster, Pennsylvania. OTEC’s “penny stock” trades over the counter
24 (OTCQB:CPWR) at less than one penny. OTEC is reportedly a project developer in
25 the renewable electricity and potable water business.
26 35. OTEC reported on its Form 10-Q filed on November 12, 2019 with the
27 SEC that as of September 30, 2019 it has assets of only about $16,000 and liabilities
28
1 exceeding $18 million. In the third quarter of 2019, OTEC and its subsidiaries
2 incurred a consolidated net loss of nearly $700,000. In its 2019 Annual Report filed
3 on Form 10K with the SEC on March 22, 2019, OTEC and its subsidiaries reported
4 consolidated net losses of nearly $8 million for the year ending 2018 and about
5 $14.5 million for the year ending 2017.
6 36. In its Annual Report dated March 20, 2020, OTEC reported that its
7 principal source of liquidity consisted of $23,243 of cash and that at December 31,
8 2019 it had a negative working capital of nearly $21.9 million and a stockholders’
9 deficiency of about $22 million. It reported a net loss for 2019 of about $5 million
10 for 2019 and acknowledged that, without additional funding, “our current cash is
11 insufficient to fund operations for the next 12 months.”
12 37. While actively seeking additional funding for its operations, OTEC is
13 misleading its investors about the facts of this dispute as reported in its most recent
14 2020 Annual Report. See Complaint, Section M, infra.
15 38. Defendant TBS is an Ohio corporation with its principal place of
16 business in Cuyahoga County, Ohio.
17 39. Defendant Migration is a Delaware limited liability company with its
18 principal place of business in Cuyahoga County, Ohio. Migration is an affiliate of
19 TBS.
20 40. Defendant Regal is an individual who resides in Cuyahoga County,
21 Ohio. At all relevant times, Regal was the president, director and managing member
22 of Defendants TBS and Migration.
23 41. The Regal Parties are generally engaged in the business of processing,
24 distributing, and selling precious metals and rare gemstones.
25 42. Sterling is informed and believes, and on that basis alleges, that the
26 Regal Parties are cash poor and badly lacking in liquid assets.
27
28
1 43. Additional intervenor defendant Tulk is an individual who, upon

2 information and belief, resides in Canada. Tulk describes himself on LinkedIn as a
3 recording artist and entrepreneur who served as the President and CEO of Solauro
4 Industries, Inc. during the period June 2009 to July 2019. Tulk previously worked
5 as a travel company representative. During the course of his world travels, Tulk
6 reportedly acquired the gemstones that became part of the Collection for himself
7 and/or a family trust and imported the stones into the United States. Tulk is the
8 President and/or Manager of Ophir.
9 44. Additional intervenor defendant Ophir is a Delaware limited liability
10 company formed by Tulk for the purpose of holding his interest in and to the
11 Collection. Its principal place of business is 75 14th Street, Suite 2200, Atlanta, GA
12 30309. Ophir’s sole member is a family trust called the Avalon Trust, created under
13 the laws of the State of Georgia.
14 JURISDICTION AND VENUE
15 45. This Court has subject matter jurisdiction over this action pursuant to
16 28 USC § 1332 because there is complete diversity of citizenship between the
17 parties and the amount in controversy exceeds $75,000.00.
18 46. This Court has personal jurisdiction over plaintiff and defendants by
19 reason of, among other things, their having commenced or appeared in this action,
20 thus consenting to the jurisdiction of this Court and by their claiming a property
21 right in and to the Collection, which is being held at the Global Trust Depository in
22 Orange County, California.
23 47. Venue is proper in this District pursuant to 28 USC § 1391(2) because
24 the Receiver has possession and control over property that is the subject of this
25 action.
26
27
28
1 BACKGROUND
2 48. Sterling’s involvement with the Regal Parties and its introduction to
3 OTEC (with whom it has no business dealings) dates back to the summer and fall of
4 2017.
5 A. Sterling’s Early Dealings with the Regal Parties and OTEC
6 49. In 2017, each of Sterling and OTEC separately had failed business
7 dealings with the Regal Parties that led each to sue the Regal Parties in separate
8 actions. Each of the dealings began with a failed agreement with Regal that one of
9 his companies would invest in the business of Sterling or OTEC, respectively.
10 OTEC was first to file suit, but only Sterling has obtained and the Perfected Lien.
11 Sterling and OTEC crossed paths in the course of their respective efforts to
12 diligence the Regal Parties, identify assets and collect on their respective debts.
13 50. On May 16, 2017, OTEC sued the Regal Parties, Coe and Large in the
14 United States District Court for the Western District of Tennessee (Case Number:
15 2:17-CV-0234-SHL-CGC) for alleged fraud and breach of an agreement to invest
16 $42 million in OTEC’s business (the “First Tenn. Action”).
17 51. In June 2017, Regal or one of his affiliated companies entered into an
18 agreement to fund an offshore Alaskan gold mining business, Phoenix Mining
19 Offshore, Inc. (“Phoenix”). Regal breached that agreement, too.
20 52. In August 2017, Migration entered into an agreement with a Sterling
21 affiliate to provide $5 million in funding for the affiliate’s core business (litigation
22 funding). By September 8, 2017, Migration had defaulted on its funding obligation.
23 53. Several weeks later, in November 2017, OTEC attorney Daniel Barks.
24 Esq. (“Barks”) contacted to inquire about Regal and his assets. Over about the next
25 two years, they communicated from time to time about Regal’s financial status.
26 54. Upon information and belief, Barks routinely monitored public filings
27 regarding Regal and learned, through Sterling’s UCC Filings and entry of the
28
1 Florida Judgment (if not earlier), about Sterling’s ownership of the Concentrate and
2 its Perfected Lien.
3 B. Regal, TBS, Tulk, Ophir and Coe’s Representations to Hackman That
TBS Owned the Collection, Free and Clear of any Liens or
4 Encumbrances
5 55. In December 2017, Regal contacted Hackman and suggested that the
6 two explore a new business deal in order to compensate Sterling for Migration’s
7 failure to provide $5 million in funding for the Sterling affiliate.
8 56. On December 5, 2017, Regal, as President of TBS, sent Hackman an
9 email, stating, “[o]ur company is in search of financing for several projects, and the
10 following is a brief description of two assets of substantial value.” The email
11 identified one the assets as the Collection. It stated:
12 Valued between $900MM and $1.2Billion Dollars, the Ophir
Collection includes a total of 43 rare and exquisite gemstones, the
13 majority of which are the largest known specimens of their kind in the
world. The collection has been awarded nine GUINNESS WORLD
14 RECORDS® titles for the world’s largest individual gemstones with
numerous applications for additional records pending, as well as
15 recognition from the global authorities of gemstones and minerals the
Gemological Institute of America (“GIA”), the European Gemological
16 Laboratory (“EGL”) and the International Gemological Institute
(“IGI”).
17
57. That same day, Regal emailed Hackman a lengthy “Investor
18
Presentation” containing details about and photographs of the gemstones and
19
mineral specimens contained in the Ophir Collection. The presentation stated,
20
The Ophir Collection is a unique collection thoughtfully assembled
21 over three decades by an private collector with a spirit and passion for
gemstones and rare, exquisite treasures. The exclusive collection has
22 been privately held in a single owner’s estate. While not previously
marketed, in recent years individual gemstones have been sought after
23 by the most exclusive global collectors due to the rarity and size of
several stones, creating much lure in collectors’ circles.
24
25 58. On December 7, 2017, Coe sent Regal and Hackman via email a copy
26 of the Ophir APA, dated Feburary 25, 2016 (Ex. 5) and a Confirmation of Payment
27 and Agreement dated June 20, 2016 (“Confirmation”, copy attached as Exhibit 8).
28 Each of the documents contained Tulk’s notarized signature on behalf of Ophir.

1 59. Section 1 of the Ophir APA states:

2 The Seller hereby sells to the Buyer, and the Buyer hereby purchases
from the Seller, the Asset. Contemporaneously with the execution of
3 this Agreement, the Seller shall assign to the Buyer the Asset, by
executing an assignment substantially in the form of Exhibit B attached
4 hereto and made a part hereof (the "Assignment"), free and clear of all
liens, claims, charges, equities, encumbrances, restrictions and voting
5 agreements of any kind.
6 60. Unlike the Filed APA, the Ophir APA does not provide that TBS’
7 agreed to buy the Collection for $20 million in cash, to be paid in monthly
8 installments of $500,000. Section 2 of the Ophir APA states:
9 The purchase price for the Asset shall be paid in stock of Solauro
Industries, Inc., a Wyoming corporation and membership units Solauro,
10 LLC, a Nevada limited liability company, and the Three Point Nine
Three Percent (3.93%) interest in each company is mutually agreed by
11 both the Buyer and Seller to be worth Twenty Million Dollars and Zero
Cents ($20,000,000.00) (the "Purchase Price"), which shall be paid
12 contemporaneously with the execution of this Agreement.
13 61. Section 3 of the Ophir APA contains the Seller’s representations,
14 among others, that “Seller is the owner of the Asset, free and clear of all liens,
15 claims, charges, equities, encumbrances, restrictions, and voting agreements.”
16 62. Exhibit B to the Ophir Agreement is a “Deed of Assignment” dated
17 February 25, 2016 between Ophir, as Assignor, and TBS, represented by Regal, as
18 Assignee. The Deed states that “Assignor as the legal and beneficial owner hereby
19 irrevocably and unconditionally assign all the Assignor’s rights, title and interest in
20 the said Ophir Collection listed and described in the Schedule “I” annexed
21 hereunder, UNTO the Assignee ABSOLUTELY.”
22 63. The Deed further states that “Assignee shall give this Notice of
23 Assignment to Blue Vault San Diego of 5638 Mission Center Road, Suite 104, San
24 Diego, California, where the said Ophir Collection is held in storage, notifying Blue
25 Vault San Diego that the Assignor had assigned all its right, title and interest in the
26 said Ophir Collection listed in its Storage Certificate # 3B001, to the said Assignee.”
27 64. The Confirmation, issued on Ophir letterhead, states:
28
Trade Base Sales Inc., an Ohio corporation, entered into a Purchase

