L. Deny knowledge or information sufficient to form a belief as to the truth or falsity of the

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1 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK J( Mutual Benefis Offshore Fund, Inc., Plaintiff, - against- Index No /2009 Emanuel Zeltser, et al., VERIFIED ANSWER Defendants J( Defendants Emanuel Zeltser ("E. Zeltser"), Sternik & Zeltser, Mark Zeltser ("M. Zeltser"), Alexander Fishkin, Joseph Kay, M. E. Seltser, P.C., and Interel Corporation ("Interel") by their attorneys Mound Cotton Wollan & Greengrass, answers the plaintiffs Complaint upon information and belief,as follows: L. Deny knowledge or information sufficient to form a belief as to the truth or falsity of the allegations contained in Paragraph i of the Complaint, deny each and every allegation of wrongdoing and specifically deny that any of the funds in issue belong or ever belonged to the plaintiff. Except, M. Zeltser and Interel deny knowledge or information sufficient to form a belief as to the truth or falsity of the allegations contained in Paragraph i of the Complaint, deny each and every allegation of wrongdoing and deny knowledge that any of the fuds in issue belong or ever belonged to the plaintiff. 2. Deny knowledge or information sufficient to form a belief as to the truth or falsity of the allegations contained in Paragraph 2 of the 3. Admitted. 4. Admitted, except state that M. Zeltser's position as an officer ofm.e. Seltser, P.C. was

2 temporar and nominal, due to the extraordinary circumstances more fully described herein. Curently, M. Zeltser is not an officer or director ofm.e. Seltser, P.C. 5. Admitted, except defendants deny that "Fishkin received fuds from escrow account( s) held in the name Interel Corporation." 6. Admitted, except M. Zeltser and Interel deny knowledge or information sufficient to form a belief as to the truth or falsity of the allegations contained in Paragraph 6 of the 7. Admitted, except defendants deny that presently, ME Seltser's principal executive office is located at 2 Penn Plaza, Suite 1500, New York, NY Except, M. Zeltser and Interel deny knowledge or information sufficient to form a belief as to the truth or falsity of the allegations contained in Paragraph 7 ofthe 8. Admitted, except defendants deny that Interel regularly conducts business in the State of New York. 9. Admitted to the extent that Joseph Kay was a trustee of Test Trust and denied as to all other allegations. Except, M. Zeltser and Interel deny knowledge or information sufficient to form a belief as to the truth or falsity of the allegations contained in Paragraph 9 of the i O. Denied, except M. Zeltser and Interel deny knowledge or information sufficient to form a belief as to the truth or falsity of the allegations contained in Paragraph i 0 of the Ii. Denied, except M. Zeltser and Interel deny knowledge or information suffcient to form a belief as to the truth or falsity of the allegations contained in Paragraph Ii of the

3 12. Denied. 13. Denied. 14. Deny knowledge or information suffcient to form a belief as to the truth or falsity of the allegations contained in Paragraph 14 of the 15. Defendants deny the allegations, except to the extent that Kayley invested $15 milion in Plaintiff. Except, M. Zeltser and Interel deny knowledge or information suffcient to form a belief as to the truth or falsity of the allegations contained in Paragraph 15 of the 16. Defendants deny the allegations, except to the extent that all funds invested by Kayley in MBOF were re-invested in MBC. Except, M. Zeltser and Interel deny knowledge or information suffcient to form a belief as to the truth or falsity of the allegations contained in Paragraph 16 of the 17. Admitted to the extent that in or about May 2004, Mutual Benefits was placed in receivership by the U.S. Securities & Exchange Commission but denied as to plaintiffs characterization of the reasons for said receivership. Except, M. Zeltser and Interel admitted to the extent that in or about May 2004, Mutual Benefits was placed in receivership by the U.S. Securities & Exchange Commission. 18. Denied, except admitted that Tanenbaum Helpern Syracuse & Hirschtritt LLP was not successful in recovery of any funds belonging to Kayley. Except, M. Zeltser and Interel deny knowledge or information suffcient to form a belief as to the truth or falsity of the allegations contained in Paragraph 18 of the 19. Denied, except admitted that Kay was a trustee of the Test Trust. Except, M. Zeltser and Intere1 deny knowledge or information sufficient to form a belief as to the truth or falsity

