Bangladesh Bank v Rizal Commercial Banking Corp.

2023 NY Slip Op 30145(U)

January 13, 2023
Supreme Court, New York County
Docket Number: Index No. 652051/2020
Judge: Andrea Masley
Cases posted with a "30000" identifier, i.e., 2013 NY Slip
Op 30001(U), are republished from various New York
State and local government sources, including the New
York State Unified Court System's eCourts Service.
This opinion is uncorrected and not selected for official
publication.
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SUPREME COURT OF THE STATE OF NEW YORK

COUNTY OF NEW YORK: COMMERCIAL DIVISION PART 48
----------------------------------------------------------------------------------- X

BANGLADESH BANK, INDEX NO. 652051/2020

Plaintiff,
MOTION DATE
- V -
003 004 009
RIZAL COMMERCIAL BANKING CORPORATION, MAIA MOTION SEQ. NO. 010 014
SANTOS DEGUITO, ANGELA RUTH TORRES,
LORENZO V. TAN, RAUL VICTOR B. TAN, ISMAEL S.
DECISION+ ORDER ON
REYES, BRIGITTE R. CAPINA, NESTOR 0. PINEDA,
ROMUALDO S. AGARRADO, PHILREM SERVICE MOTION
CORP., SALUD BAUTISTA, MICHAEL BAUTISTA,
CENTURYTEX TRADING, WILLIAM SO GO,
BLOOMBERRY RESORTS AND HOTELS, INC.,
EASTERN HAWAII LEISURE COMPANY, LTD., KAM SIN
WONG, WEIKANG XU, DING ZHIZE, GAO SHUHUA, and
JOHN DOES,

Defendants.
----------------------------------------------------------------------------------- X

HON. ANDREA MASLEY:

The following e-filed documents, listed by NYSCEF document number (Motion 003) 50, 51, 52, 53, 54,
56,59, 60, 61, 62, 63, 64, 70, 71, 72, 73, 74,219,291,292,293,296
were read on this motion to/for DISMISS

The following e-filed documents, listed by NYSCEF document number (Motion 004) 65, 66, 67, 68, 69,
75,99, 122,220
were read on this motion to/for DISMISSAL

The following e-filed documents, listed by NYSCEF document number (Motion 009) 169, 170, 171, 172,
173, 174, 183,185,213,221
were read on this motion to/for DISMISSAL

The following e-filed documents, listed by NYSCEF document number (Motion 010) 176, 177, 178, 179,
180,181,182,186,187,188,189,190,191,192,194,195,196,214,215,216,217,222
were read on this motion to/for DISMISS

The following e-filed documents, listed by NYSCEF document number (Motion 014) 245,246,247, 248,
249,250,251,252,279,280,289,290,297,304,305
were read on this motion to/for DISMISSAL

Upon the foregoing documents, it is

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While the prior motions were focused on the alleged money laundering aspect of

the purported scheme to steal $101 million (Funds) from plaintiff Bangladesh Bank's

account at the Federal Reserve Bank of New York (Fed.), these motions focus on the

theft itself in New York. Accordingly, the result is different: the court finds that it has

jurisdiction and denies the motions under CPLR 327 for forum non conveniens.

In motion 003, defendant Rizal Commercial Banking Corporation (RCBC) moves

pursuant to CPLR 3211 (a)(7) and (8) and CPLR 327(a) to dismiss the complaint.

In motion 004, defendants Lorenzo V. Tan and Raul Victor B. Tan move pursuant

to CPLR 3211 (a)(7) and (8) and CPLR 327(a) to dismiss the complaint.

In motion 009, defendant Ismael S. Reyes moves pursuant to CPLR 3211 (a)(7)

and (8) and CPLR 327(a) to dismiss the complaint.

In motion 010, defendants Nestor Pineda, Romualdo Agarrado, and Brigitte

Capina, (together the RCBC Individuals) move pursuant to CPLR 3211 (a)(7) and (8)

and CPLR 327(a) to dismiss the complaint.

In motion 014, defendant Kam Sin Wong, moves pursuant to CPLR 327(a) on

forum non conveniens grounds dismissing the complaint or, in the alternative, staying all

proceedings in this action pursuant to CPLR 2201 pending resolution of plaintiff's claims

in a Philippine forum; and awarding him the costs of this action.

The background of this case is set forth in this court's decision of April 8, 2022

and will not be repeated here except as needed. (NYSCEF 237, Decision and Order

[mot. seq. nos. 002, 006, 007] [April 8, 2022 Order].)

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RCBC

"RCBC is one of the oldest and largest banks in the Philippines, with over 400

branches and approximately 1,500 ATMs across the Philippines." (NYSCEF 53,

Affirmation of Paula Fritzie C. Zamora, RCBC's Head of Financial Institution

Management Segment, [Zamora aff.] ,i 5.) RCBC argues pursuant to CPLR 3211 (a)(8)

that the court lacks personal jurisdiction over it pursuant to CPLR 302 (a)(1), (2) and

(3)(ii) as well as that due process prevents the exercise of jurisdiction. CPLR 3211 (a)

(8) allows for dismissal where "the court has not jurisdiction of the person of the

defendant." "On a motion pursuant to CPLR 3211 (a) (8) to dismiss for lack of personal

jurisdiction, the party asserting jurisdiction has the burden of demonstrating 'satisfaction

of statutory and due process prerequisites."' (Matter of James v iFinex Inc., 185 AD3d

22, 28-29 [1st Dept 2020] [citation omitted].)

CPLR 302 {a){1)

CPLR 302 (a)(1) provides that a court may exercise personal jurisdiction over

any non-domiciliary who "transacts any business within the state or contracts anywhere

to supply goods or services in the state." In the complaint, plaintiff alleges that "certain

Defendants regularly transact business or contract in the state of New York." (NYSCEF

1, Complaint ,i 32.) Plaintiff seeks to obtain jurisdiction over these defendants based

on allegations that they are co-conspirators.

RCBC argues that correspondent bank accounts cannot support jurisdiction

unless their use is purposeful and repeated. RCBC admits:

"7. RCBC opened two correspondent banking accounts at commercial banks in

New York City-one with Bank of New York Mellon and one with Citibank-in
1963 and 1980, respectively. RCBC also maintains a correspondent account with

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Wells Fargo in Philadelphia and may at times communicate with the New York
office of Wells Fargo regarding this account.

8. The correspondent banking accounts are used to facilitate commercial and

trade payments (inward and outward remittances) in U.S. dollars. The Bank of
New York Mellon and Citibank accounts are still maintained in New York, and the
Wells Fargo account is still maintained in Philadelphia. The accounts are strictly
used to route funds out of the United States.

9. RCBC does not market or advertise its correspondent accounts to customers,

either on its website or otherwise. Details of the accounts are published in
Bankers Almanac and on the SWIFT system but not for the purpose of attracting
customers."

(NYSCEF 53, Zamora aff. ,-I,J 7-9.)

However, plaintiff alleges that RCBC has four additional U.S. correspondent

accounts at JP Morgan Chase Bank, N.A., Deutsch Bank Trust Co. Americas, Standard

Chartered Bank, and Bank of America, N.A .. (NYSCEF 61, Affidavit of Sean O'Malley,

Senior Vice President and Chief Investigator of the Financial Intelligence and

Investigation Unit at the Federal Reserve Bank of New York, ,i 13.) "In addition, [RCBC]

Foreign Currency Deposit Unit, Gen. Gil. J. Puyat Avenue, Manila, Philippines, using

SWIFT code [xxxxxxx], maintains a correspondent relationship with Wells Fargo Bank

NY Intl." (Id.) Plaintiff alleges the use of these accounts in the theft the Funds.

(NYSCEF 1, Complaint ,i 150.) Plaintiff alleges that RCBC was actively involved in the

theft, not just through its correspondent accounts. (Id. ,i,i 4-7, 144-153.)

