Bankruptcy Misconduct - Gems from the Blogosphere

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Gems from the Blogosphere

ABI Deputy Executive Director Felicia S. Turner talks with Roberta DeAngelis:
from American Bankruptcy Institute - Podcast

Roberta DeAngelis certainly spoke in great detail about executive compensation packages and the new limitations against large payments to insiders. Obviously something was needed to balance the corrupting influence of “quid pro quo” payments by large Debtors, via filings by their BigLaw bankruptcy counsel firms, to corporate insiders as a form of kickback for steering the bankruptcy legal fees to a particular law firm. In many mega cases a single firm gets not just tens of millions, but sometimes hundreds of millions of dollars in legal fees. There is no way that such a gold mine of money won’t be tainted, especially if our regulators fall asleep at the switch. Which begs the question, why would we think that the office of the U.S. Trustee is in any way genuine in their efforts to combat corruption when their attorney employees fail to disclose their own relationships and affiliations with the lawfirms they are charged with regulating? Obvious examples of criminal acts including fraudulent written disclosures to the bankruptcy court by bankruptcy lawyers and professionals of the eToys case did not merely escaped mandatory criminal referral by the U.S. Trustee. The criminal parties were gifted a purported “settlement” by the U.S. Trustee absolving them of their crimes and continuing disclosure obligations. The U.S. Trustee does not hold prosecutorial discretion for crimes, they can not decide for or against prosecution, they can only refer crimes. Ms. DeAngelis speaks in far too great detail about executive retention plans for any jury member to believe beyond a reasonable doubt that she did not understand the clear and simple facts regarding the eToys false declaration crimes.
Comment by David O'Donnell - July 21, 2008

DOJ Opera:
from the Bankruptcy Law Blog on WSJ.com

Sadly, our DOJ is merely an opera house shell which plays host to a revolving door masquerade of pretend defenders of our Constitution. Too many of these lawyers’ true allegiances remain solely to their associates in private practise law operating as the most profitable and unreported form of organized crime. Note to readers whose understanding of the real world is limited to TV and film: the largest chunk of organized crime is alive and well and built upon a foundation of BigLaw attorneys and their firms with the stalwart symbiosis of members of the Big-Four accounting Oligopoly. Sorry to disturb the racist sensibilities molded by the media which has defined all mafia as Italian American, all you need to do is follow the money.

Al-Qaida could not have assembled a more effective strategy to plot the eventual demise of the U.S.A. than to plant seeds of corruption as deep as the selfish careerists and racists which hold sway over our DOJ. Shakespeare, Napolean, and Sun Tsu would be proud of such forward thinking planning, the destruction of an enemy at such low cost and such little effort - corruption has destroyed many more governments than the sword. Methinks this current hissy fit exercise shows that the lady protest too much.

How do these Feds justify themselves having indicted Barry Bonds for lying about steroids, and for incarcerating Martha Stewart when the multi-Billion dollar bankruptcy industry of false declaration filing BigLaw firms and their conflicted hedge fund clients thrive by organized periodic fraud upon the court by oath violating attorneys who are in turn protected by their relations within the DOJ? Only a Federal Special Prosecutor stands a chance at unraveling the web of organized crime which binds the abuse of prosecutorial discretion employed by corrupt public officals such as Eliot Spitzer (thou shalt protect thy prostitution ring and their bankruptcy ring affiliates who employ death threats), the DOJ, the SEC, and the “self regulating” state bar associations. The eToys pyramid of criminality and cover up is just one slap in the face to former U.S. Attorney General John D. Ashcroft who said “there is no more important area in the fight against corruption than the challenge for us within the law enforcement and justice sectors to keep our own houses clean.” There are many more such blatant frauds upon the public whose stories will never be silenced in this new age of the internet.
Comment by David O'Donnell - July 11, 2008

American Airlines Sued in Flight Masturbation Case:
from the JONATHAN TURLEY Res ipsa loquitur (”The thing itself speaks”)

The appropriate way to view things is there are a few lawyers in law enforcement, and sitting on the bench as judges, who are overtly corrupt. There are many more lawyers, including at the DOJ, who view their roles so narrowly, and their oaths so meaningless, that they become corrupt by their tacit approval and blind indifference towards the overt corruption of their brothers and sisters. You are smokin’ some powerful dope if you think that filing a complaint with some government agency is going to unravel corruption that is tightly wound in our “justice” system. Most lawyers don’t make a fortune, but all dream of the BigLaw partnerships. Junior associates are engaged in the pyramid games at BigLaw firms as they spend a decade of 60 billable hour (or more) weeks hoping for a shot at a partnerhips which guarantee annual income of over $2 Million per partner. The vast majority fail because such huge incomes can only flow to a few people at the top of a billing pyramid. However, a lawyer working at the DOJ (or SEC) can leapfrog the private practice sweat shop career path (a/k/a lottery ticket buying) towards such lucrative partnerships landing such a job directly including huge signing bonuses. This is for lawyers without a client list or a track record of rain making. What do you suppose is the best resume to promote oneself for such a career path? “I contributed to the incarceration of x BigLaw Partners” is assuredly not the “job experience” which endears government lawyers to BigLaw. Can you say “conflict of interest” or “revolving door” or “public corruption”?
comment by DeathThreatVictim on June 4, 2008 at 9:56 am