1 Agreement with Ophir Collection LLC, Delaware limited liability
company, on February 25th, 2016 for the Forty Three (43) gemstone
2 and mineral specimens in exchange for stock and membership units of
two related mining companies. Further to the Sale, Ophir Collection
3 LLC has been retained as curator for the Ophir Collection on an
ongoing basis.
4
Ophir Collection, LLC was paid in full on that day and thereby
5 executed the Deed of Assignment on the same day, February 25th,
2016.
6
7 65. Upon information and belief, Regal asked Tulk and/or Coe to send
8 Hackman the Ophir APA and Confirmation so that Hackman could confirm TBS’
9 ownership of the Collection free and clear of any liens or encumbrances, in
10 accordance with the terms of the Ophir APA. Tulk and/or Coe sent these documents
11 to Hackman intending and expecting that Hackman would rely on them in
12 connection with his discussions with Regal over funding or some other business deal
13 for which Hackman needed confirmation of TBS’s ownership of the Collection.
14 66. None of Regal, Tulk or Coe disclosed that TBS had purportedly agreed
15 to sell the Ophir Collection for $20 million in cash, that the purchase price had not
16 been paid or that Tulk/Ophir claimed that title to the Collection would not pass to
17 TBS unless and until the $20 million had been paid in full.
18 67. In early 2018, Regal and TBS also provided Sterling with a Storage
19 Certificate issued by Blue Vault San Diego and dated December 1, 2016 (“Storage
20 Certificate”, copy attached hereto as Exhibit 9). The Storage Certificate, signed by
21 Tulk as the President of Ophir, states that the Vault had “contracted with the
22 signatory listed below for space within our vaults at 5638 Mission Center Road,
23 Suite 104, San Diego, California, 92108” for the storage of the Collection. The
24 Storage Certificate also contains Tulk’s warranty that Ophir had deposited the
25 Collection’s 43 gemstones in storage at that location.
26
27
28
1 C. Sterling Obtains Its Security Interest in the Collateral

2 a. The Ophir Collection Consulting Agreement
3 68. In January 2018, Sterling and Regal struck the consulting deal that
4 Regal had proposed to compensate Sterling for Migration’s breach of the agreement
5 to invest in a Sterling affiliate.
6 69. On January 15, 2018, a Sterling affiliate, TBS, and Regal executed the
7 Consulting Agreement. Sterling entered into the Consulting Agreement in reliance
8 on the prior representations by Regal, TBS, Coe, Tulk and Ophir that TBS owned
9 the Ophir Collection free and clear of any liens or encumbrances as more fully set
10 forth in the Ophir APA, Confirmation and Storage Certificate.
11 70. Additionally, in section 6.a of the Consulting Agreement, TBS
12 warranted and represented that “Client has good and marketable fee simple title to
13 the Assets [i.e., the Collection], free and clear of all pledges, liens, mortgages,
14 charges, encumbrances, hypothecations, options, rights of first refusal, rights of first
15 offer and security interests of any kind or nature whatsoever, whether oral or
16 written.”
17 71. The Consulting Agreement provides that the Sterling affiliate would
18 serve, for at least six months, as TBS and Regal’s exclusive consultant to monetize
19 the Collection for payment of an initial flat fee of $7.6 million upon closing of the
20 initial transaction, plus agreed upon percentage commissions on the value of any
21 subsequent transactions.
22 72. Hackman determined that, to monetize the Collection, the Collection
23 had to be transferred from the Blue Vault San Diego to an institution that would
24 issue an SKR evidencing TBS’ ownership of the Collection.
25 73. After discussions with Citibank, Hackman advised Regal that as part of
26 this effort, Sterling needed an affidavit signed by Tulk attesting to his proper
27 importation of the Collection into the country. Upon information and belief, on or
28
1 about March 21, 2018, Regal/TBS notified Tulk about Hackman’s concern and
2 provided him with a draft Affidavit that Hackman had sent to Regal.
3 74. Sterling lacks personal knowledge of whether Tulk knew of Sterling’s
4 identity at the time. Coe certainly knew about Hackman’s involvement (as he had
5 sent Hackman the Ophir APA and Confirmation) and Regal/TBS made Tulkr aware
6 that a company working to monetize the Collection needed the Ophir Affidavit to be
7 executed.
8 75. The next day, Regal provided Sterling with the Ophir Affidavit (Ex. 7)
9 signed by Tulk on March 22, 2018 before a Notary Public in Orange County,
10 California. In the Affidavit, Tulk stated under penalty of perjury:
11 1. I personally purchased or acquired each of the forty three (43)
12 gemstones and mineral specimens commonly known as the Ophir
13 Collection described on Exhibit A attached hereto (“Ophir
14 Collection”).
15 2. I personally imported each of the stones in the Ophir Collection into
16 the United States.
17 3. I personally declared each of the stones in the Ophir Collection when
18 clearing Customs and Border Protection.
19 4. Each of the stones in the Ophir Collection were purchased or
20 acquired from countries with normal trade relation status. None of
21 the stones in the Ophir Collection were purchased or acquired from
22 Sierra Leone, Angola, Liberia or any other prohibited countries.
23 5. I am a duly appointed officer of Ophir Collection, LLC (“Ophir”).
24 Pursuant to the Asset Purchase Agreement, dated February 26, 2016
25 (“Agreement”) between Ophir and Trade Base Sales, Inc. (“Trade
26 Base”), Ophir sold the Ophir Collection to Trade Base free and clear
27 of all liens, claims and encumbrances of any kind whatsoever. As of
28
1 the date hereof: (i) Trade Base is the sole and exclusive owner of the
2 Ophir Collection; (ii) the representations and warranties of Ophir
3 contained in the Agreement are true and correct.
4 Tulk signed the Ophir Affidavit personally and as the Manager of Ophir and
5 also declared his authority to sign it.
6 76. On May 7, 2018, relying on the documents provided by Regal, TBS,
7 Coe, Tulk and Ophir, Sterling obtained an SKR that would enable TBS the Regal
8 Parties to monetize the Collection in a financing. Sterling also arranged for the
9 transfer of the Collection from Blue Vault San Diego to Global Trust.
10 77. Five days later, the Regal Parties wrongfully terminated the Consulting
11 Agreement by sending Sterling a cease and desist letter, dated May 12, 2018. The
12 letter stated, among other things, that the Regal Parties “no longer wish[ed] to
13 continue [the parties’] business relationship.”
14 78. The termination letter constituted a breach of the Consulting
15 Agreement, thereby triggering the Regal Parties’ obligation, at minimum, to pay
16 $7.6 million in liquidated damages pursuant to a provision in the Consulting
17 Agreement.
18 b. The Concentrate Sale Agreement and Secured Promissory Note
19 79. Separately, on April 6, 2018, Sterling and the Regal Parties executed a
20 Letter Agreement by which Sterling sold its precious metals contained in the
21 Concentrate to the Regal Parties for $7.6 million, payable by the Regal Parties’
22 execution of a Secured Promissory Note in Sterling’s favor in the amount of the sale
23 price, i.e., $7.6 million (“Sale Agreement”). Payment of the Secured Promissory
24 Note (“Note”) became due on June 1, 2018.
25 80. The accompanying Bill of Sale provided that, upon TBS and Regal’s
26 failure to timely pay the $7.6 million purchase price due pursuant to the terms of the
27 Note, title to the Concentrate would revert to Sterling. Since TBS and Regal failed
28
1 to make that payment when due (and at all), Sterling holds title in and to the
2 Concentrate – now, in the constructive possession of and control of the Successor
3 Receiver pursuant to the Receivership Order.
4 81. Regal personally guaranteed the payment obligations in each of the
5 Consulting Agreement and the Letter Agreement, and also executed the Note as a
6 party in his individual capacity.
7 82. The Note was secured by collateral, including, among other things, the
8 Concentrate, the Collection and the Other Regal Property.
9 D. OTEC Obtains the “Agreed Judgment” in Tennessee, Without a Security
Interest, as Sterling Perfects Its UCC Lien on the Collateral
10
11 83. As Sterling was working to monetize the Collection in March and April
12 2018, OTEC, Regal and the other defendants settled the First Tenn. Action (in
13 which OTEC claimed damages arising from the Tennessee defendants’ failure to
14 make a $42 million investment in OTEC). Over a period of several weeks, they
15 filed a series of settlement notices culminating in the filing on May 2, 2018 of a
16 Second Joint Motion reflecting the parties’ final settlement.
17 84. In the Second Joint Motion, the Regal Parties agreed to pay OTEC
18 $2.975 million by June 28, 2018 – just weeks after their June 1, 2018 deadline to
19 pay Sterling the $7.6 million purchase price for the Concentrate in accordance with
20 the Note. Regal and TBS, however, had little to no cash. They further agreed that,
21 if they did not meet the June 28, 2018 deadline, they would pay OTEC a total of $8
22 million in liquidated damages.
23 85. On May 16, 2018, Hackman filed on behalf of Sterling Financial with
24 the Ohio Secretary of State a UCC Financing Statement, perfecting the following
25 interest granted Sterling pursuant to the Note.
26 [A] continuing first priority security interest and lien in and to all
of the following, wherever located …: (i) all personal property of
27 every kind and nature … (iv) the precious metals … contained in …
[the Concentrate] owned by the Secured Party and currently in the
28 possession of I. Schumann and Co. (“Schumann”), and the … Ophir
Collection owned by the Debtor and currently on deposit … with