The court has personal jurisdiction over RCBC under CPLR 302 (a)(1) because

RCBC conducts business in New York and this action is related to that business. (Al

Rushaid v Pictet & Cie, 28 NY3d 316, 328 [2016] [wire of illicit funds to New York

correspondent bank account], rearg denied, 28 NY3d 316 [2017]; Averbach v Cairo

Amman Bank, 2020 WL 486860, *7 (SD NY Jan. 21, 2020) ("When a foreign bank

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repeatedly approves deposits and the movement of funds through a correspondent

account, it is transacting business; that the foreign bank did not initiate the transaction

does not change the analysis."); Bartlett v Societe Generale De Banque Au Liban Sal,

2020 WL 7089448, *5 n2 (ED NY Nov. 25, 2020) ("single transaction is sufficient" if

transferred through defendant's New York correspondent accounts and related to the

claims). Indeed, according to plaintiff, RCBC's correspondent banking services were

critical to the theft of the Funds. CPLR 302(a)(1) "'is a single act statute' and proof of

one transaction in New York is sufficient to invoke jurisdiction, even though the

defendant never enters New York, so long as the defendant's activities here were

purposeful and there is a substantial relationship between the transaction and the claim

asserted." {Kreutter v McFadden Oil Corp., 71 NY2d 460, 467 [1988] [citation omitted].)

Here RCBC's contacts to New York were repeated and related. Therefore, plaintiff has

established that the court has jurisdiction over RCBC under CPLR 302 (a)(1).

CPLR 302 {a){2)

CPLR 302 (a)(2) provides for personal jurisdiction over a non-domiciliary who "in

person or through an agent ... commits a tortious act within the state ... " For the

purposes of conspiracy jurisdiction, "[u]sing a New York bank account for a fraudulent

scheme constitutes a tort within New York." (FIA Leveraged Fund Ltd. v Grant Thornton

LLP, 150 AD3d 492,495 [1st Dept 2017] [citation omitted].) Plaintiff asserts jurisdiction

over RCBC alleging that it is a co-conspirator. Conspiracy jurisdiction requires (1) a

tortious act of any co-conspirator in New York, (2) a prima facie conspiracy involving a

corrupt agreement, overt act, intentional participation, and damages, and (3)

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membership in conspiracy. (In re Sumitomo Copper Litigation, 120 F Supp 2d 328,

338-39 [SD NY 2000].)

Since the Funds were transferred out of the New York Fed. account, without

plaintiff's authorization, plaintiff has established that the tort occurred within New York.

(See AMP Servs. Ltd. v Walanpatrias Found., 34 AD3d 231, 232 [1st Dept 2006]

[reasoning that "[t]he actions of defendants through their agent in New York to move the

subject property from this state, if proved, would be sufficient to subject them to

personal jurisdiction pursuant to CPLR 302 (a)(2)."] [citation omitted].)

Here, plaintiff alleges a corrupt agreement. (NYSCEF 1, Complaint 12-19, 88-96,

110-115, 155, 171-176, 181-187, 189-202, 209-211, 212-223, 227-230, 234-236, 246-

249, 254-260, 296, 339.) Clearly, plaintiff alleges more than "a lapse in protocols" in

setting up fictitious accounts, as RCBC frames it. (NYSCEF 54, memorandum of law at

19. 1) Rather, plaintiff alleges that RCBC's correspondent accounts and RCBC's

Fictitious Accounts 2 were used to steal the Funds, move the Funds among RCBC

accounts after RCBC had notice, and then send the Funds to co-conspirators to be

laundered, which entitles plaintiff to the inference that RCBC agreed with co-

conspirators to steal the Funds. (FIA Leveraged Fund, 150 AD3d at 495 [allegations

that defendants' knowingly transferred funds in violation of plaintiff's rights sufficient to

create inference of agreement].) A co-conspirator's actions in New York as the agent

for an out-of-state co-conspirator can provide a basis for CPLR 302 (a)(2) jurisdiction.

1 References to page numbers are to the NYSCEF-generated page numbers.

2
Abbreviated names have the same meaning as in the April 8, 2022 Order. (NYSCEF
237.)
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( See Wimbledon Fin. Master Fund, Ltd. v Weston Capital Mgt. LLC, 160 AD3d 596, 597

[1st Dept 2018]; Weinberg v Mende/ow, 113 AD3d 485, 487 (1st Dept 2014) (attributing

coconspirators' overt acts to defendant: "[i]t is not necessary that the complaint allege

an overt act by Konigsberg.")

Plaintiff alleges damages of $81 million stolen from the New York Fed. which was

sent to the Fictious Accounts through RCBC's correspondent accounts. (NYSCEF 1,

Complaint,i,i7, 32, 48, 79,111,184,251,261,281,308,347,351,365,384,396, 397.)

Therefore, plaintiff has sufficiently alleged damages against RCBC.

Plaintiff's allegations are sufficient to create an inference of RCBC's intentional

participation in the conspiracy to steal plaintiff's Funds in New York. In addition to

RCBC's allegedly intentionally setting up the fictious accounts, the court highlights but a

few examples of RCBC's alleged overt acts from plaintiff's 123-page complaint with 449

paragraphs:

"The Jupiter branch's closed circuit television system ("CCTV") was conveniently
not working from February 4 to February 9, 2016-the very time period during
which the stolen funds were laundered. A subsequent investigation determined
that 'the timing of the damage to the CCTV [was] suspicious' and 'that it was
tampered' with." (Id. ,i 187.)

Angela Ruth Torres, Senior Customer Relations Officer of RCBC's Jupiter branch
"gave [defendant So Go] the cardboard box full of cash. Torres had to override
the bank's systems simply to hand over such a large amount of cash, which
exceeded RCBC's teller limit." (Id. ,i,i 13, 185)

"[O]n Friday, February 5, 2016, ... [w]hile a hold was placed on the Fictitious
Accounts later that day in the early evening, RCBC senior management removed
it about 45 minutes after it was put in place. This allowed tens of millions of
dollars of the Bank's stolen funds remaining in the Fictitious Accounts to be
completely looted and laundered when the bank opened for business on the
Tuesday after the holiday weekend. (Id. ,i 189.)

Plaintiff sent swift messages to stop payment to the fictious accounts, "[b]ut
RCBC was not logged onto its SWIFT server to receive these SWIFT messages
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from the Bank. The day before, Sunday, February 7-a weekend day-someone
signed-out RCBC's SWIFT Server at 6:54 a.m. RCBC personnel only signed
back onto the SWIFT Server at 9:11 a.m. on Tuesday, February 9." (Id. 205- ,m
209.)

"Defendants Deguito and Torres, of RCBC, signed the withdrawal slips," but
"there is no video of the withdrawals" because the closed-circuit TV was turned
off. (Id. ,i 222.) "By 11 :37 a.m., less than an hour after RCBC forwarded the
SWIFT messages to the Jupiter branch and sat idle doing nothing else, RCBC
had drained the Fictitious Accounts ... " (Id. ,I223.) "In all, during this key time
period, RCBC transferred approximately $58.2 million of the Bank's stolen funds
out of the Fictitious Accounts." (Id. ,i 216.)

"At around 3:31 p.m., more than six hours after RCBC received the [plaintiff]'s
stop payment instructions and well after RCBC had almost completely drained
the Fictitious Accounts, RCBC senior management finally placed a hold on the
Fictitious Accounts. RCBC then sent a misleading SWIFT message to the
[plaintiff]: "WE ACKNOWLEDGE RECEIPT OF YOUR NOTICE. ACTING ON
YOUR INSTRUCTIONS, WE HAVE PLACED ON HOLD THE REMAINING
PROCEEDS FROM THE TRANSACTIONS WHICH IS WITHOUT PREJUDICE
TO ADDITIONAL INFORMATION NOTICES OR INSTRUCTIONS THAT MAY
BE RECEIVED BY THE BANK, AND WHICH MAY BE CONTRARY TO YOUR
INSTRUCTIONS. THANK YOU. RCBC HEAD OFFICE." (Id. ,I227.) RCBC sent
a similar message to its correspondent banks. (Id. ,i 228.)

