Insiders Accused of Alleged Breach of Fiduciary and Mismanagement in CTE 1 LLC
October 27, 2021, District of New Jersey – Charles M. Forman, in his capacity as Plan Administrator for Debtor CTE 1 LLC, brings an action against multiple defendants (namely, the Debtor’s insiders and affiliated entities), including Carmine A. DeMaio III, Mark DeMaio, Frank C. Holtham Jr., Carmine Zeccardi Jr., Dmitry Zeldi, Patti Zienowicz, CTE 2 LLC d/b/a Volkswagen of Union, CTE 2 Land LLC, DeMaio Holdings, Inc. d/b/a Norman Gale Buick GMC, INFINITI of Englewood, Leonard Automotive Enterprises, Inc. d/b/a Toyota of Hackensac, Concours Motors, Inc., Zeccardi LLC, and John Doe 1-10 and Jane Doe 1-10. (“collectively “Defendants”)
The Plan Administrator commences this action against Debtor’s former principals and the Debtor’s former controller for “negligence”, “breach of fiduciary duty”, and “common law fraud”. The complaint alleges that the action arises from the Defendants’ operation of the Debtor’s Lexus of Englewood auto dealership. Specifically, the complaint contends that the Defendants engaged in “negligent and reckless acts and omissions”, “gross mismanagement”, “misrepresentations”, failed to maintain adequate record-keeping, accounting, and oversight of the Debtor, each of which constituted breaches of duties owed to the Debtor. The Plan Administrator asserts that the Defendants’ conduct resulted in damage to the Debtor and its creditors in an amount of approximately $30 million.
The lawsuit also seeks to avoid and recover from certain Defendants all “fraudulent” and “preferential” transfers of property, allegedly made to or for the benefit of certain Defendants, from an account owned by the Debtor during the applicable look-back periods according to 11 USC §§ 544, 547, 548 and 550 and applicable state law.
The case is In re CTE 1 LLC (d/b/a Lexus of Englewood), Adversary Proceeding: 21- 01455. Honorable Vincent F. Papalia is overseeing the Debtor’s bankruptcy case. The Trustee is represented by the law firm of Robert Malone Gibbons P.C. and Michael E. Holt Forman Holt.