UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF FLORIDA

Case No. 1:20-cv-22234- MARTINEZ-BECERRA

LINCO ENTERPRISES, INC.,

Plaintiff/Counter-Defendant,

v.

OLEG FIRER, EZ CAPITAL FUND, LLC,

STAR CAPITAL MANAGEMENT, LLC,

and STAR EQUITIES, LLC, 

Defendants/Counter-Plaintiffs.

_________________________________________/

PLAINTIFFS RESPONSE TO DEFENDANTS’ RULE 56 MOTION 

(WITH MEMORANDUM OF LAW IN SUPPORT)

Plaintiff, Linco Enterprises, Inc. (“Linco”), pursuant to Rule 56 of the Federal Rules of 

Civil Procedure, files this Response to the Motion for Summary Judgment (the “Motion”), ECF 

90 of the Defendants, Oleg Firer, EZ Capital Fund, LLC (“EZ Capital”), Star Capital Management, 

LLC (Star Capital”), and Star Equities, LLC (“Star Equities”). 

INTRODUCTION

The Defendants request summary judgment on Linco’s federal and state securities claims 

in Counts 1 and 3 and its common law fraud claim in Count 5 based upon two arguments. First, 

the Defendants assert that Linco cannot prove a genuine issue of material fact with respect to the 

element of “loss causation” or “proximate cause.” Second, the Defendants assert that the 

Case 1:20-cv-22234-JEM Document 114 Entered on FLSD Docket 09/08/2021 Page 1 of 20
2

misrepresentations sued upon by Linco were negated by written agreements that the parties 

executed in connection with the investments in 2017 (the “2017 Agreements”). 

Next, the Defendants request judgment on Linco’s claim in Count 4 to enforce its 

inspection rights under Section 605.0411 of the Florida Statutes based upon their position that 

Linco is not a “dissociated” member of Star Capital. 

As to the first argument with respect to Counts 1, 3, and 5, Linco asserts that the Defendants 

have not met their burden to demonstrate the non-existence of genuine issue of material fact with 

respect to “loss causation.” Instead, the Defendants gloss over the facts in the record and 

contending, without explaining why or citing record evidence, that either Linco’s subsequent 

transactions with the Defendants or the Pandemic caused all of Linco’s losses years after Linco 

made the investment. Instead, the record shows that Linco was damaged the moment it was 

induced to invest in EZ Capital, Star Capital, and Unified Advance, LLC (“Unified Advance”)

(collectively, the “Closely Held Companies”). Because the Defendants misrepresented that they 

had contributed $6.816 million to the Closely Held Companies, the membership interests 

purchased by Linco were worthless the moment Linco acquired them and turned over $1.38 million 

to the Defendants. 

As to the second argument based upon the Defendants’ construction of the written 

operating agreement (“OA”) used for EZ Capital and Unified Advance and Amendment No. 1 to 

the OA for Star Capital (the “Star Capital Amendment”), Linco asserts that the Defendants’ 

construction of these documents (the “2017 Agreements”) must be rejected based upon familiar 

contract construction principles.

Case 1:20-cv-22234-JEM Document 114 Entered on FLSD Docket 09/08/2021 Page 2 of 20
3

Finally, the third argument with respect to Count 5 is due to be rejected based upon the 

plain meaning of the language used in the Class B Common Share Purchase Agreement (the 

“Purchase Agreement”). 

THE FACTS

Linco relies upon its Opposing Statement to Defendants’ Statement of Material Facts

(PSOMF) to set forth the genuine issues of fact that are in dispute. 

STANDARD OF REVIEW

The Defendants’ statement of the Standard of Review is erroneous in one important 

respect. To the extent that the Defendants’ motion is based upon the absence of a genuine issue of 

fact, the Defendants, as the moving party under Rule 56, must either “submit affirmative evidence 

that negates an essential element of the nonmoving party's claim, . . . [or] demonstrate to the Court 

that the nonmoving party's evidence is insufficient to establish an essential element of the 

nonmoving party's claim.” Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986).The mere assertion 

by a defendant moving for summary judgment that the plaintiff “has not produced any evidence” 

to support an essential element of the plaintiff's claim does not satisfy the burden that Rule 

56(a) imposes. See 10A Fed. Prac. & Proc. Civ. § 2727.1, at 491–92 (“[T]he party moving for 

summary judgment cannot sustain its burden ... merely by asserting that the nonmovant lacks 

evidence to support its claim.”). The Defendants’ unparticularized assertion that Linco’s losses 

resulted from the Pandemic or its execution of the Settlement Agreement & Release in June 2019 

and the Purchase Agreement in September 2019 (collectively, the “2019 Agreements”), the 

Defendants have not carried their burden under Rule 56.