1 [Global] as evidenced by [SKR] Number OPH/5718/COLL-1.8B, dated
May 7, 2018.
2
3 86. On June 28, 2018, a Sterling affiliate filed on behalf of Sterling with
4 the Secretary of the State of California a UCC Financing Statement also perfecting
5 Sterling’s continuing first priority security interest and lien in and to the Collateral.
6 87. Accordingly, by June 28, 2018, OTEC (and, for that matter, Tulk, TBS
7 and Coe) were at least on constructive notice, by reason of Sterling’s UCC Filings,
8 that OTEC faced considerable difficulty in collecting the Regal Parties’ alleged debt
9 to OTEC because the UCC Filings disclosed that Sterling owned the Concentrate
10 and held the Perfected Lien.
11 88. On July 3, 2018, Sterling sued the Regal Parties in the Circuit Court of
12 the Fifteenth Judicial Circuit in and for Palm Beach County, Florida (Case No.
13 2018-CA-008427-MB-AA) seeking damages of about $15 million for breaches of
14 the Consulting Agreement, Letter Agreement and Note (“Florida Action”).
15 89. The Florida Action gave OTEC and the public – including Tulk, TBS
16 and Coe –further notice of Sterling’s ownership of the Concentrate and its Perfected
17 Lien on the Collateral and Other Regal Property. Upon information and belief,
18 shortly thereafter, Barks gained actual knowledge of the Action as he continued to
19 monitor Sterling’s activities.
20 90. Three days later, on July 6, 2018, OTEC filed a new lawsuit in the
21 United States District Court for the Western District of Tennessee, Case No. 2:18-
22 CV-02457-SHL-CGC (“Second Tenn. Action”) against Coe, Large and the Regal
23 Parties seeking $8 million in liquidated damages arising from their alleged breach of
24 the First Tenn. Action.
25 91. On August 8, 2018, the federal court in the Second Tenn. Action issued
26 an Agreed Judgment in the amount of $8 million. By then, however, OTEC was in
27
28
1 a bind because Sterling owned the Concentrate and held had its first priority
2 Perfected Lien; OTEC, however, had no comparable security interest.
3 92. In September 2018, aware of the Florida Action and Sterling’s
4 Perfected Lien, Barks contacted Hackman to explore ways in which OTEC might
5 share in a financing secured by the Collateral or otherwise partner with Sterling in
6 an effort for Sterling and OTEC to be paid by the Regal Parties. Sterling had no
7 interest in Barks’ overtures. During his communications with Barks that month,
8 Hackman learned that Barks was aware of Sterling’s Perfected Lien.
9 93. On October 15, 2018, OTEC registered the Agreed Judgment with this
10 Court, District No. 1.
11 94. By letter dated January 22, 2019, Stuart R. Fraenkel, Esq.
12 (“Fraenkel”), an attorney representing OTEC in this action, notified Global of the
13 existence of “the Agreed Judgment, duly registered in California against TBS and
14 Regal, the ‘owners of the ‘Ophir Collection,’ which you currently hold in your
15 Newport Beach Facility.” A copy of this letter is attached hereto as Exhibit 10.
16 95. In the letter, Fraenkel stated, “We are aware that you have already been
17 contacted and informed of a similar claim from Jeffery Hackman of Florida.”
18 Fraenkel provided Global with a copy of the Agreed Judgment and placed Global
19 “on notice that any movement of the said collection without a court order, identified
20 in your attached [SKR] dated May 17, 2018, may result in liability on the part of
21 your company.” OTEC was angling to leap over the Perfected Lien.
22 96. On May 10, 2019, OTEC filed with this Court a Writ of Execution for a
23 total amount of $8,147,068.49, seeking to direct the Marshal to enforce the Agreed
24 Judgment. See Dkt. No. 3.
25
26
27
28
1 E. The Florida Judgment

2 97. Before then, on April 29, 2019, Sterling and the Regal Parties resolved
3 the Florida Action by entering into a Settlement Agreement in the amount $9.75
4 million.
5 98. On May 6, 2019, the Florida state court, on consent of the parties,
6 entered the Florida Judgment approving and incorporating the terms of the
7 Settlement Agreement. Ex. 1.
8 99. The Florida Judgment states that the Judgment Amount of $9.75
9 million “shall bear interest at the statutory rate commencing on September 3, 2019,
10 and the Settlement Agreement grants Sterling the right to recover its
11 collection/attorneys’ fees.”
12 100. Paragraph 5(a) of the Settlement Agreement states, “to secure the
13 Judgment Amount, and as evidenced by the UCC Financing Statements attached to
14 the [Florida] Complaint as Exhibit D, [the Regal Parties] acknowledge and agree
15 [Sterling and certain affiliates] are secured creditors under the UCC that have
16 a continuing first priority security interest in and to,” among other things, “(i) all
17 personal property of Defendants of every kind and nature” … (iv) the
18 …Concentrate “owned by [Sterling] and currently in the possession of
19 [Schumman] and (v) the … Collection, currently on deposit in a vault space
20 contracted with Citibank by Global Trust Depository as evidenced by” certain
21 enumerated SKRs Ex. 1 ¶ 5(a) (emphasis added) (material in brackets added).
22 101. Paragraph 5(b) of the Settlement Agreement provides for the execution
23 and notarization of Irrevocable Letters of Instruction to Global and Schumann to
24 verify their possession of the Collection and Ore, respectively.
25 102. In language that bars the Regal Parties from seeking the relief sought in
26 the Joint Receiver Application, Paragraph 5(b) states, “Neither Plaintiffs nor
27 Defendants [i.e, the Regal Parties] shall, directly or indirectly, be permitted to
28
1 move or relocate the Ophir Collection and Ore Concentrate from Global or
2 Schumann’s respective possession.” Id. ¶ 5(b)(ii) (emphasis added) (material in
3 brackets added).
4 103. In negotiating the Settlement Agreement, the Regal Parties insisted
5 upon some period of exclusivity in which to find a buyer for the Collection in order
6 to pay Sterling the settlement amount, plus interest.
7 104. Paragraph 5(d) of the Settlement Agreement states that Sterling would
8 not “interfere with or frustrate” the Regal Parties efforts to monetize the Collateral
9 “contemporaneous with the satisfaction of the [Florida] Judgment. However,
10 Defendants must use their best efforts to obtain financing or monetize the
11 assets in order to pay the Judgment prior to September 3, 2019, and a condition
12 precedent to the closing of any financing shall be the payment of the Judgment
13 Amount from those proceeds.” Id. ¶ 5(d) (emphasis added).
14 105. In Paragraph 7(b) of the Settlement the Regal Parties warranted and
15 represented:
16 Until such time as the Judgment Amount is paid in full, Defendants
shall not permit entry or filing of any pledge, lien, judgment, charge,
17 encumbrance, hypothecation, option, right of first refusal, right of first
offer, agreement, security interest, or debt against the Ophir
18 Collection and Ore Concentrate, unless it is for financing or
monetizing the assets as referenced in Paragraph 5(d) above.
19
20 Id. ¶ 7(b) (emphasis added).
21 106. Sterling filed the Florida Judgment, in the amount of $9,750,435.00,
22 with the Superior Court of California for the County of Orange, Case No. 30-2019-
23 01074652-CU-EN-CJC on June 4, 2019. The Clerk issued the domesticated
24 judgment on August 26, 2019 and Sterling filed its Writ of Execution in Orange
25 County (copy attached as Exhibit 11) on September 3, 2019.
26
27
28
F. OTEC Schemes to Monetize the Collection and Fund a Litigation War

