Fairfield Sentry Limited (In Liquidation) v. Union Bancaire Privee, UBP SA

UNITED STATES BANKRUPTCY COURT

SOUTHERN DISTRICT OF NEW YORK

In re: Chapter 15

Fairfield Sentry Limited, et al. Case No. 10-13164 (JPM)

(Jointly Administered)

Debtors in Foreign Proceedings.

FAIRFIELD SENTRY LTD. (In

Liquidation), et al.,

Plaintiffs,

Adv. Pro. No. 10-03636 (JPM)

v.

ABN AMRO SCHWEIZ AG a/k/a AMRO

(SWITZERLAND) AG, et al.,

Defendants.

MEMORANDUM OPINION AND ORDER DENYING

DEFENDANT’S MOTION TO DISMISS

APPEARANCES:

ALLEGAERT BERGER & VOGEL LLP

Attorneys for Defendant, CBH Compagnie Bancaire Helvétique SA (sued as Compagnie

Bancaire Helvetique)

111 Broadway, 20th Floor

New York, NY 10006

By: John F. Zulack

Lauren J. Pincus

BROWN RUDNICK LLP

Attorneys for the Plaintiffs, Joint Liquidators

Seven Times Square

New York, NY 10036

By: Jeffrey L. Jonas

David J. Molton

Marek P. Krzyzowski

JOHN P. MASTANDO III

UNITED STATES BANKRUPTCY JUDGE

I. INTRODUCTION

Pending before the Court is the motion of the Defendant, CBH Compagnie Bancaire

Helvétique SA (“CBH” or “Defendant,” sued as Compagnie Bancaire Helvetique)1 to dismiss the

Fifth Amended Complaint (the “Amended Complaint” or the “Am. Compl.”) for lack of personal

jurisdiction. Mot. to Dismiss, ECF2 No. 736. The parties did not request oral argument on the

Motion, and instead indicated that they were resting on the papers. See Letter re: Status of

Remaining Oral Arguments, Ex. A, ECF No. 1323. For the reasons set forth herein, the Court

DENIES the Defendant’s Motion to Dismiss.

II. JURISDICTION

The Court has jurisdiction over this matter pursuant to 28 U.S.C. §§ 1334 and 157 and the

Amended Standing Order of Reference dated January 31, 2012 (Preska, C.J.). This Court

previously concluded that it has subject matter jurisdiction over this and related actions. See In re

Fairfield Sentry Ltd., 2018 WL 3756343 (Bankr. S.D.N.Y. Aug. 6, 2018) (“Fairfield I”); see also

Stip. Order, ECF No. 577. Personal jurisdiction is contested by the Defendant and will be

discussed below.

III. BACKGROUND

This adversary proceeding was filed on September 21, 2010. See Cert. Order Transferring

Case., ECF No. 1; see also Amended Complaint Against All Defendants (the “Complaint” or

1 CBH was formerly known as Banque SCS Alliance SA until 2009, and certain documents referenced by the

parties’ filings in connection with this Motion referred to CBH by its former name. Memorandum of Law in

Opposition to CBH Compagnie Bancaire Helvétique SA’s Motion to Dismiss (the “Opposition” or “Opp’n”) at 1, n.1,

ECF No. 1162.

2 Citations to this Court’s electronic docket refer to the docket of Adv. Pro. No. 10-03636-jpm unless otherwise

noted.

“Compl.”), ECF No. 8. Kenneth M. Krys and Greig Mitchell (the “Liquidators”), in their

capacities as the duly appointed Liquidators and Foreign Representatives of Fairfield Sentry

Limited (In Liquidation) (“Sentry”), Fairfield Sigma Limited (In Liquidation) (“Sigma”), and

Fairfield Lambda Limited (In Liquidation) (“Lambda” and, together with Sentry and Sigma, the

“Fairfield Funds” or the “Funds”) filed the Amended Complaint on August 12, 2021. See Am.

Compl., ECF No. 679. Via the Amended Complaint, the Liquidators seek the imposition of a

constructive trust and recovery of over $1.7 billion in redemption payments made by Sentry,

Sigma, and Lambda to various entities known as the Citco Subscribers. Id. ¶¶ 1–2, 205–06; id.

Exs. A–C. Of that amount, Defendant allegedly received approximately $681,000 through

redemption payments from its investment in Sentry. Opp’n at 1, ECF No. 1162; see also

Declaration of Joshua S. Margolin in Support of the Liquidators’ Opposition (“Margolin Decl.”)

Exs. 4–5, 26–27, 32–33, ECF No. 1163 (Redemption Records).

A. THE BLMIS PONZI SCHEME

This adversary proceeding arises out of the decades-long effort to recover assets of the

Bernard L. Madoff Investment Securities LLC (“BLMIS”) Ponzi scheme.3 See Am. Compl. ¶ 1,

ECF No. 679. The Citco Subscribers allegedly invested, either for their own account or for the

account of others, into several funds — including Sentry, Sigma, and Lambda — that channeled

investments into BLMIS. Id. ¶¶ 2, 5, 15.

Fairfield Sentry was a direct feeder fund in that it was established for the purpose of

bringing investors into BLMIS, thereby allowing Madoff’s scheme to continue. Id. ¶¶ 5; 133–34;

see also In re Picard, 917 F.3d 85, 93 (2d Cir. 2019) (“A feeder fund is an entity that pools money

3 The Court will not recount all details concerning the Ponzi scheme perpetrated by Madoff. Details of that

scheme have been recounted by many courts. See, e.g., In re Madoff, 598 B.R. 102, 106 (S.D.N.Y. 2019), aff’d 818

F. App’x 48 (2d Cir. 2020).

from numerous investors and then places it into a ‘master fund’ on their behalf. A master fund—

what Madoff Securities advertised its funds to be—pools investments from multiple feeder funds

and then invests the money.”). Fairfield Sigma and Lambda, in contrast, were indirect feeder

funds, established to facilitate investment in BLMIS through Fairfield Sentry for foreign

currencies. See Am. Compl. ¶¶ 133–34. BLMIS used investments from feeder funds, like the

Fairfield Funds, to satisfy redemption requests from other investors in the scheme. Id. ¶¶ 5–7, 13.

Without new investors, BLMIS would have been unable to make payments to those who chose to

withdraw their investments, and the scheme would have fallen apart. Id. ¶¶ 7–8, 12–14, 134.

The Amended Complaint alleges that investors received payments on account of their

shares in the Fairfield Funds based on a highly-inflated Net Asset Value (“NAV”). Id. ¶ 7. The

Citco Subscribers and the beneficial shareholders were allegedly such investors. Id. To calculate

the NAV, administrators used statements provided by BLMIS that showed “securities and

investments, or interests or rights in securities and investments, held by BLMIS for the account of

Sentry.” Id. ¶ 136. In fact, no securities were ever bought or sold by BLMIS for Sentry, and none

of the transactions on the statements ever occurred. Id. ¶ 137. The money sent to BLMIS by the

Fairfield Funds for the purchase of securities was instead used by Bernard Madoff to pay other

investors or was “misappropriated by Madoff for other unauthorized uses.” Id. The NAVs were

miscalculated, and redemption payments were made in excess of the true value of the shares. Id.

¶ 139. The Fairfield Funds were either insolvent when the redemption payments were made or

were made insolvent by those payments. Id.

CBH is a “corporate entity organized under the laws of Switzerland” with a registered

address in Geneva, Switzerland. Id. ¶ 60. CBH allegedly invested into and redeemed shares of

Sentry through Citco Fund Services (Europe) B.V., Citco Global Custody N.V. (together with

Citco Fund Services (Europe) B.V., “Citco Global Custody”) and Citco Bank Nederland N.V.

Dublin (“Citco Bank”).4 Opp’n at 5–6, ECF No. 1162. Citco Bank and Citco Global Custody

(collectively, the “Citco Subscriber”) were organized under the laws of either Curaçao or the

Netherlands. See Memorandum of Law in Support of Comapgnie Bancaire Helvétique SA’s

Motion to Dismiss for Lack of Personal Jurisdiction (the “Memorandum of Law” or “Mem. L.”)

at 6–7 n.10, ECF No. 736.

CBH invested in Sentry from 2000 to 2008 both directly and through the Citco Subscriber,

which is alleged to have facilitated investments in the Fairfield Funds for numerous shareholders

in this proceeding. See Opp’n at 6. In connection with such investments, CBH opened an account

at Citco Bank. Id. at 9. Further, CBH also appointed Citco Bank to “provide brokerage services.”

