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Replies to post #1813 on Canna Corp (fka CNCC)
01/11/19 1:56 PM
Ultegra Financial Partners, Inc.
Plaintiff,
v.
Northway Mining, Inc., a New York limited liability company, Mining Power Group, Inc., a Florida corporation, and Michael Maranda, an individual,
Defendants.
Plaintiff seeks to recover more than $686,000.00 from Defendants.
On or around December 13, 2018, Defendants, in need of money, sought a $6.2 million-dollar loan from Ultegra Financial Partners, Inc. The loan would be made in two tranches. Defendants received the first tranche of $350,000.00 of the loan on December 24, 2018. The second tranche is scheduled to be made later. On that same day, Ultegra requested $66,000.00, which was the sum of a number of fees Ultegra incurred in making the loan. Defendants agreed to pay Ultegra the $66,000.00 on or before December 26, 2018. But by December 27, 2018, Ultegra still had not received the $66,000.00 and contacted Defendants. Defendants did not respond.
On December 28, 2018, and again on January 2, 2018, Ultegra demanded payment through its counsel. But, again, Defendants did not respond. Plaintiff filed this Complaint. PARTIES
A. Plaintiff:
1. Plaintiff, Ultegra Financial Partners, Inc. (“Ultegra”), is a Colorado corporation organized under the laws of the State of Colorado, with a principle place of business at 1099 18 th Street, Suite 2680 Denver, Colorado 80202.
B. Defendants:
2. Defendant, Northway Mining, LLC (“Northway”), is a New York limited liability company, with a physical corporate address at 707 Flat Road Athens, NY 12015. Upon investigation and review of corporate filings with the Securities and Exchange Commission’s Edgar System, no member of Northway is a Colorado resident.
3. Defendant, Mining Power Group, Inc. (“Mining Power”), is a Florida corporation and the parent company of Northway. Mining Power has a principle place of business at 20200 Dixie Highway Suite 906 Miami, Florida 33180.
4. Defendant, Michael Maranda, (“Maranda”), is an individual who represents himself as the CEO of Northway. Maranda may be served at 38 Oaklawn Avenue Farmville, NY 11738.
FACTUAL ALLEGATONS
1. On December 13, 2018, Defendants executed a Term Sheet with Ultegra to borrow $6.2 million dollars (the “Loan”) from Ultegra.
2. On December 19, 2018, Defendants executed Fee Agreement and a Commitment Letter.
3. The Fee Agreement and the Commitment Letter form the core of the documents that detailed the transaction between Ultegra and Defendants.
4. As part of the Loan, Ultegra was entitled to certain fees and costs.
5. Defendants agreed to pay Ultegra a due diligence fee of $37,500.00.
6. Defendants paid Ultegra $25,000.00 of the due diligence fee, leaving a balance of $12,500.
7. Ultegra is entitled to a minimum banking fee of $620,000.00, which is 10 percent of the Loan.
8. The minimum banking fee of $620,000.00 became due the moment Ultegra presented the Commitment Letter to Defendants for execution.
9. The Loan was to be made in two traches of $350,000.00 and $5,850,000.00.
10. Ultegra was entitled to certain fees on the first tranche of the Loan.
11. Specifically, on the first tranche, Ultegra was entitled to a small banking fee of $35,000.00, which represents 10 percent of the first tranche.
12. Ultegra was also entitled to a credit facility fee of $3,500.00 and a commitment fee of $3,500.00.
13. Defendants also granted Ultegra a security interest in their assets, including an interest in the real property at 707 Flats Road in Athens, NY
14. The provision granting Ultegra a security interest provides as follows: SECURITY INTEREST GRANTING CLAUSE; ULTEGRA'S LIEN.