Where are they now: eToys.com:
from The Industry Standard - David Cotriss

Dear Mr. Cotriss:
I am not doubting your motivation for your story on eToys and its bankruptcy case. However, your presentation of the history ignores the most dramatic and most relevant facts showing the true context of the "disappearance" of so much shareholder value. The "Where are they now section" fails to report the closing of at least one law firm whose principals reopened shop under a new name, as well as the remarkable shuffling of lawyers among supervisory roles at the Department of Justice unit which is charged with regulating the conduct of bankruptcy professionals and duty bound to report bankruptcy fraud to prosecutors. It seems that a former law partner at one of the professional firm accused with the most egregious violations was the attorney at the U.S. Trustee's office who decided against prosecuting his "former" brothers and partners. Shouldn't he have stepped aside and let an un-conflicted lawyer make the decision?

This peculiar unit of the D.O.J. has an amazing history of ignoring crimes by entities associated with their fellow lawyers. Similar to how Eliot Spitzer (a former DOJ employee) and his relationship with organized crime (prostitution ring et al) is being spun into a sex scandal, when the real story that should be reported is Spitzer as chief NY State prosecutor was "owned" by an organized crime family. This crime family held career ending dirt on the Attorney General and Governor of New York. Just as corrupt public officials buried and ignored evidence in the eToys bankruptcy, Spitzer buried the "death threat advice" evidence delivered to his office by certified mail.

http://jaactv.com/330/site/content/view/12/30/

Here is a transcript of this evidence showing counsel to my former firm refusing to bring conflict of interest issues by bankruptcy professionals to the attention of the court, as he bring up the subject of death threats "happens all the time". There are many criminal and ethical violations evidenced by this attorney validated transcript:

http://jaactv.com/330/site/component/option,com_docman/task,doc_download...

The real question regarding cases like eToys, Worldcom / MCI, WebSci, AmmoCore, and many others: when will the DOJ and the FBI start to follow former federal Attorney General John D. Ashcroft's advice?

" No country -- certainly not the United States -- is free of corruption. In the real world of limited resources, we know that we can only detect, investigate and prosecute a small percentage of those officials who are corrupt."

" I remain convinced that there is no more important area in the fight against corruption than the challenge for us within the law enforcement and justice sectors to keep our own houses clean."
Comment by DeathThreatVictim - May 30 2008

Debtors' Counsel modus operandus: quid pro quo & Corporate Criminals:
from the Bankruptcy Law Blog on WSJ.com

The conduct of public companies such as Countrywide is nothing more than a set of risk reward gambles undertaken by corporate executives emboldened by the quid pro quo assurances that their selection of bankruptcy counsel will deliver an unspoken loyalty by the bankruptcy professionals. “You bring us the fees, and we will protect you, and the U.S. Trustee’s office is filled with our brothers so we are all safe.” Read more about it at www.bankruptcymisconduct.com as this story of Countrywide is a common tale. At some point, there will emerge a critical mass of public servants whose sense of duty will transcend the easy comfort of complicity. Surely, crooks have always been able to silence people of honor when their numbers are small. The emergence of truth is inevitable.
Comment by David O'Donnell - January 16, 2008

OIG Obtains Documents DOJ Unlawfully Denied Existed Re: Private FOIA Request:
from Bankruptcy Fraud Resource Center

Learning that the Office of Inspector General performed an audit of criminal referrals is an odd development. Having witnessed numerous instances of Bankruptcy Judges and Trustees failing to refer conduct that any sentient person would have to conclude was criminal, or at least suspected to be criminal, as required under Title 18 USC § 3057 - I sent a Freedom Of Information Act request to the DOJ requesting any documents reporting on criminal referals by U.S. Trustees. Their responce was they had no documents and performed no tracking. An odd claim given that one of their own U.S. Trustee manuals clearly stated that performance evaluations of staff includes review of criminal referrals. An X-files theorist might conclude that the best way for a U.S. Trustee to win a top evaluation is to ensure that NO criminal referrals are made which might implicate top law firms (a source of and destination for many DOJ lawyers), former DOJ lawyers currently in bankruptcy practise, or any of their respective well financed clients such as hedge funds and private equity firms. Sorry if I'm not at all impressed with the "bankruptcy crimes" involving mom and pop restaurants and similar small time players, with a rare small time lawyer thrown in for good measure. Why the dearth of action on the professionals involved in the big bankruptcy cases?
Comment by David O'Donnell - November 10, 2007