1 Chest by Misleading this Court
2
107. OTEC did not convert the Agreed Judgment of $8 million into a UCC
3
perfected lien. Undoubtedly knowing that Sterling had obtained the Florida
4
Judgment and Perfected Lien, OTEC unleashed a plan to leap over Sterling’s lien,
5
monetize the Collection, more than double the $8 million owed pursuant to the
6
Consent Judgment, fund a litigation war chest to pursue fraud claims against Coe
7
and Large and, ultimately, if wholly successful in that effort, rebate monies back
8
the Regal Parties in an amount that would net OTEC $42.5 million – about the
9
roughly $42 million that Regal, Coe and Large had earlier agreed to invest in OTEC.
10
108. While illegal, this plan appealed to OTEC because the Regal Parties
11
were judgment proof and OTEC needed their cooperation to mislead this Court into
12
appointing a receiver to sell the Collection. OTEC and the Regal Parties lack the
13
ability to sell the Collection on their own. To implement this scheme, OTEC needed
14
to act quickly in order to secure a receiver before Sterling became entitled on
15
September 3, 2019 to enforce the Florida Judgment. Upon information and belief,
16
OTEC also believed that Coe and Large have substantial assets and were therefore
17
willing to rebate monies to the Regal Parties if they prevailed wildly in litigation
18
against Coe and Large.
19
109. To that end, OTEC threatened to sue the Regal Parties, along with Coe
20
and Large, in fraud. Upon information and belief, they did so intending that Regal
21
would be coerced into buying into OTEC’s plan – likely conceived and orchestrated
22
by attorney Barks – to settle a so-called “prospective fraud claim” in a manner that
23
would require the Regal Parties to violate the Florida Judgment and breach the
24
Settlement Agreement incorporated therein.
25
110. While these facts support Sterling’s wrongful interference with contract
26
claim against OTEC, to the extent the Regal Parties voluntarily joined with OTEC,
27
OTEC is liable for aiding and abetting the Regal Parties’ breach of contract.
28
1 111. On May 28, 2019 just three weeks after entry of the Consent Final
2 Judgment, OTEC and the Regal Parties reportedly settled for $17,500,000 a
3 “prospective fraud in the inducement lawsuit” (Dkt. at 4:19-22) against the Regal
4 Parties and, presumably, Coe and Large, based on their prior nondisclosure about
5 their assets (namely, the Ophir Collection) in connection with the Second Tenn.
6 Action (“Fraud Settlement”).
7 112. The Regal Parties agreed, among other things (A) to join with OTEC in
8 seeking the appointment of a Receiver, supposedly to assist with OTEC’s collection
9 of the “judgment in the Memphis Litigation;” (B) to the receiver’s sale of the
10 Collection for no less than $120 million and (C) to the payment of $17.5 million as
11 the Settlement Amount to OTEC. Dkt 4-17.
12 113. As a result, OTEC parlayed what began as a $2.35 million settlement of
13 the First Tenn. Action against the Tennessee defendants into the $8 million Agreed
14 Judgment, which, under the Fraud Settlement, morphed into a $17.5 million
15 payment of a “prospective” fraud claim. Knowing the difficulties in recovering
16 monies from the Regal Parties and leaping over Sterling’s UCC Perfected Lien,
17 OTEC caused the Regal Parties to join them in asking this Court to approve a
18 receivership sale of the Collection to pay the $17.5 Fraud Settlement – under the
19 guise that a Receiver was needed to enforce the Agreed Judgment.
20 114. However, contrary to the representations made in the Joint Receiver
21 Application, OTEC, in the Fraud Settlement, traded away its right to enforce the
22 Agreed Judgment in exchange for the Regal Parties’ payment of the “Settlement
23 Amount” of $17.5 million from the Collection sale proceeds. See Dkt. 4-5
24 (Declaration of Brett M. Regal, Ex. 5), ¶ 1(a) ( (DT4-6) at ¶ 1(a)(iv)(i) (payment of
25 the “Settlement Amount” to OTEC) and ¶ 3(defining the Settlement Amount of
26 $17.5 million); see also DKT No. 4 at 4:22-5:12.
27
28
1 115. The Fraud Settlement, moreover, relieves the Regal Parties from
2 liability under the Agreed Judgment upon payment of the Settlement Amount.
3 Paragraph 1(b) of the Settlement Agreement provides:
4 [OTEC] shall, to the extent permissible under applicable law, release
the Regal Defendants, and [them] only, from their current joint and
5 severable liability under the for the judgement [sic] in the Memphis
Litigation once the amounts as outlined in Paragraph 3 below are paid
6 ….
7 116. Paragraph 3(e) provides:
8 Upon receipt of the entire Settlement Amount in good funds from the
Regal Defendants to [OTEC], any claims, whether known or unknown,
9 that [OTEC] may have against The Regal Defendants that exist or may
exist prior to the Effective Date shall be forever extinguished, explicitly
10 leaving open the claims or [sic] OTEC against all other defendants in
the Memphis Litigation.
11
12 ECF No. 4-17 ¶ 3(e). See also id., Third, Fourth and Fifth Recitals (reciting a
13 willingness to release the Regal Defendants “from … to the extent permissible under
14 applicable law, liability in the Memphis Litigation”).
15 117. The Fraud Settlement also contemplates a potential rebate of the $17.5
16 million Fraud Settlement to the Regal Parties. The Settlement preserves OTEC’s
17 alleged rights against any non-Regal debtors, including Robert Coe and David
18 Large, Tennessee defendants who are named as defendants in this action but have
19 not appeared in the case. ECF 5-3 at 1.
20 118. To that end, OTEC agreed “to the extent permissible under applicable
21 law” to release the Regal Defendants from liability under the Agreed Judgment once
22 the $17.5 million Settlement Amount is paid (id. at 3 ¶ 1(b)), and the Regal Parties
23 agreed to cooperate with OTEC’s prosecution of the “Fraud Claims” against others.
24 Id. at 3 ¶ 2(a). If, once OTEC receives $17.5 million in Collection sale proceeds,
25 OTEC recovers “over $60 million in litigation or settlement of the Fraud Claims,
26 [OTEC] shall rebate to the [Regal Parties] the Rebate Amount” (id. at 4 ¶ 2(b)),
27 defined as $17.5 million.
28
1 119. Therefore, if OTEC ends up rebating the $17.5 million Rebate Amount
2 to the Regal Parties, it will still be left with at least $42.5 million, roughly the
3 amount that Regal, Coe and Large had allegedly agreed to invest in OTEC back in
4 2017.
5 G. The Receivership Order
6 120. This Court issued the Receivership Order on July 2, 2019.
7 121. Without mention of the Florida Judgment, the Receivership Order,
8 among other things:
9 A. Appoints Mr. Pasternak as a Receiver “to carry out a levy on Regal
10 Debtor’s property in accordance with the remainder of this Order”;
11 B. Directs the Receiver “to take sole custody, possession and control of and
12 sell the Ophir Collection and [the Concentrate] owned by the Regal
13 Debtors in order to satisfy and execute on the [Agreed] Judgment and
14 the terms of the [Prospective Fraud Settlement”];
15 C. “[D]ivests Regal Debtors of, and puts under the exclusive control of
16 the receiver, the Ophir Collection, and any other property needed to
17 satisfy and execute on the Judgment and Settlement Agreement, as such
18 conditions may arise”;
19 D. Directs the Receiver to “assume sole and immediate possession,
20 custody and control of all of the Debtor Property and sell that
21 property subject to this Court’s confirmation and approval in
22 satisfaction of the [Agreed] Judgment and [Prospective Fraud]
23 Settlement”;
24 E. Grants the Receiver “authority to assign, sell and transfer the Debtor
25 Property”;
26 F. Directs that the “proceeds of any sales shall be used to satisfy the
27 [Agreed] Judgment and [Prospective Fraud] Settlement, less the
28
1 receivership’s reasonable costs and fees”; and

2 G. Permits the Receiver “to charge as interim fees his standard hourly billing
3 rate, currently at his usual $595 per hour.
4 Dkt. 9 at ¶¶ 2-8 (emphasis added).
5 122. Without mention of the Florida Judgment, paragraph 9 of the
6 Receivership Order mandates that the Receiver “shall
7 A. Take possession, custody and control of, and exclusively and in his sole
8 discretion, operate, manage, control, exploit, and possess the Debtor
9 Property;
10 B. Collect all royalties, rents, issues, profits, and income resulting from or
11 generated by Debtor Property;
12 C. Care for, preserve, possess, maintain, and subject to Order of this Court
13 confirming and approving such sale, sell Debtor Property;
14 D. Use (at his discretion) any tax identification or Social Security numbers
15 previously used in connection with Debtor Property;
16 E. Enter into such contracts as the receiver reasonably believes necessary for
17 the preservation and sale of Debtor Property;
18 F. Institute and prosecute all suits as the receiver, upon obtaining permission
19 of the Court, may reasonably believe to be necessary in connection with
20 Debtor Property, and may without further order of the Court defend all
21 suits and actions as may be instituted concerning Debtor Property;
22 G. Negotiate and make financial arrangements for any licenses or permits that
23 the receiver reasonably believes to be appropriate in connection with
24 Debtor Property;
25 H. Issue subpoenas, conduct and participate in discovery, take depositions,
26 pursue contempt actions, and otherwise pursue all remedies available by
27 law to ensure compliance with the receiver’s authority under this Order;
28
1 I. Incur the expenses necessary for the care, preservation and maintenance of
2 Debtor Property; and
3 J. Pay any funds generated from Debtor Property to OTEC in satisfaction
4 of Judgment and Settlement Agreement, and, to the extent that there
5 are funds available, pay any remaining funds to Regal Debtors.
6 Id. ¶ 9 (emphasis ordered).
7 123. Nearly all of the powers vested in, and the directives given to, the
8 Receiver pursuant to the Receivership Order contravenes the Florida Judgment.
9 124. Without mention of the Florida Judgment, the Receivership Order also
10 Orders, among other things, that “Regal Debtors
11 A. Shall immediately relinquish and turn over possession of the Debtor
12 Property to the receiver forthwith upon his appointment becoming
13 effective;
14 B. Shall relinquish and turn over possession of any other Debtor
15 Property; …
16 f. Shall cooperate with and fully assist the receiver with respect to his
17 possession and attempts to sell Debtor Property or interests therein,
18 including but not limited to promptly responding to any inquiry by the
19 receiver for information;
20 Id. at ¶ 21.
21 125. The foregoing directives to the Regal Debtors contravene the terms of
22 the Florida Judgment.
23 H. Sterling Notifies the Receiver of the Florida Judgment
24 126. In a telephone call on August 20, 2019 and by letter dated August 21,
25 2019, Sterling’s California counsel, Bradley Dugan, Esq., advised Mr. Pasternack
26 that Sterling had just learned of the Receivership Order, and discussed the existence
27
28
1 of the Florida Judgment and Sterling’s interest in the Collateral. A copy of the
2 letter, without its exhibits, is attached hereto as Exhibit 12.
3 127. The next day, August 22, 2019, Mr. Pasternak held a telephone call
4 with Dugan, Evan Frederick, Esq. (“Frederick”) (a Florida attorney who had
5 represented Sterling in obtaining the Florida Judgment), Fraenkel and Barks.
6 Fraenkel and Barks confirmed to the Receiver that Sterling owned the Concentrate
7 and held the first priority Perfected Lien in the Collateral. Mr. Pasternak committed
8 that any proceeds from a sale of the Collection would first be used to pay Sterling
9 what it was owed pursuant to the Florida Judgment.
10 128. While preserving and not waiving Sterling’s rights (id. at 4), the letter
11 took “comfort in the knowledge that the Security is safely in your possession.” Id.
12 at 1. Given the recent handling of this matter by the Successor Receiver, that is no
13 longer the case.
14 129. During the same call, Hackman also emphasized that Sterling owned
15 the Concentrate and expressed concern over the location of the Concentrate and its
16 inclusion in the Receivership Order. The Receiver assured Sterling that he was not
17 taking any steps to sell the Concentrate and both Fraenkel and Barks acknowledged
18 that Sterling owns the Concentrate and that the Regal Parties have no right to
19 encumber the Concentrate or exercise any possession or control over it.
20 130. On October 4, 2019, after Sterling had filed a writ of execution in
21 California, Hackman and Frederick spoke by telephone with Mr. Pasternack and his
22 paralegal, Ellen Phillips (“Phillips”). During the October 4 call, Hackman advised
23 Mr. Pasternack about the September 3, 2019 expiry of the Regal Parties’ “exclusive”
24 period to seek to monetize the Collection and expressed concern over the Regal
25 Parties’ ability in any event to locate a legitimate buyer for the Collection.
26 131. During the October 4 call, Mr. Pasternack reiterated his prior assurance
27 to Hackman that Sterling’s rights would be fully protected in the event of any sale of
28
1 the Collection, and he assured Hackman and Frederick that the Concentrate
2 remained in Schumann’s possession. At his direction, following the call, Phillips
3 sent Frederick an email attaching Schumann’s invoice for its storage of the
4 Concentrate, together with a photograph of the material in storage.
5 132. Mr. Pasternack died on November 21, 2019, a fact that Sterling learned
6 only after it observed on PACER this Court’s December 3, 2019 Order appointing
7 Mr. Alsbrook as Successor Receiver.
8 133. Prior to his death, the Receiver had not indicated any intention on his
9 part to support or propose a sale of the Collection that would not require a first
10 priority payment from the sale proceeds of all monies owed to Sterling pursuant to
11 the Florida Judgment, including not only the principal amount of $9.75 million, but
12 also interest and collection/attorneys’ fees.
13 I. The Order of Sale
14 134. On December 30, 2019, the Successor Receiver filed a Stipulation to
15 approve a PSA dated December 24, 2019 by which a South African Registered
16 Company (“Buyer”) agreed to purchase the Ophir Collection from TBS for
17 $220 million. This transaction has yet to close.
18 135. Although the effective date of the PSA was December 20, 2019, TBS
19 did not execute the PSA until December 24, 2019 and neither the Successor
20 Receiver nor the Vault Manager/Escrow Agent executed the PSA at all. Under the
21 terms of the PSA, the Buyer was to deposit the full purchase price with the Escrow
22 Agent by December 27, 2019. That did not happen.
23 136. About two weeks later, on January 10, 2020, the Successor Receiver
24 filed a Revised Stipulation for Issuance of an Amended [Proposed] Order
25 Approving Sale of Receivership Estate Property pursuant to the [Amended] PSA.
26 Dkt No. 22.
27
28
1 137. The Amended PSA did not change the purchase price of the Collection
2 to be sold by TBS. Rather, the Amended PSA purportedly effectuated the Buyer’s
3 “desire[]to take title to the Ophir Collection under the name of its assignee” and the
4 Parties desire to “clarify the manner” for the transfer of funds and possession of the
5 Collection. Id.
6 138. The payment and fund transfer mechanisms are hardly an example of
7 clarity. The Amended PSA requires the Successor Receiver to direct Global to issue
8 an SKR in the name of Buyer’s designee “immediately upon his receipt” of the
9 Court order approving the PSA – before the receipt of any funds. It contemplates
10 that the Buyer would then receive a copy of the new SKR, presumably for use in
11 facilitating the release of the purchase price.
12 139. The Amended PSA, however, contains no deadlines by which the
13 Successor Receiver must direct Global to deliver the new original SKR to the
14 Successor Receiver and to deliver a copy thereof to the Buyer. Until that step
15 occurs, there can be no release of the purchase price. Id.
16 140. The Amended PSA grants the Buyer 72 hours from its receipt of a copy
17 of the newly issued SKR to fund the full purchase price. But, this deadline is
18 meaningless given the absence of any deadline by which Global must deliver the
19 new SKR to the Successor Receiver and provide a copy thereof to the Buyer. Id.
20 141. This Court filed the Order of Sale on January 21, 2020 and entered the
21 Order on January 22, 2020. Dkt. No. 23.
22 J. The Successor Receiver Brushes Aside Sterling’s Objections to the Order
of Sale
23
24 142. The next day, January 23, 2020, Sterling’s counsel emailed the
25 Successor Receiver and OTEC’s counsel, asking a series of written questions
26 directed at the ambiguity in the PSA and the steps needed for the deal to close and
27 for Sterling to receive its principal of $9.75 million and its interest and
28
1 attorney/collection fees. A copy of this email exchange is attached hereto as

