Posted by
LASER Haas on Wednesday, July 02, 2008 7:10:50 PM
The entity eToys went public in 1999 for $8bn and then bankrupt March 2001.
To date, there are no reports of any SEC, FBI or Dept of Justice investigation into this classic "pump n dump" and the real question of where did the money go?
Compounding those questions is the speciousness of how the SEC and other investigative parties sat still when the Debtor eToys, represented by the Morris Nichols Arsht & Tunnel ("MNAT") law firm petitioned the Delaware Bankruptcy Court for the strange request to Destroy Books n Records.
Of the many parties that failed to object to this arcane request there is the Creditors, represented by the Traub Bonacquist & Fox ("TBF") law firm and the policing entity of the bankruptcy court, the Dept of Justice United States Trustee's.
As it was obvious to anyone, that the request was an effort to destroy evidence, onc can only speculate as to what the motivations were for the lack of response, however, armed with the Court's approve of the esoteric Order, the Senior Executives summarily abandoned the eToys estate providing a feast of plenty to the attorneys' who were left with a cookie jar, milk, the keys and no one to say no!
Initially an auction was scheduled to liquidate the entire estate of eToys for $5 million. The Creditors were alarmed about such a paltry result and sought the counsel of someone who could effect a better result. They settled upon Laser Steven Haas who had just received a significant result in another liquidation of 50% of value.
The attorneys TBF & MNAT negotiated that Haas would not be hired as a Professional Person, rather, Haas would utilize his company CLI and the attorney's would then also discouraged Haas from obtaining his own counsel, that the estate would have to pay for. Under the guise that it would save the estate expense, MNAT & TBF would supply the paperwork for CLI to the Delaware Bankruptcy Court instead of Haas doing so himself.
Despite the fact that Haas was extensively successful in his efforts and assisted in building the cash deposits of eToys to nearly $50 million, the TBF and MNAT law firms persistently found fault with everything that Haas and his company accomplished. One of the biggest critics at the end of 2001, of Haas, was the new President and CEO of eToys, Mr. Barry Gold and his secretary of sorts, Ellen Gordon from Xroads LLC (the court approved Financial Consultant responsible for accounting for eToys cash deposits).
Haas had pulled Barry Gold aside, when he came on board in May 2001 and remarked to Barry Gold that he was concerned that the TBF law firm had hidden agenda's and that Xroads LLC, Ellen Gordon and Paul Traub may be hiding additional items from all interested parties.
Haas did not know at the time, that Paul Traub and Barry Gold had been partners for some time.
Mr. Haas had discovered that there were overseas cash deposits, in the millions, that was not reported to the Courts. (The very failure to declare a cash asset on the bankruptcy filing schedules is fraud and a felony violation). When Haas reported this issue to the Creditors and the Creditors attorney, instead of being thanked for the discovery, TBF again harangued and berated the efforts.
Of the many greater returns that Haas and his company had achieved was the sale of the eToys.com name for $10 million. Inexplicably, MNAT, TBF and Barry Gold renegotiated that sale down to a purported $3 million.
Haas's company's commission and success fee's was based upon the actual sale result of the assets to buyers. At the end of 2001, TBF, MNAT and Barry Gold refused to permit Haas review of Books n Records so that a final fee application could be submitted. When it was time to file the final fee applications for CLI and Haas to the Court, MNAT simply refused to do so.
Being abandoned but having Court approval for the work, Haas hired another law firm. Haas received one more minor payment with the promise to settle on the balance. However, Haas had a problem, the CLI contracts stated that Haas must file a final fee application by March 2002. As Haas new counsel, Morris James, refused to address the readily apparent conflict of interest issues, Haas got on a plane and went to Delaware and hired a new attorney Henry Heiman. Heiman reported that he was a former Trustee and that the Court approved contracts were irrefutable. Heiman stated that he would go to court, when the time was right and force compliance with the Court approved contracts.
Haas informed the Dept of Justice United States Trustee's office of the many issues at hand, specifically the Dept of Justice trial attorney handling the case, Mark Kenney. The responses from Mr. Kenney were obtuse to the issues at hand as Mr. Kenney reflected that no crimes had occurred and there was no reason to investigate.
Then, in a bizarre turn of events, Haas discovered that Barry Gold and TBF were actually associated from as far back as the 1980's, learning this from a former associate of Paul Traub's as the TBF law firm was previously known as Traub Bonacquist & Yellen, before becoming Traub Bonacquist & Fox. Informing Henry Heiman of this fact resulted in intimidation and extortion acts by the TBF law firm that Henry Heiman actually emailed to Haas.