4 of the allegations contained in Paragraph 19 of the 20. Denied. Except, M. Zeltser and Interel deny knowledge or information suffcient to form a belief as to the truth or falsity of the allegations contained in Paragraph 20 of the 21. Denied. Except, M. Zeltser and Interel deny knowledge or information suffcient to form a belief as to the truth or falsity of the allegations contained in Paragraph 21 of the 22. Denied, except admitted that E. Zeltser and Sternik & Zeltser recovered $ 1.1 millon. Except, M. Zeltser and Interel deny knowledge or information suffcient to form a belief as to the trth or falsity of the allegations contained in Paragraph 22 of the 23. Denied, except to the extent that Emanuel Zeltser did discuss certain withholding tax issues with MBOF's principals. Except, M. Zeltser and Interel deny knowledge or information suffcient to form a belief as to the truth or falsity of the allegations contained in Paragraph 23 of the 24. Denied. Except, M. Zeltser and Interel deny knowledge or information suffcient to form a belief as to the truth or falsity of the allegations contained in Paragraph 24 of the 25. Denied, except to the extent that Sternik & Zeltser did recover a portion of Kayley's investment in MBOF/MBC. Except, M. Zeltser and Interel deny knowledge or information sufficient to form a belief as to the truth or falsity of the allegations contained in Paragraph 25 of the 26. Denied, except to the extent that in or about March 2008, Emanuel Zeltser traveled to Belarus and was unlawflly detained and held by Byelorussian KGB and released on June

5 30, Denied, except to the extent that during Emanuel Zeltser's detention in Belars, Alexander Fishkin continued the efforts of recovery of Kay ley's funds. Except, M. Zeltser and Interel deny knowledge or information suffcient to form a belief as to the truth or falsity of the allegations contained in Paragraph 27 of the 28. Denied, except to the extent that plaintiffs representatives attempted to use Emanuel Zeltser's detention in Belars in order to gain control over Kayley's money. Except, M. Zeltser and Interel deny knowledge or information sufficient to form a belief as to the truth or falsity of the allegations contained in Paragraph 28 of the Complaint, except to the belief that plaintiffs representatives attempted to use Emanuel Zeltser's detention in Belarus in order to gain control over his funds. 29. Deny knowledge or information suffcient to form a belief as to the truth or falsity of the allegations contained in Paragraph 29 of the 30. Denied. Except, M. Zeltser and Interel deny knowledge or information suffcient to form a belief as to the truth or falsity of the allegations contained in Paragraph 30 of the 3l. Denied. 32. Admitted to the extent that Mr. Fishkin sent an s concerning the funds to Samuelson and denied as to characterization of these s, or that the funds in issue have ever belonged to the plaintiff. Except, M. Zeltser and Interel deny knowledge or information suffcient to form a belief as to the truth or falsity of the allegations contained in Paragraph 32 of the

