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New York, July 2019 update received from the attorney of Deepak Agarwal — On December 4, 2018, Tracy Klestadt, the Plan Administrator in the bankruptcy case In Re Choxi.com, Inc., Case No. 16-131131, filed an adversary proceeding (Adv. Pro. No. 18-01974 (SCC)) against Deepak Agarwal, Melina Ash a/k/a Melina Agarwal, Sheela Agarwal, Vipesh Agarwal, Vishal Agarwal, Daniel Depina, DIYA Irrevocable Trust, and Depina Consulting, LLC (the, “Agarwal Defendants”), and certain other defendants.  The Agarwal Defendants responded to the proceeding by filing a motion with the U.S. Bankruptcy Court for the Southern District of New York, setting forth certain defenses, and requesting that the court dismiss the proceeding with respect to the Agarwal Defendants.

The Plan Administrator and the Agarwal Defendants have now reached an agreement to dismiss the adversary proceeding with respect to the Agarwal Defendants. The agreement states that the Agarwal Defendants make no admission or concession as to liability whatsoever as to the allegations set forth in the proceeding.

Deepak Agarwal has a lot of explaining to do.  Agarwal and his previous company Choxi (aka NoMoreRack) are in the middle of a legal battle which alleges major fraud and corruption.  Before being given the boot, Agarwal has been alleged to have engaged in massive fraud which benefited himself and his family directly.

The Allegations

Agarwal acted as the CEO of e-retailer Choxi.com after building a name for himself in both the pornography and negative option nutraceutical industries. Agarwal and his family have been alleged to have stolen millions of dollars from investors for work which was never completed and overcharged for work which was previously completed.  According to public records:

“Deepak Agarwal and Vipesh Agarwal deliberately utilized the Debtor’s relationship with Techsys to siphon funds from the Debtor. These actions resulted in the Debtor overpaying  Techsys and paying for duplicative, unperformed or unneeded services that total approximately $8 million in damages to the Debtor.”

The alleged fraud, in its full scope, was so damaging to Choxi that it supposedly caused the company to go into bankruptcy.  Recently, Choxi's assets were purchased by jClub, a discount e-retailer, in an attempt to revive the site which was once a burgeoning success.

How did it happen?

As in every case of alleged fraud, there are methods to how it is carried out.  In the case of Deepak Agarwal and Choxi, the alleged scheme was fairly simple. The marketing firm Techsys would complete marketing work and services for Choxi under an agreement in which fees were to not exceed $125,000 per month.