How far can a CEO go in diverting a company’s most valuable assets to entities controlled by his spouse before the courts call it what it is: fraud? Paley v. Curious Holdings, LLC, 2026 NY Slip Op 50829(U) (Sup Ct NY County May 11, 2026) answers that question.
Following a 14-day bench trial before Manhattan Commercial Division Justice Andrew Borrok, the court found that a CEO orchestrated a scheme to strip an animation company of its most lucrative assets, including a Disney production contract worth more than $1 million, and transfer them to entities controlled by his wife for a fraction of their value. The decision is a comprehensive roadmap through the law governing fraudulent conveyance, breach of fiduciary duty, alter ego liability, and punitive damages.
The Facts: A Disney Deal Disappears
Curious Holdings, LLC (“Curious”) was a New York animation company. Plaintiff Paley owned 11% and was a partner and Gryphon Pictures owned 89%. Defendant Korbelin served as CEO, and his wife, Grasic, worked at the company until 2012.
Curious held valuable contracts—most significantly, a Production Services Agreement with Disney for a 24-episode animated series titled “Goldie and Little Bear” (the “Goldie and Bear Project”), carrying a production fee of $1,080,000. It also held an option contract with Mo Willems Studio, Inc. to produce “Amanda’s Alligator” and a substantial equity stake (approximately $1.7 million) in Cargo Entertainment, LLC (“Cargo”), a company owned by Grasic.
Korbelin transferred the company’s operating assets, including the Disney and Mo Willems contracts, along with Curious’s equipment and software, to entities owned by his wife, (Microseries and Milk Barn) via an Asset Purchase Agreement for a mere $7,900. The timing was damning: the assignment agreement was backdated to January 1, 2014, just days before Disney approved the greenlight for the Goldie and Bear Project on January 10–16, 2014. Korbelin never disclosed to his fellow stakeholders that Curious had signed the Disney contract, that the project was being greenlit, or that assets were being transferred out from under them.
The scheme went further. Through a sham loan arrangement, Grasic’s company Cargo loaned Curious $200,000 and then seized Curious’ approximately $1.7 million equity stake in Cargo after declaring a default roughly five months later. Korbelin also continued paying Grasic’s salary and personal expenses through Curious long after she stopped working there. The court found Korbelin and Grasic’s testimony “not credible and often irreconcilably at odds with the contemporaneous documents.”
This was the second lawsuit between the parties. In a prior action, Paley obtained a $1,000,000 consent judgment on a breach of contract claim—which remained unpaid (Index No. 600502/2010). In this action, the Appellate Division had affirmed summary judgment on fraudulent conveyance liability but remanded three issues for trial: damages under the Debtor and Creditor Law, the fraud claim (specifically, what steps Paley could have taken to prevent his losses), and usurpation of corporate opportunity (Paley v. Curious Holdings, LLC, 233 AD3d 590 [1st Dept 2024]).
The Court’s Ruling
Justice Borrok’s post-trial decision applied a number of significant legal doctrines—each with force against Korbelin and Grasic.
Badges of Fraud and the Debtor and Creditor Law. The Appellate Division had already held that the transfers exhibited “sufficient badges of fraud” establishing the “necessary intent to hinder and delay” under the former Debtor and Creditor Law. On remand, the trial court determined the value of the conveyed property. Rejecting defendants’ attempt to limit recoverable assets, the court held that contracts are “property subject to the Debtor and Creditor Law.” On valuation, Justice Borrok rejected the argument that a transferred contract should be discounted by the transferor’s general overhead. Drawing a vivid analogy, he wrote: “A $1,000,000 representation is not worth less than $1,000,000 to the law firm merely because it has those expenses[.]” The principle: when a contract generates a fee that contributes to existing overhead, its value is the fee itself—not the fee minus costs incurred regardless.
Fraud: The Fiduciary’s Duty to Disclose. Applying the elements of common-law fraud, the court emphasized that Korbelin, as CEO and fiduciary, “had a duty to disclose material facts to the members of Curious, including plaintiff.” Critically, the court held that fraud could rest on material omissions—not only affirmative misrepresentations—finding distinct fraud rooted in Korbelin’s concealment of the Disney contract, the asset transfers, the Cargo investment scheme, and the ongoing payments to Grasic. On the remand issue, the court held that Paley demonstrated conclusively what steps the stakeholders “would have taken to prevent the loss” had they known the full facts, relying heavily on contemporaneous emails and ledgers.
Breach of Fiduciary Duty and Aiding and Abetting. The court found that each of Korbelin’s undisclosed self-dealing transactions independently constituted a breach. More significant was Grasic’s liability for aiding and abetting. The court recognized that under Monaghan v Ford Motor Co., an aider and abettor must provide “substantial assistance” in effecting the breach by affirmatively assisting, helping, concealing or failing to act when required to do so (71 AD3d 848 [2d Dept 2010]). The court found that Grasic was not a “mere passive or incidental beneficiary” but “a central architect” of all four breaches.
Alter Ego Liability. In a nuanced holding, the court pierced the corporate veil of Milk Barn, which was formed “with no capital, no employees, and no business” and whose “only substantive purpose was to receive the fraudulently conveyed assets of Curious[.]” Grasic was thus held personally liable as its alter ego. Microseries, which is owned by Grasic, by contrast, “existed for years before the transfer, and did substantial independent business with its own employees and clients,” and the court declined to pierce its veil. The distinction underscores that veil-piercing turns on the substance and independence of the entity—not merely its ownership by the same individual.
Punitive Damages. Finally, the court awarded $1,000,000 in punitive damages against Korbelin and another $1,000,000 against Grasic, finding their coordinated scheme willful, wanton, and malicious with a conscious disregard for the stakeholders’ rights. The court also exercised its discretion to award attorneys’ fees, with a special referee having determined that Paley was entitled to $674,345.25 in fees and $29,836.50 in disbursements.
Takeaway
For commercial litigants, Paley v. Curious Holdings offers several lessons.
First, the court’s valuation of the transferred Disney contract at its full production fee—without reduction for general overhead—establishes a plaintiff-friendly framework for measuring fraudulent conveyance damages. The contract’s value to the transferor, not its net profitability, is what counts.
Second, the decision demonstrates how thoroughly a court will scrutinize the timing and circumstances of asset transfers. Backdated agreements, undisclosed material contracts, and transfers to family-controlled entities for nominal consideration are classic badges of fraud—and courts will treat them accordingly.
Third, the alter ego analysis offers a useful lesson: entities that are mere shells formed to warehouse fraudulently transferred assets will not shield their owners from personal liability, while entities with legitimate pre-existing operations may retain their corporate separateness. Form, without substance, will not survive judicial scrutiny.
Finally, the finding that Grasic was a “central architect” rather than a passive beneficiary should give pause to anyone who helps structure a fiduciary’s self-dealing. Spouses, business partners, and advisors who actively participate in schemes to divert corporate assets face serious personal exposure—not merely as derivative beneficiaries, but as aiders and abettors subject to punitive sanctions in their own right.