6 33. Admitted to the extent that on or about Januar 29, 2009, representatives of plaintiff, M. Zeltser and Fishkin met at the New York Palace Hotel and denied as to the account of that meeting. 34. Upon information and belief, defendants deny the allegations. 35. Deny knowledge or information sufficient to form a belief as to the truth or falsity of the allegations contained in Paragraph 35 ofthe Complaint, 36. Deny knowledge or information sufficient to form a belief as to the truth or falsity of the allegations contained in Paragraph 36 of the Complaint, 37. Deny knowledge or information suffcient to form a belief as to the truth or falsity of the allegations contained in Paragraph 37 of the 38. Denied. Except, M. Zeltser and Interel deny knowledge or information sufficient to form a belief as to the truth or falsity of the allegations contained in Paragraph 38 of the 39. Admitted to the extent that a meeting between M. Zeltser and Samuelson was had on Januar 29, 2009, and that Samuelson provided M. Zeltser with purported copies of the corporate resolutions and unsigned draft of purorted corporate resolution. 40. Denied. 4l. Deny knowledge or information sufficient to form a belief as to the truth or falsity of the allegations contained in Paragraph 41 of the 42. Deny knowledge or information suffcient to form a belief as to the truth orfalsity of the allegations contained in Paragraph 42 of the Complaint, except deny that M.E. Zeltser was "not authorized" to hold funds collected from the Mutual Benefits receiver. Except, M. Zeltser and Interel deny knowledge or information suffcient to form a belief as to the

7 truth or falsity of the allegations contained in Paragraph 42 of the 43. Admitted to the extent that during Emanuel Zeltser's absence Mark Zeltser's signature was temporarily added to accounts held in the name ofm.e. Seltser, P.C. 44. Denied. 45. Denied, except admitted that funds from M.E. Zeltser P.C., were transferred to Intere Denied. 47. Defendants repeat and reallege all of the answers set forth in paragraphs 1 through 46 herein. 48. Denied. 49. Denied. 50. Denied. 5l. Denied. 52. Defendants repeat and reallege all of the answers set forth in paragraphs i through 51 herein. 53. Denied. Except, M. Zeltser and Interel deny knowledge or information sufficient to form a belief as to the truth or falsity of the allegations contained in Paragraph 53 ofthe 54. Denied. Except, M. Zeltser and Interel deny knowledge or information sufficient to form a belief as to the truth or falsity of the allegations contained in Paragraph 54 of the 55. Denied. Except, M. Zeltser and Interel deny knowledge or information sufficient to form a belief as to the truth or falsity of the allegations contained in Paragraph 55 of the

8 56. Deny knowledge or information suffcient to form a belief as to the truth or falsity of the allegations contained in Paragraph 56 of the 57. Denied. Except, M. Zeltser and Interel deny knowledge or information sufficient to form a belief as to the truth or falsity of the allegations contained in Paragraph 57 of the 58. Denied. Except, M. Zeltser and Interel deny knowledge or information suffcient to form a belief as to the truth or falsity of the allegations contained in Paragraph 58 of the 59. Denied. Except, M. Zeltser and Interel deny knowledge or information suffcient to form a belief as to the truth or falsity of the allegations contained in Paragraph 59 of the 60. Defendants repeat and reallege all of the answers set forth in paragraphs i through 59 herein. 6l. Denied. Except, M. Zeltser and Interel deny knowledge or information sufficient to form a belief as to the truth or falsity of the allegations contained in Paragraph 61 of the Complaint, except denied that funds were transferred into account controlled by M. Zeltser and Intere Denied. 63. Denied. Except, M. Zeltser and Interel deny knowledge or information sufficient to form a belief as to the truth or falsity of the allegations contained in Paragraph 63 of the

9 64. Denied. 65. Defendants repeat and reallege all of the answers set forth in paragraphs 1 through 64 herein. 66. Denied. Except, M. Zeltser and Interel deny knowledge or information sufficient to form a belief as to the truth or falsity of the allegations contained in Paragraph 66 of the 67. Denied. Except, M. Zeltser and Interel deny knowledge or information suffcient to form a belief as to the truth or falsity ofthe allegations contained in Paragraph 67 of the 68. Admitted to the extent that E. Zeltser and Stemik & Zeltser successfully recovered a portion of Kayley's funds and deny that plaintiff has ever been entitled to any portion of these funds. Except, M. Zeltser and Interel deny knowledge or information sufficient to form a belief as to the truth or falsity of the allegations contained in Paragraph 68 of the 69. Denied. Except, M. Zeltser and Interel deny knowledge or information sufficient to form a belief as to the truth or falsity of the allegations contained in Paragraph 69 of the 70. Defendants repeat and reallege all of the allegations set forth in paragraphs i through 69 herein. 7l. Denied. Except, M. Zeltser and Interel deny knowledge or information suffcient to form a belief as to the truth or falsity of the allegations contained in Paragraph 71 of the