Unlike BRHI in the prior decision, here plaintiff sufficiently alleges a conspiracy

and RCBC's participation. To show defendant's membership in the conspiracy, plaintiff

must allege that defendant knew of the conspiracy, the conspiracy could not operate

without defendant, or defendant benefitted from the conspiracy. ( Wimbledon, 160 AD3d

at 596-97 [receipt of hush money allowed reasonable inference that co-conspirator

exerted control.]) Plaintiff alleges that "[g]iven the fictitious nature of the accounts and

their supposed beneficiaries, and based upon information and belief, only the

Defendants-including RCBC and Wong-could have provided that information to the

hackers, demonstrating that they were all a part of the same conspiracy." (NYSCEF 1,

Complaint ,i 115.) The court rejects RCBC's objection that this allegation is speculative.

Rather, plaintiff is entitled to such inferences on a motion to dismiss where there is a

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factual predicate. ( See Leon v Martinez, 84 NY2d 83, 87 [1994].) Further, jurisdiction is

not undermined by its allegation that the North Korean hackers had hacked the plaintiff

before. (NYSCF 1, Complaint ,m 69-77.) While the hackers needed a bank and could

have picked any bank, they found a favorable environment at RCBC.

The court rejects RCBC's arguments that it was a not member of the conspiracy,

all of its acts were in the Philippines, and it had no relationship or control over alleged

co-conspirators. This is a motion to dismiss; RCBC's arguments are more appropriate

for an answer. "Although 'our courts have traditionally required the defendant's

presence here at the time of the tort', the First Department has affirmed that 'a

defendant with access to computers, fax machines etc., no longer has to physically

enter New York to perform a financial transaction which may be criminal or tortious."'

( Satterfield v Vstock Transfer, LLC, 2019 NY Slip Op 33279[U], *12 [Sup Ct, NY County

2019] [citation omitted].) "For instance, '[u]sing a New York bank account for a

fraudulent scheme constitutes a tort within New York."' (Id. [citation omitted].)

Therefore, like EHL in the prior decision, plaintiff has established that the court

has jurisdiction over RCBC under 302(a)(2).

302{ a){3){ii)

As stated in this court's earlier decision, "CPLR 302 (a)(3)(ii) provides for

jurisdiction over a non-domiciliary who 'commits a tortious act without the state causing

injury to person or property within the state ... if he ... expects or should reasonably

expect the act to have consequences in the state and derives substantial revenue from

interstate or international commerce."' (NYSCEF 237, April 8, 2022 Order at 23.)

Moreover, "[a] plaintiff relying on CPLR 302 (a)(3)(ii) for jurisdiction must establish:

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'First, that defendant committed a tortious act outside the State; second, that the
cause of action arises from that act; third, that the act caused injury to a person
or property within the State; fourth, that defendant expected or should reasonably
have expected the act to have consequences in the State; and fifth, that
defendant derived substantial revenue from interstate or international commerce.
(LaMarca v Pak-More Mfg. Co., 95 NY2d 210, 214 [2000].)"' (Id.. )

Defendant challenges the third element. In the context of a commercial tort

where the damage is solely economic, "the situs of commercial injury is where the

original critical events associated with the action or dispute took place, not where any

financial loss or damages occurred." ( CRT lnvs., Ltd. v BOO Seidman, LLP, 85 AD3d

470,472 [1st Dept 2011] [citations omitted].) RCBC insists the Korean hack in

Bangladesh was the initial critical event causing injury. RCBC relies on the complaint

wherein plaintiff alleges: "The North Korean hackers were able to log into the SWIFT

system at approximately 8:36 p.m. and began to create fraudulent payment orders to

execute the heist. Starting at approximately 8:55 p.m. through approximately 10:30 p.m.

(which was 9:55 a.m. to 11 :30 a.m. in New York on Thursday, February 4), the hackers

sent 36 fraudulent payment orders for nearly $1 billion-intended to drain the bulk of the

Bank's account at the New York Fed." (NYSCEF 1, Complaint ,i 137.) However, the

theft of the Funds did not begin with the hack, but with RCBC's opening of the Fictious

Accounts. The court agrees with plaintiff that fulfilling the payment orders in New York

caused the harm to plaintiff's account which it has held since 1972 at the New York Fed.

(Id. ,i,i 45-46.) The Funds taken from the Fed. would have no place to go without

RCBC's New York accounts and alleged assistance in the Philippines. Therefore,

plaintiff has established jurisdiction under CPLR 302 (a)(3)(ii).

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CPLR 302 {a){3){i)

CPLR 302 (a)(3)(i) provides for jurisdiction over a non-domiciliary who "commits

a tortious act without the state causing injury to person or property within the state, ...

regularly does or solicits business, or engages in any other persistent course of

conduct, or derives substantial revenue from goods used or consumed or services

rendered, in the state." Plaintiff asserts jurisdiction under CPLR 302 (a)(3)(i), based on

RCBC's 60 years of providing its customers services using seven correspondent bank

accounts which were also allegedly used in this case. 3 Therefore, plaintiff has

established jurisdiction under CPLR 302 (a)(3)(i).

Jurisdiction Comports with Due Process

RCBC insists that due process prevents the exercise of jurisdiction because

RCBC has no purposeful contact with New York. The court rejects RCBC's argument

relying on Al Rushaid v Pictet & Cie, a nearly identical case, where the Court of Appeals

held "that defendants' intentional and repeated use of New York correspondent bank

accounts to launder their customers' illegally obtained funds constitutes purposeful

transaction of business substantially related to plaintiffs' claims ... " (28 NY3d at 319.)

"'The minimum contacts' test 'has come to rest on whether a defendant's

conduct and connection with the forum State are such that it should
reasonably anticipate being haled into court there.' Such minimum

3
RCBC asserts that maintenance of a correspondent bank account in New York is
insufficient activity for the purposes of CPLR 302 (a)(3)(i). However, the court may not
consider RCBC's objection, stated for the first time in a footnote in its reply, since it
deprives plaintiff of the opportunity to respond. The court would reject RCBC's
argument in any case. The cases are otherwise, and here we have 60 years of activity.
(Reynolds v Aircraft Leasing, 2002 WL 31748824, *4 [Sup Ct Queens County, 2002]
["Although the clause does not require the quantity of contacts necessary to meet the
'doing business' test for jurisdiction under CPLR 301, it does require something more
than the 'one shot' single business transaction described under CLR 301 (a)([1 ).'']
[citation omitted].)
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contacts exist where a defendant purposefully avails itself of the privilege

of conducting activities within the forum State. Here, defendants'
maintenance and repeated use of a New York correspondent bank
account 'to achieve the wrong complained of in this suit satisfies the
minimum contacts component of the due process inquiry.' (Id. at 331
[citations omitted].)

Therefore, plaintiff has established this court has jurisdiction over RCBC.

Forum Non Conveniens

RCBC contends that the complaint should be dismissed on forum non

conveniens grounds because the Philippines is the proper forum.

The following factors are determinative of a forum non conveniens motion: (1)

burden on New York courts, (2) potential hardship to the parties, including the

availability of evidence and witnesses, (3) existence of an alternative forum, (4)

residency of the parties, and (5) situs of the underlying transaction out of which the

cause of action arose. (Islamic Republic of Iran v Pahlavi, 62 NY2d 474,479 (1984],

cert denied, 469 US 1108 [1985] [citations omitted].)

First, plaintiff asserts collateral estoppel based on Judge Schofield's decision

rejecting RCBC's identical motion for forum non conveniens dismissal in the 2019

Federal Action. (Bangladesh Bank v Rizal Com. Banking Corp., 2020 WL 1322275, at

*10-11 (SD NY Mar. 20, 2020). While the court again rejects plaintiff's collateral

estoppel argument for the reasons stated in the prior decision, Judge Schofield's

analysis is still persuasive:

"The obvious bona fide connection to [New York] is that the theft took place
here. The theft targeted a major U.S. institution located in New York City, the
Federal Reserve." (Id.)

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Burden on New York Courts

RCBC kindly asserts that the case would burden the New York Courts. While the

court appreciates RCBC's concern, the Commercial Division of the New York State

Supreme Court was created to host complex international cases. 4 This case would be

no more burdensome than any of the other cases on this court's docket from around the

world. Indeed, the action is easier than many as it involves the application of New York

law. Many of the documents are in English. Regardless of where this action is brought,

some translation would be needed. This factor favors New York.