Id.; see Margolin Decl. Ex. 21 at -216, ECF No. 1163 (September 2001 Brokerage and Custody

Agreement between Defendant and the Citco Subscriber.) (the “B&C Agreement”). These

services included, inter alia, the “effecting of transactions of and/or relating to the purchase and

sale of and dealing in Securities in the name of” either Citco Bank, Citco Global Custody, or “any

nominee for the account of [CBH]” and “any services ancillary thereto as set out in” the B&C

Agreement. Margolin Decl. Ex. 21 at -215. The B&C Agreement further empowered and

obligated the Citco Subscriber, “when instructed to do so by [CBH] . . . to make settlement of

transactions undertaken by or for [CBH]” and to “deliver[] or receiv[e] the Securities or other

assets of [CBH] and mak[e] or receiv[e] payments for the account of [CBH].” Id. Ex. 21 at -219.

The B&C Agreement also required Citco Bank, after receiving an order from CBH, to issue an

4 The Court will refer to the “Citco Subscriber” in this opinion as it is defined by the Plaintiffs in their

opposition memorandum. See Opp’n at 5, ECF No. 1162. The Amended Complaint refers to the “Citco Subscribers,”

a term that is defined to include both Citco Bank and Citco Global Custody, as relevant to this motion, and other Citco

banking and custody entities. See Am. Compl. ¶ 8 (defining the Citco Subscribers to include Citco Global Custody

NV, Citco Global Custody (NA) NV, Citco Fund Services (BVI), Citco Fund Services (Europe) BV, Citco Bank

Nederland N.V., Citco Bank Nederland N.V. Dublin Branch (a wholly owned subsidiary of Citco Bank Nederland

N.V.), the Citco Banking Corporation N.V.).

order confirmation containing the “[f]ull name of the Fund,” “[s]ecurities [i]dentification,”

“[a]mount/currency/approx. no. of shares” to be purchased or sold, and the “Bank’s reference.”

Id. Ex. 21 at -228. CBH is alleged to have retained the Citco Subscriber as its agent by September

2001 when CBH and the Citco Subscriber entered into this B&C Agreement. See Opp’n at 9.

From 2000 to 2008, CBH allegedly subscribed directly for at least 749.91 shares in Sentry

and subscribed via Citco for 67 shares in Sentry. See id. at 3, 6; see also Margolin Decl. Exs. 8-

12, 16 (Subscription Records). In 2001, CBH transferred to its Citco account the 749.91 shares of

Sentry it acquired via direct subscription. See Opp’n at 3. Then, between 2006 and 2008 (the

“Redemption Period”), CBH, through the Citco Subscriber, redeemed 519.9515 shares for a total

of approximately $681,000 in redemption payments. See id. at 6; see also Margolin Decl. Exs. 4–

5, 26–27, 32–33 (Redemption Records). In addition to these redemption payments, CBH allegedly

received direct payments from the Fairfield Funds’ U.S.-based manager, the Fairfield Greenwich

Group (“FGG”), for “introducing clients to FGG that subsequently invested in Sentry.” Opp’n at

13. At the directions and instructions of the Citco Subscriber, as the alleged agent of CBH , “some

. . . of the Redemption Payments were received at . . . designated United States-based bank

accounts.” Am. Compl. ¶ 141.

Bernard Madoff was arrested for alleged violations of federal securities laws on December

11, 2008. Am. Compl. ¶ 193. The United States Attorney brought criminal charges against him,

alleging that Madoff ran a Ponzi scheme. Id. On December 11, 2008, the Securities Exchange

Commission filed an action in the Southern District of New York to halt the continued offerings

of securities. Id. ¶ 194. In March 2009, Madoff pleaded guilty to criminal charges against him

and confessed to operating a Ponzi scheme and fabricating statements and trade confirmations. Id.

¶¶ 195–96. Madoff was sentenced to 150 years in federal prison and died in April 2021. Id. ¶ 197.

The Amended Complaint alleges that the Citco Subscribers, including the purported agents

of CBH, “had knowledge of the Madoff fraud, and therefore knowledge that the Net Asset Value

was inflated” when the redemption payments were made. Id. ¶ 209. The Amended Complaint

further asserts that, while receiving redemption payments, the Citco Subscribers “uncovered

multiple additional indicia that Madoff was engaged in some form of fraud” but “turned a blind

eye, [and] accept[ed] millions of dollars while willfully ignoring or, at the very least, recklessly

disregarding the truth in clear violation of the law of the British Virgin Islands . . . .” Id. ¶¶ 8, 209.

These indicia included verification that there was no “independent confirmation that BLMIS-held

assets even existed,” Madoff’s failure to segregate duties, and BLMIS’s “employing an

implausibly small auditing firm” rather than a reliable auditor. Id. ¶¶ 9, 209. In the face of red

flags such as these, the Citco Subscribers and other Citco entities purportedly “quietly reduced

[their] own exposure to BLMIS through the Funds, and significantly increasing its Custodian fees

to offset the risk.” Id. ¶ 209.

B. THE PRIOR LITIGATION AND PROCEDURAL HISTORY

The Fairfield Funds were put into liquidation in the BVI in 2009. Am. Compl. ¶¶ 26–29,

ECF No. 679. The BVI court issued orders appointing the foreign representatives, Kenneth Krys

and Greig Mitchell, as liquidators of the Fairfield Funds. Id. ¶ 29. Pursuant to the appointment

order of the BVI court,5 the “Foreign Representatives are responsible for all aspects of the Funds’

business, including protecting, realizing, and distributing assets for the Funds’ estates.” Id. ¶ 203.

The Liquidators commenced actions in the BVI against a number of investors who had redeemed

shares of the Fairfield Funds before the collapse of the scheme. Mem. L. at 4, ECF No. 736;

Fairfield Sentry Ltd. v. Citibank, N.A. London, 630 F. Supp. 3d 463, 475 (S.D.N.Y. 2022); see also

5 The order was issued by the “Commercial Division of the Eastern Caribbean High Court of Justice.” See

Am. Compl. at 1.

Fairfield Sentry Ltd. v. Theodoor GGC Amsterdam (In re Fairfield Sentry Ltd.), 596 B.R. 275, 284

(Bankr. S.D.N.Y. 2018) (“Fairfield II”).

The Liquidators filed petitions in this Court in June 2010 under Chapter 15 of the

Bankruptcy Code, seeking recognition of the BVI proceedings as foreign main proceedings. Am.

Compl. ¶ 30. This Court granted that recognition on July 22, 2010. Id. All cases filed by the

Plaintiffs were administratively consolidated before this Court in November 2010. See

Consolidation Order, Adv. Pro. No. 10-03496, ECF No. 25.

The Plaintiffs asserted multiple causes of action in those consolidated adversary

proceedings including, inter alia, mistaken payment and constructive trust.6 Compl. ¶¶ 63–86,

ECF No. 8; see also 630 F. Supp. 3d at 479. In October 2011, this Court stayed the U.S.

proceedings pending resolution of the BVI proceedings. See Am. Order Staying Redeemer

Actions, Adv. Pro. No. 10-03496, ECF No. 418.; see also Fairfield I, 2018 WL 3756343, at *3.

In April 2014, the Privy Council affirmed dismissal of the Plaintiffs’ BVI law claims for

restitution based on mistaken payment. Fairfield Sentry Ltd. (In Liquidation) v. Migani, [2014]

UKPC 9 (“Migani ”).7 The Privy Council held that the Plaintiffs’ claims for restitution in the BVI

to recover redemption payments arising out of transactions governed by the Funds’ Articles of

Association are governed by BVI law. Id. ¶ 17. The Plaintiffs’ claims to recover redemption

payments thus depended on whether Sentry was bound to make those payments under the “true

NAV per share, ascertained in the light of information which subsequently became available about

Madoff’s frauds, or . . . the NAV per share which was determined by the Directors at the time of

6 Other causes of action included unjust enrichment, money had and received, unfair preferences under BVI's

Insolvent Act § 245, undervalue transactions under the Insolvent Act § 246, breach of contract, and breach of the

implied covenant of good faith and fair dealing. Fairfield Sentry Ltd. v. Citibank, N.A. London, 630 F. Supp. 3d at

463, (S.D.N.Y. 2022).

7 Migani is available at https://jcpc.uk/uploads/jcpc_2012_0061_judgment_416722c30e.pdf and, without

numbered paragraphs, on the Westlaw database at Fairfield Sentry Ltd (In Liquidation) v Migani, 2014 WL 1219748.

redemption.” Id. ¶ 19. The Privy Council concluded that the NAV had to be definitively

determined at the time of the subscription or redemption. Id. ¶ 21. The redemption payments

made under the NAV were thus not subject to restitution and the payee was not unjustly enriched

by receiving funds, even if the amount was mistaken. Id. ¶¶ 18–19.

After Migani was issued, the Plaintiffs allegedly obtained evidence of bad faith of Citco,

the Fairfield Fund’s administrator, when it issued redemption certificates. See Fairfield I, 2018

WL 3756343, at *5–6. Plaintiffs moved to amend the complaint, seeking to add allegations that

Citco lacked good faith when it issued certificates for redemptions and was aware that the NAV

was inflated at the time. See id. at *6. The Plaintiffs argued that the certificates would not be

binding under the Funds’ Articles if they were not issued in good faith. Id.