10 72. Denied. Except, M. Zeltser and Interel deny knowledge or information suffcient to form a belief as to the truth or falsity of the allegations contained in Paragraph 72 of the 73. Denied. Except, M. Zeltser and Interel deny knowledge or information sufficient to form a belief as to the truth or falsity of the allegations contained in Paragraph 73 of the 74. Denied. Except, M. Zeltser and Interel deny knowledge or information sufficient to form a belief as to the truth or falsity of the allegations contained in Paragraph 74 of the 75. Denied. Except, M. Zeltser and Interel deny knowledge or information suffcient to form a belief as to the truth or falsity of the allegations contained in Paragraph 75 of the 76. Defendants repeat and reallege all of the allegations set forth in paragraphs 1 through 75 herein. 77. Denied. Except, M. Zeltser and Interel deny knowledge or information sufficient to form a belief as to the truth or falsity of the allegations contained in Paragraph 77 of the 78. Denied. Except, M. Zeltser and Interel deny knowledge or information sufficient to form a belief as to the truth or falsity of the allegations contained in Paragraph 78 of the 79. Denied. Except, M. Zeltser and Interel deny knowledge or information suffcient to form a belief as to the trth or falsity of the allegations contained in Paragraph 79 of the

11 80. Denied. Except, M. Zeltser and Interel deny knowledge or information suffcient to form a belief as to the truth or falsity of the allegations contained in Paragraph 80 of the 81. Denied. Except, M. Zeltser and Interel deny knowledge or information suffcient to form a belief as to the truth or falsity of the allegations contained in Paragraph 81 of the 82. Defendants repeat and reallege all of the allegations set forth in paragraphs i through 81 herein. 83. Denied. 84. Denied. 85. Denied. 86. Denied. 87. Defendants repeat and reallege all ofthe allegations set fort in paragraphs 1 through 86 herein. 88. Denied to the extent that plaintiff is entitled to injunction against the defendants. 89. Denied. 90. Denied. 9l. Denied. 92. Denied. AFFIRMATIVE DEFENSES FIRST AFFIRMATIVE DEFENSE The Complaint fails to state a cause of action upon which relief can be granted.

12 SECOND AFFIRMATIVE DEFENSE The Cour lacks subject matter jurisdiction over Plaintiffs' claims against Defendants. THIRD AFFIRMATIVE DEFENSE Some or all ofthe claims alleged in the Complaint may be barred by the applicable statute of limitations or the equitable doctrines of waiver, estoppel, laches, or unclean hands. FOURTH AFFIRMATIVE DEFENSE The Cour lacks jurisdiction over some or all of the Defendants as a result of improper service of process. FIFTH AFFIRMATIVE DEFENSE Plaintiffs lack capacity to sue in this Court. SIJ(TH AFFIRMATIVE DEFENSE Complaint lacks specificity as required by CPLR SEVENTH AFFIRMATIVE DEFENSE Plaintiffs failed to join necessar parties. EIGHTH AFFIRMATIVE DEFENSE Complaint is barred by reason of Plaintiffs' unclean hands. NINTH AFFIRMATIVE DEFENSE Plaintiffs' culpable conduct should diminish the amount of damages awarded to Plaintiffs. TENTH AFFIRMATIVE DEFENSE Plaintiffs fraudulently induced Kayley and its principals to invest in Plaintiffs' fraudulent scheme, causing them to lose their entire investment. ELEVENTH AFFIRMATIVE DEFENSE 12