Potential Hardship to the Parties, Evidence, and Witnesses

RCBC asserts that the most critical evidence and witnesses are in the

Philippines. Obviously, this court is well aware of the potential hardship on RCBC.

(See NYSCEF 237, April 8, 2022 Order at 43-44.) However, Judge Schofield is again

persuasive:

"With respect to the private interest factors, it is too simplistic to conclude that,
since most Defendants are based in the Philippines, evidence is necessarily
easier to access there. Much of the relevant evidence is in electronic form
accessible from either forum. In addition, authorities in both the Philippines and
the United States have investigated some of the events in this action. Their
findings are accessible from anywhere on the internet, and in appropriate
circumstances, this Court may take judicial notice of them."

(Bangladesh Bank, 2020 WL 1322275, *10-11.) Therefore, the court rejects RCBC's

unsupported argument that most if not all the evidence is based in the Philippines.

4
"The Commercial Division has served as a model for many other jurisdictions
interested in creating commercial courts and has even generated international interest.
... The enormous growth [of the Commercial Division] clearly reflects the commercial
bar's and the business sector's confidence in the quality of the Commercial Division and
its ability to handle complex commercial disputes with expertise and efficiency." (§ 1:7.
The Commercial Division today and in the future, 2 NY Prac, Com Litig in New York
State Courts§ 1:7 [5th ed.].)
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When the case is analyzed from the perspective of the theft, 5 the location of the

witnesses and documentary evidence favors New York. Indeed, Judge Schofield

observed in this case when it was pending in the SONY as a RICO case:

"Critical evidence of the fraudulent payment orders, the movement of the stolen
funds into correspondent accounts and the movement out of those accounts
abroad exists in or close to this district. Three of the four correspondent accounts
are in New York City and one is located nearby in Philadelphia. Federal Reserve
Senior Vice President Anne Baum attests in a declaration that the Federal
Reserve and the Bank have entered into a formal agreement, whereby the
Federal Reserve will 'provide technical assistance to Bangladesh Bank in its
litigation."'

(Id. at *10-11.) Moreover, the factor is hardship to parties, not just RCBC. Plaintiff has

no connection to the Philippines. This factor favors New York.

Existence of an Alternative Forum

RCBC argues that the availability of the Philippines as an alternate forum for two

reasons. First, RCBC asserts its amenability to service in the Philippines, but this is a

distraction not entitled to any weight since this court has jurisdiction over RCBC.

Second, RCBC asserts that the Philippines permits litigation of plaintiff's claims. ( See

generally NYSCEF 70, Affirmation of Jose Anselmo Imperial Cadiz6 dated March 26,

2021 [March 26, 2021 Cadiz aff.].)

RCBC also relies on the 2019 defamation action filed by RCBC and Reyes

against plaintiff after plaintiff filed the federal action. (NYSCEF 71, Rizal Commercial

Banking Corporation and Ismael S. Reyes vs. Bank of Bangladesh, docketed as R-

5
In analyzing EHL's motion 006 on the topic of forum non conveniens, the court was
focused on the alleged laundering in the Philippines.
6
Cadiz is a former Solicitor General of the Philippines and National President of the
Integrated Bar of the Philippines. (NYSCEF 177, Affirmation of Jose Anselmo Imperial
Cadiz dated August 30, 2021 ,i 2.)

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MKT-19-01010-CV, pending before the Regional Trial Court of Makati City, Branch

142)7 for the proposition that since plaintiff must defend itself asserting truth as a

defense to the alleged defamation arising from this case, the actions are duplicative

(NYSCEF 70, March 26, 2021 Cadiz aff.,-I,J 6-7), but that action was dismissed.

(NYSCEF 291, Plaintiff's Rule 18 letter enclosing June 30, 2022 Order of Dismissal;

NYSCEF 292, RCBC's Rule 18 Response; NYSCEF 293, Plaintiff's Reply.) Without

that action, plaintiff seems to have no connection to the Philippines.

Accordingly, plaintiff would be compelled to initiate a new action in the

Philippines where the filing fees can be significant; the filing fee for RCBC's now

dismissed defamation action was $51,000. (NYSCEF 70, March 26, 2021 Cadiz aff. ,i

6; NYSCEF 63, Affirmation of Antonio Eduardo B. Nachura8 ,i 23.) "Jury trials are not

available for civil matters in the Philippines. All judicial disputes are resolved by a

judge." (NYSCEF 63, Nachura aff. ,i 7.) Cadiz opines that "[a]ny action for discovery in

New York will have to contend with the stringent Philippine secrecy rules on financial

documents, which are also unique in the Philippines. Unlike in other jurisdictions, in the

Philippines, there are few exceptions to bank secrecy for Philippine Peso denominated

accounts, such as when there is an order from a court of competent jurisdiction for a

case involving the bank account (Republic Act No. 1405, otherwise known as the

Secrecy of Bank Deposits Act)." (NYSCEF 70, March 26, 2021 Cadiz aff. ,i 19.) These

7
Plaintiff was first to file the federal action in 2019. (Bangladesh Bank v Rizal Com.
Banking Corp., 2020 WL 1322275, at *10-11 (SONY 2020).

sNachura is a former Associate Justice of the Supreme Court of the Philippines, former
Solicitor General of the Philippines, and Dean of Arellano University College of Law.
(NYSCEF 63, Antonio Eduardo B. Nachura aff. ,i2.)
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stringent bank secrecy rules are present regardless of whether the case is heard in New

York or the Philippines. (See Id. at ,i 19 ["Bangladesh Bank was among the entities

which refused to provide a waiver of bank secrecy."]; NYSCEF 1, Complaint ,i,i 284

["RCBC officials have claimed that bank secrecy rules prohibit them from answering

questions from government regulators and the Philippines Senate's Blue Ribbon

Committee as to their procedures and whether they followed them in connection with

the theft."])

However, Nachura opines,

"I understand that Defendants in this case have suggested that certain privacy
laws would make discovery in this action extremely difficult. The privacy laws are
minimally applicable here, where the funds at issue were stolen and deposited in
accounts belonging to fictitious individuals and entities. Section 4 of the Data
Privacy Act of 2012 (Republic Act No. 10173) explicitly excludes 'information
necessary in order to carry out the functions of public authority which includes
the processing of personal data for the performance by the independent, central
monetary authority ... or Bangko Sentral ng Pilipinas to comply with Republic
Act No. 9510, and Republic Act No. 9160, as amended, otherwise known as the
Anti-Money Laundering Act and other applicable laws." (NYSCEF 63, Nachura
aff. ,i 37.) "Foreign judgments are recognized by Philippine courts."

(Id. ,i 12; see also id. ,i,i 1314.) This factor favors New York.

Residency of the Parties

The parties' residences are a neutral factor since RCBC is a resident of the

Philippines and plaintiff is a resident of Bangladesh. However, plaintiff, the central bank

of the People's Republic of Bangladesh, has since 1972 held its international reserves

in the New York Fed. (NYSCEF 1, Complaint ,i 45.) Therefore, the court gives

plaintiff's selection of New York some deference.

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Situs of the Underlying Transaction Out of Which the Cause of action Arose

The location of the events giving rise to the action is New York. Here, the court

is focusing on the theft of the Funds, not the alleged laundering. While the court

previously found the Federal Reserve systems were not compromised (NYSCEF 237,

April 8, 2022 Order at 41-42.), that does not mean the New York Fed. was not harmed.

"[T]he New York Fed itself was wronged" because of the perpetrator's use of the

Federal Reserve Bank's Fedwire system. (NYSCEF 46, Affidavit of Anne Baum, Senior

Vice President and Head of the Central Bank and International Account Services area

at the Federal Reserve Bank of New York ,i 29.) Specifically, plaintiff's Funds, resident

in New York, were harmed when stolen.

