Four New Jersey investment companies are suing to stop the owner of a Rockland County online retailer from wiping out a $1.75 million debt.
Pesach A. Cohen, of Pomona, the owner of Prime Electronics LLC, should not be allowed to use bankruptcy to escape paying a debt, according to a lawsuit filed last month in U.S. Bankruptcy Court, White Plains.
The $1.75 million debt, the complaint states, “arose due to the defendant’s fraud or defalcation while acting in a fiduciary capacity.”
Prime Electronics buys products at a discount from big box retailers, according to the complaint, and sells them online at higher prices on Amazon, eBay, and Walmart.
The lawsuit was brought by Malky Vorhand, who managed four investment companies in Lakewood, New Jersey with Herman/Naftali Vorhand, who died this past July. The companies include N&M Investments, Majestic Contracting, Majestic Investments, and Seymour Investments.
Cohen allegedly provided documents that depicted Prime Electronics as a profitable enterprise. And from mid-2019 to mid -2020, the Vorhand companies loaned $1.75 million to Cohen, the complaint states, based on “rosy financial documents.”
The terms of the deal were outlined in a letter of intent and were supposed to be detailed in a contract, according to the lawsuit. But Herman Vorhand became suspicious about Prime Electronics’ finances. When Cohen allegedly refused to return the funds, Vorhand commenced an arbitration case in a rabbinical court.
The arbitrators examined $750,000 in transactions and found discrepancies, the lawsuit states, and ruled this past June that Cohen owed the Vorhand companies $720,000.
Six days later, Cohen petitioned for Chapter 7 bankruptcy liquidation, declaring $1.2 million in assets and nearly $5.5 million in liabilities. He listed a $1.7 million claim by Herman Norhand as disputed.
Malky Vorhand argues that Cohen may not be relieved of repaying the loans because the deals were based on false financial information, the funds were misused, and Cohen intended to injure the lenders.
Cohen’s bankruptcy attorney, Charles Wertman, did not reply to a message asking for his client’s side of the story.