2 Exhibit 13.
3 143. In his response later that day, the Successor Receiver apologized,
4 stating that Sterling had asked “far too many questions for me to answer right now.”
5 He promised to give an update when “the funds are paid in and paid per the terms of
6 the order.”
7 144. Confirming that the Order of Sale did not require the full satisfaction of
8 the Florida Judgment, e.g., the payment of interest and Sterling’s collection,
9 attorneys’ fees, the Successor Receiver also wrote, “You will be provided notice of
10 our final report and be given an opportunity to request any additional
11 disbursement you think is appropriate and properly document, which request the
12 Court will consider along with my final report and account.” Ex. 13 (emphasis
13 added).
14 145. On January 30, 2020, Sterling’s counsel sent another email asking the
15 Successor Receiver to update the status of the proposed sale. Sterling’s counsel
16 stated, in part, “… at some point, I’ve got to advise my clients that the deal is not
17 progressing and that it’s time to intervene and assert their alternative rights to
18 judgment enforcement. So, if there is genuine reason to believe the deal will be
19 closed, we need to know that.” A copy of this email exchange is attached as
20 Exhibit 14.
21 146. The Successor Receiver replied, “Sorry no time for a call. Deal is not
22 done yet. As I have repeatedly informed you, I will reach out when we have funds.
23 If you feel the need to bring a motion before Judge Phillips that's fine - just give me
24 notice.” Id.
25 147. On February 10, 2020, Sterling moved to intervene in this action, as of
26 right and permissibly, pursuant to Fed. R. Civ. P. 24(a) and (b).
27
28
1 148. OTEC and the Successor Receiver opposed the motion. Mr. Alsbrook
2 argued that Sterling would be adequately protected by formally presenting its claim
3 to the Successor Receiver, as if the Successor Receiver were empowered to
4 determine the validity of that claim.
5 149. Sterling argued, among other things, that Mr. Alsbrook had already
6 refused to honor the Florida Judgment by proposing an Order of Sale that did not
7 require a priority payment to Sterling of the interest and attorneys’ fees/collection
8 costs awarded to Sterling by the Florida Judgment.
9 150. In its March 5, 2020 Minute Order Granting Motion to Intervene
10 (“Intervention Order”) (Dkt. 39), the Court, among other things, noted the
11 existence of an apparent dispute over Sterling’s right to recover post judgment
12 interest, attorneys’ fees and costs as a reason why the Parties have not defeated
13 Sterling’s showing that Sterling’s interests are not being adequately represented by
14 the Parties.
15 K. Tulk and Ophir’s Belated and Incredible Claim of Ownership over the
Collection
16
17 151. On March 25, 2020, after years of silence, Tulk contacted Hackman.
18 He disclosed that he had reached out to Mr. Alsbrook earlier this year and had
19 provided the Successor Receiver with documents supporting Ophir’s claim that TBS
20 does not own title to the Collection. Tulk offered no credible explanation for the
21 years he has spent not just standing on sidelines, but actively supporting Regal and
22 TBS’s efforts to monetize the Collection as TBS’s property and himself defrauding
23 Sterling by providing the Ophir Affidavit to Regal on the understanding that Regal
24 would send it to Sterling.
25 152. Also, Tulk has not given Sterling any explanation of why his cohort,
26 Coe, sent the Ophir APA and Certificate to Hackman and why Tulk has (apparently)
27
28
1 not told Mr. Alsbrook about the differences between the Ophir APA and the Filed
2 APA.
3 153. In telephone conversations with Hackman occurring thereafter, Tulk
4 asserted that Tulk had never signed an APA with TBS and that his signatures of
5 many of the exhibits to the Joint Receivership Application were forged or cut and
6 pasted without his knowledge and consent. He claimed not to have signed the Filed
7 APA because he would not agree to allow title to the Collection to pass from Ophir
8 to TBS unless and until the purchase price was paid in full. Tulk did not disclose or
9 acknowledge the existence of the Ophir APA.
10 154. Undermining his claim that TBS does not own the, Tulk told Hackman
11 that, over time, Ophir had agreed to proposals by Regal and TBS to increase the
12 purchase price for the Collection from $20 million to $35 million – with agreement
13 on the $35 million figure occurring in the summer of 2019.
14 155. Ophir agreed to these price increases in order to enable Regal and TBS
15 to continue trying to monetize the Collection. He did not explain why did not
16 require that Regal and TBS confirm in writing that title to the Collection would only
17 pass upon payment of the full purchase price.
18 156. Tulk also denied to Hackman having signed the Ophir Affidavit as filed
19 with this Court. He claimed to have made changes to the affidavit that Regal
20 provided to him in March 2018 and stated that he signed a version containing his
21 changes. He conveniently claimed that the changes were directed at the
22 representation that TBS owned the Collection free and clear of any liens or
23 encumbrances. Just as conveniently – and suspiciously – Tulk asserted that he does
24 not know the precise location of the original of the supposedly modified version
25 Ophir Affidavit that he admittedly signed, but believes that said document is at his
26 home in Canada. Tulk added that he is in London and cannot get home to locate the
27 original.
28
L. The Successor Receiver’s Decision to Cut Ophir into the Sale Proceeds,
1 without Conferring with Sterling or Agreeing Fully to Honor The Florida
Judgment
2
3 157. During these same conversations, Tulk told Hackman that Mr.
4 Alsbrook had recently advised Tulk that Mr. Alsbrook had obtained and would
5 support the Parties’ agreement that he first pay Ophir the sum of $35 million from a
6 Court-approved sale of the Collection, ahead of Sterling.
7 158. On April 1, 2020, Sterling’s counsel wrote to Mr. Alsbrook, stating