In December 2018, the Court found that the Plaintiffs could allege bad faith on behalf of

Citco in the U.S. proceedings and could seek recovery of the redemption payments only “where a

Defendant knew the NAV was inflated at the time of redemption.” Fairfield II, 596 B.R. at 295.

Of the common law claims, the Court allowed only the Plaintiffs’ claims for constructive trust

against the so-called “Knowledge Defendants” to proceed:

The suggestion that the subsequent disclosure of facts indicating that the valuation

was made in bad faith vitiates the contract and requires restitution lacks support.

The only exception concerns the Knowledge Defendants that received redemption

payments with the knowledge that the NAV was wrong. In those circumstances,

the Liquidators may seek to impose a constructive trust.

Id. at 301. In December 2020, this Court ruled that § 546(e) bars Plaintiffs’ BVI avoidance claims

to recover unfair preferences and undervalue transactions. In re Fairfield Sentry Ltd., 2020 WL

7345988, at *1 (Bankr. S.D.N.Y. Dec. 14, 2020) (“Fairfield III”).

Following these decisions, only the constructive trust claims survived. Id.; In re Fairfield

Sentry Ltd., No. 10-13164 (SMB), 2021 WL 771677, at *1 (Bankr. S.D.N.Y. Feb. 23, 2021)

(“Fairfield IV”), aff'd, 630 F. Supp. 3d 463 (2022). The Liquidators filed a further motion to

amend the complaints against the Knowledge Defendants. Mot. to Amend, ECF No. 618; Mot. to

Amend, Adv. Pro. No. 10-03496, ECF No. 3737. On August 5, 2021, this Court granted the motion

to amend the complaint and lifted the stay of the redeemer actions. See Order Granting Mot. to

Amend, ECF No. 676; see also Order Lifting Stay of Redeemer Actions, ECF No. 675.

C. THE PENDING MOTION

The Amended Complaint seeks the imposition of a constructive trust on the redemption

payments received from the Fairfield Funds. See Am. Compl. ¶ 205, ECF No. 679. The Amended

Complaint alleges that Defendant’s purported agent, the Citco Subscriber, had knowledge of the

fraud at BLMIS and therefore knowledge that the NAV was inflated. Id. ¶ 209. “By reason of

their receipt of some or all of the Redemption Payments, the Beneficial Shareholders have been

unjustly enriched to the detriment of the [Fairfield] Funds and other shareholders and creditors of

the Funds.” 8 Id. ¶ 213.

Under BVI law, “lack of good faith, i.e. bad faith, includes wrongdoing by one who acts

recklessly as well as one who acts with actual knowledge that he is acting wrongfully or willfully

blinds himself to that fact.” Id. ¶ 206 (citing 596 B.R. at 293). As this Court previously found:

To establish a constructive trust claim under English law, which would apply in the

BVI, “the plaintiff must show, first, a disposal of his assets in breach of fiduciary

duty; second, the beneficial receipt by the defendant of assets which are traceable

as representing the assets of the plaintiff; and third, knowledge on the part of the

defendant that the assets he received are traceable to a breach of fiduciary duty.”

Fairfield IV, 2021 WL 771677, at *3 (quoting El Ajou v. Dollar Land Holdings Ltd. [1994] 2 All

E.R. 685, 700).

The Amended Complaint alleges that the defendants, including CBH as a beneficial

shareholder of certain accounts, purposefully availed themselves of the laws of the United States

8 The Amended Complaint alleges that several other defendants may have received redemption payments made

to the Citco Subscribers. Am. Compl.¶¶ 34–112, ECF No. 679.

and the State of New York by “investing money with the Funds, and knowing and intending that

the Funds would invest substantially all of that money in New York-based BLMIS.” Am. Compl.

¶ 20.

The parties engaged in personal jurisdiction discovery between September 2021 and

August 2022. See Scheduling Order, ECF No. 714; Second Am. Scheduling Order, ECF No. 997.

Merits document and expert discovery is ongoing in this case. See Fourteenth Am. Scheduling

Order, ECF No. 1321; Fifteenth Am. Scheduling Order, ECF No. 1336.

Defendant has moved to dismiss the Amended Complaint for lack of personal jurisdiction,

arguing that the Amended Complaint has not sufficiently alleged minimum contacts with the forum

to establish personal jurisdiction over Defendant and that exercising personal jurisdiction would

be unreasonable. See Mem. L. at 1–4, 19, ECF No. 736.

The Liquidators filed an opposition to the Motion and submitted the declaration of Joshua

S. Margolin and Sara K. Joyce in support of their opposition. See Opp’n, ECF No. 1162; Margolin

Decl., ECF No. 1163; Declaration of Sara K. Joyce (“Joyce Decl.”), ECF No. 1164.9 The

Liquidators argue that exercising jurisdiction over Defendant would be reasonable and that

Defendant’s contacts with the United States, through its own actions and those of its purported

agent, in knowingly and intentionally investing in Sentry, using U.S. correspondent accounts to

invest in and receive payments from Sentry, and conducting other business activities support

personal jurisdiction. Opp’n at 2–5. Defendant filed a reply memorandum on August 10, 2023.

Reply Memorandum of Law in Further Support of Defendant CBH Compagnie Bancaire

Helvétique SA’s Motion to Dismiss for Lack of Personal Jurisdiction (the “Reply”), ECF No. 1264.

9 Pursuant to various orders of this Court, portions of certain filings and supporting documents were filed under

seal. For the analysis in this opinion, the Court will refrain from referring to any bank account numbers or names of

individual employees, named only in sealed documents, in full.

In considering the Defendant’s Motion, the Court has reviewed the above filings, all other relevant

submissions, and the record as a whole.

IV. DISCUSSION

A. THE LAW OF PERSONAL JURISDICTION

To subject a defendant to personal jurisdiction in the United States, due process requires

that the defendant have sufficient minimum contacts with the forum in which the defendant is sued

“‘such that the maintenance of the suit does not offend traditional notions of fair play and

substantial justice.’” Picard v. Bureau of Labor Ins. (In re BLMIS), 480 B.R. 501, 516 (Bankr.

S.D.N.Y. 2012) (quoting Int’l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945)). “In adversary

proceedings, courts must determine whether the defendant has minimum contacts with the United

States, rather than with the forum state.” Picard v. Fairfield Greenwich Grp. (In re Fairfield

Sentry Ltd.), 627 B.R. 546, 565 n.13 (Bankr. S.D.N.Y. 2021) (citing In re Lehman Bros. Holdings

Inc., 535 B.R. 608, 619 (Bankr. S.D.N.Y. 2015)). “When jurisdiction is satisfied through

Bankruptcy Rule 7004,10 a bankruptcy court need not address its state's long-arm statute.” Id.

n.12; see also Owens-Illinois, Inc. v. Rapid Am. Corp. (In re Celotex Corp.), 124 F.3d 619, 630

(4th Cir. 1997).

An analysis of minimum contacts “focuses on the relationship among the defendant, the

forum, and the litigation,” a relationship that “must arise out of contacts that the defendant himself

creates with the forum State.” Walden v. Fiore, 571 U.S. 277, 284 (2014) (quotations omitted).

10 “The summons and complaint and all other process except a subpoena may be served anywhere in the United

States.” Fed. R. Bankr. P. 7004(d). A bankruptcy court may exercise personal jurisdiction over a defendant served

under Rule 7004(d) “[i]f the exercise of jurisdiction is consistent with the Constitution and the laws of the United

States.” Fed. R. Bankr. P. 7004(f).

There are three conditions necessary for the Court to exercise specific jurisdiction11 over the non-

resident defendant:

First, the defendant must have purposefully availed itself of the privilege of

conducting activities within the forum State or have purposefully directed its

conduct into the forum State. Second, the plaintiff's claim must arise out of or relate

to the defendant’s forum conduct. Finally, the exercise of jurisdiction must be

reasonable under the circumstances.

U.S. Bank Nat’l Ass’n v. Bank of Am. N.A., 916 F.3d 143, 150 (2d Cir. 2019) (internal quotation

marks and citations omitted).

To survive a motion to dismiss for lack of personal jurisdiction pursuant to Federal Rule

of Civil Procedure Rule 12(b)(2), the Plaintiffs “must make a prima facie showing that jurisdiction

exists.” SPV Osus Ltd. v. UBS AG, 882 F.3d 333, 342 (2d Cir. 2018) (quoting Penguin Grp. (USA)

Inc. v. Am. Buddha, 609 F.3d 30, 34–35 (2d Cir. 2010)). A trial court has considerable procedural

leeway when addressing a pretrial dismissal motion under Rule 12(b)(2). Dorchester Fin. Sec.,

Inc. v. Banco BRJ, S.A., 722 F.3d 81, 84 (2d Cir. 2013).