Case 1:20-cv-22234-JEM Document 114 Entered on FLSD Docket 09/08/2021 Page 3 of 20
4

ARGUMENT AND AUTHORITIES

1. Linco Can Demonstrate Loss Causation of Proximate Cause.

Proximate Cause and Loss Causation. Ordinarily, proximate cause is a triable issue for 

a fact-finder, Martinez v. Spear Safer CPAs & Advisors, 06-60727-Civ-Dimitrouleas 2007 WL 

9700782, at *3-4 (Jun. 26, 2007) (so stating) (denying Rule 56 motion), and loss causation is

applied on a case-by-case basis to the wide variety of transactions to which Rule 10b-5 is 

applicable. Robbins v. Koger Props., Inc., 116 F.3d 1441, 1447 (11th Cir. 1997) (rev’g judgment 

for investors); see also EP Medsys. v. Echocath, Inc., 235 F.3d 865, 884 (3d Cir. 2000) (rev’g 

dismissal of investors’ claim) (citing several circuit court cases including Robbins for proposition 

that there is not a single “strict test” for loss causation). 

Thus, the test for loss causation has been expressed generally, including whether the 

misrepresentation (1) “touches upon the reasons for the investment's decline in value.” Robbins, 

116 F.3d at 1447, (quoting Huddleston v. Herman & MacLean, 640 F.2d 534, 549 (5th Cir. Unit 

A 1981), aff'd in part, rev'd in part on other grounds, 459 U.S. 375, 103 S.Ct. 683, 74 L.Ed.2d 548 

(1983)), (2) “related in a reasonably direct way” to a plaintiff’s loss, Anderson v. Transglobe 

Energy Corp., 35 F. Supp. 2d 1336, 1369 (M.D. Fla. 1999) (denying 12(b)(6) motion), followed 

in, Skypoint Advisors, LLC v. 3 Amigos Prods. LLC, No: 2:18-cv-356-FtM-29MRM, 2019 WL 

4600409, at *8 (M.D. Fla. Sept. 23, 2019) (same).

In all cases, just as the Defendants acknowledge, the fraud committed need not be the “sole 

and exclusive” cause of Linco’s injury, but rather a “substantial” or “significant contributing 

cause.” Motion, p. 4 (citing FindWhat Inv. Grp. V. findWhat.com, 658 F.3d 1282, 1309 (11th Cir. 

2011) (rev’g summary judgment on loss causation)). “To recover, the plaintiff need not show that 

the defendant's act was the sole and exclusive cause of the injury he has suffered; ‘he need only 

Case 1:20-cv-22234-JEM Document 114 Entered on FLSD Docket 09/08/2021 Page 4 of 20
5

show that it was substantial, i.e., a significant contributing cause.’” Bruschi v. Brown, 876 F.2d 

1526, 1531 (11th Cir. 1989) (quoting Wilson v. Comtech Telecommunications Corp., 648 F.2d 88, 

92 (2d Cir.1981)).

Many of the authorities cited in the Motion, pp. 4-7, are actually inapposite because the

cases involve scenarios distinct from the circumstances present here, including cases that involve 

a “fraud-on-the-market,” Meyer v. Greene, 71- F.3d 1189 (11th Cir. 2013); FindWhat Inv. Grp. V. 

FindWhat.com, 658 F.3d 1282 (11th Cir. 2011); Sapssov v. Health Mgmt. Assocs, Inc., 22 F. Supp. 

3d 1210 (M.D. Fla. 2014); or a supervening general decline in the relevant market, Hubbard v. 

BankAtlantic Bancorp, Inc., 688 F.3d 713 (11th Cir. 2012); or the failure of a business based upon 

other circumstances wholly unrelated to the defendant’s misrepresentation. Sherban v. 

Richardson, 445 So. 2d 1147, 1148 (Fla. 4th DCA 1984). 

None of the cases cited by Defendants provide the applicable rule for deciding this case. In 

a fraud on the market case, the defense of “loss causation” often arises because “[t]easing out the 

effect of market conditions in fraud-on-the-market cases is essential because the fraud alleged 

involves a manipulation of stock price.” U.S. Commodity Futures Trading Comm’n v. S. Tr. 

Metals, Inc., 894 F.3d 1313, 1334 (11th Cir. 2018) (aff’g denial of Rule 56 motion). However, if 

the facts of a case do not involve the manipulation of a publicly traded stock, as is true here, “there 

is no need to ask . . . whether the Defendants’ fraud, rather than independent market forces, causes 

the victims’ losses.” Id. As a matter of “bedrock policy,” if a defendant’s fraud “touches upon” or 

relates in a “reasonably direct way” to the investor’s loss, proximate cause is satisfied because loss 

is foreseeable. Id. at 1335 (citing United States v. Turk, 626 F.3d 723, (2d Cir. 2010) (holding that 

loss causation cannot be used to permit “fraudsters to roll the dice on the chips of others, assuming 

all of the upside benefit and little of the downside risk.”)).