Heiman emailed to Haas that Susan Balaschak of TBF stated that if Haas did not "back off" not only would Haas and his company CLI not get paid, his career would suffer and other retaliations would occur. Heiman then informed Haas that he should seek other counsel.
Haas found other counsels willing to take the case, but Henry Heiman refused to give that new counsel the files of Haas or CLI as Heiman abandoned his duties.
Forced to find a way to handle the issues, Haas began to study the Law and Dept of Justice US Trustee website. At that time Haas learned that the Dept of Justice attorney, Mark Kenney and Henry Heiman had been taking advantage of the fact that Haas was a layman, where they stated no violations of the law had occurred, they were both, in fact, thwarting justice and giving Haas false information.
Laser Haas called Mark Kenney and told him of the email threat that was sent to him and how it violated the law. Acting with a little fit of rage, Mark Kenney stated that there was no laws broken and that the issue of Barry Gold and Traub had been handled in the "Bonus Sales" case. This was the 2nd time the Bonus issued had been mentioned to Haas, however, it was the first time it was mentioned completely by Mark Kenney.
Armed with new knowledge of the Law, specifically Sections 101(14) and 327(a), along with the fact that they must be accompanied with a Rule 2014 affidavit, that affirms, "under penalty of perjury" that there are no undisclosed conflicts of interest, Haas looked up the Bonus Sales case on-line with PACER, the Public Access system to Court dockets.
As it turns out, Mark Kenney made a "lapse lingue" where such slip of the tongue provided Haas with the first, concrete proof positive, that the Law had been broken and that Perjury in the eToys case was profuse. As a hidden gem within the Bonus Sales bankruptcy case (DE Bankr 03-12284) an affidavit by a company entitled Asset Disposition Advisors LLC ("ADA") existed. On the first sheet of the ADA paperwork on the left side it states Barry Gold Principal and on the right side it states Paul Traub Principal.
Haas could not believe his eyes, there it was, concrete proof, irrefutable, as a court docket record, signed by Paul Traub himself, providing proof, beyond all reasonable doubt, that Paul Traub and Barry Gold had an "undisclosed" connection.
Further research of the ADA company led to the discovery that it was formed in April 2001. By all testimony before the court and a Hiring Letter not revealed until four (4) years later, Barry Gold became the "wind down coordinator" of eToys in May 2001 and then, after the initial success of the plot, Barry Gold was promoted to the President and CEO of eToys.
Both Haas and the eToys shareholders petitioned for an Emergency Hearing to deal with the malicious acts. The Emergency hearing occurred Dec. 22, 2004. At the same time, with a press release also dated Dec 22 2004, the US Trustee program announced that the new Region 3 Trustee (who presides over Delaware) was Kelly B Stapleton who replaced the Acting US Trustee Roberta DeAngelis.
The Bankruptcy Code is designed by Congress to make sure that these type of shenanigans do not occur. That is why, even though attorneys already are governed by Model Rules of Conduct and their oath's before the State Bar's, Congress wanted to make sure that the Creditors and Debtor in bankruptcy cases were "arms length" in all their transactions, in order to assure good faith dealings. This is why Section 327(a), the application of Professional Persons requires that even an attorney must supply a Rule 2014 Affidavit affirming that they are "disinterested" parties as is defined by Section 101(14).
Therefore the only way that there can be any "undisclosed" issues of a "conflict of interest" is for an attorney to supply a False Affidavit.
Supplying a False Affidavits is an act of Perjury.
Doing so intentionally, after being warned not to do an act is extensively egregious.
This particular case is made morose because the United States Trustee's office testified, in its Motion to Disgorge the TBF law firm $1.6 million, that the parties had discussions with the US Trustee about replacing key personnel of the Debtor. The US Trustee states twice in the Disgorge Motion that he instructed the parties Not to replace key personnel of the Debtor with anyone connected to the retained professionals of the estate.
Disregarding that authoritative warning, TBF, MNAT and Barry Gold, along with others, drafted the Hiring Letter for Barry Gold. He was given a contractual choice that permitted him to choose, whether or not, to apply to the Court for permission to be hired. This violates the law under pretense and "color of law". After choosing not to apply; Barry Gold was then given $40,000 per month, promoted to President/ CEO and promised a Bonus possibility at the end of the case.
Armed with these facts, alarmed that TBF was given immunity, Haas wondered what else was there that was hidden.