A showing sufficient to defeat a defendant's challenge to personal jurisdiction “varies

depending on the procedural posture of the litigation.” Id. (quoting Ball v. Metallurgie Hoboken-

Overpelt, S.A., 902 F.2d 194, 197 (2d Cir. 1990)). Following discovery, “the plaintiff's prima facie

showing, necessary to defeat a jurisdiction testing motion, must include an averment of facts that,

if credited by the trier, would suffice to establish jurisdiction over the defendant.” Ball, 902 F.2d

at 197. “In response to a post-jurisdictional discovery Rule 12(b)(2) motion, ‘the plaintiff need

persuade the court only that its factual allegations constitute a prima facie showing of

11 Courts recognize “two types of personal jurisdiction: general and specific jurisdiction. A state court may

exercise general jurisdiction only when a defendant is ‘essentially at home’ in the State.” Ford Motor Co. v. Montana

Eighth Jud. Dist. Ct., 592 U.S. 351, 352, 141 S. Ct. 1017, 1019, 209 L. Ed. 2d 225 (2021) (quoting Goodyear Dunlop

Tires Operations, S. A v. Brown, 564 U.S 915, 919, 131 S. Ct. 2846, 180 L. Ed. 2d 796 (2011)). The Plaintiffs only

allege that the Court has specific jurisdiction over Defendant. See Opp’n at 37, ECF No. 1162 (arguing that “exercising

specific jurisdiction over CBH . . . is reasonable under the circumstances” U.S. Bank Nat’l Ass’n, 916 F.3d at 150

(quoting Bristol-Myers Squibb, 137 S. Ct. at 1786)).

jurisdiction.’” Averbach v. Cairo Amman Bank, No. 19-CV-0004-GHW-KHP, 2023 WL

5016884, at *4 (S.D.N.Y. June 30, 2023) (quoting Dorchester Fin. Sec., 722 F.3d at 85). “Now

that jurisdictional discovery is complete, Plaintiffs’ burden is different, but it is not heavy.”

Averbach , 2023 WL 5016884, at *6 (citing 722 F.3d at 85). “Plaintiffs need only show that their

prima facie showing of jurisdiction is factually supported.” Id. at *6. When considering a motion

to dismiss before or after jurisdictional discovery has taken place, “the court must ‘construe the

pleadings and affidavits in the light most favorable to plaintiffs,’ and resolve all doubts, including

factual disputes, in the plaintiff's favor.” Id. at *4 (quoting Ball, 902 F.2d at 197).

B. ANALYSIS OF PURPOSEFUL AVAILMENT

“[M]inimum contacts necessary to support [specific] jurisdiction exist where the defendant

purposefully availed itself of the privilege of doing business in the forum and could foresee being

haled into court there.” Charles Schwab Corp. v. Bank of Am. Corp., 883 F.3d 68, 82 (2d Cir.

2018) (quoting Licci ex rel. Licci v. Lebanese Canadian Bank, SAL, 732 F.3d 161, 170 (2d Cir.

2013) (“Licci IV”)). For specific personal jurisdiction, “‘[c]ourts typically require that the plaintiff

show some sort of causal relationship between a defendant's U.S. contacts and the episode in suit,’

and the plaintiff's claim must in some way ‘arise from the defendant's purposeful contacts with the

forum.’” Charles Schwab Corp., 883 F.3d at 84 (quoting Waldman v. Palestine Liberation Org.,

835 F.3d 317, 341, 343 (2d Cir. 2016)). “Although a defendant’s contacts with the forum state

may be ‘intertwined with [its] transactions or interactions with the plaintiff or other parties . . . [,]

a defendant’s relationship with a . . . third party, standing alone, is an insufficient basis for

jurisdiction.’” U.S. Bank Nat’l Ass’n, 916 F.3d at 150 (quoting Walden, 571 U.S. at 134)

(alteration in original). “It is insufficient to rely on a defendant’s random, fortuitous, or attenuated

contacts or on the unilateral activity of a plaintiff with the forum to establish specific jurisdiction.”

Id.

CBH asserts that the “Liquidators affirmatively represented to the District Court that all

Redemption Payments to Citco’s Brokerage Customers (including CBH) occurred outside the

United States . . . .” Mem. L. at 15–16, ECF No. 736. Plaintiffs argued before the District Court

that “every relevant component of the transactions at issue here occurred outside the territorial

jurisdiction of the United States.” Id. at 16 (emphasis in original); see also Plaintiffs-Appellants’

Opening Brief for Second Round Appeal at 24, Fairfield Sentry Ltd. v. Citibank NA London, No.

19-cv-3911 (S.D.N.Y. July 21, 2021), ECF No. 440 (the “Opening Brief”). The Plaintiffs’

Opening Brief concerned the extraterritorial application of the § 546(e)12 safe harbor. See Opening

Brief at 24 (arguing that the “Bankruptcy Court erred in holding that Section 546(e)’s safe harbor

could apply extraterritorially to shield from avoidance settled securities transactions that occurred

exclusively outside the United States.”).

As another bankruptcy court in this district has stated, the “tests for personal jurisdiction

and extraterritoriality are not the same.” Spizz v. Goldfarb Seligman & Co. (In re Ampal-Am.

Israel Corp.), 562 B.R. 601, 613 n.14 (Bankr. S.D.N.Y. 2017). In Spizz, the bankruptcy court was

able to simultaneously find that the “[t]ransfer was not domestic, and hence, cannot be avoided”

under § 547, while also clarifying that by “attend[ing] meetings in New York around the time of,

and apparently in conjunction with, the commencement of the chapter 11 case,” a defendant may

be “subject to specific personal jurisdiction.” Id. at 613–14.

By arguing in the District Court that the redemption transfers were foreign for purposes of

extraterritoriality, Plaintiffs did not preclude arguing that there were contacts with the forum for

12 Section 546(e) of the Bankruptcy Code prohibits a trustee from avoiding a transfer that is a margin payment

or settlement payment “made by or to (or for the benefit of) a commodity broker, forward contract merchant,

stockbroker, financial institution, financial participant, or securities clearing agency, or that is a transfer made by or

to (or for the benefit of) a commodity broker, forward contract merchant, stockbroker, financial institution, financial

participant, or securities clearing agency, in connection with a securities contract. . . .” 11 U.S.C. § 546(e). “By its

terms, the safe harbor is a defense to the avoidance of the initial transfer.” Picard v. BNP Paribas S.A. (In re BLMIS),

594 B.R. 167, 197 (Bankr. S.D.N.Y. 2018) (emphasis in original).

purposes of personal jurisdiction. To determine whether a transaction is foreign or domestic for

analyzing extraterritoriality issues for federal statutes, courts look at whether the “conduct relevant

to the statute's focus occurred in the United States.” RJR Nabisco, Inc. v. European Cmty., 579

U.S. 325, 326, 136 S. Ct. 2090, 2094, 195 L. Ed. 2d 476 (2016). To determine whether personal

jurisdiction is appropriate, however, courts analyze a defendant’s contacts with the forum “under

a totality of the circumstances test.” Licci IV, 732 F.3d at 170 (citing Best Van Lines, Inc. v.

Walker, 490 F.3d 239, 242 (2d Cir. 2007)).

The Plaintiffs allege that Citco acted as an agent of the Defendant with respect to its

investments with the Fairfield Funds and as such, “the Citco agent’s conduct is imputed to CBH

for purposes of this motion.” Opp’n at 2, ECF No. 1162. Many of the jurisdictional contacts that

the Plaintiffs refer to rely on this agency relationship. Id. The Defendant counters that the

“Plaintiffs seek to transpose onto CBH the alleged U.S. contacts of the Fund’s own agent, the Citco

Subscribers.” Reply at 8, ECF No. 1264. In support of its argument, CBH argues that the Court

has already found that “the Funds were customers of Citco Bank who acted as their agents in

connection with the securities contracts pursuant to which the redemption payments were made.”

Id. (quoting Fairfield III, 2020 WL 7345988, at *7). The Defendant further argues that “CBH’s

relationship with the Citco Subscriber[] was exclusively between foreign entities and governed by

foreign law,” and that “CBH entered into a custody agreement with the Citco Subscriber[] for the

limited purpose of facilitating investments … in certain funds.” Id. at 9. CBH further states that

the B&C Agreement does not suggest “CBH availed itself of the protections of U.S. law.” Id. In

addition, the Defendant argues that asserting jurisdiction over CBH solely because the funds at

issue “momentarily transited through a U.S. bank would effectively establish general jurisdiction

in the United States for any global transaction that is conducted in U.S. Dollars – a proposition

which courts have consistently rejected.” Id. at 10–11. Before examining whether the allegations

support jurisdiction, the Court will first consider whether the Citco Subscriber’s actions should be

imputed to CBH.