Case 1:20-cv-22234-JEM Document 114 Entered on FLSD Docket 09/08/2021 Page 5 of 20
6

In cases that do not involve stock price manipulation of a stock traded on an exchange, loss 

causation rests more upon foreseeability, the cornerstone of proximate cause. Lloyd v. CVB Fin. 

Corp., 811 F.3d 1200, (9th Cir. 2016) (rev’g in part 12(b)(6) dismissal) (“the ultimate issue is 

whether the defendant's misstatement, as opposed to some other fact, foreseeably caused the 

plaintiff's loss.”); see also Castellano v. Young & Rubicam, Inc., 257 F.3d 171, 186 (2d Cir. 2001) 

(rev’g summary judgment) (“While transaction causation is generally understood as reliance, loss 

causation has often been described as proximate cause, meaning that the damages suffered by 

plaintiff must be a foreseeable consequence of any misrepresentation or material omission.”) See 

generally Restatement (Second) of Torts § 548A (1977).

The facts presented in this action fall within a less complex but often-recurring type of 

case. The defendants’ fraud induced a worthless investment in a business unlikely to produce 

profits or likely to fail because of the very matters that the defendants misrepresented or concealed. 

Bruschi v. Brown, 876 F.2d at 531 (rev’g summary judgment) (investor established loss causation 

by evidence that “defendant misrepresent[ed] a stock's intrinsic worth at the time of the 

misrepresentation”); Burnett v. Rowzee, 561 F. Supp. 2d 1120, 1128-29 (C.D. Cal. 2008) (denying 

12(b)(6) motion) (loss causation shown as to investment that looked more like a sham than an 

overvalued legitimate investment); In re Enron Corp., Secs., Derivative & Erisa Lit., 310 F. Supp. 

2d 819, 832 (S.D. Tex. 2004) (denying 12(b)(6) motion) (defendants’ fraud created the illusion of 

a growing company); Skypoint Advisors, LLC v. 3 Amigos Prods. LLC, 2019 WL 4600409, at *8 

(loss causation satisfied by allegation that film investment opportunity was actually a “façade”

created by defendants). 

Application of Law to the Facts. In this case, the Defendants have misled Linco by 

misrepresenting that Gelman and Star Equities capitalized the Closely Held Companies with 

Case 1:20-cv-22234-JEM Document 114 Entered on FLSD Docket 09/08/2021 Page 6 of 20
7

almost $7 million. PSOMF, ¶¶ 12, 29 43. Propped up by fraud instead of capital, there was never 

a viable opportunity to receive the return of its $1,380,000 investment, let alone profits. Because

Gelman and Star Equities’ misrepresentations of non-existent capital contributions went to the 

intrinsic value of the membership interests that Linco purchased, proximate cause or loss caucation 

exists in this case. See Bruschi. 

EZ Capital. EZ Capital was a holding company for the Russian company, VGF Financing 

(VGF), a cash advance business for merchants in Moscow that began operating in the second half 

of 2016 after the Defendants obtained money from Roman Khomenko of Paulstan Group, LLC, 

another investor who purchased a 13.3 percent membership interest in EZ Capital in July 2016 for 

$300,000. EZ Capital had no other purpose according to Defendants but to serve as a holding 

company for VGF. Defendants’ Statement of Material Facts (DSOMF), ECF-89, ¶¶ 18, 19. VGF 

commenced a cash advance business for merchants in Moscow in 2016. EZ Capital and its 

subsidiary were so undercapitalized as a result of the Defendants’ misrepresentations that, 

according to the testimony of VGF’s former employees, including its Initial General Director, the 

Russian company was strapped for cash the very same year that Linco made contributions of 

$600,000 to EZ Capital. VGF was unable throughout 2017 to fund merchants in queue for 

approved loans or even pay its employees. The problem never improved and after worsening in 

2019, EZ Capitan began winding up its business in early 2020. Gelman split with his wife $50,000 

in income reported by on EZ Capital’s 2017-19. The Defendants did this without any regard for 

Linco, which was treated as if it were non-existent entity, never once receiving a K-1 from EZ 

Capital, whose tax matters partner under the OA for EZ Capital was supposed to be Firer. 

Despite having invested $600,000, Linco has not received any distributions or even one 

iota of a benefit from its membership interest in EZ Capital. 

Case 1:20-cv-22234-JEM Document 114 Entered on FLSD Docket 09/08/2021 Page 7 of 20
8

None of these facts are unforeseeable, the crux of loss causation, given the complete falsity 

of the representation that EZ Capital was capitalized with $3,000,000 in contributions by Gelman 

and Star Equities. See Lloyd; Castellano; Restatement (Second) of Torts § 548A Worse still, the 

record evidence indicates that Star Equities misappropriated Linco’s second contribution of 

$300,000 to EZ Capital. Firer told Linco to send this contribution to Star Equities, yet no evidence 

has been provided during discovery or is offered in the DSOMF, to suggest what ever became of 

this $300,000 contribution.