Haas and the eToys shareholders looked everywhere for additional acts of malfeasance. Haas then discovered that MNAT, TBF and Barry Gold all had "undisclosed" connections to Bain/ KB. The significance of that is the fact that eToys sold the bulk of the estate assets to Bain/ KB for discounts in the tens of millions of dollars, including the nefarious renegotiation by the parties to reduce the $10 million dollar bid for eToys.com to only $3 million.
This is Collusion to Defraud an estate. As entrusted Officers of the Court, there is no greater crime that the attorneys can commit.
The parties were so brazen and flagrantly arrogant in their acts of mendacity, believing that they had gotten away with all the subterfuge - MNAT is actually representing Bain in the KB bankruptcy case.
Paul Traub had the unmitigated gall to petition that Court for permission to prosecute the $100 million dollar cash payment that KB paid to Bain and Michael Glazer prior to KB filing for Bankruptcy.
Haas then filed a motion to that Court. Upon reporting this to the Director of the United States Trustee and the Asst US Trustee who Motioned to Disgorge TBF the $1.6 million, both parties resigned.
Speciously and quietly (as you will find no press release in 2005 concerning the issue) the removed Roberta DeAngelis was promoted to the post of General Counsel of the US Trustee's office in Washington DC (EOUST GC).
Again, Mark Kenney stepped up to the plate and defended the perpetrators of fraud. Being that MNAT and TBF could not answer the Haas allegations and the Chairman of the Creditors Committee affidavits, the Delaware Dept of Justice submitted a Motion to the KB Court asking that Court to strike and expunge the Haas motion with proofs of perjury and fraud.
Seeing that it was readily apparent that the "fix" was in, Haas reached out to other governemant agencies such as the SEC, FBI, Public Integrity Section, the OSC, OGE, OIG, Pres Bush Corp Fraud Task Force, the OPR, Administrator of the Courts and even the US Marshall, all of whom referred Haas to the whistle blower entity, the local US Attorney and the General Counsel of the US Trustee's.
As anyone can see, though no one knew such at the time, sending any items to the General Counsel's office is a waste of energy, as you would be asking Roberta DeAngelis to prosecute her own failure to perform.
It has also been discovered that the US Attorney in Delaware, Colm F Connolly, was a partner with the MNAT law firm in 2001, the very year the fraud and perjury began (for all we know Connolly worked on the case or with the related clients).
Colm Connolly's failure to investigate or prosecute violates Ethics, Model Rules of Conduct and the protocol of the Dept of Justice that requires him to notify the Public Integrity Section.
Therefore we decided to report the case to the CA US Attorney's office where Pres Bush Corp Fraud Task Force was managed and eToys has its' home office in CA.
We received no response from the CA US Attorney, whose website states that they will answer in 8 to 12 weeks with an acknowledgement that they are looking into the issue or a decline to go any furhter.
However, the Los Angeles Times reported a story that seems to be connected. The official complaint was filed with the CA US Attorney Dec 7, 2007. A little over the 12 weeks later, the CA US Attorney walked into a staff meeting and harangued his staff. After berating them he informed them that all personnel working in the Public Corruption Unit would be reassigned.
Making the actions appear even more specious is the fact that the L A Times reported a story on March 20, 2008; that Tom O'Brien, the CA US Attorney went so far as to intimidate career prosecutors threatening to tarnish their reputations if they discussed any reason for the dismantling of the Public Corruption Unit with the Press.
Then, a few weeks later, May 2, 2008 the United States Trustee press releases made a note that Kelly B Stapleton, the girl that replaced Roberta DeAngelis, resigned.
Speciously and almost expectedly, the very person sent back into the Region 3 Trustee's office to clean up her own mess is the now notorious Roberta DeAngelis.
Then, just four days later, the WSJ reported on the fact that the FBI raided the home in Northern Virgina and his office, confiscating computers and files of Scott Bloch in Washington DC.
Scott Bloch was the head of the Office of Special Counsel in Washington DC. Of the many duties the Office of Special Counsel is responsible for, the one germane here is the fact that the OSC's office handles sensitive investigations into Government wrongdoing. This would include Whistle Blower files against government personnel.
Things are certainly heating up and the amount of disparaging acts by the current Administrations Dept of Justice seems to know no restraint.
Many subpoenas were recently issued by Congress into the political prosecutions that apparently occurred and the firing of those that refused to prosecute such cases.
Wonder when the mindset of all will turn on the light bulb about the issue that if they can make prosecutions happen for political purposes, then the next obvious question is what prosecutions, that should have occurred, were buried?
We have one such case right here!