1. Whether the Citco Subscriber Acted as an Agent of CBH for Purposes of

Personal Jurisdiction

Defendant argues that the Citco Subscriber was not an agent of CBH because the Citco

Subscriber was an agent of the Fairfield Funds. The Defendant cited the Court’s ruling in Fairfield

III, 2020 WL 7345988 at *7 that “the Funds were customers of Citco Bank[,]” and that Citco Bank

“acted as their agents in connection with the securities contracts [related to] the redemption

payments …” as support for this argument. See Reply at 8, ECF No. 1264 (arguing that “Plaintiffs’

attempt to deem the Citco Subscriber as CBH’s agent is contrary this Court’s prior rulings”).

Although the Plaintiffs did not respond to this argument, the Court will address this issue here.

CBH apparently assumes that a party cannot be the agent of multiple parties. Under this

argument, CBH asserts that, because the Court had found that the Citco Subscriber was the Funds’

agent in facilitating the redemption payments, the Citco Subscriber could not simultaneously be

an agent of other parties in the same transactions. The Court disagrees. Indeed, the Court has

already rejected this argument in prior opinions denying other defendants’ motions to dismiss this

adversary proceeding. See Fairfield Sentry Ltd. (In Liquidation), et al. v. Credit Suisse AG, et al.

(In re Fairfield Sentry Ltd.), 665 B.R. 1, 16–17 (Bankr. S.D.N.Y. 2024); see also Fairfield Sentry

Ltd. (In Liquidation), et al. v. SIX SIS Ltd., et al. (In re Fairfield Sentry Ltd.), 2025 WL 946971,

at *10 (Bankr. S.D.N.Y. Mar. 28, 2025). Many courts have long recognized that, where two

principals to the same transaction do not have conflicting interests, a third-party may serve as an

agent for both principals. See, e.g., 99 Commercial Street, Inc. v. Goldberg, 811 F.Supp. 900

(S.D.N.Y. 1993) (holding that an escrow agent can act as agent to both parties); see also Knudson

v. Weeks, 394 F.Supp. 963 (W.D. Okla. 1975) (holding that an agent may act as an agent for both

parties to the same transaction where the interest of two principals are not conflicting).

Accordingly, the Court’s holding in Fairfield III establishing the agency relationship between the

Funds and the Citco Subscriber does not necessarily bar the Plaintiffs’ allegation that the Citco

Subscriber served as CBH’s agent with respect to the redemption payments.

Courts have also recognized that a defendant “can purposefully avail itself of a forum by

directing its agents . . . to take action there.” Daimler AG v. Bauman, 571 U.S. 117, 135 n.13

(2014). In the absence of a formal agency relationship, the Court may impute an agent’s conduct

within or aimed at the forum to the principal based on “the realities of the relationship in question

rather than the formalities of agency law.” CutCo Indus., Inc. v. Naughton, 806 F.2d 361, 366 (2d

Cir. 1986). Even a defendant that “indirectly transacts financial instruments in a forum may have

purposefully availed itself of the forum if the transactions were effected by the defendant’s agent.”

In re Eur. Gov't Bonds Antitrust Litig., 2020 WL 4273811, at *6 (S.D.N.Y. July 23, 2020).

The Court must determine whether the alleged activities of the Citco Subscriber should,

for the purposes of establishing specific personal jurisdiction in this Court, be imputed to CBH.

“To establish an agency relationship for jurisdictional purposes, plaintiffs must show that the

alleged agent acted in [the forum] for the benefit of, with the knowledge and consent of, and under

some control by, the nonresident principal.” Hau Yin To v. HSBC Holdings, PLC, 700 F. App’x

66, 68 (2d Cir. 2017) (citing Grove Press, Inc. v. Angleton, 649 F.2d 121, 122 (2d Cir. 2018)).

The Plaintiffs argue that the Citco Subscriber’s conduct satisfies all three prongs of this test, given

that “(1) the Citco Subscriber’s conduct in investing in the Funds was taken on behalf and for the

benefit of CBH; (2) the Citco Subscriber acted at the direction and under the control of CBH; and

(3) the Citco Subscriber acted pursuant to CBH’s knowledge and consent. See Opp’n at 17, ECF

No. 1162 (citing In re Eur. Gov’t Bonds Antitrust Litig., 2020 WL 4273811, at *6).

The Second Circuit has explained that a principal might not be charged with the acts of an

agent when that agent, “though ostensibly acting in the business of the principal, is really

committing a fraud for his own benefit, he is acting outside the scope of his agency, and it would

therefore be most unjust to charge the principal with knowledge of it.” Wight v. BankAmerica

Corp., 219 F.3d 79, 87 (2d Cir. 2000) (quoting Munroe v. Harriman, 85 F.2d 493, 495 (2d Cir.

1936)). This exception is narrow in that the Court may still charge the principal with “the acts and

knowledge of an agent as long as the agent in some respect served the principal or, stated

differently, unless the agent ‘totally abandoned’ the principal's interests and ‘acted entirely for his

own or another's purpose.’” In re Parmalat Sec. Litig., 684 F. Supp. 2d at 472 (finding that

although the agent committed fraud “during his term of employment . . . he did it solely to benefit

himself” and that the benefit to his employer was “immaterial because [employer] was the victim

of [the agent’s] fraud”).

a. Whether the Citco Subscriber’s Conduct was Performed on Behalf and for

the Benefit of CBH

To establish an agency relationship for purposes of personal jurisdiction, “the plaintiff must

show that the alleged agent acts ‘for the benefit of’ . . . the non-resident principal . . . .” In re

Welspun Litig., No. 16 CV 6792 (VB), 2019 WL 2174089, at *7 (S.D.N.Y. May 20, 2019) (quoting

GEM Advisors, Inc. v. Corporacion Sidenor, S.A., 667 F. Supp. 2d 308, 318 (S.D.N.Y. 2009)); see

also CutCo Indus., Inc. v. Naughton, 806 F.2d 361, 366 (2d Cir. 1986)). The Plaintiffs argue that

the “on behalf/benefit of prong is satisfied when an agent’s activities open the principal to financial

gain.” Opp’n at 17, ECF No. 1162 (citing In re Sumitomo Copper Litig., 120 F. Supp. 2d at 336

(finding defendants benefited from agent’s trading activities which could result in gain if

financially successful); GEM Advisors, Inc., S.A., 667 F. Supp. 2d at 319 (finding benefit where

defendant “stood to benefit” from the alleged agent’s “actions and contracts by receiving some or

all of the sale price”)).

CBH subscribed for shares in the Fairfield Funds through the Citco Subscriber to profit by

indirectly investing in BLMIS. See Opp’n at 17–18, 24. Through the activities of its alleged agent,

the Citco Subscriber, CBH could obtain financial gain. See id. The Plaintiffs point to a private

placement memorandum (“PPM”) of the Fairfield Funds that gave “specifics about Sentry’s

investment strategy” including that “its investment would be placed with BLMIS.” Opp’n at 21.

CBH was the beneficial owner of the shares of Sentry that the Citco Subscriber subscribed to

pursuant to CBH’s orders. See Opp’n at 18. The Plaintiffs’ allegations and supporting documents

sufficiently demonstrate that the Citco Subscriber — in implementing the subscription and

redemption decisions — acted on behalf of and for the benefit of CBH in the forum.

b. Whether CBH Both Exercised Control Over and Was Aware of and

Consented to the Citco Subscriber’s Activities

To assert an agency relationship, the principal must have exercised “some control” over

the purported agent. Scholastic, Inc. v. Stouffer, 2000 WL 1154252, at *5 (S.D.N.Y. Aug. 14,

2000). For the purposes of personal jurisdiction analysis, this control prong is satisfied when the

principal has “[an] ability . . . to influence [the agent’s] acts or decisions by virtue of the parties’

respective roles.” Id. (citing Cutco Indus. v. Naughton, 806 F.2d 361, 366 (2d Cir. 1986)).

Control means the “actual exercise of control.” Hau Yin To, 700 F. App’x at 68. However,

absolute control by the principal is not necessary. Maersk, Inc. v. Neewra, Inc., 554 F. Supp. 2d

424, 442 (S.D.N.Y. 2008). The knowledge and consent prong is satisfied when the principal is

apprised of the agent’s activities. See Struna v. Leonardi, 626 F. Supp. 3d 657, 664 (S.D.N.Y.

2022). Because certain of the same facts in this case bear on “knowledge and consent” and

“control,” the two questions may be considered simultaneously. See Karabu Corp. v. Gitner, 16

F. Supp. 2d 319, 326 n.6 (S.D.N.Y. 1998) (“The same considerations which lead this Court to

conclude that the plaintiffs have not satisfied the ‘control’ prong of Kreutter, indicate that

plaintiffs also have not satisfied the ‘knowledge’ and ‘consent’ prongs of the agency test.”);

Branham v. ISI Alarms, Inc., No. 12-CV-1012 (ARR) (MDG), 2013 WL 4710588, at *7 (E.D.N.Y.

Aug. 30, 2013).