(a) To secure the full and timely payment and performance of all of Client's obligations under and with respect to this Agreement, including without limitation, Client's obligation to pay any and all Banking Fees, any Break-Up Fees, liquidated or other damages, all costs, expenses, advances and other amounts to be paid or reimbursed to Ultegra pursuant to this Agreement, and all other amounts payable by Client to Ultegra under or with respect to this Agreement (collectively, the "Obligations"), Client hereby grants to Ultegra, a continuing security interest in, lien and collateral assignment in and to, and right of setoff against (collectively, "Ultegra's Lien") all of Client's personal and real property and all rights to such personal and real property held by Client, in each case, whether now owned or existing or hereafter acquired or arising and regardless of where located, including without limitation, all: (1) accounts; (2) chattel paper; (3) commercial tort claims; (4) (i) all deposit accounts and (ii) all cash and other monies and property of Client in the possession of, or under the control of, Ultegra; (5) equipment; (6) fixtures; (7) general intangibles (including intellectual property); (8) goods; (9) instruments; (10) inventory; (11) investment property; (12) letter- of-credit rights and supporting obligations; and (13) other personal property; and real estate; together with all books, records, ledger cards, files, correspondence, computer programs, tapes, disks and related data processing software that at any time evidence or contain information relating to any of the property described above or are otherwise necessary or helpful in the collection thereof or realization thereon; and proceeds and products of all or any of the property described above (such terms shall have the meanings ascribed in the Uniform Commercial Code as then in effect in the State of Colorado; and collectively, all of the same, the "Collateral") and includes any amounts now or hereafter held by Ultegra as advance payments, deposits or retentions paid or remitted to Ultegra by or on behalf of Client. This Agreement shall be deemed to constitute a "security agreement" under the terms of the Uniform Commercial Code in effect in the State of Colorado. Client shall be the "debtor" and Ultegra shall be the "secured party". In addition to lien, Client has granted Ultegra the right to file a Mortgage or deed of trust on the property located at 3620 Austin Peay Highway, in Memphis, Tennessee in the amount equal to the minimum banking fee described above in Schedule 1 paragraph A
(b) In furtherance of the foregoing grant, Client hereby authorizes and, until such time as the Obligations are paid in full, in cash, shall continue to authorize Ultegra to (i) file one or more financing or continuation statements, and amendments thereto (or similar documents required by any laws of any applicable jurisdiction), relating to all or any part of the Collateral, and/or (ii) file a copy of this Agreement with the ultimate loan disbursement agent and/or the accounts receivable disbursement agent for the contemplated funding, which shall serve for all purposes as Client's authorization and instruction to such agents to pay to Ultegra the amount of all Banking Fees owed by Client to Ultegra and the amount of any costs, expenses, or advances or other Obligations owed to Ultegra; in each such case, without the signature of, or further authorization by, Client, and Client hereby specifically ratifies all such actions previously taken by Ultegra. An invoice for such Banking Fees, costs, expenses, and advances shall be delivered by Ultegra to Client and the applicable disbursing agent within five (5) business days before the scheduled closing. Payment of Banking Fees, costs, expenses, and advances owed by Client to Ultegra shall be made by the trustee or disbursing agent at the time of funding.
15. Defendants agreed that the Loan would be released to it in two tranches.
16. In addition, before the loan closed, but after Defendants learned about the closing costs, Defendants requested the first tranche of the loan be increased to $350,000.00 to allow Defendants to repay the closing costs.
17. On December 24, 2018, Northway received the first tranche of the Loan of $350,000.00.
18. On December 24, 2018, Ultegra requested payment of $66,000.00.
19. The $66,000.00 is the sum of: $12,500.00, which is the balance of the due diligence fee; $35,000.00, which is the small banking fee of on the first tranche; $15,000.00, which is the commitment fee; $3,500.00, which is the credit facility fee.
20. Maranda, via text message, promised to pay Ultegra the $66,000.00 on or before December 26, 2018.
21. On December 27, 2018, Ultegra sent an invoice to Maranda and again requested payment.
22. Maranda did not respond to Ultegra’s December 27, 2018, communication and no one from Northway or Power Mining responded.
23. On December 27, 2018, Ultegra emailed its invoice to Northway, Mining Power, and Maranda.
24. Neither Northway, Mining Power, nor Maranda responded to Ultegra’s December 27, 2018 invoice.
25. On December 28, 2018, through its counsel, Ultegra emailed Maranda, Donald D’Avanzo (“D’Avanzo”), Northway Chief Operating Officer, and Dror Svorai (“Svorai”), the Chief Executive Officer of Mining Power.
26. Neither Maranda, D’Avanzo, nor Svorai responded to Ultegra counsel’s email.
27. On January 2, 2018, Ultegra sent Northway, Maranda, D’Avanzo, and Svorai a Demand Letter and requested immediate payment of all fees owed to Ultegra, including Ultegra’s minimum banking fee, Ultegra’s due diligence fees, and all other fees owed to Ultegra.