Focusing now on the theft from the New York Federal Reserve, the court finds

there is a strong New York nexus to this case. "[W]here a foreign forum has a

substantial interest in adjudicating an action, such interest is a factor weighing in favor

of dismissal." (Shin-Etsu Chem. Co., Ltd. v /CIC Bank Ltd., 9 AD3d 171, 178 [1st Dept

2004] [citations omitted].) For example, in Financial & Trading Ltd. v Rhodia S.A., an

action for "fraudulent inducement to purchase shares of defendant's stock" on the Paris

stock exchange, France had a superior interest over New York in regulating the

issuance of French stock. (28 AD3d 346 [1st Dept 2006], Iv to appeal denied, 7 NY3d

306 [2006].) The court notes that the Blue-Ribbon Commission has issued its report

(NYSCEF 1, Complaint ,i 299) and criminal cases have ended or are on appeal.

(NYSCEF 72, Resolution, December 26, 2019 Order in People of the Philippines v. Raul

Victor B. Tan, Ismael S. Reyes, Brigitte B. Capifla, Romualdo S. Agarrado, and Angela

Ruth S. Torres, No. R-MKT-19-02359-CR, Republic of the Philippines [the December

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26, 2019 Order].) The Philippines has had an opportunity to investigate and regulate

the conduct at issue here. (See NYSCEF 1, Complaint ,m 107, 155, 157.) However,

with the Philippines' investigatory interest satisfied, this case becomes a commercial

litigation in which a bank in Bangladesh seeks damages from a bank in the Philippines.

New York, on the other hand, has an interest in providing a forum for such a commercial

action where New York was the target of "one of the largest bank heists in modern

history" that reached into an account at the Federal Reserve in New York. (Id. 1,

Complaint ,i 1.)

In balancing these factors, the court finds that RCBC has failed to meet its heavy

burden of demonstrating that "plaintiff's selection of New York is not in the interest of

substantial justice." (Wilson v Dantas, 128 AD3d 176, 187 [1st Dept 2015], affd 29

NY3d 1051 [2017] [internal quotation marks and citation omitted].)

CPLR 3211 {a){7)

RCBC challenges plaintiff's fraud and conspiracy claims.

On a motion to dismiss for failure to state a cause of action pursuant to CPLR

3211 (a) (7), the court accepts the facts as alleged in the complaint as true, accords the

plaintiff the benefit of every possible favorable inference, and determines only whether

the facts as alleged fit within any cognizable legal theory. (Leon, 84 NY2d at 87.) "At

the same time, however, allegations consisting of bare legal conclusions ... are not

entitled to any such consideration. Dismissal of the complaint is warranted under CPLR

3211 (a) (7) if the plaintiff fails to assert facts in support of an element of the claim, or if

the factual allegations and inferences to be drawn from them do not allow for an

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enforceable right of recovery." (Connaughton v Chipotle Mexican Grill, Inc., 29 NY3d

137, 142 [2017] [internal quotation marks and citations omitted].)

Failure to State Fraud

In its fourth cause of action, plaintiff alleges fraudulent concealment. (NYSCEF

1, ,m 382-391.) Specifically, plaintiff alleges that when RCBC informed plaintiff that a

hold had been placed on the purportedly fictitious accounts, RCBC "omitted" that

plaintiff's "stolen funds had been moved to other RCBC accounts and that the Fictitious

Account [sic] were now virtually empty." (Id. ,i 385.) To state a claim for fraudulent

concealment, plaintiff must allege a duty to disclose imposed by (i) a fiduciary duty or (ii)

one that arises if "(1) one party makes a partial or ambiguous statement that requires

additional disclosure to avoid misleading the other party ... or (2) one party possesses

superior knowledge, not readily available to the other, and knows that the other is acting

on the basis of mistaken knowledge." (Remington Rand Corp. v. Amsterdam-

Rotterdam Bank, N. V., 68 F.3d 1478, 1484 [2d Cir. 1995] [citations and internal

quotations omitted].) RCBC objects that plaintiff fails to allege that RCBC has a duty to

disclose to plaintiff because RCBC has no such duty. Further, RCBC complains that

plaintiff fails to allege fraud with sufficient particularity because plaintiff failed to identify

the sender of the message that the accounts were frozen.

RCBC's motion is denied as to the fourth cause of action for fraud. Plaintiff

sufficiently alleges that when RCBC told plaintiff that it froze the fictious accounts but

omitted that it still possessed and had just moved $58 million of plaintiff's Funds to

another RCBC controlled fictitious account, its partial statement created a duty to

disclose. Further, the court rejects RCBC's argument that essentially, the parties had

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no relationship and thus no duty to disclose. However, once plaintiff's Funds were in

RCBC's accounts, and RCBC knew it and knew the Funds to be stolen, as

demonstrated by RCBC freezing the Fictious Accounts, the parties had a relationship

such that RCBC was expected to return plaintiff's Funds. (See NYSCEF 1, Complaint

,-I,J 27, 47, 138, 165, 167, 224, 226, 278, 317,319,320,333, 338.) Their relationship

preexisted the theft from their participation in the SWIFT system in which from time-to-

time banks communicate and resolve issues through banking transactions. (Cf.

Elghanian v Harvey, 249 AD2d 206, 206 [1st Dept 1998].) Under that doctrine, a duty to

disclose arises "where one party's superior knowledge of essential facts renders a

transaction without disclosure inherently unfair." (Chiarella v United States, 445 US

222, 248 [1980] [dissenting, Blackmun, J.]) In any case, RCBC's duty to disclose was

triggered by its partial disclosure of a freeze on the Fictious Accounts after the Funds

had been transferred to other RCBC accounts. ( See Junius Const. Co. v Cohen, 257

NY 393, 399 [1931].) The court also rejects RCBC's insufficiency argument as plaintiff

has identified who sent the alleged fraudulent message to plaintiff: "RCBC Head Office,"

which signed it. (NYSCEF 1, Complaint, ,m 227-228.) Accordingly, plaintiff's fraud

claim is sufficiently particular.

Failure to State Conspiracy

RCBC argues for dismissal of conspiracy to commit conversion/theft/

misappropriation as duplicative. In its second cause of action, plaintiff alleges aiding

and abetting conversion/theft/misappropriation while in the third cause of action, plaintiff

alleges conspiracy to commit conversion/theft/misappropriation. (NYSCEF 1, Complaint

,m 363-381.) While fraud and aiding and abetting fraud can be pied alternatively,

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(Weinberg v Mende/ow, 113 AD3d 485, 487 [1st Dept 2014]), plaintiff fails to address

whether it is pleading aiding and abetting conversion/theft/misappropriation and

conspiracy to commit conversion/theft/misappropriation alternatively. Nevertheless,

RCBC's argument is rejected. The claims are different. The D.C. Circuit has explained

the difference:

"The prime distinction between civil conspiracies and aiding-abetting is that

a conspiracy involves an agreement to participate in a wrongful activity. Aiding-
abetting focuses on whether a defendant knowingly gave 'substantial assistance'
to someone who performed wrongful conduct, not on whether the defendant
agreed to join in the wrongful conduct.

(Halberstam v Welch, 705 F2d 472,478 [DC Cir 1983].)

The Second Circuit also recently examined the distinction:

"The Halberstam court noted that '[t]here is a qualitative difference between

proving an agreement to participate in a tortious line of conduct [- in the case of

conspiracy-] and proving knowing action that substantially aids tortious conduct [- in

the case of aiding and abetting]."' (Freeman v HSBC Holdings PLC, 2023 WL 105568,

*8 [2d Cir 2023].)

"The Halberstam court therefore found 'it important to keep the distinctions
[between conspiracy and aiding and abetting] clearly in mind' because 'the
distinctions can make a difference.' [W]e see no reason to inject the
foreseeability requirement pertinent to aiding-and-abetting liability into the 'in-
furtherance-of' requirement that exists for conspiracy.''

(Id. at *9 [citations omitted].)

Upon comparison of the second and third causes of action, the court rejects

RCBC's contention that conspiracy to commit conversion in the third cause of action is

redundant of aiding and abetting conversion in the second cause of action. (See

Loreley Fin. (Jersey) No. 3 Ltd. v Wells Fargo Sec., LLC, 2016 WL 5719749, *7-*8 [SD

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NY Sept. 29, 2016].) Rather, the second claim asserts RCBC's supportive role, while

the third claim asserts that RCBC joined in the conspiracy.