Knowledge and consent of the principal have been found: (i) where an agent forwarded

information to the principal (Sec. Ins. Co. of Hartford v. ITA Textiles Corp., 2000 WL 1576879,

at *2–4 (S.D.N.Y. Oct. 23, 2000)); (ii) where the complaint asserts that the principal received a

policy procured by its agent with a “New York forum selection clause that [the principal] knew or

should have known was included” (Pilkington N. Am., Inc. v. Mitsui Sumitomo Ins. Co. of Am.,

2021 WL 2000371, at *9 (S.D.N.Y. May 19, 2021)); and (iii) where the principal is alleged to have

done nothing after having received a cease-and-desist letter aside from forwarding the letter to

counsel. Branham, 2013 WL 4710588, at *7.

The Liquidators argue that CBH exercised significant control over the Citco Subscriber’s

subscription and redemption-related activities and had knowledge of and consented to those

activities such that CBH was the principal with respect to those transactions and exercised the

requisite control over the Citco Subscriber as its agent. Opp’n at 18–19, ECF No. 1162. CBH

entered into the B&C Agreement with the Citco Subscriber in September 2001, pursuant to which

CBH appointed the Citco Subscriber to act as custodian for its investments. Id. at 9; see Margolin

Decl. Ex. 21, ECF No. 1163 (B&C Agreement). Under this agreement, the Citco Subscriber could

execute subscriptions and redemptions only upon receipt of specific instructions from CBH.

Margolin Decl. Ex. 21 at -219. The B&C agreement also required the Citco Subscriber to issue

preliminary and final order confirmations to CBH and to issue a “pre-advice” statement for each

subscription or redemption. Id. Ex. 21 at -228, -229. Based on the foregoing and the lack of

allegations that CBH objected to these actions or instructed the Citco Subscriber to act differently,

the Plaintiffs have sufficiently alleged CBH consent to the Citco Subscriber’s actions. Having

found that it is appropriate to consider the conduct of the Citco Subscriber along with the

allegations of CBH’s direct actions, the Court will examine the sufficiency of the alleged contacts.

2. Defendant’s Use of Correspondent Accounts

The Plaintiffs point to CBH’s choice of correspondent accounts, through its purported

agent, as sufficient to establish minimum contacts with the United States. See Opp’n at 27–34,

ECF No. 1162. “Correspondent accounts are accounts in domestic banks held in the name of

foreign financial institutions” that are used “to effect dollar transactions.” Licci ex rel. Licci v.

Lebanese Canadian Bank, SAL, 673 F.3d 50, 56 n.3 (2d Cir. 2012) (quoting Sigmoil Res., N.V. v.

Pan Ocean Oil Corp. (Nigeria), 234 A.D.2d 103, 104, 650 N.Y.S.2d 726, 727 (1st Dept 1996)).

Plaintiffs allege that CBH, through the Citco Subscriber, its purported agent, deliberately selected

and used the Citco Subscriber’s U.S. correspondent account at HSBC Bank USA, N.A. (“HBUS”)

to effectuate the redemption payments that form the harms for which Plaintiffs seek redress. Opp’n

at 6–8, 30.

Here, the Plaintiffs have shown that the Defendant was able to use either a foreign-based

or a U.S.-based correspondent bank account for its redemption requests and, through its alleged

agent, chose the latter. See Margolin Decl. Ex. 27, ECF No. 1163 (Sentry Confirmation of Order

Received to redeem 415.54 shares of Sentry at HSBC Bank USA in New York); see also Opp’n

at 29 n. 16 (“[T]he Second Circuit has recognized that, ‘[i]n light of the widespread acceptance

and availability of U.S. currency, [a foreign bank] could have . . . processed U.S.-dollar-

denominated wire transfers . . . through correspondent accounts anywhere in the world.’”) (quoting

Licci IV, 732 F.3d at 171.); see also Joyce Decl. at 5–9, ECF No. 1164.; id. at 11 (“[S]ubscription

agreements for Fairfield Sentry . . . do not contain any requirement that the subscriber utilize a

U.S. account to send subscription payments or receive redemption payments.”); id. at 12 (“Neither

the fact that Fairfield Sentry was a U.S.-dollar denominated fund, nor the fact that the subscription

agreement instructed subscribers to wire their subscription payments to Sentry’s U.S. account, nor

the fact that Sentry made redemption payments from its own U.S. account would have prevented

a subscriber from making subscription payments from and directing redemption payments to a

U.S. dollar account located outside the U.S.”); id. at 12–13 (“The U.S. dollar was in wide

circulation outside the U.S. during the Relevant Period, and many other payment options were

widely available and easily accessible during the Relevant Period. To the extent that a foreign

subscriber chose a U.S.-based correspondent account to effectuate their payments, it was generally

for reasons of its own convenience or financial benefit.”).

CBH argues that any use of U.S.-based correspondent accounts that may have occurred

was incidental and insufficiently related to the harm for which the plaintiffs seek redress. See

Reply at 9–11, ECF No. 1264 (“[The Sentry redemption payments] momentarily transited through

the Citco Subscriber’s U.S. correspondent bank account.… [T]he momentary transfer of funds

through the U.S. banking system is not the principal wrong [of the Plaintiffs’ constructive trust

claim].”). The Defendant cites the Second Circuit’s opinion in Hau Yin To v. HSBC Holding, PLC,

700 F.App’x 66, 66–67 (2d Cir. 2017) in support of this argument. See Reply at 11. In Hau Yin

To, the Second Circuit affirmed an earlier ruling by the District Court, which had held that the

defendants’ passive use of a U.S.-based correspondent account was not a sufficient basis to confer

personal jurisdiction over those defendants. Id. at 69; see also Hau Yin To v. HSBC Holding, PLC,

2017 WL 816136 (Bankr. S.D.N.Y. Mar. 2017). Contrary to the CBH’s argument, the Second

Circuit’s opinion in Hau Yin To does not support the Defendant’s assertion here. As the District

Court noted in its opinion in Hau Yin To, the “wiring of funds through New York” by certain

foreign defendants — fund custodians that facilitated the fund transfers between BLMIS and its

feeder funds —was “passive” and “incidental” because “the passage of money through the U.S.

bank accounts …[was] not specifically directed by [the defendants] to facilitate the [BLMIS]

Ponzi scheme.” See Hau Yin To, 2017 WL 816136 at *7, n. 6.

Unlike the plaintiffs in Hau Yin To, the Liquidators here do not allege that the Defendant,

through its alleged agents, used a U.S.-based correspondent account to facilitate the BLMIS Ponzi

scheme. Instead, the Liquidators are seeking the imposition of a constructive trust related to

numerous parties — including the Defendant — because the parties, through their alleged agents,

requested and received redemption payments while knowing that the NAV was inflated. See Am.

Comp. ¶¶ 205–216, ECF No. 679. Therefore, the Defendant’s use of a U.S.-based correspondent

account through its alleged agent for receiving redemption payments is an integral part of the

Liquidators’ claim. Moreover, the Plaintiffs have shown that the Defendant had the option to use

a foreign correspondent account for its redemption requests, but instead used a U.S.-based

correspondent account through its alleged agent. See Margolin Decl. Exs. 4–5, 26–27, 32–33

(Redemption Records); see also Joyce Decl. at 5–9, 11–13.

The Plaintiffs allege that Defendant received two redemption payments from Sentry that

the Citco Subscriber requested to be sent to a correspondent account at HBUS. See Opp’n at 13.

The Plaintiffs also support their allegations with certain redemption requests and order

confirmations that correspond to certain redemption payments. See Margolin Decl. Exs. 4–5, 26–

27, 32–33 (Redemption Records).

Indeed, this was no passive endeavor; the Plaintiffs allege that Defendant made

“deliberate” and “recurring” use of U.S. correspondent accounts in transacting with Sentry.13

Opp’n at 27. The Defendant actively selected the correspondent account as a means of moving

redemption funds through New York. See Joyce Decl. at 8–9 (listing multiple “correspondent

banks offer[ing] U.S. dollar correspondent accounts located outside of the U.S.” during the

relevant period). Defendant was free to designate an account of its choice, inside the United States

or outside, to effectuate transfers and chose one based in the U.S. to receive redemption payments.

See id. at 10–12 (“Factors Influencing Choice of Correspondent Account”).