28. Northway, Maranda, D’Avanzo, and Svorai did not respond.
29. Upon information and belief, neither Northway, Mining Power, nor Maranda intended to pay Ultegra its fees.
30. Rather, Northway, Mining Power, and Maranda lured Ultegra into making the Loan on the false pretense that Northway would immediately pay Ultegra all of its fees and costs. FIRST CAUSE OF ACTION (Breach of Contract—All Defendants)
31. Ultegra incorporates the previous allegations as if fully set forth in this paragraph.
32. Defendants entered into a number of agreements for Ultegra to loan them $6.2 million dollars.
33. Under the various agreements with Ultegra, Defendants agreed to pay Ultegra its banking fees, its due diligence fees, its attorney fees, and other fees and costs Ultegra incurred in the Loan.
34. Ultegra performed under the terms of the agreements in that Ultegra delivered the first tranche of the Loan to Defendants.
35. Defendants breached the Term Sheet, the Commitment Letter, and the Fee Agreement when they refused to pay Ultegra its fees, even after multiple demands from Ultegra.
36. Ultegra suffered damages because of Defendants’ breach.
37. Ultegra is entitled to damages in excess of $686,000.00, not including Ultegra’s attorney fees and costs.
SECOND CAUSE OF ACTION (Promissory Estoppel)
38. Ultegra incorporates previous allegations as if fully set forth in this paragraph.
39. Defendants promised to pay Plaintiff fees including due diligence fees, banking fees, and other fees and costs.
40. Defendants should have reasonably expected that their promises would induce action by Plaintiff.
41. Defendants’ promise induced action by Plaintiff in that Plaintiff incurred substantial costs in anticipation of the transaction.
42. Justice requires that this Court enforce the promise.
43. Plaintiff is entitled to damages to be proven at trial.
07/29/19 7:13 PM
08/02/19 4:36 PM
08/23/19 3:02 PM
By CCN.com: A New York Bitcoin miner hosting company called Northway Mining stands accused of stealing at least 5100 pieces of mining equipment from two companies. Given the scope of the investigation currently underway by the federal government, the damage might be much more significant than this.
Northway Mining Sued For Violation of RICO Act
At least four Bitcoin companies have been allegedly victimized, though we use the term “allegedly” in its most legal definition: strictly because the accused have not yet been convicted.
MinedMap, Inc, Serenity Alpha, Inc, both of Nevada, and Quebec, Inc from Canada. The other is BlockAssets, a company based in Perth, Australia.
The former chose Northway Mining to host more 2800 Bitmain S9 miners, over half of its entire fleet, in September 2018. Another 800 miners were sent to the facility by the companies. The latter had the decision made for them by a Canadian company who couldn’t handle their 1500 units. We’ll be following up with a story about BlockAssets at another time.
As to MinedMap, Serenity Alpha, and Quebec Inc, they’re collectively filing lawsuits against Northway Mining, as a start. At the same time, the issue is currently being treated as a criminal investigation by federal authorities. As you can see in the videos below, the US Marshall Service searched the facility leased by Northway in Coxsackie, New York, this past week.
At Least Over 5000 Bitmain Miners Stolen in All
The pending lawsuit alleges that Northway bilked clients out of nearly 3600 pieces of Bitcoin mining equipment (one was recovered with the help of the Marshalls), as well as over $ 500,000 in deposits. The complaint records this:
Québec Inc. also requested the return of its deposits of $ 46,746.09, $ 23,255.66, and $ 23,824.42 for a total of $ 93,826.17 because its deposits had not been spent on electrical power since the Miners were not plugged in. […] On September 21, 2018, MinedMap and Serenity wired $ 162,000.00 to Northway as a deposit on the electrical costs Northway was to incur hosting MinedMap and Serenity’s Miners. In addition, almost one week later, MinedMap and Serenity wired an additional $ 270,000.00 as an additional deposit for electrical costs Northway would incur in providing electricity to MinedMap and Serenity’s Miners.
EXCLUSIVE!@danielikim who is suing Northway Mining LLC in NY has just entered their facility with US Marshals to find 2,300 of his s9j @BITMAINtech boxes EMPTY.
