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Eta Compute, Inc. v. Semones

United States District Court, D. Idaho

January 18, 2019

Eta Compute, Inc., Plaintiff,
v.
Timothy D. Semones; Susan Desko; Inphi Partners, LLC; Susan Desko, P.C., and DOES 1 through 50, Defendant.

          MEMORANDUM DECISION AND ORDER

          B. LYNN WINMILL U.S. DISTRICT COURT JUDGE.

         INTRODUCTION

         Plaintiff 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.

         BACKGROUND

         1. The Alleged Theft

         Plaintiff 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.

         Eta's 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.

         The 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.

         Negotiations 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.

         2. The Writ of Attachment

         On 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, Dkt. 15.

         At the 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.

         3. The Alleged Fraudulent Transfer to AAP Holdings, Ltd. and Andrew Pitt

         Upon 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[1] - 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. 37-2.

         This ex parte application is aimed at attaching the bank account containing the $270, 000. Plaintiff says this money was ...


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