CBH, through its agent, accomplished the conduct at the heart of the Liquidators’ claims

regarding payments from Sentry through its use of the U.S.-based correspondent account. The

Second Circuit has found the selection and repeated use of in-forum correspondent accounts to

perpetrate the alleged violations supports a finding of sufficient minimum contacts. Licci IV, 732

F.3d at 171; id. at 168 (quoting Licci v. Lebanese Canadian Bank, 20 N.Y.3d 327, 339, 984 N.E.2d

893, 900 (N.Y. 2012) (“[A] foreign bank’s repeated use of a correspondent account in New York

on behalf of a client . . . show purposeful availment of New York’s dependable and transparent

banking system, the dollar as a stable and fungible currency, and the predictable jurisdictional and

commercial law of New York and the United States.”); see also Spetner, 70 F.4th at 640 (“[A]

defendant foreign bank's ‘repeated use of a correspondent account in New York on behalf of a

13 To support its allegations that the Defendant deliberately chose U.S.-based correspondent accounts,

Liquidators also note that CBH, while acting as a direct subscriber, used its own account at Deutsche Bank in New

York to facilitate subscriptions of at least 749.91 shares of Sentry — shares which CBH transferred to the Citco

Subscriber, and later redeemed to receive the redemption payments. Opp’n at 27-28; see Margolin Decl. Exs. 14, 15

(Direct Subscription Records).

client . . . can constitute transacting business for purposes of § 302(a)(1), even if the defendant has

no other contacts with the forum.”). 14

The Liquidators have provided support for the allegation that the Citco Subscriber, acting

as agent of the Defendant, chose to use a correspondent account in New York to receive payments

from Sentry. See Opp’n at 12. While foreign options existed, the redemption forms show that

Defendant selected and used a U.S.-based correspondent bank receive payments from Sentry.

CBH’s repeated receipt of hundreds of thousands of dollars of redemption payments for its

investments in Sentry through a U.S. correspondent account demonstrates its purposeful availment

of the banking system of New York and the United States.

3. Defendant’s Business Contacts with the Forum

The Liquidators assert that CBH “intentionally invested in BLMIS feeder fund Sentry

knowing that Sentry was designed to subsequently invest that money in New York-based BLMIS.

CBH is subject to this Court’s jurisdiction with respect to its Sentry redemptions as a result of that

conduct.” Opp’n at 20, ECF No. 1162. Defendant describes the allegations concerning

Defendant’s subscription payments into the Fairfield Funds for the purpose of investing in BLMIS

as a “non-party-specific allegation,” which Defendant argues is not appropriate to consider under

Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 417 (1984). Mem. L. at 16,

ECF No. 736; (“ [T]he non-party-specific allegation that Citco’s Brokerage Customers allegedly

knew that their investments in the Funds would be comingled with other investments and the net

surplus of those investments would ultimately be invested in BLMIS does . . . not support

jurisdiction ”).

14 Section 302(a)(1), New York’s long-arm statute, “authorizes personal jurisdiction over a foreign defendant

for causes of action that arise out of ‘transact[ing] any business within the state,’ whether in person or through an

agent.” 70 F.4th at 640 (quoting C.P.L.R. § 302(a)(1)).

In Helicopteros, the Supreme Court found that “mere purchases, even if occurring at

regular intervals, are not enough to warrant a State’s assertion of in personam jurisdiction over a

nonresident corporation in a cause of action not related to those purchase transactions.”

Helicopteros, 466 U.S. at 418. The Supreme Court found that “one trip” to the forum “for the

purpose of negotiating the transportation-services contract . . . cannot be described or regarded as

a contact of a ‘continuous and systematic’ nature . . . .” Id. at 416. The Liquidators, however,

have described more substantial contacts here.

Specifically, the Liquidators point to the documents given to CBH by FGG, prior to CBH’s

initial direct subscription in the Fairfield Funds. See Opp’n at 6-7. The offering materials that

CBH received “made clear that the main purpose of Sentry’s existence was to invest in BLMIS, a

New York-based broker dealer.” Id. at 7; see also Margolin Decl. Ex. 18 at -948, ECF No. 1163

(July 2000 Sentry Information Memorandum describing the business objective of the company as

“seek[ing] to achieve capital appreciation of its assets by allocating its assets to an account at

Bernard L. Madoff Investment Securities . . . a registered broker-dealer in New York, which

employs an options trading strategy described as ‘split strike conversion’”); Id. Ex. 18 at -960

(“The services of Messrs. Tucker and Noel and Bernard L. Madoff Investment Securities are

essential to the continued operations of the Manager. If any of their services were no longer

available, their absence would have an adverse impact upon an investment in the Company. The

manager has delegated all investment management duties to Bernard L. Madoff Investment

Securities.”). Further, these documents show that Defendant was aware at the time that its

investments in the Fairfield Funds were effectively investments in BLMIS in New York. CBH,

through its agent, the Citco Subscriber, executed subscriptions into Sentry with this knowledge.

See id. Ex. 8 (October 2003 Sentry Long Form Subscription Agreement); see also id. Ex. 9,

(December 2003 Sentry Long Form Subscription Agreement); see also id. Ex. 10 (January 2008

Sentry Short-Form Subscription Agreements).

In August 2018, this Court held that it does not have personal jurisdiction over certain

defendants due to subscription agreements that provided for consent to jurisdiction in New York

for claims “with respect to [the Subscription] Agreement and the Fund.” Fairfield I, 2018 WL

3756343, at *11. The Liquidators here rely on the subscription agreements and private placement

memoranda not to show consent, but to show that when Defendant invested in Sentry it did so

knowing that it would avail itself of the benefits and protections of New York. Opp’n at 21–25.

The subscription agreements, signed by CBH’s agent, in this way, support the Plaintiffs’ showing

of contacts with the forum.

The Plaintiffs have supplied further support for the allegations of contacts. Exhibits

indicate that CBH was informed of the relationship between the Fairfield Funds and BLMIS in

New York through due diligence performed by CBH, its affiliate, and its alleged agent, during the

relevant period. Opp’n at 7; See Margolin Decl. Ex. 17 at -240 (email exchange between a CBH

employee and a Citco employee noting that CBH had received a Sentry PPM).

Therefore, the Court finds that the allegations and documentation provided by the Plaintiffs

through jurisdictional discovery, taken together, sufficiently demonstrate facts supporting

continuous and systemic contacts with the forum.

4. Whether the Defendant’s Contacts are Otherwise Appropriate to Support the

Court’s Exercise of Personal Jurisdiction

The Court will address CBH’s remaining arguments that the alleged contacts are not

jurisdictionally relevant under Supreme Court precedent. Mem. L. at 12, 17–19, ECF No. 736.

Defendant argues that CBH’s alleged knowledge of the Funds’ investment in BLMIS amounts to

“mere knowledge of a plaintiff’s forum contacts[,]” which it states is insufficient to establish

personal jurisdiction under Walden v. Fiore, 571 U.S. 277 (2014). Id.

In Walden, the Supreme Court found that a defendant “formed no jurisdictionally relevant

contacts” with the forum state of Nevada as “[p]etitioner never traveled to, conducted activities

within, contacted anyone in, or sent anything or anyone to Nevada.” Walden, 571 U.S. at 289.

The Supreme Court further stated that it is impermissible to allow the “plaintiff’s contacts with the

defendant and forum to drive the jurisdictional analysis.” Id. As the Supreme Court explained,

the “plaintiff cannot be the only link between the defendant and the forum,” and “the defendant’s

conduct . . . must form the necessary connection with the forum State.” Id. at 285. Nevertheless,

personal jurisdiction may be found even where a “defendant's contacts with the forum State may

be intertwined with [defendant’s] transactions or interactions with the plaintiff or other parties.”

Id. at 286.

The Plaintiffs’ allegations and supporting evidence of intentional investments into BLMIS

in New York, selection and use of U.S.-based correspondent accounts demonstrate that CBH took

affirmative actions on its own apart from the conduct of the Plaintiffs. See Opp’n at 27–32, ECF

No. 1162. The Liquidators have shown that the Defendant knew and intended that, by investing

in the Funds, Defendant’s money would enter into U.S.-based BLMIS. Id. at 2–3, 22; see also

Margolin Decl. Ex. 18, ECF No. 1163 (July 2000 Memorandum).

This certainty can be found in the Fairfield Funds’ contractual obligation to invest at least

95% of the money they received in U.S.-based BLMIS. Opp’n at 21; see Margolin Decl. Ex. 22.

at -884 (“The Investment Manager, in its sole and exclusive discretion, may allocate a portion of

the Fund's assets (never to exceed, in the aggregate, 5% of the Fund's Net Asset Value, measured

at the time of investment) to alternative investment opportunities other than its ‘split strike

conversion’ investments . . . .”). Moreover, the Plaintiffs have alleged that the Defendant,

conducted independent investigations and had read and relied upon the relevant PPMs and other

offering materials which confirmed the investments would be made with BLMIS in New York.

Opp’n at 8.

The Court thus finds that Defendant’s selection and use, both directly and through its agent,

of U.S. correspondent accounts, and due diligence of BLMIS in New York support the Court’s

exercise of jurisdiction over the claims for receiving redemption payments from the Fairfield

Funds with the knowledge that the NAV was wrong. The contacts are not random, isolated, or

fortuitous. The contacts demonstrate CBH’s purposeful activities aimed at New York in order to

effectuate transfers from Sentry. The Plaintiffs have thus provided allegations and supporting

documentation that sufficiently support a prima facie showing of jurisdiction over the Defendant.

