Tuesday, September 11, 2007

Oral Argument - September 11, 2007


CASE NO. 07-60770-CIV-ALTONAGA/Turnoff

September 11, 2007

Good morning, Your Honor.

I requested that I be heard in this Court as a matter of public importance. I want to thank you for signing the Order which has now allowed me the opportunity to do so. I want the record to reflect that the request to address the Court was also made and granted in the Evidentiary Trial that took place in January, 2007. In reliance upon that Court’s Order, I prepared a statement which was never read because the Court said it did not have to hear opening statements. With the utmost respect for this Court, I thank you for fulfilling your judicial responsibility by adhering to the Order which you signed.

Attorneys Kopplow, Cooper and Salkin’s scheme compelled them to violate Rule 2014. These attorneys, officers of the court, each filed an Affidavit, under the penalty of perjury, whereby they each denied having any connection with any party in interest in the bankruptcy of Baron’s when, in fact, more than fifty connections were present. More than fifty connections that needed to be explored by the Court. The evidence was and remains overwhelming that many of the connections rose to the level of a conflict of interest, whether potential or actual. Such disclosure would have prevented Kopplow, Cooper and Salkin from being appointed in the bankruptcy of Baron’s. Kopplow, Cooper and Salkin must have known that mandated disclosure under Rule 2014 would have caused their disqualification. Thus, their intention was not to comply with the rules in order to achieve their desired result. A result obtained by defrauding the bankruptcy court and preventing interested parties their right to be heard. An unjust result that placed them in a position to negotiate a settlement and fees that inured to their benefit, other professionals, and the Chairman of the Creditors Committee, another undisclosed connection. Such an unconscionable scheme is what ultimately caused damage to the unsecured creditors, the debtor, the destruction of a fifty-year old company, the loss of two hundred jobs, and the loss to the community who benefitted by the philanthropy of Baron’s and its owners.

You cannot imagine what these almost fourteen years have been like in our pursuit for justice. My wonderful husband, Norman, at almost seventy-six, has been deprived of what should have been his golden years reaping the fruits of his labor. Our beautiful son, Trace, is now sixteen years old. He has been denied financial security that his grandparents and parents worked so hard to bequeath and provide for him. He has been denied my undivided devotion as a mother since he was two. I have been denied a normal life forced to understand why and how things like this happen, and then working towards getting back what was taken from us so cruelly and inhumanely.

Your Honor, I now want to move from the issues in my case to the core of the process that is dictating the dynamics of my case which is a matter of great public importance. The behavior of Kopplow, Cooper and Salkin is glaring in its contempt for the rights of the citizens who must use the courts to maintain a civilized problems-solving process in society. It is glaring in its contempt for the intent and purpose of the rules and laws governing the professional behavior of lawyers who practice in our courts. But worse, is the use of such tactics that drive the pertinent issues of a case into a realm of irrationality, and disorientation, that is not accidental or “just legal game playing.” It is intentionally denying justice to the citizens for the warped benefit of a few who have grabbed power over our courts at any price. Tactics that use misinformation to distort the reality of a situation and deny the responsibility where it falls, are the interrogator’s tools for breaking the psyche of terrorists and others who may threaten our civilized society. Your Honor, I know that might sound like quite a radical leap. However, consider that I have walked into court with an apple. It was grown from an apple seed, produced by an apple tree; tastes like an apple, cuts like an apple and meets all known scientific criteria for being an apple. Kopplow, Cooper and Salkin tell me and the Court it is an orange. Regardless of the evidence and sound scientific proof I can supply and have supplied that it is an apple, these attorneys stand firm that it is an orange and cause the Court to concur through falsehoods, manipulations, and a host of unsavory, unprofessional, unethical and criminal machinations.

By the time the trier of fact has agreed that the pure apple may be an orange, my entire orientation to life, rational belief system based on a balance of truth and principles is shattered. My psyche is assaulted. Many who cannot verbalize, or who are not educated simply collapse at this point of clandestine attack on the foundation of citizens’ trust that they have an avenue to pursue justice through our courts.