RCBC challenges plaintiff's claims that RCBC participated in a conspiracy. "The

essence of a conspiracy is a concert or combination to defraud or cause other injury

actually resulting in damage." (Hijos De Daniel Espuny, S.A. v Victor M. Calderon Co.,

9 Misc 2d 983, 984 [Sup Ct, Kings County 1957] [citation omitted]., aff.'d sub nom. Hijos

De Daniel Espuny v Calderon Co., 6 AD2d 697 [2d Dept 1958].) Plaintiff's claims of

conspiracy in the 123-page complaint with 449 paragraphs are far from bald and

conclusory, as RCBC insists. (NYSCEF 54, RCBC memorandum of law at 12-13.)

RCBC moves to dismiss the seventh cause of action for conspiracy to commit

trespass to chattel for failure to plead underlying tort. RCBC is simply wrong. For

example, plaintiff alleges "[e]ach of these movements and infection of [plaintiff's]

network and computers constituted a trespass upon [plaintiff's] property, and provided

the North Korean hackers with unauthorized access to [plaintiff's] property in its

computer systems and network." (NYSCEF 1, Complaint, ,i 418; see also ,i,i 124-143,

421.)

In a footnote, RCBC moves to dismiss the causes of action for conversion/theft/

misappropriation; aiding and abetting fraud; unjust enrichment; and money had and

received. While RCBC asks the court to dismiss the complaint in its entirety, RCBC

fails to seek dismissal of the second cause of action for aiding and abetting conversion.

RCBC challenges plaintiff's claim for conversion/theft/misappropriation because

plaintiff fails to allege that the Funds RCBC received were "specific, identifiable funds"

belonging to plaintiff and thus that RCBC had "an obligation to return [the money] or

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otherwise treat in a particular manner the specific fund in question." However, the

Funds on account at the Fed. are sufficiently identified. (See Lenczycki v Shearson

Lehman Hutton, Inc., 238 AD2d 248, 248 [1st Dept 1997] ["funds of a specific, named

bank account, such as the one here, are sufficiently identifiable"], appeal denied, 91

NY2d 918 [1998]; Chambers v Weinstein, 44 Misc 3d 1224[A], *4 [Sup Ct, NY County

2014]), aff'd, 135 AD3d 450 [1st Dept 2016] [... "the specific bills need not be

identified"] [citation omitted].)

RCBC challenges plaintiff's claim for aiding and abetting fraud against RCBC

because, like its fraud claim, the allegations are not pied with particularity as to RCBC,

the entity. RCBC's objection is rejected as unspecific. Moreover, plaintiff's claim in its

123-page complaint with 449 paragraphs are particularized against RCBC. Finally,

RCBC is mentioned over 500 times in the complaint while RCBC defendants are

mentioned 40 times; plaintiff has particularized its claims against RCBC.

RCBC argues that plaintiff's eighth and ninth causes of action, which allege that

RCBC was unjustly enriched and benefited from the receipt of funds, fail because

plaintiff's allegations about RCBC making "potentially hundreds of thousands or millions

of dollars" (NYSCEF 1, Complaint ,i 430) from the alleged transfers is purely

speculative. While the amount that RCBC was paid for foreign transfers - "potentially

hundreds of thousands or millions of dollars" - is speculative, the assertion that RCBC

was paid something for providing the service of foreign transfers is not.

RCBC Individuals

The RCBC individual defendants are Brigitte R. Capina, who was the Regional

Sales Director of RCBC's Retail Banking Group (NYSCEF 1, Complaint ,i 17); Nestor 0.

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Pineda who was RCBC's District Sales Director (id. ,i 18); and Romualdo S. Agarrado,

who was the Customer Service Head of RCBC's Jupiter branch. (Id. ,i 19.)

Plaintiff alleges defendant Raul Tan, who was RCBC's Head of the Retail

Banking Group, consulted with Capina and Pineda about the hold initially put on the

Fictious Accounts. (Id. ,i 194.) They, in turn, consulted with defendant Deguito, "who

told them that the account holders were long-time, wealthy clients from the Solaire

Casino whose account documents were 'in order' and that the transfers had been

expected." (Id. ,i 194.) Capina was informed that "Tan ordered it lifted," but RCBC

would file a suspicious activity report. (Id. ,i 196.) Plaintiff alleges that "[t]he STR was

finalized days later when the funds were long gone from the accounts." (Id.) "Tan

made the decision to release the hold even though he was no longer Head of RCBC's

retail Bank Group and had no authority to do so. The decision should have been made

by Defendant Reyes," according to plaintiff, who Tan had designated as the Officer-in-

Charge of Retail Banking. (Id. ,i 199.) Plaintiff complains that "Tan made the decision,

and Reyes, Capina, Pineda, and other senior RCBC officials just let it happen." (Id. ,i

200.) Plaintiff also complains that "[w]ith the Fictitious Accounts already looted, the

officers present at this meeting (including Defendants Capina and Raul Tan) agreed to

pointlessly place a hold on those Fictitious Accounts." (Id. ,i 239.) Plaintiff infers that

"[t]hese otherwise inexplicable actions by senior RCBC personnel indicate that they had

knowledge of the fraudulent source of the stolen funds." (Id. ,i 197.)

Capina was Regional Sales director of RCBC's Retail Banking Group until

November 15, 2020, when she was hired by RCBC as an independent contractor on

November 16, 2020. (NYSCEF 178, Affirmation of Brigitte B. Capina dated August 26,

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2021 [August 26, 2021 Capina aff.] ,i 3.) The criminal complaint alleging that Capina

facilitated money laundering was dismissed. (NYSCEF 72, the December 26, 2019

Order.) Capina denies that she received service of process of the complaint in this

action "at RCBC Headquarters," but never denies receipt otherwise. (NYSCEF 214,

Affirmation of Brigitte B. Capina dated October 5, 2021 ,i 2.)

Plaintiff alleges that Pineda, was involved in RCBC's failure to take action when

the letters to the Fictious Account holders were returned to RCBC. (NYSCEF 1,

Complaint ,i,i 86, 100, 102, 103.) When "a Thank You Letter is returned [to RCBC] as

undeliverable ... the business center involved must explain in a weekly report to the

District Sales Director (in this case Defendant Pineda) the action taken in response to

the returned Thank You Letter." (Id. ,i 103.) "[N]o report was ever created" in response

to the returned Thank You Letters sent to the Fictious Accounts holders. (Id.) Pineda

was terminated by RCBC on March 31, 2016. (NYSCEF 180, Affirmation of Nestor 0.

Pineda dated August 26, 2021 [August 26, 2021 Pineda aff.] ,i 3.) Pineda states that he

"was named in a complaint brought by the Anti-Money Laundering Council, but was

ultimately cleared before criminal charges were filed." (Id. ,i 6; NYSCEF 181,

Resolution on Motion for Reconsideration, filed in The Anti-Money Laundering Council v

Raul Tan et. al, NPS Docket No. XVI-INV-16K-00346 [Department of Justice, Manila].)

Pineda denies that he received service of process of the complaint in this action "at

RCBC Headquarters," but never denies receipt otherwise. (NYSCEF 215, Affirmation of

Nestor Pineda dated October 5, 2021 ,i 2.)

Agarrado, signed off on the opening of these Fictitious Accounts, together with

defendant Angela Ruth Torres, Erlinda Isaac, and defendant Maia Santos Deguito.

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(NYSCEF 1, Complaint, ,i 104.) Since the SWIFT Server was turned off on Sunday,

February 7, 2016, "RCBC did not review the Bank's stop payment and hold SWIFT

messages until Tuesday, February 9, 2016 at 9: 11 a.m ... RCBC's Settlement

Department forwarded the Bank's SWIFT messages to ... officers at RCBC's Jupiter

branch, including Deguito, Torres, and the Head of Customer Service, Defendant

Agarrado. (Id. ,i,i 209, 212.) Agarrado states that he resigned from RCBC in July 2019.