It has come to our attention that, without informing Sterling, you have
8 been in contact with Dion Tulk and that notwithstanding certain
reservations you supposedly have about his claim of purported
9 ownership of the Ophir Collection, you have advised him that you,
OTEC and the Regal Parties are prepared to pay Mr. Tulk $35,000,000
10 from the proceeds of the sale of the Collection before honoring
Sterling’s first priority lien in and to the Collection.
11
12 159. The email complained about the unfair prejudice to Sterling and
13 objected that Mr. Alsbrook had updated Tulk about a potential sale of the Collection
14 for $120 million (not $220 million) without keeping Sterling in the loop. The email
15 continued, “we have also learned that you advised Mr. Tulk that you have not yet
16 raised the matter with Sterling because of your subjective and unfavorable view
17 about prior communications with” Sterling’s New York based counsel. Calling that
18 statement “extremely unprofessional,” the email demanded that Mr. Alsbrook
19 provide copies of this email communications with Tulk and the Parties, update the
20 Court in writing about these developments and resign.
21 160. Mr. Alsbrook responded (emphasis added):
22 The email below, wherein you label me both “untrustworthy” and

“unprofessional,” is a perfect example of the abusive conduct in which
23 you have regularly engaged over the course of this matter. As an agent
of the Court, I take the sort of accusations you are making very
24 seriously. Further, your email contains so many false and incorrect
statements that I cannot begin addressing them all.
25
I am happy to and will address this matter to the Court, but consider the
26 requests made in your email rejected. If you believe that I should be
removed as Receiver, that is fine – make a motion. There has not been
27 such a need, and at the present time I believe that engaging in whatever
28
gamesmanship you are attempting is a waste of billable time and would

1 unnecessarily increase fees and costs in this matter.
2
3 161. Sterling’s counsel responded by asking Mr. Alsbrook to identify the
4 “many false and incorrect statements,” to no avail.
5 162. Contemporaneous documentation supports the facts and concerns stated
6 in Sterling’s counsel’s April 1 email exchange with the Successor Receiver.
7 163. By email dated February 26, 2020 (copy attached as Exhibit 15), Mr.
8 Alsbrook notified Tulk of some inconsistencies in the information that you
9 provided concerning the Ophir Collection.” (Emphasis added) Mr. Alsbrook
10 referenced the Certificate and Ophir Affidavit signed by Tulk as “directly
11 contradict[ing] your statement and added, I am not an expert, but the signature on
12 the documents provided to me by Trade Base appears to be a perfect match of your
13 signature on the agreements that you provided.” (Emphasis added)
14 164. The email continued (emphasis added):

With all of that said, I agree with you that it appears that you have yet
15 to be paid. Based on my review of all relevant documentation, it
appears that you and Trade Base entered into a number of agreements
16 and modifications of those agreements that ultimately contemplated a
sale of the Ophir Collection by Trade Base that would provide $20M –
17 later increased incrementally to $35M – to you from the sale proceeds.
My understanding is that Trade Base remains committed to paying
18 you, although I can understand your concern at having discovered the
pending lawsuit.
19
In order to provide assurances that you will be compensated
20 according to the terms of your agreement, Trade Base drafted
correspondence to me on February 24, 2020 agreeing that $35M
21 should be disbursed to you from the ultimate sale proceeds that
end up in my possession as the United States District Court’s
22 Receiver. Please understand that I currently hold the Ophir Collection
for the benefit of all interested individuals.
23 Based on my review of the documents you have provided I believe
that you certainly have an interest in the collection and you can be
24 assured that no transfer or sale will occur without you being
properly compensated according to orders of the Court.
25
I am happy to discuss this matter further, as the agreements between
26 you and Trade Base appear to be somewhat convoluted and I
understand that receivership proceedings and Federal Court can be
27 daunting for non-attorneys. Feel free to contact me if you have any
questions regarding these proceedings.
28
1 165. In this one email, Mr. Alsbrook granted Tulk far more than he has
2 granted Sterling: he promised that Ophir will be paid “according to the terms of
3 your agreement,” however “convoluted” it may be. Only Mr. Alsbrook knows what
4 agreement he is referring to. By contrast, Mr. Alsbrook has not assured Sterling that
5 it will be paid according to the terms of the Florida Judgment. Instead, he has
6 said only that Sterling would receive the principal amount of the Judgment, but told
7 Sterling to “file a motion” to intervene when Sterling pressed him to commit to pay
8 Sterling paid the interest and attorneys’ fees owed pursuant to the Florida Judgment.
9 166. In an email dated March 20, 2020 (copy attached as Exhibit 16), Mr.
10 Alsbrook wrote to Tulk:
11 Hi Dion-sorry that I haven’t gotten back to you lately-our office is
closed down and I am working from home. So far the only update is
12 that Sterling was allowed to intervene, which means that he can file a
lawsuit. I don’t think that changes much in terms of you. You will
13 still have a claim if you are ultimately forced to bring it. I am waiting
14 for more information about the sale we have been discussing so that I
can share it with you.
15 In the meantime, do you have potential purchasers that you might like
16 to involve? I have confirmation that Regal and Ocean Thermal will
agree to put you first in line. I have not reached out to Sterling’s
17 counsel yet because of some difficult early conversations.
18 167. Sterling can only wonder what Mr. Alsbrook believes are the “many
19 false and incorrect statements” contained in its counsel’s April 1 email to the
20 Successor Receiver and what “convoluted” “agreement” he is relying on in assuring
21 Tulk that Ophir will be paid. $35 million. Mr. Alsbrook’s willingness to agree with
22 the Parties that Ophir will be paid “first in line” is an unjustified repudiation of the
23 priority rights that Sterling enjoys pursuant to the Florida Judgment and Perfected
24 Lien. Moreover, in promising to “share” with Tulk “more information about the
25 sale” we have been discussing while justifying his keeping Sterling in the dark
26 “because of some difficult early conversations,” Mr. Alsbrook has revealed that his
27 judgment is affected by personal bias.
28
1 M. OTEC Misleads its Investors in its Most Recent SEC Filing