Based upon the evidence discussed in this section, PSOMF, ¶¶ 22, 52, 53, 56, Linco has 

sufficiently established a basis for finding proximate cause or loss causation for the losses 

sustained as a result of its investment in EZ Capital. See Brushi. Linco has demonstrated in a 

“reasonably direct way,” see Anderson; Skypoint, that the Defendants’ misrepresentation of capital 

contributions “touches upon” the reason why EZ Capital is no longer doing business and Linco 

has received nothing in return for its $600,000 investment. See Robbins. 

Unified Advance. Unified Advance went out of business sooner than EZ Capital, in the 

second quarter of 2018, by which time the capital contributions from Linco and Paulstan were

consumed on expenses, including rent, fees and commissions paid to affiliates of Firer and 

Gelman’s final absorption of the $16,000 that remained at the of 2017. The Defendants did this 

without any regard for Linco, which was treated as if it were non-existent entity, never once 

receiving a K-1 from Unified Advance, whose tax matters partner under the OA for Unified 

Advance was supposed to be Firer. That Unified Advance was out of business less than a year is 

hardly unforeseeable given Firer, who was supposed to manage Unified, testified that whether 

Unified Advance continued to operate was “absolutely” “of no consequence” to him. PSOMF, ¶ 

62 (citing Firer’s testimony). 

Case 1:20-cv-22234-JEM Document 114 Entered on FLSD Docket 09/08/2021 Page 8 of 20
9

None of these facts are unforeseeable, the crux of loss causation, given the falsity of the 

Defendants’ representation that Unified Advance was capitalized with $1,500,000 in contributions 

by Gelman and Star Equities. See Lloyd; Castellano; Restatement (Second) of Torts § 548A

Based upon this evidence, PSOMF, ¶¶ 22, 56. Linco has sufficiently established a basis for 

finding proximate cause or loss causation for the losses sustained as a result of its investment in 

Unified Advance. Linco has demonstrated in a “reasonably direct way,” see Anderson; Skypoint, 

that the misrepresentation of capital contributions “touches upon” the reason why EZ Capital is no 

longer doing business See Robbins.

Star Capital. The purchase price that Linco paid for its membership in Star Capital was not 

an overvalued investment in a legitimate company with a possibility for growth or success. It was 

a complete sham. Supposedly, Star Capital was going to raise money for the development of a 

hotel on land owned by Star Development in which Star Capital supposedly held a fifty (50%) 

percent interest. Supposedly, the land was purchased for $3,200,000 million and had a value of 

$5,000,000. The truth was that Star Capital never did any business, and Star Development did not 

own any land when Linco invested. Star Development would not acquire any land until the 

following year for which it paid only $1,450,000. Worse still, Star Capital did not have any interest 

in Star Development. In fact, Star Capital was nothing more than a “shelf entity” without an office,

a bank account, or any assets. Star Capital’s only assets was Linco’s $480,000 deposit. Id. Star 

Capital never reported that investment on a tax return; indeed, Star Capital never filed any tax 

returns. Star Capital existed for one reason only. It was the artifice by which Firer inveigled 

Linco’s money so he could commingle it with contributions from the members in Star 

Development. Based upon this evidence, PSOMF, ¶¶ 38, 39, 66, 71, proximate cause or loss 

Case 1:20-cv-22234-JEM Document 114 Entered on FLSD Docket 09/08/2021 Page 9 of 20
10

causation with respect to the investment in Star Capital has been sufficiently established by Linco. 

See Burnett; In re Enron; Skypoint,

Linco never received any distribution or other benefit as a result of its being a member in 

the Closely Held Companies. PSOMF, ¶¶ 22, 36(b), & 37. While Linco received $150,000 in June 

2019 for what it believed to be a settlement of its investment portfolio in Unified Advance, the 

document also terminated his membership interest in Unified Advance. Similarly, he received 

$420,000 for the sale to Star Equities of his membership interest in Star Capital, but this was not 

a distribution or benefit of being a member in Star Capital. Neither of these payments, however, 

can be regarded as a benefit of membership or a distribution. On the contrary, these payments 

merely mitigate Linco’s losses before it discovered the Defendants’ fraud. 

Defendants’ Misapplication of the Law to the Facts. Much of the Defendants’ analysis of 

proximate cause assumes that the Closely Held Companies would have failed, regardless of the 

falsity of Gelman and Star Equities’ representations that they capitalized the companies with 

almost $7 million. Motion, pp. 6-9. Unlike the PSOMF, the DSOMF is devoid of any record 

evidence that confirms the Defendants’ theory that the Closely Held Companies would have failed 

regardless of how they were capitalized. 