C. WHETHER THE CLAIM ARISES OUT OF OR RELATES TO THE

DEFENDANT’S FORUM CONDUCT

The suit must “arise out of or relate to the defendant’s contacts with the forum.” Ford

Motor Co. v. Montana Eighth Jud. Dist. Ct., 592 U.S. 351, 362, 141 S. Ct. 1017, 1026, 209 L. Ed.

2d 225 (2021) (emphasis in original). “[P]roof that a plaintiff’s claim came about because of the

defendant’s in-state conduct” is not required. Id. at 1027. Instead, a court need only find “an

affiliation between the forum and the underlying controversy.” Goodyear Dunlop Tires

Operations, S.A. v. Brown, 564 U.S. 915, 919 (2011); Picard v. BNP Paribas S.A. (In re BLMIS),

594 B.R. 167, 190 (Bankr. S.D.N.Y. 2018) (“Where the defendant’s contacts with the jurisdiction

that relate to the cause of action are more substantial, however, it is not unreasonable to say that

the defendant is subject to personal jurisdiction even though the acts within the state are not the

proximate cause of the plaintiff's injury.”) (internal quotations omitted).

Defendant argues that the claims are “wholly unrelated to the Funds’ investments in, or

redemptions from BLMIS.” Mem. L. at 12, ECF No. 736. However, the Liquidators seek

imposition of a constructive trust on funds received with knowledge that the NAV was inflated.

See Am. Compl. ¶¶ 205–16, No. 679. The issue of knowledge of the inflated NAV is inextricably

tied to the Defendant’s investments with New York-based BLMIS. The allegations are directly

related to Defendant’s investment activities with BLMIS through the Fairfield Funds. Id. ¶ 207.

The Defendant’s contacts with the United States, in investing in, in communications with, and

redemptions from the Fairfield Funds, form a “sufficiently close link” between the defendant, the

forum and the litigation concerning Defendant’s activities in the forum. See MSP Recovery

Claims, Series LLC v. Takeda Pharm. Am., Inc., 2021 WL 4461773, at *3 (S.D.N.Y. Sept. 29,

2021) (quoting Ford Motor Co., 141 S. Ct. at 1032).

D. WHETHER ASSERTION OF PERSONAL JURISDICTION IS REASONABLE

If a defendant has sufficient minimum contacts, then the Court must ask “whether the

assertion of personal jurisdiction comports with ‘traditional notions of fair play and substantial

justice’—that is, whether it is reasonable under the circumstances of the particular case.” Bank

Brussels Lambert v. Fiddler Gonzalez & Rodriguez, 305 F.3d 120, 129 (2d Cir. 2002) (quoting

Metro. Life Ins. Co. v. Robertson-Ceco Corp., 84 F.3d 560, 568 (2d Cir. 1996)); see also Burger

King Corp. v. Rudzewicz, 471 U.S. 462, 476 (1985). Where the plaintiff “makes the threshold

showing of the minimum contacts required for [exercising personal jurisdiction], a defendant must

present a compelling case that the presence of some other considerations would render jurisdiction

unreasonable.” MSP Recovery Claims, Series LLC, 2021 WL 4461773, at *3 (quoting Bank

Brussels Lambert, 305 F.3d at 129). Factors the Court will consider include the burden on the

defendant, the interests of the forum in adjudicating the case, the plaintiff’s interest in obtaining

convenient and effective relief, the interstate judicial system’s interest in obtaining the most

efficient resolution of controversies, and the shared interest of the states in furthering fundamental

substantive social policies. Bank Brussels Lambert, 305 F.3d at 129.

The Defendant argues that “[t]he interests of the U.S. in this foreign law dispute between

foreign parties are minimal . . . [t]his is merely an ‘ancillary’ Chapter 15 proceeding, meant only

‘to aid foreign jurisdictions in administering bankruptcies . . . .’” Reply at 13, ECF No. 1264

(citing In re Fairfield Sentry Ltd., 458 B.R. 665, 686 (S.D.N.Y. 2011) (Preska, C.J.)).

Defendant’s reliance on In re Fairfield Sentry Ltd., 458 B.R. 665, is misplaced. In that

case, the District Court determined whether the proceeding was core or non-core; it did not

determine whether adjudication or jurisdiction in the United States was reasonable. See id. at 675.

Further, the Court has already found that it has subject matter jurisdiction over these proceedings.

See Fairfield I, 2018 WL 3756343, at *8 (Bankr. S.D.N.Y. Aug. 6, 2018). Chapter 15 allows for

recognition of Sentry’s foreign main proceeding. 11 U.S.C. § 1501(a) ("The purpose of this

chapter is to incorporate the Model Law on Cross-Border Insolvency so as to provide effective

mechanisms for dealing with cases of cross-border insolvency . . . .”); id. § 1504 (“A case under

this chapter is commenced by the filing of a petition for recognition of a foreign proceeding under

section 1515.”). Defendant correctly states that cases brought under Chapter 15 are ancillary to

foreign proceedings. Fairfield I, 2018 WL 3756343, at *2. However, the ancillary character of

such cases does not necessarily mean that the United States has minimal interest in the dispute.

Indeed, courts have recognized that the United States has a strong interest in ensuring the integrity

of its financial systems. See, e.g., Licci IV, 732 F.3d at 174 (“[T]he United States[] and New York

[have an] interest in monitoring banks and banking activity to ensure that its system is not used as

an instrument in support of terrorism, money laundering, or other nefarious ends.”). This Court

has also repeatedly emphasized such interest in other adversary actions related to the BLMIS Ponzi

scheme. See Fairfield Sentry Ltd. (In Liquidation), et al. v. HSBC Securities Services

(Luxembourg) S.A., et al. (In re Fairfield Sentry Ltd.), 658 B.R. 257, 277 (Bankr. S.D.N.Y. 2024);

see also Fairfield Sentry Ltd. (In Liquidation), et al. v. UBS Europe SE, Luxembourg Branch, et

al. (In re Fairfield Sentry Ltd.), 657 B.R. 1, 23 (Bankr. S.D.N.Y. 2024).

Defendant also argues that the “the burden on CBH is significant, particularly as the

amount in controversy is relatively small” and that “[t]he witnesses and evidence related to CBH

are exclusively overseas, and the burden of further discovery magnified by CBH's need to comply

with Swiss and other bank secrecy and data protection laws.” Reply at 13.

In 2012, this Court granted in part and denied in part a motion seeking relief as to the order

staying the action and seeking expedited initial disclosures on certain beneficial holders. See

Bench Ruling, Adv. Pro. No. 10-03496, ECF No. 799 (the “July 2012 Bench Ruling”). The Court

stated in that ruling that it was “hard-pressed to find any compelling United States’ interest in

mandating discovery here at this juncture of the pending litigation.” Id. (emphasis added).

Although the defendants before this Court in 2012 were able to describe “the strong and undeniable

interest of many nations in enforcing their banking secrecy laws” and “significant bank customer

confidentiality laws of no fewer than 30 countries, attested to by numerous declarations of foreign

law experts and letters submitted by foreign governments” that could have been implicated or

broken by complying with the Court’s prior order, CBH now describes a potential exposure to

liability under Swiss “bank secrecy and data protection laws.” Id.; Reply at 13. This Court lifted

the stay and required the Defendant to proceed to discovery in 2021. Order Lifting Stay, ECF No.

675. The July 2012 Bench Ruling shows that this Court can alleviate specific burdens identified

by a defendant. However, the mere potential for exposure to unspecified liability is not a burden

that renders exercise of jurisdiction unreasonable.

The Defendant has demonstrated that this Court’s exercise of jurisdiction over it may

impose a minimal burden in terms of requiring it to “traverse the distance” to the forum. However,

“[e]ven if forcing the defendant to litigate in a forum relatively distant from its home base were

found to be a burden, the argument would provide defendant only weak support, if any, because

the conveniences of modern communication and transportation ease what would have been a

serious burden only a few decades ago.” Chloé v. Queen Bee of Beverly Hills, LLC, 616 F.3d 158,

173 (2d Cir. 2010); see also In re Platinum & Palladium Antitrust Litig., 61 F.4th 242, 273 (2d

Cir. 2023). The Defendant has not established that the Court’s exercise of personal jurisdiction

over it would be unreasonable. Further, CBH is represented by U.S. Counsel and the United States

has a strong interest in ensuring the integrity of its financial systems. The Court thus finds that

exercising jurisdiction over the Defendant is reasonable and comports with “traditional notions of

fair play and substantial justice . . . .” See Int'l Shoe, 326 U.S. at 316, 66 S. Ct. 154.

V. CONCLUSION

For the foregoing reasons, the Court DENIES the Defendant’s Motion to Dismiss the

Amended Complaint. The Liquidators shall submit a proposed order consistent with the findings

in this decision in accordance with Local Bankruptcy Rule 9074-1.

IT IS SO ORDERED.

Dated: May 9, 2025

New York, New York

/s/ John P. Mastando III ______________________

THE HONORABLE JOHN P. MASTANDO III

UNITED STATES BANKRUPTCY JUDGE