11.” 28 U.S.C. § 1334(b). The “district court may provide that any or all cases under title 11 and
any or all proceedings arising under title 1 lor arising in or related to a case under title 1] shall be
referred to the bankruptcy judges for the district. 28 U.S.C. § 157(a). Internal Operating Procedure
15(a) for the Northern District of Llinois provides that “[p]ursuant to 28 U.S.C. § 157(a), any and
all cases under Title 11 U.S.C. and any and all proceedings arising under Title 1] U.S.C. or arising
in or related to any case under Title 11 U.S.C. are referred to the bankruptcy judges of this District.”
A “related” claim is a claim involving the debtor or a third party that is based on non-bankruptcy
law, typically a state law claim, which will impact the estate of the debtor or the allocation of
property among creditors. See In re Chapman, 269 B.R. 201, 206 (N.D. Ill. 2001); Janazzo v.
Fleetboston Fin. Corp., 2002 WL 54541 (N.D. Ill. Jan. 15, 2002).

Bear Steams is a party to the bankruptcy proceeding and has filed suit against the same
individuals that are named defendants in the Adversary Proceedings now pending in the bankruptcy
court. The alleged misconduct of the Defendants is the same in both the instant suit and the
Adversary Proceedings, and Bear Steams seeks to recover the same monies that the Trustee seeks
to recover in the pending Adversary Proceedings. A judgment in favor of Bear Stearns in this action
will deplete the funds potentially available in the bankrupt estate as the Defendants cannot be
required to repay twice the monies they allegedly converted or fraudulently conveyed. Accordingly,
Bear Stearns’ instant suit will have an impact on the estate of the debtor and the allocation of
property among JDA’s creditors. Therefore, the instant case is related to the bankruptcy proceeding.

For the foregoing reasons, Nuthi’s Motion to Adopt and Join Motion of Defendant Ravi

Yanamadula to Refer This Action to The Bankruptcy Court or, In The Alternative, to Stay These



In July 1999, the Trustee filed an adversary complaint against Bear Stearns, seeking a
turnover of JDA’s assets and accounts which Bear Steams seized on October 6, 1998. Bear Steams
filed its answer to the turnover action and filed a counter-claim against JDA in November 1999,

In July 2002, Bear Stearns filed suit in this Court. In this suit, Bear Stearns asserts causes
of action for fraud and conspiracy. The alleged misconduct by the Defendants in Bear Stearns’
instant suit is the same as the alleged misconduct as alleged in the Adversary Proceedings. For
example, Bear Stearns’ allegations relating to the improper transfer of funds from JDA’s “Back to
Work” program are almost verbatim to the allegations in the Trustee's Complaint in Adversary
Proceedings U. Bear Stearns’ allegations relating to manipulative options transfers and manipulative
securities transactions are also virtually identical to allegations found within Adversary Proceeding
i.

Yanamadula sceks to refer this suit to the bankruptcy court because the claims in the instant
suit are related to the claims in the bankruptcy proceedings of JDA.

Yanamadula asserts that the facts that give rise to the Adversary Proceedings in the
bankruptcy court are the same or substantially similar to the facts alleged in the present suit, Plaintiff
argues that the instant claims are different from the claims in the Adversary Proceedings. However,
Plaintiff does not dispute that the facts underlying the claims in the instant suit and the Adversary
Proceedings are the same or substantially similar. A review of the Adversary Proceedings and the
instant suit supports Yanamadula’s assertion that the facts underlying the instant suit and the
Adversary Proceedings are the same or substantially similar.

Section 1334(b) provides that “the district courts shall have original but not exclusive

jurisdiction of all civil proceedings arising under title 11, or arising in or related to cases under title



Proceedings is granted. The Motion to Refer This Action to The Bankruptcy Court is granted. The

alternative Motion to Stay is denied as moot. ‘

ven Lyphhe ‘}, 2002~

JOHN W. DARRAH
United States District Judge



+ Minute Oiler Form (0697)