Defendants’ first argument about the cause of Linco’s losses is to blame a disease that has 

impacted much of the world. (Linco’s losses were actually due to independent factors, or 

supervening events, such as” the Covid-19 pandemic . . ..”). This argument is not supported by 

any material fact in the DSOMF. Moreover, it is not credible to suggest that Unified Advance went 

out of business in the first quarter of 2018 and EZ Capital began winding down its business in 

early 2020 because of a pandemic that went unobserved in the United States and Russia until 

March 2020. See https://www.who.int/news/item/29-06-2020; https.//www.sciencemag.org/news/

Case 1:20-cv-22234-JEM Document 114 Entered on FLSD Docket 09/08/2021 Page 10 of 20
11

2020/03/new-coronavirus-finaly-slamming-russia-country-ready. 

Defendants’ second argument is that the time that passed between the misrepresentations 

in 2017 and Linco’s losses, two to three years later according to Defendants, means that defendants 

are entitled to judgment under Rule 56. Motion, pp. 6-8 (citing Sapssov, 22 F. Supp. 3d 1210).

1

This argument, however, has nothing to do with the evidence in the record. According to the 

PSOMF, Linco’s damages were proximately caused in 2017 when Linco purchased worthless 

membership interests in the Closely Held Companies based upon the Defendants’ 

misrepresentations that these companies were going concerns capitalized with nearly $7 million 

in contributions from Gelman and Star Equities. The fact that Linco did not discover the truth 

about its worthless investments until early 2020, PSOMF, Exhibit 1, Answer to No. 7, p. 12 (last 

sentence), does not change the fact that Linco paid $1,380,000 for investments destined to fail.

2

Defendant’s third argument is that Linco’s damages on the investments in Star Capital and 

Unified Advance were the result of Linco’s decision to sell the investments. That Linco received 

thirty percent of the total amount invested in the Closely Held Companies does not alter the fact 

 

11 Defendants describe Sappsov to suggest that loss causation cannot exist if damages are not 

sustained until 11 months after the misrepresentation is made. This misleading. In Sappsov, the 

investor made a “fraud-on-the market” claim, alleging company-wide Medicare fraud, yet a 60 

Minutes segment revealed that Medicare fraud did not exist at 66 of the company’s 70 hospitals. 

22 F. Supp. 3d at 1231. In response to the plaintiff’s after-thought that the 60 Minutes segment be 

treated as a corrective notice, the Court noted that the stock price actually increased after the 

segment and was 11 months “after the close of the Class Period.” Id. Sappsov does not stand for 

the proposition for which Defendants cite it nor is a helpful authority to the dissimilar facts 

presented in this case.

2 Even though Khazarov did not realize in 2019 that Linco had been the victim of a fraudulent 

scheme, he sought a return on investments in a foreign nation that had produced nothing in a twoyear period. In hindsight, Kharavov’s decision to mitigate his losses for reasons then unknown to 

him was a wise one. The Defendants are entitled to a set-off for that part of Linco’s losses in Star 

Capital that were recouped. The money returned by Gelman and Unified, however, did not even 

cover what was owed Linco on the investment portfolio loan. ECF 93, ¶ 7. 

Case 1:20-cv-22234-JEM Document 114 Entered on FLSD Docket 09/08/2021 Page 11 of 20
12

that Linco deserves to be whole for the losses in EZ Capital ($600,000), Unified Advance 

($300,000), and Star Capital ($90,000). To suggest that the 2019 Agreements are an intervening 

cause of Linco’s losses is a canard. Unified Advance was already out of business, and Star Capital 

was never in business. The notion that the 2019 Agreements somehow cut off rights or claims 

against the remaining Defendants is especially galling given the underhanded manner in which 

these documents were obtained from Linco. ECF 93, ¶ 8; PSOMF, ¶ 46.

In conclusion, the Defendants’ argument seems to be that Linco’s losses are because the 

Closely Held Companies were legitimately operated businesses that failed. The Defendants argue 

in the alternative, that regardless of how the Closely Held Companies may have been operated, the 

Pandemic would have destroyed them. The final argument is to blame the victim by arguing that 

Linco caused its own losses by seeking a return of its investment before the Defendants could turn 

a profit. When it comes to proximate cause, a defendant cannot expect the plaintiff to have to 

disprove an alleged intervening cause. ”Questions of proximate cause arise when more than one 

factor can be identified as the cause of any particular event, or harm. However, to have been the 

cause (or one cause) of a particular event, any given factor must have contributed to the actual 

outcome; events which occur after the injury has occurred cannot be said to have caused the 

injury.” Ambassador Hotel Co., Ltd. v. Wei-Chuan Inv., 189 F.3d 1017, 1029 (9th Cir. 1999) 

([Plaintiff] . . . did not have to prove that the hotel project would have succeeded if the 

misrepresentations made by defendants had been accurate; [Plaintiff] . . . had to prove only that 

the deception practiced by defendants caused its injury, in the sense that no other factor could more 

properly be said to have been the legal cause.”)