2 168. On March 20, 2020, the same day on which Mr. Alsbrook was assuring
3 Tulk that Sterling’s intervention does not “change much” for him, OTEC was
4 misleading its actual and potential investors about this dispute in its Annual Report.
5 169. In disclosing this litigation, OTEC wrote that, as a result of the Fraud
6 Settlement, it is now owed the $8 million Agreed Judgment plus another
7 $17,500,000, and that the “combined judgment and settlement amounts owed to us
8 total $25,500,000.” That is not true, as OTEC traded away the $8 million Agreed
9 Judgment for the Regal Parties’ agreement to join with OTEC in persuading this
10 Court to issue the Receivership Order and to pay OTEC $17.5 million from a sale of
11 the Collection.
12 170. OTEC also disclosed that the Receivership Order “appoint[s] a receiver
13 to carry out the levy on Regal Debtors’ property, such that it may be sold (subject to
14 further order of the court approving and confirming such sales), to satisfy the
15 $25,500,000 settlement and judgment amounts in our favor.” This is untrue, as the
16 Agreed Judgment is not to be satisfied from a receivership sale of the Collection.
17 171. OTEC also disclosed that “on August 15, 2019, the court-appointed
18 receiver notified the court that he had taken custody, possession, and control of the
19 “Ophir Collection” and 350,000 pounds of unrefined gold and other precious metal
20 bearing ore”; that “the receiver has the authority to assign, sell, and transfer the
21 debtors’ property” and that said “proceeds of any sales will be used to satisfy the
22 judgment and settlement agreement, less the amount needed to satisfy an existing
23 lien (currently estimated at approximately $10 million plus attorneys’ fees) and
24 receivership’s reasonable costs and fees.” The existing lien apparently refers to
25 Sterling’s Perfected Lien.
26 172. This statement is also materially false and misleading because -- as
27 OTEC well knows, as its counsel acknowledged to Mr. Pastnerak and as stated in
28
1 the Florida Judgment --Sterling owns the Concentrate and, by March 20, 2020,
2 OTEC had agreed with the Regal Parties that the Receiver would put another
3 purported creditor, Ophir, “first in line” to be paid from the sale proceeds.
4 173. Sterling has no adequate remedy at law.
5 COUNT I
6 Declaratory Judgment Regarding Sterling’s Rights Under the Florida
Judgment
7 (Against All Parties)
8 174. Sterling incorporates by reference the foregoing allegations of this
9 Complaint in Intervention.
10 175. The Florida Judgment is entitled to the Full Faith and Credit of the U.S.
11 Constitution. U.S. Const. art. IV § 1.
13 Receiver pursuant to paragraphs 2 through 9 of the Receivership Order contravenes
14 the Florida Judgment.
15 177. The directives to the Regal Parties set forth in paragraph 21 of the
16 Receiver Order contravene the terms of the Florida Judgment.
17 178. Without limiting the foregoing, the Receivership Order contravenes
18 Paragraphs 5(b)(ii), 5(d) and 7(b) of the Settlement Agreement, and hence, the
19 Florida Judgment, by
20 a. Attributing to the Regal Parties ownership of the Concentrate owned by
21 Sterling;
22 b. Granting the Receiver exclusive possession and control over the
23 Collection, Concentrate and any other property owned by the Regal
24 Parties;
25 c. Directing that the Receiver exercise exclusive possession and control
26 over the Collection, Concentrate and any other property owned by the
27 Regal Parties;
28
1 d. Directing the Receiver to levy upon the Collateral and, if necessary, all
2 of Debtor’s personal property to pay the debt owed to OTEC;
3 e. Creating an encumbrance on the Collateral for reasons other than to
4 monetize the Collateral solely to satisfy the Florida Judgment.
5 179. The Order of Sale likewise contravenes the Florida Judgment by
6 approving the sale of the Collection on the terms set forth in the Order.
7 180. Without limiting the foregoing, the Order of Sale contravenes
8 Paragraphs 5(b)(ii), 5(d) and 7(b), and hence, the Florida Judgment, by
9 A. Approving the sale of the Collection for any purpose other than to
10 monetize the asset solely to satisfy the Florida Judgment, including
11 for the purpose of paying monies allegedly owed to OTEC;
12 B. Approving the sale without making provision that the Receiver first
13 satisfy the Florida Judgment in its entirety, including the payment to
14 Sterling of the principal amount of the Judgment, the interest earned
15 thereon, and the amount of Sterling’s collection/attorneys’ fees,
16 before any further distribution of sale proceeds;
17 C. Failing to declare Sterling’s ownership of the Concentrate; and
18 D. Failing to order that the Receiver immediately turn over possession
19 and control of the Concentrate to Sterling.
20 181. There is a justiciable controversy between Sterling, OTEC and the
21 Regal Parties concerning the extent to which the Receivership Order and Order of
22 Sale complies with the Florida Judgment.
23 182. The Florida Judgment is enforceable against the Tulk Defendants in
24 equity and at law.
25 183. Sterling is entitled to a judgment declaring its rights as set forth above
26 and more fully set forth in the Prayer for Relief, including a declaration that the
27 Florida Judgment is enforceable and binding, that Sterling owns title in and to the
28
1 Concentrate and that Sterling has a first priority Perfected Lien in and to the
2 Collateral as specified in the Florida Judgment.
3 COUNT II
Decree Enforcing Sterling’s Ownership of the Concentrate
4 (Against All Parties)
7 185. The Florida Judgment is entitled to the Full Faith and Credit of the U.S.
8 Constitution. U.S. Const. art. IV § 1.
9 186. The Florida Judgment recognizes and confirms Sterling’s ownership of
10 the Concentrate.
11 187. The Tulk Defendants make no claim of ownership in and to the
12 Concentrate.
13 188. Relying on the Receivership Order, OTEC, the Regal Parties and the
14 Receiver have failed to provide a Letter of Direction to Schumann and other
15 documentation necessary to declare and enforce Sterling’s title in and to the
16 Concentrate, and to allow the transfer of the Concentrate to a person and location of
17 Sterling’s choice.
18 189. Sterling cannot obtain physical possession and control over the
19 Concentrate and transfer the same to a person and location of its choice without a
20 decree specifically directing the Receiver, Regal Parties and OTEC to issue a Letter
21 of Direction and other appropriate instructions to Schumann directing Schumann to
22 take all steps required to honor Sterling’s title in and to the Concentrate, and to
23 transfer the Concentrate to a person and location of Sterling’s choice.
24 190. The resulting harm to Sterling is irreparable in that it cannot adequately
25 be compensated by money damages. Among other things, the Concentrate has not
26 been appraised and its value, while undeniably considerable, has not been
27 established.
28
Count III
1
Alternatively, Declaratory Judgment Regarding Sterling’s Rights Under the
2 UCC
(Against All Parties)
3
6 192. Even if the Florida Judgment were not fully enforceable in and binding
7 upon this Court and the parties, prior to the issuance of the Receivership Order,
8 Sterling held its first priority Perfected Lien on the Concentrate owned by Sterling,
9 the Collection and the Other Regal Property.
11 Receiver pursuant to paragraphs 2 through 9 of the Receivership Order violates the
12 Perfected Lien.
13 194. The directives to the Regal Parties set forth in paragraph 21 of the
14 Receiver Order violate the Perfected Lien.
15 195. Without limiting the foregoing, the Receivership Order violates the
16 Perfected Lien, by
17 A. Attributing ownership of the Concentrate to the Regal Parties;
18 B. Granting the Receiver exclusive possession and control over the
19 Collection, Concentrate and other any property owned by the Regal
20 Parties that is not subject to the Perfected Lien;
21 C. Directing that the Receiver exercise exclusive possession and
22 control over the Collection, Concentrate and Other Regal Property
23 in a manner not subject to the Perfected Lien;
24 D. Directing that the Receiver levy upon the Collateral and, if
25 necessary, all of Debtor’s personal property to pay the debt owed to
26 OTEC in a manner not subject to the Perfected Lien;
27 E. Creating an encumbrance on the Collateral that is not subject to the
28 Perfected Lien.
1 196. Without limiting the foregoing, the Order of Sale contravenes the
2 Perfected Lien by:
3 A. Approving the sale of the Collection in a manner that is not subject
4 to Perfected Lien;
5 B. Approving the sale without making provision that the Receiver first
6 satisfy the Perfected Lien in its entirety, including the payment to
7 Sterling of the principal amount of the Judgment, the interest earned
8 thereon, and the amount of Sterling’s collection/attorneys’ fees,
9 before any further distribution of sale proceeds;
10 C. Failing to declare Sterling’s ownership of the Concentrate, as
11 reflected in its UCC Financing Statements; and
12 D. Failing to order that the Receiver immediately turn over possession
13 and control of the Concentrate to Sterling.
14 197. There is a justiciable controversy between Intervenor Plaintiffs and
15 Intervenor Defendants concerning the extent to which the Receivership Order and
16 Order of Sale complies with the Florida Judgment.
17 198. Accordingly, Sterling is entitled to a judgment declaring its rights as set
18 forth above.
19 COUNT IV
20 Foreclosure of Security Interest in the Collection
(Against All Parties)
21
24 200. Pursuant to the Florida Judgment and to its filing of the California UCC
25 Financing Statement, Sterling has a first priority security interest in the Collection
26 until the Note is paid in full.
27
28
1 201. The Receivership Order contravenes the Florida Judgment and violates
2 Sterling’s Perfected Lien in the Collection.
3 202. The Florida Judgment has not been satisfied and the Note has not been
4 paid in accordance with its terms and the terms of the Florida Judgment.
5 203. Sterling is therefore entitled to foreclose on its security interest in the
6 Collection, and to be awarded the immediate possession of the Collection together
7 with an award of interest and attorney’s fees pursuant to Section 8(a) of the Note.
8 204. Sterling is entitled to a decree directing the Marshal to foreclose on the
9 Collection, as provided by the Writ of Execution filed on September 3, 2019.
10 COUNT V
11 Fraud
(Against Regal and TBS)
12
15 206. Regal and TBS induced Sterling to enter into the Consulting
16 Agreement, Sale Agreement and Note by repeatedly representing that TBS owned
17 the Collection free and clear of any liens and encumbrances, including
18 representations made in the Ophir APA, the Certificate, the Consulting Agreement
19 and the Ophir Affidavit that Regal sent to Hackman with Tulk’s notarized signature.
20 207. Regal and TBS induced Sterling to enter into the Consulting
21 Agreement, Sale Agreement and Note by representing that TBS had paid Ophir the
22 purchase price of the Collection by a transfer to Ophir of certain ownership interests
23 in the Solauro entities.
24 208. Neither Regal nor TBS disclosed to Hackman the terms of the Filed
25 APA, which provides for payment of the purchase price in cash.
26 209. Tulk claims that TBS did not acquire ownership of the Collection free
27 and clear of any liens and encumbrances, that he did not execute the version of the
28
1 Ophir Affidavit given by Regal to Hackman, that many of the documents that bear
2 his signature and have been filed with this Court contain a forged signature or an
3 unauthorized cut and paste of his signature, that he did not agree to transfer title to
4 the Collection unless and until TBS paid the purchase price and that the purchase
5 price has escalated to $35 million.
6 210. The foregoing representations and omissions by Regal and TBS were
7 materially false and misleading to the extent that title to the Ophir Collection has not
8 passed to TBS, that TBS did not pay for the Collection by means of transferred
9 interests in the Solauro Entities, that the purchase price has increased to $35 million
10 and that the purchase price has been paid.
11 211. Regal and TBS knowingly mispresented and failed to disclose the true
12 facts to Hackman and Sterling in order to induce Sterling a) to enter into the
13 Consulting Agreement, the Sale Agreement and the Secured Promissory Note, b) to
14 continue performing under the Consulting Agreement, including its successful
15 efforts to obtain an SKR that would enable TBS to monetize the Collection, c) to
16 enter into the Florida Judgment and the Settlement Agreement on which it is based
17 and d) to forego enforcement of the Florida Judgment until September 3, 2019.
18 212. Just as Regal and TBS intended, Sterling reasonably relied on Regal
19 and TBS’ misrepresentations and omissions in a) entering into the Consulting
20 Agreement, the Sale Agreement and the Secured Promissory Note, b) continuing its
21 performance under the Consulting Agreement, including its successful efforts to
22 obtain an SKR that would enable TBS to monetize the Collection, c) perfecting the
23 UCC Perfected Lien, d) entering into the Settlement Agreement and Florida
24 Judgment and e) agreeing not to interfere with the Regal Parties’ efforts to monetize
25 the Collection until September 3, 2019.
26 213. Sterling would not have entered into these agreements or undertaken
27 these efforts but for the misrepresentations and omissions by the Regal Parties.
28
1 214. By reason of the foregoing, Sterling has been damaged in an amount to