Your Honor, my case was reopened on April 7, 2005 for fraud on the court for failure to disclose under bankruptcy rule 2014. That remains the issue and the violation of that plain and simple rule by attorneys Kopplow, Cooper and Salkin could not be any clearer. In the legal process, I can think of nothing more heinous, and I pray the Court concur, than the deprivation of ones due process rights by officers of the court. Kopplow, Cooper and Salkin impaired my right to due process by ignoring the rules, failing to adhere to the court’s orders, failing to provide honest representation, failing to carry out the duties of their contracts, and failing to make honest and complete disclosure to the court. The court, thus far, has failed to protect my due process rights by allowing the rules to be manipulated, allowing its orders to be ignored, and allowing officers of the court to place their interests ahead of those they are duty bound to protect by not only giving Kopplow, Cooper and Salkin a pass for perpetrating a fraud on the court but allowing them to profit by their scheme.

What I have come to learn, as a Pro-Se advocate, is that precedent is supposed to be set by previous rulings and that those rulings are the Court’s interpretation as to how to apply the law. I also have come to learn that “fraud on the court” is a particular species of fraud that is extremely difficult to prosecute because of cronyism, fraternalism, and protectionism, that the legal community affords its members.

On January 29, 30 and 31st of this year, I participated in the Court’s evidentiary trial. I thought the Court would diligently explore the facts presented in light of its pre-trial order and its order would turn thereon. I firmly believed, upon completion of the trial, that justice would finally be served. What I did not recognize and could not comprehend was the effect that a “fraud on the court” determination would have on the bankruptcy bar in South Florida, and also the unraveling of all of the final rulings made as a result of that “fraud on the court.” Please note that Judge Hyman, who made all the rulings in the 1997 bankruptcy of Baron’s, is the same Judge who reopened the case, denied Summary Judgments and presided over the evidentiary trial. And so the same Judge who was defrauded now faced the huge burden that would be created by a “fraud on the court” ruling. In addition to that burden, I believe that because of the close knit relationships developed in the bankruptcy bar, it becomes very difficult to effect the prosecution of people who appear before you on a regular basis. Whether this is difficult is not the issue - what is just and right is! Judges must have the courage to correct wrongs that are against public policy in spite of relationships.

Perhaps, in reopening the bankruptcy, Judge Hyman opened Pandora’s Box, realized what lay inside at the evidentiary trial, and then chose to close the box rather than release the secrets. Judge Hyman was able to close the box by “re-interpreting” the disclosure rules and making his own judgment of the intentions of the parties. “Fraud on the court” should not be left to interpretation by anyone. The actions of the officers of the court must speak for themselves. Re-interpreting the rules to protect officers of the court to the detriment of the public destroys the entire judicial system.

What happened in our case is rampant in bankruptcy cases around the country. The Courts rely on attorneys to act with honor and trustworthiness. To tell the truth, know the law, and protect the sanctity of the process is the responsibility of these officers of the court. To allow violations of any of these tenets to obstruct justice cannot and must not be tolerated.

The very protection the court has from appointing professionals in bankruptcy cases are the Rules of Disclosure enacted by Congress to protect honest debtors and creditors from professionals who choose to play fast and loose with the court. Examining the history of Congress reveals that it knew the problem existed, especially in the bankruptcy courts, and thus stated its concern in the Matter of Arkansas Co., (3d Cir. 1986)).

“It is significant that Congress chose to place the requirement of court approval for the employment of an attorney, accountant, or other professional directly in the Bankruptcy Code in 1978. 11 U.S.C. 1103(a). The legislative history makesclear that the 1978 Code was designed to eliminate the abuses and detrimentalpractices that had been found to prevail. Among such practices was the cronyismof the “bankruptcy ring” and attorney control of bankruptcy cases. In fact, the House Report noted that “in practice...the bankruptcy system operates more forthe benefit of attorneys than for the benefit of creditors.”

When such Rules are intentionally violated in spite of numerous opportunities to comply nothing less than the harshest of punishments should be imposed. The fact that there is no statute of limitation for fraud on the court is somewhat of a comfort to the public as to their right to redress and the vitiation of all judgments and orders procured by such an act.

In closing, Your Honor, I refer to a 1944 United States Supreme Court case, Hazel Atlas. “Furthermore, tampering with the administration of justice in the manner indisputably shown here involves far more than an injury to a single litigant. It is a wrong against the institutions set up to protect and safeguard the public, institutions in which fraud cannot complacently be tolerated consistently with the good order of society. Surely, it cannot be that preservation of the integrity of the judicial process must always wait upon the diligence of litigants. The public welfare demands that the agencies of public justice be not so impotent that they must always be mute and helpless victims of deception and fraud.”

