A federal judge has ordered New York Military Academy ”“ the alma mater of Donald Trump, class of 1964 ”“ to turn over documents for a fraud case in the Grand Court of the Cayman Islands.
Two hedge funds registered in the Cayman Islands and managed by Evenstar Capital Management Ltd., Hong Kong, want documents and deposition testimony for their case against Vincent Tianquan Mo, the head of a Chinese business empire.
Evenstar is trying to identify sources of a large influx of suspicious capital that Mo used to pay for real estate properties in the Hudson Valley.
In 2011, Mo established the Research Center on Natural Conservation (RCNC), a nonprofit organization based in Harriman, Orange County. Mo is president of the organization, according to its federal tax return for 2019.
Then RCNC bought Arden House, a historic mansion and 450-acre site near Harriman State Park, for $6.5 million. The property is ostensibly used for seminars by Tsinghua University, Mo’s alma mater, and this past July as the wedding venue for his daughter.
In 2015, RCNC bought New York Military Academy in Cornwall-on-Hudson, Orange County, for $15.8 million in a bankruptcy auction.
In 2017, RCNC bought the former Briarcliff College campus, Briarcliff Manor, from Pace University for $17.4 million. It sold the 37-acre property in February to a Monsey religious organization, Khal Toroth Chaim of Rockland, for $11.75 million.
Evenstar contends that Mo has mingled business assets for his personal benefit and RCNC has operated the properties in ways that are contrary to its charitable mission.
In 2017 and 2018, for example, the charity received more than $50 million in loans and mortgages from businesses controlled by Mo.
Last year, Evenstar asked U.S. District Court, White Plains, for subpoenas for documents from RCNC and the military academy, to identify sources of funds for the Hudson Valley real estate purchases and transactions with the Mo family and companies controlled by Mo.
The hedge funds also asked for deposition subpoenas to compel Mo to testify about funds used to buy Arden House, New York Military Academy and the Briarcliff campus.
U.S. District Judge Cathy Seibel approved the subpoenas last December, but RCNC, the military academy and other Mo entities asked the court to quash the subpoenas, arguing that they are overbroad, irrelevant to the Grand Cayman Islands case, and unduly burdensome.
U.S. Magistrate Judge Judith C. McCarthy denied the motion.
“If the allegations are correct,” she stated in an Aug. 27 opinion, “the requested discovery could help … prove the extent of Mo’s alleged misconduct.”
The scope of the requested documents is appropriate, she said, but she directed the parties to confer about minimizing duplicative requests.
She found the subpoenas for Mo’s testimony appropriate, and noted that he could designate one or more witnesses to testify for him.
The subpoenas serve twin purposes, McCarthy said, “of promoting efficient assistance to international litigations, as well as encouraging foreign courts to do the same.”