(NYSCEF 179, Affirmation of Romualdo Agarrado dated August 27, 2021 [August 27,

2021 Agarrado affj ,i 3.) Agarrado was acquitted of facilitating money laundering.

(NYSCEF 72, the December 26, 2019 Order; NYSCEF 73, Judgment, March 8, 2021,

People of the Philippines v. Raul Victor B. Tan, Ismael S. Reyes, Brigitte B. Capifla,

Romualdo S. Agarrado, and Angela Ruth S. Torres, No. R-MKT-19-02359-CR Republic

of the Philippines [the March 8, 2021 Judgment]at 28.) Like Pineda, Agarrado denies

that he received service of process "at RCBC Headquarters," but never denies receipt

otherwise. (NYSCEF 216, Affirmation of Romualdo S. Agarrado dated October 6, 2021,

aff. ,i 2)

The RCBC Individuals challenge personal service on them under the Hague

Convention. 9 However, the RCBC Individuals were subsequently served on September

30, 2021. (NYSCEF 187, Affirmation of Jesse R. Loffler ,i,i 9, 10.) Defendants do not

challenge this subsequent service. (NYSCEF 222, tr at 21: 16-23.)

9
The RCBC Individuals do not deny service of process. (See generally NYSCEF 178,
August 26, 2021 Capina aff.; NYSCEF 179, August 27, 2021 Agarrado aff; NYSCEF
180, August 26, 2021 Pineda aff.) Moreover, Capina admits that she continues to work
for RCBC. (NYSCEF 178, August 26, 2021 Capina aff. ,i 3.) Substitute service, where
the process server is barred from entry, here due to COVID restrictions, is permissible.
( See F. I. du Pont, Glore Forgan & Co. v Chen, 41 NY2d 794, 797 [1977] [service on
doorman].)
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RCBC Individuals argue that the court lacks personal jurisdiction over them

under CPLR 302 (a)(2) and (3)(ii) as well as that due process prevents the exercise of

jurisdiction. As discussed above, with regard to RCBC, the court may exercise

"conspiracy" jurisdiction over the RCBC Individuals because plaintiff sufficiently alleges

(1) a conspiracy in which co-conspirators committed tortious acts in New York, (2) a

prima facie conspiracy involving a corrupt agreement, overt acts, intentional

participation, and damages, and (3) RCBC Individuals' membership in the conspiracy.

( See In re Sumitomo Copper Litigation, 120 F Supp 2d 328, 338-39 [SD NY Oct. 30,

2000] [citations omitted].) As discussed above, these defendants were allegedly

involved in creating the Fictitious Accounts, removing an administrative hold on the

accounts, and sending allegedly fraudulent SWIFT messages to New York. "[A]

conspiracy can rarely be proved by direct evidence and is instead 'usually established

by circumstantial evidence based upon independent proof of each alleged co-

conspirator's acts, conduct and statements and the totality of conduct of all the

participants and the reasonable inference to be drawn therefrom."' (Singer v Bell, 585

F Supp 300,303 (SD NY Apr. 20, 1984] [citation omitted].) Like RCBC, which as a

corporation can only act through its individuals, the theft could not have been

accomplished without the RCBC Individuals. (See Wimbledon, 160 AD3d at 597 [fact

that fraud "could not have been accomplished without their acquiescence" is a red flag.]

[citations omitted].) Rather, the RCBC Individuals' "intentional participation in

furtherance of the conspiracy [can] be inferred from the overt acts taken by them."

(Cleft of the Rock Found v Wilson, 992 F Supp 574, 582 [ED NY Jan. 31, 1998] [citation

omitted].) The court rejects the RCBC Individuals' argument that they lacked dominion

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and control over other co-conspirators. (See Lawati v Montague Morgan Slade, 102

AD3d 427, 428-29 [1st Dept 2013] [co-conspirator had knowledge of tortious act in New

York, without having actually directed that act].) Therefore, the court has jurisdiction

under CPLR 302 (a)(2).

The court also has jurisdiction under CPLR 302 (a)(3)(ii). At the time of the theft,

the RCBC Individuals worked for RCBC, "one of the Philippines' largest banks" and

RCBC worked through the RCBC Individuals. (NYSCEF 1, Complaint ,i 4.) They were

not just corporate employees but had decisioning making authority and influence over

critical decisions for example, Tan called the RCBC Individuals regarding the hold.

Together, the RCBC Individuals' overt acts listed above were essential to preventing

RCBC from returning the Funds to plaintiff in New York. (See Bank Brussels Lambet1 v

Fiddler Gonzalez & Rodriguez, 171 F3d 779, 792 [2d Cir 1999] [conduct outside New

York caused injury in New York because the act caused disbursement of the Funds

from New York]; Gabriel Capital v CAIB lnvestmentbank Aktiengesellschaft, 28 AD3d

376, 377 [1st Dept 2006] [CPLR 302 (a)(3)(a)(ii) jurisdiction based on out-of-state

misconduct- misrepresentations by employees causing injury in New York], appeal

dismissed, 7 NY3d 922 [2006].)

The RCBC Individuals object, in a footnote in their reply, to jurisdiction under

302(a)(1) arguing that RCBC does not conduct business in New York. As discussed

above, the court found that RCBC conducts business in New York. They also argue

they are not subject to personal jurisdiction under an agency theory, because plaintiff

fails to allege its knowledge of or consent to the theft and they did not exercise control

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over RCBC in connection with the theft. To establish personal jurisdiction under an

agency theory:

"Plaintiff need not establish a formal agency relationship between

defendants and [the corporation]. He need only convince the court that
[the corporation] engaged in purposeful activities in this State in relation to
[plaintiff's] transaction for the benefit of and with the knowledge and
consent of the [individual] defendants and that they exercised some
control over [the corporation] in the matter."

(Kreutter v McFadden Oil Corp., 71 NY2d 460,467 [1988] [internal citations omitted].)

"[T]he critical question is whether the out-of-state corporate officers were 'primary

actor[s] in the transaction in New York' that is the source of th[e] litigation, and are not

'some corporate employee[s] ... who played no part in' the [transaction]." (Murray Eng'g

P.C. v Remke, 2018 WL 3773991, *5 [SD NY Aug. 9, 2018] [internal quotation marks

and citation omitted] [brackets in original].) Plaintiff's allegations about the RCBC

Individuals' overt acts, outlined above, are sufficient to establish that the RCBC

Individuals were primary actors without whom the theft could not have occurred. The

court rejects their attempt to isolate the RCBC Individuals and their overt acts which, if

true, together harmed plaintiff.

The RCBC Individuals argue that plaintiff has not established that they

intentionally participated in the conspiracy. They deny knowledge of any common goal

or purpose because the stop payment SWIFT messages did not reach RCBC as the

SWIFT server had been turned off. Again, Tan contacted Capina and Pineda about the

hold, (on the accounts Agarrado set up), in response to the SWIFT messages. Plaintiff

has established conspiracy jurisdiction because the co-conspirators were not just the

North Korean Hackers, as the RCBC Individuals focus on, but all of the defendants in

this action.
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For the reasons stated above, jurisdiction over the RCBC Individuals comports

with due process. Contrary to the RCBC Individuals' due process objection relying on

Deutsche Bank AG v Vik, the situs of the injury is at the New York Fed., albeit not the

New York Fed. itself, but plaintiff's account at the New York Fed. (163 AD3d 414 [1st

Dept 2018].) Further, their due process objection relies on their rejection to conspiracy.

However, as discussed above, plaintiff has established conspiracy jurisdiction which

constitutes minimum contacts and comports with due process.

The court rejects the RCBC Individuals' forum non conveniens argument for the

same reasons as stated above.

The RCBC Individuals challenge the fourth cause of action for fraud arguing

plaintiff fails to allege that they were involved in the alleged fraudulent response to

plaintiff's stop payment request which was sent to correspondent banks in New York as

well. However, plaintiff alleges that Capina and Pineda were involved in the hold

process. Indeed, Tan conferred with them regarding the first hold. Agarrado's

connection to these accounts is that he allegedly set them up.