Your Honor, apples cannot be oranges. Only a fair hearing will allow that truth.

Thank you.

Meryl M. Lanson, Pro Se

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.

Tuesday, September 4, 2007

Kentucky Trial Derby

Wall Street Journal, August 20, 2007

How's this for a legal bestseller? Three tort lawyers are accused of defrauding their clients of $62 million. A state judge signs off on the scam, and is rewarded with a cushy job. When the scandal comes to light, the bar association looks the other way and another state judge fails to force the men to return the money. A federal judge finally intervenes and jails all three as flight risks.

Welcome to Kentucky, where this thriller is unfolding in real life. Scholars are calling it one of the biggest legal frauds in U.S. history, but it's better viewed as a case study in how hard it is to hold trial lawyers accountable for their low crimes and misdemeanors.

The facts are largely undisputed. In 2001, American Home Products reached a $200 million settlement with 440 plaintiffs for claims that they'd suffered heart damage using the fen-phen diet drug. The lawyers -- including William Gallion, Shirley Cunningham, Jr., and Melbourne Mills, Jr. -- were supposed to get one-third of the payout. Instead, the lawyers kept $106 million, put another $20 million into a charity they established, and left the plaintiffs with a mere $74 million. Plaintiffs say they were told by their lawyers that if they complained they could be sued or go to jail.

Some plaintiffs complained nonetheless, and the circus that has followed has become a black eye for Kentucky's legal establishment. In court papers, the three men denied wrongdoing, and said they deserved the extra money. They noted that the judge who'd signed off on the original settlement, Joseph F. Bamburger, had said the lawyers were due this windfall "for their services and for the incredible risks they took," as well as for various "administrative headaches."

Maybe. Then again, when Judge Bamburger retired from the bench in 2004, he was made a director of the very same charity the lawyers had established with that $20 million. The judge was paid $5,000 a month, money he later returned. He was also reprimanded by the Judicial Conduct Commission of Kentucky for "misconduct in office."

Complaints were made to the state bar association soon after the 2001 settlement, yet six years and a criminal indictment later the organization hasn't held a full hearing on permanent disbarment. Meanwhile, Lexington attorney Angela Ford filed a civil lawsuit asking that 414 of the fen-phen plaintiffs get their money back. After a prolonged proceeding in which the defense was accorded great deference, state judge William Wehr found that Ms. Ford's clients were owed as much as $62 million.

Yet he has so far refused to require a return of the money. The three attorneys have instead had 18 months to hide, spend, or transfer it offshore. Two of the lawyers were splashed across newspapers in May as co-owners of Curlin, winner of the Preakness Stakes. Judge Wehr also inexplicably separated a fourth attorney, Stanley Chesley, from the proceedings. Mr. Chesley happens to be a powerful national tort lawyer, whose wife is a federal judge.

Messrs. Gallion, Cunningham and Mills might have got away with all this were it not for higher authorities. This June a federal grand jury indicted them on charges of fraud. Recently, in the face of endless stalling, federal judge William Bertelsman granted the defendants' motion to move their trial to January, but at the same time ordered them to jail.

He voiced his suspicion that since the three were all in "their 50s and 70s," and that under federal sentencing guidelines they faced 20 years in jail, they had a "tremendous motive to stonewall." He also felt that there was a "serious risk that the funds will be moved offshore and that with these funds at their disposal the defendants will flee to a country with which the United States has no extradition treaty. . ." The judge said he wanted a speedy proceeding because "not only these three gentlemen are on trial, the whole legal profession is on trial in this case."

For this bit of candor, Judge Bertelsman has been assailed, with law professors publicly complaining that it was inappropriate to impugn the whole profession, or to jail the poor millionaire attorneys. We'd say Judge Bertelsman has been the only one clear-eyed enough to realize that the foot-dragging and wink-winking that has characterized the treatment of these attorneys has already left a bad taste about the way some lawyers and judges protect their own.

Other judges should pay attention. A New York law firm also faces trial over accusations it conned its clients out of fen-phen money, while firms across the country are facing scrutiny for manipulating silicosis and class-action securities suits. The trial bar has too often become a law unto itself, and the only way to stop such behavior is for judges and prosecutors to hold the lawyers accountable.