Age

United States District Court, Northern District of Illinois

Name of Assigned Judge John W. Darrah Sitting Judge if Other
or Magistrate Judge . than Assigned Judge
CASE NUMBER 02 C 4419 DATE 9/17/2002
CASE BEAR STEARNS SECURITIES CORP. vs. PETER CHO
TITLE
[ln the following box (a) indicate the party Gling the motion, e.g., plaintiff, defendant, 3rd party plaintiff, and (b) state briefly the nature
MOTION: of the motion being presented. ]
DOCKET ENTRY:
ql) a Filed motion of [ use listing in “Motion" box above.]
(2) Oo Brief in support of motion due
QB) oO Answer brief to motion due. . Reply to answer brief due,
(4) Oo Ruling/Hearing on set for at
(5) im) Status hearing[held/continued to] [set for/re-set for] on set for at
(6) Oo Pretrial conference[held/continued to] [set for/re-set for] on set for at
(7) oO Trial[set for/re-set for] on at
(8) oO (Bench/Jury trial} [Hearing] held/continued to at
(9) im This case is dismissed [with/without] prejudice and without costs[by/agreement/pursuant to]
OFRCP4(m) [Local Rule 41.1 CFRCP41(aX1) OFRCP41(a)(2).
ao [Other docket entry] Status hearing held. Enter Memorandum Opinion And Order. The motion
to refer this action to the Bankruptcy Court is granted. The alternative motion to stay is denied as moot.
Case is transferred to the U.S. Bankruptcy Court for the Northern District of Illinois.
(11) [For further detail see order attached to the original minute order.)
No notices required, advised in open court.
No notices required umber of otces
Notices mailed by judge's staff.
SEP 18 2002

Notified counsel by telephone. date dockvted

a | Docketing to mail notices,

Mail AO 450 form.

ty initia

Copy to judge/magistrate judge.

{ date mailed notin
courtroom

La deputy’s
initials

Date/time received ini’ ~
central Clerk’s Office

cmniling deputy initials



UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION

BEAR STEARNS SECURITIES CORPORATION,
a Delaware Corporation,

Plaintiff, .
No. 02 C 44t9 4

PETER CHO, SIMON CHONG, RAVI
YANAMADULA, and USHA NUTHI,

Judge John W. Darrah

)
)
)
)
)
v. )
)
)
)
)
Defendants. )
MEMORANDUM OPINION AND ORDER

Plaintiff, Bear Stearns Securities Corporation (“Bear Stearns”), filed suit against Defendants,
Peter Cho (“Cho”), Simon Chong (“Chong”), Ravi Yanamadula (““Yanamadula), and Usha Nuthi
(“Nuthi”), alleging fraud and conspiracy. Presently before the Court is Yanamadula’s Motion to
Refer The Action to The Bankruptcy Court, or In The Alternative, Stay The Proceedings. Defendant
Nuthi has also moved to join Yanamadula’s motion.!

Cho, Chong, and Yanamadula are former officers, directors or employees of John Dawson
& Associates (“JDA”). Nuthi is the wife of a former officer or employee of JDA. JDA was a
registered broker/dealer located in Chicago, Illinois, engaged in the purchase, sale, and trading of
securities to and on behalf of its own accounts as well as the accounts of its customers. On
October 6, 1998, JDA ceased operations following the seizure of its accounts and assets by its
clearing broker, Bear Stearns.

On April 13, 1999, the United States Bankruptcy Court for the Northern District of Dhinois

‘Leave is granted for Nuthi to join into the present motion, “



entered a Decree Order for the liquidation of JDA. In October 2000, the Trustee in bankruptcy for
JDA filed an adversary proceeding against Cho, Chong, and Yanamadula (hereinafter “Adversary
Proceeding I’’) for the purposes of recovering damages for conversion of JDA property and funds
that were fraudulently transferred from JDA to certain of the Defendants.

In Adversary Proceeding I, the Trustec alleges that JDA’s insolvency was a result, in part,
of a series of transactions in the Proprietary Accounts by Cho, Chung, Yanamadula, and others,
including “as of” and fictitious trades, The Trustee asserts that these Defendants opened a separate
Proprietary Account of JDA in late 1997 and carly 1998, concealed the existence of one of the
Proprietary Accounts, and transferred positions from one account to the other and back and then
closed one of the accounts. Such activity operated to conceal JDA’s insolvency and its net capital
deficiency. The Trustee also asserts that these Defendants made transfers of securities positions from
JDA’s Proprietary Accounts to other accounts without receiving consideration. Based on the factual
allegations, the Trustee asserts claims for conversion by transfers of JDA’s funds and securities and
violation of the Illinois Uniform Fraudulent Transfer Act. Trial for Adversary Proceeding I is
scheduled to begin in early December 2002.

In April 2001, the Trustee filed another adversary proceeding (hereinafter “Adversary
Proceeding II”). All of the Defendants in the present law suit are named defendants in Adversary
Proceeding II. Adversary Proceeding II was filed on behalf of JDA’s customers and creditors to
recover damages caused by the Defendants’ improper conduct from December 1997 to October
1998. The Trustee seeks to recover assets misappropriated and dissipated by the Defendants after
JDA became insolvent in December 1997. Trial for Adversary Proceeding IT is scheduled to begin

in early January 2003.