Case 1:20-cv-22234-JEM Document 114 Entered on FLSD Docket 09/08/2021 Page 12 of 20
13

2. The Operating Agreements Support Linco’s Allegations.

Operating Agreements in General. Florida courts have recognized that operating 

agreements for limited liability companies should be construed according to rules of construction 

applicable to any contract. Typically, if a limited liability company has a written operating 

agreement, that document is determinative because there are few mandatory rules under Florida 

Revised Limited Liability Company in Chapter 605 of the Florida Statutes. See, e.g., In re Men’s 

Med. Clinic, LLC, No. 6:14–bk–08623–KSJ, 2014 WL 3973161 (Bankr. M.D. Fla. Aug. 7, 

2014) (“Very few limited liability companies operate without operating agreements, so the law 

interpreting Chapter 608 [prior act] of the Florida Statutes as a gap-filler is sparse”).

OAs for EZ Capital and Unified Advance. The OAs for EZ and Unified Advance are 

identical. Both companies used the same thirty-nine page template that was prepared by either 

Firer or his attorney. Contract construction always begins with the plain meaning of the contract. 

The Defendants argue that they are entitled to summary judgment based upon the language in the 

operating agreement that was used. However, in neither the DSOMF nor the Motion do the 

Defendants quote all of the operative language. By use of ellipsis, they have fail reconcile the 

argument that they have concocted with the plain meaning of the document’s relevant provisions: 

Analysis should be begin with the full definition of “Capital Contribution” in Section 1.04 of the 

agreement:

1.04 Certain Definitions and Agreements. As used in this 

Agreement, the following terms have the meanings ascribed to them 

in this Section 1.04 and include the plural as well as the singular 

number: 

. . . 

“‘Capital Contribution’ means the total cash and Fair Market Value 

[FMV] of other property contributed to the equity of the Company 

by a Member, which shall be equal to the amount stipulated in 

Case 1:20-cv-22234-JEM Document 114 Entered on FLSD Docket 09/08/2021 Page 13 of 20
14

writing by said Member and the Company, as determined by the 

Board in good faith. The transfer of liabilities to the Company in 

connection with a transfer of money or property to the Company 

shall reduce the net amount of the Capital Contribution by the 

amount of said liabilities.” (emphasis added to underscore what 

Defendants overlook).

Article III of the operating agreement sets forth the relationships among members and 

rules relating to capital contributions. In the following provision, the parties agreed as follows:

3.03 Company Capital; Representations and Warranties 

Regarding Contributions.

(a) Capital Contributions. “The Members and Warrant Holders have 

made (or are deemed to have made) Capital Contributions with 

respect to Class A Units, Class B Units and Warrants in amounts 

reflected opposite each Member's name in Exhibit A

[information for Members] and Exhibit B [information for 

Warrant Holders-there were none in either company] hereto (or 

shall make them at such times as agreed to by the Company in 

writing) and such amounts shall be credited to each Member’s 

Capital Account. . . .” (emphasis added to underscore what 

Defendants overlook).

Finally, Exhibit A to the OA for EZ Capital and the OA for Unified Advance sets forth, 

in a tabular format, the Capital Contributions for Gelman, Star Equities, and Linco. Exhibit A to 

the OA for Unified Advance reads as follows: 

Name and Address of Member Capital Contribution and Initial 

Capital Account of the Member

Number of Class A Units Issued 

to the Member

GARY GELMAN

15811 Collins Ave, 1704

North Miami Beach, FL 33160

$750,000 450 Class A Units

Represents 45% of issued

and outstanding shares

STAR EQUITIES, LLC

c/o Oleg Firer

3265 NE 167thd Street

North Miami Beach, FL 33160

$750,000 450 Class A Units

Represents 45% of issued

and outstanding shares

SERGEY KHAZAROV

LINCO ENTERPRISES, INC.