13 Plaintitls converted funds and assets belonging to Defendants tòr their own personal use. WHEREFORE, Defendants demand judgment dismissing the complaint with costs and disbursements and such other, further and alternative reliefwhich the Court may deem just and proper. BY:--~~, Michael R. Koblenz, EG.~ Allol'eys for Da(endan!s aiid Caim! ercl aim-pi aiii! iffs One Battery Park Plaza New York, NY (212) MOUND COTTON WOLLAN & GREEN GRASS By: STERNIK & ZELTSER /~II()!)l....r,.;./"'?.!/.l~-- "~'-,, bc/~ EI1ljlIel Zeltser, Esq. 119 West 72 Street #229 New York, NY (212)

14 TO: BUTZEL LONG P.C. Marin Russo, Esq. 380 Madison Avenue, 22nd Floor New York, New York (212)

15 VERIFICATION EMANUEL ZELTSER, an attorney duly admitted in New York, on his own behalf and on behalf of his law firm Sternik & Zeltser and M.E. Seltser, P.e. affrms under the penalty of perjury as follows: i have read the foregoing VERIFIED ANS WER and know the contents thereof, and state that they are true to the best of my knowledge, information, and belief. I make this verification on my own behalf and on behalf of my law firm, Sternik & Zeltser and M.E. Seltser, P.C. I am the principal of Sternik & Zeltser and M.E. Seltser, P.e. and am authorized to make this Verification. Duly affrmed on Augus! v (j I! // =--- ~L. -_;U~ / EMANUEL ZELTSER

16 STATE -:F OPjOA COUNTY OF 13 f2)f)rj ) ) ) VERIFICATION MAR ZELTSER, being duly sworn, deposes and says: I have read the foregoing VERIFIED ANSWER and know the contents thereof, and state that they are true to the best of l1y knowledge, inforl1ation, and belief. /' Sworn to before l1e this 'Î if:í o\_day of August MARK ZELTSER tf) 0"" Notary Public Slate or Florda.."; Marguerie P Boige My Commission D Exire

17 AFFl TION OF ALl:J(ER FISHIN ALEJ(ER FISHK, an attorney du1y adtted in the State of under the penalty of pei;ury: New York. af I have read the foregoing ANSWER and know the contents thereof, and stte that they ar tre to the bet of my knowledge, information, and belief. DULY AFFIRD this 21 si day of August, 2009 ~~ Alexande Fishkn

18 VERIFICATION JOSEPH KAY, affrms under the penalty of perjury as follows I have read the foregoing VERIFIED ANSWER and know the contents thereof, and state that they are true to the best of my knowledge, information, and belief. I make this Verification in a form of an affrmation in lieu of affdavit because I am currently traveling in Eastern Europe and have no ready access to a notary public. ".~ JOSEPH j~/)l.. it -c /./. /,/ G.,+;i, ff,'l()b.."t"., " '..v~-- KAY Duly affrmed on August 21, 2009

19 VERIFICATION STATE OF P!.jil)rt COUNTY OFJjO JD ) ) ) MARK ZELTSER, as the president of INTEREL CORPORATION, being duly sworn, deposes and says: I have read the foregoing VERIFIED ANSWER and know the contents thereof, and state that,/ Sworn to before me this l' ÖI ~~day of August MARK ZEL TSER &lr- "ø'l.l"" ~1i "'",,f Notl) Puti ç Stte of FlOrida Man;U8iilc P B;:lge My CVf\,i;lssÍ0n OD Expiw~ 07!05f210

FILED: KINGS COUNTY CLERK 05/09/ :30 PM INDEX NO /2016 NYSCEF DOC. NO. 7 RECEIVED NYSCEF: 05/09/2016

FILED: KINGS COUNTY CLERK 05/09/2016 08:30 PM INDEX NO. 501142/2016 NYSCEF DOC. NO. 7 RECEIVED NYSCEF: 05/09/2016 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF KINGS -------------------------------------------------------------------X