2 be proven at trial.
3 215. Regal and TBS at all times acted willfully and maliciously, and their
4 conduct is of a nature that they should be assessed with exemplary damages.
5 COUNT VI
6 Fraud
(Against the Tulk Parties)
7
10 217. The Tulk Parties induced Sterling to enter into the Consulting
11 Agreement, Sale Agreement and Note by representing that TBS owned the
12 Collection free and clear of any liens and encumbrances, including representations
13 made in the Ophir APA that Coe provided to Hackman with Tulk’s knowledge, the
14 Certificate that Regal provided to Tulk Hackman with Tulk’s knowledge and the
15 Ophir Affidavit that Regal sent to Hackman with Tulk’s notarized signature.
16 218. Until recently, the Tulk Parties did not disclose to Hackman and
17 Sterling the existence or terms of the Filed APA, the alleged increase in the
18 purchase price from $20 million to $35 million or TBS’ alleged failure to pay the
19 purchase price.
20 219. These representations and omissions were materially false and
21 misleading to the extent that title to the Ophir Collection has not passed to TBS, that
22 TBS did not pay for the Collection by means of transferred interests in the Solauro
23 Entities, that the purchase price has increased to $35 million and that the purchase
24 price has not been paid.
25 220. The Tulk Parties knowingly misrepresented and failed to disclose the
26 true facts to Hackman and Sterling in order to induce Sterling to enter into the
27 Consulting Agreement and to engage in business dealings with the Regal Parties on
28
1 the understanding that TBS owned the Collection fee and clear of any liens and
2 encumbrances.
3 221. Just as the Tulk Parties intended, Sterling reasonably relied on the Tulk
4 Parties’ misrepresentations and omissions in a) entering into the Consulting
5 Agreement, the Sale Agreement and the Secured Promissory Note, b) continuing its
6 performance under the Consulting Agreement, including its successful efforts to
7 obtain an SKR that would enable TBS to monetize the Collection, c) entering into
8 the Settlement Agreement and Florida Judgment, d) perfecting the Perfected Lien
9 and e) agreeing not to interfere with the Regal Parties’ efforts to monetize the
10 Collection until September 3, 2019.
11 222. Sterling would not have entered into these agreements or undertaken
12 these efforts but for the misrepresentations and omissions by the Tulk Parties.
13 223. By reason of the foregoing, Sterling has been damaged in an amount to
14 be proven at trial.
15 224. The Tulk Parties have acted willfully and maliciously, and their
16 conduct is of a nature that they should be assessed with exemplary damages.
17 COUNT VII
18
Equitable Estoppel
19 (Against the Tulk Parties)
22 226. As more fully set forth above, Sterling reasonably relied to its
23 detriment on the Tulk Parties’ misrepresentations and omissions in, among other
24 things, entering into a) entering into the Consulting Agreement, the Sale Agreement
25 and the Secured Promissory Note and b) perfecting the Perfected Lien.
26
27
28
1 227. By reason of the foregoing misrepresentations and omissions, the Tulk

2 Parties are equitably estopped from denying the enforceability of the UCC Perfected
3 Lien.
COUNT VIII
4
Wrongful Interference with Contractual Relations
5 (Against OTEC)
8 229. The Settlement Agreement, which is incorporated by reference in the
9 Florida Judgment, is an enforceable contract between Sterling and the Regal Parties.
10 230. At all relevant times, OTEC had knowledge of the Settlement
11 Agreement.
12 231. In May 2019, OTEC, using wrongful means, threatened fraud claims
13 against the Regal Parties in order to cause them to enter into the Fraud Settlement
14 and to include in the Fraud Settlement the Regal Parties’ agreement to file the Joint
15 Receivership Application with the Court, in breach of the Settlement Agreement and
16 in violation of the Florida Judgment.
17 232. In so doing, OTEC acted unreasonably, willfully and without
18 justification.
19 233. But for OTEC’s interference, the Regal Parties would not have entered
20 into the Fraud Settlement and filed the Joint Receivership Application.
21 234. As a direct and foreseeable result of OTEC’s interference, Sterling has
22 been damaged in an amount to be proven at trial.
23 235. OTEC has acted willfully and maliciously, and its conduct is of a
24 nature that they should be assessed with exemplary damages.
25
26
27
28
1 PRAYER FOR RELIEF

2 WHEREFORE, Sterling demands a judgment as follows:
3 A. On Count I, a judgment declaring that (1) Sterling owns title in and to
4 the Concentrate; (2) Sterling owns the Perfected Lien in and to the
5 Collateral and Other Regal Property; (3) the Florida Judgment is
6 enforceable and binding on the parties pursuant to the Full Faith and
7 Credit Clause of the U.S. Constitution; (4) the Florida Judgment forbids
8 the Receiver and Successor Receiver from, among other things,
9 exercising possession and control over the Collateral and Other Regal
10 Property and from levying the Collateral and Other Regal Property; and
11 (5) the Receivership Order and Order of Sale are vacated insofar as
12 they are contrary to the Florida Judgment;
13 B. On Count II, a decree directing the Receiver, Regal Parties and OTEC
14 to issue a Letter of Direction and other appropriate instructions to
15 Schumann directing Schumann to take all steps required to honor
16 Sterling’s title in and to the Concentrate, to transfer the Concentrate to
17 a person and location of Sterling’s choice and to take any other steps
18 necessary and to document and preserve’s Sterling’s ownership over
19 the Concentrate;
20 C. On Count III, a judgment declaring that (1) Sterling owns title in and to
21 the Concentrate; (2) Sterling owns the Perfected Lien in and to the
22 Collateral and Other Regal Property; and (3) the Receivership Order
23 and Order of Sale are vacated insofar as they are contravene the
24 Perfected Lien in and to Collateral and Other Regal Property;
25 D. On Count IV, a decree directing the Marshal to foreclose on the Ophir
26 Collection in accordance with the Writ of Execution dated September
27 16, 2019;
28
1 E. On Count V, compensatory and punitive damages against the Regal

2 Defendants in an amount to be proven at trial;
3 F. On Count VI, compensatory and punitive damages against the Tulk
4 Defendants in an amount to be proven at trial;
5 G. On Count VII, a declaration that the Tulk Parties are equitably estopped
6 from denying the enforceability of the UCC Perfected Lien;
7 H. On Count VIII, compensatory and punitive damages against OTEC in
8 an amount to be proven at trial;
9 I. On all causes of action, an award of its reasonable costs and attorneys’
10 fees; and
11 J. On all causes of action, such other and further relief as this Court
12 deems just and proper.
13 DATED: April 6, 2020 THEODORA ORINGHER PC
14
15 By:/s/ Jeffrey H. Reeves, Esq.
Jeffrey H. Reeves, Esq.
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Ocean Thermal Energy Corp V C Robert Coe III Et Al Cacdce 19 05299 0040.0

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Case 2:19-cv-05299-VAP-JPR Document 40 Filed 04/06/20 Page 1 of 51 Page ID #:771

James Kennedy, Esq. (pro hac vice pending)

1 43. Additional intervenor defendant Tulk is an individual who, upon

28 Each of the documents contained Tulk’s notarized signature on behalf of Ophir.

1 59. Section 1 of the Ophir APA states:

15 claims, charges, equities, encumbrances, restrictions, and voting agreements.”

16 62. Exhibit B to the Ophir Agreement is a “Deed of Assignment” dated

21 hereunder, UNTO the Assignee ABSOLUTELY.”

27 64. The Confirmation, issued on Ophir letterhead, states:

Trade Base Sales Inc., an Ohio corporation, entered into a Purchase

9 ownership of the Collection free and clear of any liens or encumbrances, in

11 to Hackman intending and expecting that Hackman would rely on them in

13 for which Hackman needed confirmation of TBS’s ownership of the Collection.

1 C. Sterling Obtains Its Security Interest in the Collateral

15 filed a series of settlement notices culminating in the filing on May 2, 2018 of a

16 Second Joint Motion reflecting the parties’ final settlement.

22 million in liquidated damages.

25 interest granted Sterling pursuant to the Note.

Collection owned by the Debtor and currently on deposit … with

1 E. The Florida Judgment

F. OTEC Schemes to Monetize the Collection and Fund a Litigation War

14 applicable law, liability in the Memphis Litigation”).

19 not appeared in the case. ECF 5-3 at 1.

27 defined as $17.5 million.

1 receivership’s reasonable costs and fees”; and

1 attorney/collection fees. A copy of this email exchange is attached hereto as

6 Court-approved sale of the Collection, ahead of Sterling.

7 158. On April 1, 2020, Sterling’s counsel wrote to Mr. Alsbrook, stating

18 statement “extremely unprofessional,” the email demanded that Mr. Alsbrook

20 Court in writing about these developments and resign.

21 160. Mr. Alsbrook responded (emphasis added):

22 The email below, wherein you label me both “untrustworthy” and

gamesmanship you are attempting is a waste of billable time and would

4 “many false and incorrect statements,” to no avail.

5 162. Contemporaneous documentation supports the facts and concerns stated

6 in Sterling’s counsel’s April 1 email exchange with the Successor Receiver.

8 Alsbrook notified Tulk of some inconsistencies in the information that you

9 provided concerning the Ophir Collection.” (Emphasis added) Mr. Alsbrook

10 referenced the Certificate and Ophir Affidavit signed by Tulk as “directly

12 the documents provided to me by Trade Base appears to be a perfect match of your

13 signature on the agreements that you provided.” (Emphasis added)

14 164. The email continued (emphasis added):

1 M. OTEC Misleads its Investors in its Most Recent SEC Filing

9 the Collection and the Other Regal Property.

11 Receiver pursuant to paragraphs 2 through 9 of the Receivership Order violates the

14 Receiver Order violate the Perfected Lien.

17 A. Attributing ownership of the Concentrate to the Regal Parties;

18 B. Granting the Receiver exclusive possession and control over the

19 Collection, Concentrate and other any property owned by the Regal

20 Parties that is not subject to the Perfected Lien;

21 C. Directing that the Receiver exercise exclusive possession and

22 control over the Collection, Concentrate and Other Regal Property

23 in a manner not subject to the Perfected Lien;

24 D. Directing that the Receiver levy upon the Collateral and, if

25 necessary, all of Debtor’s personal property to pay the debt owed to

26 OTEC in a manner not subject to the Perfected Lien;

27 E. Creating an encumbrance on the Collateral that is not subject to the

1 214. By reason of the foregoing, Sterling has been damaged in an amount to

1 227. By reason of the foregoing misrepresentations and omissions, the Tulk

1 PRAYER FOR RELIEF

1 E. On Count V, compensatory and punitive damages against the Regal

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