Glad to see a victim actually going after someone like this to be made an example out of! #Bitcoin $ btc #crypto pic.twitter.com/eHSugMDFhW
— TheCoinDad (@TheCoinDad) May 2, 2019
. @coindesk @CCNMarkets @BTCTN @APompliano @CryptoBoomNews @JWilliamsFstmed @jpbaric @Cointelegraph pic.twitter.com/Ug1HqdZNHG
— TheCoinDad (@TheCoinDad) May 2, 2019
CCN spoke to Daniel Injoon Kim, who is a managing partner with MinedMap and Serenity Alpha. Between the companies, they have over 5,000 Bitmain S9s operational. They would have over 50% more if it had not been for what happened with Northway Mining, a facility they hired to manage a new batch of miners.
They had the miners shipped directly from Bitmain last September, and as the video above shows, many of the boxes were found, but no miners. Kim and some partners have been mining since 2016 in Canada, but when Quebec placed a moratorium on new mining operations, they were forced to colocate with a partner. They found Northway on the recommendation of a broker they knew. Kim and his partners believe that this broker acted on good faith.
“Where Is My Money? Where Are My Miners?”
After the Bitcoin miners arrived at the facility in Coxsackie, it’s a mystery what happened to them. The likely scenario is that they’ve been resold. The miners could be somewhere operating on behalf of Northway at this point, but that can’t be verified.
Court documents claim that the facility was unable to host even 200 miners as of June 2018, which underlines the fraud allegations – plaintiffs believe that the fraud was organized and intentional from the beginning.
The miners having been brand-new, the question of why Bitmain can’t do more to locate them arises. Kim isn’t sure, and the ongoing lawsuit against Bitmain regarding the way new miners connect to Bitmain servers is news to him. He does note that Bitmain have been as helpful as he expected.
Kim told CCN:
We made a deal to have our miners hosted in their facility located 30 minutes south of Albany, NY. They lied to us continuously until the very end. We wanted to pull out the miners finally in February, he then says talk to our lawyer and as of today, May 2nd, 2019 they left our boxes, 1 miner, and have resold or hosted with other entities at 3rd party facilities.
Facility Owner Sues Northway, Too
According to court filings, Northway Mining owes the owner of the facility a significant sum of money. Kim says that Ultegra was part and parcel to the scam:
The lender, Ultegra Financial has colluded and is a part of the fraud ring.
However, Ultegra is still trying to recover lost money from Northway.
MinedMap, Serenity Alpha, and Quebec Inc have a joint lawsuit against Northway, which names several partners in crime: Michael Miranda, Michael Carter, Dror Svorai, Motorcycle Salvage, LLC, Mining Power Group, and Hudson Data Center.
The suit uses the RICO Statute – yes, the one that brought down half of the mafia throughout the 1980s and 90s. In total, eight separate charges are listed in the complaint. Kim says his law firm is doing a “fantastic job right now” and the allegations of criminal conduct are what led federal officials to get involved.
Around $ 1 Million In Lost Revenue
The lawsuit says that the plaintiffs have collectively lost around $ 1 million in Bitcoin mining revenue. It additionally states that the miners themselves are worth about $ 900,000 based on current market conditions.
Had Serenity and MinedMap timely received their Miners, they would have earned at least $ 1 million dollars to date.
Plus legal fees and the cost of wining and dining Northway partners, the alleged scammers have gotten off with a pretty sizable haul.
The Scammer Takes Off The Mask of Cordiality
The relationship between Daniel Kim (and his partners) and Northway devolved over a five-month period, in which the miners were never installed or used. Michael Maranda continually made excuses for delays, and eventually, when it came time to refund the money, said the money had been used in some other “buildout.” The lawsuit alleges that Maranda used company funds for several personal expenditures, including vehicles and real estate.
03/19/20 8:40 AM
06/01/20 9:51 PM
08/01/20 7:48 PM
10/05/20 11:16 AM
The court grants the Motion due to the nature and complexity of the charges, the massive volume and nature of discovery materials, and the location of out of District defendants and witnesses, as well as the additional reasons stated on the open record. This case is hereby declared complex pursuant to 18 U.S.C. § 3161(h)(7)(B)(ii).
02/22/21 11:41 PM
04/15/21 1:01 PM
