Wednesday, September 5, 2007

Bankruptcy Fraud eToys

Did eToys commit fraud against its shareholders when its corporate officers paid themselves millions of dollars and then filed bankruptcy?
The shareholders say yes and are yelling foul about every one washing their hands of the crime in bankruptcy court while the Wilmington, Delaware U.S. Trustee turns a blind eye to the mouns of evidence given them that the fraud continues in the bankruptcy case with sweetheart deals between the bankruptcy trustee and liquidation companies.
A small group of the shareholders organized to fight back when they learned that the attorney that was supposed be representing the creditors was in bed with the bad guys. As they investigated eToys, they uncovered layers of fraud within the Delaware Bankruptcy System, where lawyers and bankruptcy trustees conspire with each other to benefit at the expense of the victims; and that justice from the U.S. Trustee is just a word with no meaning.

The Shareholders Revolt

In the late 1990s, eToys growth was staggering and investors dumped millions into the on-line retailer giant.

But like so many of the dot.com companies, it was an illusion. In this case, Merrill Lynch cooked the books to make eToys look profitable.

By 2001, eToys, like so many other dot.coms, collapsed. Months before filing bankruptcy, the corporation's officers gave themselves millions of dollars and then quit. An interim chief was appointed to manage the company through its asset liquidation in bankruptcy.

The eToys shareholders have found themselves in the position as other victims of bankruptcy fraud, when they gave the U.S .Trustee in Wilmington, Delaware, the criminal complaint and evidence goes into a black hole and no justice.

"I have been trying to get the FBI and the Dept of Justice to clean up the corruption and I am always sent to a party of authority that places the investigation in a dead end, with no results," said Stephen L. Haas, one of the eToys victims seeking justice. "I alleged possible corruption, failure to perform by the attorney for the bankruptcy trustee Mark Kenney, who has sat idle while these crimes against us all continue to be rampant, blatant and flagrant."

Below is a Wall Street Journal article about the eToys bankruptcy scandal. The victims say the story is from a business publication standpoint and misses the big story, which is hedge fund corruption (big money, power and influence) on the Bankruptcy Court.

Shareholder's Issues:

eToys bankruptcy trustee, Mark Kenney, hired John Traub, a lawyer from the firm Traub Bonacquist & Fox to be legal counsel for the Kmart Shareholders.

Traub Bonacquist & Fox are involved in an extremely large percentage of all retail bankruptcies over $10 million such as Office Max, Montgomery Wards, Sears Homelife, KB Toys, Standard Living, Brueners, Finova and many more.

The Kmart shareholders received $0 and yet Kmart was able to acquire Sears just a few months after exiting from bankruptcy.

1 - US Trustee Robert DeAngelis replaced by Kelly B Stapleton in Phil Region 3 on Dec ( the date of the hearing on the original allegations).
2 - RR Donnelley and Goldman Sachs dissolve themselves of one another on Jan 5th 2005. ($300 million suit of Sachs that RR Donnelley voted on.)
3 - The US Trustee has sought sanctions, (due to the responses of Jan 25 2005, in the public record, the Hearing of Feb 1, 2005 where we were permitted to place the attorney's on the stand, the Depo's of Feb 9 2005, where we were permitted by the Court to depose the Attorney's and Barry Gold) where the sanctions were for $1.6 million and $750,000 ( the 750 was agreed to by Traub).
4 - The March 1 2005 hearing where James Garrity (former Fed Justice NY, who is of the firm Sherman Sterling and was hired by Traub to negotiate the Trustee settlement) -- where the Court (Her Honor Walrath) rejected approving the settlement, took all matters under advisement and most importantly, when Garrity raised the issue that I could no longer be Pro Se as my claim was by a Corporation, the Court did the depose of Traub, Barry Gold etc, on the Stand, under Oath, on the details of the Payments by Traub's firm to Barry Gold and gave us the terms, in Her Court room discussions, of void "ab initio" and removal of Mark Kenney by USC 324 for "failure to do and continued failure to perform". (the fact that brought light to the legal terms was the way counsel(s) went quite on the subject when the terms were stated.)
Lawrence A. FriedmanFormer Chief AdministratorU.S. Trustee Office Washington, D.C.
5 -Lawrence Friedman -- the Chief Administrator in Washington DC of the Dept Of Justice US Trustee Office (who had personally corresponded with Haas and assured him that corrective measures would be taken) -- RESIGNED for personal reasons shortly afterwards.
6 - The Judge in the KB case did strike and expunge Haas notes in the public pacer system of the same conflicts ongoing in that case where Paul Traub partner with Barry Gold, who worked at Stage Stores with Michael Glazer (CEO of KB) -- where Traub asked the Court for permission to prosecute the $100 million payment Michael Glazer paid himself and others prior to filing Bankruptcy of KB.
7 - 5 days after Judge Sullivan did strike and expunge my notes to him and the public he was removed from the Case and replaced by His Honor Shapero. ( I feel it was most likely the corny consistent references to the "concern" about the 8000 employees for Christmas.)
8 - The firm of Traub Bonacquist & Fox is now just the firm of Traub as Bonacquist is out of touch and Michael Fox has gone to Olshan & Frome for better business opportunities, where Frome does no Bankruptcy work and TBF was doing mega millions a year in billings.

