United States District Court, D. Idaho
MEMORANDUM DECISION AND ORDER
LYNN WINMILL U.S. DISTRICT COURT JUDGE.
Eta Compute, Inc. has filed two ex parte applications: (1) an
Ex Parte Application for Leave to File a Second Amended
Complaint (Dkt. 35); and (2) an Ex Parte Application for a
Writ of Attachment (Dkt. 36). The Court will refrain from
ruling on the ex parte application to amend the complaint.
Instead, it will expedite the briefing schedule and rule on
that application when the briefing is complete. As for the ex
parte application for a writ of attachment, the Court will
grant the application to the extent the Court will order
third parties Andrew Pitt and AAP Holdings, Ltd. to show
cause why a writ of attachment of $270, 000 in Pitt's
Banner Bank account ending in 5038 should not issue. That
hearing will be conducted on January 30, 2019 at 2:00
p.m. The Court will deny the motion to the extent
plaintiff seeks a pre-OSC-hearing writ of attachment, though
it will order AAP and Pitt Holdings not to transfer or
otherwise spend the $270, 000 held in the Banner Bank account
before the OSC hearing.
The Alleged Theft
Eta Compute, Inc. alleges that its former Chief Financial
Officer, Defendant Timothy D. Semones, in concert with his
spouse, Defendant Susan Desko, stole $3 million from Eta to
fund their lifestyle, including the ongoing construction of a
multi-million home for themselves in Idaho. When Mr. Semones
was asked about the discrepancy, he initially attempted to
cover up the theft by altering an Eta bank statement.
CEO quickly ascertained that the bank statement was altered,
and a few days later, on December 6, 2018, Mr. Semones
admitted that during the past year or so, he had transferred
a total of $3 million from Eta's account to
defendants' bank accounts “without the knowledge or
permission of anyone at Eta.” First Am. Comp.,
Dkt. 6, ¶ 22. see also Id. ¶¶ 13-21
(detailing the transfers). Mr. Semones further explained that
he had attempted to repay some of the stolen money in May
2018, by transferring $1.5 million from Defendant Inphi
Partners, LLC's checking account to Eta's account.
See Id. ¶ 26. The net result, according to
plaintiff, is that defendants continue to wrongly hold $1.5
million that rightfully belongs to Eta.
parties initially attempted to resolve this matter privately.
During a December 6, 2018 interview, Mr. Semones allegedly
said he would gather all Defendants' bank statements and
provide them to Eta's attorneys. Mr. Semones further
indicated that he had various bank accounts at Wells Fargo,
including a brokerage account containing $450, 000 in cash.
See Dudley Aff., Dkt. 7-4, ¶ 17(g). Also during
the interview, however, Mr. Semones allegedly said he did not
intend to use the $450, 000 cash in the Wells Fargo brokerage
account to repay the money he owed Eta because he “had
a child in college and ‘other needs.'”
Id. ¶ 18.
between the parties eventually broke down and on December 12,
2018, Eta sued and filed an ex part application seeking a
prejudgment writ of attachment on the bank accounts as well
as the Semones' vehicles. See Dec. 12, 2018 Ex Parte
App., Dkt. 8.
The Writ of Attachment
December 21, 2018, the Court issued a writ of attachment on
defendants' bank accounts (the “Subject
Accounts”), including the Wells Fargo brokerage
account. The Court also scheduled a show-cause hearing for
January 2, 2019. See Order, Dkt. 13; Writ,
conclusion of the January 2, 2019 show-cause hearing, the
Court maintained the attachment of the Subject Accounts and
also ordered the defendants to, among other things, provide a
full accounting to plaintiff regarding any amounts that had
been transferred into or out of the Subject Accounts from
December 1, 2018 forward. See Jan. 1, 2018 Order,
Dkt. 26. Also, to the extent defendants had, in fact,
transferred money out of the Subject Accounts, they were
ordered to identify the recipient account (the
“Recipient Accounts”). Defendants were ordered
not to make expenditures from the Recipient Accounts outside
of paying reasonable living expenses and current routine
monthly obligations. Id. at 5.
The Alleged Fraudulent Transfer to AAP Holdings, Ltd. and
receiving the Court-ordered accounting from defendants, Eta
learned that on December 10, 2018 - just a few days after
that December 6, 2018 meeting - Mr. Semones transferred $500,
000 from the Wells Fargo brokerage account into his Wells
Fargo checking account and then into a newly opened account
at Bank of the West. See Ex Parte App. Mem., Dkt.
36-1, at 2-3 (detailing the transfers). Then, on January 2,
2019 - after the Court had already attached the Subject
Accounts and perhaps just hours before the scheduled OSC
hearing - Defendants wired $270, 000 from a Bank
of the West Account to a third party, AAP Holdings, Ltd. AAP
Holdings then transferred the $270, 000 to Andrew Pitt's
account, where it presumably sits today. Andrew Pitt is the
managing partner of AAP Holdings. He pleaded guilty to wire
fraud in 1997 and was sentenced to 24 months'
incarceration. See Sept. 8, 1997 Judgment, Dkt.
ex parte application is aimed at attaching the bank
account containing the $270, 000. Plaintiff says this money