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Monday, August 18, 2014

BAE files federal suit against Virginia man named in 2010 lawsuit

CONCORD – BAE is suing a Virginia man to collect about nearly $2 million that a court ordered the man’s company to pay last year. The suit filed in U.S. District Court in Concord names William Key, of Virginia Beach, Va., and his company, Space Key Components, and accuses Key of fraudulently transferring millions of dollars in company assets to his own bank accounts to avoid paying BAE $1.8 million awarded in a suit the company won in 2013. Specifically, BAE accuses Key of fraudulent transfer of assets, breach of fiduciary duty and piercing the corporate veil, according to court documents.

Key and Space Key have filed motions to dismiss the lawsuit, arguing BAE can’t prove any of its claims and, even if it could, none of them happened in New Hampshire, according to court documents. ...

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CONCORD – BAE is suing a Virginia man to collect about nearly $2 million that a court ordered the man’s company to pay last year. The suit filed in U.S. District Court in Concord names William Key, of Virginia Beach, Va., and his company, Space Key Components, and accuses Key of fraudulently transferring millions of dollars in company assets to his own bank accounts to avoid paying BAE $1.8 million awarded in a suit the company won in 2013. Specifically, BAE accuses Key of fraudulent transfer of assets, breach of fiduciary duty and piercing the corporate veil, according to court documents.

Key and Space Key have filed motions to dismiss the lawsuit, arguing BAE can’t prove any of its claims and, even if it could, none of them happened in New Hampshire, according to court documents.

Space Key worked with BAE from 2004-2010 selling BAE-produced electronics and earning a commission. The defense giant sued Space Key Components in 2010 after selling the Space Key nearly $2 million in goods, including 200 “field programmable gate array integrated circuits,” or FPGAs, which Space Key then sold to customers in Russia and India, according
to court documents.

BAE sued when Space Key refused to pay for the FPGAs – minus its commission – and won in federal court and then on appeal, despite Space Key’s counterclaims that it was harmed because the FPGAs were faulty, according to court documents.

In the newest suit filed this summer by BAE accused William Key of transferring millions in company funds to his own financial
accounts, including at least $2.7 million from the sale of the 200 FPGAs, according to court documents.

BAE argues that Key is
personally responsible for the 2013 judgement amount because he is essentially Space Key’s “alter ego,” as the company’s sole shareholder, employee and decision maker, according to court records.

“Key caused Space Key to transfer millions of dollars to him in what he characterizes as loans, but which lack any documentation, interest rate or payment schedules,” BAE’s attorney Jonathan Shirley, of Devine, Millimet and Branch, wrote in one motion. “Key used company assets to pay personal expenses, siphoned business assets into personal accounts, and disregarded corporate formalities. Key uses Space Key not only to pay his golf club membership, but he has charged tens of thousands of dollars to credit cards that Space Key paid.”

Many of the transfers happened while the initial lawsuit was litigated between 2010-2013, according to Shirley’s motion.

Key’s attorney, Jeffrey Spear, of Orr and Reno, wrote in his motion to dismiss that all three of BAE’s claims relate to “corporate governance,” and that since Key lives in and Space Key is based in Virginia, BAE cannot prove its claims in the jurisdiction where it filed the suit.

Key also simply disputes any wrongdoing and argues in the motion to dismiss that BAE’s suit assumes Space Key was insolvent while the first lawsuit was litigated. Any transfers and loans between Key and Space Key have to be viewed through a lens before the company was ordered to pay $1.8 million. At that time Key had every reason to believe he would successfully defend the suit and win his own counterclaims, according to his motion, or would at least reduce the amount the company had to pay BAE.

“BAE’s suggestion that its judgement was somehow inevitable during the pendency of Space Key I is therefore intensely counter-factual,” Spear wrote referring to the initial lawsuit. “When viewed in the light of actual events, BAE’s allegations create no inference that Space Key was insolvent, or flirted with insolvency, during 2010 or 2011 when the putative fraudulent transfers took place.”

Neither attorney immediately responded to requests for comment.

Joseph G. Cote can be reached at 594-6415 or jcote@nashua
telegraph.com. Also, follow Cote on Twitter (@Telegraph_JoeC).