18 comments:

Laser said...

We thank Meryl and here wonderful website for the opportunity to seek to inform others about the pursuit for justice.

Sincerely
Laser

Laser said...

Update on eToys 3rd Circuit appeal.

The US Trustee has entered a brief into the 3rd Cir appeal 07-2360. The US Trustee is defending the right to give illegitimate circumvention of statutory requirements to parties that have admitted submitting false Rule 2014 affidavits.

The US Trustee desires that the Courts expunge Laser Haas as a non party (even though the Court approved Laser's entity CLI work) and that the Court dismiss eToys shareholders for submitting their brief on Jan 19th instead of Jan 18th (though FRAP Rule 26(c) states there is a 3 day time leniency.

The efforts by the US Trustee as an appellee to defend officers of the Court who have perpetrated Fraud upon the Court documents the issue of "cronyism" all the way to Washington D.C. and begs the question Why?

For this time the General Counsel of the Dept of Justice EOUST program has signed her name to the appeal efforts.

Things are heating up and Washington D.C has brought in the big guns of clout, power and influence.

We will keep you informed

thanks
Laser

Laser said...

Update Dept of Justice refuses to prosecute the firm a US Attorney was partners with.

We have provided proof of over 100 statutory violations in the bankruptcy matter of eToys 01-706 (Del Bankr. 2001)
The Dept of Justice did not seek disqualification of the attorneys who admitted to filing multiple, intentionally false, Rule 2014 affidavits.

Contrary to their oath of office, 28 USC 586(a)(3)(F) and in direct violation of 18 USC 3057(a) the United States Trustee actually & speciously sought immunity for the felony violations and the US Trustee has aggressively sought to assist defrauding our Court approved contract work by seeking to strike and expunge our proofs of fraud and perjury by powerful law firms connected to Mitt Romney.

The Asst US Trustee Frank Perch did motion to disgorge Traub $1.6 million, but mentioned nothing about the false affidavits of Morris Nichols (MNAT)

The Director of the Dept of Justice EOUST emailed us that he would take care of the issues.

The the US Attorney for the new Region 3 Trustee, Mark Kenney offered the right to circumvent the law and a "get out of jail free card" to the perpetrators.

MNAT represented both Bain and eToys when it the court approved the selling of the eToys assets to Bain. This is Collusion to defraud the estate for tens of millions of dollars.MNAT now represents Bain in the KB bankruptcy case (Del Bankr 04-10120).

We have now found the missing link, just this past week, that offers explanation of the "nolle prosequi" of the Dept of Justice, that being the reason why the US Attorney's office has refused to prosecute MNAT. For the US Attorney for Delaware is Colm F Connolly. Connolly was (and may be still) a partner at MNAT when eToys sold the assets to MNAT's other client Bain.

Lawrence Friedman, Frank Perch and Debra Yang (Pres Bush Corp Fraud Task Force) have all subsequently resigned from their key positions at the Dept of Justice, without providing an sufficient remedy of the matter.
The US Attorney in Delaware who has refused to prosecute MNAT or Bain is Colm F Connolly, who is now being considered for a Fed Judge position. As such Connolly's resume is now public knowledge.
.
While it seems to be a good career move not to investigate or prosecute your partners, associates and clients. Especially when such is connected to your future boss, a Presidential hopefull. (Miit Romney owns Bain,KB, eToys, Stage Stores, SanKaty)

It is however, a matter of grave concern when eventually get "caught"!

----------------------------------------
(please see http://www.wjfa.net/bk/etoys.html and the US Trustee Disgorge Motion eToys Docket item 2195, the Dept of Justice Settlement and immunity motion eToys docket item 2201 and the Court's Opinion approving the Settlement motion docket item 2302 which can be seen here http://www.deb.uscourts.gov/Opinions/2005/EtoysMNATfees.pdf)
The Disgorge motion only addresses 3 of the more than 100 statutory violations we have proven. They seek to cover up all the others with the Stipulation to Settle providing illegal permission to Circumvent the Law with the following clause agreed upon

"WHEREAS the United States Trustee shall not seek to compel TBF to make any additional disclosures"

Such latitude to deliberately circumvent the Law, specifically 327(a) is not even permitted of a Federal Justice, as can be seen in the cases such as In re Middleton Arms, First Jersey Securites and In re United Artist.
Which states, the Courts are forbidden from contravening clear, unambiguous statutory mandates of 327(a).
A finding of non disclosure of conflict of interest mandates disqualification.

Sincerely
Laser Haas

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