3800 S. Ocean Drive 216

Hollywood, FL 33019

$300,000 100 Class B Units

Represents 10% of issued

and outstanding shares

Case 1:20-cv-22234-JEM Document 114 Entered on FLSD Docket 09/08/2021 Page 14 of 20
15

 Totals: $1,800,000 900 Class A Units 100 Class B 

Units

Exhibit A for the OA for EZ Capital presents the information the same exact way, except 

the contributions of $1,500,000 for each of Gelman and Star Equities and $300,000 for Linco 

aggregate to $3,300,000 and Gelman and Star Equities were each allocated 475 Class A Units for 

a 47.5% interest in the issued and outstanding shares of EZ Capital and Linco 50 Class B Units 

for a 5% interest in the issued and outstanding shares. When Linco invested another $300,000 in 

EZ Capital in July 2017, Amendment No. 1 to OA for EZ Capital (the “EZ Capital Amendment 

was prepared, which indicated that Linco’s Capital Contribution was increased to $600,000 and 

he was allocated 100 Class B Units or 10% of the issued and outstanding shares. Gelman’s and 

Star Equities’ information remained the same except they interest in the issued and outstanding 

shares ws diluted to 45 percent.3

Contract Construction Rules. According to Florida law, when a court construes a 

contract, the plain meaning of all of its relevant provisions must be read, in pari materia, and no 

provision should be regarded as “mere surplusage” or “redundant.” Equity Lifestyle Props, Inc. v. 

Fla. Mowing & Landscape Serv., Inc., 556 F.3d 1232, 1242 (11th Cir. 2009). Without explaining 

why, the Defendants argue that they are entitled to judgment because the Court may “deem” them 

to have made to the Closely Held Companies the Capital Contributions that they represented Linco 

 

3 Neither the OA for EZ Capital nor the OA for Unified Advance disclosed any information about 

Paulstan Group, LLC (“Paulstan Group”) owned by Roman Khomenko. When Paulstan Group 

invested in EZ Capital and Unified Advance in 2016, Paulstan Group received Exhibit A tables 

that stated Gelman and Star Equities had each contributed only $500 to EZ Capital and Unified 

Advance. 

Case 1:20-cv-22234-JEM Document 114 Entered on FLSD Docket 09/08/2021 Page 15 of 20
16

that they had made. No explanation is offered why the Court should take this approach. As 

demonstrated below, neither the record evidence or applicable would support this result. 

If all of the evidence is considered, Gelman’s and Star Equities’ cash contributions to EZ

appear to be $0. Not a single deposit into EZ’s Wells Fargo account has been shown. According 

to documents signed with the Paulstan Group, each contributed only $500. Any cash contribution

noted in the 2017-19 tax returns for EZ do not appear to count under Section 3.03(a) unless Gelman 

was obligated to make them at specific “times as agreed to by the Company in writing.” No such 

writing has been produced. However, even if such a writing were to turn up now, the grand total 

of these contributions is only a few thousand dollars. The Note given by Star Equities to VGF (the 

“Note”), does not prove a cash contribution to EZ, even assuming the Note was funded. Moreover, 

if it were deemed a cash contribution, the “net amount of this contribution under Section 1.04 of 

the OA for EZ Capital is less than $0 as VGF was obligated to repay the Note with 12% interest.

In the case of Unified, even though no deposit was made into Unified’s bank account, 

Gelman and Star Equities can argue they each contributed $500, assuming the document that they 

executed with Paulstan Group is taken at face value. It is difficult to fathom how $75,000 

transferred to a competitor of Unified Advance months after Unified Advance went out of business

can be a contribution to Unified Advance. Making that assumption for the sake of argument, the

loans by Star Equity to Mega M are not in conformity with the requirement of Section 3.03(a) as 

Star Equities has not produced a writing signed by Unified Advance that obligated Star Equities 

obligated to advance $75,000 to Mega M. 

Finally, neither Gelman not Star Equities have proven any cash contributions to Star 

Capital. would have been future contributions no. PSOMF, ¶¶ 48-50. Thus, there is absolutely no 

evidence advanced by the Defendants to justify that each of Gelman and Star Equities should be 

Case 1:20-cv-22234-JEM Document 114 Entered on FLSD Docket 09/08/2021 Page 16 of 20
17

“deemed to have made” contributions in the amount of $3,408,000, even though it appears that 

each made cash contributions between only $0-1,000. 

One way a member could be “deemed to have made” a contribution under this operating 

agreement, would be in the case of a property contribution according to Section 1.04. That

provision requires a fairness procedure be followed for contributions of property. Section 1.04

states that a member may receive credit for a property contribution, provided there is a writing by

which the member and the Company stipulate to the “Fair Market Value” of the property based 

upon a “good faith” determination of the board. Viewed in context, the phrase “deemed to have 

made” in Section 3.03(a) becomes logical as it suggests a harmonious construction with this

fairness procedure in Section 1.04. See Equity Lifestyle. 

By comparison, the Defendants’ use of the phrase “deemed to have made” suggests that 

they wish to receive credit for any contribution that they deem themselves to have made to the 

Closely Held Companies. This construction would appear to violate the “rule of validity,” which 

requires that a contract be construed whenever possible not to render a contracting party’s promise 

illusory unless the plain meaning of the language absolutely requires that result. J.R.D. Mgmt.