Finally, the RCBC Individuals move to dismiss the other causes of action for the

same reasons asserted by RCBC, and Lorenzo Tan, Raul Tan and Ismael Reyes. For

the same reasons, the motion is denied.

Ismael Reyes

Defendant Ismael S. Reyes was the National Sales Director of RCBC's Retail

Banking Group. (NYSCEF 1, Complaint ,i 16.) As such, he "was responsible for

achieving the Retail Banking Group's business targets and overall objectives through

efficient supervision of the Regional and District Sales Directors of the Group."

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(NYSCEF 170, Affirmation of Ismael S. Reyes [Reyes aff] ,i 4.) "This includes ensuring

that sales targets are achieved through efficient execution of sales strategies and

ensuring proper implementation of [the] bank's policies and procedures." (Id.) RCBC

continues to employ Reyes. (Id.) Reyes was "designated the Officer-in-Charge of

Retail Banking after [Raul Tan] stepped down." (NYSCEF 1, Complaint ,i 199.)

However, it was Tan who "made the decision to release the hold even though he was

no longer Head of RCBC's retail Bank Group and had no authority to do so." (Id.)

Reyes did not stop the removal of the hold. (Id.)

Plaintiff alleges that on February 10, 2016, Reyes was involved in the conversion

of the Funds from dollars to pesos from the Philrem account. (Id. ,i 248.) "This incident

occurred five days after Reyes became aware of the suspicious nature of the funds and

one day after he was informed of the Bank's stop payment instructions." (Id.) Plaintiff

infers from Philrem's agreement to an "'off-market price 10'" established by Reyes and

Tan, that Philrem, was "[d]esperate to launder the money." (Id. ,i 249.) Plaintiff objects

that "RCBC made better than market rates for the foreign exchange." (Id.)

Following an Anti-Money Laundering Council of the Philippines Government

investigation, the Philippine Department of Justice charged Reyes with facilitating

money laundering when it was alleged that he: "(a) failed to insist on maintaining a hold

on the accounts; (b) failed to insist in performing EDD (due diligence); and (c) []

communicated with Philrem confirming a transaction knowing that a recall had been

sent by the Bangladesh Bank on the accounts." (NYSCEF 170, Reyes aff. ,i 6;

10
An "off-market price" here means the price was higher than the market.
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NYSCEF 72, the December 26, 2019 Order.) Reyes was acquitted. (NYSCEF 72, the

December 26, 2019 Order at 9-13.)

Reyes argues that the court lacks personal jurisdiction over him under CPLR 302

(a)(2) and (3)(ii) as well as that due process prevents the exercise of jurisdiction. The

court rejects Reyes' motion for the same reasons that the court rejects the RCBC

Individuals' motion.

Reyes challenges plaintiff's claims for fraud and conspiracy as well as other

claims for conversion/theft/misappropriation or aiding and abetting conversion/theft/

misappropriation, aiding and abetting fraud and unjust enrichment and money had and

received. The court denies Reyes' motion for the same reasons that it rejects the

RCBC Individuals' motion to dismiss plaintiff's claims under CPLR 3211 (a)(7) for failure

to state a claim.

Reyes contends that the complaint should be dismiss on forum non conveniens

grounds because the Philippines is the proper forum. The court denies this motion for

the same reasons as stated above.

Lorenzo Tan and Raul Tan

Lorenzo V. Tan was the President and CEO of RCBC. (NYSCEF 1, Complaint ,i

14.) Plaintiff alleges Lorenzo Tan was a close friend of defendant Wong and directed

defendant Maia Santos Deguito to "'take care of' Wong as a client of RCBC." (Id. ,i

155.) Lorenzo Tan "admitted to the Senate Blue Ribbon Committee that Defendant

Wong had been a 'social acquaintance' since 2002." (Id.) "Before the Philippine

Senate's Blue-Ribbon Committee, Deguito testified that Lorenzo Tan knew about the

opening of the Fictitious Accounts but chose to do nothing." (Id. ,i 157.)

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Raul Victor B. Tan was the "Head of RCBC's Retail Banking Group." (Id. ,i 15.)

Raul Tan discussed whether the hold was appropriate with Pineda and Capina. (Id. ,i

194.) Plaintiff alleges that Raul Tan knew about the suspicious transactions from

Sabino Maximiano Eco, Deputy Head of RCBC's Operations Group, but ordered the

hold to be lifted 45 minutes after it was put in place. (Id. ,i,i 191, 195.) According to

plaintiff "after Defendant Raul Tan was informed that the Bank had requested that the

funds be recalled, he stated that it was 'Bangladesh's problem,' not RCBC's problem."

(Id. ,i 198.) Raul Tan decided "to release the hold even though he was no longer Head

of RCBC's retail Bank Group and had no authority to do so." (Id. ,i 199.)

Plaintiff alleges that Raul Tan was involved with the after the fact hold on the

Fictious Accounts after the Funds were allegedly "looted," and "while the Bank's stolen

funds were now in other RCBC accounts held by Defendants So Go and Philrem." (Id.

,i 239.)

Plaintiff alleges that Raul Tan was involved with Philrem's conversion of the

Funds to pesos. RCBC's Treasury Department traded $15 million of the Funds to

pesos for Philrem. (Id. ,i 246.) "The Treasury executed that trade, earning RCBC

significant fees." (Id.) "Defendant Tan allowed Philrem's trades through RCBC's

Treasury Department despite knowing the suspicious nature of the funds and the

Bank's request to recall them." (Id. ,i 247.)

The Tans argue that the court lacks personal jurisdiction under CPLR 302 (a)(2)

and (3)(ii) as well as that due process prevents the exercise of jurisdiction. As

discussed above, the motions are denied for the same reasons.

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The Tans argue that plaintiff fails to state a claim under CPLR 3211 (a)(7) against

the Tans for fraud, conspiracy, conversion/theft misappropriation, aiding and abetting

conversion/theft misappropriation, aiding and abetting fraud, unjust enrichment, and

money had and received. For the reasons discussed above, the motion to dismiss the

claims is denied.

The Tans contend that the complaint should be dismissed on forum non

conveniens grounds because the Philippines is the proper forum. As discussed above,

the motion is denied for the same reasons.

Kam Sin Wong

Wong moves to dismiss the complaint on forum non conveniens grounds

because the Philippines is an adequate alternate forum.

Wong filed this, his second motion to dismiss, on May 2, 2022. (NYSCEF 245,

Notice of Motion.) Wong's April 28, 2021 motion to dismiss pursuant to CPLR 306-b

was denied. (NYSCEF 237, April 8, 2022 Order.) Accordingly, the court is compelled to

deny the motion based on Wong's 13-month delay after the first motion to dismiss was

filed. (Creditanstalt Inv. Bank AG v Chadbourne & Parke LLP, 14 AD3d 414,415 [1st

Dept 2005] ["Defendant's substantial delay of nearly 20 months in asserting forum non

conveniens is itself a reason for denial of the defendant's motion to dismiss."].) This

was a knowing waiver because in 2019 Wong filed a forum non conveniens motion in

the federal court, but it was denied. (Bangladesh Bank v Rizal Commercial Banking

Corp., 2020 WL 1322275 [SD NY 2020].) Even if Wong had not waived his forum non

conveniens argument, it would have been denied for the reasons stated above.

Accordingly, it is

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ORDERED that motion sequence number 003 is denied; and it is further

ORDERED that motion sequence number 004 is denied; and it is further

ORDERED that motion sequence number 009 is denied; and it is further

ORDERED that motion sequence number 010 is denied; and it is further

ORDERED that motion sequence number 014 is denied; and it is further

ORDERED that defendants are directed to file answers within 20 days of the

date of this order; and it is further

ORDERED that the parties are directed to mediation.

1/13/2023

8
DATE ANDREA MASLEY, J.S.C.

~ •
CHECK ONE: CASE DISPOSED NON-FINAL DISPOSITION

GRANTED 0 DENIED GRANTED IN PART OTHER

APPLICATION:

CHECK IF APPROPRIATE:
SETTLE ORDER

INCLUDES TRANSFER/REASSIGN
SUBMIT ORDER

FIDUCIARY APPOINTMENT • REFERENCE

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