Corp. v. Dulin, 883 So. 2d 314, 316-17 (Fla. 4th DCA 2004). Obviously, if the operating agreement 

were ambiguous on this point, the canons of construction require an interpretation that affords a 

just and reasonable result instead of an unfair or harsh result. See Calderon v. Sixt Rent a Car, 

LLC, 5 4th 1204, 1210 (11th Cir. 2021). Further, if the operating agreements were ambiguous, the

law would require the contracts be construed against the drafter, which, in this case, was Firer or 

Gelman in all instances. See Bussen v. Int’l Precious Metals Corp., 660 F. Supp. 94, 96 (S.D. Fla. 

1987).

Case 1:20-cv-22234-JEM Document 114 Entered on FLSD Docket 09/08/2021 Page 17 of 20
18

Returning to the facts, even though Defendants have submitted no record evidence in the 

DSOMF on the contributions of property by Gelman or Star Equities, during discovery the

Defendants provided responses to interrogatories to this effect. According to the record evidence

presented in PSOMF, Gelman and Star Equities have not proven even one contribution of property 

with any ascertainable value. Likewise, they have not offered any evidence that indicates either 

Gelman or Star Equities attempted to comply with the “fairness procedure” in Section 1.04.

Finally, during their depositions, Firer and Gelman made vague references to their efforts 

on behalf of EZ Capital and Unified Advance. There is not a word about capital contributions of 

service in any of the operating agreements. Notably absent from the definition of Capital 

Contributions in Section 1.04 is the word service. Another fundamental canon of contract 

construction is “expressio unius est exclusion alterius,” meaning that an agreement which

expresses one thing, particularly in specific language, excludes another thing that is not specified.

According to Section 1.04, “Capital Contribution” means money or property contributed in 

accordance with the fairness procedure for property contributions. Because the operating 

agreements do not mention service contributions, the Court need not consider this issue. Bacon v. 

Stiefel Labs., Inc., 677 F. Supp. 2d 1331, 1340 (S.D. Fla. 2010) (holding that discretionary power 

did not exist based upon this principle).

3. Linco is a Dissociated Member.

The Defendants continue to insist that even though Linco sold its entire interest in Star 

Capital, Linco occupies some sort of legal “limbo” in which it is no longer a member of Star 

Capital, yet not dissociated from this limited liability company. This argument is nonsensical.

There is simply no practical basis for deeming deeming Linco a non-dissociated member once it 

transfers its entire transferable interest in Star Capital.

Case 1:20-cv-22234-JEM Document 114 Entered on FLSD Docket 09/08/2021 Page 18 of 20
19

While there a no reported decisions under Chapter 605, other cases that have addressed this 

issue deem the entire transfer of a member’s transferable interest to be a dissociation. Salameno v. 

Rawlings, 2021 WL 1085521, at *9 (S.D.N.Y. Mar. 22, 2021) (interpreting Florida’s section 

605.0602, and finding member “dissociated” when converted his investment into shares of another 

company); Levine v. 418 Meadow Associates, LLC, CV074022329, 2014 WL 2853950, at *1 

(Conn. Super. Ct. May 16, 2014) (finding that member “dissociated" when her interest in the 

company was proportionately reduced to zero under the operating agreement, based on her failure 

to make a capital call to pay attorneys fees, and when minority members’ interest proportionally 

increased as they made up the difference in the unpaid contribution).

Thus, Linco is dissociated either under 605.0601(1) or 605.0602(5)(b) of the Florida 

Statutes. Section 605.0601(1) makes dissociation an absolute right, stating that it can be done “at 

any time, rightfully or wrongfully.” The sole purpose of this defense is to avoid liability to Linco 

for having refused and failed to properly respond to its record request to Star Capital. While there 

is no case in Florida that

Respectfully submitted,

Co-Counsel for Linco Enterprises, Inc.

GHERMAN LEGAL 

777 Brickell Ave Ste 500

Miami, Florida 33131-2803

Phone: (305) 889-7890

sgherman@ghermanlaw.com 

By: /s Sergiu Gherman

Sergiu Gherman, FBN 37031

Co-Counsel for Linco Enterprises, Inc.

BENNETT & AIELLO

Temporary Address for Mail

3471 Main Highway, Suite 206

Coconut Grove, Florida 33133-5929

Phone: (305) 358-9011

paiello@bennettaiello.com

By: /s Paul Aiello

Paul Aiello, FBN 909033

Case 1:20-cv-22234-JEM Document 114 Entered on FLSD Docket 09/08/2021 Page 19 of 20
20

CERTIFICATE OF SERVICE

I HEREBY CERTIFY that on September 8, 2021 the foregoing document has been this 

day on all attorneys of record through the CM/ECF website for this judicial district.

By: /s/ Paul Aiello

Case 1:20-cv-22234-JEM Document 114 Entered on FLSD Docket 09/08/2021 Page 20 of 20